diff --git "a/China/20.Meituan_$93.17 B_Information Technology/2018/results.txt" "b/China/20.Meituan_$93.17 B_Information Technology/2018/results.txt"
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+++ "b/China/20.Meituan_$93.17 B_Information Technology/2018/results.txt"
@@ -0,0 +1,26463 @@
+54,438,135
+Non-current assets
+ASSETS
+CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+(123,281,091)
+(8,637,836) (15,487,131)
+(11,774,342)
+Current assets
+(5,789,900) (18,916,617) (115,477,171)
+(8,642,934) (15,558,395) (123,296,397)
+(10,519,338)
+5,941,236 12,219,504 15,104,958
+(10,631,096) (18,933,663) (115,490,807)
+(5,794,998) (18,987,881) (115,492,695)
+(9,242,729)
+(10,519,338)
+2,779,455
+65,227,278
+33,927,987
+(11,774,342)
+2015
+As of December 31,
+2016
+(RMB in thousands)
+2017
+Equity attributable to equity holders of the Company
+EQUITY
+Total assets
+120,661,511
+83,634,163
+51,716,560
+42,889,847
+73,149,392
+23,634,532
+21,874,383
+47,512,119
+29,196,028
+28,082,028
+21,015,464
+2018
+12,988,077
+(17,669,672) (25,622,386)
+4,018,959
+2018
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+when the Class A Shareholders have transferred to another person the beneficial ownership of, or economic
+interest in, all of the Class A Shares or the control over the voting rights attached to them, other than in the
+circumstances permitted by Listing Rule 8A.18;
+upon the occurrence of any of the circumstances set out in Listing Rule 8A.17, in particular where a WVR
+Beneficiary is: (1) deceased; (2) no longer a member of the Board; (3) deemed by the Stock Exchange to be
+incapacitated for the purpose of performing his duties as a director; or (4) deemed by the Stock Exchange to
+no longer meet the requirements of a director set out in the Listing Rules;
+(iii)
+(ii)
+(i)
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+The weighted voting rights attached to our Class A Shares will cease when none of the WVR Beneficiaries have
+beneficial ownership of any of our Class A Shares, in accordance with Listing Rule 8A.22. This may occur:
+Meituan Dianping
+4
+Class A Shares may be converted into Class B Shares on a one to one ratio. As at the date of this annual report,
+upon the conversion of all the issued and outstanding Class A Shares into Class B Shares, the Company will issue
+735,568,783 Class B Shares, representing approximately 14.94% the total number of issued Class B Shares as at
+the date of this annual report.
+As at the date of this annual report, the WVR Beneficiaries are Wang Xing, Mu Rongjun and Wang Huiwen. Wang
+Xing beneficially owned 573,188,783 Class A Shares, representing approximately 46.68% of the voting rights in the
+Company with respect to Shareholders' resolutions relating to matters other than the Reserved Matters. The Class
+A Shares beneficially owned by Wang Xing are held by (i) Crown Holdings, a company indirectly wholly owned by
+a trust established by Wang Xing (as settlor) for the benefit of Wang Xing and his family; and (ii) Shared Patience,
+a company directly wholly owned by Wang Xing. Mu Rongjun beneficially owned 125,980,000 Class A Shares,
+representing approximately 10.26% of the voting rights in the Company with respect to Shareholders' resolutions
+relating to matters other than the Reserved Matters. The Class A Shares beneficially owned by Mu Rongjun are
+held by (i) Charmway Enterprises, a company indirectly wholly owned by a trust established by Mu Rongjun (as
+settlor) for the benefit of Mu Rongjun and his family; and (ii) Shared Vision, a company directly wholly owned by Mu
+Rongjun. Wang Huiwen beneficially owned 36,400,000 Class A Shares, representing approximately 2.96% of the
+voting rights in the Company with respect to Class A Shareholders' resolutions relating to matters other than the
+Reserved Matters. The Class A Shares beneficially owned by Wang Huiwen are held by Kevin Sunny, a company
+indirectly wholly owned by a trust established by Wang Huiwen (as settlor) for the benefit of Wang Huiwen and his
+family.
+The Company is controlled through weighted voting rights. Each Class A Share has 10 votes per share and each
+Class B Share has one vote per share except with respect to resolutions regarding a limited number of Reserved
+Matters, where each Share has one vote. The Company's WVR structure enables the WVR Beneficiaries to exercise
+voting control over the Company notwithstanding the WVR Beneficiaries do not hold a majority economic interest in
+the share capital of the Company. This allows the Company to benefit from the continuing vision and leadership of
+the WVR Beneficiaries who control the Company with a view to its long-term prospects and strategy.
+Shareholders and prospective investors are advised to be aware of the potential risks of investing in companies
+with WVR structures, in particular that interests of the WVR Beneficiaries may not necessarily always be aligned
+with those of the Shareholders as a whole, and that the WVR Beneficiaries will be in a position to exert significant
+influence over the affairs of the Company and the outcome of Shareholders' resolutions, irrespective of how other
+Shareholders vote. Shareholders and prospective investors should make the decision to invest in the Company only
+after due and careful consideration.
+WEIGHTED VOTING RIGHTS
+CORPORATE INFORMATION
+2018 Annual Report
+5
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+2017
+2016
+2015
+......
+Year ended December 31,
+equity holders of the Company
+Total comprehensive loss for the year attributable to
+Total comprehensive loss for the year
+of the Company
+Loss for the year attributable to equity holders
+Loss for the year
+Loss before income tax
+Gross profit
+Revenues
+CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
+(RMB in thousands)
+CORPORATE INFORMATION
+(40,559,116)
+Non-controlling interests
+1,471,721
+Gross profit/(loss)
+Gross margin
+747,771
+3,103,191
+6,624,416
+4,203,043
+3,988,258
+4,594,132
+Revenues
+and others Food delivery
+(RMB in thousands, except for percentages)
+hotel & travel
+Food delivery
+New initiatives
+December 31, 2018
+In-store,
+11,006,277
+(978,985)
+415,989
+美团点评
+Food delivery
+December 31, 2017
+and others
+New initiatives
+In-store,
+hotel & travel
+Food delivery
+December 31, 2018
+Year Ended
+28.7%
+87.7%
+6.3%
+(23.3%)
+86.8%
+13.4%
+214,690
+and others
+86,504,334
+hotel & travel
+December 31, 2017
+In-store,
+10,242,723
+Current liabilities
+2,326,683
+103,618,175
+64,815,964
+50,316,796
+12,475,947
+Non-current liabilities
+86,509,772
+(17,669,672) (25,575,351) (40,501,382)
+Total Equity
+5,438
+57,734
+47,035
+LIABILITIES
+20,517,370
+31,825,056
+Total liabilities
+Three Months Ended
+Unaudited
+FINANCIAL INFORMATION BY SEGMENT
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Meituan Dianping
+6
+120,661,511
+83,634,163
+51,716,560
+42,889,847
+Total equity and liabilities
+34,151,739
+124,135,545
+77,291,911
+60,559,519
+New initiatives
+3
+2018 Annual Report
+about.meituan.com
+Mr. Neil Nanpeng Shen ()
+Mr. Lau Chi Ping Martin ()
+Non-executive Directors
+Mr. Wang Huiwen (X)
+Mr. Mu Rongjun ()
+Mr. Wang Xing (E) (Chairman of the Board)
+Independent Non-executive Directors
+Executive Directors
+CORPORATE INFORMATION
+258
+253
+Glossary
+Definitions
+131
+BOARD OF DIRECTORS
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+Dr. Shum Heung Yeung Harry (¥)
+AUDIT COMMITTEE
+Ms. Lau Yee Wa ()
+Mr. Wang Yixiang ()
+JOINT COMPANY SECRETARIES
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A) (Chairman)
+CORPORATE GOVERNANCE COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Wang Huiwen (X)
+NOMINATION COMMITTEE
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Mu Rongjun ()
+Mr. Leng Xuesong (A) (Chairman)
+REMUNERATION COMMITTEE
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Leng Xuesong (A)
+Mr. Orr Gordon Robert Halyburton (Chairman)
+Notes to the Consolidated Financial Statements
+AUTHORIZED REPRESENTATIVES
+129
+127
+6
+6
+2
+Chairman's Statement
+Financial Summary and Operation Highlights
+Corporate Information
+Management Discussion and Analysis
+CONTENTS
+...............
+Annual Report
+2018
+Stock Code: 3690
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+Meituan Dianping
+20°
+14
+Directors and Senior Management
+33
+Consolidated Statement of Changes in Equity
+125
+Consolidated Statement of Financial Position
+124
+Consolidated Statement of Comprehensive Loss
+123
+Consolidated Income Statement
+117
+Independent Auditor's Report
+96
+Environmental, Social and Governance Report
+75
+Corporate Governance Report
+39
+Report of Directors
+Consolidated Statement of Cash Flows
+Mr. Wang Xing()
+Mr. Wang Huiwen (X)
+AUDITOR
+Hopewell Center
+Shops 1712-1716, 17th Floor
+Computershare Hong Kong Investor Services Limited
+HONG KONG SHARE REGISTRAR
+Hong Kong
+181 Queen's Road Central
+183 Queen's Road East
+Wanchai
+Grand Millennium Plaza
+Guotai Junan Capital Limited
+COMPLIANCE ADVISOR
+99 Queen's Road Central
+Hong Kong
+53rd Floor, The Center
+Maples and Calder (Hong Kong) LLP
+As to Cayman Islands law:
+27/F, Low Block
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+Maples Fund Services (Cayman) Limited
+COMPANY'S WEBSITE
+3690
+STOCK CODE
+China
+Beijing
+Haidian District
+No. 168 Xizhimenwai Street
+1/F, Tengda Building
+Shouti Sub-branch
+China Merchants Bank, Beijing Branch,
+PRINCIPAL BANKER
+Cayman Islands
+Grand Cayman KY1-1102
+Cricket Square
+PO Box 1093, Boundary Hall
+No. 1 East Chang An Ave
+Beijing 100738, the PRC
+Oriental Plaza
+9/F, Office Tower C1
+Beijing office
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+China
+Beijing 100102
+Chaoyang District
+No.4 Wang Jing East Road
+Block B&C, Hengjiweiye Building
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+Cayman Islands
+Grand Cayman, KY1-1104
+PO Box 309, Ugland House
+REGISTERED OFFICE
+Hong Kong
+Central
+Certified Public Accountants
+22/F, Prince's Building
+PricewaterhouseCoopers
+Level 54, Hopewell Centre
+In-store,
+hotel & travel
+183 Queen's Road East
+2
+Han Kun Law Offices
+As to the PRC law:
+Hong Kong
+15 Queen's Road Central
+The Landmark
+42/F, Edinburgh Tower
+Skadden, Arps, Slate, Meagher & Flom
+Hong Kong
+3A Chater Road
+18/F, The Hong Kong Club Building
+Davis Polk & Wardwell
+As to Hong Kong law (in alphabetical order):
+LEGAL ADVISORS
+CORPORATE INFORMATION
+Meituan Dianping
+Hong Kong
+New initiatives
+2,720,830
+21,031,933
+Number of food delivery transactions
+44.3%
+357.2
+515.6
+32.5%
+104.1
+138.0
+Total
+99.8%
+Number of domestic hotel room nights
+28.0
+and others
+(RMB in thousands, except for percentages)
+Revenues
+38,143,083
+15,840,361
+11,243,834
+82.5%
+10,852,810
+Gross profit/(loss)
+56.0
+5,268,197
+Number of Transacting Users
+Three Months Ended
+December
+56.3%
+4,089.7
+6,393.4
+35.3%
+1,354.0
+1,832.3
+(in percentages)
+(in millions)
+(in percentages)
+Number of Active Merchants
+(in millions)
+31, 2017
+31, 2018
+December
+December
+Year-over-
+year change
+31, 2017
+31, 2018
+December
+Year Ended
+Year-over-
+year change
+74.4
+14,095,355
+1,699,419
+31, 2018
+31, 2017
+(RMB in billions)
+Year-over-
+year change
+(in percentages)
+Gross transaction volume:
+Food delivery
+80.2
+57.0
+40.6%
+year change
+(in percentages)
+282.8
+65.3%
+In-store, hotel & travel
+44.7
+39.9
+11.9%
+176.8
+158.1
+11.8%
+New Initiatives and others
+171.1
+(4,258,594)
+(RMB in billions)
+31, 2018
+9,579,479
+Gross margin
+13.8%
+89.0%
+(37.9%)
+8.1%
+88.3%
+2,043,244
+940,606
+46.0%
+2018 Annual Report
+31, 2017
+7
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+OPERATING METRICS
+Three Months Ended
+Year Ended
+December
+December
+Year-over-
+December
+December
+8
+13.1
+7.2
+(in percentages)
+(units)
+32.1%
+4.4
+5.8
+29.3%
+309.5
+400.4
+year change
+(in percentages)
+(in millions)
+31, 2017
+31, 2018
+Year-over-
+December
+December
+Year Ended
+Meituan Dianping
+Average number of transactions per annual Transacting User
+38.5%
+205.0
+283.9
+25.6%
+23.8
+59.2
+18.8
+CHAIRMAN'S STATEMENT
+9
+2018 Annual Report
+Monetization rate equals the revenues for the year/period divided by the Gross Transaction Volume for the year/period.
+Adjusted operating profit equals operating profit excluding the impact of other gains, net, fair value changes on investments
+measured at fair value through profit or loss, share-based compensation expenses and amortization of intangible assets
+resulting from acquisitions.
+2
+1
+Overall monetization rate² increased to 12.6% in 2018 from 9.5% in 2017.
+Annual Active Merchants on our platform grew by 32.1% to 5.8 million in 2018 from 4.4 million in 2017.
+•
+Annual Transacting Users on our platform grew by 29.3% to 400.4 million in 2018 from 309.5 million in 2017.
+On average, the annual number of transactions each Transacting User made on our platform increased to
+23.8 transactions in 2018 from 18.8 transactions in 2017.
+26.5%
+Total Gross Transaction Volume (GTV) on our platform grew by 44.3% to RMB515.6 billion in 2018 from
+RMB357.2 billion in 2017.
+OPERATING HIGHLIGHTS
+Negative adjusted EBITDA and adjusted net loss were RMB4.7 billion and RMB8.5 billion, respectively.
+While our significant investments in new initiatives in 2018 to some extent tempered our increase in overall
+profitability, our food delivery segment and in-store, hotel & travel segment on a combined basis generated
+positive adjusted operating profit¹ in 2018. In addition, our negative adjusted EBITDA and adjusted net loss
+continued to narrow sequentially on a quarter-over-quarter basis in the fourth quarter of 2018.
+Selling and marketing expenses as a percentage of total revenues decreased to 24.3% from 32.2% in 2017,
+attributable to economies of scale, our stronger brands and healthy operating leverage.
+Total gross profit increased to RMB15.1 billion year-over-year from RMB12.2 billion in 2017. We continued to
+make gross margin improvement in our core businesses such as food delivery and in-store, hotel & travel.
+Total revenues increased by 92.3% year-over-year to RMB65.2 billion from RMB33.9 billion in 2017. We
+achieved strong revenue growth across all major business segments.
+In the year ended December 31, 2018:
+FINANCIAL PERFORMANCE HIGHLIGHTS
+Meituan Dianping has achieved many milestones in 2018: we have opened a new chapter of opportunities and
+challenges in the capital markets as a public company with our successful initial public offering on the Hong
+Kong Stock Exchange; we have upgraded our corporate structure and service offerings in accordance with the
+"Food+Platform" strategy and further solidified our market leadership; we have enhanced monetisation of our entire
+platform and our two core business segments generated positive operating profits on a combined basis. On behalf
+of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2018.
+To our Shareholders:
+In the year ended December 31, 2018:
+4
+5
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+Internal Control
+2
+The Directors acknowledge their responsibility for preparing the financial statement of the Company for the year
+ended December 31, 2018, and are aware of any material uncertainties relating to events or conditions that may
+cast significant doubt upon the Company's ability to continue as a going concern.
+The Audit Committee is delegated to monitor the implementation of the risk management policies across the
+Company on an ongoing basis to ensure that the internal control system is effective in identifying, managing and
+mitigating risks involved in its business operations.
+Number of individual
+1 - 5,000,000
+SHAREHOLDERS
+In addition, the Board believes that the Company's accounting and financial reporting functions have been
+performed by staff of the appropriate qualifications and experience and that such staff receives appropriate and
+sufficient training and development. Based on the audit report of the Audit Committee, the Board also believes that
+sufficient resources have been obtained for the Company's internal audit function and that its staff qualifications
+and experience, training programs and budgets are sufficient.
+The Audit Committee, on behalf of the Board, continuously reviews the risk management and internal control
+systems. The review process comprises, among other things, meetings with management of business groups the
+internal audit team, legal, personnel and the external auditors, reviewing the relevant work reports and information
+of key performance indicators, and discussing the major risks with the senior management of the Company. The
+Board is of the view that during the Relevant Period, the risk management and internal control systems of the
+Company are effective and adequate.
+Effectiveness of Risk Management and Internal Control
+CORPORATE GOVERNANCE REPORT
+91
+2018 Annual Report
+The Company also has certain compliance teams for its internet finance business, which are responsible for the
+formulation and implementation of internet finance-related policies and analysis of the regulatory environment
+with respect to services it provides. The Company continually reviews the implementation of its risk management
+policies and measures to ensure its policies and implementation are effective and sufficient.
+The Company's in-house legal department reviews its services for regulatory compliance before they are made
+available to the general public. Its in-house legal department and administrative department are responsible for
+obtaining any requisite governmental pre-approvals or consents, including preparing and submitting all necessary
+documents for filing with relevant government authorities within the prescribed regulatory timelines.
+In accordance with its internal procedures, the Company's in-house legal department performs the basic function of
+reviewing and updating the form of contracts it enters into with its consumers, merchants and relevant third-parties.
+Its legal department examines the contract terms and reviews relevant documents for its business operations and
+the necessary underlying due diligence materials, before it enters into any contract or business arrangements.
+In addition, the Company's quality control teams under each business group are also responsible for reviewing
+the licenses and permits of the relevant counterparties and proposed commercial terms before it enters into any
+contract or business arrangements.
+The Company has designed and adopted strict internal procedures to ensure the compliance of its business
+operations with the relevant rules and regulations. Its internal control team works closely with its business units to (i)
+perform risk assessments and give advice on risk management strategies, (ii) improve business process efficiency
+and monitor internal control effectiveness and (iii) promote risk awareness throughout the Company.
+CORPORATE GOVERNANCE REPORT
+Human Resources Risk
+The internet industry is highly dependent on the basic qualities of employees; therefore, enhancing, training and
+management of qualities of a growing population of employees is highly important for the business development of
+the Company.
+The Company provides regular and specialized training tailored to (i) the needs of its employees in different
+departments and (ii) its anti-bribery & corruption policy. The Company has a training center which regularly
+organizes internal training sessions conducted by senior employees or outside consultants. The training center
+schedules regular online and classroom trainings, reviews the content of the trainings, and follows up with
+employees to evaluate the impact of such training. Through these trainings, the Company ensures that the skill sets
+and knowledge level of its anti-bribery & corruption policy of its staff remain up-to-date, enabling them to better
+discover and meet consumers' and merchants' needs.
+The Company has in place an employee handbook and a code of conduct approved by its management and has
+distributed them to all its employees. The handbook contains internal rules and guidelines regarding work ethics,
+fraud prevention mechanisms, negligence and corruption. The Company provides employees with regular training,
+as well as resources to explain the guidelines contained in the employee handbook.
+The Company has in place an anti-bribery and corruption policy to safeguard against corruption within the
+organization. The policy explains potential bribery and corruption conduct and the Company's anti-bribery and
+corruption measures. The Company makes its internal reporting channel open and available for its staff to report
+any bribery and corruption acts, and its staff can also make reports to the anti-fraud department. The anti-fraud
+department is responsible for investigating the reported incidents and taking appropriate measures.
+The Company also maintains an internal audit department which is responsible for reviewing the effectiveness of
+internal controls and reporting to the Audit Committee and senior management on any issues identified. Its internal
+audit department members hold regular meetings with management to discuss any internal control issues it faces
+and the corresponding measures to implement toward resolving such issues. The internal audit department reports
+to the Audit Committee to ensure that any major issues identified are channeled to the committee on a timely basis.
+The Audit Committee then discusses the issues and reports to the Board, if necessary.
+The Company processes an extremely large number of transactions on a daily basis on its platform. With
+continuous expansion of its overall business scope, heightened public concerns over consumer protection and
+consumer safety issues, the Company may be subject to additional legal and social responsibilities and increased
+scrutiny and negative publicity over these issues. If the Company does not pay sufficient attention to public opinion
+or if any incident arises but is not dealt with in a timely manner, its reputation, brand and image will be affected.
+The Company always upholds the principle of being "customer-centric" to satisfy our clients and safeguard their
+interests when rendering services. Therefore, an effective risk management mechanism has been established
+to continuously minimize risks in our ongoing business procedures or information system through a series of
+evaluations and analysis with an aim to optimize our management system, upgrade our risk management and
+continuously reduce our exposure to any crisis. In addition, the Company's public relations department maintains
+close connections and interactions with other operation departments and related functional units, so that they
+can make timely and appropriate responses to any crisis that arises in accordance with established policies and
+working procedures.
+90
+90
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+The Company strives to provide ready, fair, regular and timely disclosure of information that is material to the
+investor community. Therefore, the Company works to maintain effective and on-going communication with
+shareholders so that they, along with prospective investors, can exercise their rights in an informed manner based
+on a good understanding of the Group's operations, businesses and financial information. The Company also
+encourages Shareholders' active participation in annual general meetings and other general meetings or other
+proper means. To safeguard Shareholders' interests and rights, a separate resolution will be proposed for each
+issue at general meetings, including the election of individual Directors. All resolutions put forward at general
+meetings will be voted by poll pursuant to the Listing Rules and poll results will be posted on the websites of the
+Company and the Stock Exchange in a timely manner after each general meeting.
+In addition, the Company has developed and maintains the shareholders communication policy, which is available
+on the Company's website.
+A summary of the disclosure of interests of the substantial shareholders of the Company is set out in the section
+headed "Report of Directors" of this annual report.
+92
+0
+Remuneration band (RMB)
+Details of the remuneration by band of Directors and senior management of the Company, whose biographies
+are set out in the section headed “Directors and Senior Management" of this annual report, for the year ended
+December 31, 2018 are set out below:
+The remuneration for the audit and non-audit services provided by the Auditor to the Group during the year ended
+December 31, 2018 was approximately as follows:
+REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
+The Company has arranged appropriate directors and officers' liability insurance in respect of legal action against
+the Directors and officers.
+Type of Services
+DIRECTORS AND OFFICERS LIABILITY INSURANCE
+CORPORATE GOVERNANCE REPORT
+93
+2018 Annual Report
+>5,000,000
+App 14 0.(a)
+In order to uphold good corporate governance and ensure compliance with the Listing Rules and applicable Hong
+Kong laws, the Company also engages Lau Yee Wa ("Ms. Lau"), a senior manager of corporate services division
+of Tricor Services Limited, as the other joint company secretary to assist Mr. Wang to discharge his duties as a
+company secretary of the Company. Ms. Lau's primary contact person at the Company is Mr. Wang.
+Wang Yixiang ("Mr. Wang”), a joint company secretary of the Company, is responsible for advising the Board on
+corporate governance matters and ensuring that the Board policies and procedures, as well as the applicable laws,
+rules and regulations are followed.
+JOINT COMPANY SECRETARIES
+Shareholders who intend to put forward their enquiries about the Company to the Board can send their enquiries
+to the headquarters of the Company at Block B&C, Hengjiweiye Building, No.4 Wang Jing East Road, Chaoyang
+District, Beijing, People's Republic of China to the attention of the Joint Company Secretaries or send an email to
+yixiang.wang@dianping.com.
+Enquiries to the Board
+As regards proposing a person for election as a Director, the procedures are available on the website of the
+Company.
+Shareholders may put forward proposals for consideration at a general meeting of the Company according to the
+Articles of Association. Any one or more members holding as of date of deposit of the requisition not less than one-
+tenth of the paid-up capital of the Company carrying the right of voting at general meetings of the Company shall
+at all times have the right, by written requisition, to require an extraordinary general meeting of the Company to be
+called by the Board for the transaction of any business specified in such requisition. A written requisition shall be
+deposited at the Company's principal place of business in Hong Kong. If within 21 days of such deposit the Board
+fails to proceed to convene such meeting to be held within a further 21 days, the requisitionist(s) themselves or any
+of them representing more than one-half of the total voting rights of all of them, may do so in the same manner, and
+all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to
+the requisitionist(s) by the Company.
+Convening of Extraordinary General Meeting and Putting Forward Proposals
+CORPORATE GOVERNANCE REPORT
+Meituan Dianping
+92
+For the year ended December 31, 2018, Mr. Wang and Ms. Lau undertook not less than 15 hours of relevant
+professional training respectively in compliance with Rule 3.29 of the Listing Rules.
+Crisis Management and Reputation Risk
+Please refer to Note 8 to the consolidated financial statements for details of remuneration of Directors for the year
+ended December 31, 2018.
+Amount
+(RMB'000)
+The Company understands the environmental risks it faces in its operations, and recognizes the importance
+of seeking harmony with the environment. In our operation and development, we abide by relevant laws and
+regulations such as the Environmental Protection Law of the People's Republic of China and the Energy
+Conservation Law of the People's Republic of China, and advocate environmentally friendly values and
+behaviors. We implement green operation management as described below to reduce the impact of our
+operations on the environment.
+ENVIRONMENT
+3.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+97
+2018 Annual Report
+Material aspects we identified include "Product Responsibility", "Employment”, “Supply Chain
+Management" and "Anti-corruption"; and relevant aspects include "Emissions", "Use of Resources",
+"The Environment and Natural Resources", "Community Investment", "Health and Safety", "Development
+and Training" and "Labour Standards". We will discuss these aspects respectively in this report.
+In 2018, based on continuous communication with key stakeholders and the Company's operational
+characteristics, we conducted a materiality assessment of the 11 aspects of ESG concerns listed in the
+ESG Reporting Guide as a reference for our actions and reports.
+Community interaction, public welfare
+activities, social media and poverty
+alleviation projects
+Social media, official website, press
+conference, exchange meeting and
+dedicated customer service
+Supplier assessment and supplier
+conference
+Customer service hotline, social media
+and information disclosure
+Customer service hotline, meetings and
+merchant assessment
+announcement and official website
+Communication meetings, social media
+and face-to-face communication
+Shareholders' meeting, regular
+in governmental meetings
+Policy consultation, incident reporting,
+information disclosure and participation
+Main communication channels
+Emissions, Use of Resources, The
+Environment and Natural Resources,
+and Community Investment
+Emissions, Use of Resources,
+The Environment and Natural
+Resources, Employment, Supply
+Chain Management and Product
+Responsibility
+Supply Chain Management and Anti-
+Corruption
+Product Responsibility and Anti-
+corruption
+(i) Measures for Green Operation
+Product Responsibility
+1. Green office
+For reasonable use of electricity, we use LED energy-saving lights in office areas. We arrange
+personnel to conduct regular inspections in the office areas to avoid lights that are never turned off
+in unmanned office areas. We cultivate staff's energy-saving habits in every aspect, for example,
+posting tips such as "turn off the lights in time" in an eye-catching area of the office.
+99
+2018 Annual Report
+In order to meet the needs of merchants to purchase environmentally friendly materials, we have
+uniformly screened the information of various suppliers for environmentally friendly materials for
+merchants' reference, and the platforms merchants can voluntarily choose according to their own
+circumstances. We also collect merchants' surveys and provide merchants with a lower-cost centralized
+procurement for environmentally friendly packaging materials.
+We have taken various measures to promote the use of environmentally friendly packaging and reuse
+of resources: (i) cooperation with professional institutions, governmental authorities and experts and
+scholars to develop environmentally friendly food delivery packaging; (ii) promotion of paper packaging
+and reusable food delivery packaging, as well as scientific recycling of food delivery tableware; and (iii)
+popularization of scientific waste sorting and recycling methods for merchants and users to enhance
+their environmental awareness.
+In 2017, the Company cooperated with the China Environmental Protection Foundation, the China
+Cuisine Association and hundreds of food and beverage brands to establish a "Green Food Delivery
+Alliance" and launched the "Lush Mountain Plan", which advocates the environmental protection
+concept, research on environmentally friendly paths and exploration on a scientific closed-loop to
+promote the environmental protection process of the food delivery industry.
+With a focus on the environmental impact of the food delivery services, we analyze the environmental
+risks of the food delivery industry, implement measures relevant to environmental protection and seek
+solutions to environmental problems caused by the food delivery industry.
+Promote Environmental Protection in the Industry
+We actively work with other industry peers to promote the development of technology related
+to a green data center. In order to improve the performance of big data servers and reduce
+power consumption, we work with partners to carry out research on general chips for domestic
+ARM architecture servers, and test and optimize software compatibility as well as operation and
+maintenance compatibility.
+As a large, natural cooling data center that has been put into large-scale application, Ningxia
+Zhongwei data center uses high-efficiency direct natural cooling and indirect evaporative cooling
+technology (Free Cooling technology), and adopts a wind wall system to form a cold air channel
+and a hot air channel in the machine room, thereby improving the cooling effect. Ningxia Zhongwei
+data center has achieved a high level of technology in terms of machine room structure, server
+layout, temperature control, heat recovery, etc. Compared with traditional large data centers'
+refrigeration solutions, it has a clear advantage in energy saving.
+Our data center in Ningxia Zhongwei boasts the following environmentally advantages: (i) Ningxia
+Zhongwei has a mild climate and large temperature differences between day and night, which is
+conducive to natural wind cooling and reduction of air conditioning usage and power consumption;
+and (ii) the clean energy used by Ningxia Zhongwei accounts for more than 50%, and most of
+the energy required for data center operation is clean energy, which can indirectly reduce carbon
+dioxide emissions and reduce environmental impact.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(ii)
+In June 2018, the first green data center we rented in Zhongwei City of Ningxia Hui Autonomous
+Region (hereinafter referred to as "Ningxia Zhongwei") was put into use. In the future, we plan to
+gradually migrate the servers required for big data offline business to the Zhongwei data center.
+We take into account the environmental impact and resource consumption arising from the
+deployment and operation of the data centers.
+Meituan Dianping
+98
+Green Data Centres
+2.
+We also adopt other measures to reduce resource use, such as: (i) setting all printer devices
+to print on both sides by default and posting an eye-catching tip next to the printing devices
+to encourage employees to prioritise two-sided printing to save paper; and (ii) installing direct
+drinking water systems to replace bottled water, so as to reduce the use of plastics.
+At the same time, we conduct a monthly statistical analysis of water and electricity use in the
+office areas, check abnormal conditions and take improvement measures to further enhance the
+efficiency of resource use.
+In order to save water resources, we install inductive water-saving sanitary ware in some
+office areas, post "saving water" tips on the sink and arrange regular inspections to avoid the
+phenomenon of "keeping the tap running all the time".
+Electricity and water are the main resources we consume in the Company's operations.
+The statement of the Auditors about their reporting responsibilities on the financial statements is set out in the
+section headed "Independent Auditor's Report".
+Development and Training, and Labour
+Standards
+and Anti-corruption
+PROFILE
+1.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+96
+96
+95
+2018 Annual Report
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+The Company has put in place an internal policy for the handling and disclosure of inside information in compliance
+with the SFO. The internal policy sets out the procedures and internal controls for the handling and dissemination
+of inside information in a timely manner and provides the Directors, senior management and relevant employees a
+general guide in monitoring information disclosure and responding to enquiries.
+POLICY ON THE DISCLOSURE OF INSIDE INFORMATION
+The Memorandum and Articles of Association of the Company has been amended and restated with effect from
+September 20, 2018.
+CHANGE IN CONSTITUTIONAL DOCUMENTS
+CORPORATE GOVERNANCE REPORT
+52,669
+3,899
+48,770
+Meituan Dianping
+94
+Total
+Non-audit services
+Audit and audit related services
+This report aims to reflect the performance of the Company on Environmental, Social and Governance ("ESG")
+for 2018 on an objective and fair basis. It is recommended to read the part on governance in conjunction with
+the "Corporate Governance Report" section contained in this annual report.
+Employment, Health and Safety,
+2.
+Meituan Dianping
+(iii) Materiality Assessment
+Community
+Media and non-
+governmental
+organisations
+Suppliers
+Platform merchants
+Users
+Employees
+Shareholders and Investors Employment, Product Responsibility
+Management, Product Responsibility,
+Anti-corruption, and Community
+Investment
+Government and regulators Employment, Supply Chain
+Main ESG concerns
+Main stakeholders
+The key stakeholders, concerns and communication channels we identified are listed in the table below.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We actively listen to and respond to the demands of stakeholders. Based on the characteristics of
+actual businesses and management operations, we identified key stakeholders and learned their main
+concerns through various communication channels.
+Stakeholder Engagement
+(ii)
+In order to better put the ESG concept into practice, we have built an ESG management system. The
+Board is responsible for guiding and reviewing the Company's ESG performance. The Company's
+relevant functions and business units are responsible for the specific management of issues on
+environment, employee, operation and community. We also have a Corporate Social Responsibility
+Department to carry out work related to corporate social responsibility.
+With the mission of "We help people eat better, live better”, the Company adheres to the values of
+"Customer-centric, integrity, win-win cooperation, and striving for excellence".
+ESG Concept and Management
+(i)
+ESG STRATEGY
+AUDITOR'S REMUNERATION
+•
+100
+(ii) Occupational health and safety
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(102) Meituan Dianping.
+We have established a variety of internal communication channels, such as social platforms and
+communication sessions, so that employees' requests, suggestions or opinions can be heard and
+attended to in a timely manner.
+Communication
+We have established Attendance Management System and Holiday Management System and
+other systems to manage the working hours of employees and provide employees with leaves
+such as annual leave and full-pay sick leave. Employees are free to join clubs of various types and
+participate in employee activities to relieve work stress and enrich their spare time.
+We care about the health and safety of our employees and provide a safe working environment for them.
+We abide by the Labor Law of the People's Republic of China, the Production Safety Law of the
+People's Republic of China and the Fire Prevention Law of the People's Republic of China and other
+laws and regulations concerning occupational health and safety and fire prevention in workplace, and
+have established internal systems including Administrative Measures for Access Control of Office
+Areas, Fire Safety Management System of Meituan Dianping and No-smoking Management System in
+Office Area, so as to improve safety management. Our measures to protect workplace safety include: (i)
+setting up access control to manage the entry and exit of personnel from the office areas; (ii) regularly
+conducting fire safety inspections on office premises and rectifying the identified hazards thereof; and (iii)
+conducting fire safety propaganda and drills to enhance employees' awareness of fire-fighting.
+Work-life Balance
+We objectively and fairly evaluate our employees' performances and help them improve their ability
+through performance management.
+We have established a series of systems including Performance Management System,
+Management Rank Specification and Professional Promotion Evaluation Program to improve
+the performance management process, standardize the rank management system and set up
+promotion channels.
+Promotion and Development
+4.
+3.
+We provide competitive compensation and benefits to attract and retain talent. We provide
+supplementary medical insurance and various types of subsidies for our employees. In addition,
+we also enhance employee happiness by holding theme activities during festivals, such as the
+Mid-Autumn Festival.
+Based on performance contribution, leadership and professional competence, the promotion of
+employees is reviewed by the Internal Review Committee. Prior to the review, employees can
+participate in the training to understand the promotion criteria and processes. After the review,
+employees can provide feedback on promotion through an open promotion appeal channel.
+We have set up gymnasiums in some offices, providing free fitness equipment, and promoting regular
+exercise and taking a rest after work. Employees can get health consultation services and basic
+medicines at health stations set up in some offices. We provide employees with physical examinations
+and medical report interpretations every year, and hold health lectures from time to time to improve
+employees' health awareness.
+(iii) Training and development of employees
+We are committed to providing our employees with training anytime, anywhere and as they need. In
+2016, we established the talent training platform “Internet + University" and developed a training system
+to satisfy employees' need for learning.
+Our food delivery services require a large number of delivery personnel (whom we refer to as "delivery
+riders") to assist in the services.
+Rider Protection
+(ii)
+We pay attention to the environmental and social risks of our suppliers. In the admittance process of
+suppliers, we require suppliers to provide relevant product or service qualifications and certifications
+about compliance with laws and regulations, and conduct on-site inspections and reviews on important
+suppliers. We have maintained a database of qualified suppliers, and the suppliers therein have passed
+the admittance review for suppliers. In the event that the current supplier ceases to operate due to
+environmental and social risks and problems, we will resort to the alternate supplier to ensure that the
+product or service is delivered on time.
+The Company's procurement department conducts self-assessment of procurement activities on a
+regular basis. Procurement activities are also subject to supervision and inspection by the Company's
+supervisory department and internal audit department, so as to reduce the ethics risk in the procurement
+process.
+In order to cultivate the integrity awareness of relevant employees in the procurement process and avoid
+commercial bribery and fraud, we conduct training on anti-commercial bribery and clean procurement
+for employees in charge of requirement and procurement processes. At the same time, we require
+suppliers to sign the Anti-Commercial Bribery Commitment and abide by the terms contained therein
+before engaging in business cooperation or providing the Company with products and services.
+We attach importance to the ethics risk management involved in various activities during the
+procurement period, and establish a clear procurement process with systems such as Procurement
+Management Process, Supplier Management Process for Procurement Management Department,
+Sourcing Management Process, Procurement and Acceptance Management Process, and Procurement
+Compliance and Code of Conduct, aiming at conducting standard management for the activities of the
+procurement processes of the Company.
+Transparent Procurement
+(i)
+Our main suppliers are delivery partners, and a variety of providers for materials and services. We
+understand the importance of supply chain compliance management and the establishment of stable
+business partnerships for the Company's sustainable operations, and urge supply chain partners to improve
+environmental and social risk management.
+5. SUPPLY CHAIN MANAGEMENT
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2018 Annual Report (103)
+As of December 31, 2018, we held 628 classroom training courses and 710 on-line training courses. In
+2018, the proportion of employees that received training was 99%.
+We have developed a "panoramic learning map" to build and improve the training system that covers
+different positions, ranks and development stages. For new employees, we prepare a variety of
+trainings to help them quickly adapt to their jobs; we provide targeted vocational training for on-the-job
+employees to enhance professionalism and professional competence; and we train the management to
+further enhance their leadership. In addition, we help employees broaden their vision and enhance their
+innovation capabilities through varieties of topic-sharing.
+Compensation and Benefits
+The delivery riders are full-time employees or contract workers of our delivery partners. We license
+the use of our trade name to our delivery partners, who shall comply with the operating and delivery
+standards set forth in the contract. As we have not entered into an employment agreement with delivery
+riders, they are not our employees. However, the safety of delivery riders is of great importance to
+us. We have implemented various measures to oversee our delivery partners to enhance the safety of
+delivery riders.
+We strictly abide by relevant laws and regulations to deal with employee dismissal, and detail the
+instructions for termination of employment in the labor contract and employee handbook.
+نه
+Running water consumption per capita (in tonnes per employee)
+Total energy consumption per floor area (MWh per square meter)
+Running water consumption (tonnes)
+Total energy consumption per capita (MWh per employee)
+Total energy consumption (MWh)
+Energy and resources consumption
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+12,762.02
+Meituan Dianping
+The Company's non-hazardous wastes mainly include domestic wastes and waste electronic equipment.
+Domestic wastes mainly include office wastes, which are handled by the property management companies,
+and we calculate such wastes according to the Handbook on Domestic Discharge Efficiencies for Towns
+in the First Nationwide Census on Contaminant Discharge published by the State Council. Waste electrical
+equipment is recycled and disposed of by recyclable waste collectors.
+institutions.
+The Company's hazardous wastes mainly include waste fluorescent tubes, which are disposed of by qualified
+GHG emissions include carbon dioxide, methane and nitrous oxide. GHG emissions data is presented in
+carbon dioxide equivalent and calculated by us based on the 2015 Baseline Emission Factors for Regional
+Power Grids in China issued by National Development and Reform Commission and the 2006 IPCC Guidelines
+for National Greenhouse Gas Inventories issued by the Intergovernmental Panel on Climate Change.
+Due to its business nature, the significant emissions of the Company are GHG emissions, arising mainly from
+the use of electricity derived from fossil fuels.
+•
+Notes:
+0.59
+0.09
+164,846.40
+7.82
+1. Recruitment and Dismissal
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2018 Annual Report (101)
+We abide by relevant laws and regulations including the Labor Law of the People's Republic of China,
+the Labor Contract Law of the People's Republic of China, the Social Insurance Law of the People's
+Republic of China, the Law of the People's Republic of China on the Protection of Rights and the
+Interests of Women and Labor Protection Regulations for Women Workers, so as to protect employees'
+legitimate rights and prohibit child labor and forced labor. We have established a number of internal
+systems and standardized management for employee recruitment, resignation, compensation, benefits,
+performance and promotion in accordance with the measures described below.
+(i) Employment and Labor Standards
+In 2018, we received a number of honors related to human resources management, such as "2018 Hotspot
+Work Different Employer" by liepin.com, “China Employer Brand Festival for 2018 - Top 100 Extraordinary
+Employers" and "Best Employers of College Students - Top 15 Employers in Internet Industry” by 58 Group,
+"Annual Evaluation of China's Social Recruitment - Ideal Employer of the Year" by maimai.cn, “Lagou Annual
+TOP Employer for 2018" from lagou.com and the "Professional Cooperation Breakthrough Award" by
+Tsinghua University School of Economics and Management.
+Employees are the most important asset of the Company. We strive to create a comfortable and harmonious
+workplace, protect employee rights, focus on employee health and safety, conduct employee training and
+promote employee development.
+WORKPLACE
+The packaging data does not apply to the Company.
+The water resources used by the Company come from the municipal water supply. As the water fees of two
+offices in Chengdu, one office in Shanghai and one office in Xiamen are included in the property fee, their water
+consumption cannot be separately calculated and it is not included in total running water consumption.
+Total energy consumption is calculated based on the total power consumption and the conversion factors in
+the National Standards of People's Republic of China General Principles for Calculation of the Comprehensive
+Energy Consumption (GB/T 2589-2008). As the power fees of the two offices in Chengdu are included in the
+property fee, their electricity consumption cannot be separately calculated and is not included in total energy
+consumption.
+•
+•
+Notes:
+4.
+We are committed to creating a diverse and equal working environment that treats everyone
+equally, regardless of race, gender, age or religious beliefs. We have established Specifications
+for External Recruitment Positions, which regulates the recruitment process, and prohibits the use
+of discriminatory expressions when posting job descriptions, or other expressions that violate the
+principle of equal opportunity.
+104
+5.
+6.
+0.08
+2018 Annual Report (109)
+In addition, we are actively involved in the promotion of industry regulations for Internet advertising. In
+2018, we participated in the revision of advertising regulations of Jiangsu Province.
+In order to maintain the order of the advertising market and protect the rights and interests of
+consumers, we focus on supervision of advertisements in special industries that are related to people's
+health and safety, such as medical treatment, medicine, health food, cosmetics and beauty services.
+For implementation of supervision, we set up an advertising business acceptance, review and file
+management system, implemented advertising review specifications, and developed a sensitive
+thesaurus filtering system to screen and investigate illegal words in advertisements released.
+Pursuant to Advertising Law of the People's Republic of China, Regulations on Control of Advertisement,
+Interim Measures for the Administration of Internet Advertising and relevant laws and regulations, we
+carry out strict control over the Company's related marketing promotion and advertising strategies
+through multiple review methods such as machine identification and manual review, so as to ensure that
+the published content conforms to relevant laws and regulations.
+(vi) Advertising Compliance
+Non-hazardous waste per capita (tonnes per employee)
+We also respect the intellectual property rights of other parties, and protect legitimate rights and
+interests of IPR owners through user agreements, platform IPR protection mechanisms and other
+measures. We promote relevant right protection activities and work with IPR holders to crack down on
+infringements. In 2018, we assisted many IPR owners in removing infringing products from the platform.
+We take an active part in the exchange and research on the protection and application of intellectual
+property rights on the Internet. As a vice-president unit of the Patent Protection Association of China
+("PPAC"), we have also been awarded such titles as "Patent Pilot Unit in Beijing" and "Examiners'
+Practice Base of National Intellectual Property Administration".
+We stress the importance of respect for and protection of intellectual property rights ("IPR") and focus
+on the application and layout of IPR. We protect our intellectual property rights in accordance with
+Copyright Law of the People's Republic of China, Trademark Law of the People's Republic of China,
+Patent Law of the People's Republic of China, Measures for the Administration of Internet Domain
+Names of China, Measures for the Registration of Computer Software Copyright and relevant laws and
+regulations of intellectual property in China and other jurisdictions.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Intellectual Property Rights
+(v)
+Meituan Dianping
+As a member of the information security committee of Internet Society of China ("ISC") and National
+Information Security Standardization Technical Committee ("NISST”), we participate in the discussion
+and formulation of national standards for data management and user privacy management, and actively
+promote the improvement of industry data management and user privacy management.
+Through training and publicity, we have raised risk awareness of intellectual property in business
+departments, established effective mechanisms to control intellectual property risks in various business
+links and strengthened our intellectual property accumulation to cope with external challenges.
+Respecting and encouraging originality, we have an internal system to encourage employees to be
+dedicated to innovation and creation, and to protect innovation achievements.
+1,840.39
+Total non-hazardous waste (tonnes)
+0,000001
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(iii)
+In 2018, we cooperated with the regulatory authorities to participate in the development of group
+standards for food delivery meal boxes so as to promote green development in the industry. After the
+implementation of the group standard, the food delivery industry will replace the plastic meal box with a
+more mature film-coated paper meal boxes, which can, in addition to ensuring the quality and safety of
+the meal boxes, reduce plastic waste therefrom by more than 75% or so.
+Meituan Dianping
+The environmental key performance indicators are shown below. Unless otherwise stated, these data
+only cover the data of the headquarters of the Company; the Company does not have a self-built data
+center at present. The emissions, resources and energy consumption of the rented data center are
+managed by the operators, as such data are not included in the disclosure of the Company.
+Emissions
+Total direct greenhouse gas (GHG) emissions (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+9,448.67
+0.44
+Total GHG emissions per floor area of the office (tonnes per square meter)
+0.07
+Total hazardous waste (tonnes)
+0.03
+Hazardous waste per capita (tonnes per employee)
+We sign confidentiality agreements with our employees and provide ongoing information security
+training. We also have an emergency response mechanism to evaluate critical risks, formulate disaster
+response plans and perform emergency drills on a regular basis.
+We have put in place a series of back-up management procedures. For our Al and cloud platforms, we
+deploy different back-up mechanisms, including local backup and offsite backup, depending on the
+needs of our business, to minimize the risk of loss of user data.
+Environmental Key Performance Indicators
+We encrypt user data in network transmissions. For data storage, we use encryption techniques at
+software and hardware levels to protect sensitive user data.
+In response to food safety emergencies, we have established an emergency handling system to regulate
+the handling process and measures. Merchants with food safety incidents are given penalties based
+on food safety laws and regulations and internal rules. Where a merchant is committing a serious crime
+against the law, the merchant is left to the administrative organ or the judiciary to investigate for its
+administrative or criminal responsibility.
+We set up a dedicated food safety supervision team to track and manage the activity of platform
+merchants. We established a food safety management system for the food and beverage delivery
+process, controlling key nodes such as the temperature of the food in delivery, delivery speed and
+health conditions of the riders to enhance food safety during delivery. At the same time, we conducted
+semantic analysis of consumers' review data, to quantify and categorize content related to food safety,
+providing a reference for carrying out off-line supervision.
+We attach great importance to food safety. In accordance with the State Food Safety Law, the
+Administrative Measures for Food Distribution Licensing and the Regulations for the Investigation
+and Treatment of Illegal Acts in On-line Food Trading and other laws and rules, we are responsible
+for the supervision and review of the merchants on the take-out food platform. We have established
+internal systems such as Measures for Meituan Dianping Catering Management, Standards for Online
+Management of Meituan Food Delivery Merchants and Manual for Rider Services for the management of
+food safety of take-out food and beverage. We regularly organise merchants to learn food safety-related
+policies and cooperate with industry associations to enhance supervision. We also use information
+technology and big data to support the management of platform merchants and services so that we can
+continuously improve service levels.
+Safety of Delivered Food And Beverage
+(i)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2018 Annual Report (105)
+In addition, as described below, we manage the main product responsibilities on the platform, protect user
+privacy, maintain intellectual property rights, review advertisements, and handle customer complaints in a
+timely manner.
+In accordance with the relevant requirements of the E-Commerce Law of the People's Republic of China and
+the Measures for the Supervision and Administration of Food Safety in Online Catering Services, we have
+reviewed the qualifications of platform merchants, adopted various on-line and off-line measures to verify
+the information of platform merchants and reviewed the accuracy of service descriptions thereof. We have
+built a rich UGC (user-generated content, which refers to information or content provided by users) database
+providing consumers with detailed, authentic and reliable on-line POIs (points of interest, i.e., the places
+considered interesting or helpful by the users), enabling them to make informed consumption decisions.
+We are committed to becoming China's leading e-commerce platform for services. Our platform uses
+technology to connect consumers and merchants and provide consumers with a variety of daily-life services,
+including food and beverage delivery services, in-store services, hotel and travel services and other services.
+We abide by the Law of the People's Republic of China on the Protection of Consumers Rights and Interests
+to protect the legitimate rights and interests of consumers and pay attention to the quality of products and
+services of platform merchants.
+PRODUCT RESPONSIBILITY
+In addition, the Company has implemented a number of measures to help mitigate the safety risks of the
+riders when delivering food. These measures include: (i) developing intelligent dispatch systems using
+advanced big data and artificial intelligence (AI) technology, which optimizes the orders for the riders
+based on their real-time locations, and rationalizes the riders' delivery routes; (ii) developing a voice-
+controlled smart headset, which allows delivery riders to accept orders hands-free; (iii) enhancing the
+comfort and safety of the helmets and other devices by upgrading the models and adding reflective
+strips thereto; (iv) popularizing fire safety, electricity safety and public safety knowledge and cultivating
+the self-protection awareness for the riders through a streaming media information publishing platform; (v)
+cooperating with the Tsinghua University Psychological Counselling Centre to provide free psychological
+counselling for the riders.
+We require delivery partners to set strict recruitment standards for the riders and conduct the supervision
+thereof according to our standards. In order to provide more protection for the riders, we also require
+delivery partners to buy personal accident insurance as well as third-party injury and property damage
+insurance for each delivery rider.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+At the enterprise level, we established a systematic and universal user account authorization and
+management mechanism based on which we periodically review the status of user accounts and the
+related authorization information. We regularly perform a security configuration assessment on our
+databases and servers.
+In 2018, we participated in the formulation and release of group standards to promote improvement of
+overall food safety management in the industry. These standards include Guidelines for Quality Food
+and Beverage Demonstration of the Catering Industry, Norms for Dining Area and Kitchen Environmental
+Health of the Catering Industry, Guidelines for Guest Bathroom's Cleaning and Hygiene Demonstration
+of the Catering Industry, Guidelines for Civilized Service of Catering Industry, Specification for Delivery
+Service of the Catering Industry, Guide to Microbial Risk Control during the Operation Process of the
+Catering Industry, Guidelines for Food Labels in Central Kitchen of the Catering Industry and Regulations
+on the Administration of Production, Distribution and Consumption of Cold-chain and Fresh Food from
+Vending Machines, etc.
+106
+We require delivery partners to establish a compliant fire and traffic safety management system and
+provide regular training to delivery riders. Some partners also spontaneously cooperated with the
+traffic police to organise riders to participate in safety promotion meetings and safety seminar training
+activities.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping
+Sufficient maintenance, storage and protection of user data and other related information is critical
+to our business. Pursuant to Cybersecurity Law of the People's Republic of China, Provisions on
+the Administration of Mobile Internet Applications Information Services, Provisions on the Technical
+Measures for the Protection of the Security of the Internet and other relevant regulations, we have
+implemented various internal procedures and controls to protect user data and reduce the risk of data
+leakage.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+108
+2018 Annual Report (107)
+We also monitored, conducted spot checks and promoted the service quality and safety in the operation
+stage of car-hailing. The measures we adopted include: (i) conducting facial recognition for drivers
+before daily operation; (ii) establishing patrol measures and irregularly send patrol tasks to check
+information of drivers and vehicles; (iii) actively undertaking safety training on drivers through online and
+offline methods; (iv) strengthen cooperation with public security organs, establishing "safe house", an
+offline service network, and providing safety training, psychological counselling, offline taxi validation
+and other integrated services for drivers.
+(iv) Data Security and User Privacy
+We offer pilot car-hailing services in Nanjing and Shanghai, China. Abiding by Interim Measures for the
+Management of Online Taxi Booking Service, we have obtained a license for online taxi booking service
+in the above areas.
+(ii)
+In order to regulate car-hailing operating service and ensure passenger safety, vehicles and drivers
+engaged in the service are registered and reviewed in accordance with China's regulatory provisions.
+We demand that vehicles participating in the car-hailing service comply with security standard operating
+procedures. Drivers shall satisfy the requirement of driving experience and have no record of serious
+traffic violation, criminal offence or violent crime.
+Quality of In-Store Dining, Hotel and Travel Services
+We establish and implement internal policies to protect user data security and privacy. We have a
+dedicated team to enforce our privacy practices and set up coordination mechanisms with third parties
+to deal with various information security threats in a timely manner. We comply with the industry
+standard for information security and personal identity protection, and the main operating system has
+obtained ISO27001 and National Information System Security Level 3 Certification.
+We have various regulations, such as Regulations on the Administration of Merchants' Information
+Release and Measures for Merchants' Integrity Convention and Management, to manage in-store dining
+merchants on the platform and to punish merchants with violations. We clean up unreal merchants'
+POI from time to time. In 2018, we carried out the “Listening Project” to strengthen supervision of food
+and beverage merchants' violations and promote improvement of service quality of in-store dining
+merchants.
+In accordance with relevant laws and regulations, such as the Tourism Law of the People's Republic of
+China and Regulation on Travel Agencies, we conduct management for merchants of hotels and travel
+service platforms. We set up the Integrity Merchant Management System and other internal systems
+to manage the business and services of merchants from the hospitality industry on the platform. We
+take positive measures for merchants' violations including adjustment of their search engine rankings,
+suspension of operations or business offline. We lead platform merchants to provide customers
+with green, healthy and reassuring travel products and services. In 2018, we gradually promoted the
+"Jingfangxin" program, which informs a hotel guest about the replacement and washing conditions of
+hotel textiles in his/her room, such as bedclothes, by scanning the smart chip “Jingfangxin” using a
+mobile phone.
+(iii) Safety of Online Car-hailing
+In March 2018, relying on "Lush Mountain Public Welfare Action" initiated by the Lush Mountain
+Fund, a number of merchants on the platform volunteered to become "Merchants of Lush
+Mountain Public Welfare". Merchants of Lush Mountain Public Welfare donate a certain amount of
+money from each delivery order for environmental protection and public welfare. “Lush Mountain
+Public Welfare Action" makes specific plans for low-income areas with harsh ecological conditions,
+introduces scientific and standardized management and funds to improve modes of production,
+reduce pollution and soil erosion and increase output, so as to protect the environment and
+alleviate poverty.
+Period of report
+Unless otherwise specified, the disclosure of this report covers domestic business of the Company, excluding
+the Meituan Bike (formerly Mobike) business.
+Scope of report
+9. PREPARATION INSTRUCTIONS
+In July 2018, we initiated a poverty alleviation project “Helping Tibetan Area and Xinjiang" through
+food consumption to build a consumption ecology with a focus on "eating", to connect origins of
+agricultural products, restaurant merchants and food consumers by "eating", thus to construct an
+ecological poverty alleviation system through food. We encourage merchants to purchase high-
+quality food from low-income areas to increase added value of agricultural products. We also
+encourage people to go to the above restaurants, so as to provide indirect assistance and form a
+good ecological chain of multi-directional and multi-subject assistance for poverty alleviation.
+Internet + food consumption
+3.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+With an organic integration of characteristics of local tourism and the Company's netflow and
+channel advantages, we developed a practical poverty alleviation model through travel promotion
+for local people. Through sales of special agricultural products, Internet marketing and brand
+promotion for poverty-stricken areas, a two-way interaction has been formed between "going out"
+of local specialities and "bringing in" of tourists to achieve effective poverty alleviation.
+Internet + travel
+For the period from January 1 to December 31, 2018.
+In September 2017, the Company participated in the setup of "Lush Mountain Fund" with China
+Environmental Protection Foundation, with a focus on environmentally friendly and ecological
+poverty alleviation, advocacy of public awareness and research on environmental issues in the
+take-out industry.
+2018 Annual Report (115)
+Response to the report
+This report is prepared in accordance with the ESG Reporting Guide set out in Appendix 27 to the Listing
+Rules by the Stock Exchange.
+Source of information
+The material and data in this report are mainly from the Company's statistical reports and related documents.
+The Company has committed that the report is free from false records and misleading statements, and
+assumes responsibilities for the authenticity, accuracy and completeness of the content.
+Approval
+The report was approved by the Board on March 11, 2019.
+We value opinions from our stakeholders and welcome readers to contact us through the following methods.
+Your comments will help us further improve this report and enhance our ESG performance.
+Email: legal.compliance@meituan.com
+116) Meituan Dianping.
+To the shareholders of Meituan Dianping
+(incorporated in the Cayman Islands with limited liability)
+OPINION
+INDEPENDENT AUDITOR'S REPORT
+2.
+What we have audited
+Basis of report
+Internet + ecology
+(i) Public welfare platform
+We actively responded to the Action Plan for Online Poverty Alleviation, and mobilized more social
+forces to help targeted poverty alleviation through such forms as "Internet + ecology”, “Internet + travel"
+and "Internet + food consumption".
+The consolidated financial statements of Meituan Dianping (the “Company”) and its subsidiaries (together, the
+"Group") set out on pages 123 to 252, which comprise:
+Since 2017, we have taken the employees' integrity index survey, which includes research on
+employees' perception of integrity and attitude to integrity, integrity systems and integrity behavior.
+According to the survey results, we have adjusted the direction and content of the integrity training
+to better meet the needs of the Company.
+Whistle-blowing and inspection mechanism
+The Company has set up an internal complaint and a whistle-blowing mechanism to encourage
+employees to report violations of laws and disciplines. With a protection system for whistleblowers,
+we have taken a number of measures to ensure the anonymity of whistleblowers and protect their
+legitimate rights and interests from infringement. The Department of Supervision accepts reports
+on fraud in a timely manner and forms an anti-fraud investigation team for investigation. We have
+a complaint and clarification mechanism to ensure fairness and accuracy of the investigation.
+Employees found guilty of fraud will be dismissed. The Company will report to the judicial
+authorities for matters that violate national laws.
+Jointly with several enterprises, we launched "Sunshine Integrity Alliance" to carry out anti-
+corruption action through an inter-enterprise information sharing mechanism. In December
+2018, we took the initiative to disclose our achievements of ecological anti-corruption work
+from February 2018, and cooperated with all relevant parties to supervise corporate compliance
+operations.
+112) Meituan Dianping.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(ii) Anti-money laundering
+Pursuant to Anti-Money Laundering Law of the People's Republic of China, Provisions on Anti-money
+Laundering through Financial Institutions, Measures for the Administration of Financial Institutions'
+Reporting of High-Value Transactions and Suspicious Transactions, Measures on the Administration
+of Client Identity Identification and Materials and Transaction Recording of Financial Institutions,
+Administrative Measures for Financial Institutions' Report of Transactions Suspected of Financing for
+Terrorist Purposes, Measures for the Administration of Combating Money Laundering and Financing
+of Terrorism by Internet Financial Institutions (for Trial Implementation) and other laws and regulations,
+the Company takes precautions against the risk of money laundering in related businesses and actively
+cooperates with regulatory agencies and relevant state departments to conduct anti-money laundering
+inspections and investigations.
+With our internal systems, such as Management System of Anti-money Laundering and Anti-terrorism
+Financing Activities, Organizational Structure and Job Responsibility System of Anti-money Laundering,
+Management System of Customer Identification, Management System of Customer Risk Rating and
+Classification and Management System of Reporting of Large Transactions and Suspicious Transactions,
+we detect and prevent money laundering and terrorist financing risks involved in the business. We
+have established a leading group on anti-money laundering to clarify competent departments of anti-
+money laundering and their respective responsibilities. Each branch is also equipped with an anti-money
+laundering working group and a competent department to guarantee uniform implementation and
+centralized management of anti-money laundering and anti-terrorism financing measures.
+Through the combination of systematic and manual analysis, we have established suspicious transaction
+monitoring and an analysis screening mechanism, and reported confirmed suspicious transaction
+behavior to relevant authorities. We continue to optimize and improve suspicious transaction standard
+setting and analysis screening to improve the accuracy and effectiveness of monitoring and screening
+money laundering activities. We also collect and update information on suspected money laundering
+and terrorist financing and established a blacklist database.
+2018 Annual Report (113)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+8. COMMUNITY INVESTMENT
+1.
+While seeking our own development, we actively communicate with communities to understand their needs,
+carry out public welfare and charity activities with the idea of “Internet +” and contribute to poverty alleviation
+work. In 2018, the Company was awarded "Outstanding Enterprise" at the Eleventh China Corporate Social
+Responsibility Forum held by Xinhuanet.com.
+Gongyi.meituan.com also cooperates with charitable organizations in China to explore a “Local Public
+Welfare Model”, launching fund-raising activities with local attributes or to address local social needs,
+and calling on users to pay attention to the public welfare needs around them. Projects in this platform
+involve areas such as care for left-behind children, disease relief, education, poverty alleviation and
+environmental protection.
+(ii)
+Public welfare projects
+Starting from our own business and making use of our own advantages, we carry out public welfare
+projects in order to realize common development of the enterprise and society.
+1.
+Nutritious lunch program for preschool children
+114) Meituan Dianping.
+In January 2018, together with the World Food Programme (WFP) and charity restaurants,
+we launched a nutritious lunch program for preschool children. The program is an innovative
+collaboration to provide nutritious lunches for preschoolers aged 3-5 years. Through four modules
+of nutrition (subsidy collection, nutrition subsidy for one year, healthy diet class and income
+generation for poor farmers), it helps poor preschoolers eat better. As of December 31, 2018, the
+program has benefited 25 kindergartens in west Hunan Province.
+2.
+Urban New Youth Program
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In March 2018, we launched the “Urban New Youth” program jointly with Tsinghua University
+to provide support and a platform of learning and development for daily-life services workers
+represented by food delivery riders. The first batch of projects of the “Urban New Youth"
+plan include: (i) Delivery riders' psychology hotline, with professional support provided by the
+Psychological Counselling Centre of Tsinghua University, offering psychological counselling
+for delivery riders; and (ii) Delivery riders' self-improvement school, “XuetangX.com", founded
+by Tsinghua University, providing online courses for riders, helping them fit into urban life more
+quickly and developing their reemployment skills in the new environment.
+In May 2018, making use of the technical advantage of our "Internet + daily-life services" and
+business accumulation, as well as China Development Research Foundation's academic research
+achievements and educational innovation experience on vocational education in China, we
+launched the "Urban New Youth - Win the Future" charity event jointly with China Development
+Research Foundation, exploring new vocational education patterns and cultivating skilful talents
+for China's rapidly developing daily-life services.
+(iii) Poverty alleviation
+In June 2018, we officially launched gongyi.meituan.com, an information platform in the second batch
+of internet fund-raising information platforms designated by the Ministry of Civil Affairs. As a service
+platform of "Internet + Public Welfare", gongyi.meituan.com gives full play to its resource advantages
+to provide online fund-raising information distribution channels for charitable organizations, and serves
+as a resource support for local charitable organizations and fund-raising activities so as to facilitate the
+development of local charity causes. In addition, through providing multi-scenario access to daily-life
+services, we integrate public welfare charity into users' daily consumption behavior, so that users can
+safely and conveniently participate in public welfare undertakings in the simplest way.
+•
+Code of Conduct for "Sunny Workplace"
+•
+We tested, on a sample basis, transactions by checking
+the cash receipt, reviewing the underlying contracts,
+identifying the key terms and attributes from the contracts
+and checking them against the underlying data from
+the system used in the transaction processes, and then
+recalculating the revenue amount.
+Based on the procedures performed, we found that
+the Group's revenue recognition was supported by the
+evidence obtained.
+118) Meituan Dianping.
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+Impairment assessments of goodwill
+Refer to Notes 2.9, 2.10, 4.4 and 16 to the consolidated
+financial statements
+As at December 31, 2018, the net carrying amount of
+goodwill amounted to RMB27.7 billion.
+Under International Accounting Standards ("IAS")
+36 Impairment of Assets, the Group is required
+to perform goodwill impairment assessment both
+annually and whenever there is an indication that a
+cash-generating unit ("CGU”) to which goodwill has
+been allocated may be impaired.
+The Group engaged an independent external valuer
+to prepare the goodwill impairment testing. The
+recoverable amounts of CGUS were determined
+based on the value-in-use calculations using cash
+flow projections.
+We focused on this area due to (a) the magnitude of
+the carrying amount of goodwill; and (b) the process
+of goodwill impairment assessment was complex and
+involved significant judgements and estimates which
+included assumptions such as annual revenue growth
+rate for the 5-year period, gross profit, terminal
+revenue growth rate and pre-tax discount rate.
+How our audit addressed the Key Audit Matter
+Our procedures in relation to the impairment assessments
+of goodwill included:
+We tested management's assessment including periodic
+impairment indications evaluation as to whether indicators
+of impairment exist by corroborating with management
+and market information.
+We tested the general control environment and automated
+controls of the information technology systems used in the
+transaction processes. We tested the interface between
+the operating and financial systems.
+We understood and tested management's process and
+controls in respect of the impairment assessments,
+including the implementation of impairment standard,
+the determination of appropriate valuation models and
+assumptions and the calculation of impairment provisions.
+We assessed the appropriateness of the valuation models,
+with the involvement of our internal valuation experts.
+We performed retrospective assessment through
+comparing historical results to the budgeted results, to
+assess the reliability of the management's forecast.
+We assessed the key assumptions adopted including
+annual revenue growth rate for the 5-year period and gross
+profit rate by examining the approved financial/business
+forecast models, and comparing actual results for the year
+against the previous period taking into consideration of
+market trends and our industry knowledge. We assessed
+terminal revenue growth rate and pre-tax discount rate
+with the involvement of our internal valuation experts.
+2018 Annual Report (119)
+The committee's main responsibilities include: (i) to formulate and amend the professional
+conduct system; (ii) to build the Company's integrity culture system and constantly develop the
+construction of the Company's integrity culture; (iii) to formulate and implement integrity strategies
+to identify and prevent integrity risks comprehensively; (iv) to be responsible for and take a leading
+role in the investigation and punishment of disciplinary offences; and (v) to accept and make a
+decision on appeals on disciplinary treatment from employees. The committee adopts a three-in-
+one mode, consisting of prevention, publicity and investigation, to promote the stable operation of
+the anti-fraud system.
+We have set up the Sunshine Committee to deal with corruption and uphold the value of integrity.
+The chairman of Sunshine Committee is Mu Rongjun, an executive Director. The Department
+of Supervision and other departments of the Company are members of the committee. The
+committee reports to the CEO on its own.
+5.
+4.
+Sunshine Committee
+3.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2018 Annual Report (111)
+In order to make all employees understand and follow the Code of Conduct for "Sunny
+Workplace", we employ online and offline training on integrity and policies for all employees, and
+all of them need to pass the test after training. In 2018, the coverage rate of online integrity training
+was 100%.
+Our Code of Conduct for "Sunny Workplace" is applicable to all employees. It advocates all
+employees to practice justice and protect legitimate interests of the Company, and all employees
+are required to consciously abide by national laws and regulations and internal rules and
+regulations, such as Code of Conducts for Employees.
+We evaluated the independent valuer's objectivity and
+competency. We assessed the reasonableness of the
+basis that management used to identify separate group of
+CGUS for the allocation of goodwill.
+the consolidated statement of financial position as at December 31, 2018;
+We discussed with management and evaluated their
+judgements made in determining the method and timing
+of revenue recognition and calculation.
+Our procedures in relation to the revenue recognition
+included:
+the consolidated income statement for the year then ended;
+•
+•
+•
+the consolidated statement of comprehensive loss for the year then ended;
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of cash flows for the year then ended; and
+the notes to the consolidated financial statements, which include a summary of significant accounting
+policies.
+Our opinion
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position
+of the Group as at December 31, 2018, and of its consolidated financial performance and its consolidated cash
+flows for the year then ended in accordance with International Financial Reporting Standards ("IFRSS") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
+BASIS FOR OPINION
+We conducted our audit in accordance with International Standards on Auditing ("ISAS"). Our responsibilities under
+those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Independence
+We understood and tested management's process and
+controls in respect of revenue recognition and calculation
+derived from different services.
+We are independent of the Group in accordance with the International Ethics Standards Board for Accountants'
+Code of Ethics for Professional Accountants ("IESBA Code”), and we have fulfilled our other ethical responsibilities
+in accordance with the IESBA Code.
+INDEPENDENT AUDITOR'S REPORT
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
+consolidated financial statements of the current period. These matters were addressed in the context of our audit
+of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
+separate opinion on these matters.
+Key audit matters identified in our audit are summarised as follows:
+.
+Revenue recognition
+•
+Impairment assessments of goodwill
+Key Audit Matter
+Revenue recognition
+Refer to Notes 2.27, 4.5, 4.8 and 6 to the consolidated
+financial statements
+The Group provides an e-commerce platform that
+enables merchants to sell their services or products
+to transacting users through the platform. The Group
+mainly generates revenue in the way of transaction
+commission, online marketing fees and others.
+We focused on this area as significant efforts were
+spent on auditing the accuracy of revenue recognition
+due to the magnitude of revenue amount and the
+huge volume of revenue transactions recorded in
+the operating systems and then interfaced with the
+financial system.
+How our audit addressed the Key Audit Matter
+2018 Annual Report (117)
+2.
+Construction of integrity culture
+Risk management and internal control policy
+Employee Manual and Code of Conduct has been developed and distributed to all employees.
+The manual contains internal rules and guidelines on professional ethics, anti-fraud mechanisms,
+management negligence of duty, and corruption. We set April 28 in each year as Values Day to
+promote the value of integrity across the company.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(vii) Customer Service
+We continuously strive to improve customers' level of satisfaction by offering high-quality customer
+services. We set up operation centers for customer service, equipped with professional customer service
+teams in Beijing, Shanghai, Shijiazhuang and Yangzhou. We timely check and respond to customers'
+feedback and demands in different ways, including online customer service, telephone, WeChat, email
+and public opinion monitoring.
+We have a standardized process to solve customers' problems. For example, we classify food quality
+problems in detail, normalize compensation methods and establish a quick claim mechanism so that
+customer service staff can deal with complaints in a timely and reasonable manner.
+We have established Three Lines of Defence to reduce the risk of fraud. The First Line of Defence is
+mainly composed of business and functional departments of each business group in the Company
+that are responsible for the daily operation and management, and responsible for designing and
+implementing relevant controls to deal with risks. The Second Line of Defence is made up of the
+Internal Control Department and other relevant departments that are responsible for the formulation
+of internal control policies and implementation of a comprehensive control system. The Third Line
+of Defence consists of the Company's Internal Audit Department and anti-fraud investigation team.
+The Internal Audit Department is highly independent and responsible for providing independent
+evaluation on the effectiveness of the Company's risk management and internal control system
+and overseeing management's continuous improvement in risk management and internal controls.
+The anti-fraud investigation team is responsible for receiving reports through multiple channels
+and investigating suspected fraud incidents in a timely manner. Duties and tasks of anti-fraud risk
+management are clearly assigned through the Three Lines of Defence. We continually optimize the
+Three Lines of Defence according to our business development, strengthen the risk identification,
+and improve the effectiveness of anti-fraud risk management.
+Our management team regularly evaluates customer feedback, analyses and determines the reasons for
+consumers' dissatisfaction with the service and the links that need to be improved, thereby continuously
+improving our service.
+In 2018 we were recognized as the final champion and the best customer center in China and were
+awarded the "Golden Headset" by CCM World Group.
+We also provide our customer service staff with the necessary authority and flexibility to adapt to
+different situations and provide better services and experiences to our customers. For instance, if our
+customer service staff receives a complaint about a merchant's refusal to serve the customer, the
+staff has the right to suspend the merchant's online operation on our platform once such complaint is
+confirmed.
+7.
+ANTI-CORRUPTION
+(i)
+Anti-fraud
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We pay attention to anti-fraud work, strictly follow the relevant national laws and regulations against
+corruption, bribery and anti-unfair competition, strengthen anti-fraud management, promote integrity,
+nip risks in the bud, and foster integrity culture to ensure the healthy development of enterprises.
+1.
+110) Meituan Dianping.
+1,816,453
+1,816,453
+1,816,453
+Exercise of option and RSU vesting
+5
+842,199
+(29,307)
+156,503
+156,503
+Cancellation of ordinary shares
+(29,307)
+(29,307)
+33
+(685,701)
+Share-based compensation expenses
+(609,744) 248,944,691
+(811,144)
+(811,142)
+25
+Repurchase of ordinary shares
+231,736
+231,736
+248,944,691
+Dividends
+609,744
+231,736
+36
+Business combinations
+248,944,408
+283
+(15,306) (123,296,397)
+(811,144)
+(4,000)
+their capacity as owners
+Transaction with non-controlling interests
+capital
+RMB'000
+Note
+Share
+Non-
+Attributable to equity holders of the Company
+their capacity as owners
+Business combinations
+Transaction with owners in
+Total comprehensive loss
+classified to profit or loss
+Currency translation differences
+Items that may not be
+Other comprehensive loss
+Loss for the year
+Comprehensive loss
+As of January 1, 2017
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+2018 Annual Report (127)
+5,438 86,509,772
+Total transaction with owners in
+47,969
+47,969
+(32,990)
+14,979
+(7,803,920) (115,477,171) (123,281,091)
+(4,000)
+As of December 31, 2018
+248,946,158
+2,020,201
+(609,744) 250,356,901
+(36,990)
+250,319,911
+384 258,284,687 (5,741,347) (166,039,390) 86,504,334
+286
+218 (7,617,689)
+9,338,529
+(186,013)
+(7,617,907)
+Issue of shares
+their capacity as owners
+Transaction with owners in
+Total comprehensive loss
+Currency translation differences
+due to own credit risk
+Preferred shares fair value change
+to profit or loss
+Items that may not be classified
+Other comprehensive loss
+Loss for the year
+Comprehensive loss
+As of January 1, 2018
+Adjustment on adoption of
+IFRS9, net of tax
+As of January 1, 2018
+Director
+Mu Rongjun
+31
+55,510
+31,825,056
+20,517,370
+Total liabilities
+Total equity and liabilities
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+34,151,739 124,135,545
+83,634,163
+The notes on pages 131 to 252 are an integral part of these consolidated financial statements.
+The consolidated financial statements on pages 123 to 252 were approved by the Board on March 11, 2019 and
+were signed on its behalf:
+Wang Xing
+Director
+126
+Meituan Dianping
+120,661,511
+(186,013)
+Attributable to equity holders of the Company
+Share
+(186,013)
+(7,617,907)
+(15,524) (115,492,695)
+(115,477,171) (115,477,171)
+57,734 (40,513,742)
+(49,952,475) (40,571,476)
+42,372
+98
+(12,360)
+(12,360)
+411,371
+(423,731)
+2.1.1
+(40,501,382)
+57,734
+466,103 (50,363,846) (40,559,116)
+9,338,529
+98
+Note
+capital
+RMB'000
+Share
+premium
+RMB'000
+Other
+reserves
+RMB'000
+Accumulated
+Non-
+controlling
+Sub-total
+interests
+Total
+RMB'000
+RMB'000
+RMB'000
+losses
+RMB'000
+Share
+premium
+RMB'000
+Total
+reserves
+RMB'000
+Payments for business combinations, net of cash acquired
+3,897
+Proceeds from disposals of intangible assets
+(8,251)
+(69,712)
+Purchase of intangible assets
+3,731
+24,698
+Proceeds from disposals of property, plant and equipment
+(737,680)
+(2,210,249)
+Purchase of property, plant and equipment
+Cash flows from investing activities
+(310,200)
+(9,179,818)
+(18,560)
+(198,629)
+Meituan Dianping
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+2018
+Note
+RMB'000
+(7,260,087)
+Cash flows from operating activities
+Income tax paid
+Net cash flows used in operating activities
+2017
+RMB'000
+37
+(8,981,189)
+(291,640)
+Cash used in operations
+128
+173
+(320,801)
+(91,205,155)
+(23,438,686)
+(2,284)
+11,989
+65,954
+(247,673)
+346,375
+533,068
+(26,362)
+231
+11
+Net cash flows used in investing activities
+Increase in prepayments for investments
+Dividends received
+Interest income received
+net of cash disposed
+Cash inflow/(outflow) arising from disposal of subsidiaries,
+13,185
+2,566,010
+(65,566,920)
+Proceeds from disposals of short-term investments
+75,235,650
+51,407,015
+Acquisition of investments accounted for using the equity method
+(163,675)
+Purchase of short-term investments
+(785,568)
+using the equity method
+887,906
+Acquisition of investments measured at fair value
+(1,599,549)
+887,885
+(379,577)
+Proceeds from disposal of investments measured at fair value
+Proceeds from disposal of investments accounted for
+Other
+(40,501,382)
+466,103 (50,363,846) (40,559,116)
+33
+(526,739)
+(526,739)
+(526,738)
+33
+Share-based compensation expenses
+25
+Repurchase of ordinary shares
+12,948
+12,948
+(71,264) (15,558,395)
+(15,487,131)
+(18,916,617)
+3,429,486
+3,429,486
+3,429,486
+3,429,486
+Accumulated
+losses
+RMB'000
+controlling
+Sub-total
+interests
+Liabilities directly associated with assets classified as held for sale
+RMB'000
+746,465
+RMB'000
+93
+8,567,622
+(2,742,872) (31,447,229) (25,622,386)
+47,035 (25,575,351)
+(18,916,617) (18,916,617)
+(71,264) (18,987,881)
+RMB'000
+57,734
+746,465
+Exercise of option and RSU vesting
+9,338,529
+98
+As of December 31, 2017
+632,364
+81,963
+550,401
+(220,511)
+770,907
+5
+their capacity as owners
+Total transaction with owners in
+non-controlling interests
+88,462
+67,652
+20,810
+20,810
+1,363
+6
+1,297,645
+(1,070,615)
+227,036
+227,036
+Share of equity movement in
+746,465
+an associate
+Transaction with
+| |
+82,829
+82,829
+82,829
+1,363
+Disposal of a subsidiary
+3,341,276
+3,920,323
+Deposit from transacting users
+14
+Basic and diluted loss per share (RMB)
+the equity holders of the Company
+Loss per share for loss for the year attributable to
+(18,987,881)
+(115,492,695)
+(18,916,617)
+(71,264)
+(115,477,171)
+(15,524)
+(18,987,881)
+(115,492,695)
+(54,218)
+(18,933,663)
+(115,490,807)
+(1,888)
+13
+(42.40)
+Loss for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Income tax expenses
+(10,418)
+(15,138,824)
+(19,214)
+60,885
+294,047
+(44,732)
+(104,606,058)
+(48,267)
+10
+10
+OO ON
+Loss before income tax
+12
+Share of losses of investments accounted for using equity method
+28
+(3,826,092)
+Loss for the year
+(12.37)
+The notes on pages 131 to 252 are an integral part of these consolidated financial statements.
+2018 Annual Report (123)
+The notes on pages 131 to 252 are an integral part of these consolidated financial statements.
+(15,558,395)
+(123,296,397)
+(71,264)
+(15,306)
+Non-controlling interests
+(15,487,131)
+(123,281,091)
+Equity holders of the Company
+Total comprehensive loss for the year attributable to:
+(15,558,395)
+(123,296,397)
+3,429,486
+(7,803,702)
+(186,013)
+28
+3,429,486
+124
+CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
+Other comprehensive (loss)/income:
+Items that may not be reclassified to profit or loss
+Currency translation differences
+Preferred shares fair value change due to own credit risk
+(11,085,797)
+Other comprehensive (loss)/income for the year, net of tax
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+26
+(7,617,689)
+Total comprehensive loss for the year
+Fair value changes of convertible redeemable preferred shares
+Finance costs
+Finance income
+Note
+Year ended December 31,
+CONSOLIDATED INCOME STATEMENT
+Meituan Dianping
+122
+Hong Kong, March 11, 2019
+PricewaterhouseCoopers
+Certified Public Accountants
+The engagement partner on the audit resulting in this independent auditor's report is Jack Li.
+From the matters communicated with the Audit Committee, we determine those matters that were of most
+significance in the audit of the consolidated financial statements of the current period and are therefore the
+key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to
+outweigh the public interest benefits of such communication.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
+regarding independence, and to communicate with them all relationships and other matters that may reasonably be
+thought to bear on our independence, and where applicable, related safeguards.
+We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the
+audit and significant audit findings, including any significant deficiencies in internal control that we identify during
+our audit.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express an opinion on the consolidated financial statements. We are responsible
+for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
+opinion.
+Evaluate the overall presentation, structure and content of the consolidated financial statements, including
+the disclosures, and whether the consolidated financial statements represent the underlying transactions and
+events in a manner that achieves fair presentation.
+INDEPENDENT AUDITOR'S REPORT
+2018 Annual Report (121
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based
+on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
+may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a
+material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
+in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
+conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future
+events or conditions may cause the Group to cease to continue as a going concern.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other
+information, we are required to report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE CONSOLIDATED
+FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of the consolidated financial statements that
+give a true and fair view in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies
+Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of
+consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+120
+Meituan Dianping
+2018
+INDEPENDENT AUDITOR'S REPORT
+The Audit committee are responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
+STATEMENTS
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
+are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
+opinion. We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility
+towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level
+of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
+misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
+or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
+basis of these consolidated financial statements.
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+scepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
+to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
+that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
+misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
+forgery, intentional omissions, misrepresentations, or the override of internal control.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
+Group's internal control.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability
+to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
+concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have
+no realistic alternative but to do so.
+Meituan Dianping
+RMB'000
+Revenues
+Operating loss
+208,260
+748,356
+9
+Other gains, net
+472,874
+1,836,382
+19
+at fair value through profit or loss
+Fair value changes on investments measured
+(2,171,408)
+(5,831,692)
+7
+General and administrative expenses
+(3,646,634)
+(7,071,900)
+7
+Cost of revenues
+Gross profit
+Selling and marketing expenses
+Research and development expenses
+6
+65,227,278
+2017
+RMB'000
+33,927,987
+(50,122,320) (21,708,483)
+15,104,958
+12,219,504
+7
+(15,871,901)
+(10,908,688)
+7
+ASSETS
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As of December 31,
+Deferred revenues
+1,050,119
+1,195,869
+18
+2017
+RMB'000
+RMB'000
+Note
+2018
+As of December 31,
+Deferred tax liabilities
+Non-current liabilities
+LIABILITIES
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+125
+2018 Annual Report
+(40,501,382)
+86,509,772
+Total equity
+25
+384
+98
+25
+258,284,687
+27
+9,338,529
+(5,741,347)
+(166,039,390)
+466,103
+(50,363,846)
+86,504,334
+5,438
+(40,559,116)
+57,734
+26
+Equity attributable to equity holders of the Company
+Non-controlling interests
+624,999
+28
+2,114,215
+3,102,882
+27
+162,000
+1,800,000
+32
+7,361,630
+30
+2,290,160
+3,226,407
+9,363,873
+7,596,388
+2,666,799
+5,340,963
+29
+Deferred revenues
+Borrowings
+833,500
+101,418,292
+Other non-current liabilities
+35,759
+316,264
+Borrowings
+32
+Convertible redeemable preferred shares
+470,056
+103,618,175
+Current liabilities
+Trade payables
+Payables to merchants
+Advance from transacting users
+Other payables and accruals
+2,326,683
+2.14
+Accumulated losses
+Share premium
+Trade receivables
+Inventories
+Current assets
+29,196,028
+47,512,119
+312,340
+866,884
+21
+5,919,594
+6,241,972
+19
+Financial assets at fair value through profit or loss
+Prepayments, deposits and other assets
+1,952,175
+2,103,403
+12
+Investments accounted for using the equity method
+243,263
+Note
+2018
+RMB'000
+2017
+RMB'000
+Property, plant and equipment
+15
+3,978,815
+Financial assets at fair value through profit or loss
+915,682
+16
+33,876,004
+19,852,974
+Deferred tax assets
+18
+445,041
+Intangible assets
+Other reserves
+Prepayments, deposits and other assets
+Short-term investments
+Share capital
+EQUITY
+Total assets
+83,634,163
+120,661,511
+54,438,135
+73,149,392
+88,087
+31
+19,408,839
+17,043,692
+24
+4,458,761
+4,256,120
+24
+25,838,177
+41,829,964
+Restricted cash
+Cash and cash equivalents
+Assets classified as held for sale
+2222222
+400,244
+88,374
+21
+23
+432,494
+19
+25,099
+9,064,945
+4,186,391
+20
+466,340
+Non-current assets
+Note
+Our opinion on the consolidated financial statements does not cover the other information and we do not express
+any form of assurance conclusion thereon.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other
+information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
+financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
+(15,157,090)
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+How our audit addressed the Key Audit Matter
+2018 Annual Report (129)
+We evaluated the reasonableness of management's
+forecast performance and assessed management's
+sensitivity analysis around the key assumptions, to
+ascertain the extent to which adverse changes, would
+result in the goodwill being impaired.
+Based on the procedures performed, we considered that
+the key assumptions adopted by management in the
+assessment of goodwill impairment are supported by the
+evidence obtained.
+OTHER INFORMATION
+We independently tested, on a sample basis, the accuracy
+of mathematical calculation applied in the valuation
+models and the calculation of impairment charges.
+The directors of the Company are responsible for the other information. The other information comprises all of the
+information included in the annual report other than the consolidated financial statements and our auditor's report
+thereon.
+50,363,846
+Opening accumulated losses IAS 39
+RMB'000
+Note
+The total impact on the Group's accumulated losses due to classification and
+measurement of financial instruments as of January 1, 2018 is as follows:
+(i) Classification and measurement of financial instruments
+In accordance with the transitional provision in IFRS 9, comparative figures have not been
+restated. Any adjustments to carrying amounts of financial assets or liabilities are recognized
+at the beginning of the current reporting period, with the difference recognized in opening
+retained earnings and other reserves.
+IFRS 9 replaces the provisions of IAS 39 Financial Instruments ("IAS39”) that relate to the
+recognition, classification and measurement of financial assets and financial liabilities;
+derecognition of financial instruments; and impairment of financial assets and hedge
+accounting. IFRS 9 also significantly amends other standards dealing with financial
+instruments such as IFRS 7 Financial Instruments Disclosures. The accounting policies
+were changed to comply with IFRS 9.
+The Group has applied IFRS 9 Financial Instruments for the first time commencing January 1,
+2018.
+132) Meituan Dianping.
+New and amended standards adopted by the Group
+(a)
+2.1.1 Changes in accounting policies
+Basis of preparation (Continued)
+2.1
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (131)
+The principal accounting policies applied in the preparation of the consolidated financial statements
+which are in accordance with the International Financial Reporting Standards ("IFRS"), issued by
+International Accounting Standards Board ("IASB") are set out below. The consolidated financial
+statements have been prepared under the historical cost convention, as modified by the revaluation of
+financial assets and financial liabilities at fair value through profit or loss, which are carried at fair value.
+The preparation of the consolidated financial statements in conformity with IFRS requires the use of
+certain critical accounting estimates. It also requires management to exercise its judgement in the
+process of applying the Group's accounting policies. The areas involving a higher degree of judgement
+or complexity, or areas where assumptions and estimates are significant to the consolidated financial
+statements are disclosed in Note 4.
+Basis of preparation
+2.1
+The principal accounting policies applied in the preparation of the consolidated financial statements are set
+out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+The Financial Information is presented in Renminbi ("RMB”), unless otherwise stated.
+Increase in provision for loan receivables, net of tax
+(ii)
+(ii)
+Increase in provision for trade receivables, net of tax
+trade receivables
+loan receivables
+The Group has three types of financial assets at amortized cost subject to IFRS 9's new
+expected credit loss model:
+Impairment of financial assets
+(ii)
+Management has assessed the business models and the contractual terms of the cash
+flows applying to the financial assets held by the Group at the date of initial application
+of IFRS 9 (January 1, 2018) and has classified its financial instruments into the
+appropriate IFRS 9 categories. There is no changes to the classification of the Group's
+financial assets measured at fair value through profit or loss ("FVPL") or amortized cost
+under IFRS 9.
+Classification and measurement of financial instruments (Continued)
+(i)
+New and amended standards adopted by the Group (Continued)
+(a)
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.1
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+49,952,475
+Opening accumulated losses IFRS 9
+(423,731)
+due to own credit risk from accumulated losses
+to other comprehensive income
+(ii)
+tax prepayments and loan receivables), net of tax
+Reclassify preferred shares fair value change
+deposits and other assets (excluding
+Increase in provision for prepayments,
+The Company's shares have been listed on the Main Board of the Stock Exchange since September 20,
+2018 (the "Listing").
+12,360
+The Company is an investment holding company. The Company and its subsidiaries, including
+structured entities (collectively, the "Group"), provides platform which uses technology to connect
+consumers and merchants and offers diversified daily services, including food delivery, in-store dining,
+hotel and travel booking and other services.
+1.1 General information
+prepayments, deposits and other assets (excluding tax prepayments and loan
+receivables)
+(151,000)
+(1,057,000)
+312,000
+2,305,000
+2017
+RMB'000
+Note
+2018
+Year ended December 31,
+130
+Cash and cash equivalents at the end of the year
+the assets classified as held for sale
+470,000
+Net (decrease)/increase in cash and cash equivalents
+Cash and cash equivalents at the beginning of the year
+Exchange gain/(loss) on cash and cash equivalents
+Cash and cash equivalents included in
+Payment for acquisitions of non-controlling interests
+Dividends paid
+Proceeds from disposals of non-controlling interests
+Repurchase of ordinary shares
+Exercise of option and RSU vesting
+Proceeds from issuance of convertible redeemable preferred shares
+Proceeds from issuance of ordinary shares, net
+Finance costs paid
+Proceeds from ABS, net
+Repayments of borrowings, excluding ABS
+excluding asset-backed securities ("ABS")
+Cash flows from financing activities
+Net cash flows generated from financing activities
+(62,043)
+(9,783)
+28,516,174
+GENERAL INFORMATION, REORGANIZATION AND BASIS OF PRESENTATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+1
+19,408,839
+17,043,692
+24
+24
+(51,524)
+(8,227)
+1,009,587
+9,376,575
+19,408,839
+10,040,491
+(3,323,210)
+25,507,781
+29,295,294
+(4,000)
+(24,910)
+(176,261)
+60,000
+(651,300)
+(854,630)
+170,251
+158,054
+25,802,523
+Meituan Dianping (formerly known as China Internet Plus Holdings Ltd. and then Internet Plus Holdings
+Ltd.) (“the Company") was incorporated in the Cayman Islands on September 25, 2015 as an exempted
+company with limited liability. The registered office is at Maples Corporate Services Limited, PO Box
+309, Ugland House, Grand Cayman, KYI-1104, Cayman Islands.
+The Group revised its impairment methodology under IFRS 9 for each of these
+classes of assets. Although cash and cash equivalents, restricted cash and short-
+term investments measured at amortized costs are also subject to the impairment
+requirements of IFRS 9, the identified impairment loss was immaterial.
+2018 Annual Report (133)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2.2.1 Subsidiaries controlled through Contractual Arrangements (Continued)
+2.2 Subsidiaries (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (137)
+receive substantially all of the economic interest returns generated by the PRC entities in
+consideration of the exclusive business cooperation agreements,
+exercise equity holder's voting rights of the PRC operating entities,
+•
+govern the financial and operating policies of the PRC operating entities,
+In order to comply with the People's Republic of China (the “PRC") laws and regulations which
+prohibit or restrict foreign control of companies involved in provision of internet content and
+other restricted businesses, the Group operates its website and other restricted businesses
+in the PRC through certain PRC operating entities, whose equity interests are held by certain
+management members of the Group ("Nominee Shareholders"). Historically, the Group obtained
+control over these PRC operating entities via a series of the Contractual Arrangements signed
+("Old Contractual Arrangements") between certain indirectly held subsidiaries of the Company
+in the PRC, PRC operating entities operating restricted business and their respective Nominee
+Shareholders (collectively, "VIE parties"). In preparation for listing in Hong Kong, on August 21,
+2018, the VIE parties entered into a series of Contractual Arrangements (the "Revised Contractual
+Arrangements") which replaced the Old Contractual Arrangements. The Revised Contractual
+Arrangements, includes exclusive business cooperation agreements, exclusive option agreements,
+equity pledge agreements, loan agreements and powers of attorney, which enables those indirectly
+held subsidiaries of the Company in the PRC, and the Group to:
+2.2.1 Subsidiaries controlled through Contractual Arrangements
+Non-controlling interests in the results and equity of subsidiaries are shown separately in the
+consolidated income statement, consolidated statement of comprehensive loss, statement of changes
+in equity and consolidated statement of financial position respectively.
+Intercompany transactions, balances and unrealized gains on transactions between Group companies
+are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an
+impairment of the transferred asset. Accounting policies of subsidiaries have been changed where
+necessary to ensure consistency with the policies adopted by the Group.
+Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
+controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
+(including structured entities) with the entity and has the ability to affect those returns through its power
+to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
+transferred to the Group. They are deconsolidated from the date that control ceases.
+2.2 Subsidiaries
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+The Group's activities as a lessor are not material and hence the Group does not
+expect any significant impact on the financial statements. However, some additional
+disclosures will be required in 2019.
+Operating cash flows will increase and financing cash flows will decrease by
+approximately RMB611.7 million as repayment of the lease liabilities will be classified
+as cash flows from financing activities.
+The Group expects to recognize right-of-use assets of approximately RMB2.0 billion on
+January 1, 2019, lease liabilities of RMB1.8 billion (after adjustments for prepayments
+and accrued lease payments recognized as of December 31, 2018).
+As of December 31, 2018, the Group has non-cancellable operating lease commitments
+of RMB2.1 billion, see note 35.
+The Group has set up a project team which has reviewed all leasing arrangements over
+the last year in light of the new lease accounting rules in IFRS 16. The standard will
+affect primarily the accounting for the Group's operating leases.
+IFRS 16, "Leases" addresses the definition of a lease, recognition and measurement of
+leases and establishes principles for reporting useful information to users of financial
+statements about the leasing activities of both lessees and lessors. A key change
+arising from IFRS 16 is that most operating leases will be accounted for on statement
+of financial position for lessees. The Group is a lessee of various properties which are
+currently classified as operating leases. The Group's current accounting policy for such
+leases is set out in Note 2.30. IFRS 16 provides new provisions for the accounting
+treatment of leases and will in the future no longer allow lessees to recognize certain
+leases outside of the balance sheet. Instead, almost all leases must be recognized
+in the form of an asset (for the right of use) and a financial liability (for the payment
+obligation). Thus each lease will be mapped in the Group's consolidated statements of
+financial position. Short-term leases of less than twelve months and leases of low-value
+assets are exempt from the reporting obligation.
+IFRS 16
+obtain an irrevocable and exclusive right to purchase part or all of the equity interests in the
+PRC operating entities at any time and from time to time, for considerations equivalents to
+the respectively outstanding loans to each Nominee Shareholders, and
+(i)
+obtain a pledge over all of its equity interests from its respective Nominee Shareholders as
+collaterals for all of the PRC entities' payments due to the Group to secure performance of
+entities' obligation under the Old Contractual Arrangements and the Revised Contractual
+Arrangements.
+2.2.2 Business combinations
+2018 Annual Report (139)
+When the Group ceases to consolidate a subsidiary because of a loss of control, any retained
+interest in the entity is remeasured to its fair value with the change in carrying amount recognized in
+profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently
+accounting for the retained interest as an associate, joint venture or financial asset. In addition,
+any amounts previously recognized in other comprehensive income in respect of that entity are
+accounted for as if the Group had directly disposed of the related assets or liabilities. This may
+mean that amounts previously recognized in other comprehensive income are reclassified to profit
+or loss or transferred to another category of equity as specified/permitted by applicable IFRSS.
+2.2.4 Disposal of subsidiaries
+The Group treats transactions with non-controlling interests that do not result in a loss of control
+as transactions with equity owners of the Group. A change in ownership interest results in an
+adjustment between the carrying amounts of the controlling and non-controlling interests to reflect
+their relative interests in the subsidiary. Any difference between the amount of the adjustment
+to non-controlling interests and any consideration paid or received is recognized in a separate
+reserve within equity attributable to owners of the Company.
+2.2.3 Changes in ownership interests in subsidiaries without change of control
+If the business combination is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition
+date. Any gains or losses arising from such remeasurement are recognized in profit or loss.
+Contingent consideration is classified either as equity or a financial liability. Amounts classified as
+a financial liability are subsequently remeasured to fair value with changes in fair value recognized
+in profit or loss. Amounts classified as equity is not re-measured, and its subsequent settlement is
+accounted for within equity.
+The excess of the consideration transferred, amount of any non-controlling interest in the acquiree,
+and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value
+of the identifiable net assets acquired is recorded as goodwill.
+Acquisition-related costs are expensed as incurred.
+Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
+combination are measured initially at their fair values at the acquisition date. The Group recognizes
+any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either
+at fair value or at the non-controlling interest's proportionate share of the acquired entity's net
+identifiable assets.
+2.2.2 Business combinations (Continued)
+2.2 Subsidiaries (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+fair value of any pre-existing equity interest in the subsidiary.
+•
+• fair value of any asset or liability resulting from a contingent consideration arrangement, and
+equity interests issued by the Group
+•
+Meituan Dianping
+138
+.• liabilities incurred to the former owners of the acquired business
+• fair values of the assets transferred
+The Group applies the acquisition method to account for all business combinations, regardless
+of whether equity instruments or other assets are acquired. The consideration transferred for the
+acquisition of a subsidiary comprises the:
+As a result of the Old Contractual Arrangements and Revised Contractual Arrangements, the
+Group has rights to exercise power over these PRC operating entities, receive variable returns from
+its involvement with these entities, has the ability to affect those returns through its power over the
+entities and is considered to control the entities. Consequently, the Company regarded these PRC
+operating entities and their subsidiaries as controlled structured entities and the financial position
+and results of operations of these entities have been consolidated by the Company.
+Nevertheless, there are still uncertainties regarding the interpretation and application of current
+and future PRC laws and regulations. The Directors of the Group, based on the advice of its legal
+counsel, consider that the use of both the Old Contractual Arrangements and New Contractual
+Arrangements does not constitute a breach of the relevant laws and regulations.
+Proceeds from borrowings,
+Meituan Dianping
+(b) New standards and amendments not yet adopted by the management of the Group
+(Continued)
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.1
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+For prepayments, deposits and other assets (excluding tax prepayments and
+loan receivables) already in place at January 1, 2018, the Group applies a three
+stage approach to measure ECL prescribed by IFRS 9. The impact is not material
+applying the ECL model for those other receivables as of January 1, 2018.
+Prepayments, deposits and other assets (excluding tax prepayments and loan
+receivables)
+For trade receivables, the Group applies the simplified approach to measure
+expected credit losses ('ECL') prescribed by IFRS 9, which requires the use of
+the lifetime expected loss provision for all trade receivables. The impact is not
+material applying the ECL model for those trade receivables as of January 1,
+2018.
+Trade receivables
+For loan receivables outstanding at January 1, 2018, adjustments of RMB12.4
+million of provisions for loan receivables were recognized in the opening
+accumulated losses. Impairment methodology applied has been described in
+Note 3.1(b).
+(c)
+(b)
+Loan receivables
+(a)
+Impairment of financial assets (Continued)
+(ii)
+New and amended standards adopted by the Group (Continued)
+(a)
+Meituan Dianping
+134
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.1
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(b) New standards and amendments not yet adopted by the management of the Group
+136
+A number of new standards and amendments to existing standards have been issued but
+are not yet effective for the financial year beginning January 1, 2018, and have not been early
+adopted by the Group's management. These new standards and amendments are set out
+below:
+curtailment or settlement
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.1
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (135)
+Except as disclosed below, the Group is in the process of assessing potential impact of
+the above other new standards and amendments to standards that is relevant to the Group
+upon initial application. According to the preliminary assessment made by the Directors,
+management does not anticipate any significant impact on the Group's financial positions
+and results of operations upon adopting the above new standards amendments to existing
+standards. The management of the Group plans to adopt these new standards and
+amendments to existing standards when they become effective.
+To be determined
+assets between an investor and its associate or joint venture
+Amendments to IFRS 10 and IAS 28 - Sale or contribution of
+prepayment features with negative compensation
+January 1, 2019
+Amendment to IFRS 9 - Financial instruments on
+January 1, 2019
+IFRS Standards 2015-2017 Cycle
+on long term interests in associates and joint ventures
+IFRS 17 - Insurance contracts Annual Improvements to
+January 1, 2019
+January 1, 2019
+January 1, 2019
+on or after
+year beginning
+Effective for
+financial
+IFRIC 23 - Uncertainty over income tax treatments
+Amendments to IAS 28 - 'Investments in associates',
+IFRS 16 - Leases
+IAS19 - Employee benefits on plan amendment,
+CONSOLIDATED STATEMENT OF CASH FLOWS
+RMB'000
+Meituan Dianping
+The Group amortizes intangible assets with a limited useful life using the straight-line method over
+the following periods:
+Other intangible assets mainly include trade name, user generated content, software purchased
+from third parties, online payment license, technology and licenses, user list and supplier
+relationship. They are initially recognized and measured at cost or fair value if they are acquired
+in business combinations. Other intangible assets are amortized over their estimated useful lives
+using the straight-line method which reflects the pattern in which the intangible asset's future
+economic benefits are expected to be consumed.
+2.9.2 Other intangible assets
+Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation
+is made to those cash-generating units or groups of cash-generating units that are expected to
+benefit from the business combination in which the goodwill arose. The units or groups of units are
+identified at the lowest level at which goodwill is monitored for internal management purposes at
+the operating segments.
+Goodwill arises on the acquisition of subsidiaries represents the excess of the aggregate purchase
+consideration transferred, the amount of any non-controlling interest in the acquiree and the
+acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
+net identifiable assets acquired. Goodwill on acquisitions of subsidiaries is included in intangible
+assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if
+events or changes in circumstances indicate that it might be impaired, and is carried at cost less
+accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
+amount of goodwill relating to the entity sold.
+2.9.1 Goodwill
+2.9 Intangible assets
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (143)
+Gains and losses on disposals are determined by comparing proceeds with carrying amount, and are
+recognized in "Other gains, net” in the consolidated income statement.
+An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
+amount is greater than its estimated recoverable amount.
+The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
+reporting period.
+Property, plant and equipment arising from business acquisition is depreciated over the remaining useful
+life.
+the estimated useful lives of the assets
+2-4 years
+lesser of the term of the lease or
+•
+years
+trade name
+user generated content
+(i) estimated period during which such asset can bring economic benefits to the Group; and (ii) the
+useful life estimated by comparable companies in the market.
+When determing the length of useful life of an intangible asset, management take into account the
+2-8 years
+5 years
+2-5 years
+15
+5 years
+3-10 years
+2 - 25 years
+supplier relationship
+•
+user list
+•
+technology and licenses
+•
+online payment license
+software and others
+•
+•
+144
+3 years
+5
+leasehold improvements
+2.7.3 Group companies
+Non-monetary items that are measured at fair value in a foreign currency are translated using the
+exchange rates at the date when the fair value was determined. Translation differences on assets
+and liabilities carried at fair value are reported as part of the fair value gain or loss. For example,
+translation differences on non-monetary assets and liabilities such as equities held at fair value
+through profit or loss are recognized in consolidated income statement as part of the "Fair value
+changes on investments measured at fair value through profit or loss".
+Foreign currency transactions are translated into the functional currency using the exchange rates
+at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement
+of such transactions and from the translation of monetary assets and liabilities denominated in
+foreign currencies at year end exchange rates are generally recognized in consolidated income
+statement on a net basis within "Other gains, net".
+2.7.2 Transactions and balances
+Items included in the Historical Financial Information of each of the Group's entities are
+measured using the currency of the primary economic environment in which the entity operates
+("the functional currency"). The Company's functional currency is USD as it key activities and
+transactions are denominated in USD. The Company's primary subsidiaries were incorporated
+in the PRC and these subsidiaries considered RMB as their functional currency. The Group's
+presentation currency is RMB.
+2.7.1 Functional and presentation currency
+2.7 Foreign currency translation
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (141)
+Operating segments are reported in a manner consistent with the internal reporting provided to the
+chief operating decision-maker ("CODM"). The chief operating decision-maker, who is responsible for
+allocating resources and assessing performance of the operating segments, has been identified as
+executive Directors.
+2.6 Segment reporting
+Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these
+investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the
+dividend is declared or if the carrying amount of the investment in the separate financial statements
+exceeds the carrying amount in the consolidated financial statements of the investee's net assets
+including goodwill.
+Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable
+costs of investment. The results of subsidiaries are accounted for by the Company on the basis of
+dividend received and receivable.
+2.5 Separate financial statements
+Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent
+of the Group's interest in the joint ventures. Unrealized losses are also eliminated unless the transaction
+provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures
+have been changed where necessary to ensure consistency with the policies adopted by the Group.
+Under the equity method of accounting, interests in joint ventures are initially recognized at cost
+and adjusted thereafter to recognize the Group's share of the post-acquisition profits or losses and
+movements in other comprehensive income. The Group's investments in joint ventures include goodwill
+identified on acquisition. Upon the acquisition of the ownership interest in a joint venture, any difference
+between the cost of the joint venture and the Group's share of the net fair value of the joint venture's
+identifiable assets and liabilities is accounted for as goodwill. When the Group's share of losses in a joint
+venture equals or exceeds its interests in the joint ventures, including any other unsecured receivables,
+the Group does not recognize further losses, unless it has incurred obligations or made payments on
+behalf of the joint ventures.
+The results and financial position of foreign operations (none of which has the currency of a
+hyperinflationary economy) that have a functional currency different from the presentation currency
+are translated into the presentation currency as follows:
+• bike and vehicle
+. assets and liabilities for each statement of financial position presented are translated at the
+closing rate at the date of that statement of financial position
+all resulting exchange differences are recognized in other comprehensive income.
+•
+furniture and appliances
+•
+computer equipment (including servers)
+•
+Depreciation is calculated using the straight-line method to allocate their cost, net of their residual
+values, over their estimated useful lives, as follows:
+Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as
+appropriate, only when it is probable that future economic benefits associated with the item will flow to
+the Group and the cost of the item can be measured reliably. The carrying amount of any component
+accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are
+charged to profit or loss during the reporting period in which they are incurred.
+All property, plant and equipment are stated at historical cost less depreciation and impairment.
+Historical cost includes expenditure that is directly attributable to the acquisition of the items.
+2.8 Property, plant and equipment
+Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as
+assets and liabilities of the foreign operation and translated at the closing rate.
+On consolidation, exchange differences arising from the translation of any net investment in
+foreign entities, and of borrowings and other financial instruments designated as hedges of such
+investments, are recognized in other comprehensive income. When a foreign operation is sold or
+any borrowings forming part of the net investment are repaid, the associated exchange differences
+are reclassified into income statement, as part of "Other gains, net".
+2.7.3 Group companies (Continued)
+2.7 Foreign currency translation (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+142) Meituan Dianping.
+income and expenses for each income statement and statement of comprehensive income
+are translated at average exchange rates (unless this is not a reasonable approximation of
+the cumulative effect of the rates prevailing on the transaction dates, in which case income
+and expenses are translated at the dates of the transactions), and
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+FVOCI: Assets that are held for collection of contractual cash flows and for selling the
+financial assets, where the assets' cash flows represent solely payments of principal and
+interest, are measured at FVOCI. Movements in the carrying amount are taken through
+OCI, except for the recognition of impairment gains or losses, interest income and foreign
+exchange gains and losses which are recognized in profit or loss. When the financial asset is
+derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from
+equity to profit or loss and recognized in other gains. Interest income from these financial
+assets is included in finance income using the effective interest rate method. Foreign
+exchange gains and losses are presented in other gains and impairment expenses are
+presented as separate line item in the statement of profit or loss.
+Amortized cost: Assets that are held for collection of contractual cash flows where those
+cash flows represent solely payments of principal and interest are measured at amortized
+cost. Interest income from these financial assets is included in finance income using the
+effective interest rate method. Any gain or loss arising on derecognition is recognized directly
+in profit or loss and presented in other gains together with foreign exchange gains and
+losses. Impairment losses are presented as separate line item in the statement of profit or
+loss.
+•
+Subsequent measurement of debt instruments depends on the Group's business model for
+managing the asset and the cash flow characteristics of the asset. There are three measurement
+categories into which the Group classifies its debt instruments:
+Debt instruments
+Meituan Dianping
+148
+(iv) Measurement (Continued)
+2.12.1Accounting policies applied from January 1, 2018 (Continued)
+2.12 Financial assets (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (147)
+Financial assets with embedded derivatives are considered in their entirety when determining
+whether their cash flows are solely payment of principal and interest.
+At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
+financial asset not at fair value through profit or loss, transaction costs that are directly attributable
+to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are
+expensed in profit or loss.
+(iv) Measurement
+As part of its operations, the Group securitizes financial assets, generally through the sale
+of these assets to special purpose vehicles which issue securities to investors. Further
+details on prerequisites for derecognition of financial assets are set out above. When the
+securitization of financial assets that qualify for derecognition, the relevant financial assets
+are derecognized in their entirety and a new financial asset or liabilities is recognized
+regarding the interest in the unconsolidated securitization vehicles that the Group acquired.
+When the securitization of financial assets that do not qualify for derecognition, the relevant
+financial asset are not derecognized, and the consideration paid by third parties are recorded
+as a financial liability; when the securitization of financial assets that partially qualify for
+derecognition, the book value of the transferred asset should be recognized between
+the derecognized portion and the retained portion based on their respective relative fair
+values, and the difference between the book value of the derecognized portion and the total
+consideration paid for the derecognized portion shall be recorded in profit or loss.
+FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured
+at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is
+recognized in profit or loss and presented net within "Other gains, net” in the period in which
+it arises.
+If the Group neither transfers nor retains substantially all the risks and rewards of ownership
+and continues to control the transferred asset, the Group continues to recognize the asset to
+the extent of its continuing involvement and recognizes an associated liability.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2018 Annual Report (149)
+While cash and cash equivalents, restricted cash and short-term investments measured at
+amortized costs are also subject to the impairment requirements of IFRS 9, the identified
+impairment loss was immaterial.
+prepayments, deposits and other assets (excluding tax prepayment and loan receivables)
+•
+trade receivables
+•
+loan receivables
+•
+The Group has three types of financial assets that are subject to IFRS 9's new ECL model (Note 3.1
+(b)):
+From January 1, 2018, the Group assesses on a forward looking basis the expected credit losses
+associated with its debt instruments carried at amortized cost and FVOCI. The impairment
+methodology applied depends on whether there has been a significant increase in credit risk.
+(v) Impairment
+Changes in the fair value of financial assets measured at FVPL are recognized in other gains
+in profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity
+investments measured at FVOCI are not reported separately from other changes in fair value.
+The Group subsequently measures all equity investments at fair value. Where the group's
+management has elected to present fair value gains and losses on equity investments in OCI,
+there is no subsequent reclassification of fair value gains and losses to profit or loss following the
+derecognition of the investment. Dividends from such investments continue to be recognized in
+profit or loss when the group's right to receive payments is established.
+Equity instruments
+(iv) Measurement (Continued)
+2.12.1Accounting policies applied from January 1, 2018 (Continued)
+2.12 Financial assets (Continued)
+2
+the sum of the consideration received from the transfer and any cumulative gain or loss
+that has been recognized directly in equity.
+the carrying amount of the financial asset transferred, and
+-
+2.12 Financial assets
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (145)
+The fair value of financial guarantees is determined based on the present value of the difference in cash
+flows between the contractual payments required under the debt instrument and the payments that
+would be required without the guarantee, or the estimated amount that would be payable to a third party
+for assuming the obligations.
+the amount initially recognized less, where appropriate, the cumulative amount of income
+recognized in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
+the amount determined in accordance with the expected credit loss model under IFRS 9 Financial
+Instruments, and
+•
+Financial guarantee contracts are recognized as a financial liability at the time the guarantee is issued.
+The liability is initially measured at fair value and subsequently at the higher of:
+2.11 Financial guarantee contracts
+Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and
+are tested annually for impairment, or more frequently if events or changes in circumstances indicate
+that they might be impaired. Other assets are tested for impairment whenever events or changes
+in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
+recognized for the amount by which the asset's carrying amount exceeds its recoverable amount.
+The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use.
+For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
+separately identifiable cash inflows which are largely independent of the cash inflows from other assets
+or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an
+impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
+2.10 Impairment of non-financial assets
+Research expenditures are recognized as an expenses as incurred. Costs incurred on development
+projects are capitalized as intangible assets when recognition criteria are met, including (a) it is
+technically feasible to complete the software so that it will be available for use; (b) management
+intends to complete the software and use or sell it; (c) there is an ability to use or sell the software;
+(d) it can be demonstrated how the software will generate probable future economic benefits;
+(e) adequate technical, financial and other resources to complete the development and to use
+or sell the software are available; and (f) the expenditure attributable to the software during its
+development can be reliably measured. Other development costs that do not meet those criteria
+are expensed as incurred. There were no development costs meeting these criteria and capitalized
+as intangible assets as of December 31, 2018 and 2017.
+2.9.3 Research and development
+2.9 Intangible assets (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12.1Accounting policies applied from January 1, 2018
+(i) Classification
+(ii)
+From January 1, 2018, the Group classifies its financial assets in the following measurement
+categories:
+Where a transfer of a financial asset in its entirety meets the criteria for derecognition,
+the difference between the two amounts below is recognized in profit or loss or retained
+earnings:
+(iii) Derecognition (Continued)
+2.12.1Accounting policies applied from January 1, 2018 (Continued)
+2.12 Financial assets (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+2.4 Joint arrangements (Continued)
+146
+(iii) Derecognition
+Regular way purchases and sales of financial assets are recognized on trade-date, the date
+on which the group commits to purchase or sell the asset.
+Recognition
+The Group reclassifies debt investments when and only when its business model for
+managing those assets changes.
+For assets measured at fair value, gains and losses will either be recorded in profit or loss or
+other comprehensive income ("OCI"). For investments in debt instruments, this will depend
+on the business model in which the investment is held. For investments in equity instruments
+that are not held for trading, this will depend on whether the Group has made an irrevocable
+election at the time of initial recognition to account for the equity investment at fair value
+through other comprehensive income ("FVOCI").
+The classification depends on the entity's business model for managing the financial assets
+and the contractual terms of the cash flows.
+those to be measured at amortized cost.
+those to be measured subsequently at fair value (either through other comprehensive
+income or through profit or loss), and
+The Group derecognizes a financial asset, if the part being considered for derecognition
+meets one of the following conditions: (i) the contractual rights to receive the cash flows from
+the financial asset expire; or (ii) the contractual rights to receive the cash flows of the financial
+asset have been transferred, the Group transfers substantially all the risks and rewards of
+ownership of the financial asset; or (iii) the Group retains the contractual rights to receive the
+cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows
+to the eventual recipient in an agreement that meets all the conditions of de-recognition of
+transfer of cash flows ("pass through” requirements) and transfers substantially all the risks
+and rewards of ownership of the financial asset.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+years
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+Associates are all entities over which the Group has significant influence but not control or joint control.
+The Group's investments in associates in the form of redeemable instruments are financial assets
+designated at fair value through profit or loss. All investments in associates in the form of ordinary
+shares with significant influence are accounted for using the equity method of accounting, after initially
+being recognized at cost and adjusted thereafter to recognize the Group's share of the post-acquisition
+profits or losses of the investee, and the Group's share of movements in other comprehensive income of
+the investee in other comprehensive income. Dividends received or receivable from associates and joint
+ventures are recognized as a reduction in the carrying amount of the investment.
+When the Group's share of losses in an investment accounted for using the equity method equals or
+exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does
+not recognize further losses, unless it has incurred obligations or made payments on behalf of the other
+entity.
+Unrealized gains on transactions between the Group and its associates and joint ventures are eliminated
+to the extent of the Group's interest in these entities. Unrealized losses are also eliminated unless the
+transaction provides evidence of an impairment of the asset transferred. Accounting policies of the
+investees have been changed where necessary to ensure consistency with the policies adopted by the
+Group.
+2.3 Associates
+If the ownership interest in a joint venture or an associate is reduced but joint control or significant
+influence is retained, only a proportionate share of the amounts previously recognized in other
+comprehensive income are reclassified to profit or loss where appropriate.
+2.4 Joint arrangements
+The Group has applied IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint
+arrangements are classified as either joint operations or joint ventures depending on the contractual
+rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and
+determined them to be joint ventures. Joint ventures are accounted for using the equity method.
+140
+Meituan Dianping
+The Group determines at each reporting date whether there is any objective evidence that investments
+accounted for using the equity method are impaired. If this is the case, the Group calculates the amount
+of impairment as the difference between the recoverable amount of the investment and its carrying value
+and recognizes the amount in "Other gains, net” in the consolidated income statement.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.17 Cash and cash equivalents and restricted cash
+Cash and cash equivalents includes cash in hand, deposits held at call with banks within three months,
+certain amounts of cash held in accounts managed by other financial institutions in connection with the
+provision of services and sale of goods.
+Cash that restricted from withdrawal, use or pledged as security is reported separately on the face of the
+consolidated statement of financial position, and is not included in the total cash and cash equivalents
+in the consolidated statement of cash flows.
+2.18 Share capital
+Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
+settlement of the liability for at least 12 months after the reporting period.
+2.19 Trade and other payables
+Trade and other payables represent liabilities for goods and services provided to the Group prior to the
+end of financial year which are unpaid. Trade and other payables are presented as current liabilities
+unless payment is not due within 12 months after the reporting period. They are recognized initially at
+their fair value and subsequently measured at amortized cost using the effective interest method.
+2.20 Borrowings
+Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
+subsequently measured at amortized cost. Any difference between the proceeds (net of transaction
+costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using
+the effective interest method.
+152) Meituan Dianping.
+2.21 Convertible redeemable preferred shares ("Preferred Shares")
+Holders of Series A, B, and C Preferred Shares issued by the Company are redeemable upon
+occurrence of certain future events. These instruments can also be converted into ordinary shares of the
+Company at any time at the option of the holders, or automatically upon occurrence of an initial public
+offering of the Company, or when agreed by majority of the holders as detailed in Note 28.
+Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
+shares or share options are shown in equity as a deduction from the proceeds. Convertible redeemable
+preferred shares are classified as liabilities (Note 28).
+Trade and other receivables are recognized initially at fair value and subsequently measured at
+amortized cost using the effective interest method, less allowance for impairment.
+2.14 Deposit from transacting users
+Trade receivables are amounts due from customers for services performed in the ordinary course of
+business.
+The Group assesses at the end of each reporting period whether there is objective evidence
+that a financial asset or group of financial assets is impaired. A financial asset or a group
+of financial assets is impaired and impairment losses are incurred only if there is objective
+evidence of impairment as a result of one or more events that occurred after the initial
+recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the
+estimated future cash flows of the financial asset or group of financial assets that can be
+reliably estimated. For loans and receivables, the amount of the loss is measured as the
+difference between the asset's carrying amount and the present value of estimated future
+cash flows (excluding future credit losses that have not been incurred) discounted at the
+financial asset's original effective interest rate. The carrying amount of the asset is reduced
+and the amount of the loss is recognized in profit or loss. If a loan has a variable interest
+rate, the discount rate for measuring any impairment loss is the current effective interest rate
+determined under the contract.
+2018 Annual Report (151)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12 Financial assets (Continued)
+2.12.2Accounting policies applied before January 1, 2018 (Continued)
+(iv) Impairment (Continued)
+Trade and other receivables are generally due for settlement within 1 year and therefore are all classified
+as current.
+As a practical expedient, the Group may measure impairment on the basis of an instrument's
+fair value using an observable market price.
+2.13 Offsetting financial instruments
+Financial assets and liabilities are offset and the net amount reported in the balance sheet where
+the Group currently has a legally enforceable right to offset the recognized amounts, and there is an
+intention to settle on a net basis or realize the asset and settle the liability simultaneously. The Group has
+also entered into arrangements that do not meet the criteria for offsetting but still allow for the related
+amounts to be set off in certain circumstances, such as bankruptcy or the termination of a contract.
+2018 Annual Report (153)
+Deposit from transacting users are the deposits received from transacting users of bike-sharing services,
+which are redeemable at any time upon the requests from transacting users.
+2.15 Inventories
+Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
+weighted average method. Costs of purchased inventory are determined after deducting rebates and
+discounts. Net realisable value is the estimated selling price in the ordinary course of business, less
+applicable variable selling expenses.
+2.16 Trade and other receivables
+If, in a subsequent period, the amount of the impairment loss decreases and the decrease
+can be related objectively to an event occurring after the impairment was recognized (such
+as an improvement in the debtor's credit rating), the reversal of the previously recognized
+impairment loss is recognized in profit or loss.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Redemption liability arises from put options granted by the Group, where the counterparties have the
+right to request the Group to purchase the equity instrument held by the counterparty for cash or other
+financial assets when certain conditions are met. As the Group does not have the unconditional right
+to avoid delivering cash or another financial assets under the put options, the Group recognized a
+financial liability at the present value of the estimated future cash outflows of the redemption obligation.
+Subsequently, if the Group revises its estimates of payments, the Group will adjust the carrying amount
+of the financial liability to reflect the present value of revised estimated future cash outflows at the
+financial instrument's original effective interest rate, and the adjustments will be recognized as "Other
+gains, net" in the consolidated income statement. If the put option expires without delivery, the carrying
+amount of the liability is reclassified to equity. The redemption liabilities are classified as current liabilities
+unless the put options can only be exercised 12 months after the end of the reporting period.
+2.21 Convertible redeemable preferred shares ("Preferred Shares") (Continued)
+Deferred income tax liabilities are provided on taxable temporary differences arising from
+investments in subsidiaries, and associates, except for deferred income tax liability where
+the timing of the reversal of the temporary difference is controlled by the Group and it is
+probable that the temporary difference will not reverse in the foreseeable future. Generally
+the Group is unable to control the reversal of the temporary difference for associates. Only
+when there is an agreement in place that gives the Group the ability to control the reversal of
+the temporary difference in the foreseeable future, deferred tax liability in relation to taxable
+temporary differences arising from the subsidiaries and associates' undistributed profits is
+not recognized.
+Deferred income tax assets are recognized on deductible temporary differences arising from
+investments in subsidiaries and associates only to the extent that it is probable the temporary
+difference will reverse in the future and there is sufficient taxable profit available against
+which the temporary difference can be utilized.
+2018 Annual Report (155)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.23 Current and deferred income tax (Continued)
+2.23.2Deferred income tax (Continued)
+(c) Offsetting
+2.24 Employee benefits
+2.24.1Employee leave entitlement
+Employee entitlements to annual leave are recognized when they accrue to employees. A provision
+is made for the estimated liability for annual leave as a result of services rendered by employees
+up to the end of the reporting period. Employee entitlements to sick and maternity leave are not
+recognized until the time of leave.
+2.24.2Pension obligations and other social welfare benefits
+The Group contributes on a monthly basis to various defined contribution plans organised by the
+relevant governmental authorities. The Group's liability in respect of these plans is limited to the
+contributions payable in each period. The Group's contributions to the defined contribution plans
+are expensed as incurred and not reduced by contributions forfeited by those employees who
+leave the plan prior to vesting fully in the contributions. Assets of the plans are held and managed
+by government authorities and are separated from those of the Group.
+2.24.3Bonus plan
+(b) Outside basis differences
+Deferred income tax assets are recognized only to the extent that it is probable that future
+taxable profit will be available against which the temporary differences can be utilized.
+Deferred income tax is recognized, using the liability method, on temporary differences
+arising between the tax bases of assets and liabilities and their carrying amounts in the
+consolidated financial statements. However, deferred tax liabilities are not recognized if they
+arise from the initial recognition of goodwill, the deferred income tax is not accounted for if
+it arises from initial recognition of an asset or liability in a transaction other than a business
+combination that at the time of the transaction affects neither accounting nor taxable profit or
+loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
+substantively enacted by the balance sheet date and are expected to apply when the related
+deferred income tax asset is realized or the deferred income tax liability is settled.
+(a) Inside basis differences
+The Group designated the Preferred Shares as financial liabilities at fair value through profit or loss. They
+are initially recognized at fair value. Any directly attributable transaction costs are recognized as finance
+costs in profit or loss. Before January 1, 2018, all fair value changes is recognized profit or loss under
+IAS 39. From January 1, 2018, the component of fair value changes relating to the company's own credit
+risk is recognized in OCI. Amounts recorded in OCI related to credit risk are not subject to recycling
+in profit or loss, but are transferred to retained earnings when realised. Fair value changes relating to
+market risk are recognized in profit or loss.
+The Preferred Shares were classified as non-current liabilities unless the Preferred Shares holders can
+demand the Company to redeem the Preferred Shares within 12 months after the end of the reporting
+period.
+All of Preferred Shares were converted to Class B ordinary shares upon completion of the Listing on
+September 20, 2018. The fair value of each of Preferred Shares is equal to the fair value of each of
+ordinary shares on the conversion date, which is the offer price in the Listing.
+2.22 Redemption liability
+(iv) Impairment
+2.23 Current and deferred income tax
+The income tax expense or credit for the period is the tax payable on the current period's taxable
+income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
+tax assets and liabilities attributable to temporary differences and to unused tax losses.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+154
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.23 Current and deferred income tax (Continued)
+2.23.1Current income tax
+The current income tax charge is calculated on the basis of the tax laws enacted or substantively
+enacted at the end of the reporting period in the countries where the company's subsidiaries and
+associates operate and generate taxable income. Management periodically evaluates positions
+taken in tax returns with respect to situations in which applicable tax regulation is subject to
+interpretation. It establishes provisions where appropriate on the basis of amounts expected to be
+paid to the tax authorities.
+2.23.2Deferred income tax
+Meituan Dianping
+Dividends on financial assets at fair value through profit or loss are recognized in "Other
+gains, net" in the consolidated income statement, when the Group's right to receive
+payments is established.
+Deferred income tax assets and liabilities are offset when there is a legally enforceable
+right to offset current income tax assets against current income tax liabilities and when
+the deferred income taxes assets and liabilities relate to income taxes levied by the same
+taxation authority on either the taxable entity or different taxable entities where there is an
+intention to settle the balances on a net basis.
+Loans and receivables are subsequently carried at amortized cost using the effective interest
+method.
+2.27 Revenue recognition
+Provisions are measured at the present value of management's best estimate of the expenditure
+required to settle the present obligation at the end of the reporting period. The discount rate used to
+determine the present value is a pre-tax rate that reflects current market assessments of the time value
+of money and the risks specific to the liability. The increase in the provision due to the passage of time is
+recognized as interest expense.
+Where there are a number of similar obligations, the likelihood that an outflow will be required in
+settlement is determined by considering the class of obligations as a whole. A provision is recognized
+even if the likelihood of an outflow with respect to any one item included in the same class of obligations
+may be small.
+Provisions for service warranties and make good obligations are recognized when the Group has a
+present legal or constructive obligation as a result of past events, it is probable that an outflow of
+resources will be required to settle the obligation and the amount can be reliably estimated. Provisions
+are not recognized for future operating losses.
+2.26 Provisions
+A grant of share incentive awards, that is cancelled or settled during the vesting period, is treated
+as an acceleration of vesting. The Group immediately recognizes the amount that otherwise would
+have been recognized for services received over the remainder of the vesting period.
+The Group may modify the terms and conditions on which share incentive awards were granted. If
+a modification increases the fair value of the equity instruments granted, the incremental fair value
+granted is included in the measurement of the amount recognized for the services received over
+the remainder of the vesting period.
+Revenue is recognized when or as the control of the goods or services is transferred to a customer.
+Depending on the terms of the contract and the laws that apply to the contract, control of the goods
+and services may be transferred over time or at a point in time. Control of the goods and services is
+transferred over time if the Group's performance:
+2.25.3 Modifications and Cancellations
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (157)
+In addition, in some circumstances employees may provide services in advance of the grant date
+and therefore the grant date fair value is estimated for the purposes of recognizing the expense
+during the period between service commencement period and grant date.
+For grant of RSUs, the total amount to be expensed is determined by reference to the fair value of
+the Company's shares at the grant date.
+2.25.2 RSUs
+The total expense is recognized over the vesting period, which is the period over which all of the
+specified vesting conditions are to be satisfied. At the end of each period, the entity revises its
+estimates of the number of options that are expected to vest based on the non-market vesting and
+service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or
+loss, with a corresponding adjustment to equity.
+2.25 Share-based payments (Continued)
+excluding the impact of any service and non-market performance vesting conditions, and
+including the impact of any non-vesting conditions
+•
+•
+Financial assets at fair value through profit or loss are subsequently carried at fair value.
+Gains or losses arising from changes in the fair value are recognized in the consolidated
+income statement within "Fair value changes on investments measured at fair value through
+profit or loss".
+2018 Annual Report (159)
+If a customer pays consideration or the Group has a right to an amount of consideration that is
+unconditional, before the Group transfers a good or service to the customer, the Group presents the
+contract liability when the payment is made or a receivable is recorded (whichever is earlier). A contract
+liability is the Group's obligation to transfer goods or services to a customer for which the Group has
+received consideration (or an amount of consideration is due) from the customer. The Group's contract
+liabilities were mainly resulted from the business cooperation agreement with Tianjin Maoyan Culture
+Media Co., Ltd. (the "Maoyan"), and online marketing services, which is recorded as deferred revenue.
+A contract asset is the Group's right to consideration in exchange for goods and services that the Group
+has transferred to a customer. A receivable is recorded when the Group has an unconditional right to
+consideration. A right to consideration is unconditional if only the passage of time is required before
+payment of that consideration is due.
+When either party to a contract has performed, the Group presents the contract in the statement of
+financial position as a contract asset or a contract liability, depending on the relationship between the
+entity's performance and the customer's payment.
+Contracts with customers may include multiple performance obligations. For such arrangements, the
+Group allocates revenue to each performance obligation based on its relative standalone selling price.
+The Group generally determines standalone selling prices based on the prices charged to customers. If
+the standalone selling price is not directly observable, it is estimated using expected cost plus a margin
+or adjusted market assessment approach, depending on the availability of observable information.
+Assumptions and estimations have been made in estimating the relative selling price of each distinct
+performance obligation, and changes in judgements on these assumptions and estimates may impact
+the revenue recognition.
+If control of the goods and services transfers over time, revenue is recognized over the period of the
+contract by reference to the progress towards complete satisfaction of that performance obligation.
+Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and
+services.
+provides all of the benefits received and consumed simultaneously by the customer;
+2.27 Revenue recognition (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+does not create an asset with an alternative use to the Group and the Group has an enforceable
+right to payment for performance completed to date.
+Meituan Dianping
+158
+•
+creates and enhances an asset that the customer controls as the Group performs; or
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+The expected cost of bonuses is recognized as a liability when the Group has a present legal or
+constructive obligation for payment of bonuses as a result of services rendered by employees and
+a reliable estimate of the obligation can be made. Liabilities for bonuses are expected to be settled
+within 1 year and are measured at the amounts expected to be paid when they are settled.
+•
+Financial assets at fair value through profit or loss
+(b)
+The Group classifies financial assets at fair value through profit or loss if they are
+acquired principally for the purpose of selling in the short term, i.e., are held for
+trading. The Group has investments in certain ordinary shares with preferential rights
+or convertible redeemable preferred shares issued by investee companies, which are
+hybrid instruments with embedded derivatives not closely related to the host contract.
+The Group designated the whole instruments as financial assets at fair value through
+profit or loss instead of bifurcating the embedded derivatives from the host contract.
+The Group also has interests in certain investees in the form of ordinary shares without
+significant influence. The Group managed and evaluated their performance on a fair
+value basis. The Group designated these instruments as financial assets at fair value
+through profit or loss.
+Derivative financial instruments are recognized initially at fair value. At the end of each
+reporting period the fair value is remeasured. Assets in this category are presented as
+current assets if they are expected to be sold within 12 months after the end of the
+reporting period; otherwise they are presented as non-current assets.
+156
+Loans and receivables
+Loans and receivables are non-derivative financial assets with fixed or determinable
+payments that are not quoted in an active market. If the loans and receivables are
+expected to be collected within 1 year, they are classified as current assets. If not, they
+are presented as non-current assets. The Group's loans and receivables comprise of
+trade receivables, prepayments, deposits and other assets, cash and cash equivalents,
+restricted cash and short-term investments measured at amortized cost.
+(a)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12 Financial assets (Continued)
+2.12.2Accounting policies applied before January 1, 2018 (Continued)
+(ii) Recognition and derecognition
+Regular purchases and sales of financial assets are recognized on trade date, the date on which
+the Group commits to purchase or sell the asset. Financial assets are derecognized when the
+rights to receive cash flows from the financial assets have expired or have been transferred,
+and the Group has transferred substantially all the risks and rewards of ownership.
+including any market performance conditions
+At initial recognition, the Group measures a financial asset at its fair value plus, in the case
+of a financial asset not at fair value through profit or loss, transaction costs that are directly
+attributable to the acquisition of the financial asset. Transaction costs of financial assets
+carried at fair value through profit or loss are expensed in profit or loss.
+2
+Meituan Dianping
+(iii) Measurement
+The classification depends on the purpose for which the financial assets were acquired.
+Management determines the classification at initial recognition.
+150
+2.25.1 Share options
+The Group has operated share incentive plans including share option schemes and share award
+schemes. The Internet Plus Holdings Ltd. 2015 Share Incentive Plan (or the "2015 Share Incentive Plan")
+was administered until the initial public offering, after which it was replaced by the Meituan Dianping
+Post-IPO Share Option Scheme and Post-IPO Share Award Scheme. Share-based compensation
+benefits are provided to employees via the 2015 Share Incentive Plan, the Post-IPO Share Option
+Scheme and the Post-IPO Share Award Scheme. The Group receives services from employees and
+other qualifying participants as consideration for equity instruments (including share options and RSUs)
+of the Group. The fair value of the services received in exchange for the grant of the equity instruments
+is recognized as an expense in the consolidated income statement.
+2.25 Share-based payments
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2.12 Financial assets (Continued)
+2.12.2Accounting policies applied before January 1, 2018
+For grant of share options, the total amount to be expensed is determined by reference to the fair
+value of the options granted by using option-pricing models:
+(i) Classification
+The Group classifies its financial assets into the following categories:
+• financial assets at fair value through profit or loss
+loans and receivables
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.32 Government subsides
+Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
+Group as lessee are classified as operating leases. Payments made under operating leases (net of any
+incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period
+of the lease.
+Lease income from operating leases where the Group is a lessor is recognized as income on a straight-
+line basis over the lease term. The respective leased assets are included in the balance sheet based on
+their nature.
+2.31 Dividends distribution
+Dividend distribution to the Company's shareholders is recognized as a liability in the Group's financial
+statements in the period in which the dividends are approved by the Shareholders or Directors, where
+appropriate.
+Subsidies from the government are recognized at their fair value where there is a reasonable assurance
+that the subsidies will be received and the Group will comply with all attached conditions. Under these
+circumstances, the subsidies are recognized as income or matched with the associated costs which the
+subsidies are intended to compensate.
+i)
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT
+The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
+cash flow and fair value interest rate risk, and price risk), credit risk and liquidity risk. The Group's overall
+risk management program focuses on the unpredictability of financial markets and seeks to minimize
+potential adverse effects on the Group's financial performance. Risk management is carried out by the senior
+management of the Group.
+3.1 Financial risk factors
+(a) Market risk
+2.30 Lease
+166
+Dividends are recognized when the right to receive payment is established.
+Interest income is presented as finance income where it is earned from financial assets that are
+held for cash management purposes. Any other interest income is included in "Other gains, net".
+Interest income is recognized using the effective interest method. When the loan receivables are
+impaired, the Group reduces the carrying amount to their recoverable amount, being the estimated
+future cash flow discounted at the original effective interest rate of the instrument, and continues
+unwinding the discount as interest income. Interest income on impaired loans is recognized using
+the original effective interest rate.
+(c)
+Foreign exchange risk
+New initiatives and others (Continued)
+The accounting treatment for incentives to transacting users occurs when the incentives are
+applied to purchases.
+The total incentives recorded as selling and marketing expenses have been included in Note 7-
+Transacting user incentives.
+2.27.4 Practical Expedients and Exemptions
+The Group generally expenses contract acquisition cost when incurred because the amortization
+period would have been 1 year or less. The only contract terms that are greater than 1 year come
+from the Group's micro loan business, which do not have any significant customer acquisition
+costs. Accordingly, the Group does not capitalize any incremental costs to obtain a contract.
+2.29 Dividend income
+The transaction price allocated to the performance obligations that are unsatisfied, or partially
+unsatisfied, has not been disclosed, as substantially all of the Group's contracts have a duration
+of 1 year or less. The unsatisfied performance obligation related to the Maoyan cooperation
+agreement has been included in deferred revenue (Note 27).
+2.28.1Accounting policies applied since January 1, 2018
+Interest income is calculated by applying the effective interest rate to the gross carrying amount of
+a financial asset except for financial assets that subsequently become credit-impaired. For credit-
+impaired financial assets the effective interest rate is applied to the net carrying amount of the
+financial asset (after deduction of the loss allowance).
+2018 Annual Report (165)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.28 Interest income (Continued)
+2.28.2Accounting policies applied before January 1, 2018
+2.28 Interest income
+Foreign exchange risk arises when future commercial transactions or recognized assets
+and liabilities are denominated in a currency that is not the Group entities' functional
+currency. The functional currency of the Company is USD whereas functional currency of
+the subsidiaries operating in the PRC is RMB. The Group manages its foreign exchange risk
+by performing regular reviews of the Group's net foreign exchange exposures and tries to
+minimize these exposures through natural hedges, wherever possible and may enter into
+forward foreign exchange contracts, when necessary.
+The Group is exposed to credit risk in relation to its cash and cash equivalents, restricted cash,
+short-term investment measured at amortized cost, trade receivables, prepayments, deposits
+and other assets, and financial assets at fair value through profit or loss. The carrying amounts of
+each class of the above financial assets represent the Group's maximum exposure to credit risk
+in relation to financial assets. The Group is also exposed to credit risk in relation to its financial
+guarantee contracts.
+ii)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+For prepayments, deposits and other assets (excluding loan receivables, tax prepayments),
+management makes periodic collective assessments as well as individual assessment on the
+recoverability of other receivables and prepayments to merchants based on historical settlement
+records and past experiences.
+The Group considers the probability of default upon initial recognition of asset and whether there
+has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
+To assess whether there is a significant increase in credit risk, the Group compares the risk of
+a default occurring on the asset as at the reporting date with the risk of default as at the date of
+initial recognition. It considers available reasonable and supportive forwarding-looking information.
+Especially the following indicators are incorporated:
+• internal credit rating
+Meituan Dianping
+•
+•
+actual or expected significant adverse changes in business, financial or economic conditions
+that are expected to cause a significant change to the counter party's ability to meet its
+obligations
+actual or expected significant changes in the operating results of the counter party
+• significant increases in credit risk on other financial instruments of the same counter party
+significant changes in the value of the collateral supporting the obligation or in the quality of
+third-party guarantees or credit enhancements
+significant changes in the expected performance and behaviour of the counter party,
+including changes in the payment status and operating results of the counter party.
+external credit rating (as far as available)
+The Group operates mainly in the PRC with most of the transactions settled in RMB,
+management considers that the business is not exposed to any significant foreign exchange
+risk as there are no significant financial assets or liabilities of the Group are denominated in
+the currencies other than the respective functional currencies of the Group's entities.
+168
+To manage risk arising from cash and cash equivalents, restricted cash, short-term investments
+measured at amortized cost, the Group only transacts with state-owned or reputable financial
+institutions in mainland China and reputable international financial institutions outside of mainland
+China. There has been no recent history of default in relation to these financial institutions. These
+instruments are considered to have low credit risk because they have a low risk of default and the
+counterparty has a strong capacity to meet its contractual cash flow obligations in the near term.
+The identified credit losses are immaterial.
+Cash flow and fair value interest rate risk
+The Group's income and operating cash flows are substantially independent of changes in
+market interest rates and the Group has no significant interest-bearing assets except for cash
+and cash equivalents, restricted cash and short-term investments measured at amortized
+cost, and details of which have been disclosed in Note 24 and Note 20, respectively.
+The Group's exposure to changes in interest rates is also attributable to its borrowings,
+details of which has been disclosed in Note 32. Borrowings carried at floating rates expose
+the Group to cash flow interest rate risk whereas those carried at fixed rates expose the
+Group to fair value interest rate risk.
+As of December 31, 2018, the Group's borrowings were borrowings that carried at fixed
+rates, which did not expose the Group to cash flow interest rate risk.
+2018 Annual Report (167)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+To manage risk arising from trade receivables, the Group has policies in place to ensure that credit
+terms are made to counterparties with an appropriate credit history and the management performs
+ongoing credit evaluations of its counterparties. The credit period granted to the customers is
+usually no more than 150 days and the credit quality of these customers is assessed, which
+takes into account their financial position, past experience and other factors. In view of the sound
+collection history of receivables due from them, to measure the expected credit losses, trade
+receivables have been grouped based on shared credit risk characteristics and the days past due.
+Trade receivables are written off when there is no reasonable expectation of recovery. Indicators
+that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor
+to engage in a repayment plan with the Group, and a failure to make contractual payments for a
+period of greater than 180 days past due. Impairment losses on trade receivables are presented as
+net impairment losses within operating profit. Subsequent recoveries of amounts previously written
+off are credited against the same line item.
+3
+3.1 Financial risk factors (Continued)
+(a) Market risk (Continued)
+iii)
+Price risk
+The Group is exposed to price risk in respect of financial assets at fair value through profit
+or loss and short-term investments measured at fair value through profit or loss held by
+the Group. The Group is not exposed to commodity price risk. To manage its price risk
+arising from the investments, the Group diversifies its portfolio. Each investment is managed
+by senior management on a case by case basis. The sensitivity analysis is performed by
+management, see Note 3.3 for detail.
+(b) Credit risk
+2.27.3Incentives (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+2.27 Revenue recognition (Continued)
+2018 Annual Report (163)
+2
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+(a)
+Commissions (Continued)
+In-store, hotel & travel services
+The Group's in-store, hotel & travel services provides merchants platform to sell vouchers
+and make reservations for services or hotel accommodations. Transacting users purchase
+the vouchers or make reservations via the Group's platform, and redeem the vouchers or
+reservations for underlying goods or services at the merchants' sites. The Group identifies
+merchants as the customer for such services.
+The Group recognizes commission revenues when the vouchers and reservations are
+redeemed by transacting users to enjoy the goods or services. For hotel reservations,
+commission revenues are recognized upon room check-in. Commission revenues from sale
+of packaged tours are recognized on the departure date of the tour.
+Under all circumstances, cash payments received from transacting users are initially
+recorded as advances from transacting users, as unredeemed vouchers can be returned by
+users at any time. When revenues are recognized at the point in time as determined above,
+the amounts to be remitted to third-party merchants are recorded as payables to merchants.
+(b)
+Online marketing services
+The Group generates online marketing revenue through all the aforementioned services
+primarily by delivering marketing services on its platform.
+The Group identifies merchants or marketers as the customers for online marketing services.
+Some of the customers pay the Group for performance-based marketing, which means that a
+marketer pays the Group only when a user clicks on marketer's link on the Group's websites
+or/and mobile applications, or when the advertisement is viewed by a pre-determined
+number of users. For these customers, the Group recognizes revenue each time a user clicks
+on the marketer's link or when the customers' information is viewed by pre-determined
+amount of users.
+The Group also offers display-based marketing services in the form of key words search,
+banners, and textual or graphical marketer's link. Customers pay the Group based on
+the period their advertisements are displayed on the Group's websites and/or mobile
+applications. For these customers, revenue is recognized on a pro-rata basis over the
+contractual service period, starting on the date when the advertisement is first displayed on
+the Group's websites and/or mobile applications.
+2018 Annual Report (161)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Macroeconomic information (such as market interest rates or growth rates) is incorporated as part
+of the internal rating model.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.1 The accounting policy for the Group's principal revenue sources
+160
+Meituan Dianping
+2.27 Revenue recognition (Continued)
+(a)
+The Group provides an e-commerce platform that enables merchants to sell their services
+or products to transacting users through the platform. The Group generates revenue from
+commission fees, generally charged as a percentage of the value of transactions placed by
+transacting users on the Group's platform. They are detailed as follows.
+On-demand delivery services (including food and non-food delivery)
+The on-demand delivery services offer food and non-food ordering and delivery service
+through the Group's platform. Merchants pay commissions based on a percentage of the
+value of transactions placed by transacting users through the Group's platform. Transacting
+users pay the price for food or other goods, and also the delivery service fee. Merchants
+can choose to either provide delivery service on their own or engage the Group to provide
+delivery service.
+In instances where the Group is not responsible for delivery, it identifies only the merchant
+as the customer for platform service. The Group only earns commission revenue from
+merchants for the provision of the platform service and recognizes platform commission
+revenue when the orders are placed online and payments are received from transacting
+users.
+When the Group is responsible for delivery, merchants pay an aggregated fee both for
+platform and delivery services. Transacting users also pay a delivery fee. In this instance,
+the Group identifies both merchants and transacting users as its customers for the platform
+service and delivery service. The Group performs two obligations: (a) platform service to
+display the food or other goods information to transacting users; and (b) delivery service. As
+the two performance obligations are satisfied at the same time, the Group determined it is
+not necessary to allocate the transaction price to each performance obligation, and therefore,
+the Group recognizes both aggregated commission from the merchant and delivery fee
+charged to transacting users as revenues once a transaction is completed.
+Upon the completion of a transaction, the amounts to be remitted to third-party merchants
+are recorded as payable to merchants, after netting the amount attributable to revenue from
+the cash payments received from transacting users.
+Commissions
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+(b) Online marketing services (Continued)
+For a number of merchants, the Group provides marketing services under an annual plan,
+and charges an annual fee for the plan. The Group recognizes revenue as the marketing
+services are provided over the plan period.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.3 Incentives (Continued)
+(a) On-demand delivery services (including food and non-food delivery) (Continued)
+When incentives are provided to transacting users where the Group is not responsible for
+delivery, the transacting users are not considered as customers of the Group, and such
+incentives are recorded as selling and marketing expenses.
+The Group offers a crowdsourcing delivery system, which connects merchants with
+crowdsourced delivery riders. The Group currently does not charge merchants a separate
+fee for the use of the system. The system is also used by the Group to crowdsource delivery
+riders to fulfil delivery services for which the Group is responsible. The Group provides
+incentives to these delivery riders. In situations where the Group is not responsible for the
+delivery service, the incentive is recognized as a reduction of revenue because the merchant
+is the Group's customer and the delivery rider is the merchant's vendor, and accordingly the
+incentive represents a payment on behalf of a customer. In situations where the Group is
+responsible for the delivery service, the incentive is recognized as cost of revenue as it is part
+of the Group's fulfilment costs for completion of the delivery performance obligation.
+Since the Group identifies transacting users as one of its customers for on-demand delivery
+services when the Group is responsible for the delivery service, the incentives offered to
+transacting users are considered as payment to customers and recorded as reduction of
+revenue on a transaction by transaction basis, to the extent of the delivery fees collected
+from the transacting users. The amount in excess of the revenue earned from the transacting
+users is recorded as selling and marketing expenses.
+(b) In-store, hotel & travel services
+164
+Meituan Dianping
+(c)
+New initiatives and others
+In connection with local transportation services, the Group provides incentives to both
+drivers and transacting users of the car-hailing service related to private cars and bike-
+sharing services. For this type of service, as transacting users are considered as the Group's
+customer, incentives to them are considered as a payment to customer and therefore
+recorded as a reduction of revenue. Drivers are the Group's vendor, and accordingly,
+incentives paid to drivers are recorded as cost of revenue.
+For all the business lines, the Group may facilitate cash refunds or incentives to its
+transacting users for unsatisfactory goods or services rendered by the merchants, but
+merchants are contractually responsible and liable for the quality of the goods or services.
+The Group also holds the contractual right to claim reimbursements from merchants. For
+those which are not refunded by merchants, the refunds or incentives from the Group to
+transacting users are recorded as a reduction of revenue unless there are objective evidence
+that they are not paid on behalf of merchants.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+For this revenue stream, transacting users are not the Group's customer, and therefore the
+incentives offered to Transacting Users are not considered as payment to customer but as
+selling and marketing expenses instead.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) On-demand delivery services (including food and non-food delivery)
+2.27.3Incentives
+For arrangements where consideration is paid in advance of the marketing service period,
+the Group records a contract liability (deferred revenue) when the payment is received.
+Meituan Dianping
+(c)
+Other services and sales
+Other services and sales comprise primarily revenue generated from Restaurant Management
+System ("RMS"), supply chain solutions to merchants, integrated payment systems, micro
+loan business, local transportation services and other products or services. The Group
+recognizes revenues when the respective services are rendered, or when the control of the
+products are transferred to the customers.
+Through the Group's platform, the Group assists with offering loans to merchants or
+individuals who utilize its online platform. In certain cases, the Group facilitates loans funded
+by certain financing partners to these merchants or individuals. In such instances, the Group
+does not record financing receivables arising from these loans nor loans payable to the
+financing partners. For these transactions, the Group earns loan facilitation fees from the
+customers. In other cases, the Group directly funds loans to its customers without involving a
+third-party financing partner, and accordingly records these as on-balance sheet loans. The
+Group generates interest income from these on-balance sheet loans.
+The Group's local transportation services mainly provide car-hailing and bike-sharing
+services to its transacting users. Currently, for car-hailing service related to private cars and
+bike-sharing services, the Group recognizes revenues for the fees collected from transacting
+users. As to the transportation services relating to the taxi services, the Group acts as an
+agent by connecting transacting users with taxi drivers, and does not earn any fee from
+either party, and therefore recognize no revenue. Please refer to the below section for further
+details on the principal versus agent consideration in these transactions.
+The Group provides various types of incentives to transacting users and delivery riders, including
+coupons and direct payment discounts. The major accounting policy for incentives is described as
+follows:
+The Group also generate other revenue from a long-term business cooperation agreement
+with Maoyan, which provides that Maoyan shall be our exclusive business partner for the
+movie ticketing business. Through this cooperation agreement, we provide Maoyan with
+user traffic and other sources over the cooperation period. Please refer to Note 27 for further
+details.
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.2Principal versus agent considerations
+In accordance with the principal versus agent considerations prescribed by IFRS 15, the Group
+determines whether it acts as the principal or agent in each of its revenue streams. The principal is
+the entity that has promised to provide goods or services to its customers. An agent arranges for
+goods or services to be provided by the principal to its end customer. An agent normally receives
+a commission or fee for these activities.
+As noted above, the Group earns commissions by providing an online platform that enables third-
+party merchants to sell their services or products to transacting users. The Group generally does
+not promise to provide the underlying goods or services to the transacting users; instead, the
+Group performs its role as an agent to connect third-party merchants with transacting users.
+For the food delivery services and in-store, hotel and travel services, the Group enters into
+arrangements with certain business partners ("Business Partners") for certain regions within the
+PRC. In these arrangements, the Business Partners are held responsible for operating the Group's
+online platform and provide delivery service, as applicable within these designated regions. The
+Business Partners are also responsible for the business development and customer relationship
+with merchants in these regions. Having considered the relevant facts and circumstances, related
+revenue is presented net the amount retained by the Business Partners.
+For car-hailing services related to private cars and bike-sharing services, the Group is primarily
+responsible for fulfilling the services and has discretion in establishing prices. Accordingly, the
+Group acts as a principal, and the related service revenue is presented on a gross basis.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+162
+2018 Annual Report (169)
+Transfer from Stage 2
+176) Meituan Dianping.
+26,622,461
+32,760
+495,556
+26,094,145
+791,394
+22,164
+769,230
+(Note 2.11)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Financial guarantee contracts
+32,760
+2,270,056
+470,056
+3,336
+Other non-current liabilities
+1,800,000
+Borrowings
+4,019,881
+4,019,881
+payable, and tax payable)
+36,096
+For the year ended December 31, 2018
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+9,363,873
+2,666,799
+2,290,160
+Advance from transacting users
+9,363,873
+2,666,799
+Payables to merchants
+Trade payables
+As of December 31, 2017
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Between 2
+and 5 year
+and 2 year
+1 year
+Between 1
+Less than
+(c) Liquidity risk (Continued)
+3.1 Financial risk factors (Continued)
+(excluding salaries and benefits
+Other payables and accruals
+3,341,276
+3,226,407
+Write-off policy
+iii)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (175)
+(150,990)
+(35,596)
+(66,330)
+(49,064)
+of December 31, 2018
+Loss allowance as
+(13,935)
+(9,611)
+(4,324)
+114,410
+114,410
+(109,426)
+The Group writes off loan receivables, in whole or in part, when it has exhausted all practical
+recovery efforts and has concluded there is no reasonable expectation of recovery. Indicators
+that there is no reasonable expectation of recovery include ceasing enforcement activity.
+2,290,160
+The Group may write-off loan receivables that are still subject to enforcement activity.
+Modification
+7,596,388
+5,340,963
+3,341,276
+Deposit from transacting users
+3,226,407
+Advance from transacting users
+7,596,388
+Payables to merchants
+5,340,963
+Trade payables
+As of December 31, 2018
+Total
+RMB'000
+RMB'000
+Between 2
+and 5 year
+Between 1
+and 2 year
+RMB'000
+1 year
+RMB'000
+Less than
+The table below analyzes the Group's non-derivative financial liabilities. The amount disclosed in
+the table is the contractual undiscounted cash flows.
+The Group aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of
+the underlying business, the policy of the Group is to regularly monitor the Group's liquidity risk
+and to maintain adequate cash and cash equivalents or adjust financing arrangements to meet the
+Group's liquidity requirements.
+(c) Liquidity risk
+The Group rarely modifies the terms of loans provided to customers due to commercial
+renegotiations, or for distressed loans, with a view to maximizing recovery. The Group
+considers the impact from such modification is not significant.
+iv)
+Other payables and accruals
+(excluding salaries and benefits
+payable, and tax payable)
+Total
+RMB'000
+Level 3
+RMB'000
+Level 2
+RMB'000
+Level 1
+RMB'000
+Short-term investments at fair value
+Financial assets
+As of December 31, 2017
+The following table presents the Group's assets and liabilities that are measured at fair value as of
+December 31, 2017.
+3.3.1 Fair value hierarchy (Continued)
+3.3 Fair value estimation (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+19,972,207 21,309,932
+1,337,725*
+6,241,972
+4,904,247
+1,337,725*
+profit or loss (Note 19)
+Financial assets at fair value through
+15,067,960
+through profit or loss (Note 20)
+Financial assets at fair value through
+15,067,960
+17,030,574
+profit or loss (Note 19)
+2018 Annual Report (179)
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+The discounted cash flow model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate; and
+•
+•
+•
+The use of quoted market prices or dealer quotes for similar instruments; and
+•
+Specific valuation techniques used to value financial instruments include:
+3.3.2 Valuation techniques used to determine fair values
+The Group's policy is to recognize transfers into and transfers out of fair value hierarchy levels as
+at the end of the reporting period.
+This presents an investment of listed company with observable quoted price.
+101,418,292 101,418,292
+Convertible redeemable
+Financial liabilities
+21,135,894 22,975,267
+1,839,373*
+5,944,693
+4,105,320
+1,839,373*
+17,030,574
+(109,426)
+Total
+RMB'000
+Level 2
+RMB'000
+for shareholders and benefits for other stakeholders; and
+Safeguard their ability to continue as a going concern, so that they can continue to provide returns
+The Group's objectives when managing capital are to:
+3.2 Capital management
+17,606,997
+399,275
+88,804
+17,118,918
+1,323,901
+88,804
+1,235,097
+(Note 2.11)
+Financial guarantee contracts
+399,275
+399,275
+Redemption liabilities
+162,000
+162,000
+Borrowings
+1,400,989
+1,400,989
+•
+Level 3
+RMB'000
+Maintain an optimal capital structure to reduce the cost of capital.
+The Group monitors capital (including share capital, share premium and preferred shares on an as-
+if-converted basis) by regularly reviewing the capital structure. As a part of this review, the Group
+considers the cost of capital and the risks associated with the issued share capital. In the opinion of the
+Directors, the Group's capital risk is low.
+Level 1
+RMB'000
+178) Meituan Dianping.
+through profit or loss (Note 20)
+Short-term investments at fair value
+Financial assets
+As of December 31, 2018
+The following table presents the Group's assets and liabilities that are measured at fair value as of
+December 31, 2018.
+Inputs for the asset or liability that are not based on observable market data (that is,
+unobservable inputs) (level 3).
+Inputs other than quoted prices included within level 1 that are observable for the asset or
+liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2);
+and
+Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
+.
+•
+•
+The table below analyses the Group's financial instruments carried at fair value as of December
+31, 2018 and 2017 by level of the inputs to valuation techniques used to measure fair value. Such
+inputs are categorized into three levels within a fair value hierarchy as follows:
+This section explains the judgements and estimates made in determining the fair values of the
+financial instruments that are recognized and measured at fair value in the financial statements. To
+provide an indication about the reliability of the inputs used in determining fair value, the Group has
+classified its financial instruments into the three levels prescribed under the accounting standards.
+3.3.1 Fair value hierarchy
+3.3 Fair value estimation
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (177)
+In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
+to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
+Accrual and reversal
+preferred shares (Note 28)
+originated/purchased
+(b) Credit risk (Continued)
+i)
+ECL model for loan receivables, as summarized below: (Continued)
+The impairment of loan receivables was provided based on the 'three-stages' model by
+referring to the changes in credit quality since initial recognition.
+The key judgments and assumptions adopted by the Group in addressing the requirements
+of the standard are discussed below:
+(1) Significant increase in credit risk (SICR)
+The Group considers loan receivables to have experienced a significant increase in
+credit risk when backstop criteria has been met. A backstop is applied and the loan
+receivables considered to have experienced a significant increase in credit risk if the
+borrower is past due more than 1 day on its contractual payments.
+172) Meituan Dianping.
+(2)
+Definition of default and credit-impaired assets
+(3)
+The Group defines a financial instrument as in default, when the borrower is more
+than 90 days past due on its contractual payments. This has been applied to all loan
+receivables held by the Group.
+Measuring ECL - Explanation of inputs, assumptions and estimation techniques
+The expected credit loss is measured on either a 12-month ("12M") or Lifetime basis
+depending on whether a significant increase in credit risk has occurred since initial
+recognition or whether an asset is considered to be credit-impaired. Expected credit
+losses are the discounted product of the PD, EAD, and LGD.
+The ECL is determined by projecting the PD, LGD and EAD for each future month and
+for each portfolio. These three components are multiplied together and adjusted for the
+likelihood of survival (i.e. the exposure has not prepaid or defaulted in an earlier month).
+This effectively calculates an ECL for each future month, which is then discounted back
+to the reporting date and summarized. The discount rate used in the ECL calculation is
+the original effective interest rate or an approximation thereof.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+i)
+ECL model for loan receivables, as summarized below: (Continued)
+Forward-looking information incorporated in the ECL models
+3.1 Financial risk factors (Continued)
+(4)
+FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2018
+The Group terminate its
+corporation with merchants
+The Group terminate its
+corporation with merchants
+for more than 60 days
+The Group terminate its
+corporation with merchants
+for more than 180 days and
+there is no reasonable
+expectation
+of recovery
+12 months expected
+losses. Where the
+expected lifetime of
+an asset is less than
+12 months, expected
+losses are measured
+at its expected lifetime
+Lifetime expected
+losses
+Lifetime expected
+losses
+Asset is write-off
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+To manage risk arising from loan receivables and financial guarantee contracts, standardized
+credit management procedures are performed. For pre-approval investigation, the Group
+optimizes the review process by using big data technology through its platform and system,
+including credit analysis, assessment of collectability of borrowers, monitoring the cash flow status
+of the merchants, possibility of misconduct and fraudulent activities. In terms of credit examining
+management, specific policies and procedures are established to assess loans offering. For
+subsequent monitoring, the Group monitor the cash flow and operation status of each borrowers.
+Once the loan was issued, all borrowers would be assessed by fraud examination model to prevent
+fraudulent behaviors. In post-loan supervision, the Group establishes risk monitoring alert system
+through periodical monitoring. The estimation of credit exposure for risk management purposes
+is complex and requires use of models as the exposure varies with changes in market conditions,
+expected cash flows and passage of time. The assessment of credit risk of a portfolio of assets
+entails further estimations as to the likelihood of defaults occurring, of the associated loss
+ratios and of default corrections between counterparties. The Group measures credit risk using
+Probability of Default ("PD”), Exposure at Default ("EAD") and Loss Given Default ("LGD"). This is
+consistent with the general approach used for the purposes of measuring ECL under IFRS 9. The
+maximum credit risk from financial guarantee contracts as of December 31, 2018 was RMB791
+million, the majority of which were not credit-impaired on initial recognition and not significant
+increase in credit risk subsequently. The Group has recognized guarantee liability at each of the
+reporting date.
+i)
+ECL model for loan receivables, as summarized below:
+•
+The loan receivables that is not credit-impaired on initial recognition is classified in
+'Stage 1' and has its credit risk continuously monitored by the Group. The expected
+credit loss is measured on a 12-month basis.
+If a significant increase in credit risk (as defined below) since initial recognition is
+identified, the financial instrument is moved to 'Stage 2' but is not yet deemed to be
+credit-impaired. The expected credit loss is measured on lifetime basis.
+If the financial instrument is credit-impaired (as defined below), the financial instrument
+is then moved to 'Stage 3'. The expected credit loss is measured on lifetime basis.
+In Stages 1 and 2, interest income is calculated on the gross carrying amount (without
+deducting the loss allowance). If a financial asset subsequently becomes credit-
+impaired (Stage 3), the Group is required to calculate the interest income by applying
+the effective interest method in subsequent reporting periods to the amortized cost
+of the financial asset (the gross carrying amount net of loss allowance) rather than the
+gross carrying amount.
+2018 Annual Report (171)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+Repayments are 180 days past
+due and there is no reasonable
+expectation of recovery
+The calculation of ECL incorporate forward-looking information. The Group has
+performed historical analysis and identified the per capita disposable income of urban
+residents as the key economic variables impacting credit risk and expected credit
+losses.
+(5) Grouping of instruments for losses measured on a collective basis
+Total
+RMB'000
+Gross carrying amount as
+of December 31, 2017
+1,726,744
+38,764
+10,171
+1,775,679
+Transfers:
+Transfer from Stage 1
+to Stage 2
+(90,490)
+90,490
+Transfer from Stage 1
+to Stage 3
+(117,430)
+117,430
+Transfer from Stage 2
+to Stage 1
+532
+(532)
+Write-off
+Stage 3
+Lifetime ECL
+RMB'000
+As with any economic forecasts, the projections and likelihoods of occurrence are
+subject to a high degree of inherent uncertainty and therefore the actual outcomes
+may be significantly different to those projected. The Group considers these forecasts
+to represent its best estimate of the possible outcomes and has analyzed the non-
+linearities and asymmetries within the Group's different portfolios to establish that the
+chosen scenarios are appropriately representative of the range of possible scenarios.
+RMB'000
+12-month ECL Lifetime ECL
+For ECL provisions modeled on a collective basis, a grouping of exposures is
+performed on the basis of shared risk characteristics, such that risk exposures within a
+group are homogeneous.
+ii)
+Loss allowance
+The loss allowance recognized in the period is impacted by a variety of factors, as described
+below:
+•
+Transfers between Stage 1 and Stage 2 or 3 due to loan receivables experiencing
+significant increases (or decreases) of credit risk in the period, and the subsequent “step
+up" (or "step down") between 12-month and Lifetime ECL;
+Additional allowances for new financial instruments recognized, as well as releases for
+loan receivables derecognized in the period;
+Loan receivables derecognized and write-offs of allowances related to assets that were
+written off during the period.
+2018 Annual Report (173)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+174) Meituan Dianping.
+ii)
+Loss allowance (Continued)
+The gross carrying amount of the loan receivables explains their significance to the changes
+in the loss allowance as discussed above:
+Stage 1
+Stage 2
+RMB'000
+due
+to Stage 3
+Write-off
+to Stage 3
+Transfer from Stage 1
+(64,409)
+(65,500)
+1,091
+to Stage 2
+Transfer from Stage 1
+(57,074)
+(10,171)
+(27,673)
+(19,230)
+of December 31, 2017
+Transfers:
+Loss allowance as
+Total
+RMB'000
+Stage 3
+Lifetime ECL
+RMB'000
+12-month ECL Lifetime ECL
+RMB'000
+RMB'000
+Stage 2
+Stage 1
+The following tables explain the changes in the loss allowance for loan receivables between
+the beginning and the end of the period due to these factors:
+Loss allowance (Continued)
+1,401
+ii)
+(117,430)
+Transfer from Stage 2
+101,725
+There is a significant increase
+in credit risk is presumed if
+repayment are 30 days past due
+Repayments are 90 days past
+6,240
+14,055
+81,430
+than write-off
+during the period other
+Loan receivables derecognized
+to Stage 2
+Transfer from Stage 3
+to Stage 1
+Transfer from Stage 3
+(6,652)
+(28,645)
+21,993
+to Stage 3
+Transfer from Stage 2
+400
+406
+(6)
+to Stage 1
+(116,029)
+(b) Credit risk (Continued)
+New loan receivables
+3 FINANCIAL RISK MANAGEMENT (Continued)
+28,645
+(28,645)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+170) Meituan Dianping.
+Category
+Group definition of category
+Other receivables excluding
+Prepayment to merchants
+loan receivables and
+prepayments to merchants
+Performing
+Underperforming
+Basis for
+recognition of
+expected credit
+loss provision
+Non-performing
+3.1 Financial risk factors (Continued)
+Transfer from Stage 3
+to Stage 1
+Customers have a low risk of default and a strong capacity to meet
+contractual cash flows
+to Stage 2
+Transfer from Stage 3
+3,988,070
+35,596
+3,870,816
+(114,410)
+(114,410)
+9,190,832
+9,190,832
+(6,864,031)
+(6,240)
+81,658
+(6,839,372)
+Loan receivables derecognized
+(18,419)
+during the period other
+than write-off
+New loan receivables
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+originated/purchased
+Write-off
+Gross carrying amount as
+of December 31, 2018
+2018 Annual Report (181)
+182
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.4 Valuation process, inputs and relationships to fair value (Continued)
+The following table summarizes the quantitative information about the significant unobservable
+inputs used in recurring level 3 fair value measurements except Preferred Shares which present in
+Note 28.
+Range of inputs
+Fair value at December 31,
+Description
+2018
+2017
+RMB'000
+Unobservable
+inputs
+unobservable inputs
+at December 31,
+2018
+The valuation of the level 3 instruments mainly included Preferred Shares (Note 28), contingent
+consideration (Note 19), short-term investments at fair value through profit or loss (Note 20) and
+investments at fair value through profit or loss (Note 19). As these instruments are not traded in
+an active market, their fair values have been determined by using various applicable valuation
+techniques, including discounted cash flows and market approach. Major assumptions used in the
+valuation for Preferred Shares are presented in Note 28.
+Relationship of
+RMB'000
+17,030,574
+3.3.4 Valuation process, inputs and relationships to fair value
+Change in fair value
+329,348
+351,422
+(61,000)
+25,099
+644,869
+Currency translation differences
+(644,606)
+(132,587)
+(777,193)
+As of December 31, 2017
+4,080,221
+25,099
+21,135,894
+Net unrealized gains for the year
+83,241
+351,422
+25,099
+459,762
+The Group has a team that manages the valuation of level 3 instruments for financial reporting
+purposes. The team manages the valuation exercise of the investments on a case by case basis.
+At least once every year, the team would use valuation techniques to determine the fair value of
+the Group's level 3 instruments. External valuation experts will be involved when necessary.
+2017
+Expected rate
+of return
+Investment in
+25,099
+Discount rate
+N/A
+28%
+The higher the discount rate,
+the lower the fair value
+Risk-free rate
+N/A
+2.5%
+The higher the risk-free rate,
+the lower the fair value
+DLOM
+N/A
+13%
+The higher the DLOM,
+the lower the fair value
+Expected Volatility
+(52,229,090)
+N/A
+Contingent consideration
+The higher the expected rate of
+return, the higher the fair value
+1.62%-4.9%
+2.1%-6.6%
+4,904,247
+4,080,221
+Expected volatility
+35%-50%
+40%-48%
+The higher the expected
+unlisted companies
+volatility, the lower the fair value
+Discount for lack
+of marketability
+("DLOM")
+Risk-free rate
+to fair value
+10%-28%
+The higher the DLOM,
+the lower the fair value
+2.01%-8.10%
+2.01%-3.86%
+The higher the risk-free rate,
+the higher the fair value
+Short-term investments
+15,067,960
+17,030,574
+at fair value through
+profit or loss
+10%-20%
+(563,000)
+(287,837)
+(51,651,590)
+17,030,574
+4,080,221
+25,099
+21,135,894
+Acquisitions
+61,352,377
+1,616,220
+62,968,597
+Business combinations
+380,000
+Disposals and transfers/Settlements
+(63,714,108)
+Change in fair value
+306,954
+12,880
+(3,204,736)
+2,338,030
+392,880
+(29,307)
+4,208
+(66,948,151)
+2,649,192
+As of January 1, 2018
+Currency translation differences
+Total
+RMB'000
+companies
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.2 Valuation techniques used to determine fair values (Continued)
+There were no change to valuation techniques during the year ended December 31, 2018.
+All of the resulting fair value estimates are included in level 3, where the fair values have been
+determined based on present values and the discount rates used were adjusted for counterparty
+or own credit risk.
+Short-term
+investments
+at fair value
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+The following table presents the changes in level 3 items including short-term investments at fair
+value through profit or loss, investments in unlisted companies, put and call option for Maoyan and
+contingent consideration for the year ended December 31, 2018 and 2017.
+Financial assets at fair value
+through profit or loss
+Investments
+through
+in unlisted
+Contingent
+profit or loss
+RMB'000
+consideration
+RMB'000
+40%
+61,632
+(226,205)
+Put and
+call option
+for Maoyan
+RMB'000
+Contingent
+consideration
+Total
+RMB'000
+RMB'000
+As of January 1, 2017
+12,607,872
+3,227,965
+624,000
+16,459,837
+Acquisitions
+56,382,550
+647,921
+57,030,471
+Business combinations
+7,000
+7,000
+Disposals and
+transfers/Settlements
+companies
+RMB'000
+RMB'000
+in unlisted
+through
+profit or loss
+As of December 31, 2018
+15,067,960
+4,904,247
+Net unrealized gains for the year
+107,609
+1,190,333
+19,972,207
+1,297,942
+180
+(14,500)
+Meituan Dianping
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+Short-term
+investments
+at fair value
+Financial assets at fair value
+through profit or loss
+Investments
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+The higher the expected
+SEGMENT REPORTING
+If the fair values of financial assets at fair value through profit or loss held by the Group had been 10%
+higher/lower, the loss before income tax for the years ended December 31, 2018 and 2017 would have been
+approximately RMB624 million lower/higher and RMB594 million lower/higher, respectively.
+New initiatives
+RMB'000
+RMB'000
+and others
+RMB'000
+Total
+RMB'000
+Commission
+20,283,964
+7,135,970
+589,196
+28,009,130
+Online marketing services
+Other services and sales
+710,203
+37,766
+3,649,996
+66,844
+341,476
+4,701,675
+1,112,572
+1,217,182
+Revenues in total
+In-store,
+hotel & travel
+21,031,933
+Food delivery
+23.2%
+88,876
+6,734,901
+63,157
+321,506
+8,671,590
+8,823,623
+Revenues in total
+38,143,083
+Cost of revenues
+(32,874,886)
+15,840,361 11,243,834 65,227,278
+(1,745,006) (15,502,428) (50,122,320)
+Gross profit/(loss)
+5,268,197
+14,095,355
+(4,258,594)
+15,104,958
+Gross margin
+13.8%
+89.0%
+(37.9%)
+Year ended December 31, 2017
+Other services and sales
+Cost of revenues
+10,852,810
+(1,273,331)
+5.2 Segment assets
+As of December 31, 2018 and 2017, substantially all of the non-current assets of the Group were located
+in the PRC.
+6
+REVENUES BY TYPE
+Commission
+Online marketing services
+Other services and sales
+Further disaggregation of revenues are included in Note 5.
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+47,012,249
+28,009,130
+9,391,406
+4,701,675
+8,823,623
+1,217,182
+65,227,278
+33,927,987
+There is no concentration risk as no revenue from a single external customer was more than 10% of the
+Group's total revenues for the years ended December 31, 2018 and 2017.
+(19,332,514)
+statement.
+5.1 Segment reporting (Continued)
+2,043,244
+33,927,987
+(1,102,638)
+(21,708,483)
+Gross profit
+Gross margin
+1,699,419
+9,579,479
+940,606
+12,219,504
+8.1%
+88.3%
+46.0%
+36.0%
+188
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+5
+SEGMENT REPORTING (Continued)
+The reconciliation of gross profit to loss before income tax is shown in the consolidated income
+volatility, the lower the fair value
+2,334,999
+47,012,249
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+4.5 Incentives
+As disclosed in Note 2.27, the Group provides incentives to its transacting users in various forms
+including coupons and direct payment discounts. All incentives given to the accounting customers
+are recorded as a reduction of revenue to the extent of the revenue earned from that customer on
+a transaction by transaction basis. For certain other incentives, management judgment is required
+to determine whether the incentives are in substance a payment on behalf of customers and should
+therefore be recorded as a reduction of revenue or selling and marketing expenses. Some of the factors
+considered in management's evaluation if such incentives are in substance a payments on behalf
+of customers include whether the incentives are given at the Group's discretion and the objectives,
+business strategy and design of the incentive programs.
+184
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.6 Business combinations
+Business combinations are accounted for under acquisition method. The determination and allocation
+of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions
+and valuation methodologies requiring considerable management judgment. The most significant
+variables in these valuations are discount rates, terminal values, the number of years on which to base
+the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows
+and outflows. The Group determines discount rates to be used based on the risk inherent in the related
+activity's current business model and industry comparisons. Terminal values are based on the expected
+life of assets and forecasted life cycle and forecasted cash flows over that period. Although the Group
+believes that the assumptions applied in the determination are reasonable based on information
+available at the date of acquisition, actual results may differ from the forecasted amounts and the
+difference could be material.
+4.7 Useful lives and amortization of intangible assets
+The Group's management determines the estimated useful lives and related amortization for the
+Group's intangible assets with reference to the estimated periods that the Group intends to derive future
+economic benefits from the use of these assets. Management will revise the amortization charges where
+useful lives are different from that of previously estimated, or it will write off or write down technically
+obsolete or non-strategic assets that have been abandoned or sold. Actual economic lives may differ
+from estimated useful lives. Periodic review could result in a change in useful lives and therefore
+amortization expense in future periods.
+4.8 Principal versus agent considerations
+Determining whether the Group is acting as a principal or as an agent in the provision of certain
+services to its customers requires judgment and consideration of all relevant facts and circumstances.
+In evaluation of the Group's role as a principal or agent, the Group considers, individually or in
+combination, whether the Group controls the specified good or service before it is transferred to
+the customer, is primarily responsible for fulfilling the contract, is subject to inventory risk, and has
+discretion in establishing prices.
+2018 Annual Report (185)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+5
+4.9 Current and deferred income tax
+Cash flows beyond the 5-year period are extrapolated using the estimated growth rates stated in Note
+16. These growth rates are consistent with forecasts included in industry reports specific to the industry
+in which each CGU operates.
+The Group is subject to income taxes in several jurisdictions. Significant judgement is required in
+determining the provision for income taxes. There are many transactions and calculations for which
+the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax
+outcome of these matters is different from the amounts that were initially recorded, such differences
+will impact the current and deferred income tax assets and liabilities in the period in which such
+determination is made.
+The Group tests whether goodwill and trademark of Mobike have suffered any impairment, in
+accordance with the accounting policy stated in Note 2.9 and Note 2.10. Other non-financial assets are
+reviewed for impairment whenever events or changes in circumstances indicate that the carrying value
+may not be recoverable. The recoverable amount of a cash generating unit (CGU) is determined based
+on value-in-use calculations which require the use of assumptions. The calculations use cash flow
+projections based on financial budgets approved by management covering a 5-year period.
+The loss allowances for trade receivables and prepayments, deposits and other assets are based on
+assumptions about risk of default and expected loss rates. The Group uses judgement in making these
+assumptions and selecting the inputs to the impairment calculation, based on the Group's past history,
+existing market conditions as well as forward looking estimates at the end of each reporting period.
+Details of the key assumptions and inputs used are disclosed in Noted 3.1(b).
+Fair value of Preferred Shares is affected by changes in the Company's equity value. If the Company's equity
+value had increased/decreased by 10% with all other variables held constant, the loss before income tax for
+the year ended December 31, 2017 would have been approximately RMB10.1 billion higher/lower.
+There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the years ended
+December 31, 2018 and 2017.
+The carrying amount of the Group's financial assets, including cash and cash equivalents, restricted cash,
+trade receivables, prepayments, deposits and other assets, short-term investments at amortized cost and
+the Group's financial liabilities, including borrowings, trade payables, payables to merchants, deposit from
+transacting users, advance from transacting users, other payables and accruals, redemption liabilities, and
+other non-current liabilities, approximate their fair values.
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+The preparation of financial statements requires the use of accounting estimates which, by definition, will
+seldom equal the actual results. Management also needs to exercise judgement in applying the Group's
+accounting policies.
+Estimates and judgements are continually evaluated. They are based on historical experience and other
+factors, including expectations of future events that may have a financial impact on the entity and that are
+believed to be reasonable under the circumstances. The estimates and assumptions that have a significant
+risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
+year are addressed below:
+4.1 Recognition of share-based compensation expenses
+The Group set up the 2015 Share Incentive Plan, Post-IPO Share Option Plan and Post-IPO Share Award
+Plan and granted restricted share units and options to employees and other qualifying participants. The
+fair value of the options and restricted share units are determined by the Black-Sholes option-pricing
+model at the grant date, and is expected to be expensed over the respective vesting period. Significant
+estimate on assumptions, including underlying equity value, risk-free interest rate, expected volatility,
+dividend yield, and terms, are made by the Directors and third-party valuers.
+The Group has also authorized the repurchase of ordinary shares from certain employees, founders, and
+shareholders of the Company. Judgment is required to determine whether the repurchase establishes
+"past practice" for which the Group has now created an obligation to settle in cash, and accordingly
+reclassify all outstanding awards to cash-settled. The Group has determined that no valid expectation
+for the Company to settle such share-based awards in cash is created, such that all awards remain
+equity-settled awards.
+4.2 Estimation of the fair value of financial assets and financial liabilities
+The fair value of financial instruments that are not traded in an active market is determined using
+valuation techniques. The Group uses its judgement to select a variety of methods and make
+assumptions that are mainly based on market conditions existing at the end of each reporting period.
+Changes in these assumptions and estimates could materially affect the respective fair value of these
+financial assets (Note 3.3).
+The convertible redeemable preferred shares issued by the Company are not traded in an active market
+and the respective fair value is determined by using valuation techniques. The Group applied the
+discounted cash flow method to determine the underlying equity value of the Company and adopted
+option-pricing method and equity allocation model to determine the fair value of the convertible
+redeemable preferred shares. Key assumptions such as the timing of the liquidation, redemption or IPO
+event as well as the probability of the various scenarios were based on the Group's best estimates.
+2018 Annual Report (183)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.3 Impairment provision for trade receivables and prepayments, deposits and other assets
+4.4 Recoverability of non-financial assets
+Online marketing services
+Deferred tax assets relating to certain temporary differences tax losses are recognized when
+management considers that it is probable that future taxable profit will be available against which
+the temporary differences or tax losses can be utilised. As of December 31, 2018, the Group did not
+recognize deferred income tax asset of RMB5,108 million in respect of cumulative tax losses. The
+outcome of their actual utilisation may be different from management's estimation.
+The Group made certain investments in the form of convertible redeemable preferred shares or ordinary
+shares with preferential rights of investee companies. As the Group has significant influence on these
+investee companies, judgement is required in determining whether these investments are in substance
+existing ownership interests, they are accounted for as hybrid financial instruments, which should be
+measured at fair value through profit or loss. Different conclusions around these judgements may affect
+how these investments presented and measured in the consolidated statement of financial position of
+the Group.
+For the year ended December 31, 2018
+5
+SEGMENT REPORTING (Continued)
+5.1 Segment reporting (Continued)
+The segment information provided to the Group's CODM for the reportable segments for the years
+ended December 31, 2018 and 2017 is as follows:
+Year ended December 31, 2018
+New initiatives
+Food delivery
+In-store,
+hotel & travel
+and others
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Commission
+35,719,208
+9,042,303
+2,250,738
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+4.10 Presentation and measurement of investments in associates
+2018 Annual Report (187)
+There were no separate segment assets and segment liabilities information provided to the CODM,
+as CODM does not use this information to allocate resources to or evaluate the performance of the
+operating segments.
+5.1 Segment reporting
+The Group's business activities, for which discrete financial information is available, are regularly
+reviewed and evaluated by the CODM. The CODM, who is responsible for allocating resources and
+assessing performance of the operating segments, has been identified as the executive Directors that
+make strategic decisions. As a result of this evaluation, the Group determined that it has operating
+segments as follows:
+The CODM assesses the performance of the operating segments mainly based on segment revenues
+and cost of revenues of each operating segment. Thus, segment result would present revenues, cost of
+revenues and gross profit for each segment, which is in line with CODM's performance review.
+186
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+5
+SEGMENT REPORTING (Continued)
+5.1 Segment reporting (Continued)
+Food delivery
+The food delivery segment offers food ordering and delivery service through the Group's platform.
+Revenues from the food delivery segment are primarily derived from (a) platform service to merchants
+to display the food information and connect transacting users; (b) delivery service; (c) online marketing
+services in various advertising formats provided to merchants.
+In-store, hotel & travel
+The in-store, hotel & travel segment offers merchants to sell vouchers, coupons, tickets and reservations
+on the Group's platform. Revenues from the in-store, hotel & travel segment are primarily derived from
+(a) commissions from merchants for vouchers, coupons, tickets and reservations sold on our platform;
+(b) online marketing services to merchants, including performance-based and display-based marketing
+services, as well as marketing services provided under annual plans.
+New initiatives and others
+Revenues from the new initiatives and other segments are primarily derived from (a) RMS; (b) supply
+chain solutions to merchants; (c) integrated payment services; (d) micro loan business; (e) local
+transportation services; (f) non-food delivery services; (g) other products and services.
+The CODM assesses the performance of operating segments mainly based on segment revenues and
+segment cost of revenues. The revenues from external customers reported to CODM are measured as
+segment revenues, which is the revenues derived from customers in each segment.
+The Group's cost of revenues for the food delivery segment primarily consists of (a) food delivery rider
+costs; (b) payment processing costs; (c) employee benefits expenses; (d) depreciation of property, plant
+and equipment; (e) bandwidth and server custody fees.
+The Group's cost of revenues for the in-store, hotel & travel segment primarily consists of (a) payment
+processing costs; (b) depreciation of property, plant and equipment; (c) employee benefits expenses; (d)
+online traffic costs; (e) bandwidth and server custody fees.
+The Group's cost of revenues for the new initiatives and others segment primarily consists of (a) car-
+hailing driver related costs; (b) depreciation of property, plant and equipment; (c) cost of goods sold; (d)
+other outsourcing labor costs; (e) payment processing costs.
+The revenue is mainly generated in China.
+9,391,406
+2018 Annual Report (189)
+MANAGEMENT DISCUSSION AND ANALYSIS
+437,876
+4.2%
+Total
+19,803,452
+100.0%
+10,475,378
+Our commission revenue increased by 53.8% to RMB13.2 billion in the three months ended December 31,
+2018 from RMB8.5 billion in the same period of 2017, primarily due to the substantial growth of our Gross
+Transaction Volume, especially from our food delivery business.
+Our online marketing services revenue increased by 106.3% to RMB3.1 billion in the three months ended
+December 31, 2018 from RMB1.5 billion in the same period of 2017, primarily due to the increase in the
+number of online marketing Active Merchants, as well as the increase in the average revenue per online
+marketing Active Merchant from our in-store, hotel & travel and food delivery businesses.
+Our other services and sales revenue increased by 718.1% to RMB3.6 billion in the three months ended
+December 31, 2018 from RMB0.4 billion in the same period of 2017, primarily due to the expansion of our
+products and services offerings to both merchants and consumers during the period.
+16
+Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+Our cost of revenues increased by 115.1% to RMB15.3 billion in the three months ended December 31, 2018
+from RMB7.1 billion in the same period of 2017. The increase was caused by our revenue growth in the three
+months ended December 31, 2018, especially the strong growth of our food delivery segment, as well as our
+new initiatives and others segment.
+The following table sets forth our cost of revenues by segment in the three months ended December 31, 2018
+and 2017:
+Cost of revenues:
+Unaudited
+9,534,556
+Food delivery
+(RMB in thousands, except for percentages)
+revenues
+Amount
+revenues
+18.1%
+Amount
+total cost of
+percentage of
+As a
+December 31, 2017
+December 31, 2018
+Three Months Ended
+As a
+percentage of
+total cost of
+3,582,257
+Other services and sales
+14.2%
+December 31, 2017
+December 31, 2018
+Three Months Ended
+Unaudited
+Revenues:
+The following table sets forth our revenues by type in absolute amount and as a percentage of our total
+revenues in the three months ended December 31, 2018 and 2017:
+As a
+Revenues by Type
+15
+2018 Annual Report
+Our revenues from the new initiatives and others segment increased by 462.1% to RMB4.2 billion in the
+three months ended December 31, 2018 from RMB0.7 billion in the same period of 2017, primarily due to
+the increase in revenues from sale of products and services to merchants, such as RMS and supply chain
+solutions businesses, and services to consumers, such as non-food delivery service, pilot car-hailing service
+and bike-sharing service.
+Our revenues from the in-store, hotel & travel segment increased by 48.0% to RMB4.6 billion in the three
+months ended December 31, 2018 from RMB3.1 billion in the same period of 2017, primarily due to (i) the
+increase in the number of Active Merchants as well as the average revenue per Active Merchant of our in-
+store, hotel & travel businesses, and (ii) the increase in the number and the average daily rate of domestic
+room nights consumed on our platform.
+Our revenues from the food delivery segment increased by 66.1% to RMB11.0 billion in the three months
+ended December 31, 2018 from RMB6.6 billion in the same period of 2017, primarily due to (i) the increase
+in GTV, which was driven by the increase in the number of food delivery transactions, as a result of the
+increase in food delivery user base and higher average purchase frequency per user, and (ii) the increase in
+monetization rate from 11.6% to 13.7%. We saw a revenue decrease of 1.5% compared to three months
+ended September 30, 2018 due to a slowdown in GTV growth and a dip in monetization rate from 14.0% to
+13.7%. Monetization rate dropped slightly quarter-over-quarter due to the increased subsidy ratio in response
+to the intensified competition and backdrop of macroeconomic headwinds.
+100.0%
+MANAGEMENT DISCUSSION AND ANALYSIS
+In-store, hotel & travel
+As a
+percentage of
+1,488,935
+15.5%
+3,071,073
+Online marketing services
+81.6%
+8,548,567
+percentage of
+66.4%
+Commission
+(RMB in thousands, except for percentages)
+total revenues
+Amount
+total revenues
+Amount
+13,150,122
+10,475,378
+605,874
+6,208,427
+6.3%
+In-store, hotel & travel
+3,988,258
+86.8%
+2,720,830
+87.7%
+New initiatives and others
+(978,985)
+(23.3%)
+214,690
+28.7%
+Total
+4,480,994
+22.6%
+3,351,509
+32.0%
+As a result of the foregoing, our gross profit in the three months ended December 31, 2018 and 2017 was
+RMB4.5 billion and RMB3.4 billion, respectively. The gross profit margin of food delivery business improved
+by 7.1% on a year-over-year basis, but decreased by 3.2% compared to the three months ended September
+30, 2018, due to incentives provided to some riders in certain regions under tough weather conditions to
+ensure our food delivery capacity and service quality in the winter season. The gross profit margin of in-store,
+hotel & travel business decreased by 0.9% on a year-over-year basis and decreased by 3.8% on a quarter-
+over-quarter basis, mainly due to macroeconomic headwinds' unfavorable impacts on the hotel and travel
+businesses, which have lowered the gross margin for the segment as whole. The gross margin of our new
+initiatives and others business turned from positive in three months ended December 31, 2017 to negative
+in the same period of 2018, while we achieved an improvement of 14.1% in gross margin on a quarter-over-
+quarter basis, mainly as a result of limited subsidies in the car-hailing business.
+2018 Annual Report (19
+Our other gains, net were a gain of RMB156.8 million in the three months ended December 31, 2018
+compared to a gain of RMB302.9 million in the same period of 2017. The decrease in other gains, net was
+primarily due to higher interest income from short-term investments, partially offset by foreign exchange loss
+in the three months ended December 31, 2018, and a gain of RMB125.6 million recognized for the disposal of
+certain investments in other gains, net in the three months ended December 31, 2017.
+Other Gains, Net
+Our fair value changes on investments measured at fair value through profit or loss in the three months ended
+December 31, 2018 increased by RMB749.6 million compared to the same period of 2017, primarily due to
+fair value gain from our investee companies.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+Our general and administrative expenses increased to RMB2.8 billion, or 14.4% of revenues in the three
+months ended December 31, 2018 from RMB0.9 billion, or 8.7% of revenues in the same period of 2017.
+Excluding the effect of RMB1.3 billion impairment provision of intangible assets resulting from the change
+in our branding strategy for the bike-sharing services, and RMB132.0 million of the total RMB358.8 million
+impairment provision for Mobike's overseas restructuring, our general and administrative expenses as a
+percentage of revenues would have decreased to 6.9% in the three months ended December 31, 2018.
+Besides the impairment provision, the increase in general and administrative expenses was mainly attributable
+to (i) the increase in employee benefits expenses to RMB787.9 million in the three months ended December
+31, 2018 from RMB594.1 million in the same period of 2017, as a result of the increase in headcount and
+the average salaries and benefits, including share-based payments, of our administrative personnel, (ii)
+the increase in provision of doubtful accounts due to the adoption of IFRS 9, and (iii) the increase in rental,
+facilities and utilities to support the expansion in employee headcount and business operations.
+415,989
+General and Administrative Expenses
+Research and Development Expenses
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping
+18
+Our selling and marketing expenses increased to RMB4.5 billion in the three months ended December 31,
+2018 from RMB3.4 billion in the same period of 2017, and decreased to 22.9% from 32.1% as a percentage
+of revenues. The increase in selling and marketing expenses was primarily due to the increase in employee
+benefits expenses, Transaction User incentives, amortization of intangible assets and rental, facility and
+utilities. Employee benefits expenses increased to RMB1.4 billion in the three months ended December 31,
+2018 from RMB1.0 billion in the same period of 2017 due to expansion of the selling and marketing teams
+to support the growth of our food delivery business and new initiatives and other services. Transacting User
+incentives increased to RMB1.5 billion in the three months ended December 31, 2018 from RMB1.3 billion in
+the same period of 2017, as we continued to drive the growth of the food delivery segment and to expand our
+service offerings to consumers in the new initiatives and others segment.
+Selling and Marketing Expenses
+Our research and development expenses increased to RMB2.0 billion in the three months ended December
+31, 2018 from RMB1.1 billion in the same period of 2017, and decreased to 10.0% from 11.0% as a
+percentage of revenues. The increase in research and development expenses was primarily due to the
+increase in employee benefits expenses, including share-based payments, to RMB1.8 billion in the three
+months ended December 31, 2018 from RMB1.1 billion in the same period of 2017, which resulted from the
+increase in both headcount and average salaries and benefits of our research and development personnel to
+support our business growth.
+13.4%
+1,471,721
+Food delivery
+Cost of revenues for our food delivery business increased by 53.6% to RMB9.5 billion in the three months
+ended December 31, 2018 from RMB6.2 billion in the same period of 2017, primarily attributable to the
+increase in food delivery rider costs as a result of the increase in the number of food deliveries completed.
+Cost of revenues for our in-store, hotel & travel business increased by 58.5% to RMB605.9 million in the three
+months ended December 31, 2018 from RMB382.4 million in the same period of 2017. The increase was
+primarily attributable to the increase in payment processing costs and bandwidth and server custody fees,
+which was generally in line with our revenue growth, and the increase in depreciation of property, plant and
+equipment.
+100.0%
+7,123,869
+100.0%
+15,322,458
+Total
+Cost of revenues for the new initiatives and others business increased to RMB5.2 billion in the three months
+ended December 31, 2018 from RMB0.5 billion in the same period of 2017, mainly attributable to the increase
+in cost of goods sold as we expanded our supply chain solutions business, the increase in depreciation
+of property, plant and equipment as a result of our acquisition of Mobike, the increase in car-hailing driver
+related costs, and the increase in other outsourcing labor costs due to the expansion of our non-food delivery
+service.
+7.5%
+33.8%
+5,182,028
+New initiatives and others
+5.4%
+382,361
+87.1%
+533,081
+62.2%
+4.0%
+2018 Annual Report 17
+The following table sets forth our gross profit both in absolute amount and as a percentage of revenues, or
+gross margin, by segment for the periods indicated:
+(RMB in thousands, except for percentages)
+total revenues
+Amount
+total revenues
+Amount
+percentage of
+Gross Profit and Gross Margin
+percentage of
+As a
+December 31, 2017
+December 31, 2018
+Three Months Ended
+Unaudited
+Gross profit/(loss):
+As a
+100.0%
+100.0%
+Total
+On behalf of the Board, I would like to express our sincere gratitude to our consumers, merchants and partners for
+their trust in our platform, our delivery riders for their reliable and efficient services, our entire staff and management
+team for their outstanding contributions, and our shareholders for their continuous support.
+Wang Xing
+Chairman
+Hong Kong, March 11, 2019
+2018 Annual Report
+13
+14
+MANAGEMENT DISCUSSION AND ANALYSIS
+1. FOURTH QUARTER OF 2018 COMPARED TO FOURTH QUARTER OF 2017
+The following table sets forth the comparative figures for the fourth quarter of 2018 and 2017:
+Unaudited
+Three Months Ended
+December 31, December 31,
+2018
+2017
+(RMB in thousands)
+Revenues
+Cost of revenues
+General and administrative expenses
+(1,149,301)
+(1,981,826)
+Research and development expenses
+(3,362,229)
+(4,535,051)
+APPRECIATION
+3,351,509
+(7,123,869)
+(15,322,458)
+10,475,378
+19,803,452
+Selling and marketing expenses
+Gross profit
+4,480,994
+Finally, we will take a more disciplined approach when allocating capital resources for our new initiatives and
+be more selective in scaling up new initiatives. We will improve the operational efficiencies and significantly
+narrow the operating losses of both our car-hailing and bike-sharing businesses, and strengthen their strategic
+synergies with the overall platform. We will continue the development of our RMS and supply chain solutions,
+focusing on the quality of the merchants that we serve rather than just the volume growth. We will prudently
+explore the opportunities in new retail area such as non-food delivery.
+For our in-store business, we plan to further improve monetization capabilities by expanding service
+categories, deepening merchant penetration and increasing the adoption of diversified marketing solutions. In
+particular, we plan to further increase the penetration of merchants that adopt CPC and subscription-based
+marketing solutions.
+For our food delivery business, we will continue to solidify our leading position and market share while
+maintaining our competitive advantages in operating efficiency and unit economics. To continue to drive
+growth amid industry structural changes and macroeconomic headwinds, we will further expand food delivery
+service categories and consumption scenarios and generate more personalized recommendations and
+targeted promotions to increase our consumers' transaction frequency. We will further diversify merchant
+supply on our platform, and assist high-quality restaurants to achieve rapid growth and expansion through
+accelerating their operational digitization, providing supply chain solutions and enhancing brand exposure.
+Meanwhile, we will further enhance our delivery fulfillment capabilities, improve delivery efficiencies, and
+continue to invest in research and development of autonomous delivery technologies and explore new
+delivery models.
+In-store, hotel & travel
+CHAIRMAN'S STATEMENT
+Meituan Dianping
+10
+Regarding our delivery service, we have been continuously optimizing the algorithms of our intelligent order
+dispatching system to further improve delivery efficiency, and enhancing the training and management of our
+delivery riders to ensure the consistency of our industry-leading service quality while fulfilling the fast-growing
+number of food delivery orders.
+On the merchant front, we continued to help restaurants reach new target customers, access substantial new
+consumption demand and enable merchants to improve their operational efficiencies. Our delivery capabilities
+have been further strengthened to help our merchants increase the delivery radius. In 2018, there was an
+increase in portion of delivery orders coming from more than 3 kilometers away.
+Our in-store, hotel & travel businesses continued to solidify its market leadership and further demonstrated
+strong monetization capability in 2018. While the GTV of in-store, hotel & travel businesses grew by 11.8% to
+RMB176.8 billion in 2018 from RMB158.1 billion in 2017, the monetization rate increased to 9.0% from 6.9%,
+which was primarily due to the increasing contribution of online marketing revenue. As a result, revenues from
+in-store, hotel & travel businesses in 2018 increased by 46.0% to RMB15.8 billion in 2018 from RMB10.9
+billion in 2017. Gross profit from in-store, hotel & travel businesses increased to RMB14.1 billion in 2018 from
+RMB9.6 billion in 2017, and gross margin expanded to 89.0% from 88.3%.
+In addition, through creating more diversified service categories, consumption scenarios and upgrading
+marketing programs, we increased users' transaction frequency and further boosted transaction volume
+growth. We continued to expand the service categories on our platform to include breakfasts, afternoon
+tea and midnight snacks. Delivery volume of fast food, snacks, desserts and drinks achieved strong growth
+during 2018. Since the fourth quarter of 2018, we have leveraged our food delivery membership program and
+marketing initiatives such as holiday coupon packages to increase purchase frequency of our users.
+As the world's largest food delivery service provider, we further cemented our market-leading position during
+2018 with a strategic focus on enhancing user experience, expanding service categories and food delivery
+consumption scenarios, providing more comprehensive service solutions to merchants, and improving service
+quality and efficiency of our delivery network.
+In 2018, our food delivery business sustained its strong growth momentum. The daily average number of food
+delivery transactions increased by 56.3% to 17.5 million in 2018 from 11.2 million in 2017. GTV of our food
+delivery business increased by 65.3% to RMB282.8 billion in 2018 from RMB171.1 billion in 2017. Revenue
+from food delivery increased by 81.4% year-over-year to RMB38.1 billion.
+Food delivery
+1. Company Business Highlights
+BUSINESS REVIEW AND OUTLOOK
+CHAIRMAN'S STATEMENT
+On the consumer front, we continued to implement innovative tactics to acquire users, particularly those
+internet users who have not yet used food delivery services from an online platform. We fully utilized our
+offline operation teams, delivery network and marketing resources as a whole to drive online traffic and attract
+new users. Meanwhile, we established a reward mechanism to incentivize user referrals through social media
+networks.
+(2,846,080)
+In 2018, we demonstrated the capability of our platform to successfully cross-sell a variety of low-frequency
+services to users that we have acquired through our high-frequency food services. Our comprehensive
+offerings cover consumers' daily needs, such as hotel and travel, leisure and entertainment, beauty, parenting,
+wedding planning, home renovations and vocational training, among others. In addition to the deals that
+we help merchants promote, we also enhanced our service offerings for merchants by providing them with
+more diversified marketing solutions, such as CPC and subscription-based marketing solutions. As a result,
+online marketing services revenue contributed a more significant portion of revenues of our in-store business
+in 2018, driven by the increasing number of online marketing Active Merchants. In particular, advertising
+revenues generated from beauty, vocational training, parenting, and leisure and entertainment increased by
+over 60% year-over-year in 2018.
+In addition, we launched the Black Pearl Restaurant Guide in January 2018, which further strengthened our
+Company's brand awareness and helped reinforce Meituan Dianping as the go-to platform of quality dining
+selections for consumers and authoritative online marketing channel for premium restaurants in China. Black
+Pearl Restaurant Guide 2019 included a total of 287 restaurants in 22 cities in China and 5 cities abroad.
+CHAIRMAN'S STATEMENT
+Meituan Dianping
+Overall, we strive to further strengthen our self-reinforcing ecosystem with frequent users and merchant base
+to achieve stronger economy of scale and network effect. We will focus on further growing the number of
+both Transacting Users and Active Merchants, increasing our Transacting Users' purchase frequency and
+stickiness, and enhancing our high-frequency users' loyalty to our platform.
+In 2019, we will continue executing our “Food + Platform" strategy. While maintaining the market leadership of
+our food delivery business, we also seek to further improve our platform's monetization capabilities, prudently
+explore new initiatives, and continually enhance the strategic synergies between our new initiatives and our
+core businesses.
+Company Outlook and Strategies for 2019
+19,803,452
+As an important category of our in-store business, we further solidified the leading position of our hotel
+booking business in 2018. Domestic room nights consumed increased by 38.5% to 283.9 million in 2018
+from 205.0 million in 2017, while average daily rate per room night experienced a steady increase year-over-
+year. We have also been strengthening the synergy between our hotel booking and other in-store businesses.
+Through cross-selling dining services, wedding planning services, spa, gyms and others services, we were
+able to help hotels further substantiate their revenue streams from non-lodging services.
+We launched our pilot car-hailing services in Nanjing and Shanghai to increase high-frequency services on
+our platform. In April 2018, we completed the acquisition of Mobike to better serve our users' high-frequency
+short-distance transportation needs, increase the touchpoints of our platform to consumers, collect more
+location-based service data, and expand cross-selling opportunities with our other service categories. Since
+the acquisition, we have been leveraging our offline operation experience and capabilities to increase the
+operational efficiency of Mobike and reduce its operating losses. We also have started to integrate Mobike's
+operations into our platform. We have implemented organizational realignments and integrated operation to
+improve management efficiency. In order to better direct offline traffic to our online platform, we have added
+the portal to unlock the bikes in Meituan app to gradually cultivate the users to use Meituan app as the sole
+entry point to access our bike sharing services.
+CHAIRMAN'S STATEMENT
+12
+2018 Annual Report (11
+In 2018, we increased our investment in new service categories for both consumers and merchants to satisfy
+consumers' growing demand for more diversified lifestyle services and improve merchants' operational
+efficiency.
+GTV from the new initiatives and others segment increased by 99.8% to RMB56.0 billion in 2018 from
+RMB28.0 billion in 2017. Revenues from the new initiatives and others segment increased by 450.3% to
+RMB11.2 billion in 2018 from RMB2.0 billion in 2017. Gross margin of the new initiatives and others segment
+was negative 37.9% in 2018, compared with positive 46.0% in 2017.
+New initiatives and others
+We stepped up our investment in our Restaurant Management System ("RMS”) and supply chain solutions,
+through which we can strengthen relationship with the merchants on our platform, improve their operational
+efficiency, and explore additional monetization opportunities in the food service value chain. Our RMS is
+revolutionizing the restaurant software industry with a SaaS model. It enables restaurants to digitize their
+entire operations and to better connect with online platforms. In December 2018, in addition to further
+upgrading our RMS standard edition, we also launched our RMS beverage vertical edition. So far, some of
+the most prominent teashop brands and fastest-growing beverage chain stores in China have adopted our
+RMS beverage edition, which helped them improve operational efficiency, lower labor costs, and optimize
+user experiences. Our supply chain solutions are also transforming the food service distribution with mobile
+commerce. Merchants can see real-time prices and inventory availability of food ingredients on our Kuaily Mall
+mobile app, and make orders anytime, anywhere. By aggregating orders from a large merchant base, we will
+be able to consolidate purchase and distribution with stronger operating leverage, and pass on the efficiency
+gains to merchants.
+(914,441)
+2.
+at fair value through profit or loss
+Amount
+total revenues
+Amount
+percentage of
+percentage of
+As a
+total revenues
+As a
+December 31, 2018
+Three Months Ended
+Unaudited
+The following table sets forth our revenues by segment in absolute amount and as a percentage of our total
+revenues in the three months ended December 31, 2018 and 2017:
+Revenues by Segment
+MANAGEMENT DISCUSSION AND ANALYSIS
+December 31, 2017
+Meituan Dianping
+(RMB in thousands, except for percentages)
+Food delivery
+Fair value changes on investments measured
+7.2%
+747,771
+21.2%
+4,203,043
+New initiatives and others
+Revenues:
+29.6%
+23.2%
+4,594,132
+In-store, hotel & travel
+63.2%
+6,624,416
+55.6%
+3,103,191
+Our revenues increased by 89.0% to RMB19.8 billion in the three months ended December 31, 2018 from
+RMB10.5 billion in the same period of 2017. The increase was primarily driven by (i) the increase in Gross
+Transaction Volume on our platform to RMB138.0 billion in the three months ended December 31, 2018
+from RMB104.1 billion in the same period of 2017, which was in turn driven by the increase in the number
+of Transacting Users and their purchase frequency, and (ii) the increase in monetization rate to 14.3% in the
+three months ended December 31, 2018 from 10.1% in the same period of 2017.
+11,006,277
+(1,358,685)
+(13,200)
+(15,407)
+36,179
+116,427
+(1,530,599)
+Finance costs
+Fair value changes of convertible redeemable preferred shares
+Share of losses of investments accounted for using equity method
+Finance income
+302,857
+156,792
+Other gains, net
+241,006
+(1,385,447)
+990,653
+Operating loss
+(663,781)
+(3,734,518)
+(854,601)
+(1,861,856)
+Adjusted net loss
+Adjusted EBITDA
+Non-IFRS measures:
+Loss for the period
+(2,180,818)
+(3,414,252)
+Revenues
+(2,202,664)
+(3,690,373)
+276,121
+Income tax credits
+Loss before income tax
+(31,263)
+21,846
+(56,875)
+100%
+USD195,000,000
+March 16, 2006
+100%
+platform in the PRC
+100% Online hotel and travel
+services in the PRC
+the PRC
+Tianjin Sankuai Technology Co., Ltd Tianjin,
+100% Multimedia information
+technology services in
+Beijing Kuxun Technology Co., Ltd. Beijing,
+(Shanghai) Co., Ltd.
+100%
+USD54,665,694
+April 27, 2006
+Hanhai Information Technology
+E-commerce service
+USD1,176,260,000
+July 12, 2013
+100%
+the PRC
+Shanghai,
+the PRC
+RMB1,090,000,000
+platform in the PRC
+100%
+USD200,000,000
+100%
+May 6, 2011
+January 11, 2016
+Shanghai,
+the PRC
+(Shanghai) Co., Ltd.
+Hucheng Information Technology
+the PRC
+Technology Co., Ltd.
+E-commerce service
+100%
+100%
+USD549,049,120
+March 25, 2014
+Xiamen,
+Xiamen Sankuai On-line
+platform in the PRC
+the PRC
+E-commerce service
+100%
+Beijing,
+the PRC
+Investment holding
+in Cayman
+Beijing SanKuai On-line
+Limited ("DianPing")
+Investment holding
+100%
+100%
+USD50,000
+December 20, 2005
+Cayman
+DianPing Holdings
+100%
+100%
+USD50,000
+July 29, 2010
+Cayman
+Meituan Corporation
+Directly held:
+Subsidiaries
+activities and
+place of operation
+100% Multimedia information
+technology services in
+the PRC
+2017
+in Cayman
+Technology Co., Ltd.
+Internet Plus (HongKong) Limited
+November 27, 2015 HKD1
+Indirectly held:
+in Cayman
+in Cayman
+Investment holding
+NA
+100%
+USD50,000
+April 2, 2015
+Cayman
+mobike Ltd ("Mobike")
+Investment holding
+100%
+100%
+USD50,000
+April 1, 2016
+Kangaroo Technology Corporation Cayman
+in Hong Kong
+Investment holding
+100%
+100%
+Hong Kong
+Mobike (Beijing) Information
+Technology Co., Ltd.
+Shanghai Sankuai Zhisong
+Technology Co., Ltd.
+2018
+January 12, 2016
+technology services
+100% Multimedia information
+100%
+RMB2,000,000
+March 29, 2006
+Beijing,
+the PRC
+Technology Co., Ltd.
+Beijing Kuxun Interation
+the PRC
+cloud computing in
+the PRC
+RMS system and
+100%
+100%
+RMB10,000,000
+June 17, 2015
+Beijing,
+Beijing Sankuai Cloud Computing
+Technology Co., Ltd.
+in the PRC
+in the PRC
+the PRC
+Shanghai Hantao Information
+Consulting Co., Ltd.
+September 23, 2003 RMB10,000,000
+As of December 31,
+2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+198
+2018 Annual Report (197)
+Note (b): The Effective interest held has no change after December 31, 2018 until the report date.
+Note (a): As described in Note 2.2, the Company does not have directly or indirectly legal ownership in equity of these
+structured entities or their subsidiaries. Nevertheless, under certain Contractual Arrangements entered into with
+these structured entities and their registered owners, the Company and its other legally owned subsidiaries has
+rights to exercise power over these structured entities, receives variable returns from its involvement in these
+structured entities, and has the ability to affect those returns through its power over these structured entities. As a
+result, they are presented as consolidated structured entities of the Company.
+services in the PRC
+Online payment
+100%
+100%
+November 25, 2008 RMB404,000,000
+Beijing,
+the PRC
+Technology Co., Ltd.
+Beijing Qiandaibao Payment
+in the PRC
+advisory services
+Merchant information
+100%
+100%
+Shanghai,
+the PRC
+Beijing,
+the PRC
+Co., Ltd.
+100%
+Place of
+incorporation/
+establishment
+Effective interest held (b)
+Structured entities(a):
+Name
+11 SUBSIDIARIES (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan Dianping
+196
+in the PRC
+Delivery services
+NA
+100%
+November 27, 2018 USD320,000,000
+Shanghai,
+the PRC
+in the PRC
+NA Bike-sharing services
+100%
+USD99,000,000
+Date of
+incorporation/
+establishment
+Online retail platform
+Particulars of
+issued/paid-in
+As of December 31,
+100%
+September 19, 2012 RMB5,000,000
+Shanghai,
+Shanghai SanKuai Technology
+platform in the PRC
+the PRC
+Co., Ltd.
+E-commerce service
+100%
+100%
+RMB1,090,000,000
+April 10, 2007
+Beijing,
+Beijing SanKuai Technology
+operation
+2017
+2018
+capital
+and place of
+Principal activities
+capital
+601
+Particulars of
+issued/paid-in
+RMB'000
+benefits
+and bonuses
+compensation
+Share-based
+and other
+employee
+Wages, salaries
+Pension costs
+Total
+Ye Shuhong
+Wang Xing
+Wang Huiwen
+Zhang Tao
+Name
+For the year ended December 31, 2017:
+195,887
+176,574
+726
+18,164
+423
+RMB'000
+742
+expenses
+RMB'000
+RMB'000
+2018 Annual Report (193)
+105,560
+96,216
+468
+8,876
+2,186
+130
+2,056
+48,333
+45,924
+104
+2,305
+53,137
+50,292
+130
+2,715
+1,904
+104
+1,800
+Total
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+601
+601
+1,917
+117
+1,800
+4,693
+168
+4,525
+Total
+RMB'000
+RMB'000
+RMB'000
+expenses
+benefits
+and bonuses
+RMB'000
+Fees
+RMB'000
+employee compensation
+Wages, salaries
+Share-based
+Pension costs
+and other
+Ye Shuhong
+Mu Rongjun
+Wang Huiwen
+4,072
+742
+154
+39,487
+742
+For the year ended December 31, 2018
+Total
+141
+Leng Xuesong
+141
+Shum Heung Yeung Harry
+141
+Halyburton
+Orr Gordon Robert
+Shen, Nanpeng Neil
+Lau, Chi Ping Martin
+4,205
+133
+4,072
+143,359
+139,510
+154
+3,695
+35,261
+Principal
+For the year ended December 31, 2018
+EMPLOYEE BENEFITS EXPENSES (Continued)
+Interest income from bank deposits
+Finance income
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+10 FINANCE INCOME/(COSTS)
+In August 2017, the Group and Shanghai Enlight Investment Holdings Co., Ltd. entered into an amended Sale and
+Purchase Agreement, where the Group agreed to sell 19.7% equity interests in Maoyan for a total consideration of
+RMB1.8 billion in cash. The carrying value of the 19.7% disposed was RMB1.4 billion. At the same time, Maoyan
+received new financing from other investors which further diluted the Group's retained interest in Maoyan to 8.3%,
+resulting in a dilution gain of RMB103 million.
+(i)
+208,260
+748,356
+(3,641)
+(9,329)
+(61,000)
+(222,264)
+Losses from the cancellation of put and call option for Maoyan
+Change in fair value from put and call option for Maoyan (Note 3.3.3)
+Others
+45,585
+198,762
+Government subsidies
+(7,819)
+294,047
+(1,485)
+60,885
+Bank charges and others
+Date of
+incorporation/
+establishment
+establishment
+Place of
+incorporation/
+Effective interest held (b)
+Name
+The Company's major subsidiaries (including controlled and structured entities) during the year ended
+December 31, 2018 are set out below. Unless otherwise stated, they have share capital consisting solely of
+ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the
+voting rights held by the Group.
+SUBSIDIARIES
+11
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (195)
+(19,214)
+(44,732)
+(1,924)
+(24,601)
+(17,290)
+(20,131)
+Total
+Interest expense
+Finance costs
+8
+Foreign exchange loss, net
+4,208
+9
+No director received any emolument from the Group as an inducement to join or leave the Group
+or compensation for loss of office during the year ended December 31, 2018 and 2017.
+Meituan Dianping
+194
+Inducement to join the Group and compensation for loss of office
+vi)
+The non-executive Directors have not received any remuneration for the year ended December 31,
+2018. None of the other directors waived or has agreed to waive any emoluments during the year
+ended December 31, 2018 and 2017.
+Waiver of Director's emoluments
+v)
+No significant transactions, arrangements and contracts in relation to the Group's business to
+which the Company was a party and in which a Director had a material interest, whether directly
+or indirectly, subsisted at the end of the year or at any time during the year ended December 31,
+2018 and 2017.
+Directors' material interests in transactions, arrangements or contracts
+Except as disclosed in Note 38, there were no other loans, quasi-loans and other dealings in favor
+of Directors, their controlled bodies corporate and connected entities subsisted at the end of the
+year or at any time during the year ended December 31, 2018 and 2017.
+iv)
+iii) Information about loans, quasi-loans and other dealings in favor of Directors, controlled bodies
+corporate by and connected entities with such Directors.
+No consideration provided to or receivable by third parties for making available Director's services
+subsisted at the end of the year or at any time during the year ended December 31, 2018 and
+2017.
+Consideration provided to third parties for making available Directors' services
+No Director's termination benefit subsisted at the end of the year or at any time during the year
+ended December 31, 2018 and 2017.
+i) Directors' termination benefits
+(c) Directors' and chief executive's emoluments (Continued)
+OTHER GAINS, NET
+25,099
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Year ended December 31,
+Change in fair value from contingent consideration (Note 3.3)
+104,758
+(6,294)
+Dilution (loss)/gain (Note i) (Note 12)
+125,649
+Gains from the disposal of subsidiaries (Note 11)
+(144,482)
+29,426
+Gains/(losses) from the disposal of investments
+17,027
+226,114
+Interest income from short-term investments measured at amortized cost
+329,348
+306,954
+at fair value through profit or loss (Note 3.3)
+Fair value changes of short-term investments measured
+2017
+RMB'000
+RMB'000
+For the year ended December 31, 2018:
+For the year ended December 31, 2018
+11 SUBSIDIARIES (Continued)
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+Year ended December 31,
+617,453
+1,063,796
+Pension costs - defined contribution plans (Note i)
+Share-based compensation expenses (Note 33)
+899,364
+1,602,448
+Other employee benefits
+6,163,000
+10,695,178
+Wages, salaries and bonuses
+2017
+RMB'000
+RMB'000
+2018
+Year ended December 31,
+EMPLOYEE BENEFITS EXPENSES
+Disposal of subsidiaries
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+80
+Meituan Dianping
+190
+Others mainly comprise travelling and entertainment expenses, message and verification fees, bike reallocation fees
+and bike maintenance fees.
+Impairment provision and restructuring expense has been recognized due to Mobike oversea entities restructuring
+plan. The plan includes the sale or abandonment of the selected entities in 2019. Thereof, the assets and liabilities
+of certain entities to be sold out, have been reclassified as assets classified as held for sale and liabilities directly
+associated with assets classified as held for sale.
+Impairment loss on Mobike tradename has been recognized based on management's further business plan change.
+The remaining carrying value amounted to RMB134 million of Mobike tradename would be amortized in the period of
+3 years from 2019.
+(iii)
+(i)
+38,435,213
+78,897,813
+Total cost of revenues, selling and marketing expenses, research and
+development expenses and general and administrative expenses
+1,037,868
+3,636,593
+1,865,113
+3,899
+971,100
+8,650,917
+2018
+RMB'000
+Year ended December 31,
+The five individuals whose emoluments were the highest in the Group include one and two Directors
+whose emoluments are reflected in the analysis shown in Note 8(c) for the years ended December 31,
+2018 and 2017 respectively. All of these individuals have not received any emolument from the Group
+as an inducement to join or leave the Group or compensation for loss of office during the year ended
+December 31, 2018 and 2017. The emoluments payable to the remaining individuals for the years ended
+December 31, 2018 and 2017 are as follows:
+(b) Five highest paid individuals
+Wang Xing
+Zhang Tao
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (191)
+971,100
+1,865,113
+518,564
+967,943
+General and administrative expenses
+333,438
+664,068
+Research and development expenses
+105,567
+184,628
+Selling and marketing expenses
+13,531
+48,474
+Cost of revenues
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+Employees of the Group companies in the PRC are required to participate in a defined contribution retirement scheme
+administered and operated by the local municipal government. The Group contributes funds which are calculated on
+fixed percentage of the employees' salary (subject to a floor and cap) as set by local municipal governments to each
+scheme locally to fund the retirement benefits of the employees.
+Pension costs - defined contribution plans
+(i)
+15,226,535
+25,718
+48,770
+216,208
+2,087,398
+Other outsourcing labor costs
+301,010
+3,133,770
+Cost of goods sold
+2,277,969
+3,272,934
+Promotion and advertising
+327,696
+4,252,292
+Depreciation of property, plant and equipment
+293,306
+4,463,320
+Car-hailing driver related costs
+4,208,921
+5,400,781
+Transacting user incentives
+8,650,917
+15,226,535
+Employee benefits expenses (Note 8)
+18,324,065
+30,516,055
+Food delivery rider costs
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+7 EXPENSES BY NATURE
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+126,434
+Payment processing costs
+1,524,853
+1,023,889
+215,178
+189,680
+215,215
+64,371
+285,655
+Others (Note iii)
+- Non-audit services
+- Audit and audit-related services
+Auditor's remuneration
+Tax surcharge expenses
+Online traffic costs
+Provision for doubtful accounts
+174,368
+340,714
+2017
+RMB'000
+Professional fees
+Mobike restructuring plan (Note ii)
+Impairment provision and restructuring expense for
+265,177
+484,494
+Bandwidth and server custody fees
+410,997
+970,058
+Rental, facility and utilities
+516,619
+1,114,509
+Amortization of intangible assets
+-
+1,346,000
+Impairment provision on Mobike tradename (Note i)
+358,790
+Wages, salaries and bonuses
+For the year ended December 31, 2018
+5,810
+Gain on disposal before income tax
+Income tax expense on gain
+Gain on disposal after income tax (Note 9)
+During 2018, the Group disposed three subsidiaries.
+| | | |
+1,715
+1,715
+1,273
+(8)
+(56,234)
+(858)
+130,897
+1,363
+125,649
+125,649
+In November 2017, the Group transferred all of its equity interests in its subsidiary Beijing Puzhao Tianxing
+Technology Co., Ltd. ("Tianzixing") to one of its associates, Aoqiwei Information Technology (Beijing) Co.,
+Ltd. (“Canxingjian”) in exchange of additional equity interest in Canxingjian at a fair value of RMB268 million.
+After the transaction, Tianzixing became a subsidiary of Canxingjian and the Group ultimately held 40% of
+equity interest of Canxingjian in form of preferred shares. Consequently, the Group derecognized the assets,
+including goodwill, and liabilities of Tianzixing and respective non-controlling interests at their carrying amount
+at the date of transfer, and recognized the additional equity interests in Canxingjian at fair value on the date of
+transfer.
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
+Associates
+Joint ventures
+a) Investments in associates using the equity method
+At the beginning of the year
+Additions
+Transfers (Note i)
+Dilution (loss)/gain (Note ii)
+Dividends from an associate
+Disposals
+Other reserves (Note iii)
+Share of losses of investments accounted for
+using equity method
+Currency translation differences
+- Non-controlling interests disposed
+Goodwill
+- Deferred tax liabilities
+- Other payables and accruals
+2018
+RMB'000
+2017
+RMB'000
+Total consideration received or receivable
+- Cash consideration received
+- Equity interests received
+Total disposal consideration
+3,055
+268,344
+3,055
+268,344
+Total net assets disposed
+3,055
+142,695
+At the end of the year
+18,141
+26,362
+- Trade receivables
+9,895
+- Prepayments, deposits and other assets - current
+239
+24,019
+- Inventories
+- Property, plant and equipment
+514
+2,034
+- Intangible assets
+- Trade name
+- Technology
+- Other
+- Trade payables
+2,824
+(i):
+- Cash and cash equivalents
+2018
+RMB'000
+EMPLOYEE BENEFITS EXPENSES (Continued)
+8
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3
+4
+1
+1
+1
+1
+1
+1
+1
+2017
+2018
+(c) Directors' and chief executive's emoluments
+Number of individuals
+Year ended 31 December,
+192
+HK$80,000,001 - HK$90,000,000
+HK$100,000,001 - HK$110,000,000
+HK$110,000,001 - HK$120,000,000
+HK$70,000,001 - HK$80,000,000
+HK$60,000,001 - HK$70,000,000
+Emolument bands (in HK dollar)
+HK$50,000,001 - HK$60,000,000
+The emoluments fell within the following bands:
+180,932
+302,282
+251
+174,871
+283,524
+Share-based compensation expenses
+617
+Pension costs and other employee benefits
+As of December 31,
+Meituan Dianping
+The remuneration of every Director and the chief executive is set out below:
+Name
+Other reserves in 2017 arose from the equity pick up of the shareholder's contribution to Maoyan.
+2017
+RMB'000
+2018 Annual Report (199)
+2,089,677
+1,939,107
+13,068
+2,103,403
+1,952,175
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+1,939,107
+2,384,674
+163,675
+772,500
+50,000
+13,726
+104,758
+(6,294)
+(iii):
+(ii):
+Dilution gain in 2017 was mainly from Maoyan (Note 9).
+1,939,107
+2,089,677
+Certain contractual rights attached to an investment previously classified as financial assets at fair value
+through profit or loss have been changed, thus resulting in re-designation of such investment to an
+associate of the Group accounted for using the equity method. The management of the Group considered
+that the impact to the Group is not material had this investment been classified as an investment in an
+associate accounted for using the equity method since January 1, 2018.
+(48,267)
+6,694
+82,829
+(1,386,918)
+(563)
+(11,989)
+(14,675)
+(6,747)
+Cayman Islands
+Under the current laws of the Cayman Islands, the Company and its subsidiaries incorporated in the
+Cayman Islands are not subject to tax on income or capital gain. Additionally, the Cayman Islands does
+not impose a withholding tax on payments of dividends to shareholders.
+British Virgin Islands
+Under the current laws of the British Virgin Islands, entities incorporated in British Virgin Islands are not
+subject to tax on their income or capital gains.
+200
+Meituan Dianping
+13 TAXATION (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+b) Income tax (Continued)
+Pursuant to the CIT Law, a 10% withholding tax is levied on dividends declared to foreign investors from
+China effective from January 1, 2008. The withholding tax rate may be lowered to a minimum of 5% if
+there is a tax arrangement between China and the jurisdiction of the foreign investors. However, the 5%
+withholding tax rate does not automatically apply and certain requirements must be satisfied. For the
+year ended December 31, 2018 and 2017, the Group has incurred net accumulated operating losses
+and does not have any profit distribution plan.
+Hong Kong profits tax rate is 16.5%. No Hong Kong profits tax was provided for as there was no
+estimated assessable profit that was subject to Hong Kong profits tax for the years ended December 31,
+2018 and 2017.
+PRC corporate income tax ("CIT")
+CIT provision was made on the estimated assessable profits of entities within the Group incorporated
+in the PRC and was calculated in accordance with the relevant regulations of the PRC after considering
+the available tax benefits from refunds and allowances. The general PRC CIT rate is 25% for the years
+ended December 31, 2018 and 2017.
+Certain subsidiaries of the Group in the PRC are subject to “high and new technology enterprises" and,
+accordingly, a preferential income tax rate of 15% for the years ended December 31, 2018 and 2017.
+In addition, certain PRC subsidiaries have registered as a software enterprise and are entitled to a two-
+year enterprise income tax exemption and a three-year preferential enterprise income tax rate of 12.5%.
+As a result, such PRC subsidiaries were eligible for a preferential enterprise income tax rate for their
+respective tax holiday.
+Withholding tax on undistributed dividends
+Current income tax
+Deferred income tax (Note18)
+Total income tax expenses - Net
+Year ended December 31,
+2018
+Income tax
+Hong Kong
+b)
+2,089,677
+a) Value Added Tax
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+b)
+The Group has interests in a number of individually immaterial associates that are accounted
+for using the equity method.
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Aggregate carrying amount of individually immaterial associates
+The Group is mainly subject to 6% VAT, and surcharges on VAT payments according to PRC tax law.
+RMB'000
+Aggregate amounts of the Group's share of:
+- Loss from operations
+(48,267)
+(6,747)
+- Share-based payment reserve
+(3,671)
+Share of losses of investments accounted for using equity method
+(48,267)
+(10,418)
+13 TAXATION
+1,939,107
+2017
+RMB'000
+Loss before tax
+(18,560)
+(18,409)
+(7,634)
+- Super deduction for research and development expenses
+37,471
+- Utilization of previously unrecognized tax losses
+144,808
+2018 Annual Report (209)
+The key assumptions used in the significant CGU value-in-use calculations are as follows:
+Impairment review on the goodwill of the Group has been conducted by the management as at December
+31, 2018 and 2017, according to IAS 36 "Impairment of assets". For the purposes of impairment review,
+the recoverable amount of goodwill is determined based on value-in-use calculations. The value-in-use
+calculations use cash flow projections based on business plan for the purpose of impairment reviews covering
+a 5-year period.
+The goodwill balance mainly arose from the strategic transaction of Meituan and Dianping and business
+combination of Mobike. Goodwill is attributable to the acquired transacting volume and economies of scale
+expected to be derived from combining with the operations of the Group.
+In 2018, the Group decided to reallocate goodwill of one management system relating to hotel &
+travel business from new initiatives and others segment to in-store hotel and travel due to business
+structure adjustment.
+Note (a):
+(130,897) 14,869,597
+(12,001)
+58,992
+14,953,503
+314,610
+(130,897)
+(12,001)
+58,992
+398,516
+- Expenses not deductible for income tax purposes
+(20,456)
+17,289
+- Preferential income tax rates applicable to subsidiaries
+249,502
+(35,658)
+(1,888)
+(54,218)
+The tax on the Group's loss before income tax differs from the theoretical amount that would arise using
+the tax rate of 25% for the years ended December 31, 2018 and 2017, being the tax rate of the major
+subsidiaries of the Group.
+2018 Annual Report (201)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+13 TAXATION (Continued)
+b) Income tax (Continued)
+(251,390)
+The difference is analyzed as follows:
+2017
+RMB'000
+(115,490,807)
+(18,933,663)
+Tax calculated at statutory income tax rate of 25%
+in mainland China
+28,872,702
+4,733,416
+Tax effects of:
+- Different tax rates available to different jurisdictions
+(26,036,837)
+(3,866,256)
+Year ended December 31,
+2018
+RMB'000
+97,397
+- Tax losses for which no deferred income
+tax assets were recognized
+New initiatives and others
+4,158
+Transfers
+(18,911)
+(394)
+(505)
+(18,012)
+Disposal
+233
+175
+5
+53
+(Note 36)
+Business combinations
+737,680
+(4,158)
+13,178
+1,349
+714,568
+Additions
+875,923
+4,158
+119,196
+19,730
+732,839
+At January 1, 2017
+Cost
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+8,585
+RMB'000
+At December 31, 2017
+20,579
+4,158
+82,772
+3,726
+420,574
+At December 31, 2017
+At January 1, 2017
+Net carrying amount
+(679,243)
+13,146
+(327,696)
+(364,693)
+(59,946)
+(17,230)
+(602,067)
+1,429,448
+At December 31, 2017
+12,978
+Disposal
+(23,522)
+(1,394)
+(302,780)
+Depreciation
+(36,424)
+(16,004)
+(312,265)
+At January 1, 2017
+Accumulated depreciation
+1,594,925
+13,178
+131,720
+168
+construction
+equipment appliances improvements
+Computer Furniture and Leasehold Assets under
+(679,243)
+(77,979)
+(47,329) (3,420,977)
+(1,231,642)
+At December 31, 2018
+116,598
+as held for sale
+Assets classified
+(379)
+5
+33
+differences
+Currency translation
+1,666
+(4,252,292)
+6,670
+19,601
+Disposal
+(19,699)
+(3,543,866)
+(39,518)
+(649,209)
+Depreciation
+(59,946)
+(17,230)
+(602,067)
+At January 1, 2018
+Accumulated depreciation
+8,827,256
+194,512
+9,414
+37,351
+--(341)
+116,598
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+204
+3,978,815
+194,512
+104,079
+1,660,834
+53,013
+1,966,377
+At December 31, 2018
+915,682
+13,178
+71,774
+3,349
+827,381
+At January 1, 2018
+(4,777,927)
+Impairment
+At 1 January 2018
+Addition
+Assets classified
+as held for sale
+511,230
+At 31 December 2018
+(212,464)
+141,950
+(70,514)
+(212,464)
+141,950
+(70,514)
+Net carrying amount
+182,058
+827,381
+71,774
+Assets classified as held for sale
+209
+209
+Disposal
+(1,114,509)
+(4,020)
+(139,466)
+(139,362)
+(26,000)
+(901,984)
+(3,433)
+(30,150)
+(100,812)
+(36,833)
+5
+(201,111)
+Amortization
+(309,145)
+At January 1, 2018
+Accumulated amortization
+37,398,541
+27,861,023
+28,700
+907,000
+849,830
+390,000
+1,865,688
+490,000
+5,006,300
+At December 31, 2018
+(220,500)
+(256,420) (98,000) (451,241)
+(20)
+5
+(565,565)
+213,025
+At December 31, 2018
+25,179 14,869,597 19,852,974
+36,850
+82,310
+353,167
+269,500 1,120,726
+3,095,645
+At January 1, 2018
+Net carrying amount
+(1,506,258)
+(155,422)
+(88)
+(1,346,000)
+At December 31, 2018
+(160,258)
+(3,238)
+(1,347,510)
+At December 31, 2018
+(1,346,000)
+Additions (Note 7 (i))
+(3,238)
+(1,510)
+At January 1, 2018
+Impairment
+(2,016,279)
+(7,453)
+(240,174) (169,616)
+(62,833)
+(318,500) (652,138)
+(88) (155,422)
+(4,106)
+| |
+(20)
+payment
+Software
+generated
+content
+RMB'000
+Trade
+name
+RMB'000
+Online Technology
+User
+Cost
+16 INTANGIBLE ASSETS
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (205)
+327,696
+4,252,292
+23,269
+and
+35,032
+39,361
+7,065
+267,806
+4,158,424
+2017
+RMB'000
+RMB'000
+2018
+Year ended December 31,
+Research and development expenses
+General and administrative expenses
+Selling and marketing expenses
+Cost of revenues
+Depreciation expenses have been charged to the consolidated income statement as follows:
+915,682
+13,178
+29,556
+Supplier
+and others
+license
+Assets classified as held for sale
+(4,106)
+Disposal
+16,417,739
+12,836,004
+840,000
+663,470
+478,265
+1,600,000
+Business combinations (Note 36)
+69,712
+69,712
+Additions
+20,915,216
+15,025,019
+28,700
+67,000
+RMB'000
+RMB'000
+licenses
+RMB'000
+User list relationship Goodwill
+Total
+RMB'000
+3,349
+RMB'000
+RMB'000
+At January 1, 2018
+3,406,300 490,000
+1,321,837
+390,000
+186,360
+RMB'000
+5,152,325
+19,475
+3,198,019
+88
+Net carrying amount
+At January 1, 2017
+3,234,710
+367,500
+23,516
+379,167
+133,584
+50,250
+At December 31, 2017
+3,095,645 269,500
+1,120,726 353,167
+82,310
+36,850
+(88)
+༅། ༅།༔།
+(143,421)
+(146,992)
+(12,001)
+(13,266)
+(155,422)
+(160,258)
+6,610 14,953,503 19,148,840
+25,179 14,869,597 19,852,974
+2018 Annual Report
+207
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+16 INTANGIBLE ASSETS (Continued)
+Amortization expenses have been charged to the consolidated income statement as follows:
+།།
+Selling and marketing expenses
+(3,238)
+(1,510)
+3,406,300
+490,000 1,321,837
+390,000 186,360 67,000
+28,700 15,025,019 20,915,216
+Accumulated amortization
+At January 1, 2017
+Amortization
+(172,640) (122,500)
+(136,890)
+(98,000)
+Disposal
+385
+(10,728)
+(190,744)
+361
+(10,833) (52,443) (16,750)
+(26,000) (48,754) (13,400)
+(602)
+(386,496)
+(2,433)
+(805)
+(2,831)
+385
+1,131
+At December 31, 2017
+(309,145) (220,500)
+(201,111)
+(36,833) (100,812)
+(30,150)
+(3,433)
+(901,984)
+Impairment
+At January 1, 2017
+Additions
+(1,050)
+(460)
+At December 31, 2017
+(516,619)
+General and administrative expenses
+Cost of revenues
+Research and development expenses
+In-store, hotel & travel (Note a)
+11,438,285
+7,392,786
+119,576
+18,950,647
+Bike-sharing services
+3,707,427
+- 3,707,427
+New initiatives and others
+(excluding bike-sharing services)
+314,610
+7,264
+(119,576)
+202,298
+--- 4,845,229
+14,869,597 12,836,004
+Year ended December 31, 2017
+Opening
+RMB'000
+Addition Impairment
+RMB'000 RMB'000
+Disposal
+Closing
+RMB'000
+RMB'000
+Food delivery
+3,116,702
+3,116,702
+In-store, hotel & travel
+100,342
+11,438,285
+11,438,285
+27,705,601
+1,728,527
+3,116,702
+Food delivery
+Year ended December 31,
+2018
+RMB'000
+656,729
+281,389
+288,860
+157,544
+167,093
+75,962
+1,827
+1,724
+1,114,509
+516,619
+The addition of the goodwill arose from the business combinations in each year. Majority of the Group's
+goodwill are related to the strategic transaction of Mobike in 2018 (Note 36). The Group entered into a 5-year
+strategic cooperation agreement with one platform in 2017 with a total consideration of USD200 million
+(equivalent to RMB1,307 million, of which RMB1,281 million was capitalized). The Group amortized the
+amount within the contract period.
+Impairment of goodwill
+The Group carries out its annual impairment test on goodwill by comparing the recoverable amounts of cash
+generating unit ("CGU”) to the carrying amounts. The recoverable amount of a CGU was determined based on
+value-in-use calculations. These calculations used pre-tax cash flow projections based on financial budgets
+approved by management covering a 5-year period with a terminal value related to the future cash flows
+extrapolated using the estimated growth rates stated below beyond the 5-year period. The Group believes
+that it is appropriate to cover a 5-year period in its cash flow projection, because it captures the development
+stage of the Group's businesses during which the Group expects to experience a high growth rate. The
+accuracy and reliability of the information is reasonably assured by the appropriate budgeting, forecast and
+control process established by the Group. The management leveraged their extensive experiences in the
+industries and provided forecast based on past performance and their expectation of future business plans
+and market developments.
+208
+Closing
+RMB'000
+Disposal
+RMB'000
+Impairment
+RMB'000
+Reallocation
+RMB'000
+RMB'000
+RMB'000
+At December 31, 2017
+Addition
+Year ended December 31, 2018
+Management reviews the business performance based on type of business and monitors the goodwill at the
+operating segment level. The following is a summary of goodwill allocation for each operating segment:
+Impairment of goodwill (Continued)
+16 INTANGIBLE ASSETS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+Opening
+58,992 80,392
+(130,897) (136,904)
+2017
+RMB'000
+(1,807)
+223,068
+72,233
+1,811,575
+Additions
+1,594,925
+13,178
+131,720
+20,579
+1,429,448
+At January 1, 2018
+Cost
+RMB'000
+RMB'000
+RMB'000
+70,116
+RMB'000
+RMB'000
+Total
+construction
+vehicle improvements
+appliances
+equipment
+Leasehold Assets under
+Bike and
+Computer Furniture and
+15 PROPERTY, PLANT AND EQUIPMENT
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (203)
+Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares
+outstanding to assume conversion of all dilutive potential ordinary shares. The Company has three
+categories of dilutive potential ordinary shares: Preferred Shares, share options and RSUs. As the Group
+incurred losses for the years ended December 31, 2018 and 2017, the dilutive potential ordinary shares
+were not included in the calculation of diluted loss per share as their inclusion would be anti-dilution.
+Accordingly, diluted loss per share for the years ended December 31, 2018 and 2017 were the same as
+basic loss per share of the respective years.
+RMB'000
+174,698
+Business combinations
+(Note 36)
+(274,142)
+(274,142)
+At December 31, 2018
+(2,100)
+as held for sale
+Assets classified
+1,327
+1,153
+65
+3,093,225
+109
+differences
+Currency translation
+(122,840)
+19,050
+103,575
+215
+8,936
+40,523
+5,111,531
+9,750
+178,458
+5,349,198
+Loss per share
+Disposal
+(33,273)
+(12,860)
+(48,578)
+(48,982)
+(195,742)
+Transfers
+(52,049)
+(115,477,171)
+2,723,795
+2,351,690
+(12.37)
+16 INTANGIBLE ASSETS (Continued)
+Trade
+User
+generated
+Online Technology
+Software
+name
+RMB'000
+content
+RMB'000
+and others
+RMB'000
+payment
+license
+RMB'000
+and
+Supplier
+licenses
+RMB'000
+User list relationship
+RMB'000
+For the year ended December 31, 2018
+Goodwill
+RMB'000
+Cost
+At January 1, 2017
+Additions
+3,408,400
+490,000
+34,244
+1,289,400
+390,000 188,460
+67,000
+7,300 15,096,924
+19,682,328
+1,289,400
+Loss attributable to equity holders of the Company (RMB'000)
+Weighted average number of shares in issue (thousand)
+Business combinations
+21,400
+Disposal
+Total
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+RMB'000
+206
+(1,888)
+(54,218)
+202
+Meituan Dianping
+(18,916,617)
+1,528,826
+LOSS PER SHARE
+Total income tax expenses
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+(b)
+Year ended December 31,
+(2,100)
+Meituan Dianping
+2018
+2017
+(a) Basic loss per share for the years ended December 31, 2018 and 2017 were calculated by dividing the
+loss attributable to the Company's equity holders by the weighted average number of ordinary shares in
+issue during the year.
+(34,627)
+14
+(170,579)
+27,705,601 33,876,004
+737,384
+606,418
+327,167
+171,500 1,213,550
+(2,728,131)
+21,159
+- Temporary differences utilized/(for which no deferred
+(839,040)
+- Withholding tax
+(201,900)
+(42.40)
+(248,345)
+income tax assets was recognized), net
+Change in fair value
+5,944,693
+Year ended of December 31,
+2018
+RMB'000
+2017
+RMB'000
+At the beginning of the year
+5,919,594
+Disposals and transfers (Note (i))
+1,836,382
+Additions
+647,921
+Business combinations (Note 36)
+472,874
+12,880
+4,945,886
+1,616,220
+FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+25,099
+214
+(3,204,736)
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+19
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Non-current
+Investments at fair value through profit or loss (Note a)
+Current
+Contingent consideration
+a) Investments at fair value through profit or loss
+6,241,972
+5,919,594
+6,241,972
+(14,500)
+Investments in associates at fair value through profit or loss
+61,632
+1,608,298
+Other investments at fair value
+through profit or loss (Note ii)
+4,226,015
+4,311,296
+6,241,972
+5,919,594
+(i)
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+At the beginning of the year
+1,016,755
+The Group only recognizes deferred income tax assets for cumulative tax losses if it is probable that future
+taxable amounts will be available to utilize those tax losses. Management will continue to assess the
+recognition of deferred income tax assets in future reporting periods. As of December 31, 2018 and 2017,
+the Group did not recognize deferred income tax assets of RMB5.1 billion and RMB2.9 billion in respect of
+cumulative tax losses amounting to RMB22.8 billion and RMB11.8 billion. These tax losses will expire from
+2019 to 2023.
+1,608,298
+2,015,957
+Currency translation differences
+value through profit or loss (Note i)
+RMB'000
+(132,587)
+At the end of the year
+6,241,972
+5,919,594
+(i):
+During the year ended 31 December 2018, the Group disposed several investments at fair value through
+profit or loss with the aggregate amount of RMB3.2 billion. At the same time, the Group re-designated
+one investment at fair value through profit or loss to investments accounted for using the equity method
+amounted to RMB50 million as a result of change in contractual rights of the investment (Note 12(i)).
+2018 Annual Report (215)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+a) Investments at fair value through profit or loss (Continued)
+As of December 31,
+2018
+2017
+RMB'000
+Investments in associates at fair
+(1,586,253)
+779,397
+(418,791)
+assets
+fair value
+revenue
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Others
+Total
+RMB'000
+As of January 1, 2018
+(582,895)
+(418,791)
+(584,567)
+(1,586,253)
+Business combinations
+Deferred
+(775,789)
+Intangible method or at
+Investments
+907,322
+Additions
+(Charged)/credited to
+the consolidated income statement
+(135,675)
+7,750
+(127,925)
+As of December 31, 2017
+768,674
+10,723
+2018 Annual Report (213)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+18 DEFERRED INCOME TAXES (Continued)
+The gross movement on the deferred income tax liabilities is as follows:
+using the
+equity
+(10,467)
+-
+(786,256)
+(5,350)
+(5,350)
+Disposal of a subsidiary
+858
+858
+Credited/(charged) to consolidated
+income statement
+49,844
+Credited to other comprehensive loss
+410,287
+7,897
+(367,864)
+92,267
+7,897
+As of December 31, 2017
+(582,895)
+Business combinations
+(1,681,925)
+(216,703)
+(836,975)
+Credited/(charged) to consolidated
+income statement
+472,286
+8,922 (267,256)
+(100,955)
+112,997
+Charged to other comprehensive loss
+(584,567)
+(6,961)
+As of December 31,2018
+(886,398)
+(416,830)
+(862,290) (100,955)
+(2,266,473)
+As of January 1, 2017
+(628,247)
+(6,961)
+Business combinations
+Prepayments for rental
+582,344
+Rental deposits
+147,678
+85,785
+Prepayments for fixed assets
+97,920
+-
+Loan receivables (Note i)
+74,625
+137,968
+Long term receivables
+12,215
+83,778
+Others
+1,570
+2,525
+2,284
+866,884
+249,957
+282,919
+34,050,792
+7,340,865
+22,132,640
+3,705,537
+438,307
+41,829,964
+25,838,177
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+21 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+For the year ended December 31, 2018
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Non-current
+Receivables from investment disposal
+Prepayments for investments
+312,340
+Current
+Loan receivables (Note i)
+131,568
+45,705
+Receivables from investment disposal (Note iii)
+130,362
+887,885
+Contract assets
+105,630
+47,078
+Others
+826,520
+244,943
+9,064,945
+4,186,391
+2018 Annual Report (219)
+2,973
+Receivables from third-party payment service providers
+163,951
+153,427
+83,285
+Tax prepayments
+3,762,455
+1,592,997
+3,036,667
+829,659
+Prepayments for channel marketing fee
+346,834
+2017
+RMB'000
+93,864
+220,454
+107,808
+Amounts due from related parties (Note 38)
+195,202
+89,216
+Deposits
+155,826
+Prepayments to merchants (Note ii)
+634,551
+Meituan Dianping
+HKD
+a)
+Investments at fair value through profit or loss (Continued)
+(ii) Other investments at fair value through profit or loss
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+At the beginning of the year
+Additions
+Business combinations
+Change in fair value
+4,311,296
+3,929,131
+981,669
+65,577
+5,300
+FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+1,851,128
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+For the years ended December 31, 2018 and 2017, the Group made investment in some
+convertible redeemable preferred shares or ordinary shares with preferential rights issued by
+private investee companies. The Group maintained significant influence in these companies.
+7,580
+Change in fair value
+(14,746)
+22,455
+Disposals and transfers
+Currency translation differences
+At the end of the year
+(227,982)
+(6,250)
+8,256
+(7,006)
+2,015,957
+1,608,298
+216
+Meituan Dianping
+19
+450,419
+Disposals and transfers
+Currency translation differences
+26,762,004
+15,067,960
+8,807,603
+17,030,574
+41,829,964
+25,838,177
+Short-term investments measured at amortized cost are USD zero coupon certificate of deposit
+and term deposit above months and within 1 year. They were neither past due nor impaired as of
+December 31, 2018 and 2017.
+b)
+Short-term investments measured at fair value through profit or loss
+c)
+The short-term investments measured at fair value through profit or loss are wealth management
+products. The principal and returns on all of these wealth management products are not guaranteed,
+hence their contractual cash flows do not qualify for solely payments of principal and interest. Therefore,
+they are measured at fair value through profit or loss. The fair values are within level 3 of the fair value
+hierarchy (Note 3.3). Changes in fair value (realized and unrealized) of these financial assets had been
+recognized in "Other gains, net" in the consolidated income statement.
+Short-term investments are denominated in the following currencies:
+As of December 31,
+2018
+RMB'000
+USD
+RMB
+2017
+RMB'000
+2018
+RMB'000
+As of December 31,
+Short-term investments measured at amortized cost
+At the end of the year
+(2,976,754)
+(8,250)
+53,376
+(125,581)
+4,226,015
+4,311,296
+218
+The Group also has interests in certain investee companies in the form of ordinary shares without
+significant influence, which are managed and their performance are evaluated on a fair value basis.
+The Group designated these instruments as financial assets at fair value through profit or loss.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+20 SHORT-TERM INVESTMENTS
+Short-term investments measured at
+-Amortized cost
+-Fair value through profit or loss
+a)
+2018 Annual Report (217)
+904,349
+1,515,645
+1,515,645
+4,458,761
+4,256,120
+24
+- Restricted cash
+8,807,603
+26,762,004
+20
+- Short-term investments measured at amortized cost
+3,669,072
+6,895,162
+21
+- Cash and cash equivalents
+(excluding tax prepayments)
+432,494
+466,340
+23
+22,975,267
+21,309,932
+17,030,574
+15,067,960
+5,944,693
+6,241,972
+19
+7 20
+- Prepayments, deposits and other assets
+RMB'000
+24
+19,408,839
+3,341,276
+2,290,160
+3,226,407
+9,363,873
+7,596,388
+2,666,799
+5,340,963
+29
+- Deposit from transacting users
+- Advance from transacting users
+- Payables to merchants
+17,043,692
+- Trade payables
+Financial liabilities at amortized costs:
+101,418,292
+101,418,292
+28
+- Convertible redeemable preferred shares
+Financial liabilities at fair value through profit or loss:
+Liabilities as per consolidated statement of financial position
+36,776,769
+55,511,405
+88,087
+- Assets classified as held for sale
+-
+2017
+Note
+As of December 31,
+32%
+30%
+Pre-tax discount rate (%)
+2.5%
+2.5%
+2.5%
+Terminal revenue growth rate (%)
+10%-77%
+(8%)-64%
+5%-35%
+87%-90%
+16%-30%
+Gross profit rate
+30%
+5%-36%
+services
+Bike-sharing
+In-store,
+hotel & travel
+Food delivery
+Annual revenue growth rate
+As of December 31, 2018
+Impairment of goodwill (Continued)
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+As of January 1, 2017
+for the 5-year period (%)
+As of December 31, 2017
+Annual revenue growth rate for the 5-year period (%)
+Gross profit rate
+- Trade receivables
+Financial assets at amortized costs:
+- Short-term investments at fair value through profit or loss
+- Financial assets at fair value through profit or loss
+Assets as per consolidated statement of financial position
+Financial assets at fair value through profit or loss:
+The Group holds the following financial instruments:
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(210) Meituan Dianping.
+Impairment losses of RMB12 million has been charged in "General and administrative expenses" for the year
+ended December 31, 2017.
+New initiatives and others includes different small CGUs. Those CGUs cover the business of RMS supply
+chain solutions to merchants and micro loan business. The discount rate used in the impairment testing for
+the CGUS in new initiatives and others segments is from 29% to 31%, while the terminal revenue growth rate
+is 2.5% for the years ended December 31, 2018 and 2017.
+The budgeted gross margins used in the goodwill impairment testing, were determined by the management
+based on past performance and its expectation for market development. The expected revenue growth rate
+and gross profit rates are following the business plan approved by the Company. Discount rates reflect market
+assessments of the time value and the specific risks relating to the industry.
+33%
+33%
+2.5%
+2.5%
+15%-50%
+85%-90%
+15%-25%
+10%-90%
+hotel & travel
+Food delivery
+In-store,
+Pre-tax discount rate (%)
+Terminal revenue growth rate (%)
+- Other payables (excluding salaries and
+benefits payable and other tax payable)
+2018
+RMB'000
+4,019,499
+Deferred tax liabilities:
+(1,050,119)
+536,134
+1,070,604
+(1,195,869)
+(1,586,253)
+(2,266,473)
+(100,955)
+(584,567)
+(862,290)
+Set-off of deferred tax liabilities pursuant to set-off provisions
+Net deferred tax liabilities
+Total gross deferred tax liabilities
+- to be recovered within 12 months
+- Others
+(418,791)
+(416,830)
+- Investments using the equity method or at fair value
+(582,895)
+(886,398)
+- Intangible assets arising from business combinations
+The balance comprises temporary differences attributable to:
+RMB'000
+2017
+RMB'000
+2018
+- Deferred revenue
+The movement on the gross deferred income tax assets is as follows:
+As of December 31,
+2018
+RMB'000
+142,294
+30
+1,373,351
+As of December 31,2018
+136,505
+131,571
+4,934
+Credited to consolidated income statement
+599,743
+599,743
+Business combinations
+779,397
+10,723
+768,674
+As of January 1, 2018
+Total
+RMB'000
+RMB'000
+Others
+Tax losses
+RMB'000
+(1,050,119)
+(1,195,869)
+(356,642)
+(1,050,119)
+(839,227)
+2017
+RMB'000
+As of December 31,
+(b) Deferred tax liabilities
+- to be recovered after 12 months
+18 DEFERRED INCOME TAXES (Continued)
+- Tax losses
+The balance comprises temporary differences attributable to:
+2017
+RMB'000
+RMB'000
+2018
+As of December 31,
+(a) Deferred tax assets
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
+financial position:
+18 DEFERRED INCOME TAXES
+For the year ended December 31, 2018
+2018 Annual Report (211)
+16,200,085
+25,885,858
+55,510
+162,000
+35,759
+2,270,056
+32
+32
+316,264
+assets classified as held for sale
+- Liabilities directly associated with
+- Borrowings
+- Other non-current liabilities
+- Redemption liabilities
+1,400,989
+1,373,351
+768,674
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+208,424
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+- Others
+(212) Meituan Dianping.
+243,263
+445,041
+243,263
+236,617
+- to be recovered within 12 months
+- to be recovered after 12 months
+Deferred tax assets:
+RMB'000
+2017
+RMB'000
+As of December 31,
+142,294
+10,723
+Total gross deferred tax assets
+779,397
+Set-off of deferred tax assets pursuant to set-off provisions
+2018
+(1,070,604)
+Net deferred tax assets
+445,041
+243,263
+(536,134)
+(a) Cash and cash equivalents
+As of December 31,
+24 CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (223)
+19,408,839
+432,494
+466,340
+2018
+7,459
+The maximum exposure to credit risk as of December 31, 2018 and 2017 was the carrying value of the trade
+receivables. The Group did not hold any collateral as security.
+2017
+17,043,692
+RMB'000
+Cash in hand and cash in bank
+9,629,534
+14,780,345
+Term deposit with initial terms within three months
+5,576,350
+3,279,367
+Cash held by financial institutions (Note i)
+1,837,808
+1,349,127
+2,037
+RMB'000
+56,958
+(47,693)
+84,428
+Cash and cash equivalents are denominated in the following currencies:
+(29,461)
+(131,472)
+(23,173)
+14,600
+8,011
+8,433
+14,253
+32,972
+(124,069)
+(29,461)
+The directors of the Group considered that the carrying amounts of the trade receivables balances
+approximated their fair value as of December 31, 2018 and 2017.
+The Group allows a credit period of 90 to 150 days to its customers. Aging analysis of trade receivables (net
+off allowance for impairment of trade receivables) based on invoice date is as follows:
+Trade receivables
+Up to 3 months
+3 to 6 months
+6 months to 1 year
+Over 1 year
+The majority of the Group's trade receivables were denominated in RMB.
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+281,353
+283,649
+126,376
+56,574
+USD
+RMB'000
+JPY
+Others
+4,458,761
+As of December 31, 2018, RMB178 million and USD85 million (equivalent to approximately RMB583.4
+million) restricted deposits were held by bank as letter of guarantee. The USD85 million (equivalent
+to approximately RMB583.4 million) was pledged to China Merchants Bank Co., Ltd. for the loans of
+RMB300 million (Note 32).
+As of December 31, 2017, RMB143.4 million and USD1.1 million (equivalent to approximately RMB7.3
+million) restricted deposits were held by bank as letter of guarantee.
+2018 Annual Report (225)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+25 SHARE CAPITAL AND SHARE PREMIUM
+As of December 31, 2018 and 2017, the authorised share capital of the Company comprises 10,000,000,000
+ordinary shares with par value of USD0.00001 per share.
+Issued:
+Nominal
+Number of
+value of
+ordinary
+ordinary
+Share
+Share
+shares
+shares
+capital
+premium
+Total
+'000
+USD'000
+RMB'000
+2017
+RMB'000
+4,256,120
+7,319
+625,935
+1,566
+Others
+(i) :
+224
+Meituan Dianping
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+11,247,166
+5,629,279
+88,196
+13,776,847
+5,624,311
+1,759
+79,051
+5,922
+RMB
+17,043,692
+The Group considers all highly liquid investments with an original maturity of three months
+or less, when purchased, to be cash equivalents. Cash and cash equivalents of the Group
+primarily represent bank deposits and fixed deposits with maturities less than three months.
+As of December 31, 2018 and 2017, the Group had certain amounts of cash held in accounts
+managed by other financial institutions in connection with the provision of online and
+mobile commerce and related services in the amount of RMB1.8 billion and RMB1.3 billion,
+respectively, which have been classified as cash and cash equivalents on the consolidated
+statement of financial position.
+24
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS (Continued)
+(b) Restricted cash
+Restricted cash are dominated in the following currencies:
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+RMB
+USD
+3,628,619
+4,451,442
+19,408,839
+2018
+RMB'000
+(i)
+At the end of the year
+(55,014)
+114,410
+13,614
+(150,990)
+(44,714)
+For loan receivables outstanding at January 1, 2018, adjustments of RMB12.4 million of provisions for loan
+receivables was recognized in the opening accumulated losses (Note 2.1.1(a)).
+220
+Meituan Dianping
+21
+21
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+Prepayments to merchants are derived from in-store, hotel & travel services. The Group prepays the third-party
+merchants prior to their merchant's sales campaign of vouchers on the Group's online platform. The Group
+recognizes commission revenue from in-store, hotel & travel services when the vouchers and reservations are
+redeemed by transacting users to enjoy the goods or services. At each period end, prepayments to merchants are
+assessed for impairment to ensure the recoverability, by considering reliability of the assets and existence of advance
+from transacting users.
+Prepayments to merchants
+Less: allowance for impairment(a)
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+298,128
+385,390
+(77,674)
+(277,582)
+220,454
+107,808
+(3,314)
+(57,074)
+(208,326)
+RMB'000
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+21
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+RMB'000
+Loan receivables are derived from micro loan business. Loan receivables are recorded initially at fair value and
+subsequently measured at amortized cost using the effective interest method, less allowance for impairment. The
+loan periods extended by the Group to the merchants or individuals generally range from 3 months to 18 months.
+Breakdown for loan receivables included both current and non-current portion as follows:
+Unsecured loan receivables
+Less: allowance for impairment
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+(a) Majority of loss allowance are related to the non-performing balances for which 100% provision have been
+provided.
+3,988,070
+(150,990)
+(44,714)
+3,837,080
+1,730,965
+Movements on the Group's allowance for impairment of loan receivables are as follows:
+At the beginning of the year
+Provision
+Receivables written off during the year as uncollectable
+At the end of the year
+Year ended December 31,
+2018
+2017
+1,775,679
+Year ended December 31,
+Movements on the Group's allowance for impairment of prepayments to merchants are as follows:
+At the beginning of the year
+400,244
+88,374
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+590,409
+461,955
+(124,069)
+(29,461)
+466,340
+432,494
+As of December 31, 2017, individually significant receivables have been separately assessed for impairment.
+Allowance was set up against impaired receivables arising from credit default of several customers who are in
+financial difficulties.
+Beginning from January 1, 2018, the Group applies the simplified approach permitted by IFRS 9, which
+requires expected lifetime losses to be recognized from initial recognition of the assets. The provision matrix
+is determined based on historical observed default rates over the expected life of the contract assets and
+trade receivables with similar credit risk characteristics and is adjusted for forward-looking estimates. At every
+reporting date the historical observed default rates are updated and changes in the forward-looking estimates
+are analysed.
+222
+Meituan Dianping
+23
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+TRADE RECEIVABLES (Continued)
+Movements on the Group's allowance for impairment of trade receivables are as follows:
+At the beginning of the year
+Provision
+Assets classified as held for sale
+Reversal
+Receivables written off during the year as uncollectable
+88,374
+348,430
+51,814
+2017
+RMB'000
+Reversal
+Receivables written off during the year as uncollectable
+At the end of the year
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+(277,582)
+(317,329)
+19,251
+180,657
+39,689
+58
+(77,674)
+(iii)
+(277,582)
+The remaining balances of prepayments, deposits and other assets which are subject to ECL model are all within
+performing stage with credit losses are limited to 12 months expected loss, which are not material (Note 3.1(b)).
+As of December 31, 2018 and 2017, the carrying value of prepayments, deposits and other assets was primarily
+denominated in RMB.
+2018 Annual Report (221)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+22 INVENTORIES
+Spare parts
+Merchandise
+23 TRADE RECEIVABLES
+Trade receivables
+Less: allowance for impairment
+2018
+RMB'000
+The total consideration receivable from the disposal of Maoyan in 2017 was RMB1.8 billion with RMB888 million
+received in 2017 and the rest RMB888 million was fully collected in 2018.
+At January 1, 2018
+(2,742,872)
+15
+reserve
+translation
+Capital compensation
+Adjustment on adoption of IFRS9 (net of tax)
+(265,997)
+466,103
+2018 Annual Report (227)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+27 DEFERRED REVENUE
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Non-Current
+Business cooperation agreement with Maoyan
+611,233
+833,500
+Others
+13,766
+624,999
+833,500
+Current
+Online marketing services
+2,856,343
+reserve
+1,891,948
+reserve
+Total
+20,810
+Share of equity movement in an associate
+(Note 12(a))
+Currency translation differences
+As of December 31, 2017
+82,829
+82,829
+3,429,486
+3,429,486
+20
+20
+1,232,234
+(500,154)
+466,103
+(265,997)
+(500,154)
+1,232,234
+20
+20
+As of December 31, 2017
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Others
+Business cooperation agreement with Maoyan
+222,267
+222,267
+(235,567)
+(4,879,599)
+Mobike monthly pass revenue recognition
+(491,398)
+Other revenue recognition
+Liabilities directly associated with assets classified as held for sale
+(4,077)
+(64)
+At the end of the year
+3,727,881
+2,947,715
+(i)
+In July 2016, as part of the Group's disposal of Maoyan, the Group entered into a 5-year business cooperation
+agreement with Maoyan. Subsequently in September 2017, the agreement was extended for another 14 months. The
+Group recognizes the revenue over the contract period.
+228
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES
+On October 6, 2015, the Company issued a total of 1,954,217,809 shares of Series A-1 through A-11
+Preferred Shares.
+In November 2015, the Company issued Series B Preferred Shares at an issue price of USD3.86 per share.
+Series B Preferred Shares were continuously issued beginning from November 2015 to August 2016 and total
+801,039,606 shares were issued.
+In October 2017, the Company issued Series C Preferred Shares at an issue price of USD5.59 per share. Total
+of 733,575,936 shares were issued.
+In April 2018, the Company issued 167,703,791 shares of Series A-12 Preferred Shares in connection with the
+acquisition of Mobike (Note 36).
+Upon issuance of Series A-12 Preferred shares, a total of 2,121,921,600 shares were issued from Series A-1
+through A-12 ("Series A Preferred Shares").
+Upon the Listing on September 20, 2018, all outstanding Preferred Shares of the Company have been
+converted into ordinary shares.
+The key terms of all series of Preferred Shares effective and applicable during the period ended September
+20, 2018 are as follows:
+Conversion
+Each Preferred Share may, at the option of the holders, be converted at any time after the original issue
+date into fully-paid and non-assessable ordinary shares at an initial conversion ratio of 1:1 subject to (i)
+adjustment for share splits and combinations; (ii) adjustment for ordinary share dividends and distributions; (iii)
+adjustments for other dividends; and (iv) adjustment in Preferred Share conversion price for dilutive issuances.
+2018 Annual Report (229)
+(9,627,170)
+Online marketing revenue recognition
+(222,267)
+Business cooperation agreement with Maoyan amortization
+Mobike monthly pass
+24,221
+Others
+51
+3,102,882
+2,114,215
+3,727,881
+2,947,715
+Movements on the Group's deferred revenues are as follows:
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+20,810
+2,947,715
+At the beginning of the year
+Add:
+Business cooperation agreement with Maoyan (Note i)
+191,334
+Receipt from online marketing customers
+10,586,871
+5,798,999
+Receipt from Mobike monthly pass
+515,620
+Receipt from others
+22,651
+Less:
+2,072,548
+1,548,664
+Transaction with non-controlling interests
+(1,070,615)
+258,285,071
+At January 1, 2017
+1,483,996
+14
+93
+93
+8,567,622
+8,567,715
+Exercise of option and RSU vesting
+86,664
+1
+6
+1,297,645
+1,297,651
+Repurchase of ordinary shares
+(21,996)
+(1)
+(526,738)
+(526,739)
+At December 31, 2017
+1,548,664
+15
+98
+9,338,529
+9,338,627
+258,284,687
+Share Repurchases
+384
+5,727,447
+98
+9,338,529
+9,338,627
+Issuance of ordinary shares
+4,136,806
+41
+283
+248,944,408
+248,944,691
+Exercise of option and RSU vesting
+67,649
+1
+5
+842,199
+842,204
+Repurchase of ordinary shares
+(24,667)
+(2)
+(811,142)
+(811,144)
+Cancellation of ordinary shares
+(1,005)
+(29,307)
+(29,307)
+At December 31, 2018
+57
+During the year ended December 31, 2018 and 2017, the Group executed share repurchases from certain
+employees and shareholders of the Company. All repurchased shares were retired upon repurchase. The
+fair value of the repurchased shares are reflected as a reduction to share capital and share premium in the
+Company's consolidated balance sheet. Any incremental amount paid, i.e., the difference between the
+repurchase price and per share fair value of the underlying ordinary shares, is recorded as compensation
+expenses in the Group's consolidated income statement.
+A tranch of 3,580,459 shares were repurchased between January 2017 and April 2017 at a per share price
+of USD3.86, while another tranch of 18,416,209 shares were repurchased in December 2017 at a weighted
+average per share fair value of USD5.47. The incremental amount paid of RMB223 million was recorded in
+compensation expenses for the year ended December 31, 2017.
+A tranch of 24,667,064 shares were repurchased between January 2018 and April 2018 at a weighted
+average per share fair value of USD5.47. The incremental amount paid of RMB49 million was recorded in
+compensation expenses for the year ended December 31, 2018.
+231,736
+1,816,453
+(685,701)
+47,969
+47,969
+(186,013)
+(186,013)
+(7,617,907)
+(7,617,907)
+As of December 31, 2018
+20
+20
+2,594,722
+(8,118,061)
+(218,028)
+(5,741,347)
+As of January 1, 2017
+20
+1,556,384
+(3,929,640)
+(369,636)
+Share-based compensation expenses
+746,465
+746,465
+Exercise of option and RSU vesting
+(685,701)
+1,816,453
+231,736
+| | |
+As of December 31, 2018, a total number of 234,731,722 shares which have been vested and exercised, are
+in the process of registration.
+226
+Meituan Dianping
+26 OTHER RESERVES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Share-based
+Currency
+20
+Issuance of ordinary shares
+Business combinations
+Share-based compensation expenses
+(1,070,615)
+(423,731)
+20
+1,232,234
+(500,154)
+(689,728)
+42,372
+609,744
+609,744
+Exercise of option and RSU vesting
+Transaction with non-controlling interests
+Preferred shares fair value change
+due to own credit risk
+Currency translation differences
+(423,731)
+As of December 31,
+As of January 1, 2018
+1,443,877
+Bank loan unsecured
+32 BORROWINGS
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (235)
+(55,510)
+-
+Total liabilities directly associated with assets classified as held for sale
+Deferred revenue
+(17,824)
+Deposit from transacting users
+(12,257)
+Other payables and accruals
+(1,238)
+(64)
+Advance from transacting users
+Bank loan secured
+As of December 31,
+(ii)
+(i) The amount of RMB300 million are borrowed from China Merchants Bank Co., Ltd. and secured
+by domestic loan under overseas guarantee.
+Bank borrowings of RMB1.8 billion will be repayable in 2019 and bear annual average interest rate of
+5.597% (2017: 4.785%).
+(b)
+(a)
+162,000
+Asset-backed securities
+2,270,056
+162,000
+600,000
+1,200,000
+2017
+RMB'000
+RMB'000
+2018
+470,056
+(24,127)
+Trade payables
+Liabilities directly associated with assets classified as held for sale
+The following assets and liabilities were reclassified as held for sale as at December 31, 2018:
+In December 2018, the directors of the Group decided to sell certain overseas Mobike entities. The sale is
+expected to be completed in 2019. The associated assets and liabilities were consequently presented as held
+for sale.
+31 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+234
+As of
+December 31,
+Except for RMB1.4 billion payables for acquisition of Mobike, which is denominated in USD, the majority of
+other balances are denominated in RMB.
+7,361,630
+246,470
+637,383
+239,217
+347,315
+212,984
+3,920,323
+2018
+RMB'000
+Assets classified as held for sale
+Cash and cash equivalents
+88,087
+Total assets classified as held for sale
+1,548
+15
+15,594
+19,013
+122
+271
+51,524
+Inventories
+Intangible assets
+Property, plant and equipment
+Prepayments, deposits and other assets
+Trade receivables
+Restricted cash
+The amount of RMB300 million are borrowed from China Everbright Bank Co., Ltd, guaranteed
+by Beijing Sankuai Online Technology Co., Ltd. and secured by the unexpired receivables of
+Chongqing Sankuai Micro-credit Co., Ltd.
+For the year ended December 31, 2018, the weighted average effective interest rate was 5.980%
+(2017: 7.324%).
+The Group has securitized certain loan receivables and issued RMB500 million asset-backed securities
+("ABS") in 2018. During the year ended December 31, 2018, the Group issued ABS of RMB500 million,
+of which RMB471 million represented senior tranche and RMB29 million represented subordinate
+tranches, which were fully acquired by the Group. These ABS bore interest at 5.4%-6.2% per annum in
+2018.
+236
+159,405,915
+Outstanding as of December 31, 2016
+1.51
+44,792,530
+Vested and exercisable as of December 31, 2018
+2.90
+1.14
+116,321,663
+0.60
+(41,429,635)
+Exercised during the year
+1.71
+(9,581,909)
+Forfeited during the year
+Outstanding as of December 31, 2018
+Granted during the year
+31,381,500
+3.86
+1,691,320
+2018 Annual Report (239)
+The weighted average remaining contractual life of outstanding share options was 7 years and 7 years as of
+December 31, 2018 and 2017.
+0.65
+62,477,476
+Vested and exercisable as of December 31, 2017
+1.94
+121,961,415
+Outstanding as of December 31, 2017
+0.72
+(61,949,755)
+Exercised during the year
+2.96
+(6,876,245)
+Forfeited during the year
+1.34
+407,248
+21,290,122
+24,081,670
+Options granted typically expire in 10 years from the respective grant dates. For previously granted options
+that were near its expiration date (i.e., 10 years after grant date) in 2017 and 2018, their expiration date was
+extended to October 5, 2025. The options have graded vesting terms, and vest in tranches from the grant
+date over 4 years, on condition that employees remain in service without any performance requirements.
+On August 30, 2018, a new share option scheme ("Post-IPO Share Option Scheme") and a new share award
+scheme ("Post-IPO Share Award Scheme") had been approved by the shareholders of the Company. The
+total number of Class B Shares which may be issued upon exercise of all options to be granted under the
+Post-IPO Share Option Scheme and any other schemes is 475,568,628 Class B Shares. The aggregate
+number of Class B Shares underlying all grants made pursuant to the Post-IPO Share Award Scheme
+(excluding Award Shares which have been forfeited in accordance with the Post-IPO Share Award Scheme)
+will not exceed 272,336,228 Shares without Shareholders' approval (the "Post-IPO Share Award Scheme
+Limit") subject to an annual limited of 3% of the total number of issued Shares at the relevant time.
+As of August 30, 2018, the Group has authorised and reserved 683,038,063 ordinary shares under the 2015
+Share Incentive Plan for awards of options and RSUs of the Company's ordinary shares. All the share options
+and RSUs under the 2015 Share Incentive Plan were granted between May 31, 2006 and August 2, 2018 and
+the Company will not grant further share options and RSUs under the 2015 Share Incentive Plan after the
+Listing.
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The options may be exercised at any time after they have vested subject to the terms of the award agreement
+and are exercisable for a maximum period of 10 years after the date of grant.
+2018 Annual Report (237)
+The incremental fair value, calculated as the difference between the fair value of share option award assumed
+by the Group in the Mobike option replacement and the fair value of the outstanding incentive share awards
+of Mobike as of the acquisition date, has been included in the measurement of the amount recognized for
+the services received over the remainder of the vesting period, and is recognized in the Group's consolidated
+income statement as share-based compensation expenses.
+On April 4, 2018, the Company and Mobike entered into a strategic transaction (Note 36), and the Group
+assumed all the outstanding incentive share awards of Mobike (the "Mobike option replacement"). The
+number and types of the shares issuable upon the exercise of the Mobike option replacement, and the
+applicable exercise price for share options were adjusted according to the same term as the 2015 Share
+Incentive Plan. After the replacement awards were issued, Mobike's original incentive plan ceased to operate.
+A total of 21,290,122 share options were assumed by the Group in the acquisition of Mobike. The Mobike
+option replacement has been analysed to determine whether the awards relate to pre-combination or post-
+combination services or both. To the extent Mobike option replacement is for pre-combination services, a
+portion of the value of the awards has been allocated to the consideration transferred for the acquiree. To the
+extent the Mobike option replacement is for post-combination services, the value of the awards is recognized
+as compensation expenses attributable to post-combination services.
+On October 6, 2015, the Board approved the establishment of the Company's 2015 Share Incentive Plan
+(“2015 Share Incentive Plan"), an equity-settled share-based compensation plan with the purpose of
+attracting, motivating, retaining and rewarding certain employees, consultants, and Directors. The 2015
+Share Incentive Plan is valid and effective for 10 years from the date of approval by the Board. The Group has
+reserved 598,483,347 ordinary shares under the 2015 Share Incentive Plan, and permits the awards of options
+and RSUs of the Company's ordinary shares.
+33 SHARE-BASED PAYMENTS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+In addition, according to the merger agreement with Mobike, RSUs of the Company with a total valuation
+of USD60 million would be granted to current Mobike officers, directors, and employees, and subject to the
+Company's 2015 Share Incentive Plan. The Company recorded share-based compensation expenses over the
+service period based on its best estimate of the grant day fair value of related RSUs.
+238
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+1.94
+121,961,415
+Mobike option replacement
+Granted during the year
+Outstanding as of December 31, 2017
+(USD)
+option
+share options
+per share
+Number of
+average
+exercise price
+Weighted
+Movements in the number of share options granted and their related weighted average exercise prices are as
+follows:
+Share options (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+4.71
+828,014
+Share options
+665,013
+3%
+2.5%
+4%
+13%
+40%
+40%
+28%
+Discount rate was estimated by weighted average cost of capital as of each appraisal date. The Group
+estimated the risk-free interest rate based on the yield of US Treasury Strips with a maturity life equal to
+period from the respective appraisal dates to expected liquidation date. Volatility was estimated at the dates
+of appraisal based on average of historical volatilities of the comparable companies in the same industry for
+a period from the respective appraisal dates to expected liquidation date. In addition to the assumptions
+adopted above, the Company's projections of future performance were also factored into the determination of
+the fair value of Series A, B, and C on each appraisal date.
+TRADE PAYABLES
+Trade payables
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+5,340,963
+29
+2,666,799
+23%
+2018
+27,109,363
+15,138,824
+(4,516,902)
+101,418,292
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+As of
+December 31,
+2017
+Voting rights (Continued)
+Discount rate
+Risk-free interest rate
+DLOM
+Volatility
+As of
+September 20,
+The Group applied the discount cash flow method to determine the underlying equity value of the Company
+and adopted option-pricing method and equity allocation model to determine the fair value of the convertible
+redeemable preferred shares. Key assumptions are set as below:
+2018 Annual Report (233)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+29 TRADE PAYABLES (Continued)
+5,067,050
+168,162
+1,995,402
+662,168
+102,764
+2,523
+2,987
+2017
+RMB'000
+6,706
+2,666,799
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+743,791
+5,340,963
+2018
+RMB'000
+As of December 31,
+Others
+As of December 31, 2018 and 2017, the aging analysis of the trade payables based on invoice date were as
+follows:
+Trade payables
+Up to 3 months
+3 to 6 months
+6 months to 1 year
+Over 1 year
+The majority of the Group's trade payables were denominated in RMB.
+30
+OTHER PAYABLES AND ACCRUALS
+Salaries and benefits payable
+Payables for acquisition
+Deposits
+Tax payable
+Amounts due to related parties (Note 38)
+Accrued expenses
+63,687,007
+Meituan Dianping
+For the year ended December 31, 2018
+As of December 31, 2017
+Subject to the law and applicable provisions of these Articles, if any, the Company may purchase its own
+shares as the Directors may determine and agree with the shareholder. Under specific conditions as provided
+in the Article of Association, the holders of Series C Preferred Shares shall be entitled to sell their Series C
+Preferred Shares to the Company on the same terms and in the same manner on a pro rata basis.
+Redemption features
+The Liquidation Events are defined to include: (i) any liquidation, winding-up, or dissolution of any group
+company (as defined in the share purchase agreement); (ii) any merger, acquisition, sale of voting control,
+amalgamation or consolidation of any group company, as a result of which the shareholders of the Company
+will cease to own a majority of the Equity Securities or voting power of the surviving entity; (iii) any sale of
+any group company or any sale or distribution of all or substantially all of the assets of any group company;
+(iv) the exclusive licensing of all or substantially all of the intellectual property of any group company to a
+third-party unaffiliated with any group company; or (v) any transfer in which a majority of the outstanding
+voting power of the Company is transferred; unless waived in writing by the holders of at least a majority of
+the then outstanding Preferred Shares. There is no liquidation events triggered throughout the period ended
+September 20, 2018.
+If the assets of the Company shall be insufficient to make payment of the foregoing amounts in full on all
+the Preferred Shares, then such assets shall be distributed among the holders of Preferred Share, ratably in
+proportion to the full amounts to which they would otherwise be respectively entitled thereon. After distribution
+or payment in full of the amount distributable or payable on any Preferred Shares, the assets of the Company
+legally available for distribution shall be distributed pro-rata among the holders of the ordinary shares.
+Upon Liquidation Event, whether voluntary or involuntary, before any distribution or payment shall be made to
+the ordinary shareholders, each holder of Series B and Series C Preferred Shares shall be entitled to receive
+an "Liquidation Preference Amount" equal to the greater of (i) 120% of the Series B or C issuance price plus
+all declared but unpaid dividends and (ii) amount each holder would have received had the Series B and C
+Preferred Shares been converted into ordinary shares immediately prior to the closing of such Liquidation
+Events, and each holder of Series A Preferred Shares shall be entitled to receive 100% of the issuance price,
+plus all declared but unpaid dividends.
+Liquidation preference
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+230
+Prior to the issuance of Series C Preferred Shares, specific conditions attached to above conversion rights in
+relation to Series C shareholders as summarized above were not applicable.
+2018 Annual Report (231)
+"Qualified IPO" is defined as a firm underwritten initial public offering of the ordinary shares and the listing of
+such shares for trading on the New York Stock Exchange, NASDAQ Global Market, Main Board of the Hong
+Kong Stock Exchange or any other internationally recognized stock exchange as approved by the Company
+and the holders of at least a majority of voting power of all Preferred Shares (voting as a single class), with a
+minimum valuation of a certain amount on a fully diluted basis immediately prior to the consummation of the
+offering or agreed in writing by the holders of at least a majority of voting power of all outstanding Preferred
+Shares (voting as a single class), at least a majority of voting power of all outstanding Series C Preferred
+Shares (voting as a separate class), and a majority of voting power of all outstanding Series C Preferred
+Shares held by certain Series C shareholders.
+(ii)
+the closing of a Qualified IPO, or
+(i)
+In addition, each Preferred Share shall automatically be converted, without the payment of any additional
+consideration, into fully-paid and non-assessable ordinary shares based on the then-effective applicable
+conversion price upon the earlier of:
+Conversion (Continued)
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2,598,340
+37,305
+232
+1,183,676
+the date specified by written consent or agreement of holders of a majority of the outstanding Preferred
+Shares; provided, however, that (a) no Series B Preferred Shares can be converted into ordinary shares
+without the prior written consent or agreement of holders of a majority of the outstanding Series B
+Preference shares, voting as a separate class; and (b) no Series C Preferred Shares can be converted
+into ordinary shares without the prior written consent or agreement of holders of a majority of the
+outstanding Series C Preferred Shares, voting as a separate class.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Issuance of Series C Preferred Shares
+For the year ended December 31, 2018
+Currency translation differences
+(220,435,440)
+8,336,605
+186,013
+5,888,472
+104,792,071
+101,418,292
+RMB'000
+As of January 1, 2017
+As of December 31, 2018
+Transfer to ordinary shares
+Change in fair value
+Dividends
+Voting rights
+Currency translation differences
+Each Preferred share has voting rights equivalent to the number of ordinary shares into which such Preferred
+shares could be then convertible.
+The Group monitors Series A, B, and C Preferred Shares on a fair value basis which is in accordance with its
+risk management strategy and does not bifurcate any embedded derivatives from the host instruments and
+designates entire instruments as a financial liability at fair value through profit or loss with the changes in the
+fair value recorded in the consolidated income statement.
+The movements of the convertible redeemable preferred share are set out as below:
+Non-cumulative dividends of 8% per annum when and if declared by the Board with preference to Series C
+preferred shareholders, followed by series B preferred shareholders, followed by each tranche of Series A
+from A-12 until A-1, and then ordinary shares, in that order.
+Change in fair value
+Issuance of Series A-12 preferred shares
+Includes: change in fair value due to own credit risk
+As of January 1, 2018
+Change in working capital
+Finance costs
+Decrease/(increase) in restricted cash
+7,819
+9,783
+(346,375)
+(584,347)
+62,099
+1,485
+Net exchange differences
+358,790
+1,346,000
+9,19
+(497,973)
+(1,836,382)
+Change in fair value from investments measured
+at fair value through profit or loss
+Dividend income and interest classified
+10,418
+48,267
+12
+using equity method
+594,744
+13,266
+Impairment provision for other intangible assets
+as investing cash flows
+Share of losses of investments accounted for
+(38,179)
+Increase in trade receivables
+875,167
+Increase in other payables and accruals
+Impairment provision for Mobike tradename
+745,054
+Increase in deferred revenue
+246,409
+439,578
+Increase in advance from transacting users
+5,058,537
+(1,767,485)
+(Decrease)/increase in payables to merchants
+1,353,493
+2,100,697
+Increase in trade payables
+(168,664)
+Increase in inventories
+(2,538,454)
+(3,722,048)
+Increase in prepayments, deposits and other assets
+(182,024)
+(135,879)
+(4,133,474)
+Mobike restructuring plan
+RMB'000
+15,138,824
+244
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+36 BUSINESS COMBINATIONS (Continued)
+Acquisition of Mobike (Continued)
+Note i) The share consideration paid by the Group for the acquisition of Mobike was comprised of the Company's Series
+A-12 preferred shares. The fair value of the share consideration was determined using the per share fair value of
+Series A-12 preferred share as of the acquisition date, using the option-pricing method and equity allocation model.
+Note ii) Pursuant to the share purchase agreement for the acquisition of Mobike, all outstanding awards, vested or
+unvested, that were awarded under the Mobike's current incentive plan were assumed by the Group under the
+2015 Share Incentive Plan. This represents the portion of the awards related to precombination services and were
+therefore allocated to consideration paid by the Company.
+The revenue included in the consolidated income statement since April 4, 2018 contributed by Mobike was
+RMB1.5 billion. Mobike also contributed a loss of RMB4.6 billion over the same period. The acquisition-related
+costs were not significant and had been charged to general and administrative expenses in the consolidated
+income statement for the year ended December 31, 2018.
+Had Mobike been consolidated from January 1, 2018, the Group's consolidated income statement for the
+year ended December 31, 2018 would show pro-forma revenue of RMB65.5 billion and a loss of RMB117.1
+billion.
+2018 Annual Report
+Year ended December 31,
+245
+For the year ended December 31, 2018
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS
+a)
+Cash used in operations
+Loss before income tax
+Adjustments for
+Depreciation and amortization
+1,676,265
+Provision for doubtful accounts
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018
+Note
+2017
+RMB'000
+104,606,058
+28
+preferred shares
+Fair value changes of convertible redeemable
+(85,925)
+(23,132)
+9
+Gain from business and investments disposals
+971,100
+1,865,113
+8
+-share-based payments
+Non-cash employee benefits expense
+64,371
+285,655
+7
+844,315
+5,366,801
+15,16
+(18,933,663)
+(115,490,807)
+Impairment provision and restructuring expense for
+1,870,925
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+16,906
+Liabilities from financing activities as of
+Total
+RMB'000
+shares
+RMB'000
+Borrowings
+RMB'000
+preferred
+redeemable
+Convertible
+Liabilities from financing activities
+Cash used in operations (Continued)
+a)
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+2018 Annual Report (247)
+2,270,056
+(220,435,440)
+(220,435,440)
+470,056
+1,800,000
+56
+56
+8,336,605
+8,336,605
+January 1, 2017
+104,792,071
+Cash flow
+63,687,007
+161,000
+25,802,523
+25,963,523
+Issuance of Preferred Shares
+without cash settled (Note i)
+Fair value changes of convertible
+redeemable preferred shares
+Currency translation differences
+Liabilities from financing activities as of
+December 31, 2017
+(i)
+162,000
+1,306,840
+1,306,840
+15,138,824
+15,138,824
+(4,516,902)
+(4,516,902)
+101,418,292
+15,563,979
+63,688,007
+1,000
+Increase in other non-current liabilities
+-- 104,792,071
+activities as of December 31,
+Borrowings
+due after
+1 year
+RMB'000
+due within
+1 year
+RMB'000
+Borrowings
+Convertible
+2018
+activities as of January 1,
+Liabilities from financing
+Liabilities from financing activities
+Reconciliation of liabilities generated from financing activities
+Non-cash transaction is about the acquisition of subsidiaries and investments through the issuance of
+shares. Please refer to Note 12, 19, 30 and 36. Excluding this, there were no other material non-cash
+investing and financing activities for the years ended December 31, 2018 and 2017.
+Cash used in operations (Continued)
+a)
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+246
+(291,640)
+(8,981,189)
+Cash used in operations
+(4,765,957)
+Decrease in deposit from transacting users
+redeemable
+2018
+preferred
+Total
+Liabilities from financing
+ordinary shares, net
+Proceeds from issuance of
+Recognization of issuance cost
+differences
+Currency translation
+preferred shares
+convertible redeemable
+Fair value changes of
+6,278,472
+5,888,472
+390,000
+Business combinations
+1,718,000
+470,000
+1,248,000
+Cash flow
+101,580,292
+101,418,292
+162,000
+RMB'000
+shares
+RMB'000
+2,742,501
+12,821,478
+3.34
+Total identifiable net assets
+Year ended December 31,
+The total share-based compensation expenses recognized in the consolidated income statement are RMB1.9
+billion and RMB971.1 million for the years ended December 31, 2018 and 2017, respectively. The following
+table sets forth a breakdown of the share-based compensation expenses by nature:
+RSUS (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (241)
+The fair value of each RSU at the grant dates is determined by reference to the fair value of the underlying
+ordinary shares on the date of grant.
+101,580,292
+2018
+114,505,992
+2.45
+(12,854,880)
+Forfeited during the year
+2.27
+(24,714,694)
+Vested during the year
+3.71
+80,815,301
+Granted during the year
+Outstanding as of December 31, 2017
+RMB'000
+2017
+RMB'000
+Share options
+Meituan Dianping
+242
+1-2 years
+Within 1 year
+Capital commitments
+a)
+35 COMMITMENTS
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2018 and 2017.
+DIVIDENDS
+34
+971,100
+1,865,113
+1,481
+223,154
+48,660
+Incremental fair value for repurchase of ordinary shares (Note 25)
+Others
+605,410
+1,442,579
+RSUs
+141,055
+373,874
+2.39
+71,260,265
+Outstanding as of December 31, 2016
+4.59
+The weighted average fair value of granted options was USD3.69 and USD1.94 per share, for the years ended
+December 31, 2018 and 2017, respectively.
+3.86
+2.87-3.85
+5.18-6.21
+0-5.18
+40.0%-55.0%
+2.2%-3.1%
+5.9-6.4
+3.2% 3.8%
+2.8-6.8
+45.0% 50.0%
+2017
+Year ended December 31,
+2018
+Dividend yield
+Exercise price (USD)
+Fair value of ordinary shares (USD)
+Expected volatility
+Expected term - years
+Risk-free interest rates
+Based on fair value of the underlying ordinary shares, the Group has used Black-Scholes model to determine
+the fair value of the share option as of the grant date. Key assumptions are set as below:
+Before the Listing on September 20, 2018, the Group has used the discounted cash flow method to determine
+the underlying equity fair value of the Company and adopted option-pricing model and equity allocation
+model to determine the fair value of the underlying ordinary shares. Key assumptions, such as discount rate
+and projections of future performance, are determined by the Group with best estimate.
+Fair value of share options
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+240
+As of December 31,
+Meituan Dianping
+33 SHARE-BASED PAYMENTS (Continued)
+164,133,960
+Outstanding as of December 31, 2018
+4.77
+(11,820,544)
+Forfeited during the year
+2.95
+(26,219,723)
+Vested during the year
+5.76
+87,668,245
+3.34
+114,505,992
+Granted during the year
+Outstanding as of December 31, 2017
+per RSU
+(USD)
+of RSUs
+Number
+Weighted
+average grant
+date fair value
+Movement in the number of RSUs granted and the respective weighted average grant date fair value are as
+follows:
+The Company also grants RSUs to the Company's employees, consultants, and directors under the 2015
+Share Incentive Plan and Post-IPO Share Awards Plan. The RSUs awarded vest in tranches from the grant
+date over a certain service period, on condition that employees remain in service without any performance
+requirements. Once the vesting conditions underlying the respective RSUs are met, the RSUs are considered
+duly and validly issued to the holder, and free of restrictions on transfer.
+RSUs
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Goodwill
+2018
+2017
+RMB'000
+840,000
+1,600,000
+- User list
+Trade name
+Intangible assets
+12,880
+Financial assets at fair value through profit or loss
+21,550
+Trade receivables
+- Technology
+159,115
+380,000
+Short-term investments
+392,374
+Restricted cash
+834,532
+Cash and cash equivalents
+Recognized amounts of identifiable assets acquired and liabilities assumed
+15,563,979
+Total consideration paid by the Group
+Inventories
+660,000
+- Others
+478,265
+(785,467)
+Deferred tax liabilities
+(8,125,057)
+Deposit from transacting users
+(35,176)
+Deferred revenue
+(8,080)
+Other non-current liabilities
+(246,945)
+Other payables and accruals
+(497,907)
+(390,000)
+Advance from transacting users
+Borrowings
+(414,715)
+Trade payables
+599,743
+1,918,191
+Prepayments, deposits and other assets
+5,349,198
+Property, plant and equipment
+231,736
+Option replacement (ii)
+5,888,472
+Issuance of preferred shares (167.7 million shares) (Note 28) (i)
+1 - 5 years
+Within 1 year
+The Group leases office under non-cancelable operating lease agreements. Future minimum lease
+payments under non-cancelable operating lease agreements with initial terms of 1 year or more consist
+of the following:
+26,903
+41,054
+2017
+RMB'000
+2018
+RMB'000
+As of December 31,
+Operating lease commitments
+b)
+Purchase of other property, plant and equipment
+Capital commitments (Continued)
+a)
+35 COMMITMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+26,903
+41,054
+2,535
+3,628
+24,368
+37,426
+Over 5 years
+RMB'000
+As of December 31,
+RMB'000
+9,443,771
+Cash Consideration
+April 4, 2018
+RMB' 000
+The goodwill of approximately RMB12.8 billion arising from the acquisition is attributable to business
+cooperation expected to be derived from combining with the operations of the Group. None of the goodwill
+recognized is expected to be deductible for income tax purposes. The following table summarizes the
+consideration paid for the acquisition of Mobike, the fair value of identifiable assets acquired and liabilities
+assumed.
+Acquisition of Mobike (Continued)
+36 BUSINESS COMBINATIONS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (243)
+On April 4, 2018, the Company and Tollan Holdings Limited ("Tollan Holdings"), a wholly owned subsidiary of
+the Company, completed a transaction to acquire 100% of the equity interests of mobike Ltd. ("Mobike"), an
+unlisted entity mainly operates in the PRC and connects users to dockless bikes via a mobile application.
+Acquisition of Mobike
+36 BUSINESS COMBINATIONS
+1,097,361
+2,111,477
+299,185
+223,965
+529,647
+1,281,789
+268,529
+605,723
+2017
+RMB'000
+2018
+The Company entered into a USD200 million contribution-in-kind for 5-year cooperation agreement with one
+platform. A call option was granted to the platform to exercise at the next round of financing. If the platform
+does not exercise, after a certain time period, the Company would be required to pay the amount plus interest.
+In October 2017, the call option was exercised in full with Series C Preferred Shares issued and no cash
+settlement.
+Deferred tax assets
+Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party
+or exercise significant influence over the other party in making financial and operational decisions. Parties
+are also considered to be related if they are subjected to common control. Members of key management and
+their close family members of the Group are also considered as related parties.
+Core connected person
+Core connected person
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+(i)
+Sales of service
+Associate of the Group
+414,204
+384,149
+One of the Company's shareholders
+3
+Associate of the Group
+Associate of the Group
+414,207
+(ii)
+One of the Company's shareholders
+963,941
+413,285
+Associate of the Group
+532,984
+1,496,925
+413,285
+(iii) Sales of investments
+Associate of the group
+38,776
+2018 Annual Report (249)
+38 RELATED PARTY TRANSACTIONS
+384,149
+Associate of the Group
+Purchase of goods and service
+Associate of the Group
+248
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+38
+RELATED PARTY TRANSACTIONS (Continued)
+a)
+Names and relationships with related parties
+The following significant transactions were carried out between the Group and its related parties during the
+periods presented. In the opinion of the Directors, the related party transactions were carried out in the normal
+course of business and at terms negotiated between the Group and the respective related parties.
+The following companies are significant related parties of the Group that had transactions and/or
+balances with the Group during the year ended December 31, 2018 and 2017.
+Name of related parties
+Tencent Group
+Dalian Tongda Enterprise Management Co., Ltd.
+One of the Company's shareholders
+Associate of the Group
+Tianjing Maoyan and its subsidiaries
+Changsha Xiangjiang Longzhu Private Equity
+Associate of the Group
+Associate of the Group
+b) Significant transactions with related parties
+Mu Rongjun
+Dalian Sen Cheng Logistics Co., Ltd.
+Shanghai Shang Mi Technology Co., Ltd.
+Wang Xing
+Relationship
+Investment Fund Enterprise (Limited Partnership)
+Jilin billion-Allians Bank Co., Ltd.
+Beijing Wisdom Map Technology Co., Ltd.
+the series of contractual arrangements entered into between WFOES,
+Onshore Holdcos and Registered Shareholders (as applicable)
+has the meaning ascribed to it under the Listing Rules and unless the
+context otherwise requires, refers to Wang Xing and the directly and
+indirectly held companies through which Wang Xing has an interest in the
+Company
+the director(s) of the Company
+the Company and its subsidiaries and Consolidated Affiliated Entities
+from time to time
+Hong Kong dollars, the lawful currency of Hong Kong
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
+Kong), as amended, supplemented or otherwise modified from time to
+time
+Crown Holdings Asia Limited, a limited liability company incorporated
+under the laws of the BVI, which is controlled by Wang Xing
+Computershare Hong Kong Investor Services Limited
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+has the meaning ascribed to it under the Listing Rules
+has the meaning ascribed to it under the Listing Rules
+Meituan Dianping (*) (formerly known as Internet Plus Holdings
+Ltd.), an exempted company with limited liability incorporated under the
+laws of the Cayman Islands on September 25, 2015, or Meituan Dianping
+() and its subsidiaries and Consolidated Affiliated Entities, as the
+case may be
+the Hong Kong Special Administrative Region of the PRC
+the chief operating decision-maker who is responsible for allocating
+resources and assessing performance of the operating segments
+class B ordinary shares of the share capital of the Company with a
+par value of US$0.00001 each, conferring a holder of a Class B Share
+one vote per share on any resolution tabled at the Company's general
+meeting
+"Hong Kong" or "HK"
+"Hong Kong Share Registrar❞
+Futures Ordinance" or "SFO"
+"Hong Kong Securities and
+the entities we control through the Contractual Arrangements, namely,
+the Onshore Holdcos and their respective subsidiaries (each a
+"Consolidated Affiliated Entity")
+254
+"Memorandum" or "Memorandum
+of Association"
+DEFINITIONS
+"Post-IPO Share Award Scheme"
+International Financial Reporting Standards, as issued from time to time
+by the International Accounting Standards Board
+"Hong Kong dollars" or "HK dollars"
+or "HK$"
+person(s) or company(ies) which, to the best of the Directors' knowledge
+having made all due and careful enquiries, is/are not connected (within
+the meaning of the Listing Rules) with the Company
+initial public offering
+Kevin Sunny Holding Limited, a limited liability company incorporated
+under the laws of the BVI on May 22, 2018, which is wholly owned by
+Wang Huiwen
+the listing of the Class B Shares on the Main Board of the Stock
+Exchange
+"Onshore Holdcos", each an
+"Onshore Holdco❞
+"Model Code"
+Meituan Dianping
+"Mobike Beijing"
+"Meituan Finance"
+"Main Board"
+“Listing Rules"
+“Listing Date"
+"Listing"
+"Kevin Sunny"
+"IPO"
+"Independent Third Party(ies)"
+"IFRS"
+"Mobike"
+"Group", "our Group" or "the Group",
+"we", "us", or "our"
+the forthcoming annual general meeting of the Company to be held on
+May 17, 2019
+"Crown Holdings"
+the articles of association of the Company adopted on August 30, 2018
+with effect from Listing, as amended from time to time
+September 20, 2018
+"Class A Shares"
+"Chengdu Meigengmei❞
+"Charmway Enterprises"
+"CG Code"
+"BVI❞
+"Board"
+"Beijing Xinmeida"
+has the meaning ascribed to it under the Listing Rules
+"Beijing Sankuai Technology"
+"Beijing Mobike"
+"Beijing Kuxun Interaction"
+"Auditor"
+"Audit Committee❞
+"associate(s)"
+"Articles" or "Articles of Association"
+"AGM"
+DEFINITIONS
+Meituan Dianping
+"Beijing Sankuai Cloud Computing"
+"Director(s)"
+the audit committee of the Company
+Beijing Kuxun Interaction Technology Co., Ltd. (ÀNÁRA
+Ā]), a limited liability company incorporated under the laws of the PRC on
+March 29, 2006 and our Consolidated Affiliated Entity
+"Controlling Shareholder(s)"
+"Contractual Arrangement(s)"
+"Consolidated Affiliated Entities"
+"connected transaction(s)"
+"connected person(s)"
+"Company", "our Company",
+"the Company"
+"Companies Ordinance"
+"CODM"
+"Class B Shares"
+the external auditor of the Company
+DEFINITIONS
+class A shares of the share capital of the Company with a par value of
+US$0.00001 each, conferring weighted voting rights in the Company
+such that a holder of a Class A Share is entitled to ten votes per share
+on any resolution tabled at the Company's general meeting, save for
+resolutions with respect to any Reserved Matters, in which case they
+shall be entitled to one vote per share
+Charmway Enterprises Company Limited, a limited liability company
+incorporated under the laws of the BVI, which is controlled by Mu Rongjun
+Chengdu Meigengmei Information Technology Co., Ltd. (¤¤¤§
+), a limited liability company incorporated under the laws of
+the PRC on July 18, 2014 and our Consolidated Affiliated Entity
+the corporate governance code as set out in Appendix 14 to the Listing
+Rules
+the British Virgin Islands
+the board of Directors
+Beijing Xinmeida Technology Co., Ltd. (X¾£¤ŒÃ¬), a
+limited liability company incorporated under the laws of the PRC on
+March 17, 2016 and our Consolidated Affiliated Entity
+Beijing Sankuai Technology Co., Ltd. (=), a limited
+liability company incorporated under the laws of the PRC on April 10,
+2007 and our Consolidated Affiliated Entity
+Beijing Sankuai Cloud Computing Co., Ltd. (RTHĦĦRA¬), a
+limited liability company incorporated under the laws of the PRC on June
+17, 2015 and our Consolidated Affiliated Entity
+Beijing Mobike Technology Co., Ltd. (R), a limited
+liability company incorporated under the laws of the PRC on January 27,
+2015 and our Consolidated Affiliated Entity
+2018 Annual Report (253)
+the Rules Governing the Listing of Securities on The Stock Exchange of
+Hong Kong Limited, as amended, supplemented or otherwise modified
+from time to time
+the post-IPO share option scheme adopted by the Company on August
+30, 2018
+the memorandum of association of the Company adopted on August 30,
+2018 as amended from time to time
+Tencent Holdings Limited (HKEx Stock Code: 700), or Tencent Holdings
+Limited and/or its subsidiaries, as the case may be
+Tianjin Antechu Technology Co., Ltd. (##), a limited
+liability company incorporated under the laws of the PRC on January 17,
+2018 and our Consolidated Affiliated Entity
+has the meaning ascribed to it in section 15 of the Companies Ordinance
+has the meaning ascribed to it in the Listing Rules
+The Stock Exchange of Hong Kong Limited
+a wholly owned subsidiary of Tencent
+), a company established in the PRC on November 11, 1998 and
+A
+Shenzhen Tencent Computer Systems Co., Ltd.
+Shared Vision Investment Limited, a limited liability company incorporated
+under the laws of the BVI, which is wholly owned by Mu Rongjun
+"%"
+"WVR Structure"
+"WVR Beneficiaries"
+"WFOES", each a "WFOE"
+"weighted voting right"
+"VIE(s)"
+"US dollars", "U.S. dollars" or "US$"
+"United States", "U.S." or "US"
+"Tencent"
+"Tianjin Antechu Technology"
+the United States of America, its territories, its possessions and all areas
+subject to its jurisdiction
+United States dollars, the lawful currency of the United States
+variable interest entity(ies)
+has the meaning ascribed to it in the Listing Rules
+Tianjin Xiaoyi Technology, Shanghai Juzuo, Beijing Kuxun Technology,
+Tianjin Wanlong, Beijing Sankuai Online, Shenzhen Sankuai Online,
+Shanghai Hanhai, Sankuai Cloud Online and Mobike Beijing
+Meituan Dianping
+258
+the number of transactions is generally recognized based on the
+number of payments made. (i) With respect to our in-store business,
+one transaction is recognized if a user purchases multiple vouchers
+with a single payment; (ii) with respect to our hotel-booking business,
+one transaction is recognized if a user books multiple room nights with
+a single payment; (iii) with respect to our attraction, movie, air and train
+ticketing businesses, one transaction is recognized if a user purchases
+multiple tickets with a single payment; (iv) with respect to our bike-
+sharing business, if a user uses a monthly pass, then one transaction is
+recognized only when the user purchases or claims the monthly pass,
+and subsequent rides are not recognized as transactions; if a user does
+not use a monthly pass, then one transaction is recognized for every ride
+a user account that paid for transactions of products and services on
+our platform in a given period, regardless of whether the account is
+subsequently refunded
+the revenues for the year/period divided by the Gross Transaction
+Volume for the year/period
+the value of paid transactions of products and services on our platform
+by consumers, regardless of whether the consumers are subsequently
+refunded. This includes delivery charges and VAT, but excludes any
+payment-only transactions, such as QR code scan payments and point-
+of-sale payments
+a merchant that meets any of the following conditions in a given period:
+(i) completed at least one transaction on our platform, (ii) purchased any
+online marketing services from us, (iii) processed offline payment at least
+once through our integrated payment systems, or (iv) generated any
+order through our ERP systems
+"transaction"
+"Transacting User"
+"substantial shareholder"
+"monetization rate"
+"Active Merchant"
+GLOSSARY
+2018 Annual Report (257)
+Certain amounts and percentage figures included in this document have been subject to rounding adjustments.
+Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding
+them.
+The English names of the PRC entities, PRC laws or regulations, and the PRC governmental authorities referred
+to in this document are translations from their Chinese names and are for identification purposes. If there is any
+inconsistency, the Chinese names shall prevail.
+Unless otherwise expressly stated or the context otherwise requires, all data in this document is as of the date of
+this document.
+per cent
+has the meaning ascribed to it in the Listing Rules
+has the meaning ascribed to it under the Listing Rules and unless the
+context otherwise requires, refers to Wang Xing, Mu Rongjun and Wang
+Huiwen, being the holders of the Class A Shares, entitling each to
+weighted voting rights
+"Gross Transaction Volume"
+or "GTV"
+"subsidiary(ies)"
+"Stock Exchange"
+"Shenzhen Tencent Computer"
+"Shanghai Hantao"
+"SFC"
+"RSU(s)"
+"RMB" or "Renminbi❞
+"Reserved Matters"
+"Reporting Period"
+"Relevant Period"
+"Registered Shareholders"
+"Prospectus"
+"Shanghai Lutuan”
+"Pre-IPO ESOP"
+"PRC"
+"Post-IPO Share Option Scheme"
+DEFINITIONS
+2018 Annual Report (255)
+the post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+Tianjin Antechu Technology, Shanghai Lutuan, Beijing Kuxun Interaction,
+Shanghai Sankuai Technology, Meituan Finance, Beijing Sankuai Cloud
+Computing, Beijing Xinmeida, Chengdu Meigengmei, Beijing Mobike,
+Beijing Sankuai Technology and Shanghai Hantao
+), a limited liability company incorporated under the laws of the
+PRC on January 12, 2016 and our indirect wholly owned subsidiary
+the Model Code for Securities Transactions by Directors of Listed Issuers
+as set out in Appendix 10 to the Listing Rules
+Mobike (Beijing) Information Technology Co., Ltd. (À)
+mobike Ltd., an exempted company with limited liability incorporated
+under the laws of the Cayman Islands on April 2, 2015 and our direct
+wholly owned subsidiary
+"PRC Legal Advisor"
+the stock exchange (excluding the option market) operated by the Stock
+Exchange, which is independent from and operates in parallel with the
+GEM of the Stock Exchange
+"Shanghai Sankuai Technology"
+"Shareholder(s)"
+"Shared Vision"
+DEFINITIONS
+Meituan Dianping
+256
+Shared Patience Inc., a limited liability company incorporated under the
+laws of the BVI, which is wholly owned by Wang Xing
+holder(s) of the Share(s)
+the Class A Shares and Class B Shares in the share capital of the
+Company, as the context so requires
+Shanghai Sankuai Technology Co., Ltd. (), a limited
+liability company incorporated under the laws of the PRC on September
+19, 2012 and our Consolidated Affiliated Entity
+Shanghai Hantao Information Consultancy Co., Ltd. (AND
+A), a limited liability company incorporated under the laws of the
+PRC on September 23, 2003 and our Consolidated Affiliated Entity
+Shanghai Lutuan Technology Co., Ltd. (Ã), a limited
+liability company incorporated under the laws of the PRC on January 12,
+2017 and our Consolidated Affiliated Entity
+"Share(s)"
+the Securities and Futures Commission of Hong Kong
+Renminbi, the lawful currency of China
+those matters resolutions with respect to which each Share is entitled to
+one vote at general meetings of the Company pursuant to the Articles of
+Association, being: (i) any amendment to the Memorandum or Articles,
+including the variation of the rights attached to any class of shares, (ii)
+the appointment, election or removal of any independent non-executive
+Director, (iii) the appointment or removal of the Company's auditors, and
+(iv) the voluntary liquidation or winding-up of the Company
+the registered shareholders of the Onshore Holdcos
+the period from the Listing Date to December 31, 2018
+the year ended December 31, 2018
+prospectus of the Company dated September 7, 2018
+the pre-IPO employee stock incentive scheme adopted by the Company
+dated October 6, 2015, as amended from time to time
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+the People's Republic of China
+252
+"Shared Patience"
+restricted share unit(s)
+There were no material subsequent events during the period from December 31, 2018 to the approval date of
+these consolidated financial statements by the Board on March 11, 2019.
+Beijing Meituan Finance Technology Co., Ltd. (¤¶à¶¸Á®Á
+]), a limited liability company incorporated under the laws of the PRC on
+August 9, 2017 and our Consolidated Affiliated Entity
+(23,077,808)
+21,107,233
+27,281,595
+45,684,536
+63,064,966
+RMB'000
+2017
+2018
+RMB'000
+Note
+As of December 31,
+Current assets
+Prepayments, deposits and other assets
+Investments in subsidiaries
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+38 RELATED PARTY TRANSACTIONS (Continued)
+c)
+d)
+Balances with related parties
+As of December 31,
+90,346,561
+2018
+66,791,769
+18,819,750
+Non-current liabilities
+LIABILITIES
+Equity attributable to equity holders of the Company
+Accumulated losses
+Other reserves
+Share premium
+Share capital
+EQUITY
+88,727,973
+127,432,404
+Total assets
+21,936,204
+37,085,843
+2,992,032
+3,960,689
+Cash and cash equivalents
+124,422
+20,104
+Prepayments, deposits and other assets
+Short-term investments
+2017
+RMB'000
+RMB'000
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+233,504
+88
+9,281
+457
+120,443
+54
+14,461
+375
+39 CONTINGENCIES
+248,428
+130,235
+The Group did not have any material contingent liabilities as of December 31, 2018 and 2017, except for the
+financial guarantee amount, disclosed in Note 3.1(c).
+250
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+40 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+(a) Financial position of the Company
+ASSETS
+Non-current assets
+SUBSEQUENT EVENTS
+Pension costs and other employee benefits
+Share-based compensation expenses
+Others
+Wages, salaries and bonuses
+Key management compensation
+212,984
+Other receivables from related parties
+Associate of the Group
+One of the Company's shareholders
+Core connected person
+19,654
+31,240
+175,548
+47,976
+10,000
+Convertible redeemable preferred shares
+195,202
+(ii)
+Other payables to related parties
+Associate of the Group
+378,972
+194,194
+One of the Company's shareholders
+28,276
+18,790
+407,248
+89,216
+Current liabilities
+33,105,050
+Total liabilities
+Currency translation differences
+Preferred shares fair value change due to own credit risk
+Other comprehensive loss
+Loss for the year
+(609,744)
+Other payables and accruals
+(685,701)
+107,119
+(609,744)
+(4,712,673) (127,527,156)
+Accumulated
+(2,175,504)
+(15,236,311)
+Currency translation differences
+3,534,313
+Total comprehensive loss
+1,358,809
+(23,077,808)
+Transaction with owners in their capacity as owners
+Comprehensive loss
+Share-based compensation expenses
+746,465
+(7,841,497)
+Exercise of option and RSU vesting
+Other reserve
+RMB'000
+(48,660)
+(4,819,792) (126,917,412)
+Other comprehensive loss
+Loss for the year
+Comprehensive loss
+As of January 1, 2017
+As of December 31, 2018
+Total transaction with owners in their capacity as owners
+Exercise of option and RSU vesting
+Issuance of ordinary shares
+losses
+Business combinations
+Transaction with owners in their capacity as owners
+Total comprehensive loss
+(5,244,707)
+(186,013)
+(104,263,335)
+610,928 (22,654,077)
+423,731
+(23,077,808)
+1,034,659
+(423,731)
+RMB'000
+Share-based compensation expenses
+231,736
+(1,070,615)
+(324,150)
+88,727,973
+127,432,404
+101,432,495
+1,387,162
+14,203
+1,387,162
+101,418,292
+28
+(12,704,522)
+126,045,242
+(23,077,808)
+1,034,659
+(4,712,673)
+(127,527,156)
+40(b)
+9,338,529
+258,284,687
+25
+98
+384
+25
+Total equity and liabilities
+Total transaction with owners in their capacity as owners
+Wang Xing
+The statement of financial position of the Company was approved by the Board of Directors on March
+11, 2019 and was signed on its behalf.
+Mu Rongjun
+Director
+As of December 31, 2017
+1,034,659
+Director
+As of January 1, 2018
+Adjustment on adoption of IFRS9, net of tax
+As of December 31, 2017
+609,744
+(b) Reserve movement of the Company
+40 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+For the year ended December 31, 2018
+2018 Annual Report (251)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+41
+12,219,504
+Our general and administrative expenses increased to RMB5.8 billion, or 8.9% of revenues in 2018 from
+RMB2.2 billion, or 6.4% of revenues in 2017. Excluding the effect of RMB1.3 billion impairment provision
+of intangible assets resulting from the change in our branding strategy for the bike-sharing services, and
+RMB132.0 million of the total RMB358.8 million impairment provision for Mobike's overseas restructuring,
+our general and administrative expenses as a percentage of revenues increased to 6.7% in 2018. Besides the
+impairment provision, the increase in general and administrative expenses was mainly attributable to (i) the
+increase in employee benefits expenses to RMB2.5 billion in 2018 from RMB1.3 billion in 2017, as a result
+of the increase in headcount and the average salaries and benefits, including share-based payments, of our
+administrative personnel, (ii) the increase in provision of doubtful accounts due to the adoption of IFRS 9
+and expansion of our micro loan business, and (iii) the increase in rental, facilities and utilities to support the
+expansion in employee headcount and business operations.
+36.0%
+General and Administrative Expenses
+Our selling and marketing expenses increased to RMB15.9 billion in 2018 from RMB10.9 billion in 2017, and
+decreased to 24.3% from 32.2% as a percentage of revenues. The increase in selling and marketing expenses
+was primarily due to the increase in employee benefits expenses, Transaction User incentives, promotion
+and advertising expenses and amortization of intangible assets. Employee benefits expenses increased to
+RMB5.1 billion in 2018 from RMB3.5 billion in 2017 due to our expansion of the selling and marketing teams
+to support the expansion of our food delivery business and new initiatives and other services. Transacting
+User incentives increased to RMB5.4 billion in 2018 from RMB4.2 billion in 2017, as we continued to drive
+the rapid growth of the food delivery segment and to expand our service offerings to consumers in the new
+initiatives and others segment. Promotion and advertising expenses increased to RMB3.3 billion in 2018 from
+RMB2.3 billion in 2017, primarily due to our increased spending in marketing and branding campaigns to drive
+growth in active users.
+Selling and Marketing Expenses
+Research and Development Expenses
+Our research and development expenses increased to RMB7.1 billion, or 10.8% of revenues in 2018 from
+RMB3.6 billion, or 10.7% of revenues in 2017, primarily due to the increase in employee benefits expenses,
+including share-based payments, to RMB6.6 billion in 2018 from RMB3.4 billion in 2017, which resulted from
+the increase in both headcount and average salaries and benefits of our research and development personnel
+to support our business growth.
+2018 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+As a result of the foregoing, our gross profit in 2018 and 2017 was RMB15.1 billion and RMB12.2 billion,
+respectively.
+25
+(3,826,092)
+294,047
+(18,987,881)
+23.2%
+15,104,958
+Total
+46.0%
+940,606
+(115,492,695)
+(37.9%)
+New initiatives and others
+88.3%
+9,579,479
+89.0%
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+14,095,355
+(4,258,594)
+(11,085,797)
+Loss for the year
+(1,888)
+60,885
+(44,732)
+(19,214)
+redeemable preferred shares
+(104,606,058)
+(15,138,824)
+(54,218)
+Share of losses of investments
+(48,267)
+(10,418)
+Loss before income tax
+(115,490,807)
+(18,933,663)
+Income tax expenses
+accounted for using equity method
+Our fair value changes on investments measured at fair value through profit or loss in 2018 increased by
+RMB1.4 billion compared to 2017, primarily due to fair value gain from our investee companies.
+Operating Loss
+Our other gains, net were a gain of RMB748.4 million in 2018 compared to a gain of RMB208.3 million in
+2017, primarily due to the increase in interest income from short-term investments as well as government
+subsidies. In 2017, a loss of RMB366.7 million was recognized for the disposal of certain investments in other
+gains, net.
+MANAGEMENT DISCUSSION AND ANALYSIS
+The following tables set forth the reconciliations of our non-IFRS financial measures for the three months
+ended December 31, 2018 and 2017, and the years ended December 31, 2018 and 2017, to the nearest
+measures prepared in accordance with IFRS.
+Unaudited
+Three Months Ended
+December 31,
+2018
+December 31,
+2017
+(RMB in thousands)
+In-store, hotel & travel
+(3,734,518)
+(1,530,599)
+Add:
+Fair value changes on investments measured at fair value
+through profit or loss
+(990,653)
+(241,006)
+Other gains, net
+(156,792)
+(302,857)
+Depreciation of property, plant and equipment
+1,361,812
+2018 Annual Report (27
+To supplement our consolidated results which are prepared and presented in accordance with IFRS, we
+also use adjusted EBITDA and adjusted net loss as additional financial measures, which are not required by,
+or presented in accordance with IFRS. We believe that these non-IFRS measures facilitate comparisons of
+operating performance from period to period and company to company by eliminating potential impacts of
+items that our management does not consider to be indicative of our operating performance such as certain
+non-cash items and certain impact of investment transactions. The use of these non-IFRS measures have
+limitations as an analytical tool, and one should not consider them in isolation from, or as a substitute for
+analysis of, our results of operations or financial conditions as reported under IFRS. In addition, these non-
+IFRS financial measures may be defined differently from similar terms used by other companies.
+RECONCILIATION OF NON-IFRS MEASURES TO THE NEAREST IFRS MEASURES
+There were no important events affecting the Company and its subsidiaries which occurred after December
+31, 2018 and up to the date of this annual report.
+Operating Loss
+As a result of the foregoing, our operating loss in 2018 was RMB11.1 billion, compared to an operating loss of
+RMB3.8 billion in 2017.
+Fair Value Changes of Convertible Redeemable Preferred Shares
+Fair value changes of convertible redeemable preferred shares increased to a loss of RMB104.6 billion in 2018
+from a loss of RMB15.1 billion in 2017, resulting from significant increase in the valuation of our Company,
+which was determined by the offering price of the Company's Shares in our initial public offering in September
+2018.
+Loss Before Income Tax
+Primarily as a result of the foregoing, our loss before income tax in 2018 was RMB115.5 billion, compared to
+a loss of RMB18.9 billion in 2017.
+26
+26
+Meituan Dianping
+3.
+Other Gains, Net
+MANAGEMENT DISCUSSION AND ANALYSIS
+Represents impairment provision of intangible assets resulting from the change in the branding strategy for our bike-
+sharing services.
+Represents gains or losses from fair value change on investments, including (i) fair value changes on investments
+measured at fair value through profit or loss; (ii) dilution gain; (iii) change in fair value from contingent consideration;
+and (iv) change in fair value from put and call option for Maoyan.
+***
+Represents gains or losses from disposal of investments and subsidiaries.
+2018 Annual Report
+29
+We had income tax expenses of RMB1.9 million in 2018, compared to income tax expenses of RMB54.2
+million in 2017, primarily due to the increase in the recognition of deferred tax assets as we expected certain
+subsidiaries to make profit and therefore utilize the accumulated losses carried forward.
+Loss For the Year
+As a result of the foregoing, we had losses of RMB115.5 billion and RMB19.0 billion in 2018 and 2017,
+respectively.
+Important Events after Reporting Date
+Income Tax Expenses
+8.1%
+Year Ended
+13.8%
+2018
+2017
+(RMB in thousands)
+Operating Loss
+(11,085,797)
+(3,826,092)
+Add:
+Fair value changes on investments measured at fair value
+through profit or loss
+(1,836,382)
+(472,874)
+Other gains, net
+(748,356)
+(208,260)
+Depreciation of property, plant and equipment
+December 31,
+December 31,
+Year Ended
+MANAGEMENT DISCUSSION AND ANALYSIS
+Gains on disposal of investments and subsidiaries ***
+(124,384)
+Amortization of intangible assets resulting from acquisitions
+188,742
+81,661
+Impairment and expense provision for Mobike restructuring plan
+Impairment of intangible assets *
+358,790
+4,252,292
+1,346,000
+(1,861,856)
+(1,385,447)
+***
+Represents impairment provision of intangible assets resulting from the change in the branding strategy for our bike-
+sharing services.
+Represents gains or losses from fair value change on investments, including (i) fair value changes on investments
+measured at fair value through profit or loss; (ii) dilution gain; (iii) change in fair value from contingent consideration;
+and (iv) change in fair value from put and call option for Maoyan.
+Represents gains or losses from disposal of investments and subsidiaries.
+28 Meituan Dianping
+Adjusted net loss
+(285,684)
+327,696
+1,114,509
+Fair value gains on investments **
+(1,834,296)
+(541,731)
+(Gains)/losses on disposal of investments and subsidiaries ***
+(29,426)
+241,097
+Amortization of intangible assets resulting from acquisitions
+Impairment and expense provision for Mobike restructuring plan
+Impairment of intangible assets
+663,268
+325,875
+358,790
+1,346,000
+Adjusted net loss
+(8,517,188)
+(2,852,716)
+104,320
+971,100
+1,865,113
+15,138,824
+104,606,058
+516,619
+Share-based compensation expenses
+1,865,113
+971,100
+Impairment and expense provision for Mobike restructuring plan
+358,790
+Impairment of intangible assets *
+Amortization of intangible assets
+1,346,000
+(4,733,831)
+(2,691,811)
+Loss for the year
+(115,492,695)
+(18,987,881)
+Add:
+Fair value changes of convertible redeemable preferred shares
+Share-based compensation expenses
+Adjusted EBITDA
+1,699,419
+(984,359)
+459,997
+The following table sets forth the comparative figures for the years ended December 31, 2018 and 2017:
+Revenues
+Cost of revenues
+Gross profit
+Selling and marketing expenses
+Research and development expenses
+Year Ended
+December 31,
+December 31,
+2018
+2017
+(RMB in thousands)
+65,227,278
+33,927,987
+(50,122,320) (21,708,483)
+15,104,958
+YEAR ENDED DECEMBER 31, 2018 COMPARED TO YEAR ENDED DECEMBER 31, 2017
+MANAGEMENT DISCUSSION AND ANALYSIS
+2.
+Meituan Dianping
+5,268,197
+Food delivery
+(RMB in thousands, except for percentages)
+MANAGEMENT DISCUSSION AND ANALYSIS
+Operating Loss
+As a result of the foregoing, our operating loss in the three months ended December 31, 2018 was RMB3.7
+billion, compared to an operating loss of RMB1.5 billion in the same period of 2017.
+Fair Value Changes of Convertible Redeemable Preferred Shares
+12,219,504
+Fair value changes of convertible redeemable preferred shares was nil in the three months ended December
+31, 2018 as a result of the completion of our initial public offering in September 2018, compared to a loss of
+RMB663.8 million in the same period of 2017.
+Primarily as a result of the foregoing, our loss before income tax in the three months ended December 31,
+2018 was RMB3.7 billion, compared to a loss of RMB2.2 billion in the same period of 2017.
+Income Tax Credits
+We had income tax credits of RMB276.1 million in the three months ended December 31, 2018, compared
+to income tax credits of RMB21.8 million in the same period of 2017, primarily due to the increase in the
+recognition of deferred tax assets as we expected certain subsidiaries to make profit and therefore utilize the
+accumulated losses carried forward.
+Loss For the Period
+As a result of the foregoing, we had losses of RMB3.4 billion and RMB2.2 billion in the three months ended
+December 31, 2018 and 2017, respectively.
+20
+20
+Loss Before Income Tax
+Fair value gains on investments **
+(15,871,901) (10,908,688)
+(3,646,634)
+As a
+December 31, 2017
+December 31, 2018
+Gross profit/(loss):
+The following table sets forth our gross profit both in absolute amount and as a percentage of revenues, or
+gross margin, by segment in 2018 and 2017:
+Gross Profit and Gross Margin
+MANAGEMENT DISCUSSION AND ANALYSIS
+24 Meituan Dianping
+Cost of revenues for the new initiatives and others business increased to RMB15.5 billion in 2018 from
+RMB1.1 billion in 2017, mainly attributable to the increase in car-hailing driver related costs, depreciation of
+property, plant and equipment primarily as a result of our acquisition of Mobike, cost of goods sold as we
+expanded our supply chain solutions business, and other outsourcing labor costs due to expansion of our
+non-food delivery service.
+Cost of revenues for our in-store, hotel & travel business increased by 37.0% to RMB1.7 billion in 2018 from
+RMB1.3 billion in 2017. The increase was primarily attributable to the increase in payment processing costs
+and bandwidth and server custody fees, which was generally in line with our revenue growth, and the increase
+in depreciation of property, plant and equipment and other outsourcing labor costs.
+Cost of revenues for our food delivery business increased by 70.0% to RMB32.9 billion in 2018 from RMB19.3
+billion in 2017, primarily attributable to the increase in food delivery rider costs as a result of the increase in
+the number of food deliveries completed.
+100.0%
+21,708,483
+100.0%
+643,223
+As a
+percentage of
+percentage of
+Amount
+(5,831,692)
+(2,171,408)
+General and administrative expenses
+Fair value changes on
+investments measured at fair value
+through profit or loss
+Other gains, net
+1,836,382
+748,356
+(7,071,900)
+472,874
+Operating loss
+Finance income
+Finance costs
+Fair value changes of convertible
+total revenues
+Amount
+total revenues
+208,260
+Amortization of intangible assets
+100.0%
+151,460
+Total
+New initiatives and others
+In-store, hotel & travel
+Food delivery
+Cost of revenues:
+The following table sets forth our cost of revenues by segment in 2018 and 2017:
+December 31, 2018
+Our cost of revenues increased by 130.9% to RMB50.1 billion in 2018 from RMB21.7 billion in 2017. The
+increase was caused by our revenue growth in 2018, especially the strong growth of our food delivery
+segment, as well as our new initiatives and others segment.
+MANAGEMENT DISCUSSION AND ANALYSIS
+23
+2018 Annual Report
+Our other services and sales revenue increased by 624.9% to RMB8.8 billion in 2018 from RMB1.2 billion in
+2017, primarily due to the expansion of our products and services offerings to both merchants and consumers
+during the year.
+Our online marketing revenue increased by 99.7% to RMB9.4 billion in 2018 from RMB4.7 billion in 2017,
+primarily due to the increase in the number of online marketing Active Merchants, as well as the increase in
+the average revenue per online marketing Active Merchant from our in-store, hotel & travel and food delivery
+businesses.
+Our commission revenue increased by 67.8% to RMB47.0 billion in 2018 from RMB28.0 billion in 2017,
+primarily due to the substantial growth of our Gross Transaction Volume, especially from our food delivery
+business.
+Cost of Revenues
+100.0%
+December 31, 2017
+percentage of
+33,927,987
+100.0%
+Our revenues from the food delivery segment increased by 81.4% to RMB38.1 billion in 2018 from RMB21.0
+billion in 2017, primarily due to (i) the increase in GTV, which was driven by the increase in the number of
+food delivery transactions, as a result of the increase in food delivery user base and higher average purchase
+frequency per user, and (ii) the increase in monetization rate from 12.3% to 13.5%.
+Our revenues from the in-store, hotel & travel segment increased by 46.0% to RMB15.8 billion in 2018 from
+RMB10.9 billion in 2017, primarily due to (i) the increase in the number of Active Merchants as well as the
+average revenue per Active Merchant of our in-store, hotel & travel businesses, and (ii) the increase in the
+number and the average daily rate of domestic room nights consumed on our platform.
+Our revenues from the new initiatives and others segment increased by 450.3% to RMB11.2 billion in 2018
+from RMB2.0 billion in 2017, primarily due to the increase in revenues from sales of products and services to
+merchants, such as RMS and supply chain solutions businesses, and services to consumers, such as non-
+food delivery service, pilot car-hailing service and bike-sharing service.
+22 Meituan Dianping
+As a
+MANAGEMENT DISCUSSION AND ANALYSIS
+revenues
+Amount
+revenues
+Amount
+As a
+percentage of
+total cost of
+total cost of
+(RMB in thousands, except for percentages)
+65,227,278
+33,927,987
+65,227,278
+Amount
+total revenues
+Amount
+percentage of
+percentage of
+As a
+total revenues
+As a
+December 31, 2018
+Year Ended
+Revenues:
+The following table sets forth our revenues by type in absolute amount and as a percentage of our total
+revenues in 2018 and 2017:
+Revenues by Type
+317,537
+December 31, 2017
+100.0%
+(RMB in thousands, except for percentages)
+47,012,249
+Total
+3.5%
+1,217,182
+13.5%
+8,823,623
+Other services and sales
+Commission
+13.9%
+14.4%
+9,391,406
+Online marketing services
+82.6%
+28,009,130
+72.1%
+4,701,675
+Total
+Year Ended
+2,043,244
+50,122,320
+5.0%
+1,102,638
+30.9%
+15,502,428
+5.9%
+Share-based compensation expenses
+1,273,331
+1,745,006
+89.1%
+19,332,514
+65.6%
+32,874,886
+Non-IFRS measures:
+3.5%
+Adjusted EBITDA
+663,781
+6.0%
+Share-based compensation expenses
+643,223
+459,997
+Impairment and expense provision for Mobike restructuring plan
+358,790
+Impairment of intangible assets
+Fair value changes of convertible redeemable preferred shares
+*
+Adjusted EBITDA
+(854,601)
+(1,358,685)
+Loss for the period
+(3,414,252)
+(2,180,818)
+1,346,000
+Adjusted net loss
+Add:
+(2,691,811)
+(RMB in thousands, except for percentages)
+Food delivery
+38,143,083
+58.5%
+21,031,933
+62.0%
+As a
+percentage of
+total revenues
+15,840,361
+10,852,810
+32.0%
+New initiatives and others
+11,243,834
+(4,733,831)
+17.2%
+24.3%
+Amount
+In-store, hotel & travel
+Amount
+(2,852,716)
+total revenues
+2018 Annual Report (21
+MANAGEMENT DISCUSSION AND ANALYSIS
+Revenues
+Revenues by Segment
+The following table sets forth our revenues by segment in absolute amount and as a percentage of our total
+revenues in 2018 and 2017:
+Our revenues increased by 92.3% to RMB65.2 billion in 2018 from RMB33.9 billion in 2017. The increase was
+primarily driven by (i) the increase in Gross Transaction Volume on our platform to RMB515.6 billion in 2018
+from RMB357.2 billion in 2017, which was in turn driven by the increase in the number of Transacting Users
+and their purchase frequency, and (ii) the increase in monetization rate to 12.6% in 2018 from 9.5% in 2017.
+Revenues:
+Year Ended
+December 31, 2018
+December 31, 2017
+As a
+percentage of
+(8,517,188)
+37
+Chen Shaohui (), aged 37, is the Chief Financial Officer and a Senior Vice President of the Company. He is
+responsible for overseeing the Company's finance, strategic planning, investments and capital market activities.
+Before joining the Company in November 2014, Chen Shaohui worked as an analyst in A.T. Kearney from June
+2004 to October 2005, an investment manager in WI Harper from October 2005 to August 2008 and an investment
+director in Tencent (HKEx Stock Code: 700) from January 2011 to October 2014.
+In July 2018, Chen Shaohui was appointed as a director of Beijing Enlight Media Co., Ltd. (SZSE Stock Code:
+300251) and a non-executive director of Maoyan Entertainment (HKEx Stock Code: 1896).
+Wang Huiwen (EX), aged 40, is a Co-founder, an executive Director and a Senior Vice President of the
+Company. For further details, please see the section headed "Directors and Senior Management Executive
+Directors" above.
+Chen Shaohui received his bachelor's degree in economics from Peking University in June 2004 and his master's
+degree in business administration from Harvard University in May 2010.
+2018 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Zhang Chuan received his bachelor's degree in computer science from Beijing Normal University in July 1997 and
+his master's degree in business administration from Tsinghua University in June 2003.
+Prior to joining the Company in January 2011, Chen Liang worked as a software engineer in Guangzhou Institute
+of Communications (from August 2002 to November 2004 and the chief technology officer in
+Shenzhen Tianshitong Technology Co., Ltd. (2) from November 2004 to December 2005. He
+co-founded xiaonei.com (¼) in December 2005 and worked there from January 2006 to October 2006. xiaonei.
+com () was subsequently sold to China InterActive Corp in October 2006 which was later renamed as Renren
+Inc. (NYSE Ticker: RENN). Chen Liang worked as the research and development manager of the communication
+division in Beijing Yahoo Network Information Technology Co., Ltd. from May 2007 to June 2008. After that, he co-
+founded taofang.com () in June 2008 and worked there from 2008 to 2010.
+Chen Liang received his bachelor's degree in mechatronic engineering from South China University of Technology
+in July 2002.
+Zhang Chuan (II), aged 42, is a Senior Vice President and is responsible for overseeing the Company's in-store
+services business.
+Before joining the Company in January 2017, Zhang Chuan worked as development manager in the Information
+Centre of Ministry of Education from September 1997 to 2005, senior product manager at Yonyou Software Co.,
+Ltd. (SHSE Stock Code: 600588) from May 2005 to August 2006, product director at Baidu, Inc. (NASDAQ Ticker:
+BIDU) from August 2006 to October 2011, and executive vice president at 58.com Inc. (NYSE Ticker: WUBA) from
+October 2011 to December 2016.
+38 Meituan Dianping
+REPORT OF DIRECTORS
+Mu Rongjun (*), aged 39, is a Co-founder, an executive Director and a Senior Vice President of the Company.
+For further details, please see the section headed "Directors and Senior Management Executive Directors"
+above.
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+Chen Liang (), aged 38, is a Senior Vice President and was responsible for overseeing the Company's hotel
+and travel businesses during the Reporting Period.
+Wang Xing (E), aged 40, is a Co-founder, an executive Director, the Chief Executive Officer and Chairman of
+the Board. For further details, please see the section headed "Directors and Senior Management Executive
+Directors" above.
+Orr Gordon Robert Halyburton was appointed as a non-executive director of Lenovo Group Limited (HKEx Stock
+Code: 992) in September 2015 and redesignated as an independent non-executive director in September 2016. Orr
+Gordon Robert Halyburton has been an independent non-executive director of Swire Pacific Limited (HKEx Stock
+Code: 00019 and 00087) since August 2015. He is also the vice chairman of China-Britain Business Council.
+Shum Heung Yeung Harry received his Ph.D. in Robotics from Carnegie Mellon University in August 1996. He was
+elected into the National Academy of Engineering of United States in February 2017.
+GLOBAL OFFERING
+Orr Gordon Robert Halyburton, aged 56, is an independent non-executive Director. He was appointed as Director
+in September 2018 is responsible for providing independent advice on financial and accounting affairs and
+corporate governance matters, and other matters subject to the Board guidance and approval.
+Orr Gordon Robert Halyburton joined Mckinsey & Company in 1986 and served as senior partner of Mckinsey &
+Company from July 1998 until August 2015 when he retired. He was a member of McKinsey's global shareholder
+board from July 2003 until June 2015.
+Orr Gordon Robert Halyburton acquired extensive corporate governance experience during his position as a senior
+partner of McKinsey & Company, as well as a director and member of board committees in Lenovo Group Limited
+(HKEx Stock Code: 992) and Swire Pacific Limited (HKEx Stock Code: 00019 and 00087). His corporate governance
+experience includes, among others, (i) reviewing, monitoring and making recommendations as to the companies'
+policies, practices and compliance; (ii) proposing measures to ensure effective communication between the board
+and shareholders; (iii) opining on proposed connected transactions; and (iv) understanding requirements of the
+Listing Rules and directors' duty to act in the best interest of the company and the shareholders as a whole.
+Orr Gordon Robert Halyburton received his bachelor's degree in engineering science from Oxford University in June
+1984 and his master's degree in business administration from Harvard University in June 1986.
+2018 Annual Report
+35
+36
+SENIOR MANAGEMENT
+36
+Leng Xuesong (A), aged 50, is an independent non-executive Director. He was appointed as Director in
+September 2018 is responsible for providing independent advice on finance, executive compensation and corporate
+governance matters, and other matters subject to the Board guidance and approval.
+Leng Xuesong joined Warburg Pincus, an international private equity firm, in September 1999 as an associate and
+served as managing director when he left in August 2007. From September 2007 to December 2014, he served as
+managing director at General Atlantic LLC, where he focused on investment opportunities in North Asia. In January
+2015, Leng Xuesong founded Lupin Capital, a China-focused private equity fund.
+Leng Xuesong acquired extensive corporate governance experience through his position as managing director
+of private equity funds and as non-executive director of various listed companies in Hong Kong and the US. He
+has accumulated corporate governance experience in (i) reviewing, monitoring and providing recommendations
+as to the companies' policies and compliance; (ii) facilitating effective communication between the board and
+shareholders; and (iii) understanding requirements of the Listing Rules and directors' duty to act in the best interest
+of the company and the shareholders as a whole.
+Leng Xuesong received his bachelor's degree in international industrial trade from Shanghai Jiao Tong University
+in July 1992 and his master's degree in business administration from the Wharton School of the University of
+Pennsylvania in May 1999.
+Leng Xuesong served as non-executive director of China Huiyuan Juice Group Limited (HKEX Stock Code: 1886)
+from September 2006 to August 2007 and Zhongsheng Group Holdings Limited (HKEx Stock Code: 881) from
+August 2008 to June 2015. He served as non-executive director of Wuxi Pharmatech (Cayman) Inc. (NYSE Ticker:
+WX) from March 2008 to December 2015 and Soufun Holdings Ltd. (NYSE Ticker: SFUN) from September 2010 to
+December 2014.
+Shum Heung Yeung Harry (), aged 52, is an independent non-executive Director. He was appointed as
+Director in September 2018 and is responsible for providing independent advice on technology innovation, the
+global technology and internet industry trends, and other matters subject to the Board guidance and approval.
+Shum Heung Yeung Harry joined Microsoft Research in November 1996 as a researcher based in Redmond,
+Washington. In November 1998, he moved to Beijing as one of the founding members of Microsoft Research China
+(later renamed Microsoft Research Asia) and spent nine years there first as a researcher, subsequently moving on to
+become managing director of Microsoft Research Asia and a distinguished engineer of Microsoft Corporation. From
+October 2007 to November 2013, Shum Heung Yeung Harry served as the corporate vice president responsible
+for Bing search product development. He has been the executive vice president of Microsoft Corporation since
+November 2013.
+DIRECTORS AND SENIOR MANAGEMENT
+Shum Heung Yeung Harry has acquired corporate governance experience in his capacity as the executive vice
+president of Microsoft Corporation. His key corporate governance experience includes (i) making recommendations
+as to internal control systems and policies; (ii) regular communication with the board of directors; and (iii)
+implementing corporate governance measures.
+DIRECTORS AND SENIOR MANAGEMENT
+The Company was incorporated in the Cayman Islands on September 25, 2015 as an exempted company with
+limited liability under the laws of the Cayman Islands. The Company's Class B Shares were listed on the Main Board
+of the Stock Exchange on the Listing Date.
+Meituan Dianping
+The Company is China's leading e-commerce platform for services. It provides a platform using technology to
+connect consumers and merchants and offering diversified daily services, including food delivery, in-store dining,
+hotel and travel booking and other services. The activities of the principal subsidiaries are set out in Note 11 to the
+consolidated financial statements.
+19,408,839
+9,376,575
+1,009,587
+(8,227)
+Cash and cash equivalents included in the assets classified
+as held for sale
+Cash and cash equivalents at the end of the year
+(51,524)
+17,043,692
+19,408,839
+Net Cash Used in Operating Activities
+Cash and cash equivalents at the beginning of the year
+Exchange gain/(loss) on cash and cash equivalents
+Net cash used in operating activities primarily consists of our loss for the year and non-cash items, such as
+depreciation and amortization, fair value changes of convertible redeemable preferred shares, and adjusted
+by changes in working capital.
+Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+Net Cash Used in Investing Activities
+For the year ended December 31, 2018, net cash used in investing activities was RMB23.4 billion, which was
+mainly attributable to purchase of short-term investments of RMB91.2 billion and payments for business
+combinations, net of cash acquired of RMB7.3 billion, purchase of property, plant and equipment of RMB2.2
+billion, and purchase of investments measured at fair value through profit or loss of RMB1.6 billion, partially
+offset by proceeds from disposal of short-term investments of RMB75.2 billion, and proceeds from disposal
+of investments measured at fair value through profit or loss of RMB2.6 billion.
+Net Cash Generated from Financing Activities
+For the year ended December 31, 2018, net cash generated from financing activities was RMB29.3 billion,
+which was mainly attributable to proceeds from issuance of ordinary shares.
+Capital Structure
+The Group continued to maintain a healthy and sound financial position. Our total assets grew from RMB83.6
+billion as of December 31, 2017 to RMB120.7 billion as of December 31, 2018, whilst our total liabilities
+changed from RMB124.1 billion as of December 31, 2017 to RMB34.2 billion as of December 31, 2018.
+Gearing ratio
+As of December 31, 2018, our total borrowings were RMB2.3 billion, which included (1) bank borrowings of
+RMB1.8 billion due in 2019 with annual average interest rate of 5.597%; and (2) RMB470.1 million asset-
+backed securities due in 2020 with interest rate at 5.4%-6.2% per annum.
+For the year ended December 31, 2018, net cash used in operating activities was RMB9.2 billion, which was
+primarily attributable to our loss before income tax of RMB115.5 billion, as adjusted by (i) non-cash items,
+which primarily comprised fair value changes of convertible redeemable preferred shares of RMB104.6 billion
+and depreciation and amortization of RMB5.4 billion, and (ii) changes in working capital, which primarily
+comprised a decrease in deposit from transacting users of RMB4.8 billion, an increase in prepayments,
+deposits and other assets of RMB3.7 billion, an increase in trade payables of RMB2.1 billion, a decrease in
+payables to merchants of RMB1.8 billion, and a decrease in restricted cash of RMB0.6 billion.
+10,040,491
+(3,323,210)
+Net (decrease)/increase in cash and cash equivalents
+PRINCIPAL ACTIVITIES
+Neil Nanpeng Shen was the non-executive director of Homeinns Group from 2006 to 2017 and non-executive
+director of PPDAI Group Inc. (NYSE Ticker: PPDF) from 2017 to August 2018 and the independent non-executive
+director of Momo Inc. (NASDAQ Ticker: MOMO) from May 2014 to December 2018.
+Independent Non-executive Directors
+30
+30
+4.
+MANAGEMENT DISCUSSION AND ANALYSIS
+LIQUIDITY AND CAPITAL RESOURCES
+We had historically funded our cash requirements principally from capital contribution from shareholders
+and financing through issuance and sale of equity securities. We had cash and cash equivalents of RMB17.0
+billion and short-term investments of RMB41.8 billion as of December 31, 2018, compared to the balance of
+RMB19.4 billion and RMB25.8 billion as of December 31, 2017.
+The following table sets forth our cash flows for the years indicated:
+Year Ended
+December 31,
+December 31,
+2018
+2017
+(RMB in thousands)
+Net cash used in operating activities
+Net cash used in investing activities
+(9,179,818)
+(23,438,686)
+(310,200)
+(15,157,090)
+29,295,294
+25,507,781
+As of December 31, 2018, our gearing ratio, calculated as total borrowings divided by total equity attributable
+to equity holders of the Company was approximately 2.6%.
+Contingent Liabilities
+Net cash generated from financing activities
+Significant Investment and Material Acquisition
+33
+DIRECTORS AND SENIOR MANAGEMENT
+Non-executive Directors
+Lau Chi Ping Martin (), aged 46, is a non-executive Director. He was appointed as Director in October 2017
+and is responsible for providing advice on business and investment strategies, general market trends, and other
+matters subject to the Board guidance and approval.
+Lau Chi Ping Martin joined Tencent (HKEx Stock Code: 700) in February 2005 as the Chief Strategy and Investment
+Officer. In February 2006, Lau Chi Ping Martin was promoted as the president of Tencent to manage the day-to-
+day operation of Tencent. In March 2007, he was appointed as an executive director of Tencent. Prior to joining
+Tencent, Lau Chi Ping Martin was an executive director at Goldman Sachs (Asia) L.L.C.'s investment banking
+division and the Chief Operating Officer of its Telecom, Media and Technology Group. Prior to that, he worked at
+McKinsey & Company, Inc. as a management consultant.
+Lau Chi Ping Martin received a Bachelor of Science degree in Electrical Engineering from the University of Michigan
+in July 1994, a Master of Science degree in Electrical Engineering from Stanford University in July 1995 and an
+MBA degree from Kellogg Graduate School of Management, Northwestern University in June 1998.
+In July 2011, Lau Chi Ping Martin was appointed as a non-executive director of Kingsoft Corporation Limited (HKEx
+Stock Code: 3888), an internet based software developer, distributor and software service provider listed in Hong
+Kong. In March 2014, Lau Chi Ping Martin was appointed as a director of JD.com, Inc. (NASDAQ Ticker: JD). In
+March 2014, Lau Chi Ping Martin was appointed as a director of Leju Holdings Limited (NYSE Ticker: LEJU). In July
+2016, Lau Chi Ping was appointed as a director of Tencent Music Entertainment Group (formerly known as China
+Music Corporation) (NYSE Ticker: TME). In December 2017, Lau Chi Ping Martin was appointed as a director of
+Vipshop Holdings Limited (NYSE Ticker: VIPS), an online discount retailer company listed on the New York Stock
+Exchange.
+Neil Nanpeng Shen (), aged 51, is a non-executive Director. He was appointed as Director in October 2015
+and is responsible for providing advice on investment and business strategies, financial discipline, and other
+matters subject to the Board guidance and approval.
+Neil Nanpeng Shen founded Sequoia Capital China in September 2005 and has been serving as the founding
+managing partner since then. Prior to founding Sequoia Capital China, he co-founded Ctrip.com International, Ltd.,
+or Ctrip (NASDAQ Ticker: CTRP), a leading travel service provider in China, in 1999. Neil Nanpeng Shen served as
+Ctrip's president from August 2003 to October 2005 and its chief financial officer from 2000 to October 2005. Neil
+Nanpeng Shen also co-founded and served as non-executive Co-Chairman of Homeinns Hotel Group, a leading
+economy hotel chain in China, which commenced operations in July 2002.
+Neil Nanpeng Shen received his bachelor's degree in applied mathematics from Shanghai Jiao Tong University in
+July 1988 and his master's degree from Yale University in November 1992.
+34
+DIRECTORS AND SENIOR MANAGEMENT
+Neil Nanpeng Shen has been an independent non-executive director of Ctrip (NASDAQ Ticker: CTRP) since
+October 2008, a non-executive director of Noah Holdings Limited (NYSE Ticker: NOAH) since January 2016, a non-
+executive director of BTG Hotels Group Co., Ltd. (SHSE Stock Code: 600258) since January 2017, a non-executive
+director of 360 Security Technology Inc. (SHSE Stock Code: 601360) since February 2018, an independent non-
+executive director of Pinduoduo Inc. (NASDAQ Ticker: PDD) since April 2018 and a non-executive director of China
+Renaissance Holdings Limited (HKEx Stock Code: 1911) since June 2018.
+39
+2018 Annual Report
+The business review and performance analysis of the Group for the Reporting Period are set out in the sections
+headed "Chairman's Statement", "Management Discussion and Analysis", "Corporate Governance Report" and
+"Environmental, Social and Governance Report" of this annual report.
+BUSINESS REVIEW
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2018.
+The Company is a holding company incorporated under the laws of the Cayman Islands. As a result, the payment
+and amount of any future dividend will also depend on the availability of dividends received from its subsidiaries.
+PRC laws require that dividends be paid only out of the profit for the year calculated according to PRC accounting
+principles, which differ in many aspects from the generally accepted accounting principles in other jurisdictions,
+including the IFRS. PRC laws also require foreign-invested enterprises to set aside at least 10% of its after-tax
+profits as the statutory common reserve fund until the cumulative amount of the statutory common reserve fund
+reaches 50% or more of such enterprises' registered capital, if any, to fund its statutory common reserves, which
+are not available for distribution as cash dividends. Dividend distribution to Shareholders is recognized as a liability
+in the period in which the dividends are approved by Shareholders or Directors, where appropriate. Under Cayman
+law, dividends may be distributed from (a) profits (current period or retained) or (b) share premium. We do not
+currently have an expected dividend payout ratio. The determination to pay dividends will be made at the discretion
+of the Board and will be based upon our earnings, cash flow, financial condition, capital requirements, statutory
+fund reserve requirements and any other conditions that our Directors deem relevant.
+DIVIDEND POLICY AND FINAL DIVIDENDS
+The results of the Group for the year ended December 31, 2018 are set out in the consolidated statement of
+comprehensive loss contained in this annual report.
+The Group did not have any material contingent liabilities as of December 31, 2018, except for the financial
+guarantee in the total amount of RMB791.4 million as disclosed in Note 3.1(c) to the consolidated financial
+statements.
+RESULTS
+2018 Annual Report
+Wang Huiwen has over 10 years of managerial and operational experience in the internet industry. Prior to co-
+founding the Company, he co-founded xiaonei.com (), China's first college social network website, in
+December 2005 and worked there as co-founder from December 2005 to October 2006. xiaonei.com () was
+sold to China InterActive Corp in October 2006 which was later renamed as Renren Inc. (NYSE Ticker: RENN). In
+January 2009, Wang Huiwen co-founded taofang.com () and worked there from June 2008 to October 2010.
+Wang Huiwen received his bachelor's degree in electronic engineering from Tsinghua University in July 2001.
+Meituan Dianping
+Mu Rongjun received his bachelor's degree in automation engineering from Tsinghua University in July 2002 and
+his master's degree in computer science and technology from Tsinghua University in July 2005.
+On April 4, 2018, the Company, Tollan Holdings Limited, being a then wholly owned subsidiary of the
+Company, and Mobike entered into a merger agreement pursuant to which Tollan Holdings Limited merged
+with and into Mobike, with Mobike being the surviving company and becoming a wholly owned subsidiary of
+the Company. Pursuant to the merger agreement, all issued and outstanding ordinary and preferred shares of
+Mobike were cancelled in consideration for a combination of cash paid by the Company and an issuance of
+the newly created Series A-12 Preferred Shares of the Company to the former shareholders of Mobike.
+Particulars of the aforementioned acquisition are set out in Note 36 to the consolidated financial statements
+and further details of the merger agreement are set out in the section headed "History, Reorganization and
+Corporate Structure" of the Prospectus.
+Wang Huiwen (E), aged 40, is a Co-founder, an executive Director and a Senior Vice President of the
+Company. He is responsible for the on-demand delivery and certain new initiatives of the Company.
+2018 Annual Report
+31
+MANAGEMENT DISCUSSION AND ANALYSIS
+Foreign Exchange Risk
+Employees
+As of December 31, 2018, we had a total of approximately 58,390 full-time employees. Substantially all of our
+employees are based in China, primarily at our headquarters in Beijing and Shanghai, with the rest in Xiamen,
+Shijiazhuang, Yangzhou, Chengdu and other cities.
+Our success depends on our ability to attract, retain and motivate qualified personnel. As part of our recruiting
+and retention strategy, we offer employees competitive salaries, performance-based cash bonuses, and other
+incentives. We have adopted a training program, pursuant to which employees regularly receive trainings from
+management, technology, regulatory and other internal speakers or external consultants.
+As required under the PRC regulations, we participate in housing fund and various employee social security
+plans that are organized by applicable local municipal and provincial governments, including housing,
+pension, medical, maternity, work-related injury and unemployment benefit plans, under which we make
+contributions at specified percentages of the salaries of our employees. We also purchase commercial
+health and accidental insurance for our employees. Bonuses are generally discretionary and based in part
+on employee performance and in part on the overall performance of our business. We have granted and
+plan to continue to grant share-based incentive awards to our employees in the future to incentivize their
+contributions to our growth and development.
+32
+The Group operates mainly in the PRC with most of the transactions settled in RMB. The Group's business is
+not exposed to any significant foreign exchange risk as there are no significant financial assets or liabilities of
+the Group are denominated in the currencies other than the respective functional currencies of the Group's
+entities.
+32
+Meituan Dianping
+DIRECTORS AND SENIOR MANAGEMENT
+The biographical details of the Directors and senior management of the Company are set out as follows:
+DIRECTORS
+Mu Rongjun has over 10 years of managerial and operational experience in the internet industry. Prior to co-
+founding the Company, he worked as senior software engineer and project manager in Baidu, Inc. (NASDAQ
+Ticker: BIDU), the leading Chinese language internet search provider, from July 2005 to May 2007. Mu Rongjun
+was also a co-founder and the engineering director of fanfou.com (¼), a social media company specializing in
+microblogging, from May 2007 to July 2009.
+Executive Directors
+Wang Xing (E), aged 40, is a Co-founder, an executive Director, the Chief Executive Officer and Chairman of
+the Board. Wang Xing is responsible for the overall strategic planning, business direction and management of the
+Company. He oversees the senior management team. Wang Xing founded meituan.com in 2010 and currently holds
+directorship in various subsidiaries, Consolidated Affiliated Entities and operating entities of the Company.
+Wang Xing has over 10 years of managerial and operational experience in the internet industry. Prior to co-founding
+the Company, he co-founded xiaonei.com (¼), China's first college social network website in December 2005
+and worked there as chief executive officer from December 2005 to April 2007. xiaonei.com () was sold to
+China InterActive Corp in October 2006 which was later renamed as Renren Inc. (NYSE Ticker: RENN). Wang Xing
+also co-founded fanfou.com (¼), a social media company specializing in microblogging, in May 2007 and was
+responsible for the management and operation of this company from May 2007 to July 2009.
+Wang Xing received his bachelor's degree in electronic engineering from Tsinghua University in July 2001 and his
+master's degree in computer engineering from University of Delaware in January 2005.
+Mu Rongjun (1), aged 39, is a Co-founder, an executive Director and a Senior Vice President of the Company.
+He is responsible for the financial services and corporate affairs of the Company.
+2018 Annual Report
+Details of the retirement and employee benefits scheme of the Company are set out in Note 8 to the consolidated
+financial statements.
+RETIREMENT AND EMPLOYEE BENEFITS SCHEME
+App 16 para 15
+Details of the emoluments of the Directors, and five highest paid individuals during the Reporting Period are set out
+in Note 8 to the consolidated financial statements.
+EMOLUMENT POLICY
+A remuneration committee was set up for reviewing the Group's emolument policy and structure for all
+remuneration of the Directors and senior management of the Group, having regard to the Group's operating results,
+individual performance of the Directors and senior management and comparable market practices. As for the
+independent non-executive Directors, their remuneration is determined by the Board upon recommendation from
+the Remuneration Committee.
+MANAGEMENT CONTRACTS
+No contracts concerning the management and administration of the whole or any substantial part of the business of
+the Company were entered into or existed during the Relevant Period.
+Save as otherwise disclosed in this annual report, at no time during the Relevant Period was the Company or any
+of its subsidiaries a party to any arrangement that would enable the Directors to acquire benefits by means of
+acquisition of shares in, or debentures of, the Company or any other body corporate, and none of the Directors
+or any of their spouses or children under the age of 18 was granted any right to subscribe for the equity or debt
+securities of the Company or any other body corporate or had exercised any such right.
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+43
+The Directors and the senior management personnel are eligible participants of the Pre-IPO ESOP, Post-IPO Share
+Option Scheme and Post-IPO Share Award Scheme.
+REPORT OF DIRECTORS
+Nature of interest(1)
+As of December 31, 2018, the interests and short positions of the Directors and the chief executives of the
+Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations
+(within the meaning of Part XV of the SFO) which have been notified to the Company and the Stock Exchange
+pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or
+deemed to have taken under such provisions of the SFO), or which were recorded in the register required to be
+kept pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant
+to the Model Code as set out in Appendix 10 of the Listing Rules were as follows:
+Interests of Directors and Chief Executives in the Company
+Approximate
+percentage
+of interest in
+Name of Director or
+chief executive
+Number and class
+Relevant company
+of securities
+each class
+of Shares
+No Director had a material interest, either directly or indirectly, in any transaction, arrangement or contract of
+significance to the business of the Group to which the Company or any of its subsidiaries or fellow subsidiaries was
+a party during the Relevant Period.
+WANG Xing(2)
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+approximately 20% to selectively pursue acquisitions or investments in assets and businesses which are
+complementary to our business and are in line with our strategies; and
+Meituan Dianping
+Beneficiary and founder of a Trust (L)
+•
+approximately 10% for working capital and general corporate purpose.
+Since we are an offshore holding company, we will need to make capital contributions and loans to our PRC
+subsidiaries or through loans to our Consolidated Affiliated Entities such that the IPO Proceeds can be used in
+the manner described above. Such capital contributions and loans are subject to a number of limitations and
+approval processes under PRC laws and regulations. There are no costs associated with registering loans or
+capital contributions with relevant PRC authorities, other than nominal processing charges. Under PRC laws and
+regulations, the PRC governmental authorities are required to process such approvals or registrations or deny our
+application within a prescribed period, which are usually less than 90 days. The actual time taken, however, may
+be longer due to administrative delay. We cannot assure you that we can obtain the approvals from the relevant
+governmental authorities, or complete the registration and filing procedures required to use our the IPO Proceeds
+as described above, in each case on a timely basis, or at all. This is because PRC regulation of loans and direct
+investment by offshore holding companies to PRC entities may delay or prevent us from using the IPO Proceeds
+to make loans or additional capital contributions to our PRC subsidiaries or Consolidated Affiliated Entities, which
+could materially and adversely affect our liquidity and our ability to fund and expand our business.
+MAJOR CUSTOMERS AND SUPPLIERS
+Major Customers
+For the year ended December 31, 2018, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+• approximately 35% to development new services and products;
+approximately 35% to upgrade our technology and enhance our research and development capabilities;
+•
+The net proceeds from the IPO were approximately RMB28,516.2 million, after deducting the underwriting fees,
+commissions and related total expenses paid and payable by us in connection thereto ("IPO Proceeds"). From
+the Listing Date up to December 31, 2018, we have not utilized any IPO Proceeds. We will gradually utilize the IPO
+Proceeds for the following purposes consistent with those set out in the section headed "Future Plans and Use of
+Proceeds" in the Prospectus:
+USE OF NET PROCEEDS FROM LISTING
+REPORT OF DIRECTORS
+Details of the Directors to be re-elected at the AGM are set out in the circular to the Shareholders to be dispatched
+before the AGM.
+App 16 para
+2018 Annual Report
+41
+REPORT OF DIRECTORS
+DIRECTORS AND SENIOR MANAGEMENT
+Biographical details of the Directors and senior management of the Company are set out in the section headed
+"Directors and Senior Management" of this annual report.
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS
+The Company has received an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules from
+each of the independent non-executive Directors, and the Company considers such Directors to be independent
+during the Relevant Period.
+DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
+Each of the executive Directors has entered into a service contract with the Company. Pursuant to this contract,
+they agreed to act as executive Directors for an initial term of three years with effect from the date the appointment
+is approved by the Board until the third annual general meeting of the Company after the Listing Date (whichever
+is earlier). Either party has the right to give not less than three months' written notice to terminate the contract. No
+annual director's fees are payable to the executive Directors under the current arrangement.
+Each of the non-executive Directors has entered into an appointment letter with the Company. Their appointment
+as a Director shall continue for three years after or until the third annual general meeting of the Company after the
+Listing Date, whichever is earlier, (subject to retirement as and when required under the Articles of Association) until
+terminated in accordance with the terms and conditions of the appointment letter or by either party giving to the
+other not less than one month's prior notice in writing. Under these appointment letters, the non-executive Directors
+are not entitled to receive annual salaries in their capacity as non-executive Directors. The non-executive Directors
+have not received any remuneration for the year ended December 31, 2018.
+Each of the independent non-executive Directors has entered into an appointment letter with the Company.
+The initial term of their appointment shall be three years from the date of the Prospectus or until the third annual
+general meeting of the Company after the Listing Date, whichever is earlier, (subject to retirement as and when
+required under the Articles of Association) until terminated in accordance with the terms and conditions of the
+appointment letter or by either party giving to the other not less than three months' prior notice in writing. Under
+these appointment letters, each of the independent non-executive Directors will receive an annual director's fee of
+HK$500,000 per annum.
+None of the Directors has entered into a service contract which is not determinable by the Group within one year
+without payment of compensation (other than statutory compensation).
+Details of the emoluments of the Directors during the Reporting Period are set out in Note 8 to the consolidated
+financial statements.
+42
+REPORT OF DIRECTORS
+Trust
+WANG Huiwen (4)
+Songtao Limited
+As of December 31, 2018, the Company's reserves available for distribution, amounted to approximately RMB258.3
+billion.
+DISTRIBUTABLE RESERVES
+16.13%
+Interest in controlled corporation (L)
+Charmway Enterprises
+118,650,000
+Class A Shares
+16.13%
+Interest in controlled corporation (L)
+Shared Vision
+7,330,000
+1.00%
+Class A Shares
+Beneficial interest (L)
+BANK LOANS AND OTHER BORROWINGS
+6,000,000
+Class B Shares
+Beneficiary and founder of a Trust (L)
+Details of movements in the reserves of the Company and the Group during the Reporting Period are set out on
+page 127 in the consolidated statement of changes in equity.
+RESERVES
+Details of movements in the share capital of the Company during the Reporting Period are set out in Note 25 to the
+consolidated financial statements.
+REPORT OF DIRECTORS
+SHARE CAPITAL
+Meituan Dianping.
+40
+Details of movements in the property, plant and equipment of the Company and the Group during the Reporting
+Period are set out in Note 15 to the consolidated financial statements.
+PROPERTY, PLANT AND EQUIPMENT
+For the year ended December 31, 2018, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+Major Suppliers
+0.13%
+Particulars of bank loans and other borrowings of the Company and the Group as of December 31, 2018 are set out
+in Note 32 to the consolidated financial statements.
+DIRECTORS
+The Directors during the Relevant Period and up to date of this annual report are:
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+66.56%
+66.56%
+Interest in controlled corporation (L)
+Crown Holdings
+489,600,000
+Class A Shares
+66.56%
+Interest in controlled corporation (L)
+Shared Patience
+83,588,783
+Class A Shares
+11.36%
+MU Rongjun (3)
+Beneficiary and founder of a Trust (L)
+Trust
+118,650,000
+Class A Shares
+16.13%
+Interest in controlled corporation (L)
+Day One Holdings Limited
+118,650,000
+Class A Shares
+Mr. Leng Xuesong (A)
+Mr. Orr Gordon Robert Halyburton
+Independent Non-executive Directors
+Mr. Neil Nanpeng Shen ()
+Mr. Lau Chi Ping Martin ()
+Non-executive Directors
+Mr. Wang Huiwen (X)
+Mr. Mu Rongjun ()
+Mr. Wang Xing () (Chairman of the Board)
+Executive Directors
+Interest in controlled corporation (L)
+Trust
+In accordance with Article 17.18 of the Articles of Association, Wang Xing, Mu Rongjun and Wang Huiwen shall
+retire by rotation, and being eligible, have offered themselves for re-election at the AGM.
+2018 Annual Report
+489,600,000 Class A Shares
+66.56%
+Share Patience (1)
+Beneficial interest
+83,588,783 Class A Shares
+11.36%
+Songtao Limited (1)
+Interest in controlled corporation
+489,600,000 Class A Shares
+66.56%
+TMF (Cayman) Ltd.
+Wang Xing
+Trustee
+489,600,000 Class A Shares
+66.56%
+Beneficiary of a trust(¹)
+489,600,000 Class A Shares
+66.56%
+Founder of a trust(1)
+66.56%
+Beneficial interest
+class of Shares
+of Shares held
+interest in each
+(6)
+Sequoia Capital China Funds refers to Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P., Sequoia
+Capital China Principals Fund I, L.P., Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P., Sequoia
+Capital China Principals Fund II, L.P., Sequoia Capital 2010 CV Holdco, Ltd., SCC Venture V Holdco I, Ltd., SCC Venture VI
+Holdco, Ltd., SCC Venture VI Holdco B, Ltd., SCC Growth 2010-Top Holdco, Ltd., Sequoia Capital 2010 CGF Holdco, Ltd.,
+SCC Growth IV Holdco A, Ltd., SCC Growth IV 2017-E, L.P. and SCC Growth IV 2017-D, L.P. (which hold approximately
+1.22%, 0.14%, 0.19%, 3.71%, 0.09%, 0.62%, 0.95%, 0.01%, 0.05%, 0.01%, 1.12%, 0.47%, 0.02%, 0.25% and 0.42%,
+respectively, of the outstanding Shares), and Sequoia Capital Global Growth Funds refers to Sequoia Capital Global Growth
+Fund, L.P., Sequoia Capital Global Growth Principals Fund, L.P. and SC GGFII Holdco, Ltd. (which hold approximately
+0.50%, 0.01% and 0.65%, respectively, of the outstanding Shares). The Sequoia Capital China Funds and the Sequoia
+Capital Global Growth Funds may act together with respect of the holding, disposal and casting of vote rights of the
+Shares. Accordingly, the Sequoia Capital China Funds and the Sequoia Capital Global Growth Funds together control a
+10.44% interest in the share capital of the Company (or 12.05% of the total issued Class B Shares) and as a result, each of
+the Sequoia Capital China Funds and each of the Sequoia Capital Global Growth Funds is deemed to be interested in such
+10.44% interest in the share capital of the Company (or 12.05% of the total issued Class B Shares).
+The general partner of each of Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P. and Sequoia
+Capital China Principals Fund I, L.P. is Sequoia Capital China Management I, L.P. ("SCC Management I"). The general
+partner of each of Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P. and Sequoia Capital China
+Principals Fund II, L.P. is Sequoia Capital China Management II, L.P. ("SCC Management II"). The sole shareholder of
+Sequoia Capital 2010 CV Holdco, Ltd. is Sequoia Capital China Venture 2010 Fund, L.P., whose general partner is SC
+China Venture 2010 Management, L.P. ("SCCV 2010 Management"). The sole shareholder of SCC Venture V Holdco I, Ltd.
+is Sequoia Capital China Venture Fund V, L.P., whose general partner is SC China Venture V Management, L.P. ("SCCV
+V Management"). The sole shareholder of each of SCC Venture VI Holdco, Ltd. and SCC Venture VI Holdco B, Ltd. is
+Sequoia Capital China Venture Fund VI, L.P., whose general partner is SC China Venture VI Management, L.P. ("SCCV VI
+Management"). The controlling shareholder of SCC Growth 2010-Top Holdco, Ltd. and the sole shareholder of Sequoia
+Capital 2010 CGF Holdco, Ltd. is Sequoia Capital China Growth 2010 Fund, L.P. ("China Growth Fund 2010"), whose
+general partner is SC China Growth 2010 Management, L.P. ("SCCGF 2010 Management"). In respect of the casting of
+votes held by China Growth Fund 2010 in SCC Growth 2010-Top Holdco, Ltd., China Growth Fund 2010 is accustomed to
+act in accordance with the instructions of Sequoia Capital China Growth Fund I, L.P. The sole shareholder of SCC Growth IV
+Holdco A, Ltd. is Sequoia Capital China Growth Fund IV, L.P., whose general partner is SC China Growth IV Management,
+L.P. ("SCCGF IV Management" and, together with SCC Management I, SCC Management II, SCCV 2010 Management,
+SCCV V Management, SCCV VI Management and SCCGF 2010 Management, collectively, the "General Partners"). The
+general partner of each of SCC Growth IV 2017-E, L.P. and SCC Growth IV 2017-D, L.P. is SCCGF IV Management. The
+general partner of each of the General Partners is SC China Holding Limited, which is a wholly owned subsidiary of SNP
+China Enterprises Limited. Neil Nanpeng Shen is the sole shareholder of SNP China Enterprises Limited. Therefore, Neil
+Nanpeng Shen is deemed to be interested in the 10.44% interest in the share capital of the Company (or 12.05% of the
+total issued Class B Shares).
+Each of the independent non-executive Directors, namely Orr Gordon Robert Halyburton, Leng Xuesong and Shum Heung
+Yeung Harry was granted RSUs equivalent to 60,000 Class B Shares under the Post-IPO Share Award Scheme.
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+None of the Directors or chief executives of the Company had interests and short positions in shares, underlying
+shares or debentures in associated corporations of the Company as of December 31, 2018.
+Save as disclosed above, as of December 31, 2018, none of the Directors or the chief executives of the Company
+had or was deemed to have any interest or short position in the Shares, underlying shares or debentures of the
+Company or its associated corporations (within the meaning of Part XV of the SFO) that was required to be notified
+to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
+and short positions which they were taken or deemed to have taken under such provisions of the SFO), or required
+to be recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the
+Company and the Stock Exchange pursuant to the Model Code.
+46
+46
+Interest in controlled corporation (1)
+Meituan Dianping
+SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND
+UNDERLYING SHARES
+As of December 31, 2018, to the best knowledge of the Directors, the following persons had interests or short
+positions in the Shares or underlying Shares which fall to be disclosed to the Company under the provisions of
+Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to
+section 336 of the SFO:
+see updated
+Name of Substantial Shareholder
+Class A Shares-Wang Xing
+Crown Holdings (1)
+Capacity/Nature of interest
+Approximate
+percentage of
+Number and class
+REPORT OF DIRECTORS
+(5)
+83,588,783 Class A Shares
+Class A Shares-Mu Rongjun
+Charmway Enterprises (2)
+Shared Vision (2)
+Beneficial interest
+623,420,905 Class B Shares
+13.10%
+Tencent Mobility Limited (3)
+Morespark Limited (3)
+Beneficial interest
+389,413,655 Class B Shares
+8.19%
+Beneficial interest
+8,850,245 Class B Shares
+0.19%
+Great Summer Limited (3)
+Beneficial interest
+25,000,000 Class B Shares
+0.53%
+TPP Follow-on | Holding B Limited (3)
+Beneficial interest
+3,150,931 Class B Shares
+49
+Dr. Shum Heung Yeung Harry (#)
+Class B Shares - Tencent
+Huai River Investment Limited (3)
+1.00%
+7,330,000 Class A Shares
+Interest in controlled corporation (2)
+Beneficial interest
+118,650,000 Class A Shares
+16.13%
+Beneficial interest
+7,330,000 Class A Shares
+1.00%
+Day One Holdings Limited (2)
+Interest in a controlled corporation
+118,650,000 Class A Shares
+11.36%
+16.13%
+Trustee
+118,650,000 Class A Shares
+16.13%
+Beneficiary of a trust (2)
+118,650,000 Class A Shares
+16.13%
+Founder of a trust(2)
+118,650,000 Class A Shares
+16.13%
+TMF (Cayman) Ltd
+Mu Rongjun
+REPORT OF DIRECTORS
+489,600,000 Class A Shares
+2018 Annual Report
+573,097,093 Class B Shares
+Beneficial interest
+0.09%
+4,473,024 Class B Shares
+Beneficial interest
+TPP Follow-on I Holding C Limited (3)
+0.07%
+4.95%
+Class A Shares
+12.05%
+Interest in controlled corporation (L)
+36,400,000
+4.95%
+Class A Shares
+Interest in controlled corporation (L)
+Kevin Sunny
+36,400,000
+4.95%
+Class A Shares
+Beneficial interest (L)
+Aim Mars Investment Limited
+23,278,600
+2018 Annual Report (47
+Notes:
+Purpose
+The purpose of the Pre-IPO ESOP is to promote the success and enhance the value of the Company by linking
+the personal interests of the Directors, employees and consultants to those of the shareholders of the Company
+and by providing such individuals with an incentive for outstanding performance to generate superior returns to
+the shareholders of the Company. The Pre-IPO ESOP is further intended to provide flexibility to the Company in its
+ability to motivate, attract and retain the services of Directors, employees and consultants upon whose judgment,
+interest, contribution and special effort the successful conduct of the Company's operation is largely dependent.
+45
+The Pre-IPO ESOP of the Company was approved and adopted pursuant to the written resolutions of all
+shareholders of the Company dated October 6, 2015 as amended from time to time. The Pre-IPO ESOP
+commenced on October 6, 2015 and will expire on the tenth anniversary of the commencement date. The following
+is a summary of certain principal terms of the Pre-IPO ESOP.
+PRE-IPO ESOP
+The controlling shareholder of SC GGFII Holdco, Ltd. is Sequoia Capital Global Growth Fund II, L.P. The general partner
+of Sequoia Capital Global Growth Fund II, L.P is SC Global Growth II Management, L.P., whose general partner is SC US
+(TTGP), Ltd. Therefore, each of Sequoia Capital Global Growth Fund II, L.P., SC Global Growth II Management, L.P. and SC
+US (TTGP), Ltd. is deemed to be interested in the 0.65% interest in the share capital of the Company (or 0.75% of the total
+issued Class B Shares).
+The general partner of Sequoia Capital Global Growth Fund, L.P. and Sequoia Capital Global Growth Principals Fund, L.P.
+is SCGGF Management, L.P., whose general partner is SC US (TTGP), Ltd. Therefore, each of SCGGF Management, L.P.
+and SC US (TTGP), Ltd. is deemed to be interested in the 0.52% interest in the share capital of the Company (or 0.60% of
+the total issued Class B Shares).
+36,400,000
+Management. The general partner of each of the General Partners is SC China Holding Limited, which is a wholly owned
+subsidiary of SNP China Enterprises Limited. Neil Nanpeng Shen is the sole shareholder of SNP China Enterprises Limited.
+In addition, China Growth Fund IV is interested in more than 33.3% limited partnership interest in SCC Growth IV 2017- D,
+L.P., Neil Nanpeng Shen is interested in more than 33.3% limited partnership interest in Sequoia Capital China Partners
+Fund I, L.P., and Joy Halo Limited is interested in more than 33.3% limited partnership interest in SCC Growth IV 2017- E,
+L.P. Each of Gopher Global Secondary Opportunities Fund II LP (which is controlled by its general partner, Gopher Global
+Secondary Opportunities Fund II GP Limited) and Gopher China Special Opportunity Fund V LP (which is controlled by
+its general partner, Gopher China Special Opportunity Fund V GP Limited) is interested in more than 33.3% of Joy Halo
+Limited. Each of Gopher Global Secondary Opportunities Fund II GP Limited and Gopher China Special Opportunity
+Fund V GP Limited is wholly owned by Gopher GP Holdings Limited, which is wholly owned by Gopher Fund Holdings
+Limited, which is in turn wholly owned by Noah Holdings Limited (a company incorporated in Cayman Islands whose
+shares are listed on the New York Stock Exchange). Therefore, each of China Venture 2010 Fund, China Venture Fund V,
+China Venture Fund VI, China Growth Fund I, China Growth Fund 2010, China Growth Fund IV, the General Partners, SC
+China Holding Limited, SNP China Enterprises Limited, Neil Nanpeng Shen, Joy Halo Limited, Gopher Global Secondary
+Opportunities Fund II LP, Gopher Global Secondary Opportunities Fund II GP Limited, Gopher China Special Opportunity
+Fund V LP, Gopher China Special Opportunity Fund V GP Limited, Gopher GP Holdings Limited, Gopher Fund Holdings
+Limited and Noah Holdings Limited is deemed to be interested in the 9.27% interest in the share capital of the Company (or
+10.70% of the total issued Class B Shares).
+REPORT OF DIRECTORS
+REPORT OF DIRECTORS
+48
+The general partner of each of Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P. and Sequoia
+Capital China Principals Fund I, L.P. is Sequoia Capital China Management I, L.P. ("SCC Management I"). The general
+partner of each of Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P. and Sequoia Capital China
+Principals Fund II, L.P. is Sequoia Capital China Management II, L.P. ("SCC Management II"). The sole shareholder of
+Sequoia Capital 2010 CV Holdco, Ltd. is Sequoia Capital China Venture 2010 Fund, L.P. ("China Venture 2010 Fund"),
+whose general partner is SC China Venture 2010 Management, L.P. ("SCCV 2010 Management"). The sole shareholder
+of SCC Venture V Holdco I, Ltd. is Sequoia Capital China Venture Fund V, L.P. ("China Venture Fund V"), whose general
+partner is SC China Venture V Management, L.P. ("SCCV V Management"). The sole shareholder of each of SCC Venture VI
+Holdco, Ltd. and SCC Venture VI Holdco B, Ltd. is Sequoia Capital China Venture Fund VI, L.P. ("China Venture Fund VI"),
+whose general partner is SC China Venture VI Management, L.P. ("SCCV VI Management"). The controlling shareholder
+of SCC Growth 2010-Top Holdco, Ltd. and the sole shareholder of Sequoia Capital 2010 CGF Holdco, Ltd. is Sequoia
+Capital China Growth 2010 Fund, L.P. ("China Growth Fund 2010"), whose general partner is SC China Growth 2010
+Management, L.P. ("SCCGF 2010 Management"). In respect of the casting of votes held by China Growth Fund 2010 in
+SCC Growth 2010-Top Holdco, Ltd., China Growth Fund 2010 is accustomed to act in accordance with the instructions
+of Sequoia Capital China Growth Fund I, L.P. ("China Growth Fund I"). The sole shareholder of SCC Growth IV Holdco A,
+Ltd. is Sequoia Capital China Growth Fund IV, L.P. ("China Growth Fund IV"), whose general partner is SC China Growth
+IV Management, L.P. ("SCCGF IV Management" and, together with SCC Management I, SCC Management II, SCCV 2010
+Management, SCCV V Management, SCCV VI Management and SCCGF 2010 Management, collectively, the "General
+Partners"). The general partner of each of SCC Growth IV 2017-E, L.P. and SCC Growth IV 2017-D, L.P. is SCCGF IV
+Includes Shares held by: (a) Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P., Sequoia Capital
+China Principals Fund I, L.P., Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P., Sequoia Capital
+China Principals Fund II, L.P., Sequoia Capital 2010 CV Holdco, Ltd., SCC Venture V Holdco I, Ltd., SCC Venture VI Holdco,
+Ltd., SCC Venture VI Holdco B, Ltd., SCC Growth 2010-Top Holdco, Ltd., Sequoia Capital 2010 CGF Holdco, Ltd., SCC
+Growth IV Holdco A, Ltd., SCC Growth IV 2017-E, L.P. and SCC Growth IV 2017-D, L.P. (collectively referred to as the
+"Sequoia Capital China Funds"), which hold approximately 1.22%, 0.14%, 0.19%, 3.71%, 0.09%, 0.62%, 0.95%, 0.01%,
+0.05%, 0.01%, 1.12%, 0.47%, 0.02%, 0.25% and 0.42%, respectively, of the outstanding Shares; and (b) Sequoia Capital
+Global Growth Fund, L.P., Sequoia Capital Global Growth Principals Fund, L.P. and SC GGFII Holdco, Ltd. (collectively
+referred to as the "Sequoia Capital Global Growth Funds"), which hold approximately 0.50%, 0.01% and 0.65%,
+respectively, of the outstanding Shares. The Sequoia Capital China Funds and the Sequoia Capital Global Growth Funds
+may act together with respect of the holding, disposal and casting of voting rights of the Shares. Accordingly, the Sequoia
+Capital China Funds and the Sequoia Capital Global Growth Funds together control a 10.44% interest in the share capital of
+the Company (or 12.05% of the total issued Class B Shares) and as a result, each of the Sequoia Capital China Funds and
+each of the Sequoia Capital Global Growth Funds is deemed to be interested in such 10.44% interest in the share capital of
+the Company (or 12.05% of the total issued Class B Shares).
+Huai River Investment Limited, a company incorporated under the laws of the British Virgin Islands, Tencent Mobility
+Limited, a company incorporated under the laws of Hong Kong, Morespark Limited, a company incorporated under the
+laws of Hong Kong and Great Summer Limited, a company incorporated under the laws of the British Virgin Islands, are
+direct wholly owned subsidiaries of Tencent. TPP Follow-on I Holding B Limited and TPP Follow-on I Holding C Limited,
+companies incorporated under the laws of the Cayman Islands, are beneficially owned by Tencent.
+Charmway Enterprises is wholly owned by Day One Holdings Limited which is in turn wholly owned by TMF (Cayman)
+Ltd. The entire interest in Day One Holdings Limited is held by TMF (Cayman) Ltd. as trustee for a trust established by Mu
+Rongjun (as settlor) for the benefit of Mu Rongjun and his family. Mu Rongjun is deemed to be interested in the 118,650,000
+Class A Shares held by Charmway Enterprises under the SFO. Shared Vision is wholly owned by Mu Rongjun.
+(4)
+(3)
+(2)
+(1) Crown Holdings is wholly owned by Songtao Limited which is in turn wholly owned by TMF (Cayman) Ltd. The entire
+interest in Songtao Limited is held by TMF (Cayman) Ltd. as trustee for a trust established by Wang Xing (as settlor) for
+the benefit of Wang Xing and his family. Wang Xing is deemed to be interested in the 489,600,000 Class A Shares held by
+Crown Holdings under the SFO. Shared Patience is wholly owned by Wang Xing.
+Meituan Dianping
+0.49%
+Class B Shares-Sequoia
+Sequoia Capital China Funds and
+Sequoia Capital Global Growth Funds (4)
+44
+573,097,093
+12.05%
+Class B Shares
+Global Growth Funds
+60,000
+0.00%
+Class B Shares
+60,000
+0.00%
+of Shares
+Class B Shares
+0.00%
+Class B Shares
+(1)
+The letter "L" denotes the person's Long Position in such Shares.
+(2)
+(4)
+Class B Shares
+Charmway Enterprises is wholly owned by Day One Holdings Limited. The entire interest in Day One Holdings Limited is
+held through a trust which was established by Mu Rongjun (as settlor) for the benefit of Mu Rongjun and his family. Mu
+Rongjun is deemed to be interested in the 118,650,000 Class A Shares held by Charmway Enterprises under the SFO.
+Shared Vision is wholly owned by Mu Rongjun. Mu Rongjun is granted RSUs equivalent to 1,000,000 Class B Shares and
+options with respect to 5,000,000 Class B Shares under the Pre-IPO ESOP.
+Kevin Sunny is wholly owned by Aim Mars Investment Limited. The entire interest in Aim Mars Investment Limited is held
+through a trust established by Wang Huiwen (as settlor) for the benefit of Wang Huiwen and his family. Wang Huiwen is
+deemed to be interested in the 36,400,000 Class A Shares held by Aim Mars Investment Limited under the SFO. Wang
+Huiwen is granted RSUs equivalent to 15,700,000 Class B Shares, and options with respect to 7,578,600 class B Shares
+under the Pre-IPO ESOP.
+60,000
+each class
+Crown Holdings is wholly owned by Songtao Limited. The entire interest in Songtao Limited is held through a trust which
+was established by Wang Xing (as settlor) for the benefit of Wang Xing and his family. Wang Xing is deemed to be interested
+in the 489,600,000 Class A Shares held by Crown Holdings under the SFO. Shared Patience is wholly owned by Wang Xing.
+Approximate
+percentage
+of interest in
+Name of Director or
+chief executive
+Nature of interest(1)
+SHEN Nanpeng Neil (5)
+Interest in controlled corporations (L)
+Beneficial interest (L)
+Halyburton (6)
+LENG Xuesong (6)
+ORR Gordon Robert
+SHUM Heung
+Yeung Harry (6)
+of securities
+Beneficial interest (L)
+Sequoia Capital China Funds
+and Sequoia Capital
+Relevant company
+Number and class
+Beneficial interest (L)
+Notes:
+REPORT OF DIRECTORS
+Meituan Dianping
+0
+Orr Gordon Robert
+Halyburton
+November 23,
+2018
+6.25% to vest in each
+60,000
+3,750
+0
+3,750
+quarter commencing from
+December 20, 2018 until
+September 20, 2022
+Leng Xuesong
+November 23,
+2018
+6.25% to vest in each
+60,000
+2018 (2)
+0
+60,000
+2018
+Date of Grant
+as of
+December 31,
+0
+The table below shows the details of RSUs granted to the Directors and other employees under the Post-IPO Share
+Award Scheme:
+Name
+Directors
+Number of
+Shares
+Number of
+underlying
+RSUs granted
+RSUs
+RSUs vested
+during the
+year ended
+December 31,
+Vesting Period
+such date of early termination as determined by the Board, provided that such termination shall not affect
+any subsisting rights of any selected participant under the rules of the Post-IPO Share Award Scheme,
+provided further that for the avoidance of doubt, the change in the subsisting rights of a selected participant
+in this paragraph refers solely to any change in the rights in respect of the Award Shares already granted to a
+selected participant.
+2018
+during the
+year ended
+December 31,
+2018 (1)
+cancelled
+during the
+year ended
+December 31,
+RSUS lapsed
+during the
+year ended
+December 31,
+Shares
+underlying
+RSUs
+outstanding
+2018
+60,000
+59
+December 20, 2018 until
+0
+10,926,663
+The Shares underlying the vested RSUs were issued to the grantees in March 2019.
+(2) Including the RSUs which have vested but the Shares have not been issued as of December 31, 2018.
+58
+Meituan Dianping
+REPORT OF DIRECTORS
+EQUITY-LINKED AGREEMENTS
+On April 4, 2018, the Company, Tollan Holdings Limited, being a then wholly owned subsidiary of the Company,
+and Mobike entered into a merger agreement pursuant to which Tollan Holdings Limited merged with and into
+Mobike, with Mobike being the surviving company and becoming a wholly owned subsidiary of the Company.
+Pursuant to the merger agreement, all issued and outstanding ordinary and preferred shares of Mobike were
+cancelled in consideration for a combination of cash paid by the Company and an issuance of the newly
+created Series A-12 Preferred Shares of the Company to the former shareholders of Mobike. Particulars of the
+aforementioned acquisition are set out in Note 36 to the consolidated financial statements and further details of
+the merger agreement are set out in the section headed "History, Reorganization and Corporate Structure" of the
+Prospectus.
+Save as otherwise disclosed, other than the Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share
+Award Scheme, no equity-linked agreements that will or may result in the Company issuing shares, or that require
+the Company to enter into any agreements that will or may result in the Company issuing shares, were entered into
+by the Company during 2018 or subsisted at the end of 2018.
+PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
+During the Relevant Period, neither the Company nor any of its subsidiaries or Consolidated Affiliated Entities has
+purchased, sold or redeemed any of the Company's listed securities.
+PRE-EMPTIVE RIGHTS
+There is no provision for pre-emptive rights under the Articles of Association or the laws of the Cayman Islands that
+would oblige the Company to offer new shares on a pro rata basis to existing Shareholders.
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+Neil Nanpeng Shen, our non-executive Director, is a non-executive director of Ctrip.com International, Ltd. (NASDAQ
+Ticker: CTRP), a travel service provider in China. The Company is of the view that such competing interest will not
+result in any material conflict of interest because, in his capacity as our non-executive Director, Neil Nanpeng Shen
+does not participate in the day-to-day management of Ctrip.
+Save as otherwise disclosed, as at the date of this annual report, none of the Directors and their respective
+associate(s) was interested in any business which competes or is likely to compete, either directly or indirectly, with
+the business of the Group during the Relevant Period.
+2018 Annual Report
+the end of the period of ten years commencing on the Listing Date except in respect of any non-vested Award
+Shares granted hereunder prior to the expiration of the Post-IPO Share Award Scheme, for the purpose of
+giving effect to the vesting of such Award Shares or otherwise as may be required in accordance with the
+provisions of the Post-IPO Share Award Scheme; and
+2,620,121
+11,250
+13,546,784
+(1)
+September 20, 2022
+Shum Heung
+Yeung Harry
+November 23,
+2018
+6.25% to vest in each
+60,000
+3,750
+0
+0
+60,000
+quarter commencing from
+quarter commencing from
+October 4, 2018
+to November 23,
+2018
+December 20, 2018 until
+September 20, 2022
+4 years
+13,366,784
+0
+2,620,121
+0
+10,746,663
+Total
+Notes:
+Other Employees
+(ii)
+Meituan Dianping
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+0
+0
+0
+0
+5,000,000
+US$3.86-
+US$5.18
+US$1.005- 7,578,600
+US$5.18
+4-6 years
+February 1, 2015 to
+July 1, 2018
+Wang Huiwen
+6 years
+July 1, 2017 to
+July 1, 2018
+Directors
+Mu Rongjun
+5,000,000
+2018(4)
+2018
+price
+December 31,
+the exercise
+December 31,
+the exercise
+exercise
+price(3)
+as of the
+Exercise Price Listing Date(2)
+Vesting
+Period (¹)
+Date of Grant
+Name
+options
+outstanding
+as of
+price
+2,522,660
+0
+0
+The Shares underlying the exercised options were issued to the grantees in March 2019.
+(3)
+Including Shares that have not been issued pursuant to options that had been exercised as of the Listing Date.
+(2)
+The exercise period of the share options granted under the Pre-IPO ESOP shall be any time after the end of the vesting
+period and before the 10th anniversary of the grant date, subject to the terms of the Pre-IPO ESOP and the share option
+award agreements signed by the grantees.
+(1)
+Notes:
+3,012,917 256,313,002
+0
+0
+259,325,919 139,991,339(3)
+Total
+US$3.86)
+(US$0.0708-
+3,012,917 243,734,402
+0
+0
+137,468,679
+(US$0.000017-
+US$3.86)
+US$5.18
+246,747,319
+0.5 to 6 years US$0.000017-
+May 31, 2006 to
+August 1, 2018
+Other Employees
+US$3.86)
+(US$1.005-
+7,578,600
+0
+December 31,
+2018 and
+(4) Including the options which have been exercised but the Shares have not been issued as of December 31, 2018.
+Date to
+December 31,
+2018 and
+Performance objectives and other terms
+i.
+The Committee shall determine the methods by which the exercise price of an Option may be paid and the
+methods by which Shares will be delivered or deemed to be delivered to the Participants. Forms of payment
+may include, without limitation, (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible
+under the applicable laws, cash or check in Renminbi, (iii) cash or check denominated in any other local
+currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the
+Committee in order to avoid adverse financial accounting consequences and having a fair market value on
+the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) the
+delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares
+then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of
+the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided, however,
+that payment of such proceeds is then made to the Company upon settlement of such sale, (vi) other property
+acceptable to the Committee with a fair market value equal to the exercise price or (vii) any combination of the
+foregoing.
+RSUs
+Payment
+iii.
+The Committee shall determine the time or times at which an Option may be exercised in whole or in part,
+including exercise prior to vesting; provided, however, that the term of any Option granted under the Pre-IPO
+ESOP shall not exceed ten years, except as amended, modified or terminated by the Board or the Committee.
+The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an
+Option may be exercised. The Option may not be exercised until vested.
+REPORT OF DIRECTORS
+Time and conditions of exercise
+ii.
+Meituan Dianping
+50
+The Committee, in its discretion, may set performance objectives or other vesting criteria which, depending
+on the extent to which they are met, will determine the number or value of RSUs that will be paid out to the
+Participants.
+50
+Exercise price
+i.
+Options
+The Committee is authorized to grant Awards to Participants in accordance with the terms of the Pre-IPO
+ESOP. Awards granted will be evidenced by an agreement ("Award Agreement") between the Company and the
+Participant. The Award Agreement includes additional provisions specified by the Committee. The Committee can
+determine the terms and conditions of the Award, including the grant or purchase price of Awards.
+Grant of Awards
+The Pre-IPO ESOP is administered by the Board or the Committee to whom the Board shall delegate the authority
+to grant or amend Awards to Participants other than any of the Committee members, independent Directors
+and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the
+Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office, shall conduct
+the general administration of the Pre-IPO ESOP if required by applicable laws, and with respect to Awards granted
+to the Committee members, independent Directors and executive officers of the Company and for purposes of such
+Awards the term "Committee” as used in the Pre-IPO ESOP shall be deemed to refer to the Board.
+Administration
+The maximum aggregate number of Shares which may be issued is 683,038,063, subject to any adjustments for
+other dilutive issuances. No share options or RSUs may be granted under the Pre-IPO ESOP after the Listing.
+Maximum Number of Shares
+Those eligible to participate in the Pre-IPO ESOP include employees, consultants and Directors, as determined
+by a committee authorized by the Board (the "Committee”). Subject to the provisions of the Pre-IPO ESOP, the
+Committee may, from time to time, select from among all eligible individuals (the "Participants") to whom awards
+in the form of options ("Options"), restricted share awards ("Restricted Shares") and restricted share units ("RSU”)
+(collectively "Awards") shall be granted and shall determine the nature and amount of each option. No individual
+shall have any right to be granted an Award pursuant to the Pre-IPO ESOP.
+Eligible Participants
+REPORT OF DIRECTORS
+The Committee shall determine the exercise price per Share subject to an Option, which may be either a fixed
+price or a variable price related to the fair market value of the Shares. The exercise price per Share shall be
+set forth in the Award Agreement. The exercise price per Share subject to an Option may be adjusted in the
+absolute discretion of the Committee, the determination of which shall be final, binding and conclusive. For
+the avoidance of doubt, to the extent not prohibited by applicable laws, a re-pricing of Options mentioned
+in the preceding sentence shall be effective without the approval of the Shareholders or the approval of the
+relevant Participants. Notwithstanding the foregoing, the exercise price per Share subject to an Option under
+an Award Agreement shall not be increased without the approval of the relevant Participants.
+ii.
+Form and timing of payment of RSUs
+At the time of grant, the Committee shall specify the date or dates on which the RSUs shall become fully
+vested and non-forfeitable. Upon vesting, the Committee, in its sole discretion, may pay RSUs in the form of
+cash, Shares or a combination thereof.
+and the
+Listing Date
+options
+outstanding
+to
+underlying
+the Listing
+the period
+Shares
+period from
+lapsed during
+from the
+Listing Date
+options
+exercised
+before the
+underlying
+Number of
+Shares
+Number of
+during the
+options
+options
+cancelled
+Number of
+Number of
+options
+exercised
+Number of
+Number of
+The table below shows the details of share options granted to the Directors and other employees under the Pre-IPO
+ESOP.
+Up to the Listing Date, the Company has granted share options under the Pre-IPO ESOP to 4,584 grantees (including
+Directors, senior management, other connected persons of the Company and other employees of the Company)
+to subscribe for an aggregate of 259,325,919 Shares and a portion of which corresponding to 139,991,339 Shares
+has been exercised before the Listing Date. The Company has not granted further share options under the Pre-IPO
+ESOP after the Listing. The exercise price of the share options under the Pre-IPO ESOP is between nil to US$5.18.
+Outstanding Share Options Granted under the Pre-IPO ESOP
+REPORT OF DIRECTORS
+2018 Annual Report (51
+from the
+Listing Date
+to
+42
+52
+Meituan Dianping
+the closing price of a Class B Share as stated in the daily quotations sheet issued by the Stock Exchange on
+the date of grant;
+(ii)
+(i)
+The amount payable for each Class B Share to be subscribed for under an option in the event of the option being
+exercised shall be determined by the Board, provided that it shall be at least the highest of:
+Exercise Price
+Unless approved by our Shareholders, the total number of Class B Shares issued and to be issued upon exercise
+of the options granted and to be granted under the Post-IPO Share Option Scheme and any other share option
+scheme(s) of the Company to each selected participant (including both exercised and outstanding options) in any
+12-month period shall not exceed 1% of the total number of Class B Shares in issue (the "Individual Limit"). Any
+further grant of options to a selected participant which would result in the aggregate number of Class B Shares
+issued and to be issued upon exercise of all options granted and to be granted to such selected participant (including
+exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further
+grant exceeding the Individual Limit shall be subject to separate approval of our Shareholders (with such selected
+participant and his associates abstaining from voting).
+Maximum Entitlement of a Participant
+As of December 31, 2018, no option had been granted pursuant to the Post-IPO Share Option Scheme.
+The Company may also grant options in excess of the Option Scheme Mandate Limit, provided such grant is to
+specifically identified selected participant and is first approved by Shareholders in a general meeting.
+REPORT OF DIRECTORS
+Meituan Dianping
+542
+the average closing price of the Class B Shares as stated in the daily quotations sheets issued by the Stock
+Exchange for the five business days immediately preceding the date of grant; and
+54
+The overall limit on the number of Class B Shares which may be issued upon exercise of all outstanding options
+granted and yet to be exercised under the Post-IPO Share Option Scheme and any other share option schemes
+of the Company at any time (and to which the provisions of Chapter 17 of the Listing Rules are applicable) must
+not exceed 30% of the Class B Shares in issue from time to time (the “Option Scheme Limit”). No options may be
+granted under any schemes of the Company (or its subsidiaries) if this will result in the Option Scheme Limit being
+exceeded.
+The total number of Class B Shares which may be issued upon exercise of all options to be granted under the Post-
+IPO Share Option Scheme and any other schemes is 475,568,628 Class B Shares (the "Option Scheme Mandate
+Limit”), representing 8.40% of the issued share capital of the Company (on a one share one vote basis) as of the
+date of this annual report. Options which have lapsed in accordance with the terms of the rules of the Post-IPO
+Share Option Scheme (or any other share option schemes of the Company) shall not be counted for the purpose of
+calculating the Option Scheme Mandate Limit.
+Maximum Number of Class B Shares
+Any individual, being an employee, director, officer, consultant, advisor, distributor, contractor, customer, supplier,
+agent, business partner, joint venture business partner or service provider of any member of the Group or any
+affiliate who the Board or its delegate(s) considers, in their sole discretion, to have contributed or will contribute
+to the Group is entitled to be offered and granted options. However, for any individual who is resident in a place
+where the grant, acceptance or exercise of options pursuant to the Post-IPO Share Option Scheme is not permitted
+under the laws and regulations of such place or where, in the view of the Board or its delegate(s), compliance with
+applicable laws and regulations in such place makes it necessary or expedient to exclude such individual, such
+individual is not eligible to be offered or granted options.
+Qualifying Participants
+The purpose of the Post-IPO Share Option Scheme is to provide selected participants with the opportunity to
+acquire proprietary interests in the Company and to encourage selected participants to work towards enhancing
+the value of the Company and its Shares for the benefit of the Company and Shareholders as a whole. The Post-
+IPO Share Option Scheme will provide the Company with a flexible means of retaining, incentivising, rewarding,
+remunerating, compensating and/or providing benefits to selected participants.
+Purpose
+REPORT OF DIRECTORS
+53
+2018 Annual Report
+The Post-IPO Share Option Scheme was conditionally adopted by the then Shareholders at the Shareholders'
+meeting on August 30, 2018. The Post-IPO Share Option Scheme shall be valid and effective for a period of ten (10)
+years commencing on the Listing Date. The following is a summary of certain principal terms of the Post-IPO Share
+Option Scheme:
+POST-IPO SHARE OPTION SCHEME
+The Option Scheme Mandate Limit may be refreshed at any time by obtaining prior approval of our Shareholders
+in general meeting and/or such other requirements prescribed under the Listing Rules from time to time. However,
+the refreshed Option Scheme Mandate Limit cannot exceed 10% of the Class B Shares in issue as at the date of
+such approval. Options previously granted under the Post-IPO Share Option Scheme and any other share option
+schemes of the Company (and to which provisions of Chapter 17 of the Listing Rules are applicable) (including
+those outstanding, cancelled or lapsed in accordance with its terms or exercised), shall not be counted for the
+purpose of calculating the refreshed Option Scheme Mandate Limit.
+(iii) the nominal value of a Class B Share on the date of grant.
+Grant Offer Letter and Notification of Grant of Options
+An offer shall be made to selected participants by a letter in duplicate which specifies the terms on which the option
+is to be granted and an offer shall be deemed to have been accepted and the option to which the offer relates
+shall be deemed to have been granted and to have taken effect when the duplicate of the offer letter comprising
+acceptance of the offer duly signed by the grantee with the number of Class B Shares in respect of which the
+offer is accepted clearly stated therein, together with a remittance in favor of the Company of HK$1.00 by way of
+consideration for the grant thereof, which must be received by the Company within 20 business days from the date
+on which the offer letter is delivered to the grantee.
+Termination
+REPORT OF DIRECTORS
+57
+2018 Annual Report
+As at December 31, 2018, 13,546,784 RSUs had been granted under the Post-IPO Share Award Scheme and
+therefore the total number of Shares available for grant under the Post-IPO Share Award Scheme was 258,789,444
+Shares, representing 4.57% of the issued share capital of the Company (on a one share one vote basis) as of the
+date of this annual report.
+The aggregate number of Class B Shares underlying all grants made pursuant to the Post-IPO Share Award
+Scheme (excluding Award Shares which have been forfeited in accordance with the Post-IPO Share Award
+Scheme) will not exceed 272,336,228 Shares, representing 4.81% of the issued share capital of the Company (on a
+one share one vote basis) as of the date of this annual report, without Shareholders' approval subject to an annual
+limit of 3% of the total number of issued Shares at the relevant time.
+Maximum Number of Shares to Be Granted
+Each grant of an Award to any Director or the chairman of the Company shall be subject to the prior approval of
+the independent non-executive Directors (excluding any independent non-executive Director who is a proposed
+recipient of an Award). The Company will comply with the relevant requirements under Chapter 14A of the Listing
+Rules for any grant of Shares to connected persons of the Company.
+The Board or the committee of the Board or person(s) to which the Board has delegated its authority may, from time
+to time, at their absolute discretion, grant an Award to a selected participant (in the case of the Board's delegate(s),
+to any selected participant other than a Director or an officer of the Company) by way of an award letter ("Award
+Letter"). The Award Letter will specify the Grant Date, the number of Award Shares underlying the Award, the
+vesting criteria and conditions, the Vesting Date and such other details as the Board or its delegate(s) may consider
+necessary.
+Grant of Award
+An Award gives a selected participant a conditional right, when the Award Shares vest, to obtain the Award Shares
+or, if in the absolute discretion of the Board or its delegate(s), it is not practicable for the selected participant to
+receive the Award in Shares, the cash equivalent from the sale of the Award Shares.
+Awards
+REPORT OF DIRECTORS
+56
+Any individual, being an employee, director (including executive Directors, non-executive Directors and independent
+non-executive Directors), officer, consultant, advisor, distributor, contractor, customer, supplier, agent, business
+partner, joint venture business partner or service provider of any member of the Group or any affiliate (an "Eligible
+Person❞ and collectively "Eligible Persons") who the Board or its delegate(s) considers, in its sole discretion, to
+have contributed or will contribute to the Group is eligible to receive an Award, subject to the applicable laws and
+regulations.
+Eligible Participants
+The purpose of the Post-IPO Share Award Scheme is to align the interests of eligible persons with those of the
+Group through ownership of Class B Shares, dividends and other distributions paid on Shares and/or the increase
+in value of the Shares, and to encourage and retain eligible persons to make contributions to the long-term growth
+and profits of the Group.
+Purpose
+The Post-IPO Share Award Scheme was conditionally adopted by the then Shareholders at the Shareholders'
+meeting on August 30, 2018. The Company may appoint a trustee to administer the Post-IPO Share Award Scheme
+with respect to the grant of any award ("Award") by the Board which may vest in the form of Class B Shares ("Award
+Shares”) or the actual selling price of the Award Shares in cash in accordance with the Post-IPO Share Award
+Scheme. The following is a summary of certain principal terms of the Post-IPO Share Award Scheme.
+POST-IPO SHARE AWARD SCHEME
+The Post-IPO Share Option Scheme shall be valid and effective for a period of ten years commencing on the Listing
+Date, but in all other respects the provisions of the Post-IPO Share Option Scheme shall remain in full force and
+effect to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may
+be required in accordance with the provisions of the rules of the Post-IPO Share Option Scheme.
+Duration
+An option may, subject to the terms and conditions upon which such option is granted, be exercised in whole or
+in part by the grantee giving notice in writing to the Company in such form as the Board may from time to time
+determine stating that the option is thereby exercised and the number of Class B Shares in respect of which is
+exercised. The expiry of the period within which an option may be exercised is to be determined and notified by
+the Board to each grantee at the time of making an offer, and shall not expire later than ten years from the date of
+grant.
+Time of Exercise of an Option
+REPORT OF DIRECTORS
+55
+2018 Annual Report
+Including the RSUs which have vested but the Shares have not been issued as of December 31, 2018.
+(3)
+The Shares underlying the vested RSUs were issued to the grantees in March 2019.
+(2)
+2018
+2018 (2)
+December 31, December 31, December 31, December 31,
+outstanding
+as of
+Date to
+the Listing
+the Listing
+Date to
+to
+Shares
+underlying
+RSUs
+period from
+period from
+from the
+Listing Date
+during the
+during the
+RSUs vested
+lapsed
+Number of
+RSUs
+RSUs
+cancelled
+Number of
+Shares
+underlying
+RSUs
+outstanding
+as of the
+RSUs vested
+before the
+Vesting Period Listing Date (1) Listing Date(2)
+Date of Grant
+Name
+The table below shows the details of RSUs granted to the Directors and other employees under the Pre-IPO ESOP.
+Up to the Listing Date, the Company has granted RSUs under the Pre-IPO ESOP representing an aggregate of
+252,774,461 Shares and a portion of which corresponding to 89,316,913 Shares has vested before the Listing Date.
+The Company has not granted further RSUs under the Pre-IPO ESOP after the Listing.
+Outstanding RSUs Granted under the Pre-IPO ESOP
+REPORT OF DIRECTORS
+2018
+(i)
+2018 (3)
+Mu Rongjun
+Wang Huiwen
+(1) Including Shares that have not been issued pursuant to RSUs that had been vested as of the Listing Date.
+Notes:
+Total
+0 247,947,680
+3,367,084
+6,142,069
+252,774,461 89,316,913
+231,247,680
+0
+3,367,084
+5,754,569
+86,708,579
+236,074,461
+December 29, 2010 to 0 to 6 years
+August 2, 2018
+Other Employees
+15,700,000
+0
+0
+387,500
+1,000,000
+0
+0
+0
+1,000,000 166,667
+15,700,000 2,441,667
+6 years
+4 to 6 years
+January 1, 2016 to
+July 1, 2018
+July 1, 2017
+Directors
+An Award includes all cash income from dividends in respect of those Shares from the date the Award is granted
+(the "Grant Date") to the date the Award vests (the "Vesting Date"). For the avoidance of doubt, the Board at its
+discretion may from time to time determine that any dividends declared and paid by the Company in relation to the
+Award Shares be paid to the selected participant even though the Award Shares have not yet vested.
+The annual cap for the year ended December 31, 2018 is RMB450 million, while the actual transaction amount for
+the year ended December 31, 2018 is approximately RMB368.4 million.
+The FIL does not explicitly stipulate the contractual arrangements as a form of foreign investment. The FIL does
+not mention concepts including "de facto control" and "controlling through contractual arrangements" nor does it
+specify the regulation on controlling through contractual arrangements. Furthermore, the FIL does not specifically
+stipulate rules on the Relevant Businesses. Instead, the FIL stipulates that "foreign investors invest in PRC through
+any other methods under laws, administrative regulations, or provisions prescribed by the State Council". In
+addition, the FIL does not specify what actions shall be taken with respect to the existing companies with a VIE
+structure, whether or not these companies are controlled by PRC entities and/or citizens. Therefore, as advised by
+the PRC Legal Advisor, currently our Contractual Arrangements are not affected under the FIL.
+65
+66
+Meituan Dianping
+REPORT OF DIRECTORS
+Equity Pledge Agreements
+Under the Equity Pledge Agreements entered into between the WFOES, the Registered Shareholders and the
+Onshore Holdcos on August 21, 2018, the Registered Shareholders agreed to pledge all their respective equity
+interests in the Onshore Holdcos that they own, including any interest or dividend paid for the shares, to the WFOES
+as a security interest to guarantee the performance of contractual obligations and the payment of outstanding
+debts. The pledge in respect of the Onshore Holdcos takes effect upon the completion of registration with the
+relevant administration for industry and commerce and shall remain valid until after all the contractual obligations
+of the Registered Shareholders and the Onshore Holdcos under the relevant Contractual Arrangements have been
+fully performed and all the outstanding debts of the Registered Shareholders and the Onshore Holdcos under the
+relevant Contractual Arrangements have been fully paid.
+Powers of Attorney
+The Registered Shareholders executed Powers of Attorney on August 21, 2018, pursuant to which the Registered
+Shareholders irrevocably appointed the WFOES and their designated persons (including but not limited to Directors
+and their successors and liquidators replacing the Directors but excluding those who are non-independent or may
+give rise to conflicts of interest) as their attorneys-in-fact to exercise on their behalf, and agreed and undertook
+not to exercise without such attorneys-in-fact's prior written consent, any and all right that they have in respect
+of their equity interests in the Onshore Holdcos. The Powers of Attorney shall remain effective for so long as each
+Registered Shareholder holds equity interest in the Onshore Holdcos.
+Loan Agreements
+Other than in the case of Beijing Mobike, Shanghai Hantao and Chengdu Meigengmei, the relevant WFOES and their
+Registered Shareholders entered into Loan Agreements on August 21, 2018, pursuant to which the WFOES agreed
+to provide loans to the Registered Shareholders, to be used exclusively as investment in the relevant Onshore
+Holdcos. The loans must not be used for any other purposes without the relevant lender's prior written consent.
+The term of each loan commences from the date of the agreement and ends on the date the lender exercises its
+exclusive call option under the relevant Exclusive Option Agreement, or when certain defined termination events
+occur, such as if the lender sends a written notice demanding repayment to the borrower, or upon the default of the
+borrower, whichever is earlier.
+REPORT OF DIRECTORS
+New VIE Structure in Relation to Shanghai Hantao
+In order to enhance the internal control and management system of the Group and for administration efficiency
+purpose, on November 13, 2018, the relevant parties as detailed below entered into the following agreements to
+change the registered shareholders of Shanghai Hantao from the original registered holders, namely Zhang Tao,
+Li Jing, Long Wei, Ye Shuhong, Zhang Bo and Shenzhen Litong Industrial Investment Fund Co., Ltd (collectively,
+the “Original Registered Holders”) to the executive Directors, Wang Xing and Mu Rongjun (collectively, the "New
+Registered Holders"):
+(1) the Termination Agreement, pursuant to which the Original Registered Holders, Shanghai Hantao and WFOE
+agreed that the series of contractual arrangements between Shanghai Hantao, the Original Registered Holders
+and the WFOE that are designed to allow the Company to exercise control over the operations of Shanghai
+Hantao and enjoy the economic benefits generated by Shanghai Hantao ("Original VIE Structure") shall be
+terminated;
+(2)
+2018 Annual Report
+Under the Exclusive Option Agreements entered into among the Onshore Holdcos, the WFOEs and the Registered
+Shareholders on August 21, 2018, the WFOES have the rights to require the Registered Shareholders to transfer any
+or all their equity interests in the Onshore Holdcos to the WFOES and/or a third party designated by it, in whole or in
+part at any time and from time to time, for considerations equivalent to the respectively outstanding loans owed to
+the Registered Shareholders (or part of the loan amounts in proportion to the equity interests being transferred) or,
+if applicable, for a nominal price, unless the relevant government authorities or the PRC laws request that another
+amount be used as the purchase price, in which case the purchase price shall be the lowest amount under such
+request. The Exclusive Option Agreements shall remain effective unless terminated in the event that the entire
+equity interests held by the Registered Shareholders in the Onshore Holdcos have been transferred to the WFOES
+or their appointee(s).
+Exclusive Option Agreements
+Under the Exclusive Business Cooperation Agreements, the service fee shall consist of 100% of the total
+consolidated profit of the Onshore Holdcos, after the deduction of any accumulated deficit of the Consolidated
+Affiliated Entities in respect of the preceding financial year(s), operating costs, expenses, taxes and other statutory
+contributions and subject to any necessary adjustment by the WFOES of the scope and amount of service fees
+according to the PRC tax law and tax practices.
+(x)
+(xi)
+Beijing Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%; and
+the Registered Shareholders of Shanghai Hantao were changed from Zhang Tao, Li Jing, Long Wei, Ye Shuhong,
+Zhang Bo and Shenzhen Litong Industrial Investment Fund Co., Ltd to Wang Xing and Mu Rongjun in November
+2018. For further details, please refer to the announcement of the Company dated November 13, 2018.
+>” denotes a direct legal and beneficial ownership in the equity interest.
+(3)
+' denotes a contractual relationship.
+(3)
+64
+REPORT OF DIRECTORS
+(4)
+"----" denotes the control by WFOES over the Registered Shareholders and the Onshore Holdcos through (a) powers of
+attorney to exercise all shareholders' rights in the Onshore Holdcos, (b) exclusive options to acquire all or part of the equity
+interests in the Onshore Holdcos and (c) equity pledges over the equity interests in the Onshore Holdcos.
+These include certain companies which do not currently carry out any business operations but are intended to carry out
+businesses which are subject to foreign investment restrictions in accordance with the Guidance Catalog of Industries
+for Foreign Investment. For further details of the subsidiaries of the Onshore Holdcos, see the section headed "History,
+Reorganization and Corporate Structure - Corporate Structure" of the Prospectus.
+A brief description of the specific agreements that comprise the Contractual Arrangements entered into by each of
+the WFOES and the Onshore Holdcos is set out as follows:
+Exclusive Business Cooperation Agreements
+Each of the Onshore Holdcos entered into the Exclusive Business Cooperation Agreements with each of the
+WFOES on August 21, 2018, pursuant to which, in exchange for a monthly service fee, the Onshore Holdcos agreed
+to engage the WFOEs as each of their exclusive provider of technical support, consultation and other services,
+including the use of any relevant software legally owned by the WFOEs; development, maintenance and updating
+of software in respect of the Onshore Holdcos' business; design, installation, daily management, maintenance
+and updating of network systems, hardware and database design; providing technical support and staff training
+services to relevant employers of the Onshore Holdcos; providing assistance in consultancy, collection and
+research of technology and market information (excluding market research business that wholly foreign-owned
+enterprises are prohibited from conducting under the PRC laws); providing business management consultation;
+providing marketing and promotional services; providing customer order management and customer services;
+transfer, leasing and disposal of equipment or properties; and other relevant services requested by the Onshore
+Holdcos from time to time to the extent permitted under the PRC laws.
+Meituan Dianping
+(ix) Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+the Equity Transfer Agreement, pursuant to which the Original Registered Holders agreed to transfer 95%
+and 5% of the equity interests in Shanghai Hantao to Wang Xing and Mu Rongjun, respectively, at a total
+consideration of RMB18 million; and
+The contractual arrangements under the New VIE Structure are on substantially the same terms as those in place
+under the Original VIE Structure, save as to the identity of the registered shareholders of Shanghai Hantao and the
+Loan Agreements entered into for the purpose of providing to the New Registered Holders the consideration under
+the Equity Transfer Agreement.
+Risks Relating to the Contractual Arrangements
+These are the certain risks that are associated with the Contractual Arrangements, including:
+•
+If the PRC government finds that the agreements that establish the structure for operating the Company's
+business do not comply with PRC laws and regulations, or if these regulations or their interpretations change
+in the future, the Company could be subject to severe penalties or be forced to relinquish its interests in those
+operations.
+Since the FIL remains relatively new, uncertainties exist with respect to the interpretation and implementation
+of the FIL and how it may impact the viability of the Company's current corporate structure, corporate
+governance and business operations.
+The Company's contractual arrangements may not be as effective in providing operational control as direct
+ownership, and its VIE shareholders may fail to perform their obligations under its contractual arrangements.
+2018 Annual Report
+69
+Shenzhen Tencent Computer is a subsidiary of Tencent, which is a substantial shareholder of the Company, and
+therefore a connected person of the Company.
+On September 1, 2018, Meituan Dianping (for itself and on behalf of other members of the Group) entered into a
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent),
+pursuant to which Tencent would provide marketing and promotional services for the Company (including but
+not limited to advertisement solicitation services on Tencent's social media network, provision of links to the
+Company's platform, technical support to enable the Company to give virtual "red packets" to its users via its
+platform and mobile apps, and grant of access to Tencent's platform to provide its services to Tencent's clients).
+In return for these marketing and promotional services, the Company would pay certain promotional service fees
+in one or more of the following manners including cost-per-time, cost-per-click, cost-per-mille, cost-per-sale and
+cost-per-download. The term of the Marketing and Promotion Services Framework Agreement commenced on the
+Listing Date and expires on December 31, 2020.
+Marketing and Promotion Services Framework Agreement
+As disclosed in the Prospectus, the Group has entered into the following partially-exempt continuing connected
+transactions during the year ended December 31, 2018. For further details, please refer to the section headed
+"Connected Transactions - Partially Exempt Continuing Connected Transactions" in the Prospectus.
+PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+Cloud Services and Technical Services Framework Agreement
+Accordingly, notwithstanding that the transactions contemplated under the Contractual Arrangements technically
+constitute continuing connected transactions under Chapter 14A of the Listing Rules, the Directors consider that it
+would be unduly burdensome and impracticable and would add unnecessary administrative costs to the Company,
+for all the transactions contemplated under the Contractual Arrangements to be subject to strict compliance with
+the requirements set out under Chapter 14A of the Listing Rules, including, among other things, the announcement
+and approval of independent Shareholders.
+The Directors (including independent non-executive Directors) are of the view that the continuing connected
+transactions set out above have been entered into in the Company's ordinary and usual course of business on
+normal commercial terms or better which are fair and reasonable and in the interests of the Company and the
+Shareholders as a whole.
+Our Consolidated Affiliated Entities conduct e-commerce and information platform services, cloud storage service,
+other value-added telecommunications service businesses, online culture business and radio and television
+program services, which are subject to foreign investment restrictions in accordance with the Special Administrative
+Measure for Entity of Foreign Investment (Negative List) (2018). In addition, our Consolidated Affiliated Entities also
+conduct outbound tourism and departure businesses, which are subject to qualification requirements that we do not
+satisfy. After consultation with the Company's PRC Legal Advisor, Han Kun Law Offices, the Company determined
+that it was not viable for it to hold its Consolidated Affiliated Entities directly through equity ownership. Instead,
+we decided that, in line with common practice in industries in the PRC subject to foreign investment restrictions,
+we would gain effective control over, and receive all the economic benefits generated by the businesses currently
+operated by our Consolidated Affiliated Entities through the Contractual Arrangements between the WFOES, on the
+one hand, and our Consolidated Affiliated Entities and the Registered Shareholders, on the other hand. For further
+details in relation to the foreign investment restrictions relating to the Contractual Arrangements, please refer to
+the sections headed “Contractual Arrangements Qualification Requirements under the FITE Regulations" of the
+Prospectus.
+Reasons for Adopting the Contractual Arrangements
+Although the Original VIE Structure does not include a loan agreement, a majority of the remaining contractual
+arrangements of the Company contain loan agreements and the Loan Agreements under the New VIE Structure
+are reproduced from and structured in substantially the same terms as the other existing loan agreements. The
+inclusion of the new Loan Agreements into the New VIE Structure is in line with the approach adopted for the
+remaining Onshore Holdcos which the Company controls through a series of contractual arrangement (except
+for Chengdu Meigengmei and Beijing Mobike). Hence, the New VIE Agreements constitute a reproduction of the
+existing contractual arrangements with loan agreements.
+In relation to the contractual arrangements under the New VIE Structure, the Company will fulfill and comply
+with the same conditions as those imposed on the contractual arrangements under the Existing VIE Structure as
+disclosed on pages 359 to 361 of the Prospectus, mutatis mutandis.
+For further details in relation to the New VIE Structure, please refer to the announcement of the Company dated
+November 13, 2018.
+2018 Annual Report
+67
+REPORT OF DIRECTORS
+The Foreign Investment Law
+a new set of VIE agreements, including the Exclusive Business Cooperation Agreement, the Powers
+of Attorney, the Exclusive Option Agreement, the Equity Pledge Agreement, the Loan Agreements, the
+Confirmations from the New Registered Holders and the spouse Undertakings (collectively known as the "New
+VIE Agreements”), pursuant to which the Group established the new structure through the entering into of the
+New VIE Agreements (the "New VIE Structure").
+On March 15, 2019, the National People's Congress promulgated the Foreign Investment Law ()(the
+"FIL"), which will take effect on January 1, 2020. The FIL will replace the existing laws regulating foreign investment
+in PRC, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture
+Enterprise Law and the Wholly Foreign-invested Enterprise Law. The FIL embodies an expected regulatory trend
+in PRC to rationalize its foreign investment regulatory regime in line with prevailing international practice and the
+legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.
+Save as disclosed above, there were no other new contractual arrangements entered into, renewed and/or
+reproduced between the Group and the Onshore Holdcos and/or Consolidated Affiliated Entities during the
+Relevant Period. There was no material change in the Contractual Arrangements and/or the circumstances under
+which they were adopted during the Relevant Period.
+Save for the reproduction of the contractual arrangements in the case of Shanghai Hantao as disclosed above,
+for the Relevant Period, none of the Contractual Arrangements had been unwound on the basis that none of the
+restrictions that led to the adoption of the Contractual Arrangements had been removed. As of December 31, 2018,
+the Company had not encountered interference or encumbrance from any PRC governing bodies in operating its
+businesses through its Consolidated Affiliated Entities under the Contractual Arrangements.
+The revenue of the Onshore Holdcos and their respective subsidiaries amounted to RMB5.6 billion for the year
+ended December 31, 2018, representing approximately 8.5% of the total revenue for the year of the Group. The
+total assets of the Onshore Holdcos and their respective subsidiaries amounted to RMB27.7 billion as of December
+31, 2018, representing approximately 23.0% of the total assets of the Group.
+68
+80
+Meituan Dianping
+REPORT OF DIRECTORS
+Nevertheless, there are possibilities that the implementing rules of the FIL (if any), future laws, administrative
+regulations or provisions of the State Council may stipulate contractual arrangements as a way of foreign
+investment, and then whether our Contractual Arrangements will be recognized as foreign investment, whether our
+Contractual Arrangements will be deemed to be in violation of the foreign investment access requirements and how
+our Contractual Arrangements will be handled are uncertain.
+Chengdu Meigengmei is owned as to 50% and 50% by Li Huijuan () and Fu Dongping (1), respectively,
+both of whom are current employees of the Company. The arrangement was the result of a commercial decision
+as agreed between Chengdu Meigengmei and its investee companies when Chengdu Meigengmei commenced
+operations;
+99
+Beijing Xinmeida is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+On January 18, 2019, the Board resolved to issue an aggregate of 21,952,250 Class B Shares to the above grantees
+upon vesting of the above RSUs. There will not be any actual cash outflow by the Group upon the proposed issue
+of Class B Shares to the above grantees. Assuming the grantees become fully entitled to all RSUs after the vesting
+period, the total number of Class B Shares to be issued would be limited to 21,952,250, or approximately 0.39%
+of the total issued share capital of the Company (on a one share one vote basis) as of the date of this annual
+report. For further details, please refer to the announcements and circular of the Company dated January 18, 2019,
+January 25, 2019 and February 20, 2019, respectively.
+Mu Rongjun, Wang Huiwen, Orr Gordon Robert Halyburton, Leng Xuesong and Shum Heung Yeung Harry are
+Directors of the Company and Chen Liang is a director of certain significant subsidiaries of the Company. Therefore,
+they are connected persons of the Company. The proposed issue of Class B Shares to each of the connected
+grantees constitutes a non-exempt connected transaction of the Company under Chapter 14A of the Listing
+Rules and is subject to reporting, announcement and the Independent Shareholders' approval requirements. The
+proposed issue of Class B Shares was approved by independent Shareholders in the extraordinary general meeting
+held on February 20, 2019.
+Annual Review by the Independent Non-executive Directors and the Auditor
+The independent non-executive Directors have reviewed the continuing connected transactions outlined above, and
+confirmed that such continuing connected transactions had been entered into:
+(a)
+in the ordinary and usual course of business of the Group;
+(b)
+on normal commercial terms or better; and
+(c)
+in accordance with the relevant agreements governing them on terms that were fair and reasonable and in the
+interests of the Company and the Shareholders as a whole.
+The Auditor has performed the relevant procedures regarding the continuing connected transactions in accordance
+with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or
+Reviews of Historical Financial Information" and with reference to Practice Note 740 "Auditor's Letter on Continuing
+Connected Transactions under the Hong Kong Listing Rules" issued by Hong Kong Institute of Certified Public
+Accountants. The Auditor has issued an unqualified letter containing its findings and conclusions in respect of the
+continuing connected transactions disclosed in Note 8(b) (Five highest paid individuals), Note 8(c) (Director's and
+chief executive's emoluments), Note 33 (Share-based payments) and Note 38 (Related party transactions) to the
+consolidated financial statements of this annual report in accordance with Rule 14A.56 of the Listing Rules. A copy
+of the Auditor's letter has been provided by the Company to the Stock Exchange.
+62
+62
+Meituan Dianping
+REPORT OF DIRECTORS
+REPORT OF DIRECTORS
+61
+2018 Annual Report
+Reference is also made to the announcement of the Company dated November 23, 2018, in which the Company
+announced, among other things, that on November 23, 2018, the Company granted an aggregate of 180,000
+award shares in the form of RSUs to the three independent non-executive Directors, namely, Orr Gordon Robert
+Halyburton, Leng Xuesong and Shum Heung Yeung Harry under the Post-IPO Share Award Scheme subject to the
+terms and conditions of the Post-IPO Share Award Scheme.
+On September 1, 2018, Meituan Dianping (for itself and on behalf of other members of the Group) entered into a
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent),
+pursuant to which Tencent agreed to provide cloud services, cloud storage and cloud services-related technical
+support to the Group for service fees. The precise scope of service, service fee calculation, method of payment and
+other details of the service arrangement will be agreed between the relevant parties separately. The service fees will
+be determined after arm's length negotiation between the parties with reference to the market rates. The term of
+the Cloud Services and Technical Services Framework Agreement commenced on the Listing Date and expires on
+December 31, 2020.
+The annual cap for the year ended December 31, 2018 is RMB200 million, while the actual transaction amount for
+the year ended December 31, 2018 is approximately RMB107.4 million.
+60
+60
+Meituan Dianping
+REPORT OF DIRECTORS
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+The Auditor has performed agreed upon procedures regarding the continuing connected transactions entered into
+by the Group during the year ended December 31, 2018 as set out above and states that:
+As disclosed in the Prospectus, the Group has entered into the following non-exempt continuing connected
+transactions during the year ended December 31, 2018. For further details, please refer to the section headed
+"Connected Transactions - Non-exempt Continuing Connected Transactions" in the Prospectus.
+On September 1, 2018, Meituan Dianping (for itself and on behalf of other members of the Group) entered into a
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent),
+pursuant to which Tencent agreed to provide the Company with payment services in order to enable its consumers
+to make online payments for the Company's service offerings through Tencent payment channels on both mobile
+devices and personal computers or directly on the Tencent payment interface embedded on its mobile apps and
+website. The Company shall in return pay payment service commissions to Tencent. The precise scope of service,
+commission rate, the applicable payment channel and other details of the arrangement shall be agreed between
+the relevant parties. The term of the Payment Services Framework Agreement commenced on the Listing Date and
+expires on December 31, 2020.
+The annual cap for the year ended December 31, 2018 is RMB1.1 billion, while the actual transaction amount for
+the year ended December 31, 2018 is approximately RMB488.2 million.
+We have followed the pricing policies as disclosed in the Prospectus in respect of the above continuing connected
+transactions. Before entering into any service agreement pursuant to the above framework agreements, we
+assessed our business needs and compared the service fees proposed by Tencent with the fees offered by at least
+one other comparable service providers. We only entered into a service agreement with Tencent if (i) the fees rates
+and quality of service provided by Tencent were no less favorable than those from other independent third party
+service provider; and (ii) it was in the best interest of the Company and the Shareholders as a whole.
+NON-EXEMPT CONNECTED TRANSACTIONS
+Issue of Class B Shares to Connected Grantees of Restricted Share Units
+(viii)
+Reference is made to the disclosure in the section headed "Statutory and General Information
+Outstanding share options and RSUs granted” in Appendix IV to the Prospectus, in which it was disclosed that
+1,000,000, 15,700,000 and 5,072,250 RSUs have been granted to Mu Rongjun, Wang Huiwen and Chen Liang,
+respectively, under the Pre-IPO ESOP.
+Payment Services Framework Agreement
+(a)
+D. Pre-IPO ESOP
+(c)
+Onshore Holdcos and their subsidiaries
+Notes:
+(1)
+Registered Shareholders refer to the registered shareholders of the Onshore Holdcos, namely, (i) Tianjin Antechu
+Technology; (ii) Shanghai Lutuan; (iii) Beijing Kuxun Interaction; (iv) Shanghai Sankuai Technology; (v) Meituan Finance; (vi)
+Beijing Sankuai Cloud Computing; (vii) Beijing Xinmeida; (viii) Chengdu Meigengmei; (ix) Beijing Mobike; (x) Beijing Sankuai
+Technology; and (xi) Shanghai Hantao.
+(i)
+Tianjin Antechu Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(ii) Shanghai Lutuan is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+100%
+(iii)
+Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(v)
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vi)
+Beijing Sankuai Cloud Computing is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(b)
+(vii)
+(iv)
+Registered Shareholders(1)
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Management and
+consulting services
+for transactions involving the provision of goods or services by the Group, nothing has come to its attention
+that causes it to believe that the continuing connected transactions were not, in all material respects, in
+accordance with the pricing policies of the Group;
+Service
+Fees
+nothing has come to its attention that causes it to believe that the transactions were not entered into, in all
+material aspects, in accordance with the relevant agreements governing such transactions; and
+(d) nothing has come to its attention that causes it to believe that such continuing connected transactions have
+exceeded the annual caps as set by the Company.
+Certain related party transactions as disclosed in Note 38 to the consolidated financial statements constituted as
+connected transactions or continuing connected transactions as defined in Chapter 14A of the Listing Rules and
+are in compliance with the disclosure requirements under Chapter 14A of the Listing Rules and disclosed in this
+annual report.
+CONTRACTUAL ARRANGEMENTS
+The Company has entered into a series of Contractual Arrangements with the WFOES and the Onshore Holdcos,
+pursuant to which the Company obtained effective control over, and received all the economic benefits generated
+by, the businesses operated by the Consolidated Affiliated Entities. Accordingly, through the Contractual
+Arrangements, the Company's Consolidated Affiliated Entities' results of operations, assets and liabilities, and cash
+flows are consolidated into the Company's financial statements.
+2018 Annual Report
+Save as disclosed in this annual report, during the Relevant Period, the Company had no connected transactions
+or continuing connected transactions which are required to be disclosed in accordance with the provisions under
+Chapter 14A of the Listing Rules in relation to the disclosure of connected transactions and continuing connected
+transactions.
+63
+REPORT OF DIRECTORS
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the Contractual Arrangements:
+Our Company
+WFOES
+nothing has come to its attention that causes it to believe that the disclosed continuing connected
+transactions have not been approved by the Board;
+100%
+Hong Kong, March 11, 2019
+The Board is committed to ensuring the Company adhere to a high standard of corporate governance.
+CORPORATE GOVERNANCE PRACTICES
+The Board is pleased to present the corporate governance report of the Company for the Relevant Period.
+CORPORATE GOVERNANCE REPORT
+74 Meituan Dianping
+Chairman
+The Board believes that good corporate governance standards are essential in providing a framework for the
+Company to safeguard the interests of shareholders, enhance corporate value, formulate its business strategies
+and policies, and enhance its transparency and accountability.
+CORPORATE GOVERNANCE REPORT
+The Company has adopted and applied the principles as set out in the CG Code. The Board is of the view that
+during the Relevant Period, the Company has complied with all the applicable code provisions as set out in the
+CG Code, except for code provision A.2.1 described in the paragraph headed "Board of Directors - Chairman and
+Chief Executive Officer".
+BOARD OF DIRECTORS
+The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its own code of
+conduct regarding Directors' securities transactions. Having made specific enquiries of all Directors, each of the
+Directors has confirmed that he has complied with the required standards as set out in the Model Code for the
+Relevant Period.
+The Company has also adopted its own code of conduct regarding employees' securities transactions on terms
+no less exacting than the standard set out in the Model Code for the compliance by its relevant employees who
+are likely to be in possession of unpublished inside information of the Company in respect of their dealings in the
+Company's securities.
+2018 Annual Report
+75
+CORPORATE GOVERNANCE REPORT
+Responsibilities
+The Board is responsible for leading and controlling the Company and oversees the Group's businesses, strategic
+decisions and performance and is collectively responsible for promoting the success of the Company by directing
+and supervising its affairs. Directors of the Board make decisions objectively in the interests of the Company.
+The Board directly, and indirectly through its committees, leads and provides direction to the management by laying
+down strategies and overseeing their implementation, monitors the Group's operational and financial performance,
+and ensures that sound internal control and risk management systems are in place.
+Wang Xing
+All Directors have full and timely access to all the information of the Company as well as the services and advice
+from the joint company secretaries and senior management. The Directors may, upon request, seek independent
+professional advice in appropriate circumstances, at the Company's expense for discharging their duties to the
+Company.
+All Directors, including non-executive Directors and independent non-executive Directors, have brought a wide
+spectrum of valuable business experience, knowledge and professionalism to the Board for its efficient and
+effective functioning.
+MODEL CODE FOR SECURITIES TRANSACTIONS
+On behalf of the Board
+IMPORTANT EVENTS AFTER THE REPORTING PERIOD
+PricewaterhouseCoopers was appointed as the Auditor during the Reporting Period. The accompanying financial
+statements prepared in accordance with IFRSS have been audited by PricewaterhouseCoopers.
+The Company is not presently a party to any legal proceedings that, if determined adversely to the Company,
+would individually or taken together have a material adverse effect on its business, results of operations, financial
+condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of
+defense and settlement costs, diversion of management resources and other factors.
+The Directors shall disclose to the Company details of other offices held by them and the Board regularly reviews
+the contribution required from each Director to perform his/her responsibilities to the Company.
+As far as the Board is aware, the Group has complied with the relevant laws and regulations that have a significant
+impact on the Group in all material respects.
+72
+Meituan Dianping
+REPORT OF DIRECTORS
+PERMITTED INDEMNITY PROVISION
+Under the Articles of Association, every Director or other officers of the Company acting in relation to any of the
+affairs of the Company shall be entitled to be indemnified against all actions, costs, charges, losses, damages and
+expenses which he may incur or sustain in or about the execution of his duties in his office. The Company has
+arranged appropriate insurance coverage in respect of legal action against its directors and officers.
+There were no important events affecting the Company and its subsidiaries which occurred after December 31,
+2018 and up to the date of this annual report.
+AUDIT COMMITTEE
+PricewaterhouseCoopers shall retire at the forthcoming AGM and, being eligible, will offer itself for re-appointment.
+A resolution for the re-appointment of PricewaterhouseCoopers as Auditor will be proposed at the AGM.
+The Audit Committee, together with the Auditor, reviewed the accounting principles and policies adopted by the
+Group and the consolidated financial statements during the Reporting Period.
+The Company is committed to maintaining high standards of corporate governance practices. Information on the
+corporate governance practices adopted by the Company is set out in the Corporate Governance Report of this
+annual report.
+SUFFICIENCY OF PUBLIC FLOAT
+Based on information publicly available to the Company and to the best knowledge of the Directors, at least 25%
+of the Company's total issued shares, the prescribed minimum percentage of public float approved by the Stock
+Exchange and permitted under the Listing Rules, was held by the public at all times during the Relevant Period and
+as of the date of this annual report.
+CLOSURE OF THE REGISTER OF MEMBERS
+The Company will hold the AGM on May 17, 2019. The register of members of the Company will be closed from
+May 14, 2019 to May 17, 2019, both days inclusive, in order to determine the identity of the Shareholders who are
+entitled to attend the AGM, during which period no share transfers will be registered. To be eligible to attend the
+AGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged for
+registration with the Company's share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited
+(for both holders of Class A Shares and holders of Class B Shares), at Shops 1712-1716, 17th Floor, Hopewell
+Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:30 p.m. on May 10, 2019.
+2018 Annual Report (73
+REPORT OF DIRECTORS
+PROFESSIONAL TAX ADVICE RECOMMENDED
+If the shareholders are unsure about the taxation implications of purchasing, holdings, disposing of, dealing in, or
+the exercise of any rights in relation to, the Shares, they are advised to consult an expert.
+AUDITOR
+CORPORATE GOVERNANCE
+The Board reserves its discretion on all major matters including policy matters, strategies and budgets, internal
+control and risk management, material transactions (in particular those that may involve conflict of interests),
+financial information, appointment of Directors and other significant operational matters of the Company.
+During the Reporting Period, the charitable and other donations made by the Group amounted to approximately
+RMB12 million.
+76
+Chairman and Chief Executive Officer
+Pursuant to code provision A.2.1 of the CG Code, companies listed on the Stock Exchange are expected to comply
+with, but may choose to deviate from the requirement that the responsibilities between the chairman and the chief
+executive officer should be segregated and should not be performed by the same individual. The Company does
+not have a separate chairman and chief executive officer and Wang Xing currently performs these two roles. The
+Board believes that vesting the roles of both chairman and chief executive officer in the same person has the
+benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic
+planning for the Group. The Board considers that the balance of power and authority for the present arrangement
+will not be impaired and this structure will enable the Company to make and implement decisions promptly and
+effectively. The Board will continue to review and consider splitting the roles of chairman of the Board and the chief
+executive officer of the Company at a time when it is appropriate by taking into account the circumstances of the
+Group as a whole.
+Composition
+As at the date of this annual report, the Board is comprised of eight Directors, with three executive Directors, two
+non-executive Directors and three independent non-executive Directors. During the Relevant Period and up to the
+date of this annual report, there has been no change to the composition of the Board.
+A list of Directors and their respective biographies are set out in the section headed "Directors and Senior
+Management" of this annual report.
+The Board's composition is in compliance with the requirement under Rule 3.10A of the Listing Rules that the
+number of independent non-executive directors must represent at least one-third of the Board. The Board believes
+that the balance between the executive Directors and the non-executive Directors is reasonable and adequate to
+provide sufficient checks and balances that safeguard the interests of the Shareholders and the Group.
+The Board values the importance of professional judgment and advice provided by non-executive Directors to
+safeguard the interests of the Shareholders. The non-executive Directors contribute diversified qualifications and
+experience to the Group by expressing their views in a professional, constructive and informed manner, and actively
+participate in Board and committee meetings and to bring professional judgment and advice on issues relating to
+the Group's strategies, policies, performance, accountability, resources, key appointments, standards of conduct,
+conflicts of interests and management process, with the Shareholders' interests being the utmost important factor.
+The non-executive Directors also exercise their professional judgment and utilize their expertise to scrutinize the
+Company's performance in achieving agreed corporate goals, and monitor performance reporting.
+78
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+CORPORATE GOVERNANCE REPORT
+Further, in compliance with Rule 3.10 of the Listing Rules, one of the Company's independent non-executive
+Directors has the appropriate professional qualifications of accounting or related financial management expertise,
+and provides valuable advice from time to time to the Board. The Company has also received from each
+independent non-executive Director an annual confirmation of his independence and the Nomination Committee
+has conducted an annual review and considers that all independent non-executive Directors are independent,
+taking into account of the independence guidelines set out in Rule 3.13 of the Listing Rules in the context of the
+length of service of each independent non-executive Director.
+Appointments and Re-election of Directors
+Each of the executive Directors has entered into a service contract with the Company. Pursuant to this agreement,
+they agree to act as executive Directors for an initial term of three years with effect from the date the appointment
+is approved by the Board until the third annual general meeting of the Company after the Listing Date (whichever is
+earlier). Either party has the right to give not less than three months' written notice to terminate the agreement.
+Each of the non-executive Directors has entered into an appointment letter with the Company. The appointment
+as a Director shall continue for three years after or until the third annual general meeting of the Company after the
+Listing Date, whichever is earlier (subject to retirement as and when required under the Articles of Association), until
+terminated in accordance with the terms and conditions of the appointment letter or by either party giving to the
+other not less than one month's prior notice in writing.
+Each of the independent non-executive Directors has entered into an appointment letter with the Company. The
+initial term of the appointment shall be three years from the date of this document or until the third annual general
+meeting of the Company after the Listing Date, whichever is earlier (subject to retirement as and when required
+under the Articles of Association), until terminated in accordance with the terms and conditions of the appointment
+letter or by either party giving to the other not less than three months' prior notice in writing.
+None of the Directors has entered into a service contract which is not determinable by the Group within one year
+without payment of compensation (other than statutory compensation).
+In accordance with the Articles of Association, all Directors are subject to retirement by rotation at least once every
+three years and any new Director appointed to fill a casual vacancy shall submit himself for re-election by the
+Shareholders at the first general meeting of the Company after appointment and new Directors appointed as an
+addition to the Board shall submit himself for re-election by the Shareholders at the next following general meeting
+of the Company after appointment.
+The procedures and process of appointment, re-election and removal of Directors are set out in the Articles
+of Association. The Nomination Committee is responsible for reviewing the Board composition and making
+recommendations to the Board on the appointment or re-election of Directors and succession planning for
+Directors.
+2018 Annual Report (79
+From time to time the Company may become involved in legal proceedings or be subject to claims arising in the
+ordinary course of its business.
+As part of the Company's corporate governance practice to provide transparency to the investor community and in
+compliance with the Listing Rules and the CG Code, the independent non-executive Directors are clearly identified
+in all corporate communications containing the names of the Directors. In addition, an up-to-date list of Directors
+identifying the independent non-executive Directors and the roles and functions of the Directors is maintained on
+the Company's website and the Stock Exchange's website.
+Responsibilities relating to implementing decisions of the Board, directing and coordinating the daily operation
+and management of the Company are delegated to the senior management of the Group. The senior management
+administers, interprets, enforces, supervises compliance with the internal policies and operational procedures
+and conducts regular reviews on such policies and procedures across different levels of the Group. The senior
+management communicates with the Board on a regular basis.
+2018 Annual Report (77
+Note: (1)
+76
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+Continuous Professional Development of Directors
+The Company believes education and training are important for maintaining an effective Board. Every Director has
+received formal and comprehensive training to ensure appropriate understanding of the business and operations of
+the Company and full awareness of Director's responsibilities and obligations under the Listing Rules and relevant
+statutory requirements.
+The Company arranges continuous professional development training to Directors such as internally facilitated
+briefings and provision of reading material on relevant topics to ensure Directors keep abreast of regulatory
+developments and changes in order to effectively perform their responsibilities and to ensure that their contribution
+to the Board remains informed and relevant. Directors also regularly meet with the senior management team
+to understand the Group's businesses, governance policies and regulatory environment. All Directors are also
+encouraged to attend relevant training courses.
+The Directors pursued continuous professional development and relevant details are summarized as follows:
+Participated
+in continuous
+professional
+development(¹)
+Name of Director
+Executive Directors
+App 14 1.0)
+Wang Xing
+Wang Huiwen
+Non-executive Directors
+Lau Chi Ping Martin
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+Leng Xuesong
+Shum Heung Yeung Harry
+V
+V
+Mu Rongjun
+LEGAL PROCEEDINGS AND COMPLIANCE
+Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+DONATIONS
+Listing Rules Implications and Waivers from the Stock Exchange
+REPORT OF DIRECTORS
+Meituan Dianping
+70
+(iv) the Company will engage external legal advisers or other professional advisers, if necessary, to assist the
+Board to review the implementation of the Contractual Arrangements, review the legal compliance of WFOE
+and its Consolidated Affiliated Entities to deal with specific issues or matters arising from the Contractual
+Arrangements.
+the Company will disclose the overall performance and compliance with the Contractual Arrangements in its
+annual reports; and
+the Board will review the overall performance of and compliance with the Contractual Arrangements at least
+once a year;
+major issues arising from the implementation and compliance with the Contractual Arrangements or any
+regulatory enquiries from government authorities will be submitted to the Board, if necessary, for review and
+discussion on an occurrence basis;
+(iii)
+The Group has adopted measures to ensure the effective operation of the Group's businesses with the
+implementation of the Contractual Arrangements and its compliance with the Contractual Arrangements, including:
+For further details, please refer to the section headed "Risk Factors-Risks Relating to Our Contractual
+Arrangements" of the Prospectus.
+If the Company exercises the option to acquire equity ownership of its VIES, the ownership transfer may
+subject us to certain limitations and substantial costs.
+laws.
+The Company conducts its business operations in China through its VIEs by way of Contractual
+Arrangements, but certain of the terms of the Contractual Arrangements may not be enforceable under PRC
+The equity holders, directors and executive officers of the VIES may have potential conflicts of interest with
+the Company.
+The Contractual Arrangements with the Company's VIES may be subject to scrutiny by the tax authorities in
+China. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore could
+substantially reduce its consolidated profit and the value of your investment.
+The Company may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held
+by its VIES, which could render it unable to conduct some or all of its business operations and constrain its
+growth.
+•
+REPORT OF DIRECTORS
+For the purposes of Chapter 14A of the Listing Rules, and in particular the definition of "connected person", the
+Consolidated Affiliated Entities will be treated as the Company's wholly owned subsidiaries, and their directors,
+chief executives or substantial shareholders (as defined in the Listing Rules) and their respective associates will be
+treated as the Company's "connected persons" as applicable under the Listing Rules (excluding for this purpose,
+the Consolidated Affiliated Entities), and transactions between these connected persons and our Group (including
+for this purpose, the Consolidated Affiliated Entities), other than those under the Contractual Arrangements, will be
+subject to requirements under Chapter 14A of the Listing Rules.
+The transactions contemplated under the Contractual Arrangements constitute continuing connected transactions
+of the Company.
+(i)
+(a)
+In relation to the Contractual Arrangements, the Stock Exchange has granted a waiver from strict compliance with
+(i) the announcement, circular and independent shareholders' approval requirements under Chapter 14A of the
+Listing Rules in respect of the transactions contemplated under the Contractual Arrangements pursuant to Rule
+14A.105 of the Listing Rules, (ii) the requirement of setting an annual cap for the transactions under the Contractual
+Arrangements under Rule 14A.53 of the Listing Rules and (iii) the requirement of limiting the term of the Contractual
+Arrangements to three years or less under Rule 14A.52 of the Listing Rules, for so long as the Shares are listed on
+the Stock Exchange subject however to the following conditions:
+The Auditor has carried out review procedures in accordance with Hong Kong Standard on Assurance Engagements
+3000 "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information" and with reference
+to Practice Note 740 "Auditor's Letter on Continuing Connected Transactions under the Hong Kong Listing Rules"
+issued by the Hong Kong Institute of Certified Public Accountants annually on the transactions carried out pursuant
+to the Contractual Arrangements. The Auditor has confirmed in a letter to the Board that the transactions carried
+out pursuant to the Contractual Arrangements during the year ended December 31, 2018 had received the approval
+of the Board, had been entered into in accordance with the relevant provisions of the Contractual Arrangements
+and that no dividends or other distributions had been made by the Company's Consolidated Affiliated Entities to
+the holders of its equity interests which were not otherwise subsequently assigned or transferred to the Group.
+any new contracts entered into, renewed and/or reproduced between the Group and the Consolidated
+Affiliated Entities during the Relevant Period are fair and reasonable, or advantageous to the Shareholders, so
+far as the Group is concerned and in the interest of the Shareholders as a whole.
+no dividends or other distributions had been made by the Company's Consolidated Affiliated Entities to the
+holders of its equity interests which were not otherwise subsequently assigned or transferred to the Group;
+and
+(c)
+(b)
+The independent non-executive Directors have reviewed the Contractual Arrangements outlined above, and
+confirmed that:
+Annual Review by the Independent Non-executive Directors and the Auditor
+REPORT OF DIRECTORS
+2018 Annual Report (71
+(a) the transactions carried out during the Relevant Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+the Group will disclose details relating to the Contractual Arrangements on an ongoing basis.
+(e)
+the Contractual Arrangements may be renewed and/or reproduce (i) upon expiry or (ii) in relation to any
+existing, newly established or acquired wholly foreign-owned enterprise or operating company (including
+a branch company), engaging in the same business as that of our Group, without obtaining Shareholders'
+approval, on substantially the same terms and conditions as the Contractual Arrangements; and
+the Contractual Arrangements shall continue to enable the Group to receive the economic benefits derived by
+the Consolidated Affiliated Entities;
+(d)
+(c)
+no change without independent Shareholders' approval;
+(b)
+no change without independent non-executive Directors' approval;
+Meituan Dianping
+84
+(k) making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+reviewing and monitoring all risks related to the Company's WVR structure, including connected transactions
+between the Company and/or its subsidiary or consolidated affiliated entity on one hand and any WVR
+Beneficiary on the other and making a recommendation to the Board on any such transaction;
+confirming, on an annual basis, that the WVR Beneficiaries have been members of the Board throughout the
+year and that no matters under Rule 8A.17 of the Listing Rules have occurred during the relevant financial
+year;
+reviewing and monitoring the management of conflicts of interests and making a recommendation to the
+Board on any matter where there is a potential conflict of interest between the Company, its subsidiary or
+consolidated affiliated entity and/or shareholder on one hand and any WVR Beneficiary on the other;
+confirming, on an annual basis, whether or not the WVR Beneficiaries have complied with Rules 8A.14, 8A.15,
+8A.18 and 8A.24 of the Listing Rules throughout the year;
+reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+CORPORATE GOVERNANCE REPORT
+(j)
+(1) seeking to ensure effective and on-going communication between the Company and its shareholders,
+particularly with regards to the requirements of Rule 8A.35 of the Listing Rules;
+(g)
+(n) disclosing, on a comply or explain basis, its recommendations to the Board in respect of the matters in
+sub-paragraphs (i) to (k) above in the report referred to in sub-paragraph (m) above.
+As the Shares of the Company have only been listed since September 20, 2018, no meeting of the Corporate
+Governance Committee was held in the Relevant Period. On January 18, 2019, the Corporate Governance
+Committee held a meeting, considered and approved the Policy for the Disclosure of Significant Information and
+reviewed the following matters:
+(a) the training and continuous professional development of Directors and senior management;
+(b) the code of conduct applicable to employees and Directors;
+(၁)
+(d)
+(e)
+(f)
+(h)
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+(m) reporting on the work of the Corporate Governance Committee on at least a half-yearly and annual basis
+covering all areas of its terms of reference; and
+(i)
+(၁)
+(g)
+(a)
+the Board Diversity Policy;
+(b) the structure, size and composition of the Board;
+the re-appointment of the Company's compliance advisor;
+the re-election of Directors and its schedule; and
+(d) the independence of the independent non-executive Directors.
+App 14 L.(d)(ii)
+2018 Annual Report
+83
+CORPORATE GOVERNANCE REPORT
+Corporate Governance Committee
+The Company has established a corporate governance committee in compliance with Chapter 8A of the Listing
+Rules. The primary duties of the Corporate Governance Committee are to ensure that the Company is operated and
+managed for the benefit of all Shareholders and to ensure the Company's compliance with the Listing Rules and
+safeguards relating to the WVR Structure of the Company.
+The Corporate Governance Committee comprises three independent non-executive Directors, namely Leng
+Xuesong, Orr Gordon Robert Halyburton and Shum Heung Yeung Harry. Leng Xuesong is the chairman of the
+Corporate Governance Committee.
+In accordance with Rule 8A.30 of the Listing Rules and the Corporate Governance Code set out in Appendix 14 of
+the Listing Rules, the duties of the Corporate Governance Committee as set out in its terms of reference include:
+(a)
+(b)
+(c)
+developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory
+requirements;
+(d) developing, reviewing and monitoring the code of conduct and compliance manual (if any) applicable to
+employees and Directors;
+(e)
+(f)
+(h)
+the disclosure in the Corporate Governance Report and the Company's compliance with the CG Code;
+The First Line of Defence is mainly formed by the business and functional departments of each business group
+of the Company who are responsible for the daily operation and management. It is responsible for designing and
+implementing controls to address the risks.
+all risks related to the Company's WVR Structure, including connected transactions between the Company
+and its subsidiary or Consolidated Affiliated Entity on the one hand and any WVR Beneficiary on the other;
+Below is a summary of the significant risks of the Company along with the applicable response strategies. With the
+growth of business scale, scope, complexity and the changing external environment, the Company's risk profile
+may change and the list below is not intended to be exhaustive.
+App 14 C.2.4(b)
+2018 Annual Report
+87
+CORPORATE GOVERNANCE REPORT
+Compliance Risk
+Although the internet and technology industry is still evolving, regulatory authorities in numerous jurisdictions have
+been, in an attempt to keep up with such evolution, developing more comprehensive and stringent regulations
+to regulate the industry, including obtaining and maintaining necessary licenses, approvals and permits relevant
+to applicable business. As the Company is continuously expanding its businesses in the PRC and overseas, it
+is required to comply with the new applicable laws and regulations in different jurisdictions that are specifically
+relevant to the Company's businesses, such as laws relating to data protection, internet information security, IP,
+etc. Any changes in governance policies and regulations could have a negative impact on the business, financial
+condition and operating results of the Company.
+The Company has several professional departments and teams that work closely with management of business
+groups to monitor and identify changes in any relevant laws and regulations, so as to take appropriate actions or
+measures to ensure the Company is in compliance with applicable laws and regulations.
+Market Competition Risk
+The Company faces competition in every aspect of its business, and particularly from other companies in the on-
+demand delivery businesses, instore services businesses and the hotel & travel services. To obtain and maintain
+competitive advantage in these business segments would require us to divert significant managerial, financial
+and human resources. In addition, each of the Company's business segments is subject to rapid market changes
+and the potential development of new business models and the entry of new and well-funded competitors.
+Some of its current competitors have, and future competitors may have, greater financial, technical or marketing
+resources, longer operating histories, greater brand recognition or larger consumer bases than it does, or may
+enter into business alliances that strengthen their competitive positions. Increased competition may reduce the
+Company's market share and profitability and require it to increase its marketing and promotional efforts and capital
+commitment in the future.
+The business and functional departments of each business group identify, assess and respond to the risk issues in
+their operations. The internal control department reports significant risks at the Company level through collecting,
+consolidating and analyzing such risk issues, and ensures that appropriate response strategies and control
+measures have been taken, which are reviewed by the senior management teams. The internal control department
+reviews and evaluates the actions made in response to the significant risks from time to time.
+Although the Company has been successful in capturing the market opportunities created by the mobile internet
+boom, to remain competitive, it needs to stay abreast of the constantly evolving industry trends and to enhance
+and improve the responsiveness, functionality and features of its mobile apps, websites and systems. As a result,
+in order to attract and retain users and compete against its competitors, the Company has to continue investing
+significant resources in research and development to enhance its information technology and improve its existing
+services.
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+Information System Risk
+Protection of user data and other related information is critical to the Company's business. Any loss or leakage of
+sensitive user information could have a significant negative impact on affected users and the Company's reputation,
+and even lead to potential legal action against the Company.
+The Company has implemented various controls to ensure that user data is protected and risks of leakage and
+loss of such data is mitigated. We collect personal information and data from users with their prior consent, and
+implement company-wide policies on data collection, usage, disclosure, transfer and storage. We also encrypt user
+data in network transmission. For data storage, we use encryption technologies at software and hardware levels to
+protect sensitive user data.
+User data is handled strictly in accordance with our defined policies. It has obtained the ISO 27001 and National
+Information System Security Level Protection Level 3 Certification. It has established a coordination mechanism
+with third-party agencies to handle information security threats in a timely manner.
+At the enterprise level, the Company established a systematic and universal user account authorization and
+management mechanism based on which it periodically reviews the status of user accounts and the related
+authorization information. Security configuration assessments on its databases and servers are regularly performed
+with implementation of procedures for system log management.
+The Company has put in place a series of backup management procedures. For its Al and cloud platforms, the
+Company deploys different backup mechanisms, including local backups and offsite backups, depending on
+the needs of its business, to minimize the risk of user data loss. For its Site Reliability Engineering department, it
+establishes protocols for the design, implementation and monitoring of offsite backups.
+We provide information security training to employees and conduct ongoing trainings. The Company also has
+an emergency response mechanism to evaluate critical risks, formulate disaster response plans and perform
+emergency drills on a regular basis.
+The Audit Committee also reviews cybersecurity updates of the Company every six months to advise and provide
+recommendations for the improvement of the Group's information security system operating normally under
+persistent and sophisticated cyber-attacks, enabling the Company to strengthen customer trust and enhance its
+user experience. The Audit Committee last reviewed cybersecurity updates during an Audit Committee meeting in
+November 2018.
+88
+As an internet company with diverse business areas, the Company's business is characteristic of its variety and fast
+adaptations. Therefore, catering to these characteristics, the risk management of the Company has established a
+dynamic risk management process.
+These systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and
+can only provide reasonable but not absolute assurance against material misstatement or loss.
+The Third Line of Defence mainly consists of the functions of internal audit and anti-fraud investigation of
+the Company, which holds a high degree of independence and is responsible for providing an independent
+evaluation on the effectiveness of the Company's risk management and internal control systems, and monitoring
+management's continuous improvement over the risk management and internal control areas. The anti-fraud
+investigation function is responsible for receiving whistleblower reports through various channels and for following
+up and investigating alleged fraudulent activities.
+the written confirmation provided by the WVR Beneficiaries that they have complied with Rules 8A.14, 8A.15,
+8A.18 and 8A.24 of the Listing Rules throughout the Relevant Period; and
+the Company's various policies and practices on corporate governance.
+The Corporate Governance Committee has confirmed that (i) the WVR beneficiaries have been members of the
+Board throughout the Relevant Period; (ii) no matter under Rule 8A.17 has occurred during the Relevant Period;
+and (iii) the WVR Beneficiaries have complied with Rules 8A.14, 8A.15, 8A.18 and 8A.24 of the Listing Rules during
+the Relevant Period. In respect of the issue of Class B Shares to connected grantees of RSUs including, amongst
+others, Mu Rongjun and Wang Huiwen, both being WVR Beneficiaries, the members of the independent board
+committee, who are also members of the Corporate Governance Committee, having taken into account the advice
+of the independent financial adviser, considered that the terms of the proposed issue of Class B Shares are fair
+and reasonable and in the interests of the Company and the Shareholders as a whole and recommended the
+independent Shareholders to vote in favor of the resolutions. For further details, please refer to the announcements
+and circular of the Company dated January 18, 2019, January 25, 2019 and February 20, 2019, respectively. The
+Corporate Governance Committee has also reviewed the remuneration and terms of engagement of the Company's
+compliance advisor and recommended to re-appoint Guotai Junan Capital Limited as the compliance advisor of the
+Company.
+On March 8, 2019, the Corporate Governance Committee held a meeting, reviewed and approved the 2018
+Corporate Governance Report and reviewed the Policy for the Disclosure of Significant Information and Policy of
+Conflict of Interests.
+2018 Annual Report
+85
+86
+CORPORATE GOVERNANCE REPORT
+RISK MANAGEMENT AND INTERNAL CONTROL
+Adequate and effective risk management and internal control systems are key to safeguarding the achievement
+of the Company's business strategies. The risk management and internal control systems shall also ensure the
+achievement of the Company's objectives in operational effectiveness and efficiency, reliable financial reporting,
+and compliance with applicable laws, regulations and policies.
+The Board acknowledges that it is the Board's responsibility to ensure that the Company has established and
+maintained adequate and effective risk management and internal control systems. The Board delegates its
+responsibility to the Audit Committee to review the practices of management with respect to risk management
+and internal control, including the design, implementation and supervision of the risk management and internal
+control systems. This review formally takes place four times a year at quarterly intervals, one of which includes an
+annual review on the effectiveness of the risk management and internal control systems. The Board is responsible
+for overseeing the risk appetite of the Company including determining the risk level the Company expects and is
+able to take, and proactively considering, analyzing and formulating strategies to manage the key risks that the
+Company is exposed to.
+The Company is devoted to establishing and maintaining risk management and internal control systems consisting
+of policies and procedures that it considers to be appropriate for its business operations, and it is dedicated to
+continuously improving these systems.
+Risk Management
+The Company is committed to continuously improving the risk management system, including structure, process
+and culture, through the enhancement of risk management ability, to ensure long-term growth and sustainable
+development of the Company's business.
+The Company has established a risk management system which sets out the roles and responsibilities of each
+relevant party as well as the relevant risk management policies and processes. Each business group of the
+Company, on a regular basis, identifies and assesses risk factors that may negatively impact the achievement of its
+objectives, and formulates appropriate response measures. The Company's staff also attends training in relation to
+risk management and internal controls on a regular basis.
+To ensure that the risk management and internal control systems are effective, the Company, under the supervision
+and guidance of the Board and factoring the actual needs of the Company, has adopted the "Three Lines of
+Defence" internal monitoring model as an official organizational structure for risk management and internal control.
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+The First Line of Defence - Operation and Management
+As the Shares of the Company have only been listed since September 20, 2018, no meeting of the Nomination
+Committee was held during the Relevant Period. On March 11, 2019, the Nomination Committee held a meeting,
+considered and approved the Nomination Policy which sets out the nomination principles and procedures of the
+Board and reviewed the following matters:
+The Second Line of Defence - Risk Management
+The Second Line of Defence mainly consists of the internal control department, cybersecurity center, legal
+department, finance department, food safety team and safety affairs department of the Company. This line of
+defence is responsible for formulating policies related to management of litigation, finance, cybersecurity, food
+safety and health-and-safety risks and the internal control of the Company and for planning and implementing
+the establishment of integrated risk control systems. For ensuring effective implementation of such systems, this
+line of defence also assists and supervises the first line of defence in the establishment and improvement of risk
+management and internal control systems.
+The Third Line of Defence - Independent Assurance
+the Conflict of Interest Declaration Policy of the Company and any potential conflict of interest between the
+Company and the WVR beneficiaries;
+The Company regards increasing diversity at the Board level as an essential element in supporting the attainment
+of its strategic objectives and its sustainable development. The Company has implemented a board diversity policy.
+In designing the Board's composition, Board diversity has been considered from a number of aspects, including
+but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills,
+knowledge and length of service. All Board appointments will be based on meritocracy, and candidates will be
+considered against objective criteria, having due regard for the benefits of diversity on the Board. The Company
+aims to maintain an appropriate balance of diversity perspectives of the Board that are relevant to the Company's
+business growth.
+(c)
+The Nomination Committee consists of three members, namely Leng Xuesong and Shum Heung Yeung Harry, the
+independent non-executive Directors and Wang Huiwen, the executive Director. Leng Xuesong has been appointed
+as the chairman of the Nomination Committee.
+2/2
+2/2
+2/2
+222
+2/2
+22
+2/2
+2/2
+2/2
+2/2
+222
+1/2
+||
+Notes:
+(1)
+(2)
+No meeting of the Remuneration Committee was held during the Relevant Period. The Remuneration Committee held a
+meeting on January 18, 2019 and all members of the Remuneration Committee attended the meeting.
+No meeting of the Nomination Committee was held during the Relevant Period. The Nomination Committee held a meeting
+on March 11, 2019 and all members of the Nomination Committee attended the meeting.
+(3) No meeting of the Corporate Governance Committee was held during the Relevant Period. The Corporate Governance
+Committee held meetings on January 18, 2019 and March 8, 2019 and all members of the Corporate Governance
+Committee attended the meeting.
+At the two Board meetings held during the Relevant Period, the Board discussed a wide range of matters, including
+the Company's financial and operational performances, approved interim and quarterly results of the Company,
+amendments to the terms of reference of the Audit Committee, grant of RSUs under the Post-IPO Share Award
+Scheme, business prospects and other significant matters.
+As the Shares of the Company have only been listed since September 20, 2018, no meeting of the Chairman with
+the non-executive Directors (including independent non-executive Directors) without the presence of executive
+Directors was held during the Relevant Period. A meeting between the Chairman and the non-executive directors
+was held on March 11, 2019.
+No annual general meeting was held during the Relevant Period. The Company held an extraordinary general
+meeting on February 20, 2019 to approve the re-appointment of the Auditor and issuance of new Shares to certain
+connected persons.
+2/2
+2/2
+Committee(3)
+Committee(2)
+CORPORATE GOVERNANCE REPORT
+Board Activity
+As the Shares of the Company have only been listed since September 20, 2018, the Board has met only twice in
+the Relevant Period. The attendance of each Director at Board and committee meetings of the Company, whether
+in person or by means of electronic communication, is detailed in the table below:
+Name of Director
+Executive Directors
+Wang Xing
+Mu Rongjun
+Wang Huiwen
+Non-executive Directors
+Lau Chi Ping Martin
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+Leng Xuesong
+Shum Heung Yeung Harry
+Attendance/No. of Meetings held during the Relevant Period
+Corporate
+Audit Remuneration
+Nomination
+Governance
+Board
+Committee
+Committee(1)
+80
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+BOARD COMMITTEES
+The Company has established a remuneration committee with written terms of reference in compliance with Rule
+3.25 of the Listing Rules and the CG Code and Corporate Governance Report as set out in Appendix 14 to the
+Listing Rules. The primary duties of the Remuneration Committee include the following:
+(a) making recommendations to the Board on the remuneration packages and the Company's policy and
+structure for remuneration for all Directors and senior management;
+(b) reviewing and approving the management's remuneration proposals with reference to the corporate goals and
+objectives resolved by the Board from time to time;
+89
+(d)
+establishing formal and transparent procedures for developing remuneration policy and structure to ensure
+that no Director or any of his/her associates will participate in deciding his/her own remuneration; and
+advising shareholders of the Company on how to vote in respect of any service contracts of Directors that
+require shareholders' approval in accordance with the Listing Rules.
+The Remuneration Committee consists of three members, namely Leng Xuesong and Shum Heung Yeung Harry,
+the independent non-executive Dirrectors and Mu Rongjun, the executive Director. Leng Xuesong has been
+appointed as the chairman of the Remuneration Committee.
+As the Shares of the Company have only been listed since September 20, 2018, no meeting of the Remuneration
+Committee was held during the Relevant Period. On January 18, 2019, the Remuneration Committee held a meeting
+and considered the overall remuneration principles, the structure of the Company and the remuneration packages
+for the Directors and senior management.
+For details in relation to the Company's Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award
+Scheme, please refer to the section headed "Report of Directors" of this annual report.
+82
+82
+Meituan Dianping
+CORPORATE GOVERNANCE REPORT
+Nomination Committee
+The Company has established a nomination committee with written terms of reference in compliance with the CG
+Code and Corporate Governance Report in Appendix 14 to the Listing Rules. The primary duties of the Nomination
+Committee include the following:
+(a) reviewing the Board composition;
+(b) developing the criteria for identifying candidates for nomination and appointment of Directors;
+(c)
+assessing the independence of independent non-executive Directors;
+(d) making recommendations to the Board on the appointment or re-appointment of Directors and succession
+planning for Directors; and
+(e)
+developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+Remuneration Committee
+The Nomination Committee reviews at least annually the structure, size and composition (including the skills,
+knowledge and experience) of the Board and where appropriate, make recommendations on changes to the Board
+to complement the Company's corporate strategy.
+The Audit Committee annually reviews the relationship of the Company with the Auditor and recognizes that the
+Auditor's independence is a fundamental governance principle. The Auditor provides quarterly updates to the
+Audit Committee if any independence issue is identified and is required to give an annual confirmation on their
+independence. Having also reviewed the effectiveness of the external audit process as well as the independence
+and objectivity of the Auditor, the Audit Committee is satisfied with this relationship. As such, the Audit Committee
+has recommended their re-appointment at the AGM.
+81
+The Board has established four committees, namely, the Audit Committee, the Remuneration Committee, the
+Nomination Committee and the Corporate Governance Committee. All Board committees of the Company are
+established with specific written terms of reference which deal clearly with their authority and duties. The terms of
+reference of the Audit Committee, the Nomination Committee, the Remuneration Committee and the Corporate
+Governance Committee are available on the Company's website and the Stock Exchange's website.
+Audit Committee
+The Company has established an audit committee with written terms of reference in compliance with Rule 3.21
+of the Listing Rules and the CG Code and Corporate Governance Report as set out in Appendix 14 to the Listing
+Rules. The primary duties of the Audit Committee include the followings:
+(a) making recommendations to the Board on the appointment, re-appointment and removal of the external
+auditor;
+(b)
+(c)
+reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the
+audit process in accordance with applicable standards;
+developing and implementing policies on engaging an external auditor to supply non-audit services;
+(d) monitoring the integrity of the Company's financial statements, annual reports, accounts and half-yearly
+reports; and
+(e)
+reviewing financial information and oversight of the Company's financial reporting, financial controls, risk
+management and internal control systems.
+The Audit Committee consists of three independent non-executive Directors, namely Orr Gordon Robert
+Halyburton, Leng Xuesong and Shum Heung Yeung Harry. Orr Gordon Robert Halyburton has been appointed
+as the chairman of the Audit Committee and is the independent non-executive Director with the appropriate
+professional qualifications.
+During the Relevant Period, the Audit Committee met twice. Individual attendance of each Audit Committee
+member is set out on page 80. The Audit Committee also met the external auditors twice without the presence of
+the executive Directors.
+The Audit Committee's major work during the Relevant Period includes:
+(a) reviewing the 2018 interim report;
+reviewing the Company's quarterly results announcement for the third quarter ended September 30, 2018;
+(b)
+(c)
+reviewing compliance with CG Code, Listing Rules and relevant laws;
+(d) reviewing the Company's cybersecurity structure and the effectiveness of the Company's cybersecurity
+management and technology framework; and
+(e) reviewing the terms of engagement, independence and remuneration of the external auditor.
+App 14 L.(a), (b)
+2018 Annual Report
+CORPORATE GOVERNANCE REPORT
+2018 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+1,728,980 (25,036,620)
+Operating (loss)/profit
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+8,722,427 14,674,065
+26,126,641
+Total revenues
+12,025,596
+20,055
+880,009
+(including interest revenue)
+Other services and sales
+322,990
+4,066,205 2,325,479
+4,636,167
+3,223,472
+Online marketing services
+7,768,614
+14,254,546
+Food delivery services
+Commission
+Revenues:
+(RMB in thousands)
+Revenues:
+Total
+-
+14,160,298
+travel
+hotel &
+In-store,
+initiatives Unallocated
+New
+delivery
+Food
+Unaudited Three Months Ended December 31, 2020
+(5,005,856)
+(433,211)
+3,897,016 (10,205,238)
+1,735,577
+(18,306,347)
+-
+(433,211) (54,528,989)
+(24,391,064) (4,825,411) (24,879,303)
+(18,306,347)
+49,523,133
+12,925,660
+8,182,629
+14,254,546
+and others
+items¹
+travel
+(RMB in thousands)
+2021
+2020
+As of December 31,
+2019
+2018
+2017
+Current liabilities
+Non-current liabilities
+LIABILITIES
+Total Equity
+of the Company
+Non-controlling interests
+Equity attributable to equity holders
+EQUITY
+Total assets
+Current assets
+Non-current assets
+ASSETS
+CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+1,729,681 (25,038,801)
+29,196,028 47,512,119 49,877,870 78,268,647 92,824,592
+54,438,135 73,149,392 82,135,045 88,306,155 147,828,677
+and others
+83,634,163 120,661,511 132,012,915 166,574,802 240,653,269
+86,504,334
+5,438
+Unallocated
+New
+initiatives
+In-store,
+hotel &
+Food
+delivery
+Unaudited Three Months Ended December 31, 2021
+FINANCIAL INFORMATION BY SEGMENT
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Meituan 2021 Annual Report 7
+83,634,163 120,661,511 132,012,915 166,574,802 240,653,269
+Total equity and liabilities
+34,151,739 39,958,521 68,940,527 115,096,507
+124,135,545
+Total liabilities
+103,618,175 2,326,683 3,365,958 17,792,886 46,503,550
+20,517,370 31,825,056 36,592,563 51,147,641 68,592,957
+97,634,275 125,556,762
+(40,501,382) 86,509,772 92,054,394
+125,613,442
+(56,680)
+97,693,027
+(58,752)
+92,112,445
+(58,051)
+(40,559,116)
+57,734
+(15,487,131) (123,281,091) 2,921,721
+(RMB in thousands)
+Total
+64.7
+ΝΑ
+61.8
+37.8
+118.9
+(including interest revenue)
+Other services and sales
+Online marketing services
+35.0
+ΝΑ
+24.8
+ΝΑ
+12.6
+ΝΑ
+\ \/ //
+304.4
+31.0
+32.0
+34.2
+Total revenues
+13.5
+21.3
+58.7
+(21.8)
+70.0
+38.1
+96.7
+Operating (loss)/profit
+12.6
+ΝΑ
+ΝΑ
+NA
+12.6
+Including: Food delivery related costs
+33.7
+(21.8)
+63.2
+11.9
+18.1
+Cost of revenues, operating expenses
+and unallocated items
+30.6
+NA
+22.2
+items¹
+28.8
+NA
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+37,917,504
+7,847,378
+6,060,683
+12,664,562
+11,344,881
+-
+7,135,360 9,244,159
+21,537,985
+Total revenues
+14,558 7,430,860
+401,960
+(including interest revenue)
+Other services and sales
+79,875
+6,029,499 3,581,958 1,733,424
+2,441,964 3,538,844
+Online marketing services
+Commission
+12,664,562
+Food delivery services
+Operating (loss)/profit
+NA
+(20,655,633) (4,313,425) (15,246,990)
+(16,252,764)
+882,352 2,821,935 (6,002,831)
+12.6
+(Percentages %)
+Total
+items¹
+and others
+travel
+delivery
+Unallocated
+New
+initiatives
+Year-over-year change
+hotel &
+Food
+In-store,
+Commission
+Food delivery services
+Revenues:
+8 Meituan 2021 Annual Report
+Unallocated items mainly include (i) share-based compensation expenses, (ii) amortisation of intangible assets resulting
+from acquisitions, (iii) fair value changes of other financial investments at fair value through profit or loss, and (iv) other
+(losses)/gains, net. They are not allocated to individual segments.
+(554,152) (2,852,696)
+(554,152) (40,770,200)
+(16,252,764)
+75.5
+4,708,313 (23,538,379)
+(18,916,617) (115,477,171)
+(15,558,395) (123,296,397)
+Certified Public Accountants and
+Registered PIE Auditor
+PricewaterhouseCoopers
+AUDITOR
+Mr. Wang Huiwen (X)
+Mr. Wang Xing (1)
+AUTHORIZED REPRESENTATIVES
+Ms. Lau Yee Wa ()
+Ms. Xu Sijia ()
+AUDIT COMMITTEE
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+Independent Non-executive Directors
+Mr. Neil Nanpeng Shen ()
+Mr. Lau Chi Ping Martin ()
+Non-executive Directors
+Mr. Wang Huiwen (X)
+Mr. Mu Rongjun ()
+Mr. Wang Xing (E) (Chairman of the Board)
+Executive Directors
+22/F, Prince's Building
+Central
+JOINT COMPANY SECRETARIES
+Hong Kong
+Mr. Orr Gordon Robert Halyburton (Chairman)
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+Mr. Orr Gordon Robert Halyburton
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Leng Xuesong (A) (Chairman)
+CORPORATE GOVERNANCE COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Wang Huiwen (X)
+Beijing 100102
+China
+Chaoyang District
+No. 4 Wang Jing East Road
+Block B&C, Hengjiweiye Building
+NOMINATION COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Mu Rongjun ()
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+Cayman Islands
+Grand Cayman, KY1-1104
+PO Box 309, Ugland House
+REMUNERATION COMMITTEE
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Leng Xuesong (A)
+REGISTERED OFFICE
+Level 54, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+BOARD OF DIRECTORS
+2 Meituan 2021 Annual Report
+47
+Report of Directors
+41
+17
+Directors and Senior Management
+Management Discussion and Analysis
+11
+6
+2
+Chairman's Statement
+Financial Summary and Operation Highlights
+Corporate Information
+CONTENTS
+ANNUAL REPORT 2021
+美図 美
+hair salon
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+Stock Code: 3690
+Meituan
+美 美
+89
+CORPORATE INFORMATION
+Corporate Governance Report
+116
+H
+Glossary
+300
+Definitions
+293
+177
+Notes to the Consolidated Financial Statements
+175
+Consolidated Statement of Cash Flows
+173
+Consolidated Statement of Changes in Equity
+171
+Consolidated Statement of Financial Position
+170
+Consolidated Statement of Comprehensive Income
+Consolidated Income Statement
+169
+Independent Auditor's Report
+163
+Environmental, Social and Governance Report
+2,238,769
+2,919,043
+LEGAL ADVISORS
+CORPORATE INFORMATION
+(iii)
+(ii)
+(i)
+The weighted voting rights attached to our Class A Shares will cease when none of the WVR Beneficiaries have
+beneficial ownership of any of our Class A Shares, in accordance with Listing Rule 8A.22. This may occur:
+CORPORATE INFORMATION
+Meituan 2021 Annual Report 5
+Class A Shares may be converted into Class B Shares on a one to one ratio. As at the date of this annual report,
+upon the conversion of all the issued and outstanding Class A Shares into Class B Shares, the Company will issue
+678,249,783 Class B Shares, representing approximately 12.42% of the total number of issued Class B Shares as
+at the date of this annual report.
+As at the date of this annual report, the WVR Beneficiaries are Wang Xing, Mu Rongjun and Wang Huiwen. Wang
+Xing beneficially owned 515,869,783 Class A Shares, representing approximately 42.14% of the voting rights in the
+Company with respect to Shareholders' resolutions relating to matters other than the Reserved Matters. The Class
+A Shares beneficially owned by Wang Xing are held by (i) Crown Holdings, a company indirectly wholly owned by
+a trust established by Wang Xing (as settlor) for the benefit of Wang Xing and his family; and (ii) Shared Patience,
+a company directly wholly owned by Wang Xing. Mu Rongjun beneficially owned 125,980,000 Class A Shares,
+representing approximately 10.29% of the voting rights in the Company with respect to Shareholders' resolutions
+relating to matters other than the Reserved Matters. The Class A Shares beneficially owned by Mu Rongjun are
+held by (i) Charmway Enterprises, a company indirectly wholly owned by a trust established by Mu Rongjun (as
+settlor) for the benefit of Mu Rongjun and his family; and (ii) Shared Vision, a company directly wholly owned by Mu
+Rongjun. Wang Huiwen beneficially owned 36,400,000 Class A Shares, representing approximately 2.97% of the
+voting rights in the Company with respect to Class A Shareholders' resolutions relating to matters other than the
+Reserved Matters. The Class A Shares beneficially owned by Wang Huiwen are held by Kevin Sunny, a company
+indirectly wholly owned by a trust established by Wang Huiwen (as settlor) for the benefit of Wang Huiwen and his
+family.
+Shareholders and prospective investors are advised to be aware of the potential risks of investing in companies
+with WVR structures, in particular that interests of the WVR Beneficiaries may not necessarily always be aligned
+with those of the Shareholders as a whole, and that the WVR Beneficiaries will be in a position to exert significant
+influence over the affairs of the Company and the outcome of Shareholders' resolutions, irrespective of how other
+Shareholders vote. Shareholders and prospective investors should make the decision to invest in the Company only
+after due and careful consideration.
+The Company is controlled through weighted voting rights. Each Class A Share has 10 votes per share and each
+Class B Share has one vote per share except with respect to resolutions regarding a limited number of Reserved
+Matters, where each Share has one vote. The Company's WVR structure enables the WVR Beneficiaries to exercise
+voting control over the Company notwithstanding the WVR Beneficiaries do not hold a majority economic interest in
+the share capital of the Company. This allows the Company to benefit from the continuing vision and leadership of
+the WVR Beneficiaries who control the Company with a view to its long-term prospects and strategy.
+WEIGHTED VOTING RIGHTS
+CORPORATE INFORMATION
+4 Meituan 2021 Annual Report
+about.meituan.com
+COMPANY'S WEBSITE
+3690
+Hong Kong
+181 Queen's Road Central
+Grand Millennium Plaza
+upon the occurrence of any of the circumstances set out in Listing Rule 8A.17, in particular where a WVR
+Beneficiary is: (1) deceased; (2) no longer a member of the Board; (3) deemed by the Stock Exchange to be
+incapacitated for the purpose of performing his duties as a director; or (4) deemed by the Stock Exchange to
+no longer meet the requirements of a director set out in the Listing Rules;
+27/F, Low Block
+when the Class A Shareholders have transferred to another person the beneficial ownership of, or economic
+interest in, all of the Class A Shares or the control over the voting rights attached to them, other than in the
+circumstances permitted by Listing Rule 8A.18;
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+Total comprehensive income/(loss) for the year
+Total comprehensive income/(loss) for the year
+attributable to equity holders of the Company
+Profit/(loss) for the year attributable to equity
+holders of the Company
+4,707,612 (23,536,198)
+4,437,875 (23,566,477)
+34,050,142 42,474,128
+114,794,510 179,127,997
+33,927,987 65,227,278 97,528,531
+12,219,504 15,104,958 32,320,388
+(18,933,663) (115,490,807) 2,762,388
+(18,987,881) (115,492,695) 2,236,165
+Profit/(loss) for the year
+Profit/(loss) before income tax
+Gross profit
+Revenues
+(RMB in thousands)
+2021
+2020
+Year ended December 31,
+2018
+2019
+2017
+CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+6 Meituan 2021 Annual Report
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+Meituan 2021 Annual Report 3
+Guotai Junan Capital Limited
+China
+Beijing 100738, the PRC
+No. 1 East Chang An Ave
+Oriental Plaza
+9/F, Office Tower C1
+Beijing office
+Han Kun Law Offices
+As to the PRC law:
+Hong Kong
+15 Queen's Road Central
+The Landmark
+42/F, Edinburgh Tower
+Skadden, Arps, Slate, Meagher & Flom
+Hong Kong
+Central
+3A Chater Road
+18/F, The Hong Kong Club Building
+Davis Polk & Wardwell
+As to Hong Kong law (in alphabetical order):
+HONG KONG SHARE REGISTRAR
+As to Cayman Islands law:
+STOCK CODE
+Maples and Calder (Hong Kong) LLP
+18 Harbour Road, Wanchai
+Hong Kong
+Beijing
+Haidian District
+No. 168 Xizhimenwai Street
+1/F, Tengda Building
+Shouti Sub-branch
+China Merchants Bank, Beijing Branch,
+PRINCIPAL BANKER
+Cayman Islands
+Grand Cayman KY1-1102
+PO Box 1093, Boundary Hall
+Maples Fund Services (Cayman) Limited
+Cricket Square
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+Hong Kong
+183 Queen's Road East
+Wanchai
+Hopewell Centre
+Shops 1712-1716, 17th Floor
+Computershare Hong Kong Investor Services Limited
+COMPLIANCE ADVISOR
+26th Floor, Central Plaza
+Food
+delivery
+1
+New
+initiatives
+202.8
+51.3
+51.2
+55.0
+ΝΑ
+57.7
+55.0
+54.3
+38.6
+ΝΑ
+ΝΑ
+NA
+38.6
+Online marketing services
+ΝΑ
+Commission
+Revenues:
+(Percentages %)
+Total
+items¹
+initiatives Unallocated
+and others
+travel
+hotel &
+Food
+delivery
+New
+In-store,
+Year-over-year change
+8,180,933 (10,854,996) 4,170,796 4,330,102
+2,833,369
+4,170,796 (110,464,408)
+(49,291,318)
+Food delivery services
+53.8
+Other services and sales
+(including interest revenue)
+Unallocated items mainly include (i) share-based compensation expenses, (ii) amortisation of intangible assets resulting
+from acquisitions, (iii) fair value changes of other financial investments at fair value through profit or loss, and (iv) other
+(losses)/gains, net. They are not allocated to individual segments.
+1
+NA
+ΝΑ
+253.7
+72.3
+117.9
+Operating (loss)/profit
+38.3
+ΝΑ
+NA
+ΝΑ
+38.3
+83.1
+Year Ended December 31, 2021
+In-store,
+hotel &
+132.6
+41.0
+96.7
+56.4
+89.3
+ΝΑ
+89.6
+Total revenues
+(63,431,950) (13,071,465) (38,131,789)
+(49,291,318)
+45.3
+84.4
+ΝΑ
+56.0
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+42.1
+53.1
+114,794,510
+ΝΑ
+(5,001,058) (202,255,196)
+(68,183,267)
+-
+179,127,997
+6,174,641 14,093,113 (38,393,895)
+(90,137,137) (18,437,212) (88,679,789)
+(68,183,267)
+96,311,778 32,530,325 50,285,894
+Operating (loss)/profit
+Total revenues
+42,934,430
+40,744,531
+63,968
+2,125,931
+29,085,170
+-
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+982,816
+54,203,640
+52,904,757
+-
+28,547,274 15,798,936 8,558,547
+11,434,933 16,667,421
+66,265,319 21,252,398 27,276,793
+54,203,640
+Other services and sales
+(including interest revenue)
+Online marketing services
+Commission
+Food delivery services
+Revenues:
+(RMB in thousands)
+Total
+items¹
+and others
+(5,001,058) (23,127,199)
+travel
+1
+Revenues:
+22,645,870
+40,899 21,524,042
+1,080,929
+18,908,045
+324,597
+11,018,337
+7,565,111
+34,124,184
+5,428,154
+18,502,868 10,193,162
+39,116,411
+39,116,411
+(RMB in thousands)
+Total
+items¹
+and others
+travel
+Food delivery services
+Commission
+Online marketing services
+Other services and sales
+(including interest revenue)
+Total revenues
+Meituan 2021 Annual Report 9
+Unallocated items mainly include (i) share-based compensation expenses, (ii) amortisation of intangible assets resulting
+from acquisitions, (iii) fair value changes of other financial investments at fair value through profit or loss, and (iv) other
+(losses)/gains, net. They are not allocated to individual segments.
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Operating (loss)/profit
+Year Ended December 31, 2020
+Food
+delivery
+In-store,
+hotel &
+New
+initiatives
+Unallocated
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+Unallocated
+Shum Heung Yeung Harry
+7/7
+Leng Xuesong
+Note: (1) Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+Orr Gordon Robert Halyburton
+All Directors, including non-executive Directors and independent non-executive Directors, have brought a wide
+spectrum of valuable business experience, knowledge and professionalism to the Board for its efficient and
+effective functioning.
+Neil Nanpeng Shen
+confirming, on an annual basis, that the WVR Beneficiaries have been members of the Board throughout the
+year and that no matters under Rule 8A.17 of the Listing Rules have occurred during the relevant financial
+year;
+90 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+BOARD OF DIRECTORS
+Responsibilities
+The Board is responsible for leading and controlling the Company and overseeing the Group's businesses, strategic
+decisions and performance and is collectively responsible for promoting the success of the Company by directing
+and supervising its affairs. Directors of the Board make decisions objectively in the interests of the Company.
+The Board directly, and indirectly through its committees, leads and provides direction to the management by laying
+down strategies and overseeing their implementation, monitors the Group's operational and financial performance,
+and ensures that sound internal control and risk management systems are in place.
+All Directors have full and timely access to all the information of the Company as well as the services and advice
+from the joint company secretaries and senior management. The Directors may, upon request, seek independent
+professional advice in appropriate circumstances, at the Company's expense for discharging their duties to the
+Company.
+The Directors shall disclose to the Company details of other offices held by them and the Board regularly reviews
+the contribution required from each Director to perform his/her responsibilities to the Company.
+The Board reserves its discretion on all major matters including policy matters, strategies and budgets, internal
+control and risk management, material transactions (in particular those that may involve conflict of interests),
+financial information, appointment of Directors and other significant operational matters of the Company.
+Responsibilities relating to implementing decisions of the Board, directing and coordinating the daily operation
+and management of the Company are delegated to the senior management of the Group. The senior management
+administers, interprets, enforces, supervises compliance with the internal policies and operational procedures
+and conducts regular reviews on such policies and procedures across different levels of the Group. The senior
+management communicates with the Board on a regular basis.
+Meituan 2021 Annual Report 91
+CORPORATE GOVERNANCE REPORT
+Continuous Professional Development of Directors
+The Company believes education and training are important for maintaining an effective Board. Every Director has
+received formal and comprehensive training to ensure appropriate understanding of the business and operations of
+the Company and full awareness of Director's responsibilities and obligations under the Listing Rules and relevant
+statutory requirements.
+The Company arranges continuous professional development training to Directors such as internally facilitated
+briefings and provision of reading material on relevant topics to ensure Directors keep abreast of regulatory
+developments and changes in order to effectively perform their responsibilities and to ensure that their contribution
+to the Board remains informed and relevant. Directors also regularly meet with the senior management team
+to understand the Group's businesses, governance policies and regulatory environment. All Directors are also
+encouraged to attend relevant training courses.
+The Directors pursued continuous professional development and relevant details are summarized as follows:
+Name of Director
+Participated
+in continuous
+professional
+development(¹)
+Executive Directors
+Wang Xing
+Mu Rongjun
+Wang Huiwen
+Non-executive Directors
+Lau Chi Ping Martin
+Independent Non-executive Directors
+V
+V
+The Board values the importance of professional judgment and advice provided by non-executive Directors to
+safeguard the interests of the Shareholders. The non-executive Directors contribute diversified qualifications and
+experience to the Group by expressing their views in a professional, constructive and informed manner, and actively
+participate in Board and committee meetings to bring professional judgment and advice on issues relating to the
+Group's strategies, policies, performance, accountability, resources, key appointments, standards of conduct,
+conflicts of interest and management process, with the Shareholders' interests being the utmost important factor.
+The non-executive Directors also exercise their professional judgment and utilise their expertise to scrutinise the
+Company's performance in achieving agreed corporate goals, and monitor performance reporting.
+CORPORATE GOVERNANCE REPORT
+Corporate
+Governance Meeting of
+Committee Shareholders
+Nomination
+Committee
+Committee
+Committee
+Board
+Name of Director
+Audit Remuneration
+Attendance/No. of Meetings Held during the Reporting Period
+The Board has met seven times during the Reporting Period. The attendance of each Director at Board and
+committee meetings of the Company, whether in person or by means of electronic communication, is detailed in
+the table below:
+Board Activity
+Directors.
+The procedures and process of appointment, re-election and removal of Directors are set out in the Articles
+of Association. The Nomination Committee is responsible for reviewing the Board composition and making
+recommendations to the Board on the appointment or re-election of Directors and succession planning for
+In accordance with the Articles of Association, all Directors are subject to retirement by rotation at least once every
+three years and any new Director appointed to fill a casual vacancy shall submit himself for re-election by the
+Shareholders at the first general meeting of the Company after appointment and new Directors appointed as an
+addition to the Board shall submit himself for re-election by the Shareholders at the next following general meeting
+of the Company after appointment.
+CORPORATE GOVERNANCE REPORT
+94 Meituan 2021 Annual Report
+None of the Directors has entered into a service contract which is not determinable by the Group within one year
+without payment of compensation (other than statutory compensation).
+Each of the independent non-executive Directors has entered into an appointment letter with the Company.
+The initial term of the appointment shall be three years from the date of the Prospectus or until the third annual
+general meeting of the Company after the Listing Date, whichever is earlier (subject to retirement as and when
+required under the Articles of Association), unless terminated in accordance with the terms and conditions of the
+appointment letter or by either party giving to the other not less than three months' prior notice in writing. On April
+12, 2021, each of the independent non-executive Directors entered into an appointment letter with the Company on
+similar terms for three years.
+Chairman and Chief Executive Officer
+Pursuant to provision A.2.1 of the CG Code (code provision C.2.1 of the New CG Code), companies listed on
+the Stock Exchange are expected to comply with, but may choose to deviate from the requirement that the
+responsibilities between the chairman and the chief executive officer should be segregated and should not be
+performed by the same individual. The Company does not have a separate chairman and chief executive officer and
+Wang Xing currently performs these two roles. The Board believes that vesting the roles of both chairman and chief
+executive officer in the same person has the benefit of ensuring consistent leadership within the Group and enables
+more effective and efficient overall strategic planning for the Group. The Board considers that the balance of power
+and authority for the present arrangement will not be impaired and this structure will enable the Company to make
+and implement decisions promptly and effectively. The Board will continue to review and consider splitting the roles
+of chairman of the Board and the chief executive officer of the Company at a time when it is appropriate by taking
+into account the circumstances of the Group as a whole.
+Composition
+As at the date of this annual report, the Board is comprised of eight Directors, with three executive Directors, two
+non-executive Directors and three independent non-executive Directors. During the Reporting Period and up to the
+date of this annual report, there has been no change to the composition of the Board.
+A list of Directors and their respective biographies are set out in the section headed "Directors and Senior
+Management" of this annual report.
+The Board's composition is in compliance with the requirement under Rule 3.10A of the Listing Rules that the
+number of independent non-executive directors must represent at least one-third of the Board. The Board believes
+that the balance between the executive Directors and the non-executive Directors is reasonable and adequate to
+provide sufficient checks and balances that safeguard the interests of the Shareholders and the Group. None of the
+members of the Board is related to one another.
+92 Meituan 2021 Annual Report
+reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+CORPORATE GOVERNANCE REPORT
+Further, in compliance with Rule 3.10 of the Listing Rules, one of the Company's independent non-executive
+Directors has the appropriate professional qualifications of accounting or related financial management expertise,
+and provides valuable advice from time to time to the Board. The Company has also received from each
+independent non-executive Director an annual confirmation of his independence and the Nomination Committee
+has conducted an annual review and considers that all independent non-executive Directors are independent,
+taking into account of the independence guidelines set out in Rule 3.13 of the Listing Rules in the context of the
+length of service of each independent non-executive Director.
+As part of the Company's corporate governance practice to provide transparency to the investor community and in
+compliance with the Listing Rules and the CG Code, the independent non-executive Directors are clearly identified
+in all corporate communications containing the names of the Directors. In addition, an up-to-date list of Directors
+identifying the independent non-executive Directors and the roles and functions of the Directors is maintained on
+the Company's website and the Stock Exchange's website.
+Appointments and Re-election of Directors
+Each of the executive Directors has entered into a service contract with the Company. Pursuant to this agreement,
+they agree to act as executive Directors for an initial term of three years with effect from the date the appointment
+is approved by the Board or until the third annual general meeting of the Company after the Listing Date (whichever
+is earlier), upon which the service contracts were automatically renewed. Either party has the right to give not less
+than three months' written notice to terminate the agreement.
+Each of the non-executive Directors has entered into an appointment letter with the Company. The appointment
+as a Director shall continue for three years after the Listing Date or until the third annual general meeting of the
+Company after the Listing Date, whichever is earlier (subject to retirement as and when required under the Articles
+of Association), unless terminated in accordance with the terms and conditions of the appointment letter or by
+either party giving to the other not less than one month's prior notice in writing. On April 12, 2021, each of the
+non-executive Directors entered into an appointment letter with the Company on similar terms for three years.
+Meituan 2021 Annual Report 93
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+reviewing financial information and oversight of the Company's financial reporting, financial controls, risk
+management and internal control systems.
+(f)
+The Nomination Committee reviews at least annually the structure, size, composition (including the skills, knowledge
+and experience) and diversity of the Board and where appropriate, makes recommendations on changes to the
+Board to complement the Company's corporate strategy.
+The Nomination Committee consists of three members, namely Leng Xuesong and Shum Heung Yeung Harry, the
+independent non-executive Directors and Wang Huiwen, the executive Director. Leng Xuesong has been appointed
+as the chairman of the Nomination Committee.
+CORPORATE GOVERNANCE REPORT
+98 Meituan 2021 Annual Report
+developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+making recommendations to the Board on the appointment or re-appointment of Directors and succession
+planning for Directors; and
+(e)
+(d)
+(c) assessing the independence of independent non-executive Directors;
+The Company regards increasing diversity at the Board level as an essential element in supporting the attainment
+of its strategic objectives and its sustainable development. The Company has implemented a board diversity policy.
+In designing the Board's composition, Board diversity has been considered from a number of aspects, including
+but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills,
+knowledge and length of service. All Board appointments will be based on meritocracy, and candidates will be
+considered against objective criteria, having due regard for the benefits of diversity on the Board. The Company
+aims to maintain an appropriate balance of diversity perspectives of the Board that are relevant to the Company's
+business growth. In recognising the particular importance of gender diversity, the Company will appoint at least
+one female director by no later than December 31, 2024. We are also committed to adopting a similar approach to
+promote diversity within the management (including but not limited to the senior management) of our Company to
+enhance the effectiveness of corporate governance of our Company as a whole.
+(b) developing the criteria for identifying candidates for nomination and appointment of Directors;
+The Company has established a nomination committee with written terms of reference in compliance with the CG
+Code and Corporate Governance Report in Appendix 14 to the Listing Rules. The primary duties of the Nomination
+Committee include the following:
+Nomination Committee
+For details in relation to the Company's Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award
+Scheme, please refer to the section headed "Report of Directors" of this annual report.
+review of director and management compensation scheme;
+(b)
+(a) review compensation and benefits framework and structure; and
+The Remuneration Committee's major work during the Reporting Period includes:
+During the Reporting Period, the Remuneration Committee met once. Individual attendance of each Remuneration
+Committee member is set out on page 94.
+The Remuneration Committee consists of three members, namely Leng Xuesong and Shum Heung Yeung Harry,
+the independent non-executive Directors and Mu Rongjun, the executive Director. Leng Xuesong has been
+appointed as the chairman of the Remuneration Committee.
+(a) reviewing the Board composition;
+(d) advising shareholders of the Company on how to vote in respect of any service contracts of Directors that
+require shareholders' approval in accordance with the Listing Rules.
+The Nomination Committee has a primary responsibility for identifying suitably qualified candidates to become
+members of the Board and, in carrying out this responsibility, will give adequate consideration to the board diversity
+policy. In forming its perspective on diversity, the Nomination Committee will also take into account factors
+based on the Company's business model and specific needs from time to time, including without limitation, skills,
+knowledge, experience, gender and background.
+During the Reporting Period, the Nomination Committee met once. Individual attendance of each Nomination
+Committee member is set out on page 94.
+(e)
+(d) developing, reviewing and monitoring the code of conduct and compliance manual applicable to employees
+and Directors;
+reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory
+requirements;
+(၁)
+(b) reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+(a)
+In accordance with Rule 8A.30 of the Listing Rules and the Corporate Governance Code set out in Appendix 14 of
+the Listing Rules, the duties of the Corporate Governance Committee as set out in its terms of reference include:
+The Corporate Governance Committee comprises three independent non-executive Directors, namely Leng
+Xuesong, Orr Gordon Robert Halyburton and Shum Heung Yeung Harry. Leng Xuesong is the chairman of the
+Corporate Governance Committee.
+The Nomination Committee will ensure that the Board has the appropriate balance of skills, experience and diversity
+of perspectives that are required to support the execution of its business strategy and in order for the Board to
+be effective. The Nomination Committee will report annually on the Board's composition and make appropriate
+disclosures regarding the board diversity policy in the Corporate Governance Report of the Company's annual
+reports. It will also monitor the implementation of the board diversity policy.
+The Company has established a corporate governance committee in compliance with Chapter 8A of the Listing
+Rules. The primary duties of the Corporate Governance Committee are to ensure that the Company is operated and
+managed for the benefit of all Shareholders and to ensure the Company's compliance with the Listing Rules and
+safeguards relating to the WVR Structure of the Company.
+In accordance of the board diversity policy of the Company, the Nomination Committee considered the gender,
+age, cultural and education background, professional experience, knowledge, independency, length of service of
+the candidates for re-election of the retiring independent non-executive Directors, Orr Gordon Halyburton, Leng
+Xuesong and Shum Heung Yeung Harry, in 2021. After due consideration of the aforesaid mentioned factors and
+the previous contributions of the independent non-executive Directors, the Nomination Committee was satisfied
+that Orr Gordon Halyburton, Leng Xuesong and Shum Heung Yeung Harry would continue to bring valuable
+business experience, knowledge and professionalism to the Board for its efficient and effective functioning and
+diversity.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 99
+(d) reviewing and assessing the independence of the independent non-executive Directors.
+reviewing the re-election of Directors and its schedule; and
+(c)
+(b) reviewing and assessing the structure, size, composition and diversity of the Board;
+(a) reviewing and monitoring the implementation of the board diversity policy;
+The Nomination Committee's major work during the Reporting Period includes:
+Corporate Governance Committee
+(g)
+establishing formal and transparent procedures for developing remuneration policy and structure to ensure
+that no Director or any of his/her associates will participate in deciding his/her own remuneration; and
+CORPORATE GOVERNANCE REPORT
+The Audit Committee consists of three independent non-executive Directors, namely Orr Gordon Robert
+Halyburton, Leng Xuesong and Shum Heung Yeung Harry. Orr Gordon Robert Halyburton has been appointed
+as the chairman of the Audit Committee and is the independent non-executive Director with the appropriate
+professional qualifications.
+General
+monitoring the integrity of the Company's financial statements, annual reports, accounts and half-yearly
+reports; and
+(e)
+(d)
+developing and implementing policies on engaging an external auditor to supply non-audit services;
+(c)
+(b) reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the
+audit process in accordance with applicable standards;
+(a) making recommendations to the Board on the appointment, re-appointment and removal of the external
+auditor;
+96 Meituan 2021 Annual Report
+The Company has established an audit committee with written terms of reference in compliance with Rule 3.21
+of the Listing Rules and the CG Code and Corporate Governance Report as set out in Appendix 14 to the Listing
+Rules. The primary duties of the Audit Committee include the followings:
+The Board has established four committees, namely, the Audit Committee, the Remuneration Committee, the
+Nomination Committee and the Corporate Governance Committee. All Board committees of the Company are
+established with specific written terms of reference which deal clearly with their authority and duties. The terms of
+reference of the Audit Committee, the Nomination Committee, the Remuneration Committee and the Corporate
+Governance Committee are available on the Company's website and the Stock Exchange's website.
+BOARD COMMITTEES
+On June 23, 2021, the Company held its annual general meeting to consider and approve the re-election of
+Directors, the grant of general mandates to issue and repurchase shares, and the re-appointment of the Auditor.
+All the proposed resolutions to the annual general meeting were taken by poll and the poll results were set out
+in the Company's announcement dated June 23, 2021. The Chairman as well as other members of the Board
+were available to respond to enquiries during the annual general meeting, which provided opportunities for
+communication between Directors, senior management and the Shareholders.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 95
+During the Reporting Period, the Chairman met once with the independent non-executive Directors without the
+presence of executive Directors.
+At the Board meetings held during the Reporting Period, the Board discussed a wide range of matters, including
+the Company's financial and operational performances, approved interim and quarterly results of the Company,
+business prospects and other significant matters.
+1/1
+2/2
+Audit Committee
+(c)
+CORPORATE GOVERNANCE REPORT
+The Audit Committee's major work during the Reporting Period includes:
+Meituan 2021 Annual Report 97
+(b) reviewing and approving the management's remuneration proposals with reference to the corporate goals and
+objectives resolved by the Board from time to time;
+(a) making recommendations to the Board on the remuneration packages and the Company's policy and
+structure for remuneration for all Directors and senior management;
+The Company has established a remuneration committee with written terms of reference in compliance with Rule
+3.25 of the Listing Rules and the CG Code and Corporate Governance Report as set out in Appendix 14 to the
+Listing Rules. The primary duties of the Remuneration Committee include the following:
+Remuneration Committee
+The Audit Committee annually reviews the relationship of the Company with the Auditor and recognizes that the
+Auditor's independence is a fundamental governance principle. The Auditor provides quarterly updates to the
+Audit Committee if any independence issue is identified and is required to give an annual confirmation on their
+independence. Having also reviewed the effectiveness of the external audit process as well as the independence
+and objectivity of the Auditor, the Audit Committee is satisfied with this relationship. As such, the Audit Committee
+has recommended their re-appointment at the AGM.
+reviewing the Company's ESG work.
+(g)
+reviewing the terms of engagement, independence and remuneration of the external auditor; and
+During the Reporting Period, the Audit Committee met four times. Individual attendance of each Audit Committee
+member is set out on page 94. The Audit Committee also met the external auditor four times without the presence
+of the executive Directors.
+(f)
+(e)
+reviewing the Company's cybersecurity structure and the effectiveness of the Company's cybersecurity
+management and technology framework;
+(d)
+reviewing compliance with CG Code, Listing Rules and relevant laws;
+(c)
+reviewing the Company's quarterly result announcements for the first quarter ended March 31, 2021 and the
+third quarter ended September 30, 2021, respectively;
+(b)
+reviewing the 2021 interim report;
+(a)
+reviewing the Company's continuing connected transactions;
+Executive Directors
+Leng Xuesong
+7/7
+4/4
+2/2
+1/1
+7/7
+4/4
+1/1
+7/7
+1/1
+1/1
+Shum Heung Yeung Harry
+7/7
+4/4
+1/1
+Wang Xing
+2/2
+Orr Gordon Robert Halyburton
+1/1
+0/1
+Mu Rongjun
+7/7
+1/1
+Wang Huiwen
+7/7
+1/1
+ངངང
+1/1
+Independent Non-executive Directors
+1/1
+Non-executive Directors
+1/1
+Lau Chi Ping Martin
+Neil Nanpeng Shen
+7/7
+0/1
+With regard to daily operations, each business departments and functional departments of the Company identify,
+assess and respond to the risk issues in their operations. The internal control department reports significant risks at
+the Company level through collecting, consolidating and analysing such risk issues, and ensures that appropriate
+response strategies and control measures have been taken, which are reviewed by the management teams. The
+internal control department reviews and evaluates the actions made in response to the significant risks from time to
+time.
+The Company recognizes the importance of employees' risk awareness for risk management and internal control.
+Through thematic training and activities, risk research and investigation, project collaboration, promotional material
+etc., our risk management department introduces concepts and knowledge of risk management and internal control
+to all the staff and promotes participation of business personnel during projects, to cultivate the risk awareness and
+compliance concept of employees.
+Major Risks
+In 2021, management of the Company identified six major risks through the above risk management process.
+Compared with last year, in light of the constantly changing external environment and the continuous expansion of
+the Company's business scale and scope of operation, the management is of view that the top six risks disclosed
+in 2020 still persist, albeit with an adjusted risk level. In particular, there is a considerable increase in compliance
+risk and a slight decrease in human resources risk, while the other risk levels are mostly unchanged and the overall
+ranking of major risks remains the same.
+Below is a summary of the significant risks of the Company along with the applicable response strategies. With the
+growth of business scale, scope, complexity and the constantly changing external environment, the Company's risk
+profile may change and the list below is not intended to be exhaustive.
+Although the internet and technology industry is still evolving, regulatory authorities in numerous jurisdictions
+have been, in an attempt to keep up with such evolution, developing more comprehensive and stringent laws
+and regulations to regulate the industry, including obtaining and maintaining necessary licences, approvals and
+permits relevant to applicable business. The Company, when conducting its business, is required to comply with
+new laws and regulations in different jurisdictions, such as regulations relating to anti-monopoly, data protection,
+cybersecurity, IP, financial compliance, etc. In addition, along with the continuous expansion of the Company's
+business, certain innovative businesses may encounter uncertainties in the applicable laws and regulations in
+such sector or regulatory policy development. For example, on February 7, 2021, the Anti-Monopoly Commission
+of the State Council promulgated the Guidelines to Anti-Monopoly in the Field of Internet Platforms, or the
+Anti-Monopoly Guidelines for Internet Platforms. The Anti-Monopoly Guidelines for Internet Platforms is consistent
+with the Anti-Monopoly Law and further clarifies the principles of Anti-Monopoly law enforcement in the platform
+economy, provides clearer guidelines for operators in the platform economy to operate in compliance with laws
+and regulations, and promotes the orderly, innovative and healthy development of the platform economy. In 2021,
+the Company was punished for violating the Anti-Monopoly Law due to its "choose one" behaviour in food delivery
+CORPORATE GOVERNANCE REPORT
+106 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+business, and was fined for failing to file cases of concentration of business operators. The company is conducting
+a thorough compliance rectification in accordance with the requirements of the State Administration for Market
+Regulation of the People's Republic of China (the "SAMR"). With the establishment of the State Anti-Monopoly
+Bureau and the revision of the Anti-Monopoly Law, it is expected that the Internet industry will be under strong
+anti-monopoly supervision for a long time. The Company will maintain its strict compliance standard and regulate
+its operation in accordance with relevant laws and regulations.
+The Company has several professional departments and teams that work closely with management of business
+groups and identify changes in any relevant laws, regulations and regulatory policies, so as to take appropriate
+actions or measures, update and improve internal system and processes continuously, to facilitate that the
+Company is in compliance with applicable laws, regulations and regulatory policies.
+Market Competition and Innovation Risk
+Compliance Risk
+Meituan 2021 Annual Report 105
+Risk Management Process
+The Company is an internet company with diverse business areas and the Company's business is characteristic of
+its variety and fast adaptations. Therefore, catering to these characteristics, the risk management of the Company
+has established a dynamic risk management process and has updated and optimised such process constantly.
+During the Reporting Period, in order to further improve the coverage and depth of risk assessment, a risk
+assessment project team established by the Company carried out risk assessment works covering all business
+areas of the Company, identified relevant risks faced by the Company via management interviews, questionnaires,
+collective discussions, expert consultations, scenario analyses and other methods, categorized and assessed
+relevant risk factors, comprehensively and systematically analysed and assessed key risks with reference to
+the Company's risk mitigation measures and the management's risk appetite, and established a long-term risk
+assessment mechanism.
+The systems mentioned above are designed to manage rather than eliminate the risk of failure to achieve business
+objectives, and can only provide reasonable but not absolute assurance against material misstatements or losses.
+The third line mainly consists of the departments of internal audit and fraud investigation of the Company. The
+internal audit department is responsible for providing an independent and objective assurance and consulting on
+the effectiveness of the Company's risk management and internal control systems, and monitoring management's
+continuous improvement over the risk management and internal control areas. The fraud investigation department
+is responsible for receiving whistle-blower reports through various channels and for following up and carrying out
+independent investigations on alleged fraudulent activities.
+Third Line - Internal audit and fraud investigation - Independent Assurance
+The second line mainly consists of, among others, the internal control department, finance department, legal
+department, information security department, risk management department, safety affairs department and
+business compliance department of the Company. It is responsible for formulating policies related to management
+of operations, finance, compliance and litigation, information security and fraud risks and the internal control
+of the Company, and for planning and establishing an integrated risk control system. For ensuring effective
+implementation of such systems, the second line also assists and supervises the first line in the establishment and
+improvement of risk management and internal control systems.
+Second Line - Risk Management
+CORPORATE GOVERNANCE REPORT
+104 Meituan 2021 Annual Report
+The first line is mainly formed by the business departments and functional departments of the Company who
+are responsible for daily operation and management. It is responsible for designing and implementing mitigation
+measures to address the risks.
+First Line-Operation and Management
+Management
+The Organisation Governing Body mainly comprises of the Board of Directors, Corporate Governance Committee
+and Audit Committee of the Company. It is responsible for establishing a reasonable framework and workflow for
+effective organisational governance and ensuring that the goals and activities of the organisation align with the
+primary interests of the stakeholders.
+Organisation Governing Body - Oversight
+In conducting risk assessments, the Company comprehensively utilised a combination of qualitative and
+quantitative methods to analyse the possibility of risk occurrence and the impact on the achievement of objectives,
+and finally prioritized the risks according to their significance.
+The Company faces competition in every aspect of its business, and particularly from other companies in the
+instant on-demand delivery businesses, instore services businesses, hotel & travel services and retail businesses.
+To obtain and maintain competitive advantage in these business segments would require us to divert significant
+managerial, financial and human resources. In addition, each of the Company's business segments is subject to
+rapid market changes, the emergence of new business models and the entry of new and well-funded competitors.
+Some of its current competitors have, and future competitors may have, greater financial, technical or marketing
+resources, longer operating histories, greater brand recognition or larger consumer bases than it does, or may
+enter into business alliances that strengthen their competitive positions. Increased competition may reduce the
+Company's market share and profitability and require it to increase its marketing and promotional efforts and capital
+commitment in the future. In the meantime, the pace of technology innovation will have a certain impact on the
+Company's competitive position as users increasingly demand for innovation in services and products.
+The Company has a professional team which conducts in-depth analysis and research on competition in the
+industry regularly and provides relevant reports to the management for reference, and supports them to formulate
+timely and effective countermeasures to market competition risk.
+time.
+The Company also maintains an internal audit department which is responsible for reviewing the effectiveness
+of internal control and reporting any issues identified by the department to the Audit Committee. Members of
+the internal audit department hold regular meetings with the management to discuss about any internal control
+issues it faces and the corresponding measures to resolve them. The internal audit department reports to the Audit
+Committee to ensure that any material issue identified is delivered to the Audit Committee in a timely manner. The
+Audit Committee discusses the reported issues and reports to the Board when necessary.
+The Audit Committee is delegated to monitor the implementation of the risk management policies across the
+Company on an ongoing basis in order to ensure that the internal control system is effective in identifying,
+managing and mitigating risks in its business operations.
+Based on the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organisation
+of the Treadway Commission ("COSO"), the Company established an internal control system which has been
+tailored to the actual circumstances of the Company. The objective of the Company's internal control is to provide
+reasonable assurance to the achievement of its operational, reporting and compliance objectives.
+Internal Control
+Meanwhile, the Company adheres to the value of integrity, and has carried out measures such as implementing the
+employees' code of conduct, providing anti-bribery and anti-corruption trainings, implementing a whistle-blower
+mechanism, conducting investigations and punishment on any acts of bribery and corruption, to ensure that its
+employees adhere to its fundamental values.
+Human capital has always been the Company's core asset. The Company has formulated and implemented a
+series of measures to provide continuous professional development for its employees, in order to facilitate business
+development and to maintain sustainable competitiveness. Such measures include: (i) improving recruitment
+standards and attracting better talents to join the Company, raising employees' qualities from the source; (ii)
+increasing investment in building a study and development department covering all employees, developing the
+"panoramic learning map" and continuously enriching the training system that encapsulates the promotion of
+culture, general competency, professional expertise and leadership and to provide targeted trainings for employees;
+(iii) supporting and facilitating the leadership role of its management, stimulating its employees' full potential and
+promoting personal development among its employees.
+The internet industry is highly dependent on the basic qualities of its employees; therefore, gradually improving core
+personnel capabilities to catch up with the Company's rapid development is essential to the strategic development
+of the Company.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 109
+Human Resources Risk
+The Company consistently adheres to its fundamental principle of integrity, combats fraud and has zero tolerance
+for it. The Company has established effective internal control systems and continuously optimises such systems to
+identify and mitigate fraud risk. The Company conducts comprehensive and thorough investigation on any potential
+fraudulent conduct. Any fraudulent conduct will be dismissed with immediate effect and those who are involved in
+more serious cases will be transferred to the relevant judicial departments according to the applicable dealt with
+strictly in accordance with the relevant rules and regulations of the Company. Cases involving breaches of national
+laws and regulations will be immediately transferred to judicial departments. Meanwhile, the Company combats
+the illegal internet industry together with the police force and promotes the establishment of the Trust and Integrity
+Enterprise Alliance together with other members of the internet industry to combat internet fraudulent behaviours
+and to build a healthy, orderly and civilized internet ecosystem.
+In light of the rapid development of the internet industry, fraud cases have occurred frequently outside and within
+the industry and have caused harm to the internet industry as a whole. Fraudulent activities engaged by business
+partners, employees or third parties may exert a negative impact on the operations, finance and reputation of the
+Company.
+Fraud Risk
+The Company always upholds the principle of being "customer-centric" to satisfy its customers and safeguard their
+interests when rendering services. Therefore, an effective risk management mechanism has been established to
+continuously minimize risks in the Company's ongoing business procedures or information system through a series
+of evaluations and analysis with an aim to optimise its management system, upgrade its risk management and
+continuously reduce the Company's exposure to any crisis. In addition, the Company's public relations department
+maintains close connections and interactions with other operation departments and related functional units,
+proactively responds to societal concerns and deals with crises in a lawful and reasonable manner and protects the
+Company's reputation in accordance with established policies and working procedures.
+The management and the leaders of various business segments of the Company closely monitor the market
+competition, and share relevant information and their insights and judgments on the market competition in real
+The Company processes an extremely large number of transactions on a daily basis on its platform. With
+continuous expansion of its overall business scope, heightened public concerns over consumer protection and
+consumer safety issues, the Company may be subject to additional legal and social responsibilities and more
+impacts of negative publicity and regulatory concerns over these issues. If the Company does not pay sufficient
+attention to public opinion or if any incident arises but is not dealt with in a timely manner, its reputation, brand and
+image will be affected.
+CORPORATE GOVERNANCE REPORT
+108 Meituan 2021 Annual Report
+The Company's Audit Committee also reviews the cybersecurity updates every six months to provide suggestions
+and recommendations for the proper functioning of the information security systems under cyberattack, to help
+the Company to improve customer trust and user experience. During the Reporting Period, the Company's Audit
+Committee held meeting in the first and third quarter and reviewed the latest working process of cybersecurity.
+The Company provides information security training to employees and conduct ongoing trainings. The Company
+also has an emergency response mechanism to evaluate critical risks, formulate disaster response plans and
+perform emergency drills on a regular basis.
+The Company has put in place a series of backup management procedures. For its Al and cloud platforms, the
+Company deploys different backup mechanisms, including local backups and offsite backups, depending on
+the needs of its business, to minimise the risk of user data loss. For its site reliability, our technical department
+establishes protocols for the design, implementation and monitoring of offsite backups.
+At the enterprise level, the Company established a systematic and universal user account authorization and
+management mechanism based on which it periodically reviews the status of user accounts and the related
+authorization information. Security configuration assessments on its databases and servers are regularly performed
+with implementation of procedures for system log management.
+User data is handled strictly in accordance with the Company's defined policies. It has obtained the ISO 27001
+and National Information System Security Level Protection Level 3 Certification. It has established a coordination
+mechanism with third-party agencies to handle information security threats in a timely manner.
+The Company has implemented various controls to ensure that user data is protected and risks of leakage and loss
+of such data is mitigated. It collects personal information and data from users in strict compliance with applicable
+laws and regulation, and implement company-wide policies on data collection, usage, disclosure, transfer and
+storage. It also encrypts user data in network transmission. For data storage, the Company uses encryption
+technologies at software and hardware levels to protect sensitive user data.
+Protection of user data and other related information is critical to the Company's business. On August 20, 2021,
+the Standing Committee of the National People's Congress promulgated the Personal Information Protection Law,
+which integrates the scattered rules with respect to personal information rights and privacy protection and took
+effect in November 2021. Any loss or leakage of sensitive user information could have a significant negative impact
+on affected users and the Company's reputation, and even lead to potential legal action against the Company.
+Third Line
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 107
+Meanwhile, the Company has been committed to the innovation of business planning, with a focus on the core
+businesses while launching new initiatives, which helps strengthen the competitiveness of its core businesses, and
+constantly builds and consolidates its ecosystem.
+The Company continues to invest in core businesses, enhance and improve the responsiveness, functionality and
+features of its mobile apps, websites and systems, and strives to consolidate its core competitiveness on user end,
+merchant end and distribution end, in order to attract and retain users and cope with the ever-changing competitive
+environment.
+Crisis Management and Reputation Risk
+Information Security Risk
+Second Line
+The internal audit team provides
+continuous supervision and evaluation
+from a perspective independent from
+the management, and conducts internal
+audit on a regular basis; the fraud
+investigation team is responsible for
+complaint reporting and investigation
+(i)
+(h)
+(g) reviewing the written confirmation provided by the WVR Beneficiaries that they have complied with Rules
+8A.14, 8A.15, 8A.18 and 8A.24 of the Listing Rules throughout the Relevant Period;
+assessing, reviewing and monitoring all risks related to the Company's WVR Structure, including connected
+transactions between the Company and its subsidiary or Consolidated Affiliated Entity on the one hand and
+any WVR Beneficiary on the other;
+reviewing and assessing the Conflict of Interest Declaration Policy of the Company and any potential conflict
+of interest between the Company and the WVR beneficiaries and making relevant recommendations to the
+Board to ensure good corporate governance standards and to avoid potential conflicts of interest between the
+Company or the Shareholders on the one hand and the WVR Beneficiaries on the other;
+(f)
+First Line
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 101
+(d) reviewing the disclosure in the Corporate Governance Report and the Company's compliance with the CG
+Code;
+(c) assessing, reviewing and making recommendation to the Board for the re-appointment of the Company's
+compliance advisor;
+(b) reviewing the code of conduct applicable to employees and Directors;
+reviewing and monitoring the training and continuous professional development of Directors and senior
+management (in particular, Chapter 8A of the Listing Rules and knowledge in relation to risks relating to the
+weighted voting rights structure);
+(a)
+The Corporate Governance Committee's major work during the Reporting Period includes:
+During the Reporting Period, the Corporate Governance Committee met two times. Individual attendance of each
+Corporate Governance Committee member is set out on page 94.
+(n) disclosing, on a compliance or explanation basis, its recommendations to the Board in respect of the matters
+in sub-paragraphs (i) to (k) above in the report referred to in sub-paragraph (m) above.
+(m) reporting on the work of the Corporate Governance Committee on at least a half-yearly and annual basis
+covering all areas of its terms of reference; and
+seeking to ensure effective and on-going communication between the Company and its shareholders,
+particularly with regards to the requirements of Rule 8A.35 of the Listing Rules;
+making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+(1)
+(k)
+reviewing and monitoring all risks related to the Company's WVR structure, including connected transactions
+between the Company and/or its subsidiary or consolidated affiliated entity on one hand and any WVR
+Beneficiary on the other and making a recommendation to the Board on any such transaction;
+reviewing and monitoring the management of conflicts of interests and making a recommendation to the
+Board on any matter where there is a potential conflict of interest between the Company, its subsidiary or
+consolidated affiliated entity and/or shareholder on one hand and any WVR Beneficiary on the other;
+(i)
+(i)
+(h) confirming, on an annual basis, whether or not the WVR Beneficiaries have complied with Rules 8A.14, 8A.15,
+8A.18 and 8A.24 of the Listing Rules throughout the year;
+CORPORATE GOVERNANCE REPORT
+100 Meituan 2021 Annual Report
+the Company's various policies and practices on corporate governance, including but not limited to the
+Company's shareholders' communication policy; and
+Reporting on the work of the Corporate Governance Committee covering all areas of its terms of reference.
+(e)
+The Corporate Governance Committee has confirmed that (i) the WVR beneficiaries have been members of the
+Board throughout the Reporting Period; (ii) no matter under Rule 8A.17 has occurred during the Reporting Period;
+and (iii) the WVR Beneficiaries have complied with Rules 8A.14, 8A.15, 8A.18 and 8A.24 of the Listing Rules during
+the Reporting Period. The Corporate Governance Committee has also reviewed the remuneration and terms of
+engagement of the Company's compliance advisor and recommended to re-appoint Guotai Junan Capital Limited
+as the compliance advisor of the Company.
+Internal Audit and Fraud
+Investigation Team
+Internal control, finance, legal,
+information security, business
+transaction security, safety affairs,
+business compliance and other
+teams provide expertise, support
+monitoring and challenge on
+risk-related matters
+Risk Management Team
+Each of the business teams
+undertakes daily business
+operation management and
+internal control functions
+Business Team
+Independent assurance services
+During the Reporting Period, the Corporate Governance Committee has sought to ensure effective and on-going
+communication between the Company and the Shareholders as set out in Section E "Communication with
+Shareholders" of Appendix 14 of the Listing Rules, in particular, by ensuring that: (i) the general meeting of the
+Company (where the Board of Directors and appropriate senior management of the Company are available
+to respond to enquiries) was held to provide an opportunity for communication between the Directors, senior
+management and the Shareholders; (ii) both English and Chinese version of any corporate communication that
+requires Shareholders' attention or any announcements relating to matters to be disclosed under the Listing Rules
+(including but not limited to those involving insider information, corporate actions and corporate transactions)
+were published in a timely manner; (iii) quarterly results that include detailed financial and operating results were
+prepared and published as voluntary periodic disclosure; (iv) the Company's website, where information on the
+Company's announcements, reports, financial information and other information are available for public access, has
+been maintained as a communication platform with the Shareholders; and (v) written enquiries or requests sent by
+Shareholders to the Company's address or email are dealt with in an informative and timely manner.
+Takes actions (including managing risk) to achieve organisational objectives
+Management
+Reports to the Board of Directors and assists in monitoring the
+management of the Company on the effectiveness and adequacy
+of the design, implementation and supervision of the risk
+management and internal control systems
+Audit Committee
+Corporate Governance Committee
+Formulates, reviews and evaluates the corporate governance
+policies of the Company and reviews the Company's compliance.
+with the corporate governance code and related disclosure
+on the design, implementation and
+supervision of the risk management and
+internal control systems on an ongoing basis
+Monitors the management of the Company
+Internal Audit and
+Oversight
+Assesses and determines the nature
+and level of the risks that are acceptable
+to the Company in achieving its
+strategic objectives
+Ensures that the Company has
+established and maintained effective
+risk management and internal control
+systems
+102 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+RISK MANAGEMENT AND INTERNAL CONTROL
+The Board acknowledges that it is the Board's responsibility to ensure that the Company has established
+and maintained adequate and effective risk management and internal control systems. The Board delegates
+its responsibility to the Audit Committee to review the practices of management with respect to the design,
+implementation and supervision of risk management and internal control systems. This review formally takes
+place at quarterly intervals, one of which includes an annual review on the effectiveness of the risk management
+and internal control systems. The Board is responsible for overseeing the risk appetite of the Company including
+determining the risk level the Company expects and is able to take, and proactively considering, analysing and
+formulating strategies to manage the key risks that the Company is exposed to.
+The Company is devoted to establishing and maintaining risk management and internal control systems including
+policies and procedures that it considers to be appropriate for its business operations, and it is dedicated to
+continuously improving these systems.
+Adequate and effective risk management and internal control systems are key to safeguarding the achievement
+of the Company's business strategies. The risk management and internal control systems shall also ensure the
+achievement of the Company's objectives in operational effectiveness and efficiency, reliable financial reporting,
+and compliance with applicable laws, regulations and regulatory policies.
+The Company has established a risk management system which sets out the roles and responsibilities of each
+relevant party as well as the relevant risk management policies and processes. The Company is committed
+to continuously improving the risk management system by optimising the organisational structure for risk
+management, standardizing the risk management process and enhancing the risk management capability, with an
+aim to ensure long-term growth and sustainable development of the Company's business.
+The Company adheres to the fundamental concept that risk management serves to achieve its strategic objectives
+with the participation of all employees. To ensure that the risk management and internal control systems are
+effective, the Company, under the supervision and guidance of the Board and factoring in the actual needs of the
+Company, has adopted an organisational structure for risk management across all divisions, details of which are set
+out below.
+Meituan 2021 Annual Report 103
+CORPORATE GOVERNANCE REPORT
+Organisation Governing Body
+The Board of Directors
+Organisational Structure for Risk Management
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Government and
+regulatory bodies
+Main stakeholders
+In 2021, the main stakeholders, their main concerns, and the main communication channels are as follows:
+We actively listen to and respond to the demands of stakeholders. According to the characteristics of actual
+businesses, management, and operations, we identify key stakeholders and understand their main concerns
+through various communication channels.
+Stakeholder Engagement
+Meituan 2021 Annual Report 119
+In order to better practice our ESG concept and strategy, bolster our competitiveness in terms of sustainable
+development, form a long-term ESG working mechanism, promote harmonious co-development with stakeholders
+and contribute to our middle to long-term strategic goals, we enacted a three-tier governance structure, which
+contains governance, management, and execution, with documented rules guide the work and responsibilities of
+each tier to promote our ESG work.
+Execution
+The Risk Management Committee is the management body responsible for ESG matters in the Company. It
+discusses important ESG matters, reviews ESG prospects, strategies, framework, principles, policies, guides ESG
+practice, and reviews achievement of ESG goals.
+Management
+The Audit Committee is responsible for supervising important ESG matters, reviewing prospects, strategies,
+framework, principles, and policies. It reviews and monitors ESG practice and the achievement of ESG goals and
+briefs the Board on the aforesaid.
+The Board of Directors is the highest decision-making body on ESG management. It supervises ESG matters and
+is generally responsible for ESG strategies and reporting. It authorizes the Audit Committee to supervise ESG
+management and is briefed by that committee on major ESG-related matters.
+Governance
+Shareholders and
+investors
+Comprised of representatives from relevant departments, the ESG Execution Team promotes the execution
+of management strategies and realisation of goals. It evaluates priorities and risks, organises training to raise
+employees' ESG awareness, conducts relevant research, and reports to the management and governance levels
+regularly.
+Employees
+ESG Management
+Suppliers
+Talk with the Delivery Couriers, complaint
+hotline, Product Experience Project
+Social media, official websites, press
+conferences, exchange meetings, and
+dedicated customer service
+Supplier assessment and supplier
+conferences
+Online platform, customer service hotline,
+meetings and merchant inspection
+Online platform, customer service hotline,
+social media and information disclosure
+HR helpdesk, communication meetings,
+social media, and face-to-face
+communication and communication hotline
+Shareholder meetings, performance
+announcements, annual report, semi-annual
+reports, official website, communication
+meetings and emails
+Users
+Policy consultation, incident reporting,
+visitor reception, information disclosure,
+and participation in governmental meetings
+Delivery Courier Health and Safety,
+Customer Complaint Management, Product
+and Service Safeguard
+Supply Chain Management, Product
+and Service Safeguard, Anti-Corruption,
+Information Security and Privacy Protection
+Delivery Courier Health and Safety, Product
+and Service Safeguard, Customer Complaint
+Management, Driving Environmental
+Protection Practice in the Industry, Energy
+Conservation, Life Service Industry
+Empowerment and Development, and Water
+Conservation
+Product and Service Safeguard, Information
+Security and Privacy Protection, and
+Customer Complaint Management
+Customer Complaint Management, Life
+Service Industry Empowerment and
+Development, and Product and Service
+Safeguard
+Product and Service Safeguard, Anti-
+Corruption, Platform Information
+Management, Legal Employment, Delivery
+Courier Health and Safety, Information
+Security and Privacy Protection, Climate
+Change Response, and Life Service Industry
+Empowerment and Development
+Delivery Courier Health and Safety,
+Information Security and Privacy, Employee
+Training and Development, Product and
+Service Safeguard, and Anti-Corruption
+Legal Employment, Employee Rights
+and Benefits, Employee Training and
+Development, Occupational Health and
+Safety, Diversity and Equal Opportunities,
+Product and Service Safeguard, and Social
+Welfare Participation
+Main ESG concerns
+Delivery couriers
+Media and
+non-governmental
+organisations
+Main communication channels
+Encourage the public to jointly take part in public services
+Platform merchants
+Accomplish as new socially-responsible enterprises
+For the year ended December 31, 2021, Xu Sijia and Lau Yee Wa undertook not less than 15 hours of relevant
+professional training respectively in compliance with Rule 3.29 of the Listing Rules.
+DIRECTORS AND OFFICERS LIABILITY INSURANCE
+The Company has arranged appropriate directors and officers' liability insurance in respect of legal action against
+the Directors and officers.
+REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
+Please refer to Note 8 to the consolidated financial statements for details of remuneration of Directors for the year
+ended December 31, 2021.
+Details of the remuneration by band of Directors and senior management of the Company, whose biographies are
+set out in the section headed "Directors and Senior Management" of this annual report, and for the year ended
+December 31, 2021 are set out below:
+Remuneration band (RMB)
+0
+1 - 5,000,000
+Number of individuals
+2
+4
+5
+In order to uphold good corporate governance and ensure compliance with the Listing Rules and applicable Hong
+Kong laws, the Company also engages Lau Yee Wa, an associate director of corporate services division of Tricor
+Services Limited, as the other joint company secretary to assist Xu Sijia to discharge her duties as a company
+secretary of the Company. Lau Yee Wa's primary contact person at the Company is Xu Sijia.
+>5,000,000
+The Directors acknowledge their responsibility for preparing the financial statement of the Company for the year
+ended December 31, 2021, and are aware of any material uncertainties relating to events or conditions that may
+cast significant doubt upon the Company's ability to continue as a going concern.
+The statement of the Auditors about their reporting responsibilities on the financial statements is set out in the
+section headed "Independent Auditor's Report".
+114 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+AUDITOR'S REMUNERATION
+The remuneration for the audit and non-audit services provided by the Auditor to the Group during the year ended
+December 31, 2021 was approximately as follows:
+Type of Services
+Audit and audit-related services
+Non-audit services (1)
+Total
+Note:
+Amount
+(RMB'000)
+47,879
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 113
+Xu Sijia, a joint company secretary of the Company, is responsible for advising the Board on corporate governance
+matters and ensuring that the Board policies and procedures, as well as the applicable laws, rules and regulations
+are followed. Xu Sijia has been appointed to succeed Wang Yixiang as joint company secretary of the Company
+effective since July 31, 2020. For further details, please refer to the announcement of the Company dated July 31,
+2020.
+110 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+The Company has designed and adopted strict internal procedures to ensure its business operation complies with
+the relevant rules and regulations. Its internal control department works closely with its business units to (i) perform
+risk assessments and provide advice on risk management strategies, (ii) monitor internal control effectiveness and
+promoting risk management level and (iii) promote risk awareness throughout the Company. Apart from its internal
+control department, the Company has also established different functions and teams to cooperate with each
+other in their areas of expertise in order to improve the effectiveness of its internal control systems, with details as
+follows:
+In accordance with its internal procedures, the Company's legal department performs the basic function of
+reviewing and updating the form of contracts it enters into with its consumers, merchants and relevant third-parties.
+The Company's legal department examines the contractual terms and reviews relevant documents for its business
+operations, and the necessary underlying due diligence materials, before it enters into any contract or business
+arrangements. In addition, the Company's quality control departments of each business segments are also
+responsible for reviewing the licences and permits of the business partners and proposed commercial terms before
+it enters into any contract or business arrangements.
+The Company's legal department reviews its services for regulatory compliance before they are made available to
+the general public. Its legal department and administrative department are responsible for obtaining any requisite
+governmental pre-approvals or consents, including preparing and submitting all necessary documents for filing with
+relevant government authorities within the prescribed regulatory timelines.
+The business compliance departments of the Company consist of various professional functions, among which
+(i) the content compliance department is responsible for the compliance management of the internet content,
+conducts compliance reviews on the internet content through a combination of automated and manual control,
+and removes inappropriate content in order to mitigate compliance risk of internet content; (ii) the food safety
+compliance department is responsible for the food safety risk management, conducts study on regulations, policies
+and industry trend, optimises the internal control policy of food safety, guides and supervises the implementation
+of food safety laws and regulations requirements and internal compliance measures in all food business segments,
+and enables partners such as merchants and suppliers to jointly control and mitigate food safety risks; (iii) the
+internet finance compliance department for internet finance business is responsible for the analysis of the regulatory
+environment with respect to services it provides, formulation and implementation of internet finance-related policies
+as well as recruitment of talents to strengthen the compliance team, in order to mitigate financial compliance risks.
+The information security department of the Company promotes the information security management of the
+Company through technical and management measures, focusing on the cybersecurity, data security and the
+protection of the user privacy, and it periodically reports to the Audit Committee.
+The internal control department of the Company mitigates internet fraud, internet cheats in relation to illegal
+industry, and operational risks to ensure assets safeguard and the efficiency and effectiveness of operation by
+providing continuous training, improving the business transaction security management process and system, and
+upgrading the risk control models as well as resolving the risk events.
+Meituan 2021 Annual Report 111
+CORPORATE GOVERNANCE REPORT
+Effectiveness of Risk Management and Internal Control
+•
+In addition, the Board believes that the Company's accounting and financial reporting functions have been
+performed by employees of the appropriate qualifications and experience and that such employees receive
+appropriate and sufficient training and development. Based on the audit report of the Audit Committee, the Board
+also believes that sufficient resources have been obtained for the Company's internal audit function and that its
+employees qualifications and experience, training programs and budgets are sufficient.
+COMMUNICATIONS WITH SHAREHOLDERS
+The Company strives to provide ready, fair, regular and timely disclosure of information that is material to the
+investor community. Therefore, the Company works to maintain effective and on-going communication with
+shareholders so that they, along with prospective investors, can exercise their rights in an informed manner based
+on a good understanding of the Group's operations, businesses and financial information. The Company also
+encourages Shareholders' active participation in annual general meetings and other general meetings or other
+proper means. General meetings can provide an opportunity for communication between the directors, senior
+management and the Shareholders. The Company recognizes the importance of effective communication with
+Shareholders and encourages them to attend general meetings to raise any concerns they might have with the
+Board of Directors or the senior management directly. Board members and appropriate senior management of the
+Company are available at such meetings to respond to enquiries raised by the Shareholders.
+To safeguard Shareholders' interests and rights, a separate resolution will be proposed for each issue at general
+meetings, including the election of individual Directors. All resolutions put forward at general meetings will be voted
+by poll pursuant to the Listing Rules and poll results will be posted on the websites of the Company and the Stock
+Exchange in a timely manner after each general meeting.
+During the Reporting Period, the Company held an annual general meeting on June 23, 2021. Notice of the meeting
+was sent to the Shareholders on May 21, 2021, at least 20 clear business days before the meeting. The chairman of
+the Board and the chairman of each of the Audit Committee, the Corporate Governance Committee, the Nomination
+Committee and the Remuneration Committee attended the annual general meeting and were available to answer
+any questions raised by the Shareholders. A representative of the Auditor also attended the meeting to answer
+any questions about the conduct of the audit, the preparation and content of the auditors' report, the accounting
+policies and auditor independence.
+112 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+The Company has developed and maintains the shareholders' communication policy with the objective of
+promoting effective and on-going communication between the Company and the Shareholders, which is available
+on the Company's website at "about.meituan.com". The Company's website is maintained as a communication
+platform with the Shareholders, where information on the Company's announcements, reports, financial information
+and other information are available for public access.
+The Company's management regularly reviewed the implementation and effectiveness of these shareholder
+communication channels in 2021 and confirmed their effectiveness.
+A summary of the disclosure of interests of the substantial shareholders of the Company is set out in the section
+headed "Report of Directors" of this annual report.
+Convening of Extraordinary General Meeting and Putting Forward Proposals
+Shareholders may put forward proposals for consideration at a general meeting of the Company according to the
+Articles of Association. Any one or more members holding as of date of deposit of the requisition not less than
+one-tenth of the paid-up capital of the Company carrying the right of voting at general meetings of the Company
+shall at all times have the right, by written requisition, to require an extraordinary general meeting of the Company to
+be called by the Board for the transaction of any business specified in such requisition. A written requisition shall be
+deposited at the Company's principal place of business in Hong Kong. If within 21 days of such deposit the Board
+fails to proceed to convene such meeting to be held within a further 21 days, the requisitionist(s) themselves or any
+of them representing more than one-half of the total voting rights of all of them, may do so in the same manner, and
+all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to
+the requisitionist(s) by the Company.
+As regards proposing a person for election as a Director, the procedures are available on the website of the
+Company.
+Enquiries to the Board
+Shareholders who intend to put forward their enquiries about the Company to the Board can send their enquiries to the
+headquarters of the Company at Block B&C, Hengjiweiye Building, No. 4 Wang Jing East Road, Chaoyang District, Beijing,
+People's Republic of China to the attention of the Joint Company Secretaries or send an email to ir@meituan.com.
+The Company welcomes views and enquiries of the Shareholders. Enquiries to the Board or senior management of
+the Company will be dealt with in an informative and timely manner.
+JOINT COMPANY SECRETARIES
+8,053
+55,932
+The Audit Committee, on behalf of the Board, continuously reviews the risk management and internal control
+systems of the Company. The review process comprises, among other things, meetings with management of
+business, the internal audit department, legal personnel and the external auditors, reviewing the relevant work
+reports and information of key performance indicators, and discussing the major risks with the management of
+the Company. The Board is of the view that during the Reporting Period, the risk management and internal control
+systems of the Company are effective and adequate.
+CHANGES IN CONSTITUTIONAL DOCUMENTS
+Promote the harmonious coexistence of corporate development and environmental sustainability
+Promote environmental protection in the industry
+2. Customers:
+Be customer-oriented
+Pursue excellence, continuously improve, and achieve a good reputation among customers
+Create greater value for people's lives
+3.
+Partners:
+4.
+•
+Maintain win-win collabouration with our eco-system partners
+Guarantee interests of different partners
+•
+Promote sustainable development in the industry
+Operation:
+. Promote integrity
+•
+Protect employees' rights and interests
+•
+Promote talent development
+118 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+5.
+.
+Assist in providing solutions to more social issues
+•
+Create greater social value
+•
+(1) The non-audit services conducted by the Auditor mainly include certain consulting services and tax related services.
+Advocate green consumption
+•
+Community:
+1.
+No changes to the Memorandum and Articles of Association of the Company during the Reporting Period.
+Environment:
+POLICY ON THE DISCLOSURE OF INSIDE INFORMATION
+The Company has put in place an internal policy for the handling and disclosure of inside information in compliance
+with the SFO. The internal policy sets out the procedures and internal controls for the handling and dissemination
+of inside information in a timely manner and provides the Directors, senior management and relevant employees a
+general guide in monitoring information disclosure and responding to enquiries.
+DIVERSITY
+Meituan 2021 Annual Report 115
+CORPORATE GOVERNANCE REPORT
+The Company is committed to promote diversity in our Company to the extent practicable by taking into
+consideration a number of factors in respect of our corporate governance structure. The Company seeks to achieve
+board diversity and workforce diversity through the consideration of a number of factors, including but not limited
+to gender, age, language, cultural background, educational background, industry experience and professional
+experience.
+-
+-
+We have adopted the board diversity policy which sets out the objective and approach to achieve and maintain
+diversity of our Board in order to enhance the effectiveness of our Board. In recognizing the particular importance
+of gender diversity, the Company will appoint at least one female director by no later than December 31, 2024. For
+more details, please refer to the section headed "Corporate Governance Report – Board Committees Nomination
+Committee” in this annual report. In 2021, we hired 100,033 full-time employees, of which 62,699 were male and
+37,334 were female. The gender ratio in the workforce (including senior management) was approximately 16.79
+males to 10 females. The Company is aiming to achieve a more balanced gender ratio in the workforce next year
+and will continue to monitor and evaluate the diversity policy from time to time to ensure its continued effectiveness.
+116 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+REPORT OVERVIEW
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+We identified key stakeholders and their environmental, social, and governance (hereinafter referred to as “ESG")
+issues of concern, prioritized the ESG issues stakeholders concerned and responded in the report according to
+materiality of their concerned issues in the chapter of "Stakeholder Engagement" and "Materiality Assessment".
+We use quantitative data to present KPIs at the environmental and social levels so that they can be measured
+and validated. Quantitative criteria, methodologies, assumptions, and/or calculation tools for KPIs, as well as the
+sources of conversion factors used, have been described in the appropriate places in the report. We have adopted
+a statistical approach to disclosure that is consistent with previous years, and individual changes have been
+explained in the corresponding places.
+Meituan (hereinafter referred to as "the Company", "Company" or "We") prepared this report in accordance with
+the Environmental, Social and Governance Reporting Guide set out in Appendix 27 to the Listing Rules of the Hong
+Kong Stock Exchange and Clearing (HKEX) Ltd., and upholds the principle of materiality, quantitative, balance, and
+consistency.
+ESG CONCEPT AND MANAGEMENT
+Focusing on the Company's mission and values, we have enhanced the ESG concepts integration, and formulated
+our ESG strategies from the following aspects:
+Meituan 2021 Annual Report 117
+We have set environmental targets associated with the business. The Board conducts regular reviews of the
+progress of environmental targets.
+We value the significant impact that ESG-related risks and opportunities may have and incorporate ESG-related
+risks and opportunities into our risk management system. The Board supervises the assessment of ESG-related
+risks and opportunities and ensures that an appropriate and effective ESG risk management and internal supervise
+system is in place.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+With the mission of "we help people eat better, live better”, the Company adheres to the values of "customer-
+oriented, integrity and honesty, win-win cooperation, and the pursuit of excellence".
+We have developed our ESG concept and management strategy and integrated it into our business development.
+The Board conducts regular reviews of the ESG concept and management strategy to assess their potential impact
+on the Company's overall strategy.
+The Board takes full responsibility for the Company's ESG strategy and reporting. The Board's Audit Committee
+assists Board to oversee ESG issues. The Committee on Risk Management (hereinafter referred to as the "Risk
+Management Committee”) conducts the daily management of ESG issues and guides ESG practices. The relevant
+functional departments of the company jointly formed an ESG Execution Team to implement ESG related work and
+report to the management level and governance level regularly.
+BOARD STATEMENT
+Unless otherwise indicated, the scope of the disclosure in this report includes the ESG performance of businesses
+direct operated and managed by the Company. This report's time frame is from January 1, 2021, to December 31,
+2021.
+The Company conducted a materiality assessment of ESG issues stakeholders concerned. The Board participated
+in the evaluation, prioritization, and management of important ESG issues.
+This report aims to reflect our ESG performance in 2021 on an objective, fair, and balance basis. It is recommended
+to read the part on governance in conjunction with the Corporate Governance Report in this annual report.
+In June 2021, we initiated the "Lush Mountain Science and Technology Fund", the first public welfare fund focusing
+on "carbon neutrality and circular economy", in strategic cooperation with the Cast Alliance for Ecological and
+Environmental Sciences and Industry, the China Petroleum and Chemical Industry Federation, and other relevant
+organisations. The Fund aimed to support scientific exploration and technological transformation for carbon
+neutrality, promote low-carbon and circular economic and social development, and realise the vision and blueprint
+of a beautiful China. The Fund focus mainly on two directions: the “Lush Mountain Science and Technology Award"
+and the "Science and Innovation China", environmental technology innovation demonstration project of the "Lush
+Mountain Plan", hoping to encourage more young scientists to devote themselves to eco-friendly and low-carbon
+research and promote the value of more environmental science and technology achievements in the industry.
+126 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Bikes and Meituan Electric Mopeds' both practice a full-cycle green concept, upholding the "3 Rs'
+reduce, reuse, recycle – in design, procurement, manufacturing, placement, operation, and scrapping. One hundred
+percent of scrapped bikes (bikes and electric mopeds) are reused or recycled. During the design process, the
+components are designed as universally adaptable and easy to maintain, and the frames are lightweight. We choose
+environmentally friendly suppliers in the procurement stage and produce durable products in the manufacturing
+process to extend product life and reduce waste. We also select environmentally-friendly lithium batteries to drive
+electric mopeds. During the placement and operation stage, which is based on scientific and smart scheduling,
+we renovate components or bikes for reuse by storing and recycling the components separately according to their
+condition. During the scrapping stage, on the one hand, hazardous wastes such as batteries in locks and batteries
+to power electric mopeds are uniformly handed over to bike lock and battery suppliers for recycling, on the other
+hand, harmless wastes such as bodies and tires are recycled in cooperation with resource recycling companies to
+form a closed-loop of the supply chain.
+We have partnered with the China Environmental Protection Foundation to establish the "Lush Mountain Nature
+Guardians Plan". This Plan aims to fund and guide social organisations and scientific research institutions to
+carry out public welfare projects around protected areas with nature-based solutions that allow us to effectively
+improve the ecological quality of those areas. At the same time, the “Lush Mountain Nature Guardians Plan" has
+the potential of helping humans to adapt to climate change and build up an ecosystem where people and nature
+coexist harmoniously. By the end of 2021, 30 projects, totaling RMB12.3 million, had been selected and announced
+to the public.
+Meituan Bikes and Meituan Electric Mopeds' Full-Cycle Green Concept
+-
+Lush Mountain science & technology
+Lush Mountain public welfare
+As of the end of 2021, environmental protection concepts popularized by the "Lush Mountain Plan" had been
+accessed more than 2.2 billion times online. Two batches of the recommended lists of green packaging were
+released with 161 pieces of environment-friendly products from 101 high-quality food delivery packaging suppliers
+were included in the recommended list. Across the country, more than 30 million biodegradable packaging bags,
+1.91 million items in more than 30 types of innovative green packages, and 120,000 sets of recyclable tableware
+have been distributed to merchants to collect feedback from merchants and consumers and optimise packaging
+products continuously. More than 1,200 large-scale garbage sorting and lunch box recycling pilot projects have
+been carried out, with over 670,000 "Lush Mountain Public Welfare Merchants" have been gathered together for
+collabourative activities on environmental protection and public welfare.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+On the merchant side, we have launched a product function called "Merchant Lush Mountain Files" function
+to encourage merchants to share their environmental protection practices. Since June 2021, merchants on the
+Meituan Food Delivery were enabled to publish their user-visible environmental protection files and enrich their
+environmental protection file information by practicing various eco-friendly measures such as "reducing the use of
+disposable items", "choosing environmentally friendly packaging" and "advocating and participating in packaging
+recycling". By the end of 2021, more than 2 million merchants had their own "Lush Mountain Files" with about
+35,000 merchants actively uploading their environmental protection experiences or commitments in the "Merchant
+Lush Mountain Files". In addition, we jointly launched the "Oppose Food Waste and Provide Small-Portion Dishes"
+initiative with the China Hotel Association, calling on catering businesses to provide small-portion dishes and “one-
+person meal" packages to consumers in a variety of ways.
+Low-carbon eco-system
+In 2021, we have promoted plastic products recycling projects in Xiamen and Shanghai. In Xiamen, we have
+launched the annual “Million Kilogramme Plastic Lunch Box Recycling Plan" with approximately 3 tonnes of plastic
+lunch boxes recycled daily. In Shanghai, we have set up a lunch box recycling pilot project with approximately 3-5
+tonnes of plastic lunch boxes recycled daily.
+We, together with Green Recycled Plastic Supply Chain Joint Working Group, jointly issued the Detailed Rules on
+the Implementation of Design Evaluation of Plastic Products Easy to Recycle: Recycling-Evaluation Guidelines on
+Disposable Catering Plastic Packaging Containers for Food Delivery. The guideline, which bases on the General
+Principles for Evaluation of Plastic Products Easy to Recycle and Regenerate Design, is China's first completely
+independent recycle standard for plastic products, which fills the gap in domestic recycling standards.
+Meituan 2021 Annual Report 125
+We cooperate with the China Pulp and Paper Research Institute, the Degradable Plastics Committee of the China
+Plastics Association, as well as packaging manufacturers and catering merchants to carry out food delivery
+packaging innovations and continue to explore innovative and practical green packaging solutions that meet the
+practical needs of catering businesses. We released the Green Packaging Recommendation List of 2021 under
+the "Lush Mountain Plan". Based on the two fundamental categories of "degradable plastics" and "paper" in the
+first recommendation list of 2020, we have added a new category of "easy-to-recycle and easy-to-reuse plastic
+packaging containers" to the 2021 list, which aimed to provide more innovative and environmentally friendly
+packaging solutions to merchants.
+Green packaging
+In 2020, we put forward three environmental targets as our action guide for the "Lush Mountain Plan". In 2021,
+we comprehensively upgrade the environmental protection strategy of the "Lush Mountain Plan" and take "better
+life, beautiful nature" as our vision. We focus on the green and low-carbon development of all platforms, promote
+related parties in the ecological chain to co-construct and share, and explore the path of harmonious coexistence
+between human beings and nature. Moreover, we set up four major sectors: Green Packaging, Low-carbon Eco-
+system, Lush Mountain Science & Technology, and Lush Mountain Public Welfare to help achieve the 2025
+environmental targets.
+Meituan Food Delivery has launched the "Lush Mountain Plan" since 2017 as the food delivery industry's first action
+plan to focus on environmental protection. It has promoted environmental protection processes throughout the
+food delivery value chain and among consumers.
+At the same time, users of Meituan Bikes and Meituan Electric Mopeds can donate miles through their green and
+low-carbon rides, which were then allocated by Meituan to build basketball courts for rural schools. For more
+information on the progress of our public welfare activities this year, please refer to the "Community Investment -
+Public Welfare Platform and Projects" section of this report.
+We promote low-carbon development and circular economy of the industries and continue to implement various
+environmental protection actions in response to policy guidance requirements of the Working Guidance for Carbon
+Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy by
+the Communist Party of China Central Committee and the State Council and the "14th Five-Year Plan" Action Plan
+for Plastic Pollution Control.
+On the user side, as of the end of 2021, more than 100 million users have used the "Tableware Free" function
+through our product when placing orders. We have launched text-reminder function on the food-ordering page, so
+that when users order a certain amount of food, they will receive a notification of "Please order food in moderation,
+which is environmentally friendly and healthy", and a push of "Please strictly practice thrift and avoid waste" on the
+order page. In addition, we promote sustainable consumption advocacy activities such as "Meituan Food Delivery
+Environmental Protection Day", "Arbor Day Online Education”, and “Reducing the Use of Disposable Plastic Straws
+Plan" for World Earth Day every year.
+Meituan 2021 Annual Report 127
+Starting from 2022, all newly renovated or replaced lighting system in our headquarter offices will stop using
+fluorescent tubes.
+Climate Change Response
+Measures Taken by Meituan Food Delivery to Promote Environmental Protection in the Industry
+"Warehouses and service stations" refers to warehouses and stations used for Meituan Select business, Kuailv
+Jinhuo, Meituan Grocery, and Meituan Bikes and Electric Mopeds.
+"Regional sales offices" refers to offices used by sales personnel and other supporting personnel - are distributed
+in 22 provinces, 5 autonomous regions, and 4 municipalities in Mainland China;
+"Headquarters (HQ) offices" include headquarters-level offices in Beijing and Shanghai with integrated functions,
+and centre offices of customer service and R&D offices which are mainly used by customer service and R&D
+personnel. Among them, the headquarter-level workplaces are mainly Beijing Hengdian, R&D park and surrounding
+workplaces, and the Shenya office in Shanghai. Centre offices of customer service and R&D offices mainly include
+offices in Shijiazhuang, Yangzhou, Nantong, Wuhan, Chengdu, and Xiamen;
+Environmental performance indicators in the Company include offices, warehouses for Meituan Select businesses,
+warehouses for Kuaily Jinhuo, and warehouses and service stations for Meituan Grocery, as well as warehouses for
+Meituan Bikes and Electric Mopeds.2
+Below are the key environmental performance indicators of the Company. The Company currently does not have
+a self-built data centre. Third-party operators oversee the emissions, resources and energy consumption of the
+rented data centre, and such data is not included in the scope of the Company's disclosure for the time being.
+Environmental Performance Indicators
+Our greenhouse gas emissions are mainly due to the energy consumption of our operations. Based on the energy
+use efficiency target already set, we will not set a separate greenhouse gas emission reduction target this year.
+Using total energy consumption per employee in 2021 as a benchmark, by the end of 2026, total per
+employee energy consumption in headquarter offices will be reduced by 8% compared with 2021.
+Using running water consumption per employee in 2021 as a benchmark, by the end of 2026, per employee
+running water consumption in headquarter offices will be reduced by 8% compared with 2021.
+•
+Starting from 2022, electronic wastes generated in all headquarter offices will be 100% treated for harmless
+disposal.
+Starting from 2022, all the headquarter offices will sort wastes by categories.
+We set environmental targets based on our previous environmental performance considering characteristics of our
+own operations. The targets we set include:
+Environmental Targets
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 129
+In terms of opportunities in addressing climate change, we actively explore carbon reduction opportunities in the
+process of providing products and services, focus on reducing the carbon footprint of products and services.
+We combine business attributes to promote industry carbon reduction and guide consumers to foster low-
+carbon and environmentally friendly consumption habits. For example, the shared cycling service provided by
+Meituan Bikes and Meituan Electric Mopeds has lower carbon emissions than other modes of transportation,
+which could contribute to the transformation of green and low-carbon travel in urban transportation. At the same
+time, Meituan Bikes and Meituan Electric Mopeds practice the concept of full-cycle environmental protection
+management and is committed to reducing environmental impact. Also, we have launched the "Lush Mountain
+Plan" campaign to provide catering merchants with recyclable, degradable, or reusable solutions for packaging.
+We establish a lunch box recycling system in conjunction with upstream and downstream partners and promote
+users to practice "Tableware Free" and other sustainable consumption behaviours to build a low-carbon ecology.
+In the process of retail business development, we take various measures to reduce resource consumption and
+improve energy efficiency, including: (i) using RFID (Radio Frequency Identification) technology to identify and
+manage the use of packaging materials in business operations to avoid packaging waste; (ii) using recyclable ice
+plates instead of traditional single-use ice plates made of dry ice; and (iii) optimising the way products are secured
+during transportation and reducing the use of single-use plastics such as plastic wrap; (iv) refined management
+of electricity-consuming equipment, including timely shut-down of non-essential equipment and priority to more
+efficient speed-freezing equipment; (v) exploration of intelligent electricity saving methods, through AloT (Artificial
+Intelligence & Internet of Things) monitoring technology to timely identify electricity-use applications that could be
+further improved. For the relevant contents of Meituan Bikes and Meituan Electric Mopeds and “Lush Mountain
+Plan", please refer to the chapters of "Meituan Bikes and Meituan Electric Mopeds' Full-Cycle Green Concept" and
+"Measures Taken by Meituan Food Delivery to Promote Environmental Protection in the Industry" in this report.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+128 Meituan 2021 Annual Report
+In terms of transition risks, facing the long-term trend of China's green economy and low-carbon transition, we
+should manage the carbon emissions generated by our own operations, comply with and respond to national
+regulations and policies related to reducing carbon emissions. At the same time, we should evaluate the impact
+of the application of emerging low-carbon technologies, the deployment of data centres with higher energy
+efficiency, and the procurement of low-carbon environmentally friendly materials in our business. We closely
+monitor the regulations and policies related to climate change and carbon emissions reduction that may have a
+significant impact, and we analyse the policy trends and prepare in advance. We apply low-carbon technologies
+to our workplaces and rented data centres to reduce energy consumption and carbon emissions. We have set
+an energy use efficiency target for headquarter offices to manage our environmental impact. We value the energy
+consumption level of data centres while renting them, and plan the location of data centres reasonably to ensure
+its stable power supply while improving the utilisation rate of clean energy and establishing a carbon emission
+monitoring mechanism. For information on energy conservation and carbon reduction in the workplace and data
+centres, please refer to the "Creating Green Offices", "Environment Management of Data Centre", "Environmental
+Targets" and "Green Procurement" chapters of this report.
+In terms of physical risks, extreme weather such as floods, typhoons, and rainstorms that occur due to climate
+change may affect our workplace operations, employee safety, and provision of products and services. In order to
+avoid and reduce the company's property losses and casualties caused by the occurrence of extreme weather, we
+have established a dedicated team to be responsible for emergency response in the event of extreme weather and
+established an extreme weather emergency plan. The response mechanism we have established includes: before
+extreme weather occurs, predicting the scope and impact of extreme weather, and activating the plan in time;
+when extreme weather occurs, conducting emergency responses according to the actual situation of the weather
+changes, continuously adjusting the response level and meet assistance needs; after extreme weather occurs,
+gradually resume workplace and business operations, evaluate losses, and review the plan and find optimisation
+directions. We also developed the "Weather Forewarning System" to provide weather warnings to employees
+nationwide. In 2021, the system sent more than 200,000 weather forewarning notifications to our employees.
+We recognize that climate change is an important issue to all stakeholders, which will have a significant impact on
+the environment and society and will also have an impact on our operations. We have carried out climate change
+impact identification and analysis work.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+With a focus on the environmental impact on the industries of our major businesses, we analyse the environmental
+risks of these industries, implement protection measures and seek solutions to industry environmental problems.
+Diversity and Equal
+Opportunities
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Water Conservation
+⚫ Environmental
+issues
+Social Welfare Participation
+Energy Conservation
+Employee Training and Development
+Social issues
+Supply Chain Management
+☐ Driving Environmental Protection ●
+Practice in the Industry
+Materiality to stakeholders
+Legal Employment
+Platform Information
+Management
+Life Service Industry
+Empowerment and Development
+Occupational Health and Safety
+Customer Complaint Management ●
+Employee Rights and Benefits
+Anti-Corruption
+[▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬Product and Service Safegaurd ●
+Information Security
+and Privacy
+Protection
+Delivery Courier Health
+and Safety
+We will discuss the contents of each topic separately in this report, and the results of the analysis of the material
+issues are shown in the figure below.
+In 2021, based on continual communication with key stakeholders and our operational characteristics, we
+conducted a materiality assessment for our actions and reports using the Environmental, Social and Governance
+Reporting Guide as a reference.
+Materiality Assessment
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+120 Meituan 2021 Annual Report
+With the improvement of the Company's capabilities concerning environmental statistics, data of Meituan Select business,
+Meituan Bikes and Meituan Electric Mopeds have been disclosed since 2021.
+Climate Change Intellectual Property Protection
+Response
+Promoting Environmental Protection in the Industry
+Materiality to Meituan's business
+Meituan 2021 Annual Report 121
+124 Meituan 2021 Annual Report
+1 According to National Data Centre Application Development Guidelines (2020) issued by The Information and
+Communication Development Department of the Ministry of Industry and Information Technology of the People's Republic
+of China in February 2021, as of the end of 2019, the average PUE of hyperscale data centres was 1.46, and the average
+PUE of large-scale data centres was 1.55. The average design PUES of hyperscale and large-scale data centres were 1.36
+and 1.39, respectively.
+We actively participate in research on the transformation of the eco-friendly data centre. Topics include (i) China's
+peak carbon dioxide emissions and carbon neutrality target planning, and data centre related carbon reduction
+technology route research; (ii) global high-tech enterprises renewable energy utilisation, carbon neutrality target,
+and realisation path research; (iii) data centre's liquid cooling technology research; and (iv) intensive data centre site
+selection and deployment, with its related network, energy, and other resource protection research.
+In 2021, we expanded the rental area of the data centre and introduced a number of energy-saving and emissions-
+reduction measures in the newly-rented data centre, such as: (i) applying HVDC (high voltage direct current) power
+supply to effectively reduce the damage of cables and uninterruptible power supplies; (ii) adopting intelligent lighting
+control systems to reduce the overall energy consumption; (iii) installing photovoltaic energy storage systems
+on roofs and walls to establish green energy supply and effectively reduce PUE levels; (iv) enhancing the energy
+efficiency standards of infrastructure; and (v) using the intelligent monitoring system to improve resource utilisation
+and reduce operating costs.
+Data centres in Ningxia Zhongwei apply energy-saving and emissions-reducing measures including: (i) utilising
+variable frequency pumps and wind turbines of Electrical Commutation (EC) and other equipment; (ii) using software
+to regulate the cooling system's airflow, optimise its heat exchange efficiency; (iii) using a Building Automation
+(BA) control system to conduct real-time analysis of data and operation load of environmental sensors according
+to changes in seasons, and adjust operation modes of the cooling system with an aim to fully tap into natural
+resources; (iv) by increasing return air temperature to improve the cooling efficiency and increase the natural
+cooling period; (v) adopting a heat recovery unit to recycle the waste heat in the exhaust of the data centre to heat
+domestic hot water system; and (vi) refining motor capacity to use power and resources more efficiently.
+All the data centres we have rented in Ningxia Zhongwei are on large scale with a natural cooling system in use.
+The data centres use high-efficiency direct natural cooling and indirect evaporative cooling. A wind wall system
+forms a cold air channel and a hot air channel in the machine room, improving the cooling effect. With sophisticated
+machine room structure, server layout, temperature control and heat recovery, data centres in Ningxia Zhongwei
+tend to have a significant advantage in energy preservation over traditional large-scale data centres' cooling
+solutions.
+In 2021, we continue to rent the data centres in Zhongwei City, Ningxia Hui Autonomous Region (hereinafter
+referred to as "Ningxia Zhongwei") as our main data centres and continue to expand the server rack-scale in the
+region. The centres in Ningxia Zhongwei use renewable energy to supply electricity, and their average power usage
+effectiveness (PUE) is 1.25, which is below the industry average¹.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 123
+We do not have self-built data centre. We actively respond to the Working Guidance for Carbon Dioxide Peaking
+and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy by the Communist
+Party of China Central Committee and the State Council and other policy directions and consider environmental
+protection capabilities as an important assessment indicator for data centre suppliers. When renting a data centre,
+we take into account the environmental impact of its layout and operation, resource consumption, renewable
+energy (hydropower, wind power, and photovoltaic power generation, etc.) utilisation conditions, regional climate,
+and environment scenarios, etc., and give priority to renting an eco-friendly data centre. We require data centre
+suppliers to strictly abide by the Air Pollution Control Law of the People's Republic of China, the Water Pollution
+Prevention and Control Law of the People's Republic of China, the Soil Pollution Prevention and Control Law
+of the People's Republic of China, the Law of the People's Republic of China on the Prevention and Control of
+Environment Pollution Caused by Solid Wastes" and other laws and regulations. We evaluate and review the
+environmental impact assessment report and energy-saving assessment report of the data centre and value its
+environmental performance. We require data centre suppliers to formulate the On-Site Construction Safe and
+Civilized Standard Manual and Hazardous Waste Management Manual to integrate pollutant source prevention,
+process management, and end treatment into the whole process of project operation, and refine the management
+of the classification, collection, storage, and recycling of waste on the construction site. In addition, we strictly
+control the domestic waste and domestic wastewater generated during the operation process, properly classify,
+and recycle the waste, and guarantee the compliance discharge of wastewater.
+Environment Management of Data Centre
+In terms of waste treatment, we strictly follow local authorities' rules on waste treatment in our areas of operation.
+In our Beijing and Shanghai offices, dustbins are categorized to collect different types of waste. Hazardous waste
+from offices - such as fluorescent tubes, batteries, toner cartridges, and ink cartridges – is collected separately and
+handed over to qualified agencies for further treatments. Among them, waste toner cartridges and ink cartridges
+generated by printing equipment are all handed over to printing service suppliers for recycling and disposal. For
+electronic waste generated during operation (such as waste computers, monitors, telephones, projectors, etc.),
+we have formulated an internal processing process for unified management, and handed it over to professional
+institutions for harmless disposal and recycling.
+-
+In terms of resources saving, we have introduced multiple measures to save water and paper. We have installed
+inductive water-saving taps in some office areas, and posted awareness-raising tips for water- and paper-
+conservation to enhance employees' awareness. We strive to implement a green office strategy including: setting
+double-sided printing as default in all printers to encourage employees to print documents on both sides and
+placing recycling boxes beside printers to collect used paper.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+122 Meituan 2021 Annual Report
+In terms of energy saving, we have promoted multiple measures in offices, including: (i) expanding the application
+of energy-saving LEDs, replacing manually controlled lights with sound-activated ones, and shortening the duration
+of lighting. Personnel regularly inspect offices to ensure that lights are turned off when no one is at work; (ii) saving
+electricity in air-conditioning by deploying centralized control systems in selected meeting rooms and cafeteria to
+control the temperature and the switch on/off of air-conditioning in the back-stage, and reduce energy waste; (iii)
+shutting down nonessential equipment in offices and washrooms during nonworking hours; and (iv) strengthening
+the management of electricity consumption by establishing a monthly and quarterly workplace electricity
+consumption reminder mechanism. Analysing the causes of abnormal electricity consumption in the workplace and
+paying attention to it. Additionally, we have posted awareness-raising notices in relevant places, such as near the
+air-conditioning temperature control panels and switch panels.
+Electricity and water are the main resources consumed in our offices and operations. A unified, refined online
+system manages data of both energy and resources consumption and waste treatment in our offices across the
+country, to improve the efficiency of our environmental management.
+Creating Green Offices
+We strictly observe relevant laws and regulations, such as the Environmental Protection Law of the People's
+Republic of China and the Energy Conservation Law of the People's Republic of China. An Environment, Health and
+Safety (hereinafter referred to as “EHS”) working group manages our environmental affairs and authorizes directors
+of relevant departments to supervise environmental matters. They promote environmental management in daily
+operations and controls risks, so as to reduce our environmental impact on the environment.
+Practicing Green Operations
+We have realised that our business will have environmental impacts. To improve the environmental performance
+of our operations, we identified the major environmental challenges we face. We review our major business
+procedures to reduce our negative impacts on the environment, enhance environmental protection capability across
+the industry, and improve our overall performance of environmental protection.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+ENVIRONMENT
+2
+16.67%
+Total greenhouse gas (GHG) emissions (tonnes)
+Non-management
+100,004
+Full-time
+100,033
+Contractors and other types
+492
+Total turnover rate
+Employee turnover rate by gender
+Employee turnover rate by age group
+24.03%
+Male
+Female
+Age 30 and under
+Age 31 to 50
+25.07%
+22.29%
+28.04%
+18.92%
+Employee turnover rate by geographical region
+Above age 50
+The Mainland of China
+20.00%
+24.03%
+Hong Kong, Macao and Taiwan
+Other countries and regions
+521
+3
+8
+100,514
+We work closely with our business departments to promote talent development through the development of
+customized learning programmes, standardized learning products, and personalized learning programmes. We
+aim to provide employees with on-demand training regardless of location or time limitations. We have established
+a training framework to improve employee's management capabilities and professional skills. We continuously
+improve our employee training systems by developing courses on different topics, integrating various learning
+development programmes, improving course quality, and creating learning products that are suitable for employee
+development. At the same time, we carry out digital learning products and digital organisation guarantee
+mechanisms, and a series of digital training systems.
+Our face-to-face classes, online courses, and practical activities cover different roles, ranks, and development
+stages. For newly recruited employees, we provide online and offline training in various forms, aiming to improve
+their professional skills, help them better integrate into the workplace, become more competent for their positions,
+and seek their own career development directions. For example, we provide employees from campus recruitment
+with a three-year talent training plan covering company culture, management systems, business capabilities, etc., to
+help these employees achieve role transformation. For on-the-job employees, regular training on important laws and
+regulations is held to improve employees' legal awareness; special training on information security is carried out to
+enhance employees' awareness of information security. Employee's general workplace skills are learned and trained
+by adopting methods that are more in line with the learning habits of young employees. Based on work scenarios,
+we provide technical training for employees to improve their professional quality and professional ability. For
+management, step-by-step Leadership Echelon training is available to managers at different levels and is tailored to
+their abilities and characteristics. For example, we have launched the leadership training project "Prosperity Plan"
+and the management basic skills training project "New Tree Plan". Among them, “Prosperity Plan" through offline
+training, pre-training online learning, and post-training feedback follow-up help employees strengthen their overall
+understanding of the business and business thinking and improve their ability to formulate functional strategies,
+team building, and horizontal collabouration. The "New Tree Plan" aims to help managers understand the role of
+managers to have a clear development direction, and meet the key challenges of their current role. In addition, we
+have promoted the mentoring programme for front-line sales personnel. Through the combination of online and
+offline teaching methods, we have integrated the three-in-one teaching methods of "apprenticeship", "autonomous
+learning" and "mentoring" to help them better understand the Company's management process, be familiar with
+job-related responsibilities, and master professional knowledge and skills so as to carry out their work smoothly.
+Meituan 2021 Annual Report 137
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Workplace Performance Indicators
+Employment
+Indicators
+Total number of employees
+Number of employees by gender
+Number of employees by age group
+2021
+100,525
+0.00%
+Male
+Age 30 and under
+Age 31 to 50
+62,982
+37,543
+60,440
+40,068
+Above age 50
+17
+Number of employees by geographical region
+Number of employees by management level
+Number of employees by employment type
+The Mainland of China
+Hong Kong, Macao and Taiwan
+Other countries and regions
+Management
+Female
+We set up a talent development department covering all employees, focusing on the concept of "truth-seeking and
+pragmaticism", with a focus on "talent development”, “cultural heritage”, and “knowledge management" to create a
+talent development system that conforms to industry development and represents our characteristics. We continue
+to improve the training management mechanism and formulate internal management policies such as Internal
+Curriculum Management Policy and Internal Lecturers Management Policy, in order to standardize the planning,
+implementation, and management of training.
+Employee turnover rate = number of employee departure in the reporting year*2/(the number of employees at the
+beginning of the reporting year + the number of employees at the end of the reporting year).
+138 Meituan 2021 Annual Report
+99.8%
+Average training hours of employees by gender
+Male
+47.7
+Female
+36.8
+Average training hours of employees
+by management level
+SUPPLY CHAIN MANAGEMENT
+Management
+Non-management
+23.2
+43.7
+Our main suppliers are delivery partners and providers of products and services. Supply chain compliance
+management and stable business partnerships are important for our sustainable operation, and we urge partners to
+improve their environmental and social risk management.
+Management of Supplier Compliance
+We have enhanced our procurement management and set up the Purchasing Compliance and Code of
+Conduct, Code of Conduct for Meituan Employees & Suppliers, Code of Conduct for Business Communication
+of Procurement Management Department, Communication Guidelines for "Separated Employees" Associated
+Partners. We have also identified and managed key segments by introducing the Purchasing Demand Management
+Process, Purchasing Source Management Process, Supplier Management Process, Bidding Management
+Specification, Procurement Contract and Order Management Process, and Purchase Acceptance Management
+Process. We have formed a standardized management system that covers the whole procurement process,
+activities and the procurement of all categories.
+Meituan 2021 Annual Report 139
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Before official engagement, we require all suppliers to complete real-name authentication, and sign and abide by
+terms concerning anti-corruption, confidentiality, and behaviour with integrity as stipulated in our Anti-Commercial
+Bribery Agreement, Confidentiality Agreement, and Commitment of Self-discipline. By the end of 2021, our 2,876
+newly added suppliers have completed the signing of the Anti-Commercial Bribery Agreement, Confidentiality
+Agreement, and Commitment of Self-discipline.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Through internal sharing and training, we upskill business capabilities of employees who are in the position of
+suppliers' management and advance the implementation of the management system and processes.
+Management of Supply Chain Environmental and Social Risks
+We pay attention to environmental and social risks in supplier onboarding and cooperation.
+We require suppliers to follow the standards we have established during the supplier onboarding process, they will
+need to provide qualifications and certification for relevant products or services as well as proof of no illegal records
+or misconduct by the supplier. We will further evaluate the integrity profile of suppliers by inquiring the corporate
+credit information publicity system and conducting on-site inspections and regular audits against key suppliers.
+We require suppliers of specific categories to meet the qualification requirements of environmental management
+or occupational health and safety management systems and verify the authenticity and accuracy of information
+about suppliers. To further minimize environmental and social risks, we have set up a supplier management team
+and introduced third-party on-site inspections for key suppliers, including on-site risk evaluation and information
+verification.
+We manage and track suppliers' performance to continuously update the evaluation of their professional services
+during their performing contracts. Qualified suppliers are listed on our database, and all suppliers listed in the
+database have passed the supplier onboarding audit. If a supplier terminates its operation owing to environmental
+and social risks or problems, a back-up supplier would be activated to ensure that products or services are
+delivered on time.
+Non-management
+100.0%
+Management
+by management level
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Health and Safety
+Indicators
+Number of work-related fatalities
+Rate of work-related fatality (%)
+2021
+2020
+2019
+0
+0
+0
+0
+The number of employees leaving the Company refers to the number of employees who resigned voluntarily. The
+number does not include employees leaving during their probation period.
+0
+The number of working days lost due to work injuries in 2021 was 7,958 days.
+The data of occupational health and safety-related deaths and injuries due to work is identified by the Human
+Resources and Social Security Bureau. The rate of work-related fatality number of work-related fatalities/total
+number of employees.
+Employee Training
+=
+Indicators
+2021
+Percentage of employees trained by gender
+Male
+99.9%
+Female
+99.8%
+Percentage of employees trained
+0
+Employee Training and Development
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+136 Meituan 2021 Annual Report
+3,302.94
+0.08
+2021
+102,155.43
+3
+4
+5
+6
+Due to the Company's business nature, the significant emissions of the Company are GHG emissions, arising mainly from
+the use of electricity generated by fossil fuels.
+GHG emissions include carbon dioxide, methane and nitrous oxide. GHG emissions data is presented in carbon dioxide
+equivalent and calculated based on the 2019 Baseline Emission Factors for Regional Power Grids in China for CDM and
+CCER issued by the Ministry of Ecology and Environment and the 2006 IPCC Guidelines for National Greenhouse Gas
+Inventories issued by the Intergovernmental Panel on Climate Change.
+The Company's hazardous wastes mainly contain waste fluorescent tubes, toner cartridges and ink cartridges from offices,
+which are disposed of by qualified institutions. In 2021, the actual hazardous waste per employee in the HQ offices was
+0.000003 tonnes, and the actual hazardous waste per employee in regional offices was 0.00007 tonnes. The data listed in
+the table above is rounded to two decimal places.
+The Company's non-hazardous wastes mainly include domestic wastes and waste electronic equipment from various types
+of offices. Domestic wastes mainly include office wastes, which are handled by the property management companies, and
+we calculate such wastes according to the First National Census on Pollution Sources - Manual for Waste Generation and
+Discharge Coefficients in Urban Households published by the State Council of the PRC. Waste electrical equipment are
+handed to professional institutions for harmless disposal and recycling.
+Meituan 2021 Annual Report 131
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Energy and Resources Consumption7, 8, 9
+HQ offices
+Total energy consumption (MWh)
+2021
+30,047.24
+Total energy consumption per employee (MWh per employee)
+0.64
+Total energy consumption per square metre floor area (MWh per square metre)
+0.08
+Running water consumption (tonnes)
+331,942.00
+0.00
+2.59
+0.02
+0.15
+Emissions 3, 4, 5, 6
+HQ offices
+Total GHG emissions per employee in office (tonnes per employee)
+Total GHG emissions per square metre floor area of the office (tonnes per square metre)
+Total hazardous waste (tonnes)
+Hazardous waste per employee (tonnes per employee)
+Total nonhazardous waste (tonnes)
+Nonhazardous waste per employee (tonnes per employee)
+Regional sales offices
+Total greenhouse gas (GHG) emissions (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+Total GHG emissions per square metre floor area of the office (tonnes per square metre)
+Total hazardous waste (tonnes)
+Hazardous waste per employee (tonnes per employee)
+Running water consumption per employee (tonnes/per employee)
+Total nonhazardous waste (tonnes)
+Warehouses and service stations
+Total greenhouse gas (GHG) emissions (tonnes)
+2021
+20,097.91
+0.43
+0.05
+0.15
+0.00
+4,120.94
+0.09
+2021
+5,721.03
+Nonhazardous waste per employee (tonnes per employee)
+7.17
+Regional sales offices
+2021
+Labour Standards
+We have formulated the Attendance Management Policy, Employee Separation Policy, and Integrity Workplace
+Code of Conduct to protect the legitimate rights and interests of our employees. We avoid child labour by verifying
+the identification of candidates before employment, and we have a record of zero illegal employment incidents such
+as child labour since the establishment of the Company. We respect the willingness of employees at all stages of
+employment, to ensure that employees participate in work on a voluntary basis and avoid forced labour. We have
+formulated an internal management system in accordance with the requirements of relevant laws and regulations,
+clarifying the remedial measures that should be implemented when child labour and forced labour occurred. We are
+committed to avoiding the occurrence of employment-related violations.
+Meituan 2021 Annual Report 133
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Compensation and Benefits
+We offer competitive salaries and performance-based incentives to all employees. Moreover, we continue to grant
+share-based incentives to motivate our core positions and employees who have contributed to our corporate's
+long-term growth and development, making their interests are consistent with the interests of shareholders. For
+more details, please refer to the chapter "Report of Directors - Post-IPO Share Option Scheme” in this annual
+report.
+We provide social insurance and housing fund for employees in line with the law, and we also provide commercial
+insurance and various subsidies including accident insurance, life insurance, and supplementary medical insurance.
+We establish Kind Fund, including Kind Loans, Serious Illness Care, Death Grants, Special Occasions Solatium and
+Emergency Fund and carried out Kind Fund Management Policy to help employees and their families in need.
+Promotion and Development
+We established a position ranking and incentive system, and formulated policies such as the Performance
+Management Policy, the Position Ranking Management Policy and the Position Ranking Review Plan, to improve
+the process of performance review, standardize the position management system, and set a clear path for
+promotion. Through the position ranking and incentive system, we are able to help employees with their capacity
+building focusing on what their positions require.
+We have set up several professional committees composed of our internal experts to establish the Company's
+professional talent standards. Based on the standard, we provide employees with a variety of training content,
+promote experience sharing, and support the professional growth of employees. At the same time, we encourage
+employees to pursue their own career paths that meet personal interests and aim to unleash employees' potential.
+We evaluate our employees' performances in an objective and fair manner and help them develop their capability
+and career through performance management. We review the employees based on their values, performance
+contribution, leadership and professional competence. Employees who make outstanding contributions enjoy fast
+promotions. Prior to the review, employees can participate in training to understand the promotion criteria and
+processes. At the same time, we have an internal supervision mechanism for the promotion process. Employees
+can make suggestions on their promotion-related matters or give feedback on discovered violations.
+134 Meituan 2021 Annual Report
+We strictly abide by relevant laws and regulations when it comes to employee separation. We formulated Employee
+Separation Policy, a standardized procedure to protect employee's rights during the separation process.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Our Attendance Management Policy, Holiday Management Policy, and other policies manage the working hours of
+employees with a certain flexibility and provide employees with holidays such as statutory annual leave, additional
+leave, and full-pay sick leave.
+We offer recreational facilities including gyms and libraries and hold online and offline activities during festivals such
+as International Women's Day, World Teachers' Day, Spring Festival, and Mid-Autumn Festival. In 2021, we held
+the first "Meituan Family Day" event to improve employees' and their families' understanding of the Company and
+enhance employee cohesion. We have over 40 culture and sports clubs, where employees are free to join various
+clubs and participate in employee activities. We also established "Warmth Classes" on the theme of "body" and
+"mind", in order to protect the physical and mental health of our employees.
+Communication
+We have a variety of internal channels, such as internal topic community, social platforms, HR helpdesk, and
+communication sessions, to encourage employees to set up connections with others and aim to create an open
+and equal working environment. We listen and respond to employees' suggestions and feedback in a timely manner
+to better understand employees' demands and their working experience. We also proactively communicate and
+explain the general concerns of employees through online and offline channels.
+We have introduced the Measures on Releasing Institutional Policies, built a platform to release such policies, and
+strengthened democratic management of the institutional process. Before the official release of major policies that
+are directly relevant to employee interests, we conduct research and interviews with staff, so as to protect their
+rights.
+Occupational Health and Safety
+We provide a safe working environment for our employees. We abide by the Labour Law of the People's Republic
+of China, the Work Safety Law of the People's Republic of China, the Fire Protection Law of the People's Republic
+of China, and other laws and regulations concerning occupational health and safety and fire prevention.
+Meituan 2021 Annual Report 135
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We established internal policies including the Administrative Measures for Access Control of Office Areas, Fire
+Safety Management Policy of Meituan, and No Smoking Management Policy in Office Area to bolster our safety
+management. Some of our workplaces have obtained ISO 45001 occupational health and safety management
+system certification. We set up an EHS working group, and appointed safety specialists to facilitate the workplace
+safety risk identification, operation control, compliance evaluation, and internal audit, and strengthen enterprise
+safety management through the closed-loop management of “planning-implementation-inspection-improvement"
+to reduce safety risks. Measures safeguarding workplace safety include: (i) setting up a 24-hour Security Operations
+Centre to respond to emergency needs and remotely monitor potential risks; (ii) setting up the Company's first aid
+system, formulating first aid response procedures, and establishing a three-level response strategy composed of
+security personnel, health cabins, and employee volunteers; (iii) building an emergency response team and forming
+a team of certified emergency lecturers. In 2021, a total of 505 people have finished the certification training; (iv)
+Increasing the automated external defibrillators (AED) installed in the workplace, at present, all headquarters and
+regional workplaces with more than 300 people have achieved full coverage of AED to ensure the demand for
+first aid equipment in emergency situations; (v) setting up an office security system to manage the entry and exit
+of employees in working areas; (vi) for offices, conducting regular fire safety inspections in offices and rectifying
+identified hazards; for warehouse, improving the warehouse operation environment, formulating warehouse
+operation safety manuals, standardizing the use of warehouse equipment, timely discovering and rectifying
+potential safety hazards, and organising personnel to supervise warehouse operation safety manuals on-site; and
+(vii) carrying out security training and exercises covering all employees by combining online first aid courses and
+offline skills popularization courses to enhance employees' work safety and fire safety awareness; for, carrying out
+special traffic safety training for sales personnel to publicize and implement the concept of road safety. Also, we
+have established an emergency process to ensure the timely and compliant handling of accidental injuries.
+We care about our employees' physical and mental health. We manage the testing of air quality, drinking water,
+and lighting in our workplace to provide a comfortable working environment for our employees. Consulting services
+and basic medicines are available at health stations in some offices. We provide annual physical examinations and
+medical reports interpretations and host irregular health lectures to raise health awareness. We have an Employee
+Assistance Programme (EAP) and partner with external organisations to provide a mental health hotline and regular
+mental health training sessions to reduce employees' stress.
+During the COVID-19 pandemic (hereinafter referred to as the "pandemic"), we have carried out regular prevention
+and pandemic control management and adopted a variety of pandemic prevention and control measures to
+reduce the risk of infection. We installed devices to measure body temperature at all workplaces and provided
+masks and other disease prevention equipment. We established a daily reporting system to collect information on
+employees' physical conditions. Nucleic acid testing was arranged for employees, and abnormalities were treated
+in a timely manner. In 2021, we organised multiple in-home vaccinations for employees and stopped office visits in
+cities with high pandemic risks. At the same time, our access control system is connected with the national health
+code system, so as to know the abnormal pandemic situation in advance and prevent non-green code personnel
+from entering the office. All our offices have complied with the requirements of the local government to prevent
+the pandemic by carrying out office disinfection work and strengthening the regular management of workplace
+pandemic prevention.
+Work-Life Balance
+Green Procurement
+During the interview process, we check candidates' working experience and skills, which enables us to employ
+qualified candidates who meet job requirements.
+Recruitment and Separation
+Total energy consumption (MWh)
+9,751.47
+Total energy consumption per employee (MWh per employee)
+0.26
+Total energy consumption per square metre floor area (MWh per square metre)
+0.04
+Running water consumption (tonnes)
+53,644.29
+Running water consumption per employee (tonnes per employee)
+3.54
+Warehouses and service stations
+Total energy consumption (MWh)
+We recruit candidates who match the positions the most, and we treat different races, ethnicities, genders, ages,
+and religious beliefs equally, to ensure that admission and development opportunities are accessible to all. We
+issued Job Posting Policy, to standardize and better manage recruitment and prevent the use of discriminatory
+words or other statements in breach of the spirit of equal opportunity in job descriptions. In 2021, we issued the
+Employee Recruitment and Selection Policy to specify possible discrimination behaviours and relevant disciplinary
+penalties. We continue to optimise the recruitment process, to ensure our policies instill both equality and diversity
+and guarantee compliance by organising recruitment training and conducting regular reviews.
+Running water consumption (tonnes)
+172,000.15
+1,003,522.59
+7 Electricity costs of some offices, warehouses and service stations are included in property management fees. Electricity
+consumption cannot be counted separately and is not included in the total energy consumption.
+8
+9
+The water resources used by the Company come from municipal water supply and there were no concerns in sourcing
+water. Water fees of some of the offices, warehouses and service stations are included in property fees, therefore water
+consumption cannot be counted separately and is not included in running water consumption.
+In 2021, we conducted research on the statistics of packaging materials used for finished products. The Company does
+not participate in the production process and has no finished products, therefore this indicator is not applicable to the
+Company.
+132 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+WORKPLACE
+Employees are our greatest assets. We are striving to build a comfortable and harmonious workplace, to ensure
+equal opportunities, to protect employees' rights, to provide competitive compensation and benefits that match
+employees' capabilities, and to ensure there are sufficient resources and opportunities for learning. For more
+information, please refer to the chapter "Management Discussion and Analysis - Employees" in this annual report.
+Employment and Labour Standards
+To protect employees' legitimate rights and prevent child labour and forced labour, we abide by relevant laws and
+regulations, including the Labour Law of the People's Republic of China, the Labour Contract Law of the People's
+Republic of China, the Social Insurance Law of the People's Republic of China, the Law of the People's Republic of
+China on the Protection of Women's Rights and Interests, the Labour Protection Regulations for Women Workers
+and the Labour Protection Regulations for Juvenile Workers. We have established internal policies and standardized
+procedures regarding recruitment, separation, compensation, benefits, performance review, and promotion, in
+accordance with the measures described below.
+2021
+We regard the responsibility of environmental protection in the procurement of products and services. In 2021,
+the Company invested more than RMB100 million in actively promoting the application of environmentally
+friendly material packaging bags such as fully biodegradable shopping bags, non-woven shopping bags, and
+environmentally friendly paper bags in the Company's business lines. At the same time, we evaluate energy
+consumption level when newly renting data centre, requiring data centre we rented meet the PUE≤1.3 standards.
+Suppliers can report any corruption-related issues during business cooperation to us via a questionnaire inserted
+in the procurement system. We regularly review suppliers and set up an operational mechanism of supplier
+blacklist for centralized procurement. If a violation committed by a supplier is substantiated, cooperation would be
+suspended and the supplier's credentials would be canceled.
+130 Meituan 2021 Annual Report
+During the pandemic, we have adopted timely measures to reduce health and safety risks for delivery couriers:
+(i) disinfecting and monitoring delivery sites across the country, with delivery boxes sterilized in mornings and
+evenings; (ii) launching contactless delivery, releasing Specifications on Contactless Restaurant Services, piloting
+unmanned delivery and providing smart food cabinets in some cities, to reduce the risk of cross-infection between
+clients and delivery couriers; (iii) bolstering protection for delivery couriers by establishing records of their health,
+and requesting them to check their temperature, wear a mask, report health conditions daily and accept random
+inspections. If abnormal symptoms were found, the delivery couriers concerned would stop work immediately and
+be referred to hospital for treatment; (iv) making transparent health information connection between merchants
+and delivery couriers through health cards and other aspects delivery courier; (v) educating delivery couriers about
+disease prevention and control, to improve delivery couriers' knowledge of disease prevention, distributing the
+Manual on Psychological Protection of Delivery Couriers Amidst the Pandemic and, during the pandemic, offering
+psychological consulting; and (vi) providing free protection and subsidy solutions for tests, screening of suspected
+cases, quarantine, confirmation, and treatment. Life and care funds, compensation, and security subsidies were
+also offered to delivery couriers' family members infected by COVID-19.
+142 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In addition to measures ensuring delivery couriers' safety, we continue to deliver care to the delivery courier
+community in many aspects. We held activities such as "Talk With the Delivery Couriers" to enhance the
+communication with delivery couriers and respond to their expectations and concerns. Since 2020, we have
+initiated the "Tongzhou Project" in response to delivery couriers' feedback and improved delivery couriers'
+experience from four perspectives, namely, the guarantee of work, experience improvement, career development,
+and life care. Specific measures include: (i) implementing the delivery courier's complaint mechanism by sorting
+out delivery overtime related complaints caused by more than 30 special scenarios such as "unable to contact
+the user", which allows delivery couriers to eliminate the negative impact of the complaints; (ii) optimising the
+delivery algorithm by collecting opinions and suggestions from stakeholders including delivery couriers and external
+experts and conducting user surveys in some cities. In 2021, we have announced twice regarding delivery couriers
+distribution algorithm to the society, thereby actively promoting the transparency of algorithm; (iii) continuously
+improving the delivery courier training and development system, and introducing various knowledge and skills
+training covering topics of daily life and work. We have started the delivery courier "Stationmaster Training Plan"
+and "Delivery Courier Transfer Plan" to help delivery couriers set long-term and stable career development paths
+while providing more career directions that meet delivery couriers' personal interests; meanwhile, we support
+delivery couriers who are willing to receive better development to increase education levels by funding them to
+prepare for university programmes. We also managed to collabourate with the Open University of China, so that
+qualified delivery couriers can receive full scholarships equivalent to annual tuition fees in order to obtain junior
+college degrees. (iv) Since 2018, holding the 717 Delivery Couriers' Day for four consecutive years, and organising
+other activities such as the National Delivery Couriers' Basketball League, the Mobile Game Challenge, and the Site
+Get-Together to strengthen delivery couriers' sense of professional identity; (v) launching the "Tongzhou Guardian"
+1 m² self-service health area, which integrates functions such as delivery couriers' health promotion, service
+guidelines, service applications, feedback, and equipment and medical supplies display to help delivery couriers
+acquire proper health support; (vi) setting up food delivery courier's mental health counseling hotline and mental
+health mini-classes, helping them relieve pressure and negative emotions in their daily work and life and maintain
+a positive and optimistic mindset, in a scientific and comprehensive manner; (vii) providing 7*24 hours online
+health counseling and drug-delivery services for delivery couriers and their families. Delivery couriers can acquire
+free consultation from doctors or pharmacists through the delivery couriers' App and receive monthly allowances
+for medicine purchase so as to reduce their medical expenses and associated pressure; (viii) setting up a serious
+illness care fund to assist the families of delivery couriers who suffer from serious illnesses. From the launch of
+serious illness care in 2019 to the end of 2021, a total of 374 delivery couriers and 1,015 delivery couriers' families
+have been assisted, with a total of RMB67.518 million has been distributed, providing effective help for the delivery
+courier's family to tide over the difficulties; and (ix) the Meituan Public Welfare Foundation continuously promoting
+the "Daishu Baby Public Welfare Programme" to help delivery couriers across the industry resolve dilemmas related
+to delivery couriers' children who may suffer from serious illnesses, accidental injuries, and other difficult situations.
+In 2021, the "Daishu Baby Public Welfare Programme" has been upgraded, families with severe diseases can now
+receive up to RMB100,000 in assistance. At the same time, we established the industry's first free ward school for
+delivery couriers' children (Daishu Babies) in Yanjiao, Beijing, providing free fundamental education for food delivery
+couriers' children. By the end of 2021, we have assisted 296 children from industry-wide food delivery couriers and
+provided emergency medical assistance equivalent to about RMB10.487 million.
+Meituan 2021 Annual Report 143
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+PRODUCT RESPONSIBILITY
+Platform Responsibility
+We are committed to becoming China's leading e-commerce platform for life services. Our platform uses
+technology to connect consumers and merchants and provide consumers with a variety of daily-life services,
+including food delivery, in-store, hotel & travel, and new initiatives and others. We abide by the Law of the People's
+Republic of China on the Protection of Consumer Rights and Interests to protect the legitimate rights and interests
+of consumers and value the quality of products and services of platform merchants. In accordance with the relevant
+requirements of the E-Commerce Law of the People's Republic of China and the Measures for the Supervision
+and Administration of Food Safety in Online Catering Services and other laws and regulations, we review the
+qualifications of merchants and check the accuracy of their qualifications and service descriptions.
+Safety Guarantees
+Food Safety
+We attach great importance to food safety. In accordance with the Food Safety Law of the People's Republic
+of China, the Regulation on the Implementation of the Food Safety Law of the People's Republic of China, the
+Measures for the Supervision and Administration of Food Safety in Online Catering Services, the Measures for the
+Investigation and Punishment of Illegal Acts Related to Online Food Safety and other laws and regulations, we are
+responsible for the supervision and review of the merchants on our platform, as well as our retail businesses. We
+have established food recall management measures, formulated a management process for the recall and disposal
+of unsafe food. We have clarified the recall procedures for unsafe food, including suspension, sealing, recall, and
+service termination process of non-compliant merchants. We did not have any significant health and safety-related
+recalls during the year.
+We continuously enhance our organisational capacity on food safety and human resource guarantee. At the
+Company level, we have established Food Safety Committee and food safety office to take the responsibilities
+of formulating strategies, building competence on food safety, interpreting laws and regulations with further
+implementations, coordinating departments to ensure food safety, setting external food safety cooperation,
+thereby achieving efficient cooperation of the management of food safety. At the business line level, we have
+comprehensively improved our organisational personnel structure and set a quality control team to undertake
+qualification examination of cooperative merchants, supplier's admittance management, fresh agricultural products
+warehousing, in-stock management, and other responsibilities. We actively fulfill the responsibility of food safety,
+take the initiative to carry out food safety assessment, prevention, and sampling inspection, to ensure the food
+safety of commodities and food products sold. For cases of food safety emergencies, we have established an
+emergency response system and clearly defined the procedures and measures. We cooperate with relevant
+food safety supervision and related authorities to ensure proper emergency handling. We implement appropriate
+treatment measures according to the specific situation, in accordance with food safety laws and regulations and
+platform rules.
+144 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We have implemented measures to reduce safety risks and protect labour rights during delivery service of delivery
+couriers, including: (i) continuously optimising the order dispatch system to rationalize the delivery time limit and
+route settings, and setting flexible delivery time for delivery couriers. Offering complaints panel for delivery couriers
+to extend the delivery time limit for special scenarios such as severe weather and delayed meals to improve delivery
+safety; (ii) piloting “Anti-fatigue” reminders and dispatch interventions to implement the delivery courier's "stop
+dispatching for 20 minutes when continuous delivery for 4 hours" requirement to ensure delivery couriers have
+enough time to rest; (iii) upgrading software and hardware for delivery couriers, including smart earphones, smart
+helmets, back-lights on helmets, voice control system, reinforcement gears, and upgraded reflective strips, etc. to
+reduce safety risks during operation and riding. At the same time, providing delivery couriers with windshield quilts,
+handlebar covers, leather knee pads and other cold-proof equipment and materials in freezing cold seasons; (iv)
+aggregating various safety and security measures related to delivery courier daily delivery, covering severe weather
+warning, delivery courier insurance checking, safety knowledge, emergency contact person, case reporting, etc. via
+online safety centre in the delivery couriers' order receiving App; (v) rolling out a charging and battery replacement
+network, providing a dense network of charging and replacement devices, and mitigating fire risks when delivery
+couriers charge bikes themselves; (vi) encouraging delivery partners to strengthen education and guidance of safety
+for delivery couriers and briefing delivery couriers on traffic safety, fire safety and emergency countermeasures;
+(vii) incorporating safety into delivery couriers' bonuses, ensuring them value safe delivery; and (viii) establishing
+a process to handle traffic accidents and safety incidents, and assigning full-time safety personnel to manage the
+process.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 141
+From two perspectives – supervision over delivery partners and care for delivery couriers - we have taken measures
+to ensure the safety and labour rights of delivery couriers. Delivery partners must have a compliant management
+system for traffic and fire safety and must conduct regular training regarding traffic rules, riding-related safety,
+emergency response, and dress codes. Evaluation standards must be set and delivery couriers may only work
+when they have passed an exam and are equipped with knowledge and skills related to traffic and cycling safety.
+We have established a centre to remotely monitor delivery partners, encourage them to upgrade their safety
+equipment. A mechanism to evaluate delivery partners' violations against safety policies has been put into place
+for implementation. Indicators are adjusted dynamically according to changes in the safety environment, e.g., the
+evaluation has incorporated indicators such as the rate of wearing masks and offline safety badges to strengthen
+safety management and supervision during the pandemic. In 2021, we proactively supported the regulatory
+authorities by developing policies on occupational injury protection for personnel. Depending on the types of
+delivery couriers, we required partners to purchase employer's liability insurance for delivery couriers or worked
+together with partners to launch personal accident insurance products for delivery couriers. The corresponding
+insurance products have been covered to all delivery couriers during their service and provided more protection for
+delivery couriers' personal and occupational safety.
+140 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Number of Suppliers
+Number of suppliers by region
+The Mainland of China
+Other Countries and Regions
+2021
+From the perspective of food delivery, internal policies such as the Food Safety Management Measures for
+Meituan Online Food Ordering, the Online Catering Service Provider Review and Registration Specifications and
+the Management Specifications for Fresh Goods of Meituan Food Delivery complete our food safety system. We
+establish evaluation standards and regularly evaluate the implementation of the food delivery safety management
+system, to identify risks and propose improvements. To objectively evaluate the safety performance of online
+merchants, and the safety status of disposable tableware, we engaged third parties to carry out sampling tests
+and verification for food delivery and disposable tableware. Together with the China Cuisine Association, the Same
+City Real-time Logistics Branch of China Federation of Logistics & Purchasing (CFLP), and industry partners we
+jointly formulated China's first group standard for the Management of Intelligent Takeaway Cabinet, focusing on the
+function, quality, location, operation requirements, and food safety management of the cabinet, so as to improve
+the standardization level of the delivery performance process. We keep optimising our offline food safety inspection
+mechanisms to help and guide merchants to continuously improve the food safety management. We continue
+to explore and promote "consuming delivered food with rest assured" and measures of food safety guarantee to
+increase customers' level of satisfaction and to protect their rights.
+26,728
+9
+"Number of Suppliers" refers to the number of suppliers maintained in the supplier management system as of
+December 31, 2021. "Region" refers to the place where the suppliers are registered.
+Management and Protection of Delivery Couriers
+Our platform requires a large number of delivery personnel (referred to as "delivery couriers") to assist in the
+services. These delivery couriers who obtain job opportunities through our platform represent a new form of
+employment. The safety and rights of delivery couriers are an important part of our supply chain's social risk
+management and social responsibility fulfillment.
+Delivery partners may use our logo, provided they comply with contracted operation and delivery standards. We
+require our partners to comply with the requirements of relevant laws and regulations and set recruitment standards
+for delivery couriers and supervise delivery couriers according to our criteria to protect the labour rights of the
+delivery couriers. We conduct facial recognition tests and other safety mechanisms to confirm delivery couriers'
+identities and ensure the safety of our service.
+We abide by the Work Safety Law of the People's Republic of China and other relevant laws and regulations. We
+continuously update and improve the distribution safety management mechanism, promote production safety
+standardization and informatization process in the distribution business, build a safety risk classification control and
+hidden danger investigation and management mechanism, and earnestly fulfill the production safety obligations of
+platform enterprises.
+-
+8
+From the perspective of retail food, we strengthen the development and implementation of our food safety
+management system. We formulate and improve food safety management systems, including stock inspection,
+commodity admittance management, on-site audit for suppliers, third-party inspection, warehousing acceptance
+examination, and cold-chain control for imported food products. In the supplier and commodity entering stage,
+we will check several qualification materials, including business licence, food production and operation licence,
+commodity qualification certificate, etc. For food suppliers with large purchases and sales of aquatic products,
+fruits, vegetables, etc., we will proceed with on-site inspections and random inspections to strengthen the control
+and supervision of the upstream supply chain. In the process of commodity storage, we have carried out the
+sensory inspection of commodities and the rapid detection of high-risk fresh agricultural products by establishing a
+rapid assessment labouratory. In terms of food safety risk identification, through cooperation with third-party testing
+agencies, we regularly perform special food safety sampling assessments, use a digital approach to monitor the
+food safety performance of the commodities, and take timely control measures for unqualified products.
+Hong Kong, Macau, and Taiwan
+From the perspective of self-operated food, we have established a quality control team and formulated the
+Guidelines for Food Safety Management and Control of Self-operated Brand Commodities and Food to clarify
+our responsibilities and requirements. Our updated, self-operated system covers supplier access, warehouse
+acceptance, shelf storage, warehouse storage, transportation and distribution, and complaint handling. In
+conjunction with third-party testers, we conduct regular sampling on self-operated food. This enhances safety and
+improves the management of suppliers.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We have established a merchant platform training system, and regularly organise the merchant community to
+participate in training courses through online and offline training methods. We invite industry experts to give
+lectures to promote knowledge and enhance merchant service awareness. For example, we helped local market
+supervision agencies by carrying out the "Safe 365" food safety public welfare training programme. We invited 10
+well-known experts in the industry, carried out 100 online training sessions in 146 cities in 21 provinces across
+the country. Over 2 million catering practitioners were benefited from the "Safe 365” programme. We enhance
+the business awareness of compliance and food safety knowledge and create a safe and secure consumption
+environment for consumers. At the same time, we provide a platform for merchants to carry out industry experience
+sharing and learning. Merchants could share cutting-edge industry information and opinions in the form of offline
+summits, forums, salons, and data seminars, improving the quality of merchant services, thereby promoting the
+common development of the industry.
+We supervise and assess platform merchants' quality of service and take appropriate actions in the event of
+violations such as service non-performance and false advertising. We have established a strict control system and
+a systematic violation handling process in accordance with it, so as to standardize the behaviour of merchants
+and safeguard consumers' rights and interests, by way of warnings, adjusting search results, obscuring ratings, or
+suspending businesses and stores, according to the severity of the violation.
+The pandemic has pressed the “pause button" for the development of the catering industry, nonetheless also pressed
+the "acceleration button" for catering merchants who embrace digital transformation. In order to support small-,
+medium-, and micro-sized merchants, Meituan Food Delivery has launched a series of initiatives and free tools to
+help small and medium-sized enterprises improve their online business capabilities and meal efficiency, increase
+the number of orders, and effectively increase their income. For example, we launched the "Food Delivery Butler
+Service" and continued to invest resources and subsidies to work with professional food delivery operators in the
+industry to provide a full range of food delivery operation services for small-, medium-, and micro-sized businesses
+to help merchants quickly grasp the essentials of online operation. Moreover, we provide free food delivery cloud
+printers for newly launched small and medium-sized catering merchants in high-risk areas of the pandemic, and
+distribute "Chucanbao" (an electronic hardware of Meituan) to small and medium-sized catering merchants with
+difficulties in operation across the country, helping catering merchants save costs while solving business problems
+such as wrong orders, lost orders, and conflicts in food delivery. In addition, we provide special traffic support to
+new small- and medium-sized catering merchants to help these less-experienced new merchants thrive in the food
+delivery business.
+Customer Service
+We constantly strive to improve customer satisfaction by providing high-quality customer service. We set up
+operation centres in Shijiazhuang, Yangzhou, Nantong, and Wuhan with professional service teams. We practice
+smart customer service, equipping teams with intelligent assistance that can quickly answer high-frequency and
+repetitive questions, handle standardized tasks automatically, conduct batch processing to address unexpected
+business peaks, and improve our efficiency of customer problem handling. At the same time, we quickly identify
+possible service problems and improve the customer service management efficiency by using the intelligent quality
+inspection system.
+Meituan 2021 Annual Report 149
+148 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We provide customer service personnel with flexibility and authority so that they can deal with different situations
+and hence provide better service and experience for customers. For example, if we receive complaints about a
+merchant refusing to serve a customer, once these complaints are confirmed, personnel could be authorized to
+suspend the merchant from the platform until the rectification is completed.
+By soliciting feedback through questionnaires, we identify and analyse reasons for consumer dissatisfaction and
+areas that require improvements.
+Since 2018, for the third consecutive year, we have won the CCM World Group's Golden Headset championship, which
+rates "China's Best Customer Service Centres". Based on the award judging rules, as a member of the “ Group's Golden
+Headset❞ Directors Club, we will permanently retain the Group's Golden Headset.
+Intellectual Property Rights
+We emphasize the importance of respecting and protecting intellectual property rights (IPR) and focus on their
+application and accumulation. We protect our IPR in accordance with the Copyright Law of the People's Republic
+of China, the Patent Law of the People's Republic of China, the Trademark Law of the People's Republic of China,
+and other relevant laws and regulations in China and the other jurisdictions where we operate.
+We have established effective mechanisms to control intellectual property risks, including (i) systematically
+identifying and evaluating intellectual property risks, making response plans, and improving prevention mechanisms;
+(ii) establishing evaluation procedures in key businesses, including pre-examination rules for IPR in procurement,
+R&D and trademark reviews during new brand design, and the determining of IPR for major projects; (iii) monitoring
+and cracking down external infringements by cleaning up fake trademarks and applications, to enhance the integrity
+of the market and protect the interest of users; (iv) enhancing our resilience against risk through external exchanges
+and cooperation, which helps create a safer domestic and international environment for business development; and
+(v) improving intellectual property operation guidelines across all businesses and undertaking ongoing training and
+publicity to raise business departments' awareness of IPR risks.
+From the perspective of Community E-Commerce Food, we, in collabourate with the China Chain Management &
+Franchise Association (CCFA) and industry partners, have formulated several food safety group standards such
+as Guidelines for Food Safety Control of Community E-Commerce Merchants Entering and Guidelines for Food
+Safety Control of Community E-Commerce Stores for key components in the community group buying scenario,
+so as to promote the formalization and standardization of food safety management in community e-commerce
+formats and promote the development of industry in a disciplined manner. We have launched a food safety science
+popularization project for the central warehouse, grid warehouse, and self-pickup point of community e-commerce
+and have continuously improved the food safety awareness and capability of personnel in all stages.
+We timely check and respond to customers' feedback and demands through different ways, including online
+customer service, telephone, WeChat, email, and public opinion monitoring. We continue to improve and
+standardize the customer complaint problem-solving process, clarify the internal responsible party for each
+procedure from problem initiation, problem handling to problem resolution, and urge and follow up with the main
+responsible party for problem resolution and feedback.
+We guide merchants to provide safe, healthy, and convenient products and services to consumers. We undertook
+multiple projects to standardize the quality of merchants to enhance consumers' experience. For example, for
+catering snacks, merchants and well-known catering snack chain brands have jointly formulated the group
+standard Operation Requirements for Snack Chain Enterprises in Digital Services of Catering. This standard was
+established by the China Hotel Association, aiming to guide chain enterprises of catering snacks to realise digital
+service and management and enhance service competitiveness. For hotel merchants, we worked with the China
+Hotel Association to implement the "Pandemic Prevention and Clean Project". The China Hotel Industry Pandemic
+Prevention and Self-discipline Convention sets out our standards for hotel hygiene and cleaning, again enabling
+users to make informed choices. For the ticket merchants of scenic spots, the "Elderly-Friendly Ticket Project"
+has been launched. Based on the operational difficulties of online ticket purchase for the elderly, we optimise the
+user interface, simplify the operating procedure and use intelligent methods to improve the operation, so as to help
+solve the problem of the elderly using intelligent systems and provide better service to the elderly. In addition, in
+the context of the normalization of domestic pandemic prevention, we assist scenic spots and the government by
+applying scientific and technological pandemic prevention. We helped to check the health status of tourists during
+the reservation and admission of the scenic spot to prevent people with abnormal health conditions from entering.
+We have optimised the allocation of materials and personnel resources, reduced the operating pressure in the
+scenic spot, and improved the accuracy and efficiency of pandemic prevention and control, thereby improving the
+tourist experience.
+We have a professional customer service team and a thorough procedure to resolve complaints from users. In
+2021, the total number of complaints we received from the users is 898,071 cases, which accounted for 14/10,000
+of the total number of services, and 97.2% of the complaints were resolved within 3 working days.
+Merchants Management
+Abiding by the Electronic Commerce Law of the People's Republic of China, the Tourism Law of the People's
+Republic of China and the Regulations on Travel Agencies, we have formulated rules and regulations for the
+management of merchants from various platforms: namely, Meituan Merchant Integrity Evaluation and Management
+Measures, the Policy on Merchant Integrity Management, Regulations for the Release of Merchant Information,
+Convention on Merchant Integrity and Management Measures, Specifications on Meituan Food Delivery
+Provider's Service, Management Measures for Meituan's Non-reception of Catering Merchants, Measures for the
+Administration of False Transactions by In-store Catering Merchants, Meituan's Regulations for the Release of Non-
+food Information, Management Measures for Contract Compliance Guarantee of In-store Merchants, Regulation
+on Meituan Alternative Accommodation Landlord's Integrity, Regulations for Ticket Supplier of Meituan In-store
+Business Group and Rules on Meituan Travel Merchants.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 145
+In 2021, we organised trainings for employees, delivery couriers, suppliers, and merchants to promote our food
+safety culture and enhance awareness and capability of food safety compliance. For employees, we conduct
+regular training of "Food Safety Lecture" where industry experts share instructive practices, regulations, and
+policies. For delivery couriers, they are regularly reminded of food safety and pandemic prevention requirements
+in the delivery process. For suppliers, we carry out regular special trainings to promote key points on food safety
+management. For merchants, we launch various columns such as "Safe Catering" where we send popular science
+articles and practical suggestions weekly.
+We actively participate in the social co-governance of food safety. We participated in the national "Food Safety
+Publicity Weeks" activity to jointly advocate food safety culture and promote good practices. We have signed
+food safety strategic cooperation agreements with market supervision departments to support the collabourative
+construction of food safety demonstrative districts and cities and explore government-enterprise cooperation
+food safety governance programmes. By strengthening government and business collabouration, we improve the
+comprehensive management on qualification examination prior to food safety related incidents, conduct accurate
+control during the incidents, and take rapid measures regarding problematic merchants after the incidents. In
+collabouration with market supervision departments, we explore the online exhibition of "Bright Kitchen and Stove"
+for catering merchants and continue to improve the food safety transparency of delivered food consumption. We
+continue to strengthen communication and cooperation with industry associations, universities, and scientific
+research institutions to explore collabourative governance schemes on food safety through seminars, research
+projects and joint training on food safety assurance in the fresh-food supply chain, promotion and implementation
+of national food safety standards training, delivered food safety governance, and annual appraisal of food safety
+legal events.
+146 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Ride Safety
+We maintain food safety management during emergencies and the pandemic. During the flood in Henan province,
+we, in collabouration with CCFA, invited experts from institutions such as the National Food Safety Threat and
+Risk Assessment Centre and the Kexin Food and Health Information Exchange Centre to jointly produce and issue
+graphic and video sessions such as the Guide to Resumption of Work after Flooding in Catering Stores. Using
+this guidance, we passed on key topics on post-flood catering food safety management to merchants through
+multiple media such as regulatory departments, social media, and online platforms. During the pandemic, while
+meeting the fundamental catering service demands of users, we innovate food safety products and services around
+key segments such as food safety and pandemic prevention, food delivery, and cold chain food management.
+Meanwhile, we joined market supervision bodies to carry out the "Safe 365" public welfare training programme on
+food safety to support catering businesses in pandemic prevention and control and food safety risk management.
+As the end of 2021, the "Safe 365” programme had carried out a total of 100 trainings in 21 provinces and 146
+cities covering approximately 2 million catering practitioners across the country. According to the situation of
+pandemic prevention and control, we formulate Guidelines for Disinfection of Imported Cold Chain Foods and
+Emergency Response Plan for Imported Cold Chain Foods to reduce risks in all procedures, protecting the safety of
+employees, merchants, delivery couriers, and users.
+We conduct daily management and monitoring of service quality and safety during the operation of online ride-
+sharing. Abiding by the Interim Measures for the Management of Online Taxi Booking Service, we conduct pilot
+online ride-sharing and information-matching. We and our service providers hold online ride-sharing licences in our
+areas of operation.
+In 2021, we upgraded the Rider-sharing Safety and Risk Management Committee to the Rider-sharing Risk and
+Integrity Management Committee. This enhanced the pre-control capacity of safety risks on the basis of rapid
+response and handling of incidents. We continue to consolidate our ability to manage and control safety risks
+in advance, and actively promote the timely identification and rectification of hidden risks. At the same time, we
+implement the responsibility of safety management, improve the safety management mechanism, and continuously
+improve the professional and standardized level of safety management.
+To regulate ride-sharing and ensure passenger safety, vehicles and drivers are registered and reviewed in
+accordance with supervising regulations. Vehicles participating in the ride-sharing service must conform to technical
+security standards. Drivers shall satisfy the requirements of driving experience, comply with safety operating rules,
+and have no record of a serious traffic violation, criminal offense, or violent crime.
+We manage and monitor service quality and safety during ride-sharing service. In 2021, we have taken several
+safety management measures, including: (i) continually conducting psychological health assessments, identifying
+drivers with high psychological risk, and taking timely countermeasures; (ii) continually providing online and offline
+pre-job training, daily training, and error correction training for drivers, plus daily safety publicity for passengers and
+partners; (iii) continually conducting facial recognition for drivers before daily operation; (iv) continually operating
+and optimising functions such as trip recording and one-click alarms, implementing a 24-hour security officer and
+customer service duty system, checking the daily safety service behaviour of drivers, and constructing a hazard
+inspection and processing mechanism; (v) developing pandemic prevention functions, verifying the implementation
+certificates of pandemic prevention measures uploaded by drivers and passengers, and responding to urban
+pandemic prevention work requirements; (vi) customizing and installing driving recorders, developing relevant App
+operation and maintenance tools and algorithm models, realising real-time identification and recording of abnormal
+conditions inside cars during service; (vii) carrying out safe product strategy scenarios and sand table exercises to
+optimise the response and disposal process of risk order monitoring; and (viii) establishing classifications for crisis
+events, strengthening cooperation with public security organisations, and enhancing guidelines for emergency
+disposal procedures.
+Meituan 2021 Annual Report 147
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We continually improve the safety management mechanism to enhance users' safety.
+We also value the safety management of the Meituan Bikes and Electric Mopeds sharing service. In 2021, we took
+a number of measures to ensure the safe use of shared bikes and electric mopeds, including: (i) strictly abiding
+by relevant national standards regarding the R&D and production of bikes and electric mopeds, such as the
+Technical Specifications for Safety of Electric Mopeds (GB17761-2018), to carry out vehicle qualification testing to
+ensure vehicle safety; (ii) ensuring availability of vehicles delivered through management methods such as failure
+identification, automatic off-line of malfunctioning vehicles, and overall vehicle maintenance; (iii) providing users
+with insurance products during vehicle use to guarantee their personal safety; (iv) cooperating with local traffic
+control departments to organise instructions on user riding safety, and launch the "User Online Academy" to
+improve users' awareness and skills of safe riding; (v) passing user real-name authentication, face certification and
+other technical means to prevent minors from riding. In 2021, no major accident was caused by quality flaws of
+shared bikes and electric mopeds.
+Violation Reporting and Inspection Mechanism
+We have undertaken an integrity index survey for five consecutive years since 2017 and examined factors including
+integrity perception, integrity attitude, integrity behaviour, and integrity system. We shared the results with the
+whole company.
+Our culture of integrity is promoted by a series of publicity activities. We have organised various forms of publicity
+activities to raise employees' awareness of gifts declaration this year. A total of more than 6,000 employees have
+participated in the activities and self-declared on receiving gifts.
+We emphasize training and assessment for positions with a high risk of corruption. For example, employees
+involved in procurement are trained in anti-bribery and “clean” procurement. tests for all staff in the procurement
+department raise their awareness of bribery and fraud risks.
+We coordinate all departments to promote the co-development of an integrity culture and continuously consolidate
+it. Integrity training and publicity are conducted for employees at different levels including the board of directors
+and senior management, and exams are designed to ensure understanding of our Integrity Workplace Code of
+Conduct. In 2021, we organised 827 sessions of integrity training or publicity activities with approximately 400
+professional lecturers. The participants totaled 108,720, including the Board members attending one specialized
+training session and managers attending 109 anti-corruption sessions. In 2021, 97.27% of the participants passed
+our annual integrity examination with one attempt.
+We adhere to the integrity concept of "making integrity one of the organisational capabilities and core
+competencies" and carry out a series of integrity culture development, including training, assessment, cultural
+publicity, and other forms.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Additionally, taking both the triadic model and the actual situation into account, we have built a multilateral risk
+management system covering all employees to reduce the risk of fraud. For details, please refer to the section
+of "Risk Management and Internal Control - Organisational Structure for Risk Management” in the Corporate
+Governance Report included in this annual report.
+Meituan 2021 Annual Report 155
+Our Integrity Committee, which takes the responsibility of defending Meituan's core values of integrity and honesty,
+sets "honest Meituan, honest eco-system, and honest industry" as its key objectives. It leads the Company in
+corruption investigation and handling, integrity culture development, and anti-corruption actions with fraud-
+prevention mechanism establishment by means of anti-fraud prevention, integrity communication, and fraud
+investigation. We implement a "triad" of prevention, investigation, and publicity to eradicate fraud. Adhering to our
+Framework of Integrity & Operational Mechanism of Integrity Committee, the Committee independently reports
+to the CEO and Board of Directors. The Committee's main responsibilities include: (i) formulating and amending
+our professional conduct system; (ii) building and continuously deepening our integrity culture; (iii) formulating
+and implementing strategies to identify and prevent risks; (iv) leading the investigation and handling of disciplinary
+breaches, and making qualitative decisions on major, difficult and complex cases; (v) accepting and adjudicating
+appeals from employees regarding disciplinary treatment; and (vi) formulating Reporting Platform, Investigation
+and Handling Platform, Adjudication Platform, Grievance Platform, Enforcement Platform, and Document and File
+Management Platform, and integrating abovementioned functions into the Case Investigation Platform. In 2021, the
+Committee investigated and responded to more than 30 major cases and transferred more than 40 people to the
+judicial process. Employees who violate disciplines are handled in accordance with the provisions of the Integrity
+Workplace Code of Conduct.
+In 2021, we revised the Integrity Workplace Code of Conduct, which stipulates the professional behaviour of
+employees, by further clarifying the Company's behavioural requirements to reflect the core value of "integrity".
+We issued the Integrity Management Responsibility Policy to clarify that managers are responsible for managing
+employee fraud-related incidents. We continuously optimise and update our internal policies, including Avoidance
+of Interest Conflicts & Integrity Declaration Policies, Prohibition of Private Agreements, Prohibition of Confidential
+Information Disclosure, and Management System of Receiving Gifts. These rules apply to all employees and
+provide basic guidelines for the development of integrity. We keep working through potential corruption risks
+involved across the internal and external communication of employees, monitoring fraud with full coverage and zero
+tolerance, and dealing with violations with serious actions in accordance with rules and regulations we formulated.
+Anti-fraud System and System Development
+We strictly adhere to the Anti-Unfair Competition Law of the People's Republic of China and other relevant laws
+and regulations. We continuously strengthen anti-fraud management, improve internal systems, and cultivate a
+culture of integrity to ensure the healthy development of the enterprise. Internally, we strive to create a decent and
+fair workplace environment, enhance the integrity awareness of all employees, and provide better products and
+services to customers. Externally, we create an open, transparent, and efficient cooperation environment to attract
+high-quality partners to work with us.
+Development of Integrity Culture
+Our Integrity Platform encourages employees to proactively declare receiving of gifts and conflicts of interest. We
+also accept employees' reports of violations of laws and commercial ethics through a whistle-blowing mechanism.
+A closed-loop management system integrates the acceptance of reports, investigation and inquiry, qualitative
+judgment, appeals, and penalties. Standardised clue operation is characterized by the way of "full coverage,
+no omissions, high efficiency, and mandatory feedback." We have protection systems for whistleblower their
+information to safeguard whistleblowers' legitimate rights and interests. Our Department of Integrity and Supervision
+accepts fraud reports and forms investigative teams. We establish an appeal and clarification mechanism to ensure
+the fairness and accuracy of the investigation. Employees found related to fraud are dismissed based on laws and
+regulations. Cases that violate national laws are referred to judicial authorities.
+We have set up a financial and legal compliance centre, clarifying the competent departments and responsibilities
+of anti-money laundering work, equipped with anti-money laundering compliance personnel, full-time personnel
+for suspicious transaction monitoring, anti-money laundering product designers and anti-money laundering system
+support teams, setting up anti-money laundering work departments in each branch, and continuously strengthening
+the professional building of anti-money laundering work teams.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+As one of the initiators and vice-chairmen of the strategic decision-making committee, we co-founded the Trust
+and Integrity Enterprise Alliance in 2017 and continue to participate in its anti-corruption actions. We issue anti-
+corruption announcements every year, which aim at sanctioning corruption, fraud, counterfeiting, breach of
+information security rules, and other criminal acts through Internet approaches, improve the anti-corruption
+governance level of alliance members and foster a community of integrity with our partners.
+In 2021, we received litigation results of 5 corruption cases. All 6 employees involved in the cases have been
+transferred to the public security authorities. The above persons were convicted of 2 non-state functionaries for
+accepting bribes and 4 for job embezzlement. They were each sentenced to prison terms ranging from 6 months to
+3 years. We have terminated labour relations with the above-mentioned employees by the Integrity Workplace Code
+of Conduct and established a case review mechanism to prevent the recurrence of similar cases. We believe that
+the cases have insignificant impacts on our businesses.
+Anti-Money Laundering and Counter-Terrorism Financing
+We abide by laws and regulations such as the Anti-Money Laundering Law of the People's Republic of China, the
+Measures for the Administration of the Reporting by Financial Institutions of Suspicious Transactions Involving
+Terrorist Financing, Measures for Administration of Anti-money-Laundry and Anti-terrorism by Payment Institutions,
+Measures for the Administration of Combating Money Laundering and Financing of Terrorism by Providers of
+Internet Financial Services, and Guidelines for the Self-assessment of Risks of Money Laundering and Finance of
+Terrorism of Incorporated Financial Institutions.
+In 2021, in accordance with the latest regulatory documents and requirements such as Guidelines for the Self-
+assessment of Risks of Money Laundering and Finance of Terrorism of Incorporated Financial Institutions and the
+Measures for the Administration of the Reporting by Financial Institutions of Suspicious Transactions Involving
+Terrorist Financing, we updated our anti-money-laundering internal control system. To enhance our anti-money-
+laundering efforts, we revised documents including the Administrative Measures for the Reporting of Large-sum
+Transactions and Suspicious Transactions. We fulfilled the reporting obligations of large-sum and suspicious
+transactions in accordance with the requirements of China's anti-money laundering authorities.
+We identify and control money laundering risks through assessments of our businesses and products. Compliance
+solutions are proposed to those that are high risk. Risk is tracked and monitored throughout the business
+development process.
+Meituan 2021 Annual Report 157
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In the aspects of risk monitoring in user identity verification, money-laundering, and terrorism financing, we verify
+qualifications and licences submitted by merchants and verify merchant identities via third parties, in accordance
+with our "Know Your Customer" and "Risk Priority" principles. Through system screening and manual analysis,
+we identify and monitor money-laundering risks related to our business, and report on confirmed suspicious
+transactions to relevant authorities in a timely manner. Through regular evaluation and system optimisation,
+we continuously enhance the accuracy and effectiveness of monitoring and identification of money-laundering
+activities.
+We pay great attention to improving employees understanding and caution on money laundering. In 2021, we
+offered 34 internal and external training programmes that covered anti-money-laundering laws and regulations
+and regulatory documents issued by supervision, and experience sharing from industry partners. We also share
+and disseminate anti-money laundering knowledge through an internal knowledge base, workgroups, and our
+WeChat account in formats of articles, money laundering risk tips, short videos, etc. We carried out campaigns at
+our branches, in business districts, and among communities, involving a wide range of participants and achieving
+considerable results.
+We communicate and interact with anti-money-laundering authorities, regulators, and related associations, and
+assist them to raise public awareness and disseminate such knowledge. At the same time, we have strengthened
+cooperation with peers to share our anti-money laundering work experience. In 2021, we actively participated in the
+"Anti-Money Laundering Essay Competition" of the People's Bank of China and held a seminar with the Agricultural
+Bank of China on "Suspicious Transaction Monitoring and Customer Due Diligence" to exchange knowledge of
+both parties. We participated in the "Seminar on Practices and Policies for Penetrating and Identifying Beneficiary
+Owners in Anti-Money Laundering Work in the Payment Industry" organised by the Institute of Law of the Chinese
+Academy of Social Sciences, and discussed with regulators and peers the key points and future trends of
+beneficiary owner identification work, and put forward reasonable and constructive suggestions.
+Anti-fraud
+COMMUNITY INVESTMENT
+156 Meituan 2021 Annual Report
+ANTI-CORRUPTION
+While protecting our own data security and user privacy, we actively promote the enhancement of industry-wide
+data security and user personal information management infrastructure. We formulated the Security Specification
+on Third-Party Application Development and the Security Specification on Service Provider System, reviewed
+the capabilities and qualifications of our service providers, and required partners to comply with our security
+specifications. As a member of the National Information Security Standardization Technical Committee, we actively
+participated in the formulation of national standards for data security and user privacy. We participated in the
+formulation of the Requirements for the Protection of User Rights and Interests in App Automation Decision-making
+by the China Academy of Information and Communications Technology and made suggestions on the development
+of industry standards. At the same time, a series of standards for the Minimum Necessary Evaluation Specifications
+for App Collection and Use of Personal Information by the China Academy of Information and Communications
+Technology, which we participated in the compilation of, have been released.
+154 Meituan 2021 Annual Report
+While advancing our own development, we actively communicate with communities to understand their needs,
+and carry out public welfare charity and community investment activities with the concept of "Internet +”. We train
+life service practitioners through various channels, to boost the impact of our community investment and promote
+community sustainable development.
+150 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+By respecting and encouraging innovation, we strengthen our intellectual property management and accumulation.
+We have formulated the Company Patent Strategy to guide the accumulation and application of patents. Based on
+the standards of patent output and value evaluation, we have improved our innovation and patent applications by
+implementing our Guidelines for Patent Application of Innovative Ideas, reviewing pre-patent proposals, applying for
+text quality sampling, and spurring patent filing efficiency and output value through spiritual and material incentives.
+In 2021, our applications for trademarks, patents, and software copyrights increased steadily. We have completed
+the "Meituan" and "Meituan Food Delivery" trademark registration in all categories.
+We respect the IPR of other parties and protect owners' rights and interests with measures such as user
+agreements and protection mechanisms on our platform. On receiving infringement notices, we delete or block the
+offending item in accordance with relevant laws and regulations, and complaint practices. We protect rights holders
+with a closed loop of the front-end, mid-end, back-end to co-governance and supervision, including (i) front-end:
+building a brand protection database to intercept the source of infringing stores; (ii) mid-end: establishing an online
+anti-counterfeiting mechanism and continuously enhancing control efforts to promote rectification and compliance
+operations of existing merchants (iii) back-end: launching and iterating our IPR protection platform to meet the
+demands of brand rights protection and improve processing efficiency and transparency; and (iv) co-governance
+and supervision: collaborating with IPR owners, regulatory agencies, the public, etc. for collaborative governance,
+introducing a public review mechanism to allow public participation in the formulation of intellectual property
+protection rules, and publishing reports to accept supervision from the public on an annual basis, etc.
+We actively promote the protection and application of intellectual property rights in technological innovations such
+as artificial intelligence, big data, autonomous driving and algorithms, and actively participate in communication
+and research activities. We are the vice president unit of the Patent Protection Association of China and have
+been awarded the titles of "National Outstanding Intellectual Property Enterprise”, “Zhongguancun's Intellectual
+Property Leading Model Enterprise" and "State Intellectual Property Office Auditor Practice Base". In 2021, three
+patented products produced by our independent research and development won the National Intellectual Property
+Administration's "22nd China Patent Excellence Award".
+Data Security and User Privacy
+Data security and user privacy protection are critical to our business. Pursuant to the Civil Code of the People's
+Republic of China, the Cybersecurity Law of the People's Republic of China, Data Security Law of the People's
+Republic of China, Personal Information Protection Law of the People's Republic of China, the Cryptography Law
+of the People's Republic of China, the Provisions on the Administration of Mobile Internet Applications Information
+Services, the Provisions on the Technical Measures for the Protection of the Security of the Internet, the Provisions
+on the Cyber Protection of Children's Personal Information, and other relevant laws and regulations, we have
+implemented procedures and controls to protect user data and reduce the risk of leakage.
+Our Data Security and Governance Committee prevents systematical data risks through organisational guarantee,
+mechanism construction, and special projects. We continuously optimise our management system, formulating
+Meituan Privacy Policy, Regulations on Privacy Protection, Security Specification of Personal Sensitive Data
+Application, Regulations on Data Security, and Employee Information Security and Confidentiality Behaviour
+Standard. These regulate the collection and use of personal information, the application of cookies and similar
+technologies, the preservation and protection of personal information, sharing, transfer, and public disclosure, and
+the protection of minors' personal information.
+Meituan 2021 Annual Report 151
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Our information security management covers authorization, security assessment, encryption, data backup, and
+vulnerability prevention and control. Our self-registered user account with systematic and universal authorization
+and management has enabled us to regularly check the status of user accounts and related authorization
+information and to manage access via network devices. We periodically evaluate the security of our databases and
+servers. There are user data encryptions at the software and hardware level, and we strive to manage the storage
+of, and access to, user data with physical, electronic, and other measures, in compliance with industry standards.
+We protect personal information from unauthorized access, public disclosure, use, modification, damage, or loss
+through information contact confidentiality agreements and monitoring and auditing mechanisms. We have also
+developed backup procedures. For artificial intelligence and cloud platforms, local or off-site backup is deployed
+depending on the nature of the business. Based on the above, we constantly build prevention and control systems,
+classify, and manage information security vulnerabilities and undertake daily inspections. We also have an
+emergency response mechanism, which includes hierarchical data security risk management, assessment of risks,
+formulation of disaster response plans, and conducting regular drills.
+A dedicated team enforces our privacy policies and coordinates with third parties to deal with security threats in
+a timely manner. We comply with industry standards for information security and user privacy; our main operating
+system holds ISO 27001 certification and passed the National Information System Security Level 3 Testing.
+Confidentiality agreements are signed with employees and relevant training is provided continually. All new
+employees take information security courses. Employees in high-risk positions must be trained immediately and
+pass an exam before officially starting to work. In everyday work, we educate all employees about information
+security and regulations via online and offline training. Our Integrity Workplace Code of Conduct includes
+stipulations regarding information security management, interaction security, and information release control of
+employee departure and transfer. Employees who leak data will receive severe disciplinary actions.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+152 Meituan 2021 Annual Report
+Compliance of Information
+Compliance of Advertisement
+Pursuant to the Advertising Law of the People's Republic of China, the Regulations on Control of Advertisement,
+the Interim Measures for the Administration of Internet Advertising, the Interim Measures for the Administration of
+Censorship on Advertisements for Drugs, Medical Devices, Dietary Supplement, and Formula Foods for Special
+Medical Purposes and other laws and regulations, we have set up advertising acceptance, review, and file
+management systems. We continually enhance advertising review standards and processes.
+We strengthen the construction of the advertising review team and organise learning and training to publicize
+compliance knowledge and cases of violations to increase the awareness of advertising risks and compliance
+capabilities. We improve the ability to identify advertising content, achieve full coverage of advertising reviews,
+and review materials with a high number of exposures. At the same time, we developed a filtering system for
+sensitive words to screen and investigate illegal words in advertisements released and carried out strict control over
+advertising and marketing materials through multiple review methods such as machine identification and manual
+review, to ensure that the published content conforms to relevant laws and regulations and that risks of violations
+of the law are properly controlled. Additionally, to protect the rights and interests of consumers, we set up relevant
+special advertising review regulations and focused on a review of advertisements in special industries such as
+medical treatment, medicine, and health food.
+Compliance of UGC
+For the compliance and quality management of UGC (user-generated content), we comply with the Measures for
+the Administration of Internet Information Services and the Regulations on Ecological Governance of Network
+Information Content.
+Meituan 2021 Annual Report 153
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+The Integrity Convention of Meituan Users clarifies responsibilities and obligations on our platform. Our review
+mechanism has improved UGC quality via automated and manual inspection. Our multiple-layer manual review
+mechanism assigns reviewers by content with special personnel to review high-risk contents. By constantly
+enhancing automatic identification, adding semantic analysis models such as inappropriate language and
+advertisement, we have strengthened its accuracy and ability to respond to violations. Our capacity for immediate
+response and continuous management in accordance with corresponding regulations are established in smooth
+communication with regulatory authorities. For illegal content, we have implemented a hierarchical management
+policy with additional measures such as blocking and deleting. We have optimised the UGC content management
+system, improved text recognition capabilities and screening accuracy, and optimised image recognition models.
+We train and assess the UGC content security awareness of our employees by publishing the Content Security
+Work Manual, articles on the internal official account, and conducting online and offline content security courses
+for employees. We require all UGC content reviewers must pass the trains and exams of the UGC content security
+special project can start working.
+Compliance of POI
+We attach great importance to the compliance, authenticity, and accuracy of POIs (points of interest, i.e., the
+places considered interesting or helpful by the users). We have established a review system to filter and correct POI
+content through three defensive measures, which are automatic identification, manual calibration, and verification
+of merchant information. We optimise the review and control of POI content and seek to enhance the quality of
+POI. Our measures to enhance the quality of POI includes: (i) establishing error correction and reporting procedures
+from users, merchants, and many other sources to rectify inaccurate POI information in a timely manner; (ii) forging
+an automatic identification system to screen and filter inappropriate and illegal POIs; (iii) collecting the reported
+POI content to sort out the common problems, and then conducting unified review and rectification of POI data;
+(iv) using the manual and intelligent recognition system to carry out quality sampling inspection and review of
+POI content; (v) setting up communication channels with regulatory institutions and continuously completing POI
+management according to regulatory requirements, and (vi) providing training on the control of fake POI and
+organising employees in relevant positions to take exams to assess their POI management ability. We will continue
+to expand the identification scope of the POI anti-cheating model, build intelligent correction capability for quality
+inspection, and improve the level of POI content security and quality management.
+We open the POI information submission portal on the terminals of users and merchants, and actively collect users'
+feedback by setting up dedicated service hotlines between merchants and users, to revise data, iterate products,
+and improve user experience.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Public Welfare Platform and Projects
+We set up a Content Security Committee to strengthen the Company's content security management, formulated
+and implemented content security work policies to promote the construction of a content security system and
+enhanced the compliance and accuracy of UGC content. We have taken many steps to ensure UGC content
+compliance, including: (i) setting up a prevention and control mechanism for sensitive occasions, and focusing
+on prevention and control of the content security of sensitive occasions such as festivals; (ii) establishing an
+OKR mechanism for business-related UGC, clarifying and implementing the Company's content security risk
+management work; (iii) establishing an emergency response mechanism for content management, covering
+regulatory directives and special projects, and providing recall capabilities for UGC contingency on the platform;
+(iv) establishing a response system for public opinion-related issues to review procedures of external public opinion
+emergency response mechanisms, and to cover the staged handling process of public opinion in terms of early
+warning, identification, response, and management mechanisms; (v) establishing a sensitive-word database, and
+continuously track and update new sensitive words.
+158 Meituan 2021 Annual Report
+Meituan Public Welfare Platform is one of the Internet fundraising information platforms designated by the Ministry
+of Civil Affairs for charitable organisations, positioned in the characteristics of the "Internet + Public Welfare" model,
+aiming to provide equal and accurate information release and fundraising services for charitable organisations and
+to build safe, efficient, and convenient public welfare donation channels for the public.
+Responding to Floods: We have continuously cooperated with the Red Cross Society of China and the ONE
+Foundation to jointly carry out a number of public welfare projects to help charities raise donations and
+provide necessities for the people affected by floods. In July 2021, Henan provenance and its surrounding
+area continued to suffer heavy rainfall, causing severe waterlogging in many cities. Railways were shut down
+and flights were canceled, causing heavy casualties and property losses. We set up the "Meituan Aid Henan
+Flood Control and Disaster Relief Project" to support disaster relief work and donated RMB100 million to the
+Red Cross Society of China. At the same time, we quickly launched the "Henan Rainstorm Donation Project",
+opened warehouses in the disaster-stricken areas, donated disaster relief materials in conjunction with the
+Red Cross Foundation of China, delivered 275 trucks of materials, and donated more than 630,000 pieces
+of food and daily necessities to provide support for public health, emergency rescue, living security, post-
+disaster reconstruction and other related work in the disaster-stricken areas of Henan.
+Earthquake relief: In May 2021, more than 20 earthquake incidents occurred in Yangbi County, Dali
+Prefecture, Yunnan Province, causing more than 1,300 households and a total of 21,000 people to be heavily
+affected. In order to ensure the supply of materials to residents in the affected area, we launched the Yunnan
+Yangbi earthquake relief operation, urgently connected with the Red Cross Society of China and other related
+departments and completed the material relief work for the four disaster-stricken counties within 24 hours. In
+the process of material relief, we rely on the strict timeliness requirements in daily business performance and
+our mature and efficient logistics links in Yunnan supported by past regional operation experience, we were
+able to ensure the distribution efficiency of disaster relief materials and the supply of materials to affected
+residents during disasters.
+COVID-19 prevention and control: We have set up a special fund upon the outbreak of COVID-19 since
+2020. In 2021, to normalize COVID-19 pandemic prevention and control during this post-pandemic period,
+the Meituan Public Welfare Foundation launched a "Negative Pressure Ambulance Donation" project to
+support pandemic prevention and control around the country by donating negative pressure ambulances
+needed for pandemic prevention transit. By the end of 2021, we had donated a total of 100 negative pressure
+ambulances to Guangxi Zhuang Autonomous Region, Hebei Province, Heilongjiang Province, Jilin Province,
+Gansu Province, and other places.
+In 2021, we actively responded to events of public health emergencies and natural disasters and fulfilled our
+corporate social responsibility to guarantee people's livelihoods, stabilize employment and promote economic
+recovery.
+Disaster Relief and Pandemic Prevention
+Meituan 2021 Annual Report 159
+Integrity Charity Sale: All kinds of gifts declared through our "Integrity Workplace Declaration" initiative are
+sold at charity sales and all proceeds are donated to public welfare projects.
+Clothes Donation: We collect donations of clothes from employees, and put boxes in offices to collect other
+donated items. In 2021, a total of more than 2,000 employees participated in the donation;
+Monthly Donation Programme: We encourage our employees to donate RMB1 per day to support the children
+of delivery couriers in the industry. In 2021, nearly 20,000 employees joined the programme and donated
+RMB5.75 million to the "Daishu Baby Public Welfare Programme" helping 162 industry-wide delivery couriers'
+children who suffer from serious diseases.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Our employees are important participants in public welfare activities, Meituan employees participate in public
+welfare activities through various forms such as public welfare monthly donations, public welfare visits, employee
+clothing donations, Integrity Charity Sale, Charity Days, and Public Welfare Salons, and deeply understand and
+participate in contributing social value.
+Encouraging Employee Participation
+Integrating user behaviour: We combine public welfare with user behaviours and guide users to participate
+in public welfare in various forms when enjoying life services. We focus users' attention on environmental
+protection via food delivery orders through "Power Donation". Those who choose the "Tableware Free" option
+when ordering can get corresponding energy credits for public welfare funds. The credits will then be used to
+support public welfare projects of environmental protection.
+Combining with consumption scenarios: Based on user consumption habits, we promote high-quality projects
+through big data analysis. This enables users to embrace and participate in public welfare while satisfying
+their daily needs. For example, we launched The Girls' Package project on the Meituan App "Guess What You
+Like"
+page, "Dream Classroom" and "Water Purification Plan" on our map page.
+Meituan Charity continues to explore the integration of public welfare and users' daily consumption scenarios,
+expand promotion channels, allow users to easily participate in public welfare in daily life, and perceive the concept
+and value of public welfare.
+Encouraging User Participate
+We encouraged the integration of our "Public Welfare Merchant Programme" into the daily business of merchants.
+As of the end of 2021, the plan had encompassed catering, hotel, food delivery, tickets, and other businesses,
+with more than 730,000 participating merchants. At the same time, we jointly launched our "Playground for Village
+Kids" with charity organisations aiming to build multifunctional playgrounds for kindergartens and primary schools
+in less-developed areas to help the children grow up healthily and happily. Thanks to the support of kind users
+and charitable merchants, the programme had provided over 170 village kindergartens and primary schools with
+multifunctional playgrounds as of the end of 2021.
+Public Welfare Cooperation
+•
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+114,794,510
+884,897
+1,000,004
+179,127,997
+Including: Interest revenue
+Selling and marketing expenses
+Gross profit
+Cost of revenues
+7
+5,6
+(136,653,869)
+General and administrative expenses
+42,474,128
+34,050,142
+7
+(40,683,166) (20,882,685)
+Research and development expenses
+7
+(16,675,595)
+(10,892,514)
+Revenues
+7
+(80,744,368)
+2020
+RMB'000
+Code.
+Key Audit Matter
+•
+the consolidated income statement for the year then ended;
+the consolidated statement of comprehensive income for the year then ended;
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of cash flows for the year then ended; and
+the notes to the consolidated financial statements, which include significant accounting policies and other
+explanatory information.
+Our opinion
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position
+of the Group as at December 31, 2021, and of its consolidated financial performance and its consolidated cash
+flows for the year then ended in accordance with International Financial Reporting Standards ("IFRSS") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
+BASIS FOR OPINION
+We conducted our audit in accordance with International Standards on Auditing ("ISAS"). Our responsibilities under
+those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report.
+RMB'000
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants
+(including International Independence Standards) issued by the International Ethics Standards Board for
+Accountants ("IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA
+(8,612,626)
+164 Meituan 2021 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
+consolidated financial statements of the current period. These matters were addressed in the context of our audit
+of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
+separate opinion on these matters.
+Key audit matters identified in our audit are summarised as follows:
+•
+Revenue recognition
+Impairment assessments of goodwill
+Independence
+(5,593,895)
+(185,734)
+(259,953)
+(23,566,477)
+30,279
+4,437,875
+269,737
+(23,536,198)
+4,707,612
+(Loss)/profit for the year
+(Loss)/profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+(Loss)/earnings per share for (loss)/profit for the year attributable
+13
+to the equity holders of the Company
+Diluted (loss)/earnings per share (RMB)
+(23,538,379)
+2,181
+4,708,313
+(701)
+(23,536,198)
+4,707,612
+14
+(3.90)
+0.78
+0.81
+(3.90)
+Basic (loss)/earnings per share (RMB)
+Income tax credits
+(Loss)/profit before income tax
+264,105
+(467,690)
+Fair value changes of other financial investments at
+fair value through profit or loss
+19
+815,747
+4,955,909
+Other (losses)/gains, net
+9
+•
+3,160,835
+Operating (loss)/profit
+Finance income
+Finance costs
+Share of gains of investments accounted for using the equity method
+5002
+(23,127,199)
+4,330,102
+10
+10
+12
+546,037
+(1,130,935)
+145,620
+213,684
+(370,016)
+Net provisions for impairment losses on financial and contract assets
+the consolidated statement of financial position as at December 31, 2021;
+We established our "Growth System for Talents of Digitalized New Professions" which is composed of four blocks
+- capability standards, learning maps, learning systems, and joint certification to nurture new professional
+practitioners and offer clear guidance. We collaborated with top national associations to analyse and define required
+standards for digital operation positions in catering, delivery, beauty service, scenic spots, and hotels. In hotel
+industry, we have been honoured as the fourth batch of vocational education and training evaluation organisations
+by the Ministry of Education. We have also been chosen to pilot the "1+X certificate (academic certificate + multiple
+professional certificates)” programme. We can issue relevant professional skills certificates to vocational college
+students and practitioners in the industry.
+The consolidated financial statements of Meituan (the "Company") and its subsidiaries (the "Group"), which are set
+out on pages 169 to 292, comprise:
+Based on the procedures performed, we considered that
+the risk assessment of goodwill impairment remained
+appropriate and the key assumptions adopted by
+management in the assessment of goodwill impairment
+are supported by the evidence obtained.
+bias.
+We also considered whether the judgements made in
+selecting the models, significant assumptions and data
+would give rise to indicators of possible management
+We assessed the adequacy of the disclosures related
+to goodwill impairment in the context of the applicable
+financial reporting framework.
+We evaluated the reasonableness of management's
+forecast performance and assessed management's
+sensitivity analysis around the key assumptions, to
+ascertain the extent to which adverse changes, would
+result in the goodwill being impaired.
+We independently tested, on a sample basis, the
+accuracy of mathematical calculation applied in the
+valuation models and the calculation of impairment
+charges.
+How our audit addressed the Key Audit Matter
+OTHER INFORMATION
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+The directors of the Company are responsible for the other information. The other information comprises all of the
+information included in the annual report other than the consolidated financial statements and our auditor's report
+thereon.
+166 Meituan 2021 Annual Report
+We evaluated the independent valuer's objectivity and
+competency. We assessed the reasonableness of the
+basis that management used to identify separate group of
+CGUS for the allocation of goodwill.
+We assessed the appropriateness of the valuation models
+and significant assumptions with the involvement of our
+internal valuation experts.
+We evaluated and tested the key controls over the
+impairment of goodwill.
+We obtained an understanding of the management's
+internal control and assessment process of goodwill
+impairment and assessed the inherent risk of material
+misstatement by considering the degree of estimation
+uncertainty and level of other inherent risk factors such
+as complexity, subjectivity, changes and susceptibility to
+management bias or fraud. We evaluated the outcome
+of prior period assessment of the goodwill to assess the
+effectiveness of the management's estimation process.
+We tested management's assessment including periodic
+impairment indications evaluation as to whether indicators
+of impairment exist by corroborating with management
+and market information.
+Our procedures in relation to the impairment assessments
+of goodwill included:
+How our audit addressed the Key Audit Matter
+From the matters communicated with the Audit Committee, we determine those matters that were of most
+significance in the audit of the consolidated financial statements of the current period and are therefore the
+key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to
+outweigh the public interest benefits of such communication.
+The engagement partner on the audit resulting in this independent auditor's report is Jack Li.
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, March 25, 2022
+We assessed the key assumptions adopted including
+annual revenue growth rate for the 5-year period and
+gross profit rate by examining the approved financial/
+business forecast models, and comparing actual
+results for the year against the previous period taking
+into consideration of market trends and our industry
+knowledge. We assessed terminal revenue growth rate
+and pre-tax discount rate with the involvement of our
+internal valuation experts.
+Meituan 2021 Annual Report 169
+Our opinion on the consolidated financial statements does not cover the other information and we do not express
+any form of assurance conclusion thereon.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other
+information, we are required to report that fact. We have nothing to report in this regard.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
+regarding independence, and to communicate with them all relationships and other matters that may reasonably
+be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
+applied.
+We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the
+audit and significant audit findings, including any significant deficiencies in internal control that we identify during
+our audit.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express an opinion on the consolidated financial statements. We are responsible
+for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
+opinion.
+Evaluate the overall presentation, structure and content of the consolidated financial statements, including
+the disclosures, and whether the consolidated financial statements represent the underlying transactions and
+events in a manner that achieves fair presentation.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based
+on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
+may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a
+material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
+in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
+conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future
+events or conditions may cause the Group to cease to continue as a going concern.
+INDEPENDENT AUDITOR'S REPORT
+168 Meituan 2021 Annual Report
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
+Group's internal control.
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
+to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
+that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
+misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
+forgery, intentional omissions, misrepresentations, or the override of internal control.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other
+information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
+financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
+•
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
+are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
+opinion. We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility
+towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level
+of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
+misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
+or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
+basis of these consolidated financial statements.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
+STATEMENTS
+The Audit Committee is responsible for overseeing the Group's financial reporting process.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability
+to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
+concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have
+no realistic alternative but to do so.
+The directors of the Company are responsible for the preparation of the consolidated financial statements that
+give a true and fair view in accordance with IFRSS and the disclosure requirements of the Hong Kong Companies
+Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of
+consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+FINANCIAL STATEMENTS
+RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE CONSOLIDATED
+INDEPENDENT AUDITOR'S REPORT
+Meituan 2021 Annual Report 167
+Refer to notes 2.27, 4.5, 4.6 and 6 to the consolidated
+financial statements.
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+scepticism throughout the audit. We also:
+CONSOLIDATED INCOME STATEMENT
+Year ended December 31,
+2021
+Meituan 2021 Annual Report 161
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In the winter of 2021, we launched the "South-to-North Vegetable Transportation” project and cooperated with
+large agricultural enterprises bases in southern China to help high-quality vegetables in the south to reach the
+tables of northern urban. Relying on a long supply period, the "South-to-North Vegetable Transportation" project
+has enabled northern consumers to have a rich type of vegetable supply in winter.
+In the meantime, we organise rural revitalisation activities combining the festive themes during public festivals. For
+example, responding to the call of the Ministry of Commerce, we have organised corresponding public welfare
+activities in combination with the theme of the festival. For instance, we have launched the "Spring Festival Online
+Shopping Festival" and set up the "Special Event for Promoting Agriculture" channel to increase the supply
+of agricultural fresh with geographical labels that we directly sourced from the farmers. The project effectively
+enriched consumers' choices of high-quality agricultural commodities and helped farmers make more income at
+the same time. During the "2021 Harvest Festival," we cooperated with nearly 10,000 merchants on the platform to
+hold a variety of promotional exhibitions, sales docking, and live-streaming marketing activities and set up a "Rural
+Revitalisation Pavilion" section online. More than 1,500 types of featured agricultural products from high-quality
+agricultural bases across the country were sold online. The project aimed to provide customers with high-quality
+products while helping rural development.
+Talent Development
+We actively respond to the requirements of policies and guidelines such as Opinions on Accelerating the
+Revitalisation of Rural Talents and Notice on Doing a Good Job in the Cultivation of High-quality Farmers in
+2021. We epitomize the role of our enterprises in the cultivation of rural talents and promoting employment. We
+jointly launched the "E-commerce Leader Training Programme" with the China Guangcai Foundation, the China
+International E-Commerce Centre, and the Management Cadre College of the Ministry of Agriculture and Rural
+Affairs to teach and share e-commerce operation knowledge and cases for rural talents such as the first secretary
+in the village and the key figures who made their fortune, and jointly implement the local rural revitalisation strategy.
+We hire nearly 100 lecturers with rich entrepreneurial and teaching experience to jointly develop seven teaching
+sections and nearly 200 thematic training courses around "E-commerce Mode Operation", "Supply Chain
+Operation", "Live Streaming E-commerce”, “Agricultural Cooperative Innovation And Development”, etc., to provide
+introductory and advanced special courses for groups at different learning stages. At the same time, we actively
+mobilize resources during the training period, provide business docking channels and organise excellent case
+exchanges, so that students can not only learn e-commerce operation knowledge, but also establish contact with
+the Meituan agricultural products purchasing team, promote agricultural products purchasing signing intention, and
+set the connection between products and production and marketing supply chains.
+We provide more choices for the employment of disadvantaged groups in rural areas through new e-commerce
+formats and provide job opportunities in service stations in rural areas for the elderly, the sick, the disabled, and
+other disadvantaged groups who cannot work in the field and lack employment opportunities in rural areas. By
+doing so, these people can utilise their abilities and earn income from the job we offered to improve their life quality.
+162 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Since the end of 2021, we have launched the "Agricultural Produce Direct Sourcing" programme, cooperating with
+large-scale agricultural enterprises and agricultural bases to increase the direct sourcing of high-quality agricultural
+products from the source area to help high-quality agricultural products reach the community directly and increase
+farmers' income at the same time. We have leveraged the advantages of the digital economy of the e-commerce
+platform to help improve the production, distribution, circulation, and consumption of agricultural products through
+scientific and technological innovation, i.e., digitalization, standardization, and branding of the supply chains, as
+well as to help revitalise the rural area and stimulate the economic growth in the future. By the end of 2021, we have
+more than 400 bases for “direct sourcing agricultural products", covering 24 provinces across the country with
+commodities including various vegetables, fruits, and aquatic products with rich regional characteristics.
+Supporting the Life Service Industry Practitioners
+We support delivery couriers who represent the flexible form of employment by driving the emergence of more than
+70 different new professions derived from new business forms such as "Food Delivery Operator", "Meal Package
+Planner", "Battery Replacement Specialist of Electric Moped", "Hotel Revenue Manager".
+-
+We worked with China Entrepreneur Magazine and the China International Electronic Commerce Centre to co-found
+the Economic Talent Development Committee. In order to promote the development of talents in the life service
+industry, we co-published a “Partners Sharing Plan" with industrial associations and representative enterprises.
+As of the end of 2021, we had over 2,000 lecturers in the life service industry. We have developed 8,953 courses
+in practical operations, business operations, management, and industry dynamics, with approximately 39.8 million
+trainees. Moreover, nearly 3,000 practitioners in new professions have received their professional certifications.
+To the Shareholders of Meituan
+(incorporated in the Cayman Islands with limited liability)
+OPINION
+What we have audited
+Meituan 2021 Annual Report 163
+INDEPENDENT AUDITOR'S REPORT
+We promote our industry's overall development by enhancing the service quality of life service practitioners. We
+responded to policies including the Guiding Opinions on Promoting Standardised and Healthy Development
+of Platform Economy, the Implementation Plan for National Vocational Education Reform, and the Vocational
+Education Action Plan for 2019-2021 - issued by the Ministry of Human Resources and Social Security to create
+a base of digital talents in the life service industry. We have set up several training centres such as catering, food
+delivery, hotels management, beauty care, and home-rental, and jointly launched "Store Manager Class" with the
+Ministry of Human Resources and Social Security to meet the learning and certification needs of new professional
+practitioners and help cultivate digital talents in the life service industry.
+Industry Upgrade
+In 2021, with great success in China's poverty alleviation progress, the state launched the Rural Revitalisation
+Strategy. In this context, we leverage the technology and talent advantages of Internet platform enterprises,
+promote the transformation of the agricultural industry, strengthen talent cultivation, improve the living standards of
+rural residents, and actively fulfill corporate social responsibility.
+Rural Revitalisation
+Note
+We focused on this area due to (a) the magnitude of
+the carrying amount of goodwill; and (b) the estimation
+of recoverable amount is subject to high degree of
+estimation uncertainty. The inherent risk in relation to
+the impairment assessment of goodwill is considered
+significant due to the complexity of the models,
+subjectivity of significant assumptions used, and
+significant judgements involved in selecting data, such
+as annual revenue growth rate for the 5-year period,
+gross profit, terminal revenue growth rate and pre-tax
+discount rate.
+The Group engaged an independent external valuer
+to prepare the goodwill impairment testing. The
+recoverable amounts of CGUS were determined based
+on the value-in-use calculations using cash flow
+projections.
+Under International Accounting Standards ("IAS") 36
+Impairment of Assets, the Group is required to perform
+goodwill impairment assessment both annually and
+whenever there is an indication that a cash-generating
+unit ("CGU") to which goodwill has been allocated may
+be impaired.
+As at December 31, 2021, the net carrying amount of
+goodwill amounted to RMB27.7 billion.
+Refer to Notes 2.9, 4.4 and 16 to the consolidated
+financial statements.
+Impairment assessments of goodwill
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+Meituan 2021 Annual Report 165
+Based on the procedures performed, we found that
+the Group's revenue recognition was supported by the
+evidence obtained.
+We tested, on a sample basis, transactions by checking
+the cash receipt, reviewing the underlying contracts,
+identifying the key terms and attributes from the contracts
+and checking them against the underlying data from
+the system used in the transaction processes, and then
+recalculating the revenue amount.
+We tested the general control environment and automated
+controls of the information technology systems used
+in the transaction processes. We tested the interface
+between the operating and financial systems.
+We discussed with management and evaluated their
+judgements made in determining the method and timing
+of revenue recognition and calculation.
+We understood and tested management's process and
+controls in respect of revenue recognition and calculation
+derived from different services.
+We focused on this area as significant efforts were
+spent on auditing the accuracy of revenue recognition
+due to the magnitude of revenue amount and the
+huge volume of revenue transactions recorded in
+the operating systems and then interfaced with the
+financial system.
+The Group provides an e-commerce platform that
+offers diversified daily goods and services in the
+broader retail by leveraging technology, including
+food delivery, in-store, hotel and travel booking and
+other services and sales. The Group mainly generates
+revenue in the way of food delivery services fees,
+commission, online marketing services fees and other
+services and sales. Revenue of RMB179.1 billion was
+recognised for the current year.
+Our procedures in relation to the revenue recognition
+included:
+How our audit addressed the Key Audit Matter
+160 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Stabilizing prices during disasters: We respond to the government's call to resolutely resist illegal acts such as
+price gouging and price fraud during disasters. When disasters occurred, we launched an initiative to ensure
+the supply of materials and stabilize prices during disasters to our business partners, calling them to help
+ensure the price stability of pandemic prevention materials and daily necessities when facing pandemics and
+disasters. At the same time, we strengthened the risk analysis of the supply and demand of daily necessities
+to provide alerts and a basis for decision-making for the supply of materials and price stability during
+disasters. Through the practice of emergency incidents, we have continuously summarized and upgraded our
+emergency handling capabilities, formed a systematic work plan for people's livelihood security, and assisted
+in ensuring the material needs of residents in case of disasters.
+Supporting post-disaster reconstruction: We have carried out a number of measures to support businesses
+affected by the disaster to resume work and production. For example, we provided decoration funds for
+merchants with seriously damaged storefronts in the hardest-hit areas. We provided free door-to-door
+repairing service to replace the damaged Meituan Cash Register System and other hardware; We provided
+"Resume Work Disinfection Package" to disaster-stricken catering merchants, and together with authoritative
+organisations we launched a series of popular science training courses on food safety called "Relieved
+Resumption". We helped merchants achieve faster recovery through financial support measures such as
+subsidies, the extension of service period, active provision of claim settlement services and interest-free
+business loans,
+•
+Revenue recognition
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+January 1, 2023
+12,27
+Transaction with owners in their
+capacity as owners
+Equity-settled share-based payments 27,33
+Shares held for shares award scheme 26
+Exercise of share options and RSUs
+vesting
+of associates
+Tax benefit from share-based
+Appropriations to general reserves
+Total transaction with owners in
+21,671
+21,671
+21,671
+3,272,930
+3.272,930
+payments
+3,272,930
+Share of other changes in net assets
+1,728,980
+other comprehensive income
+20,27 ---
+84,387
+84,387
+84,387
+Fair value changes of debt
+instruments at fair value through
+other comprehensive income
+Currency translation differences
+(60)
+(2,920,302)
+2
+Total comprehensive income
+(60)
+(2,920,302)
+(60)
+(2,920,302)
+(2,978,632) 4,708,313
+1,729,681
+(701)
+27 ---
+27
+(1)
+26.27
+5 2,795,272
+Meituan 2021 Annual Report 175
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+2021
+Note
+RMB'000
+2020
+RMB'000
+97,634,275
+Cash flows from operating activities
+Income tax paid
+Net cash flows (used in)/generated from operating activities
+36(a)
+(3,756,727)
+(254,730)
+8,561,324
+(86,311)
+(4,011,457)
+Cash (used in)/generated from operations
+(58,752)
+(6,262,066) (159,200,503) 97,693,027
+395 263,155,201
+1
+(2,283,840)
+511,438
+511,438
+22
+27
+---
+44,862
+44,862
+44,862
+27
+_ _ - 108,195 (108,195)
+their capacity as owners
+6 2,795,272
+1,142,147 (108,195) 3,829,230
+3,829,230
+As of December 31, 2020
+Fair value changes of other financial
+investments at fair value through
+8,475,013
+(142,657)
+(142,657)
+(109)
+(109)
+Total transaction with owners in
+their capacity as owners
+16
+48,066,036
+4,736,891
+(2,649) 52,800,294
+wholly-owned subsidiary
+(109)
+As of December 31, 2021
+411 311,221,237
+(2,866,675) (182,741,531) 125,613,442
+(56,680) 125,556,762
+174 Meituan 2021 Annual Report
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Attributable to equity holders of the Company
+52,800,185
+Shares held for
+Distributions from a non
+2,649
+- 45,285,900
+Issuance of convertible bonds
+(equity component)
+27,32
+- 1,513,938
+1,513,938
+- 1,513,938
+(2,649)
+Tax benefit from share-based
+Appropriations to general reserves
+22
+27
+--- 535,289
+535,289
+535,289
+27
+payments
+Non-
+Share
+Share shares award
+389
+260,359,929
+(4,447,252) (163,800,621)
+92,112,445
+(58,051)
+92,054,394
+Comprehensive income
+As of January 1, 2020
+Profit for the year
+Share of other comprehensive loss of
+investments accounted for using
+the equity method
+4,708,313
+4,708,313
+(701) 4,707,612
+12,27
+,27 ---
+Other comprehensive income
+RMB'000
+RMB'000
+RMB'000
+Other
+Accumulated
+controlling
+capital
+premium
+scheme
+reserves
+losses
+Sub-total
+interests
+Total
+Note
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+(142,657)
+Cash flows from investing activities
+Purchases and prepayments of property, plant and equipment
+and intangible assets
+The preparation of the consolidated financial statements in conformity with IFRS requires the use of
+certain critical accounting estimates. It also requires management to exercise its judgement in the
+process of applying the Group's accounting policies. The areas involving a higher degree of judgement
+or complexity, or areas where assumptions and estimates are significant to the consolidated financial
+statements are disclosed in Note 4.
+2.1.1 New amendments adopted by the Group
+The Group has applied the following amendments for the first time commencing January 1, 2021:
+Amendments to IFRS 9, IAS 39,
+IFRS 7, IFRS 4 and IFRS 16
+Interest Rate Benchmark Reform - phase 2
+178 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+The consolidated financial statements of the Group have been prepared in accordance with all
+applicable International Financial Reporting Standards ("IFRSS") issued by International Accounting
+Standards Board ("IASB") and disclosure requirements of the Hong Kong Companies Ordinance. The
+consolidated financial statements have been prepared under the historical cost convention, as modified
+by the revaluation of financial assets and financial liabilities at fair value through profit or loss or through
+other comprehensive income, which are carried at fair value.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1.1 New amendments adopted by the Group (Continued)
+The Group had certain interest-bearing bank borrowings denominated in USD based on the
+London Interbank Offered Rate ("LIBOR") as of December 31, 2021. For these bank borrowings,
+since the interest rates of these instruments were not replaced by alternative risk-free rates ("RFR")
+during this year, the amendments did not have any significant impact on the financial position and
+performance of the Group. Replacement of the benchmark rates of these instruments from LIBOR
+to an RFR has yet to commence.
+2.1.2 New standards and amendments not yet adopted by the Group
+The following new standards and amendments have been issued, but are not effective for the
+Group's financial year beginning on January 1, 2021 and have not been early adopted by the
+Group's management.
+Amendments to IAS 28 and IFRS 10
+IAS 16 (Amendments)
+2.1
+Sale or contribution of assets
+between an investor and its
+associate or joint venture
+Property, plant and equipment:
+Basis of preparation and changes in accounting policies and disclosures
+The principal accounting policies applied in the preparation of the consolidated financial statements are set
+out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
+13,396,185
+(675,171)
+(963,716)
+25(a)
+32,513,428
+17,093,559
+1
+2.1
+Meituan 2021 Annual Report 177
+GENERAL INFORMATION
+For the year ended December 31, 2021
+Meituan (the "Company") was incorporated in the Cayman Islands ("Cayman”) on September 25, 2015 as an
+exempted company with limited liability under the laws of the Cayman Islands. The registered office is at PO
+Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company's Class B shares have
+been listed on the Main Board of the Hong Kong Stock Exchange since September 20, 2018.
+The Company is an investment holding company. The Company and its domestic subsidiaries, including
+structured entities (collectively, the "Group"), offers diversified daily goods and services in the broader retail
+by leveraging technology, including food delivery, in-store, hotel and travel booking and other services and
+sales.
+The consolidated financial statements are presented in Renminbi ("RMB"), unless otherwise stated.
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Effective for
+financial year
+beginning on
+January 1, 2023
+Amendments to IAS 12
+Deferred tax related to assets
+January 1, 2023
+and liabilities arising from
+a single transaction
+2
+Definition of Accounting Estimates
+Meituan 2021 Annual Report 179
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.1
+Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1.2 New standards and amendments not yet adopted by the Group (Continued)
+The Group is in the process of assessing potential impact of the above new standards and
+amendments that is relevant to the Group upon initial application. According to the preliminary
+assessment made by the directors of the Company ("Directors”), management does not
+anticipate any significant impact on the Group's financial positions and results of operations upon
+adopting the above new standards and amendments except for the Amendments to IAS 12. The
+management of the Group plans to adopt these new standards and amendments when they
+become effective.
+2.2 Subsidiaries
+Subsidiaries are entities (including structured entities) over which the Group has control. The Group
+controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
+with the entity (including structured entities) and has the ability to affect those returns through its power
+to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
+transferred to the Group. They are deconsolidated from the date that control ceases.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Amendments to IAS 8
+Statement 2
+Amendments to IAS 1 and IFRS Practice Disclosure of Accounting Policies
+or after
+To be
+determined
+January 1, 2022
+Amendments to IFRS 3
+proceeds before intended use
+Reference to the conceptual
+framework
+January 1, 2022
+IAS 37 (Amendments)
+IAS 1 (Amendments)
+Onerous contract - cost of fulfilling
+January 1, 2022
+a contract
+Classification of liabilities as current
+January 1, 2023
+and non-current
+IFRS 17
+Insurance contracts
+January 1, 2023
+17,093,559
+4,661,090
+16,095,040
+17,418,081
+disposals of subsidiaries
+Gains received from treasury investments and other
+financial instruments
+Dividends received
+(867,327)
+996,319
+24,325
+1,629,777
+Net cash outflow arising from disposals or deemed
+Loans payments to investees and others
+Prepayments for investments
+Net cash flows used in investing activities
+(1,205,221)
+18,912
+(913,000)
+1,234,179
+37,081
+(42,000)
+Loans repayments from investees and others
+(7,326,690)
+(5,040,733)
+601,370
+(9,010,455)
+(15,824,436)
+Proceeds from disposals of property, plant and equipment
+and intangible assets
+106,219
+279,764
+Payments for acquisitions of businesses, net of cash acquired
+Purchases of treasury investments
+(13,786)
+(26,849)
+(409,062,234)
+(196,817,451)
+Sales and maturities of treasury investments
+364,318,074
+199,496,075
+Purchases of investments accounted for using the equity method
+Proceeds from disposals of investments in associates and others
+Purchases of other financial investments at fair value
+(2,367,376)
+70,806
+(19,181)
+35,887 - - 45,285,000
+45,285,887
+(58,491,834)
+176 Meituan 2021 Annual Report
+19,288,691
+13,337,825
+(620,127)
+(218,611)
+275,371
+499,088
+45,286,099
+Increase in financial liabilities
+(2,191,299)
+791,400
+114,600
+Net cash flows generated from financing activities
+Net increase in cash and cash equivalents
+Cash and cash equivalents at the beginning of the year
+Exchange losses on cash and cash equivalents
+Cash and cash equivalents at the end of the year
+78,598,331
+(936,380)
+Payments of lease liabilities
+Net proceeds from issuance of ordinary shares
+Proceeds from exercise of share options
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+Note
+2021
+RMB'000
+2020
+RMB'000
+Cash flows from financing activities
+36(c)
+Proceeds from borrowings, excluding asset-backed securities ("ABS")
+25,346,479
+10,900,292
+Repayments of borrowings, excluding ABS
+(9,578,283)
+(5,448,702)
+Repayments of ABS
+(830,031)
+Net proceeds from issuance of notes payable
+Finance costs paid
+(21,232,004)
+13
+26
+placement and subscription
+12,940,125
+Short-term treasury investments
+21
+84,282,016
+43,999,364
+Restricted cash
+25(b)
+15,281,586
+13,276,919
+Cash and cash equivalents
+25(a)
+32,513,428
+17,093,559
+147,828,677
+88,306,155
+Total assets
+12,775,667
+240,653,269
+22
+1,030,948
+Prepayments, deposits and other assets
+220
+2,022,705
+605,918
+3,381,272
+7,569,817
+92,824,592
+Prepayments, deposits and other assets
+78,268,647
+Inventories
+23
+681,693
+466,492
+Trade receivables
+24
+1,793,035
+Current assets
+166,574,802
+EQUITY
+Share capital
+(58,752)
+125,556,762
+97,634,275
+172 Meituan 2021 Annual Report
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+LIABILITIES
+Non-current liabilities
+(56,680)
+Deferred tax liabilities
+Note
+2021
+RMB'000
+2020
+RMB'000
+18(b)
+895,691
+755,694
+Financial liabilities at fair value through profit or loss
+As of December 31,
+97,693,027
+125,613,442
+(159,200,503)
+Share premium
+Shares held for shares award scheme
+Other reserves
+Accumulated losses
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+26
+411
+395
+26
+311,221,237
+263,155,201
+26
+27
+(2,866,675)
+(182,741,531)
+(6,262,066)
+other comprehensive income
+Other financial investments at fair value through
+13,180,943
+13,868,788
+163,604
+27
+(1,540,203)
+(2,920,302)
+Share of other comprehensive loss of investments
+accounted for using the equity method
+Fair value changes of other financial investments at
+fair value through other comprehensive income
+12,27
+(43,633)
+27
+(142,357)
+(86,821)
+84,387
+Other comprehensive loss for the year, net of tax
+(1,500,422)
+(2,978,632)
+Total comprehensive (loss)/income for the year
+(25,036,620)
+20,27
+27
+Net provisions for impairment losses on debt instruments at
+fair value through other comprehensive income
+Items that will not be reclassified to profit or loss
+Currency translation differences
+(60)
+170 Meituan 2021 Annual Report
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+Other comprehensive loss:
+Items that may be reclassified to profit or loss
+Year ended December 31,
+Note
+2021
+RMB'000
+2020
+RMB'000
+Share of other comprehensive income/(loss) of investments
+accounted for using the equity method
+12,27
+1,836
+(300)
+Fair value changes of debt instruments at fair value through
+other comprehensive income
+27
+4,795
+1,728,980
+114,600
+Total comprehensive (loss)/income for the year attributable to:
+(25,038,801)
+31,048,814
+31,676,381
+Deferred tax assets
+18(a)
+1,378,468
+448,670
+Long-term treasury investments
+16
+21
+612,967
+Other financial investments at fair value through profit or loss
+19
+14,299,857
+10,256,786
+Investments accounted for using the equity method
+12
+4,010,442
+13,917,165
+22,814,246
+15
+1,729,681
+Non-controlling interests
+2,181
+(701)
+(25,036,620)
+1,728,980
+Meituan 2021 Annual Report 171
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As of December 31,
+2021
+Note
+RMB'000
+2020
+RMB'000
+ASSETS
+Non-current assets
+Property, plant and equipment
+Intangible assets
+Equity holders of the Company
+Intercompany transactions, balances and unrealised gains on transactions between Group companies
+are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an
+impairment of the transferred asset. Accounting policies of subsidiaries have been changed where
+necessary to ensure consistency with the policies adopted by the Group.
+Deferred revenues
+166,700
+Fair value changes of other financial
+investments at fair value through
+other comprehensive income
+20.27
+(86,821)
+(86,821)
+(86,821)
+(41,797)
+Fair value changes of debt
+other comprehensive income
+27
+4,795
+4,795
+- 4,795
+Net provisions for impairment losses
+on debt instruments at fair value
+instruments at fair value through
+through other comprehensive
+(41,797)
+12,27
+Total
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2021
+395 263,155,201
+(6,262,066) (159,200,503) 97,693,027
+(41,797)
+(58,752) 97,634,275
+Loss for the year
+Other comprehensive loss
+Share of other comprehensive loss
+of investments accounted for
+(23,538,379) (23,538,379)
+2,181 (23,536,198)
+using the equity method
+Comprehensive income
+income
+Currency translation differences
+22
+26
+1
+5,193,445
+5,193,445
+5,193,445
+(1)
+Exercise of share options and
+Shares held for shares award scheme
+RSUS vesting
+2
+2,780,149
+1
+(2,508,430)
+271,722
+271,722
+Issuance of shares upon
+26,27
+Equity-settled share-based payments 27,33
+capacity as owners
+Transaction with owners in their
+27
+163,604
+27
+(1,540,203)
+163,604
+(1,540,203)
+163,604
+(1,540,203)
+Total comprehensive loss
+(1,500,422)
+(23,538,379) (25,038,801)
+2,181
+(25,036,620)
+Share of other changes in net
+assets of associates
+12,27
+158,922
+158,922
+158,922
+interests
+Sub-total
+losses
+RMB'000
+reserves
+RMB'000
+15,165,619
+11,967,026
+Payables to merchants
+10,950,920
+9,414,936
+Advances from transacting users
+5,171,054
+29
+4,307,861
+30
+18,400,738
+12,779,429
+Borrowings
+31
+11,565,200
+6,395,002
+Other payables and accruals
+29
+Trade payables
+Current liabilities
+Borrowings
+31
+12,219,667
+1,957,470
+Notes payable
+32
+30,383,378
+12,966,341
+Lease liabilities
+15
+2,994,226
+1,648,008
+Other non-current liabilities
+10,588
+184,073
+46,503,550
+17,792,886
+Deferred revenues
+28
+28
+5,052,830
+Meituan 2021 Annual Report 173
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Attributable to equity holders of the Company
+Shares held for
+Non-
+Share
+Share shares award
+Director
+Other Accumulated
+capital
+premium
+scheme
+Note
+RMB'000
+RMB'000
+RMB'000
+controlling
+Mu Rongjun
+Director
+Wang Xing
+Lease liabilities
+Income tax liabilities
+15
+1,756,559
+1,089,847
+104,387
+140,710
+68,592,957
+51,147,641
+Total liabilities
+115,096,507
+68,940,527
+Total equity and liabilities
+240,653,269
+166,574,802
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+The consolidated financial statements on pages 169 to 292 were approved by the Board of Directors on March 25,
+2022 and were signed on its behalf:
+5,478,480
+Non-controlling interests in the results and equity of subsidiaries are shown separately in the
+consolidated income statement, consolidated statement of comprehensive income, consolidated
+statement of changes in equity and consolidated statement of financial position respectively.
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+2
+2.9 Intangible assets
+2.9.1 Goodwill
+Goodwill arising from the acquisition of subsidiaries represents the excess of the aggregate
+purchase consideration transferred, the amount of any non-controlling interests in the acquiree
+and the acquisition-date fair value of any previous equity interests in the acquiree over the fair
+value of the identifiable net assets acquired. Goodwill on acquisitions of subsidiaries is included
+in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more
+frequently if events or changes in circumstances indicate that it might be impaired, and is carried
+at cost less impairment losses. Gains or losses on the disposal of a subsidiary include the carrying
+amount of goodwill relating to the subsidiary sold.
+Goodwill is allocated to cash-generating units ("CGU”) for the purpose of impairment testing.
+The allocation is made to those CGUS or groups of CGUs that are expected to benefit from the
+business combination in which the goodwill arose. The CGUS or groups of CGUs are identified at
+the lowest level at which goodwill is monitored for internal management purposes at the operating
+segments.
+2.9.2 Other intangible assets
+Other intangible assets mainly include those arising from business combinations other than
+goodwill and software and others. They are initially recognised and measured at cost or fair value
+where appropriate. Other intangible assets are amortised over their estimated useful lives using
+the straight-line method as follows, reflecting the pattern in which the intangible asset's future
+economic benefits are expected to be consumed.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+Other intangible assets arising from business combinations
+Software and others
+2-25 years
+1-10 years
+Meituan 2021 Annual Report 187
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+186 Meituan 2021 Annual Report
+Gains or losses on disposals are determined by comparing proceeds with carrying amount, and are
+recognised in "Other (losses)/gains, net" in the consolidated income statement.
+Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, where
+appropriate, only when it is probable that future economic benefits associated with the item will flow to
+the Group and the cost of the item can be measured reliably. The carrying amount of any component
+accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are
+charged to profit or loss during the reporting period in which they are incurred.
+Depreciation is calculated using the straight-line method to allocate their cost, net of their residual
+values, over their estimated useful lives, as follows:
+•
+Computer equipment (including servers)
+Furniture and appliances
+•
+Bikes and electric mopeds
+•
+Leasehold improvements
+.
+Others
+3 years
+3-5 years
+2-3 years
+the shorter of the lease term and
+the estimated useful lives
+2-5 years
+The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
+reporting period.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+All property, plant and equipment ("PP&E”) are stated at historical cost less accumulated depreciation
+and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the
+items.
+2.9 Intangible assets (Continued)
+Research expenditures are recognised as expenses as incurred. Costs incurred on development
+projects are capitalised as intangible assets when recognition criteria are met, including (a) it is
+technically feasible to complete the software so that it will be available for use; (b) management
+intends to complete the software and use or sell it; (c) there is an ability to use or sell the software;
+(d) it can be demonstrated how the software will generate probable future economic benefits;
+(e) adequate technical, financial and other resources to complete the development and to use
+or sell the software are available; and (f) the expenditure attributable to the software during its
+development can be reliably measured. Other development costs that do not meet those criteria
+are expensed as incurred. There were no development costs meeting these criteria and capitalised
+as intangible assets as of December 31, 2021 and 2020.
+The Group reclassifies debt instruments when and only when its business model for managing
+those assets changes.
+Meituan 2021 Annual Report 189
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For assets measured at fair value, gains or losses will either be recorded in profit or loss or other
+comprehensive income. For investments in debt instruments, this will depend on the business
+model in which the investments are held. For investments in equity instruments that are not held
+for trading, this will depend on whether the Group has made an irrevocable election at the time of
+initial recognition to account for the equity instruments at fair value through other comprehensive
+income ("FVOCI").
+2.13 Financial assets (Continued)
+Regular way purchases and sales of financial assets are recognised on trade-date, the date on
+which the Group commits to purchase or sell the asset.
+2.13.3 Derecognition
+The Group derecognises a financial asset, if the part being considered for derecognition meets one
+of the following conditions: (i) the contractual rights to receive the cash flows of the financial asset
+expire; (ii) the contractual rights to receive the cash flows and substantially all the risks and rewards
+of ownership of the financial asset have been transferred; or (iii) the Group retains the contractual
+rights to receive the cash flows of the financial asset, but assumes a contractual obligation to
+pay the cash flows to the eventual recipient in an agreement that meets all the conditions of
+derecognition of transfer of cash flows ("pass through" requirements) and substantially all the risks
+and rewards of ownership of the financial asset have been transferred.
+Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the
+difference between the two amounts below is recognised in profit or loss or retained earnings:
+the carrying amount of the financial asset transferred; and
+the sum of the consideration received from the transfer and any cumulative gains or losses
+that has been recognised directly in equity.
+2.13.2 Recognition
+The classification depends on the entity's business model for managing the financial assets and
+the contractual terms of the cash flows.
+those to be measured at amortised cost.
+•
+2.10 Shares held for shares award scheme
+The nominal value of the shares transferred by the Company to the Share Scheme Trust, is presented as
+"Shares held for shares award scheme".
+When the Share Scheme Trust transfers the Company's shares to the awardees upon vesting, the
+related nominal value of the awarded shares vested are credited to "Shares held for shares award
+scheme" and related equity-settled share-based payments were transferred from “Other reserves" to
+"Share premium".
+2.11 Impairment of non-financial assets
+Other than goodwill mentioned in Note 2.9.1, other non-financial assets are tested for impairment
+whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
+An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
+recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal
+and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for
+which there are separately identifiable cash inflows which are largely independent of the cash inflows
+from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill
+that suffered an impairment are reviewed for possible reversal of the impairment at the end of each
+reporting period.
+188 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12 Land use rights
+Land use rights are up-front payments to acquire long-term interest in land. They are stated at historical
+cost less accumulated depreciation and impairment in “Property, plant and equipment", and charged to
+the consolidated income statement on a straight-line basis over the remaining period of the lease.
+2.13 Financial assets
+2.13.1 Classification
+The Group classifies its financial assets in the following measurement categories:
+•
+those to be measured subsequently at fair value (either through other comprehensive income
+or through profit or loss), and
+2.9.3 Research and development
+If the Group neither transfers nor retains substantially all the risks and rewards of ownership and
+continues to control the transferred asset, the Group continues to recognise the asset to the extent
+of its continuing involvement and recognises an associated liability.
+2.8 Property, plant and equipment
+For the year ended December 31, 2021
+2.2 Subsidiaries (Continued)
+2.2.2 Changes in ownership interests in subsidiaries without change of control
+The Group treats transactions with non-controlling interests that do not result in a loss of control
+as transactions with equity owners of the Group. A change in ownership interests results in an
+adjustment between the carrying amounts of the controlling and non-controlling interests to reflect
+their relative interests in the subsidiary. Any difference between the amount of the adjustment
+to non-controlling interests and any consideration paid or received is recognised in a separate
+reserve within equity attributable to equity holders of the Company.
+2.2.3 Changes in ownership interests in subsidiaries with change of control
+When the Group ceases to consolidate a subsidiary because of a loss of control, any retained
+interests in the entity are remeasured to its fair value with the change in carrying amount
+recognised in profit or loss. This fair value becomes the initial carrying amount for the purpose of
+subsequently accounting for the retained interests as an associate, a joint venture or a financial
+asset. In addition, any amounts previously recognised in other comprehensive income in respect
+of that entity are accounted for as if the Group had directly disposed of the related assets or
+liabilities. This may mean that amounts previously recognised in other comprehensive income are
+reclassified to profit or loss or transferred to another category of equity as specified/permitted by
+applicable IFRSS.
+2.3 Associates
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Associates are entities over which the Group has significant influence but not control or joint control.
+The Group's investments in associates in the form of convertible redeemable preferred instruments or
+ordinary shares with preferential rights are financial assets designated at fair value through profit or
+loss. All investments in the form of ordinary shares with significant influence are accounted for using the
+equity method of accounting.
+182 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.3 Associates (Continued)
+Upon the acquisition of the ownership interest in an associate, any difference between the cost of the
+associate and the Group's share of the net fair value of the associate's identifiable assets and liabilities
+is accounted for as goodwill which is included in the carrying amount of the investment.
+When the Group's share of losses in an investment accounted for using the equity method equals or
+exceeds its interest in the investee, including any other unsecured long-term receivables, the Group
+does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
+investee.
+The investments accounted for using the equity method are initially recognised at cost and adjusted
+thereafter to recognise the Group's share of the post-acquisition movements in equity of the investee
+in profit or loss or other reserves. Dividends received or receivable from associates accounted for using
+the equity method are recognised as a reduction in the carrying amount of the investment.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 181
+If the business combination is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interests in the acquiree is remeasured to fair value at the
+acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or
+loss.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.2 Subsidiaries (Continued)
+2.2.1 Business combinations
+The Group applies the acquisition method to account for all business combinations, regardless
+of whether equity instruments or other assets are acquired. The consideration transferred for the
+acquisition of a subsidiary comprises the:
+•
+fair values of the assets transferred
+liabilities incurred to the former owners of the acquired business
+equity interests issued by the Group
+fair value of any asset or liability resulting from a contingent consideration arrangement, and
+•
+fair value of any pre-existing equity interests in the subsidiary.
+Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
+combination are measured initially at their fair values at the acquisition date. The Group recognises
+any non-controlling interests in the acquired entity on an acquisition-by-acquisition basis either at
+fair value or at the non-controlling interests' proportionate share of the acquired entity's identifiable
+net assets.
+Acquisition-related costs are expensed as incurred.
+The excess of the consideration transferred, amount of any non-controlling interests in the
+acquiree, and the acquisition-date fair value of any previous equity interests in the acquiree over
+the fair value of the identifiable net assets acquired is recorded as goodwill.
+Contingent consideration is classified either as equity or financial liability. Amounts classified as
+financial liability are subsequently remeasured to fair value with changes in fair value recognised
+in profit or loss. Amounts classified as equity is not remeasured, and its subsequent settlement is
+accounted for within equity.
+Unrealised gains on transactions between the Group and its associates are eliminated to the extent of
+the Group's interest in these investees. Unrealised losses are also eliminated unless the transaction
+provides evidence of an impairment of the asset transferred. Accounting policies of the investees have
+been changed where necessary to ensure consistency with the policies adopted by the Group.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The Group determines at each reporting period end whether there is any objective evidence that
+investments accounted for using the equity method are impaired. If this is the case, the Group calculates
+the amount of impairment as the difference between the recoverable amount of the investment and
+its carrying value and recognises the amount in "Other (losses)/gains, net" in the consolidated income
+statement.
+2.4 Joint arrangements
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.7 Foreign currency exchange and translation (Continued)
+2.7.3 Group companies
+The results and financial position of foreign operations (none of which has the currency of a
+hyperinflationary economy) that have a functional currency different from the presentation currency
+are translated into the presentation currency as follows:
+•
+184 Meituan 2021 Annual Report
+•
+income and expenses for each income statement and statement of comprehensive income
+are translated at average exchange rates (unless this is not a reasonable approximation of
+the cumulative effect of the rates prevailing on the transaction dates, in which case income
+and expenses are translated at the dates of the transactions), and
+all resulting translation differences are recognised in other comprehensive income.
+On consolidation, foreign exchange gains or losses arising from the exchange of any net
+investment in foreign entities, and of borrowings and other financial instruments designated as
+hedges of such investment, are recognised in the consolidated statement of comprehensive
+income. When a foreign operation is sold or any borrowings forming part of the net investment are
+repaid, the related foreign exchange gains or losses are reclassified into the consolidated income
+statement, as part of "Other (losses)/gains, net".
+Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as
+assets and liabilities of the foreign operation and are translated at the closing rate.
+Meituan 2021 Annual Report 185
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+assets and liabilities for each statement of financial position presented are translated at the
+closing rate of the date of that statement of financial position
+Non-monetary items that are measured at fair value and denominated in a foreign currency are
+exchanged using the exchange rates at the date when the fair value was determined. Exchange
+differences on assets and liabilities carried at fair value are reported as part of the fair value
+changes.
+Foreign currency transactions are exchanged into the functional currency using the exchange rates
+at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement
+of such transactions and from the exchange of monetary assets and liabilities denominated in
+foreign currencies at period end exchange rates are generally recognised in consolidated income
+statement on a net basis within “Other (losses)/gains, net".
+2.7.2 Transactions and balances
+The Group has applied IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint
+arrangements are classified as either joint operations or joint ventures depending on the contractual
+rights and obligations of each investor, rather than the legal structure of the joint arrangement. The
+Group has both joint operations and joint ventures.
+The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations
+and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been
+incorporated in the consolidated financial statements under the appropriate headings. Interests in joint
+ventures are accounted for using the equity method of accounting as mentioned in Note 2.3.
+Meituan 2021 Annual Report 183
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.5 Separate financial statements
+Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable
+costs of investment. The results of subsidiaries are accounted for by the Company on the basis of
+dividend received or receivable.
+Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these
+investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the
+dividend is declared or if the carrying amount of the investment in the separate financial statements
+exceeds the carrying amount in the consolidated financial statements of the investee's net assets
+including goodwill.
+2.6 Segment reporting
+Operating segments are reported in a manner consistent with the internal reporting provided to the
+chief operating decision-maker ("CODM"). The CODM, who is responsible for allocating resources and
+assessing performance of the operating segments, mainly refers to the executive Directors.
+2.7 Foreign currency exchange and translation
+2.7.1 Functional and presentation currency
+Items included in the financial statements of each of the Group's entities are measured using the
+currency of the primary economic environment in which the entity operates ("functional currency").
+The Company's functional currency is USD as its key activities and transactions are denominated
+in USD. The Company's primary subsidiaries were incorporated in the PRC and these subsidiaries
+considered RMB as their functional currency. The Group's presentation currency is RMB.
+If the ownership interest in an associate accounted for using the equity method is reduced but
+significant influence is retained, only a proportionate share of the amounts previously recognised in
+other comprehensive income are reclassified to profit or loss where appropriate.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+180 Meituan 2021 Annual Report
+(661,883)
+The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:
+Costs and Expenses
+Our revenues from the new initiatives and others segment increased by 58.7% to RMB14.7 billion for the fourth
+quarter of 2021 from RMB9.2 billion for the same period of 2020, mainly contributed by our retail businesses, B2B
+food distribution services and other new initiatives.
+Our revenues from the in-store, hotel & travel segment increased by 22.2% to RMB8.7 billion for the fourth quarter
+of 2021 from RMB7.1 billion for the same period of 2020. As we offered more variety and enhanced the quality of
+supply on our platform, and provided merchants with more online solutions, we were able to achieve steady growth
+in both GTV and online marketing Active Merchants, as well as a higher adoption rate of online marketing products
+by merchants, all of which drove the growth in commission revenue and online marketing services revenue.
+With the launch and wide adoption of a new fee structure for our food delivery merchants in 2021, we offer more
+flexibility in delivery methods and better transparency in pricing. We present the food delivery services revenue
+from both merchant side and consumer side for our 1P model, for which we organised and provide food delivery
+services, and the commission revenue purely represents the technology service fees from our merchants and third-
+party agent partners who use our food delivery platform. All the figures for comparative periods are presented in
+this way. Our revenues from the food delivery segment increased by 21.3% to RMB26.1 billion for the fourth quarter
+of 2021 from RMB21.5 billion for the same period of 2020. As we continually improved our membership program
+and diversified supply on our platform, the enlarged base of Transacting Users and higher order frequency resulted
+in the increase in GTV and thus the increase in revenues on a year-over-year basis.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2021 Annual Report 19
+37,917,504
+9,244,159
+7,135,360
+21,537,985
+Costs and Expenses:
+Total
+7,430,860
+14,558
+401,960
+(including interest revenue)
+Other services and sales
+6,060,683
+79,875
+3,538,844
+2,441,964
+Online marketing services
+12,664,562
+11,344,881
+7,847,378
+1,733,424
+Unaudited
+Three Months Ended
+December 31, 2020
+9.3%
+4,581,961
+Research and development expenses
+46.4%
+20.2%
+7,675,340
+22.7%
+11,239,904
+Selling and marketing expenses
+31.9%
+75.1%
+December 31, 2021
+28,461,795
+37,540,530
+Cost of revenues
+(RMB in thousands, except for percentages)
+year change
+of revenues
+Amount
+of revenues
+Amount
+Year-over-
+As a
+percentage
+As a
+percentage
+75.8%
+3,249,199
+3,581,958
+12,664,562
+7,768,614
+14,254,546
+Total
+(RMB in thousands)
+and others
+hotel & travel
+Food delivery
+In-store, New initiatives
+Three Months Ended December 31, 2021
+Unaudited
+Food delivery services
+Commission
+4,066,205
+Revenues
+As China encountered regional COVID-19 outbreaks during the fourth quarter of 2021, we experienced sequentially
+slower year-over-year revenue growth. Our revenues increased by 30.6% to RMB49.5 billion for the fourth quarter
+of 2021 from RMB37.9 billion for the same period of 2020. The increase was mainly driven by the slower yet steady
+revenue growth of our food delivery and in-store, hotel & travel segments, and strong revenue growth of our new
+initiatives especially the retail businesses.
+Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+18 Meituan 2021 Annual Report
+(589,128)
+(1,436,520)
+(3,935,732)
+Adjusted net loss
+(2,009,748)
+Adjusted EBITDA
+Non-IFRS measures:
+(2,244,292)
+The following table sets forth our revenues by segment and type in absolute amount for the fourth quarter of 2021
+and 2020:
+6,029,499
+2,325,479
+3,223,472
+Food delivery services
+Commission
+Total
+(RMB in thousands)
+New initiatives
+and others
+In-store,
+hotel & travel
+Food delivery
+Three Months Ended December 31, 2020
+49,523,133
+14,674,065
+Unaudited
+8,722,427
+14,254,546
+14,160,298
+26,126,641
+Total
+12,925,660
+12,025,596
+20,055
+880,009
+(including interest revenue)
+Other services and sales
+Online marketing services
+8,182,629
+322,990
+4,636,167
+Revenues
+Other gains, net
+8.6%
+General and administrative expenses
+Net provisions for impairment losses
+December 31,
+Three Months Ended
+Unaudited
+Cost of revenues
+Including: Interest revenue
+Revenues
+The following table sets forth the comparative figures for the fourth quarter of 2021 and 2020:
+The Fourth Quarter of 2021 Compared to the Fourth Quarter of 2020
+594,023
+Meituan 2021 Annual Report 17
+Hong Kong, March 25, 2022
+December 31,
+Chairman
+On behalf of the Board, I would like to express my sincere gratitude to our consumers, merchants, business
+partners, staff and management, and investors for their continuous trust and support. I would also like to thank
+wholeheartedly our couriers for their commitment and dedication. In 2022, we will continue to adhere our mission
+that "we help people eat better, live better", provide better value for our consumers and merchants, and contribute
+more to the broader society.
+APPRECIATION
+As we entered 2022, we still face challenges from COVID control measures and weakening consumption
+environment. Nevertheless, we are confident that we will be able to navigate through hard times and obstacles
+and achieve healthy growth, as we continue to strengthen our fundamental capabilities for the long term. With
+regard to our food delivery and in-store, hotel & travel segments, we will focus on high-quality growth, enhance
+user experience for both consumers and merchants, solidify our competitive advantage, and constantly improve
+operating efficiency. Meanwhile, we remain committed to facilitating the digital transformation process across
+industries, and will place additional emphasis on the long-term value creation and social responsibility fulfillment
+along the journey. Furthermore, we will continue to implement the upgraded “Retail + Technology" strategy,
+better help small and micro merchants to cope with difficult times, bring more convenience to people's lives, and
+in particular, provide reliable supply of daily necessities for people in the affected areas by the pandemic. As our
+goods retail business grows, we expand our network of partners, from mainly urban- and county-based merchants
+to rural-based "new farmers”. We will commit our support in promoting "rural revitalization", and will bring high
+quality products and services to tens of thousands of villages in China. In addition, we will continue to create a
+wide range of job opportunities while placing particular emphasis on the welfare and needs of flexible workers.
+Particularly, for our food delivery couriers, we will always take their rights and interests as top priority, and make our
+best efforts in improving their welfare and benefits. Last but not least, we will continue to leverage technology and
+innovations to bring more value for all the market participants, and contribute to the high quality development of
+digital economy.
+Company Outlook and Strategy for 2022
+CHAIRMAN'S STATEMENT
+16 Meituan 2021 Annual Report
+For Meituan Grocery, we continued to grow our user base and GTV in 2021. After completing coverage in four
+existing tier-one cities, we provided more diverse SKU selections and better experience for consumers. We also
+optimised our product structure, enhanced warehousing and logistics capabilities, and refined operations at front-
+end distribution centres, which altogether led to continued improvement in efficiency and unit economies.
+Meituan Instashopping delivered another stellar growth in 2021, with highest daily order volume exceeding 6.3
+million in December 2021. Leveraging our location-based e-commerce platform and on-demand delivery network,
+we offered consumers diverse selections of retail goods and convenient on-demand delivery services, and
+successfully converted a large number of high-quality food delivery users into Meituan Instashopping users. On the
+supply side, we expanded product categories and collaborated with more high-quality local stores. We provided
+local retailers with comprehensive suites of online solutions and tools, effectively helping the store owners digitize
+operations and improve efficiency. As a result, categories such as flowers, supermarkets and convenience stores
+maintained high growth momentum. Earlier this year, we rolled out the 24/7 medicine delivery services and received
+positive feedbacks from consumers, as it addressed consumers' urgent needs for medicine. We firmly believe
+that the endgame of the retail industry is "Everything Now", and we will continue to leverage our strengths and
+capabilities to facilitate such transformation.
+For Meituan Select, thanks to clear regulatory guidance and positive market environment, we achieved healthy
+growth as a major market player. We continually iterated our business model and actively built up various aspects
+of our long-term capabilities. By continually optimising our operations at different nodes, we improved operating
+efficiency and unit economics throughout 2021. The three-level logistics network system established by Meituan
+Select, which fulfills next-day pick-up orders, now covers the majority of neighborhoods and villages in 30 provinces
+across China. We continued to provide larger and more diverse SKU offerings while improving delivery efficiency
+and reliability. The launch of our fresh produce direct sourcing program allowed us to effectively match production
+and demand through both centralized and demand-based procurement process, in turn generating additional
+revenues for farmers. Residents in rural areas also have more convenient access to abundant and value-for-money
+daily necessities that previously only urban residents could obtain, eliminating the urban-rural consumption gap and
+further empowering modern agriculture. We launched a growth scheme for new agricultural merchants to help them
+continually improve cultivation techniques and provide vocational training in rural areas, focusing on e-commerce
+skills and operations. Meituan Select also provides a large number of flexible jobs for pick-up station managers,
+and creates an increasing number of job opportunities in logistics, warehousing, and processing. Thanks to our
+rapidly built supply chain and logistics system, the Meituan Select team actively responded to the government's
+call for assistance in Zhengzhou, Xi'an, and other cities affected by COVID-19 and natural disasters, providing a
+reliable supply of necessities to people in need. Looking forward, strictly adhering to regulatory requirements is
+our top priority, as we continue to strive for balanced, high-quality growth. We will focus on developing our own
+capabilities, while enhancing consumer experiences.
+CHAIRMAN'S STATEMENT
+Meituan 2021 Annual Report 15
+Wang Xing
+For the fourth quarter of 2021, revenues from the new initiatives and others segment increased by 58.7% year over
+year to RMB14.7 billion. Operating loss for the segment increased year over year to RMB10.2 billion for the fourth
+quarter of 2021, while the operating margin improved to negative 69.5% sequentially.
+2021
+(RMB in thousands)
+726,955
+at fair value through profit or loss
+Fair value changes of other financial investments
+(54,187)
+(52,489)
+and contract assets
+Net provisions for impairment losses on financial
+(1,950,943)
+(2,435,083)
+General and administrative expenses
+(3,249,199)
+2020
+(4,581,961)
+(7,675,340)
+(11,239,904)
+9,455,709
+11,982,603
+Gross profit
+(28,461,795)
+(37,540,530)
+252,335
+37,917,504
+238,175
+49,523,133
+Research and development expenses
+41.0%
+We continued to expand investments in new initiatives, especially in goods retail, as we upgraded to the "Retail +
+Technology" strategy. Revenues from the new initiatives and others segment increased by 84.4% year over year to
+RMB50.3 billion in 2021. Operating loss from new initiatives and others segment expanded to RMB38.4 billion in
+2021 from RMB10.9 billion in 2020, while operating margin decreased 36.6 percentage points year over year.
+For hotel & travel, although regional COVID-19 outbreaks and strict travel restrictions brought negative impact,
+we still withstood the challenges and helped hotel merchants recover. In 2021, our domestic hotel room nights
+grew 34.5%, thanks to the industry recovery and our strategic focus on the domestic travel market, local
+accommodations, and short-haul travel scenarios. In addition, we solidified our competitive advantage in the low-
+star domain, bringing offline users to our online platform, and helping more hotel merchants digitize operations. For
+high-star hotels, room nights contribution exceeded 16.5% in 2021, thanks to our continued improvement in high-
+star supply and consumer service quality.
+(149,735)
+Share of (losses)/gains of investments accounted
+for using the equity method
+(163,855)
+117,398
+Loss before income tax
+(5,344,209)
+(2,815,309)
+Income tax credits
+5,058
+571,017
+(331,672)
+Loss for the period
+(3.1%)
+0.1%
+54,187
+0.1%
+52,489
+on financial and contract assets
+24.8%
+5.1%
+1,950,943
+4.9%
+2,435,083
+(5,339,151)
+New initiatives and others
+Finance costs
+157,174
+For in-store, our transaction volume, GTV, and annual active merchants all reached record highs. We deepened
+penetration into lower-tier cities in China with broader coverage scope, and helped accelerate the digitization
+process in these under-served markets. Categories such as leisure and entertainment, sports, elderly care, medical
+care, and pet care demonstrated strong growth momentum, while categories such as handicraft activities, music
+recording, interactive light shows, and stress relief emerged as a new consumption trend. Moreover, we continued
+to introduce tailored products and services for merchants from different categories, helping them improve online
+operations. On the consumer side, we not only offered increasingly convenient and diverse products, but also
+effectively stimulated consumption through various marketing and promotional campaigns during holiday seasons,
+which further strengthened consumer mindshare of Meituan as the "go-to destination for local services".
+For the fourth quarter of 2021, revenues from our in-store, hotel & travel businesses increased by 22.2% year over
+year to RMB8.7 billion. Operating profit for the segment increased to RMB3.9 billion from RMB2.8 billion for the
+fourth quarter of 2020, while operating margin increased to 44.7% from 39.5%, due to change in revenue mix.
+CHAIRMAN'S STATEMENT
+14 Meituan 2021 Annual Report
+Despite the negative impacts from sporadic COVID-19 outbreaks and macro environment, our in-store, hotel &
+travel segment still achieved solid growth. During the year, we continued to bring broader consumption categories
+to cope with the ever-evolving demands from consumers, while onboarding more merchants and introducing
+diverse online solutions to the merchants. As a result, revenues from the in-store, hotel & travel businesses
+increased by 53.1% year over year to RMB32.5 billion in 2021. Operating profit from the in-store, hotel & travel
+businesses increased to RMB14.1 billion in 2021 from RMB8.2 billion in 2020, while operating margin increased to
+43.3% from 38.5%.
+In-store, hotel & travel
+For the twelve months ended December 31, 2021, around 5.27 million food delivery couriers earned income through
+our Meituan platform. We continued to promote our "Tongzhou Project" to ensure proper rights and interests of
+food delivery couriers, and prioritized enhancing courier experience and creating a positive ecosystem. To better
+understand the couriers' needs, we held 136 courier feedback sessions in 2021. We continued to optimise our
+algorithms and rules taking into account the couriers' feedback. For example, we changed the display of estimated
+delivery time of each order from a point of time to an extended period of time, alleviating pressure of couriers
+during delivery. In some regions, we launched various pilot programs, such as only scheduling courier pickup after
+meals are ready to reduce the wait time and reassigning orders to other couriers in unexpected situations. These
+measures help dispatch orders to couriers in a more thoughtful manner while ensuring their safety, and enable
+couriers to earn relatively higher income with more reasonable workload. We also worked with our delivery partners
+to launch a pilot scheme to optimise the service quality assessment mechanism, which changes the practice of
+income reduction due to consumer bad reviews or late delivery into point reduction for the couriers, so that they
+can make up for the loss of points through other performance and activities. The couriers' monthly rewards are
+linked to the accumulated points of the month. This optimised scheme effectively mitigates financial impacts on
+couriers due to occasional, unexpected situations, while ensuring consumer experience simultaneously. In the
+adverse weather conditions in the fourth quarter, we increased courier incentives and distributed one million pieces
+of cold protection apparel to couriers in affected markets. We also provided free accommodations and quarantine
+subsidies for couriers who were affected by the COVID control measures. Furthermore, we continued to implement
+various charity programs that offer support for thousands of couriers' families. We provided couriers with full
+scholarships, allowing them to undertake further education and receive a higher degree without financial burden.
+In the meantime, we are actively cooperating with the arrangements of the pilot program that provides couriers
+with occupational injury insurance, under the guidance of the relevant authorities. We will fulfill our corporate
+responsibilities, ensure that the pilot program meets the planned timeline, and cover all expenses for participating
+couriers. Going forward, we plan to provide couriers with a more comprehensive welfare scheme and worker
+benefits, along with continued improvement on their sense of fulfillment and well-being.
+CHAIRMAN'S STATEMENT
+Meituan 2021 Annual Report 13
+On the merchant side, we continued to help millions of restaurants digitize their business operations through
+comprehensive services and online marketing tools, bringing additional business volumes to help merchants
+generate income under this challenging environment. An increasing number of merchants used our online marketing
+products and stepped up in their online promotions given the effectiveness of boosting consumer demand. We
+make our utmost efforts to understand our merchants' pain points and address their issues, as it is crucial for us to
+provide support and create value for them. In May 2021, we rolled out a new fee structure that splits fee charged
+from merchants into a technology service fee, which is the commission revenue, and a food delivery services fee.
+The new fee structure promotes more transparent pricing and clearer cost structures, and benefits the majority of
+the small- and medium-sized merchants on our platform. Starting from the fourth quarter of 2021, we separately
+disclosed the food delivery services revenue to reflect this new fee structure in our financial results.
+We are glad to see that food delivery has become an essential service for consumers. We have not only diversified
+selections for consumers, but also continued to identify the evolving consumption trend and to promote the growth
+of new consumption categories. Categories such as late-night snacks, milk tea, salads and light meals witnessed
+notable growth during the year. The increase in supply effectively incentivized higher order volume from the mid-
+and high-frequency users. As a result, food delivery annual Transacting Users increased by 13% year over year,
+and annual average transaction frequency increased by 25% year over year. The growth demonstrates consumers'
+ongoing trust in our platform and their recognition of food delivery as an indispensable service in daily life.
+69,724
+For the fourth quarter of 2021, GTV of our food delivery business increased by 20.7% year over year to RMB188.6
+billion, with daily average order volume increasing by 17.4% year over year to 42.5 million. Our revenues from food
+delivery business increased by 21.3% year over year to RMB26.1 billion. Operating profit from our food delivery
+business increased to RMB1.7 billion for the fourth quarter of 2021 from RMB882.4 million for the fourth quarter
+of 2020, while operating margin increased to 6.6% from 4.1%, primarily attributable to higher portion of online
+marketing services revenue and lower seasonal courier incentives.
+12 Meituan 2021 Annual Report
+Despite challenges from the macro environment, natural disasters and sporadic COVID-19 outbreaks, our food
+delivery business achieved strong growth in 2021. Annual Transacting Users and average transaction frequency
+broke record highs. Our peak daily order volume exceeded 50 million in August and subsequently reached historic
+highs again in December. GTV increased by 43.6% year over year to RMB702.1 billion, and revenue increased by
+45.3% year over year to RMB96.3 billion in 2021. Operating profit increased to RMB6.2 billion in 2021 from RMB2.8
+billion in 2020, while operating margin increased to 6.4% from 4.3%. Our solid business performance in 2021 was a
+testament to our resilient business model and competitive strength in consumer base, merchant base and delivery
+network.
+Food delivery
+BUSINESS REVIEW AND OUTLOOK
+In 2021, we upgraded our corporate strategy from "Food + Platform" to "Retail + Technology", further expanding
+our product and service offerings to the broader retail, connecting with more market participants, and leveraging
+technology to facilitate advancement across industries. Our businesses growth remained strong, with total
+revenues increasing by 56.0% year over year to RMB179.1 billion in 2021. The aggregate operating profit for the
+food delivery and the in-store, hotel & travel segments reached RMB20.3 billion in 2021, up from RMB11.0 billion in
+2020. Operating loss for the new initiatives and others segment expanded as we remained committed to business
+areas that would bring long-term value. Both adjusted EBITDA and adjusted net profit experienced year-over-year
+decrease and turned to negative RMB9.7 billion and adjusted net loss of RMB15.6 billion in 2021, respectively. Our
+net cash flows from operating activities turned to an outflow of RMB4.0 billion in 2021 from an inflow of RMB8.5
+billion in 2020. We had cash and cash equivalents of RMB32.5 billion and short-term treasury investments of
+RMB84.3 billion as of December 31, 2021, compared to the balances of RMB17.1 billion and RMB44.0 billion as of
+December 31, 2020, respectively.
+FINANCIAL PERFORMANCE HIGHLIGHTS
+1,283,147
+Operating loss
+(5,005,856)
+(2,852,696)
+Finance income
+CHAIRMAN'S STATEMENT
+MANAGEMENT DISCUSSION AND ANALYSIS
+Selling and marketing expenses
+690.5
+8.8
+2020
+change
+Gross Transaction Volume of food delivery
+Number of food delivery transactions²
+Number of domestic hotel room nights
+(in millions, except for percentages)
+188,620.8
+3,910.6
+115.3
+156,287.3
+3,331.3
+119.7
+20.7%
+17.4%
+2021
+(3.7%)
+December 31,
+2021
+December 31,
+2020
+Year-over-year
+Gross Transaction Volume of food delivery
+Number of food delivery transactions²
+Number of domestic hotel room nights
+(in millions, except for percentages)
+702,057.4
+14,367.6
+476.9
+488,851.2
+10,147.4
+354.5
+Year Ended
+43.6%
+41.6%
+Year-over-year
+27.2%
+10 Meituan 2021 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+OPERATING METRICS
+Number of Transacting Users
+Number of Active Merchants
+Average number of transactions per annual Transacting User
+December 31,
+2021
+Three Months Ended
+December 31, December 31,
+Twelve Months Ended
+December 31,
+2020
+(in millions, except for percentages)
+510.6
+35.2%
+6.8
+29.2%
+(units, except for percentages)
+35.8
+28.1
+Year-over-year
+change
+34.5%
+change
+Our 1P model, for which we organise and provide food delivery services, accounts for about 67% of total number of food
+delivery transactions for all periods or years presented.
+To our Shareholders:
+Meituan 2021 Annual Report 11
+CHAIRMAN'S STATEMENT
+Despite the challenges in 2021, we continued to innovate and leverage technology to provide consumers with
+more diverse and higher-quality services. On the merchant front, we remained committed to assisting small-
+and medium-sized merchants adapt to online operations, which helped accelerate digital transformations across
+various service categories. During the year, we upgraded our corporate strategy from "Food + Platform" to "Retail +
+Technology", expanding our goods and services matrices, as well as improving our service quality. Via exploring the
+retail business, we extended our services to rural areas and less developed markets and provided rural residents
+with a much wider variety and quantity of value-for-money products, including fresh produce and daily necessities.
+Furthermore, we created a wide range of job opportunities while placing emphasis on the welfare and benefits of
+flexible workers. Meanwhile, we remained absolutely focused on building fundamental capabilities for long-term
+development, supporting our ecosystem partners, and more importantly, fulfilling our social responsibilities that
+create more value for the society at large.
+2
+On behalf of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2021.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 197
+Deferred income tax liabilities are provided on taxable temporary differences arising from
+investments in subsidiaries and associates, except for deferred income tax liabilities where the
+timing of the reversal of the temporary difference is controlled by the Group and it is probable that
+the temporary difference will not reverse in the foreseeable future. Generally the Group is unable
+to control the reversal of the temporary difference for associates. Only when there is an agreement
+in place that gives the Group the ability to control the reversal of the temporary difference in the
+foreseeable future, deferred tax liabilities in relation to taxable temporary differences arising from
+the subsidiaries and associates' undistributed profits is not recognised.
+Deferred income tax assets are recognised only to the extent that future taxable profit, against
+which the temporary differences and tax losses can be utilised, will be probably available.
+The current income tax charge is calculated on the basis of the tax laws enacted or substantively
+enacted at the end of the reporting period in the countries where the Company's subsidiaries
+operate and generate taxable income. Management periodically evaluates positions taken in tax
+returns with respect to situations in which applicable tax regulation is subject to interpretation. It
+establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
+authorities.
+2.23.2 Deferred income tax
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.23.1 Current income tax
+Deferred income tax is recognised, using the liability method, on temporary differences arising
+between the tax base of assets and liabilities and their carrying amounts in the consolidated
+financial statements. However, deferred tax liabilities are not recognised if they arise from the
+initial recognition of goodwill. The deferred income tax is not accounted for if it arises from initial
+recognition of an asset or liability in a transaction other than a business combination that at the
+time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is
+determined using tax rates (and laws) that have been enacted or substantively enacted at the end
+of the reporting period and are expected to apply when the related deferred income tax asset is
+realised or the deferred income tax liability is settled.
+2.23 Current and deferred income tax (Continued)
+Cash that restricted from withdrawal, use or pledged as security is reported separately in the
+consolidated statements of financial position, and is not included in the consolidated statements of cash
+flows.
+2.19 Share capital
+2.23 Current and deferred income tax (Continued)
+Cash and cash equivalents includes cash on hand and cash in bank, deposits held at call with
+banks within three months and certain amounts of cash held in accounts managed by other financial
+institutions in connection with the provision of services and sales of goods.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+194 Meituan 2021 Annual Report
+Trade receivables are recognised initially at the amount of consideration that is unconditional, unless
+they contain significant financing components when they are recognised at fair value. Other receivables
+are recognised initially at fair value. Trade and other receivables are subsequently measured at
+amortised cost using the effective interest rate method, less allowance for impairment.
+Trade and other receivables are generally due for settlement within 1 year and therefore are all classified
+as current.
+Trade receivables are amounts due from customers for goods and services provided in the ordinary
+course of business.
+2.17 Trade and other receivables
+Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
+shares or share options are shown in equity as a deduction from the proceeds.
+2.20 Trade and other payables
+The income tax expenses or credits for the period is the tax payable on the current period's taxable
+income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
+tax assets and liabilities attributable to temporary differences and unused tax losses.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Inventories are stated at the lower of cost and net realisable value. Cost is primarily determined using
+the weighted average method. Costs of purchased inventory are determined after deducting rebates
+and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less
+applicable variable selling expenses.
+Trade and other payables represent liabilities for goods and services provided to the Group prior to the
+end of financial year which are unpaid. Trade and other payables are presented as current liabilities
+unless payment is not due within 12 months after the end of the reporting period. They are recognised
+initially at their fair value and subsequently measured at amortised cost using the effective interest rate
+method.
+2.21 Borrowings, notes payable and borrowing costs
+Borrowings and notes payable issued by the Group are initially recognised at fair value, net of
+transaction costs incurred. They are subsequently measured at amortised cost. Any difference between
+the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over
+their contractual terms using the effective interest rate method.
+The fair value of the liability portion of convertible bonds is determined using a market interest rate for
+equivalent non-convertible bonds. This amount is recorded as a liability on an amortised cost basis
+until extinguished on conversion or maturity of the convertible bonds. The remainder of the proceeds is
+allocated to the conversion option, which is recognised in other reserves, net of income tax effects.
+Meituan 2021 Annual Report 195
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.21 Borrowings, notes payable and borrowing costs (Continued)
+Borrowing costs are expensed in the period in which they are incurred.
+Borrowings and notes payable are removed from the consolidated statement of financial position when
+the obligation specified in the contract is discharged, cancelled or expired.
+2.22 Financial liabilities at fair value through profit or loss
+The Group irrevocably designate a financial liability at fair value through profit or loss when doing so
+results in more relevant information at initial recognition, because either:
+(a)
+(b)
+it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes
+referred to as "an accounting mismatch") that would otherwise arise from measuring assets or
+liabilities or recognising the gains and losses on them on different bases; or
+a group of financial liabilities or financial assets and financial liabilities is managed and its
+performance is evaluated on a fair value basis, in accordance with a documented risk management
+or investment strategy, and information about the group is provided internally on that basis to
+the Group's key management personnel, for example, the Group's Board of Directors and chief
+executive officer.
+2.23 Current and deferred income tax
+196 Meituan 2021 Annual Report
+Borrowings and notes payable are classified as current liabilities unless the Group has an unconditional
+right to defer settlement of the liability for at least 12 months after the end of the reporting period.
+2.16 Inventories
+2.13.3 Derecognition (Continued)
+2.15 Deposits from transacting users
+FVOCI: Assets that are held for collection of contractual cash flows and for selling,
+where the assets' cash flows represent solely payments of principal and interest,
+are measured at FVOCI. Movements in the carrying amount are taken through other
+comprehensive income, except for the provisions or reversals of impairment losses,
+interest income and foreign exchange gains or losses which are recognised in profit
+or loss. When the financial asset is derecognised, the cumulative gains or losses
+previously recognised in other comprehensive income is reclassified to profit or loss
+and presented in "Other (losses)/gains, net". Interest income from these financial
+assets is included in finance income using the effective interest rate method. Foreign
+exchange gains or losses are presented in "Other (losses)/gains, net" and impairment
+losses are presented as separate line item in the consolidated income statement.
+Amortised cost: Assets that are held for collection of contractual cash flows where
+those cash flows represent solely payments of principal and interest are measured
+at amortised cost. Interest income from these financial assets is included in finance
+income using the effective interest rate method. Any gains or losses arising from
+derecognition is recognised directly in profit or loss and presented in "Other (losses)/
+gains, net" together with foreign exchange gains or losses. Impairment losses are
+presented as separate line item in the consolidated income statement.
+•
+Subsequent measurement of debt instruments depends on the Group's business model
+for managing the asset and the cash flows characteristics of the asset. There are three
+measurement categories into which the Group classifies its debt instruments:
+Debt instruments
+(a)
+2.13.4 Measurement (Continued)
+2.13 Financial assets (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 191
+Financial assets with embedded derivatives are considered in their entirety when determining
+whether their cash flows are solely payment of principal and interest.
+At initial recognition, the Group measures a financial asset at its fair value plus, transaction costs
+that are directly attributable to the acquisition of the financial asset, in case that a financial asset
+is not at fair value through profit or loss ("FVPL"). Transaction costs of financial assets at FVPL are
+expensed in profit or loss.
+2.13.4 Measurement
+As part of its operations, the Group securitises financial assets, generally through the sale of these
+assets to special purpose vehicles which issue securities to investors. When the securitisation
+of financial assets is qualified for derecognition, the relevant financial assets are derecognised
+in their entirety and a new financial asset or liability is recognised regarding the interest in the
+unconsolidated securitisation vehicles that the Group acquired. When the securitisation of financial
+assets is not qualified for derecognition, the relevant financial assets are not derecognised, and
+the consideration paid by third parties are recorded as a financial liability. When the securitisation
+of financial assets is partially qualified for derecognition, the book value of the transferred assets
+should be recognised between the derecognised portion and the retained portion based on their
+respective fair values, and the difference between the book value of the derecognised portion and
+the total consideration paid for the derecognised portion shall be recorded in profit or loss.
+2.13 Financial assets (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+190 Meituan 2021 Annual Report
+FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at
+FVPL. Gains or losses on debt instruments that is subsequently measured at FVPL are
+recognised in profit or loss and presented within "Other (losses)/gains, net".
+192 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial assets and liabilities are offset and the net amount reported in the balance sheet where
+the Group currently has a legally enforceable right to offset the recognised amounts, and there is an
+intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group has
+also entered into arrangements that do not meet the criteria for offsetting but still allow for the related
+amounts to be set off in certain circumstances, such as bankruptcy or the termination of a contract.
+2.14 Offsetting financial instruments
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 193
+While cash and cash equivalents, restricted cash, treasury investments at amortised cost or at
+FVOCI are also subject to the impairment requirements of IFRS 9, the identified impairment losses
+were immaterial.
+Financial assets in prepayment, deposits and other assets, other than loan receivables
+Trade receivables
+Deposits from transacting users are the deposits received from transacting users of bike-sharing
+services, which are placed in the custody of certain bank accounts and redeemable at any time upon
+the requests from transacting users.
+•
+Loan receivables
+•
+The Group has three types of financial assets that are subject to IFRS 9's new ECL model
+(Note 3.1.2):
+The Group assesses on a forward-looking basis the expected credit losses ("ECL") associated with
+its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied
+depends on whether there has been a significant increase in credit risk ("SICR").
+2.13.5 Impairment
+Changes in the fair value of financial assets at FVPL are recognised in "Fair value changes
+of other financial investments at fair value through profit or loss" as applicable. Equity
+instruments designated as FVOCI are not subject to impairment assessment.
+The Group subsequently measures all equity instruments at fair value. Where the Group's
+management has elected to present fair value changes of equity instruments in other
+comprehensive income, there is no subsequent reclassification of such fair value changes to
+profit or loss following the derecognition of the financial assets. Dividends from such equity
+instruments continue to be recognised in profit or loss when the Group's right to receive
+payments is established.
+(b) Equity instruments
+2.13.4 Measurement (Continued)
+2.13 Financial assets (Continued)
+2.23.2 Deferred income tax (Continued)
+Deferred income tax assets are recognised on deductible temporary differences arising from
+investments in subsidiaries and associates only to the extent that it is probable the temporary
+difference will reverse in the future and there is sufficient taxable profit available against which the
+temporary difference can be utilised.
+2.18 Cash and cash equivalents and restricted cash
+2.24 Employee benefits
+The total expenses are recognised over the vesting period, over which all of the specified vesting
+conditions are to be satisfied. At the end of each period, the Group revises its estimates of the
+number of share options that are expected to vest based on the non-market performance vesting
+and service conditions. It recognises the impact of the revision to original estimates, if any, in profit
+or loss, with a corresponding adjustment to equity.
+Meituan 2021 Annual Report 199
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.25 Share-based payments (Continued)
+2.25.2 RSUs
+For grant of RSUs, the total amount to be expensed is determined by reference to the fair value of
+the Company's shares at the grant date.
+In addition, in some circumstances employees may provide services in advance of the grant date
+and therefore the grant date fair value is estimated for the purpose of recognising the expenses
+during the period between service commencement date and grant date.
+2.25.3 Modifications and Cancellations
+The Group may modify the terms and conditions of share incentive awards granted. If a
+modification increases the fair value of the equity instruments granted, the incremental fair value
+granted is included in the measurement of the amount recognised for the services received over
+the remainder of the vesting period.
+A grant of share incentive awards, that is cancelled or settled during the vesting period, is treated
+as an acceleration of vesting. The Group immediately recognises the amount that otherwise would
+have been recognised for services received over the remainder of the vesting period.
+2.26 Provisions
+Provisions for service warranties and make good obligations are recognised when the Group has a
+present legal or constructive obligation as a result of past events. It is probable that an outflow of
+resources will be required to settle the obligation and the amount can be reliably estimated. Provisions
+are not recognised for future operating loss.
+Where there are a number of similar obligations, the likelihood that an outflow will be required in
+settlement is determined by considering the class of obligations as a whole. A provision is recognised
+even if the likelihood of an outflow with respect to any one item included in the same class of obligations
+may be small.
+Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
+offset current income tax assets against current income tax liabilities and when the deferred
+income tax assets and liabilities relate to income tax levied by the same taxation authority on either
+the taxable entities or different taxable entities where there is an intention to settle the balances on
+a net basis.
+including the impact of any non-vesting conditions.
+excluding the impact of any service and non-market performance vesting conditions, and
+Provisions are measured at the present value of management's best estimate of the expenditure
+required to settle the present obligation at the end of the reporting period. The discount rate used to
+determine the present value is a pre-tax rate that reflects current market assessments of the time value
+of money and the risks specific to the liabilities. The increase in the provision due to the passage of time
+is recognised as interest expenses.
+including any market performance conditions
+•
+Employee entitlements to annual leave are recognised when they accrue to employees. A provision
+is made for the estimated liability for annual leave as a result of services rendered by employees
+up to the end of the reporting period. Employee entitlements to sick and maternity leave are not
+recognised until the time of leave.
+2.24.2 Pension obligations and other social welfare benefits
+The Group contributes on a monthly basis to various defined contribution plans organised by the
+relevant governmental authorities. The Group's liability in respect of these plans is limited to the
+contributions payable in each period. The Group's contributions to these plans are expensed as
+incurred. Assets of the plans are held and managed by government authorities and are separated
+from those of the Group. During the reporting period, no forfeited contributions had been used by
+the Group to reduce the existing level of contributions.
+2.24.3 Bonus plan
+198 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+The expected cost of bonuses is recognised as a liability when the Group has a present legal or
+constructive obligation for payment of bonuses as a result of services rendered by employees and
+a reliable estimate of the obligation being made. Liabilities for bonuses are expected to be settled
+within 1 year and are measured at the amounts expected to be paid when they are settled.
+2.25 Share-based payments
+The Group has operated share incentive awards including share option schemes and share award
+schemes. The pre-IPO employee stock incentive scheme adopted by the Company dated October 6,
+2015 ("Pre-IPO ESOP") was administered until the initial public offering, after which it was replaced
+by the post-IPO share option scheme ("Post-IPO Share Option Scheme") and the post-IPO share
+award scheme ("Post-IPO Share Award Scheme") adopted by the Company on August 30, 2018. The
+Group receives services from employees and other qualified participants as consideration for equity
+instruments (including share options and restricted share units, "RSUS”) of the Group under the above
+schemes. The fair value of the services received in exchange for the grant of the equity instruments is
+recognised as an expense in the consolidated income statement.
+2.25.1 Share options
+For grant of share options, the total amount to be expensed is determined by reference to the fair
+value of the share options granted using Black-Scholes models:
+•
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.24.1 Employee leave entitlement
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Right-of-use assets are generally depreciated over the shorter of the right-of-use assets' useful life and
+the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option,
+the right-of-use assets are depreciated over the underlying assets' useful life.
+Right-of-use assets are presented in "Property, plant and equipment" in the Group's consolidated
+statement of financial position.
+The payments associated with leases of the low-value assets are recognised on a straight-line basis
+as expenses in profit or loss. The low-value assets comprise small items of facilities. Variable lease
+payments not based on an index or a rate are recognised in profit or loss when the triggering condition
+of those payments occurs.
+The Group considers the lease as a single transaction in which the assets and liabilities are integrally
+linked. There is no net temporary difference at inception. Subsequently, when the differences on
+settlement of the lease liabilities and the amortisation of the leased assets arise, there will be a net
+temporary difference on which deferred income tax is recognised.
+Meituan 2021 Annual Report 207
+Subsidies from the government are recognised at their fair value where there is a reasonable assurance
+that the subsidies will be received and the Group will comply with all attached conditions. Under these
+circumstances, the subsidies are recognised as income or matched with the associated costs which the
+subsidies are intended to compensate.
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.31 Dividends distribution
+Dividend distribution to the Company's shareholders is recognised as a liability in the Group's
+consolidated financial statements in the period in which the dividend is approved by the Company's
+shareholders or Directors where appropriate.
+2.32 Government subsidies
+restoration costs.
+3
+For the year ended December 31, 2021
+•
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+any lease payments made at or before the commencement date;
+In arrangements with multiple distinct performance obligations, total consideration is allocated to each
+performance obligation based on its relative standalone selling price ("SSP"). The Group generally
+determines the SSP based on the prices charged to customers. Relevant information will be taken
+into consideration when more than one SSP for individual performance obligation exists. If the SSP is
+not directly observable, it is estimated based on adjusted market assessment approach or cost plus a
+margin, depending on the availability of observable information.
+FINANCIAL RISK MANAGEMENT
+Revenues are principally comprised of food delivery services, commission, online marketing services
+and other services and sales. The Group recognises revenues when or as the control of the promised
+goods or services is transferred to the customers, netting of value-added taxes ("VAT"). Depending on
+the terms of the contracts and the laws that apply to the contracts, if control of the promised goods or
+services is transferred over time, revenues are recognised over the period of the contracts by reference
+to the progress towards complete satisfaction of those performance obligations. Otherwise, revenues
+are recognised at a point in time when the customers obtain control of the promised goods or services.
+2.27 Revenue recognition
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+any initial direct costs; and
+200 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2.30 Leases other than land use rights (Continued)
+Right-of-use assets are measured at cost comprising the following:
+•
+the amount of the initial measurement of lease liabilities;
+•
+206 Meituan 2021 Annual Report
+The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
+cash flow and fair value interest rate risk, and price risk), credit risk and liquidity risk. The Group's overall
+risk management programme focuses on the unpredictability of financial markets and seeks to minimise
+potential adverse effects on the Group's financial performance. Risk management is carried out by the senior
+management of the Group.
+(c)
+Financial risk factors
+Meituan 2021 Annual Report 209
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk
+The Group is exposed to price risk in respect of financial assets measured at fair value
+held by the Group. The Group is not exposed to commodity price risk. To manage its price
+risk arising from the financial assets, the Group diversifies its portfolio. Each investment
+is managed by senior management on a case by case basis. The sensitivity analysis is
+performed by management (Note 3.3).
+The Group is exposed to credit risk in relation to certain financial and contract assets, of which
+the carrying amounts represent the Group's maximum exposure to the credit risk. The ECL arising
+from the credit risk are presented as “Net provisions/(reversals) for impairment losses on financial
+and contract assets" in the consolidated income statement.
+Cash and cash equivalents, restricted cash and treasury investments
+To manage credit risk arising from cash and cash equivalents, restricted cash and treasury
+investments, the Group only transacts with state-owned or reputable financial institutions.
+Primarily these instruments are considered to have a low risk of default and the counterparty
+has a strong capacity to meet its contractual cash flows obligations in the near term. The
+identified credit losses are immaterial.
+(b)
+Trade receivables and contract assets
+To manage credit risk arising from trade receivables and contract assets, the Group has
+policies in place to ensure that credit terms are made to counterparties with an appropriate
+credit history and the management performs ongoing credit evaluations of its counterparties.
+The credit period granted to the customers is usually no more than 180 days considering
+their financial position, past experience and other factors.
+The contract assets relate to unbilled work in progress and have substantially the same risk
+characteristics as the trade receivables for the same types of contracts. To measure the
+ECL, trade receivables and contract assets have been grouped based on shared credit risk
+characteristics and the days past due.
+(a)
+Price risk
+As of December 31, 2021, the Group's notes payable were carried at fixed rates, and the
+Group's borrowings were partially carried at floating rates.
+The Group's exposure to changes in interest rates is also attributable to its borrowings and
+notes payable, details of which have been disclosed in Note 31 and Note 32. Borrowings
+and notes payable carried at floating rates expose the Group to cash flow interest rate risk
+whereas those carried at fixed rates expose the Group to fair value interest rate risk.
+3.1.1 Market risk
+(a) Foreign exchange risk
+Foreign exchange risk arises when future commercial transactions or recognised assets and
+liabilities are denominated in a currency that is not the Group entities' functional currency.
+The Group manages its foreign exchange risk by performing regular reviews of the Group's
+net foreign exchange exposures and tries to minimise these exposures through natural
+hedges, wherever possible and may enter into forward foreign exchange contracts, when
+necessary.
+The Group operates mainly in the PRC with most of the transactions settled in RMB, and the
+functional currency of the Company is USD whereas functional currency of the subsidiaries
+operating in the PRC is RMB. The management considers that the business is not exposed to
+any significant foreign exchange risk as there are no significant financial assets or liabilities of
+the Group are denominated in the currencies other than the respective functional currencies
+of the Group's entities.
+208 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.1 Market risk (Continued)
+(b)
+Cash flow and fair value interest rate risk
+The Group's income and operating cash flows are substantially independent of changes in
+market interest rates and the Group has no significant interest-bearing assets except for
+cash and cash equivalents, restricted cash, loan receivables and treasury investments at
+amortised cost, and details of which have been disclosed in Note 25, Note 22(a) and Note
+21.
+The Group evaluates whether it acts as a principal or an agent to determine whether it is appropriate
+to record the gross amount of revenues and related costs, or the net amount earned as commission.
+The Group is a principal if it controls the specified goods or services before being transferred to the
+customers. Generally, a principal is the primary obligor, has latitude in establishing the selling price, or
+is subject to inventory risks. Otherwise, the Group is an agent to arrange for goods or services to be
+provided by other parties.
+3.1
+Meituan 2021 Annual Report 201
+2.27 Revenue recognition (Continued)
+2
+2.27.4 Practical Expedients and Exemptions
+The transaction price allocated to the performance obligations that are unsatisfied, or partially
+unsatisfied, has not been disclosed, as substantially all the Group's contracts with customers have
+a duration of 1 year or less.
+2.28 Interest income
+Interest income is calculated by applying the effective interest rate to the carrying amount of financial
+assets after considering the impairment losses arising from credit risk.
+Interest income earned from financial assets that are held for cash management purposes is presented
+as finance income. Interest revenue earns from financial assets that are held for micro-credit business
+(Note 2.27.1). Any other gains from treasury investments is included in "Other (losses)/gains, net".
+2.29 Dividend income
+Dividend income is recognised when it is received or when the right to collection is unconditionally
+established.
+2.30 Leases other than land use rights
+The Group leases land use rights (Note 2.12), various offices and others. The lease contracts other than
+land use rights are typically for fixed periods of 1 month to 10 years and may have extension options.
+They do not impose any covenants other than the security interests in the leased assets that are held by
+the lessors. Leased assets may not be used as security for borrowing purposes.
+2.27 Revenue recognition (Continued)
+Right-of-use assets and lease liabilities arising from a lease other than land use rights are initially
+measured on a present value basis at the date when the leased assets are available for use by the
+Group.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.30 Leases other than land use rights (Continued)
+Lease liabilities include the net present value of the following lease payments:
+•
+fixed payments (including in-substance fixed payments), and
+.
+Meituan 2021 Annual Report 205
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+204 Meituan 2021 Annual Report
+(d)
+The Group provides various online marketing services primarily to merchants in the Group's
+online marketplaces or through the third-party marketing affiliate programme, including but
+not limited to pay for performance marketing services on which the merchants are charged
+through market-based mechanism based on effective clicks on certain information, display
+marketing services that allow merchants to place promotion information online, and other
+value-added marketing services under an annual plan.
+Revenue from performance-based marketing services is recognised when relevant specified
+performance measures are fulfilled. Revenues from display-based and other value-added
+marketing services are recognised ratably over the contractual service period. The online
+marketing services revenue is recorded on a gross basis when the Group is the principal to
+the merchants in the respective arrangements.
+In general, the merchants need to make advance payments for all the online marketing
+services which is primarily recorded in "Deferred revenues".
+Other services and sales
+Other services and sales revenue primarily comprises (i) sales of goods, mainly generated
+from B2B food distribution services and Meituan Grocery, (ii) various services rendered by
+various businesses such as community e-commerce, bike-sharing and electric mopeds,
+ride-sharing, power banks and micro-credit, and (iii) interest revenue. The Group recognises
+the other services and sales revenue on a gross basis as a principal when the control of the
+goods is transferred to the customers, or when the respective services are rendered, netting
+of any possible transacting users incentives which are not in exchange for a distinct good or
+service to the Group.
+Loan facilitation services and post-origination services are identified as two distinct
+performance obligations, to which the total consideration is allocated based on relative SSP
+appropriately. Loan facilitation services revenue is recognised at point of time when the loan
+contract is established between borrowers and lenders and post-origination services revenue
+is recognised over the loan contract period.
+Interest revenue is derived from the loan principal, funded entirely or partially by the Group,
+by applying the effective interest rate to the carrying amount of loan receivables after
+considering the impairment losses arising from credit risk.
+Meituan 2021 Annual Report 203
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.2 Contract Balances
+When either party to a contract has performed, the Group presents the contract in the
+consolidated statement of financial position as a contract asset or a contract liability, depending
+on the relationship between the entity's performance and the customer's payment.
+A contract asset is the Group's right to consideration in exchange for goods and services that
+the Group has transferred to a customer. A receivable is recorded when the Group has an
+unconditional right to consideration, if only the passage of time is required before payment of
+that consideration is due. The Group's contract assets are mainly trade receivables due from loan
+facilitation services, online marketing services and other services.
+If a customer pays consideration or the Group has a right to an amount of consideration that is
+unconditional, before the Group transfers a good or service to the customer, the Group presents
+the contract liability when the payment is made, or a receivable is recorded (whichever is earlier).
+A contract liability is the Group's obligation to transfer goods or services to a customer for which
+the Group has received consideration (or an amount of consideration is due) from the customer.
+The Group's contract liabilities are mainly resulted from the online marketing services, which are
+recorded as deferred revenues.
+Contract costs include incremental costs of obtaining a contract and costs to fulfil a contract with
+the customers. The contract costs are amortised using a method which is consistent with the
+pattern of recognition of the respective revenues.
+2.27.3 Incentives to transacting users
+When incentives provided to transacting users that are considered as customers from an accounting
+perspective, the incentives are recorded as a reduction of revenue if there is no exchange of
+distinct good or service to the Group or the fair value of the good or service received cannot be
+reasonably estimated. Otherwise, despite the absence of any explicit contractual obligations
+to incentivise the transacting users on behalf of customers, which in most circumstances are
+merchants, the Group further evaluates the varying features of different incentive programmes to
+determine that whether the incentives represent implicit obligations to transacting users on behalf
+of customers. If so, it will be recorded as a reduction of revenues, otherwise the "Selling and
+marketing expenses" (Note 7).
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+The lease payments to be made under reasonably certain extension options are also included in the
+measurement of the lease liabilities.
+payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
+option.
+To determine the incremental borrowing rate, the Group:
+Commission
+(b)
+The Group provides on-demand food delivery services to certain merchants and transacting
+users (collectively as the "Food delivery services Customers") as a principal. Food delivery
+services revenue is recognised at the time when the on-demand food delivery services
+are provided and is determined based on the fees charged to the Food delivery services
+Customers, netting of any possible transacting users incentives which are not in exchange
+for a distinct good or service to the Group. The relevant costs are recorded under "Food
+delivery related costs" in cost of revenues.
+(a) Food delivery services
+2.27.1 The accounting policy for the Group's principal revenue types
+The Group uses technology to arrange for the provision of the specified goods or services by
+merchants or third-party agent partners (collectively as the "Commission Customers”) in the
+Group's online marketplaces as an agent. Technical service fees charged to the Commission
+Customers, primarily determined as a percentage of respectively relevant transaction
+amount, are recognised as commission revenue upon the completion of the underlying
+goods or services provided by the Commission Customers to the transacting users.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The advance payments from the transacting users are initially recorded in "Advances from
+transacting users", which can be withdrawn at any time. Once the commission revenue
+is recognised, the amounts to be remitted to the Commission Customers are recorded in
+"Payables to merchants".
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+202 Meituan 2021 Annual Report
+2.27 Revenue recognition (Continued)
+2.27.1 The accounting policy for the Group's principal revenue types (Continued)
+(c)
+Online marketing services
+The lease payments are allocated between the lease liabilities and the finance costs. The finance costs
+are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest
+on the remaining balance of the lease payments for each period.
+makes adjustments specific to the lease, e.g. term, country, currency and security.
+.
+uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases
+held by the Group, which does not have third-party financing; and
+where possible, uses recent third-party financing received by the individual lessee as a starting
+point, adjusted to reflect changes in financing conditions since third party financing was received;
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
+be readily determined, which is generally the case for leases in the Group, the lessee's incremental
+borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds
+necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment
+with similar terms, security and conditions.
+If an SICR (as defined below) since initial recognition is identified, the loan
+receivables are moved to "Stage 2" but are not yet deemed to be credit-impaired.
+The ECL is measured on lifetime basis.
+amount.
+In Stages 1 and 2, interest revenue is calculated on the gross carrying amount
+(without deducting the loss allowance). If in Stage 3, the Group is required to
+calculate the interest revenue by applying the effective interest rate method
+in subsequent reporting periods to the amortised cost of the loan receivables
+(the gross carrying amount net of loss allowance) other than the gross carrying
+3 FINANCIAL RISK MANAGEMENT (Continued)
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+The key judgements and assumptions adopted by the Group in addressing the
+requirements of the standard are discussed below:
+If the loan receivables are credit-impaired (as defined below), then they are moved
+to "Stage 3". The ECL is measured on lifetime basis.
+Significant increase in credit risk (SICR)
+3.1 Financial risk factors (Continued)
+Definition of default and credit-impaired assets
+216 Meituan 2021 Annual Report
+As with any economic forecasts, the projections and likelihoods of occurrence
+are subject to a high degree of inherent uncertainty and therefore the actual
+outcomes may be significantly different to those projected. The Group considers
+these forecasts to represent its best estimate of the possible outcomes and
+has analysed the non-linearities and asymmetries within the Group's different
+portfolios to establish that the chosen scenarios are appropriately representative
+of the range of possible scenarios.
+The calculation of ECL incorporates forward-looking information. The Group has
+performed historical analysis and identified the per capita disposable income of
+urban residents as the key economic variables impacting credit risk and ECL.
+Forward-looking information incorporated in the ECL models
+The ECL is determined by projecting the PD, EAD and LGD for each future month
+and for each portfolio and these three components are multiplied together. This
+effectively calculates an ECL for each future month, which is then discounted
+back to the reporting period end and summarised. The discount rate used in the
+ECL calculation is the original effective interest rate or an approximation thereof.
+The ECL is measured on either a 12-month or lifetime basis depending on
+whether an SICR has occurred since initial recognition or whether an asset is
+considered to be credit-impaired. ECL are the discounted product of the PD,
+EAD, and LGD.
+Measuring ECL - Explanation of inputs, assumptions and estimation techniques
+ECL model for loan receivables: (Continued)
+(i)
+(d) Loan receivables (Continued)
+3.1.2 Credit risk (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 215
+The Group defines a financial instrument as in default and credit-impaired, when
+the borrower is more than 90 days past due on its contractual payments. This has
+been applied to all loan receivables held by the Group.
+The Group considers loan receivables to have experienced an SICR if the
+borrower is past due more than 1 day on its contractual payments.
+3.1 Financial risk factors (Continued)
+3.1 Financial risk factors (Continued)
+(d)
+ECL model for loan receivables: (Continued)
+210 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1.2 Credit risk (Continued)
+(b)
+Trade receivables and contract assets (Continued)
+The expected loss rates are based on the payment profiles of sales over a period of 36
+months or enough credit cycle for those new lines of business and the corresponding
+historical credit losses experienced within this period. The Group identifies the urban per
+capita disposable income and the total retail sales of consumer goods of the countries to
+be the most relevant factors, and accordingly adjusts the historical loss rates based on
+expected changes in these factors to reflect current and forward-looking information on
+macroeconomic factors affecting the ability of the customers to settle the financial assets.
+The Group applies the IFRS 9 simplified approach to measure ECL which uses lifetime
+expected loss allowance for all trade receivables and contract assets.
+Trade receivables are written off when there is no reasonable expectation of recovery with
+indicators including, amongst others, the failure of a debtor to engage in a repayment plan
+with the Group, and a failure to make contractual payments for a period of greater than 180
+days past due. Subsequent recoveries of amounts previously written off are credited against
+the same line item.
+(c) Prepayments, deposits and other assets other than contract assets and loan receivables
+For prepayments, deposits and other assets other than contract assets and loan receivables
+(“other receivables and prepayments to merchants"), the management makes periodic
+collective assessments as well as individual assessment on the recoverability of other
+receivables and prepayments to merchants based on historical settlement records and past
+experiences incorporating forward-looking information. Impairment on other receivables and
+prepayments to merchants is measured as either 12-month ECL or lifetime ECL, depending
+on whether there has been an SICR since initial recognition on an ongoing basis throughout
+each reporting period. To assess whether there is an SICR, the Group compares the risk of
+a default occurring on the asset as at the reporting period end with the risk of default as at
+the date of initial recognition. It considers available reasonable and supportive forwarding-
+looking information. Especially the following indicators are incorporated:
+3.1.2 Credit risk (Continued)
+Meituan 2021 Annual Report 211
+Changes in the inputs, assumptions and estimation techniques of ECL calculation
+during the reporting period.
+and
+Loan receivables derecognised and write-offs of loss allowance related to assets
+that were written off during the reporting period, and the subsequent recovery;
+Increases of loss allowance for new financial instruments recognised, as well as
+decreases due to loan receivables derecognition in the reporting period;
+•
+• Transfers between Stage 1, Stage 2 or Stage 3 due to loan receivables
+experiencing significant increases (or decreases) of credit risk in the reporting
+period, and the subsequent “step up” (or “step down") between 12-month and
+lifetime ECL;
+The loss allowance recognised in the reporting period is impacted by a variety of
+factors, as described below:
+Loss allowance
+For ECL provisions modeled on a collective basis, a grouping of exposures is
+performed on the basis of shared risk characteristics, such that risk exposures
+within a group are homogeneous.
+Grouping of instruments for losses measured on a collective basis
+ECL model for loan receivables: (Continued)
+(i)
+Loan receivables (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+•
+3.1 Financial risk factors (Continued)
+To manage credit risk arising from loan receivables, standardised credit management
+procedures are performed. For pre-approval investigation, the Group optimises the review
+process using big data technology through its platform and system, including credit analysis,
+assessment of collectability of borrowers, monitoring the cash flows status of the merchants,
+possibility of misconduct and fraudulent activities. In terms of credit examining management,
+specific policies and procedures are established to assess loans offering. For subsequent
+monitoring, the Group monitors the cash flows and operation status of each borrowers. Once
+the loan is issued, all borrowers will be assessed by fraud examination model to prevent
+fraudulent behaviours. In post-loan supervision, the Group establishes risk monitoring alert
+system through periodical monitoring. The estimation of credit exposure for risk management
+purposes is complex and requires use of models as the exposure varies with changes in
+market conditions, expected cash flows and passage of time. The assessment of credit risk
+of a portfolio of assets entails further estimations as to the likelihood of defaults occurring,
+of the associated loss ratios and of default corrections between counterparties. The Group
+measures credit risk using Probability of Default ("PD"), Exposure at Default ("EAD") and Loss
+Given Default ("LGD"). This is consistent with the general approach used for the purpose of
+measuring ECL under IFRS 9.
+(i)
+ECL model for loan receivables:
+The impairment of loan receivables was provided based on the "three-stages" model
+78,443
+37,389
+5,965,763
+For the year ended December 31, 2021, fair value changes of loan receivables existed
+in the net decreases of stage 2 and stage 3.
+218 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(d)
+Loan receivables (Continued)
+Loss allowance (Continued)
+The following table explains the changes in the loss allowance for loan receivables
+between the beginning and the end of the reporting period due to these factors:
+Stage 1
+Stage 2
+12-month ECL
+Lifetime ECL
+Stage 3
+Lifetime ECL
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Loss allowance as of January 1, 2021
+Transfers:
+Loan receivables
+(d)
+3.1.2 Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+(73,592)
+73,592
+Net decreases
+(923,885)
+(73,391)
+(50,962) (1,048,238)
+Write-offs
+Recovered after written off
+(285,007)
+36,992
+(285,007)
+36,992
+Gross carrying amount as
+of December 31, 2021
+5,849,931
+(223,799)
+Lifetime ECL
+An SICR is presumed if
+repayments are 30 days past
+due
+Non-performing
+Write-off
+3 FINANCIAL RISK MANAGEMENT (Continued)
+(i) Repayments are 3 years past
+due
+(ii) and there is no reasonable
+expectation of recovery
+The Group terminates its
+cooperation with merchants for
+more than 60 days
+(i) Repayments are 3 years past
+due
+(ii) and there is no reasonable
+expectation of recovery
+Lifetime ECL
+Assets are written off
+Meituan 2021 Annual Report 213
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+Underperforming
+Transfer from Stage 2 to Stage 3
+(80,504)
+(354,219)
+(91,439)
+(46,806)
+(283,573)
+Meituan 2021 Annual Report 219
+Loan receivables (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(d)
+Loan receivables (Continued)
+(iii)
+Write-off policy
+(iv)
+For the year ended December 31, 2021
+The Group writes off loan receivables, in whole or in part, when it has exhausted all
+practical recovery efforts and has concluded there is no reasonable expectation of
+recovery. Indicators that there is no reasonable expectation of recovery include ceasing
+enforcement activity.
+The Group may write-off loan receivables that are still subject to enforcement activity.
+Modification
+The Group rarely modifies the terms of loans provided to customers due to commercial
+renegotiations, or for distressed loans, with a view to maximising recovery. The Group
+considers the impact from such modification is not significant.
+3.1.3 Liquidity risk
+The Group aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the
+underlying businesses, the policy of the Group is to regularly monitor the Group's liquidity risk and
+to maintain adequate cash and cash equivalents or to adjust financing arrangements to meet the
+Group's liquidity requirements.
+(d)
+3.1.2 Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+214 Meituan 2021 Annual Report
+The loan receivables that are not credit-impaired on initial recognition are
+classified in "Stage 1" and have its credit risk continuously monitored by the
+Group. The ECL is measured on a 12-month basis.
+(145,328)
+of December 31, 2021
+Loss allowance as
+36,588
+Transfer from Stage 1 to Stage 2
+3,325
+(88,487)
+(85,162)
+Transfer from Stage 1 to Stage 3
+5,997
+(203,665)
+(197,668)
+Transfer from Stage 2 to Stage 1
+74
+72
+Transfer from Stage 2 to Stage 3
+55,174
+(70,414)
+(49,916)
+(15,240)
+26,027
+22,496
+35,518
+84,041
+Write-offs
+285,007
+285,007
+Recovered after written off
+(36,992)
+(36,992)
+Changes in ECL measurement
+43,124
+(192)
+(6,344)
+Net decreases
+(99)
+Repayments are 90 days past
+due
+Transfer from Stage 2 to Stage 1
+months, expected losses are
+measured at its expected
+lifetime
+by referring to the changes in credit quality since initial recognition.
+(i)
+Meituan 2021 Annual Report 217
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(d)
+Loan receivables (Continued)
+(ii)
+99
+an asset is less than 12
+For the year ended December 31, 2021
+Stage 1
+Stage 2
+12-month ECL
+Lifetime ECL
+RMB'000
+RMB'000
+Stage 3
+Lifetime ECL
+RMB'000
+Total
+RMB'000
+Gross carrying amount as
+of January 1, 2021
+7,104,601
+The gross carrying amount of the loan receivables explains their significance to the
+changes in the loss allowance as discussed above:
+the expected lifetime of
+12-month ECL, where
+The Group terminates its
+cooperation with merchants
+3.1.2 Credit risk (Continued)
+(c) Prepayments, deposits and other assets other than contract assets and loan receivables
+(Continued)
+•
+internal credit rating (macroeconomic information, such as market interest rates or
+growth rates)
+•
+•
+external credit rating (as far as available)
+actual or expected significant adverse changes in business, financial or economic
+conditions that are expected to cause a significant change to the counterparty's ability
+to meet its obligations
+actual or expected significant changes in the operating results of the counterparty
+SICR on other financial instruments of the same counterparty
+significant changes in the value of the collateral supporting the obligation or in the
+quality of third-party guarantees or credit enhancements, and
+significant changes in the expected performance and behaviour of the counterparty,
+including changes in the payment status and operating results of the counterparty.
+212 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c) Prepayments, deposits and other assets other than contract assets and loan receivables
+(Continued)
+Category
+Group definition of category
+Other receivables
+Prepayments to merchants
+Performing
+Basis for recognition of
+ECL provision
+Customers have a low risk of default and a strong capacity to meet
+contractual cash flows
+107,499
+49,916
+Loss allowance (Continued)
+118,026
+7,262,016
+Transfers:
+Transfer from Stage 1 to Stage 2
+(118,026)
+Transfer from Stage 1 to Stage 3
+(212,858)
+212,858
+4,128,024
+56,417,497
+- 56,417,497
+Other financial investments at
+fair value through other
+comprehensive income (Note 20)
+This presents investments in listed entities with observable quoted price.
+at fair value through profit or
+loss (Note 19)
+Other financial investments
+through other comprehensive
+income (Note 22(a))
+5,414,982
+9,543,006
+2,261,812*
+-- 4,210,835
+4,210,835
+Loan receivables at fair value
+-
+12,038,045 14,299,857
+532,455*
+1,490,250
+2,022,705
+|- - 3,295,284 3,295,284
+2,794,267
+at fair value through profit or
+loss (Note 21)
+Short-term treasury investments
+Fair value estimation
+3.3.1 Fair value hierarchy
+This section explains the judgements and estimates made in determining the fair values of the
+financial instruments that are recognised and measured at fair value in the consolidated financial
+statements. To provide an indication about the reliability of the inputs used in determining the fair
+values, the Group has classified its financial instruments into three levels prescribed under the
+accounting standards.
+The Group analyses its financial instruments carried at fair values by level of the inputs to valuation
+techniques used to measure the fair values. Such inputs are categorised into three levels within a
+fair value hierarchy as follows:
+•
+Level 1: unadjusted quoted prices in active markets for identical assets or liabilities
+•
+•
+Level 2: inputs other than quoted prices included within level 1 that are observable for the
+assets or liabilities, either directly (that is, as prices) or indirectly (that is, derived from prices)
+Level 3: inputs for the assets or liabilities that are not based on observable market data (that
+is, unobservable inputs)
+222 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+at fair value through other
+comprehensive income (Note 21)
+Long-term treasury investments
+For the year ended December 31, 2021
+3.3 Fair value estimation (Continued)
+3.3.1 Fair value hierarchy (Continued)
+The following tables present the Group's assets and liabilities that are measured at fair value as of
+December 31, 2021 and 2020.
+Level 1
+RMB'000
+Level 2
+RMB'000
+Level 3
+RMB'000
+Total
+RMB'000
+As of December 31, 2021
+Financial assets
+Short-term treasury investments
+at fair value through profit or
+loss (Note 21)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+*
+4,128,024
+Meituan 2021 Annual Report 223
+loss (Note 19)
+2,124,519*
+8,132,267
+10,256,786
+Other financial investments at
+fair value through other
+comprehensive income (Note 20)
+605,918*
+605,918
+2,730,437
+65,442 41,729,324
+44,525,203
+fair value through profit or
+Financial liabilities
+through profit or loss
+The fair values of financial instruments that are not traded in active markets are determined using valuation
+techniques. The Group uses its judgements to select a variety of methods and make assumptions that
+are mainly based on market conditions existing at the end of each reporting period. Changes in these
+assumptions and estimates could materially affect the respective fair values of these financial assets
+and financial liabilities (Note 3.3).
+Estimation of the fair values of financial assets and financial liabilities
+The Group has also authorised the repurchase of ordinary shares from certain employees, founders, and
+Shareholders of the Company. Judgement is required to determine whether the repurchase establishes
+"past practice" for which the Group has now created an obligation to settle in cash, and accordingly
+reclassifies all outstanding awards to cash-settled. The Group has determined that no valid expectation
+for the Company to settle such share-based awards in cash is created, such that all awards remain
+equity-settled awards.
+The Group set up the Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award
+Scheme and granted RSUs and share options to employees and other qualified participants. The
+fair value of the share options is determined by the Black-Scholes option-pricing model at the grant
+date, and is expected to be expensed over the respective vesting period. Significant estimates on
+assumptions, including underlying equity value, risk-free interest rate, expected volatility, dividend yield,
+and terms, are made by the Directors and third-party valuers. The fair value of the RSUs is determined
+by reference to the grant-date market price of the ordinary shares.
+4.2
+4.1 Recognition of share-based compensation expenses
+Estimates and judgements are continually evaluated. They are based on historical experiences and other
+factors, including expectations of future events that may have a financial impact on the entity and that are
+believed to be reasonable under the circumstances. The estimates and assumptions that have a significant
+risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
+year are addressed below:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+224 Meituan 2021 Annual Report
+114,600
+114,600
+Financial liabilities at fair value
+82,866,893 89,789,184
+612,967
+965,553
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.1 Fair value hierarchy (Continued)
+For the year ended December 31, 2021
+As of December 31, 2020
+Financial assets
+Short-term treasury investments
+at fair value through profit or
+612,967
+loss (Note 21)
+at fair value through other
+comprehensive income (Note 21)
+Long-term treasury investments
+at fair value through profit or
+loss (Note 21)
+Other financial investments at
+Level 1
+RMB'000
+Level 2
+RMB'000
+Level 3
+RMB'000
+Total
+RMB'000
+32,083,979
+32,083,979
+65,442
+900,111
+Short-term treasury investments
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+Specific valuation techniques used to measure financial instruments include:
+comprehensive income
+NA
+Note a
+Note a
+4,210,835
+Loan receivables at fair
+value through other
+through profit or loss
+The higher the expected rate of
+return, the higher the fair value
+investments at fair value
+0.00%-2.43% 0.00% -2.40%
+Expected rate of return
+612,967
+3,295,284
+Long-term treasury
+income
+through other comprehensive
+The higher the expected rate of
+return, the higher the fair value
+investments at fair value
+1.45%-2.80% 2.80%-3.20%
+Financial liabilities at fair
+Expected rate of return
+114,600
+value through profit or loss
+If the respective unobservable inputs of financial assets at fair value through profit or loss held by
+the Group had been 10% higher/lower, the aggregate profit before income tax for the years ended
+December 31, 2021 and 2020 would have been approximately RMB118 million lower/higher and
+RMB166 million lower or RMB124 million higher, respectively.
+The fair value of financial liabilities at fair value through profit or loss is based on the fair value of
+underlying investments in the Fund (Note 2.22) and the predetermined distribution mechanism of
+returns that set out in the agreement of the Fund. Therefore, the significant unobservable inputs
+are the same with those used in the valuation of the underlying investments in unlisted companies
+disclosed above.
+The Group established and consolidated a limited partnership investment fund ("the Fund") with
+limited life in January 2020. The Fund invested in private companies providing local consumer
+services in the form of ordinary shares or preferred shares and measured these investments at fair
+value through profit or loss. The Group designates the return payables to other limited partners who
+invested in the Fund at fair value through profit or loss at initial recognition.
+Financial liabilities at fair value through profit or loss.
+Note b:
+For loan receivables at fair value through other comprehensive income, the fair values are
+determined based on discounted cash flows model using unobservable discount rates that reflect
+credit risk.
+Loan receivables at fair value through other comprehensive income
+Note a:
+3.3.4 Valuation process, inputs and relationships to fair value (Continued)
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+228 Meituan 2021 Annual Report
+Note b
+The higher the risk-adjusted
+discount rate, the lower the
+fair value
+Note b
+MA
+NA
+Note b
+If the respective unobservable inputs of financial assets at fair value through other comprehensive
+income held by the Group had been 10% higher/lower, the aggregate other comprehensive
+income for the years ended December 31, 2021 and 2020 would have been approximately RMB16
+million lower or RMB18 million higher and RMB31 thousand higher/lower, respectively.
+900,111
+Short-term treasury
+2021
+Description
+Fair values
+as of December 31,
+The following table summarises the quantitative information about the significant unobservable
+inputs used in recurring level 3 fair value measurements.
+The Group's level 3 instruments are listed in the table in Note 3.3.3. As these instruments are not
+traded in active markets, their fair values have been determined using various applicable valuation
+techniques, including discounted cash flows and market approach.
+The Group has a team that manages the valuation of level 3 instruments for financial reporting
+purposes. The team manages the valuation exercise of the investments on a case by case basis.
+At least once every year, the team would use valuation techniques to determine the fair value of
+the Group's level 3 instruments. External valuation experts will be involved when necessary.
+3.3.4 Valuation process, inputs and relationships to fair value
+3.3 Fair value estimation (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 227
+3
+46,842
+4,450
+111
+148,811
+Net unrealised gains for the year
+114,600
+8,132,267
+RMB'000
+5,414,982
+2020
+RMB'000
+Range of inputs
+as of December 31,
+2021
+through profit or loss
+return, the higher the fair value
+investments at fair value
+The higher the expected rate of
+0.00%-5.12% (0.11%)-6.70%
+The higher the DLOM, the lower
+the fair value
+20%-25%
+15%-29%
+Discount for lack of
+marketability ("DLOM")
+56,417,497 32,083,979 Expected rate of return
+Short-term treasury
+the lower the fair value
+The higher the expected volatility,
+40%-49%
+40%-78%
+13,528,295 8,132,267 Expected volatility
+Investments in unlisted
+companies
+to fair value
+Relationships of
+unobservable inputs
+2020
+Unobservable inputs
+612,967
+The carrying amounts of the Group's financial assets and financial liabilities measured at amortised
+cost are approximate their fair values.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+4,307,861
+Advances from transacting users
+9,414,936
+9,414,936
+Payables to merchants
+11,967,026
+11,967,026
+Trade payables
+As of December 31, 2020
+Total
+RMB'000
+5 years
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Over
+Between 2
+and 5 years
+Between 1
+and 2 years
+1 year
+Less than
+4,307,861
+36,405,942 9,028,620 104,032,638
+Other payables and accruals
+7,253,714
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 221
+60,647,669
+9,410,158
+1,267,331 8,947,930
+41,022,250
+119,512
+2,997,509
+10,223
+16,057,371
+352,752 5,951,932 9,399,935
+882,633 893,109
+119,512
+Other non-current liabilities
+352,752
+1,211,544
+Lease liabilities
+Notes payable
+8,529,740
+31,946 1,983,377
+6,514,417
+Borrowings
+7,253,714
+Meituan 2021 Annual Report 229
+4,426,687
+5,233,721
+As of December 31, 2021
+Total
+RMB'000
+RMB'000
+RMB'000
+Over
+5 years
+Between 2
+and 5 years
+Between 1
+and 2 years
+RMB'000
+RMB'000
+1 year
+Less than
+The Group analyses its non-derivative financial liabilities into relevant maturity grouping based
+on the remaining year at each reporting period end to the contractual maturity date. The amount
+disclosed in the table is the contractual undiscounted cash flows.
+3.1.3 Liquidity risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+220 Meituan 2021 Annual Report
+4
+For the year ended December 31, 2021
+Trade payables
+54,171,389
+15,165,619
+Payables to merchants
+34,525,462
+8,941,919
+86,701
+344,686 24,894,171
+1,522,958 1,650,762
+344,686
+1,973,300
+Lease liabilities
+Notes payable
+24,198,222
+9,861,009
+2,559,043
+11,778,170
+Borrowings
+8,787,640
+8,787,640
+Other payables and accruals
+5,171,054
+5,171,054
+Advances from transacting users
+10,950,920
+10,950,920
+15,165,619
+3.3.2 Valuation techniques used to determine fair values
+900,111
+As of December 31, 2020
+32,083,979
+As of January 1, 2021
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+or loss
+through profit
+in unlisted
+companies
+in unlisted
+companies
+income
+or loss
+income
+or loss
+comprehensive
+through profit
+900,111
+comprehensive
+612,967
+114,600
+Changes in fair values
+783,750
+(1,068,094)
+Transfers
+(906,000)
+(773,798)
+(18,850,641)
+(605,747)
+(325,609)
+(350,153,466)
+Deductions
+791,400
+450,000
+5,160,883
+23,118,704
+3,284,298
+4,769,314
+374,408,482
+Additions
+8,132,267
+1,112,454
+fair value
+Investments
+Short-term
+treasury
+investments
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+3.3 Fair value estimation (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 225
+The following tables present the movement of level 3 items which use significant unobservable
+inputs in determining their fair values for the years ended December 31, 2021 and 2020. The Group
+determines transfers between levels of the fair value hierarchy are deemed to have occurred on the
+date of the event or change in circumstances that caused the transfer.
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+All of the resulting fair value estimates are included in level 3, where the fair values have been
+determined based on present values and the discount rates used were adjusted for counterparty
+or own credit risk.
+There was no change to valuation techniques in use during the year ended December 31, 2021.
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+The discounted cash flows model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate;
+•
+•
+The use of quoted market prices or dealer quotes for similar instruments;
+•
+Short-term
+Investments
+treasury
+investments
+at fair value
+through profit
+liabilities at
+Financial
+at fair value
+through other
+investments
+treasury Loan receivables
+income
+or loss
+other assets
+at fair value
+through other
+comprehensive
+through profit
+deposits and
+fair value
+Prepayments,
+investments at
+investments
+Other financial
+Other financial
+at fair value
+at fair value
+through other
+Long-term
+32,083,979
+78,237
+(57,228)
+6,849,861
+694,106
+900,000
+176,723,212
+Additions
+5,089,127
+23,988,182
+As of January 1, 2020
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+profit or loss
+value through
+liabilities at fair
+Financial
+or loss
+Investments
+in unlisted
+companies
+or loss
+114,600
+income
+Deductions
+(41,237)
+(328,650)
+(44,501)
+(1,380,201)
+Currency translation differences
+The Group's objectives when managing capital are to:
+.
+Safeguard its ability to continue as a going concern, so that it can continue to provide returns for
+shareholders and benefits for other stakeholders; and
+Maintain an optimal capital structure to reduce the cost of capital.
+In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
+to Shareholders, return capital to Shareholders, issue new shares or sell assets to reduce debt.
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+3.2 Capital management
+4,908,385
+4,599
+111
+812,289
+Changes in fair values
+(8,071,981)
+Transfers
+(314,475)
+(168,059,503)
+39,833
+or loss
+comprehensive
+77,412
+375,797
+for the year
+Net unrealised gains/(losses)
+1,490,250
+12,038,045
+4,210,835
+3,295,284
+5,414,982
+56,417,497
+As of December 31, 2021
+(91,667)
+(36,067)
+(7,071)
+(1,033,952)
+differences
+Currency translation
+256,500
+678,454
+28,299
+through profit
+(57,228)
+226 Meituan 2021 Annual Report
+through profit
+at fair value
+through other
+through profit
+at fair value
+Long-term
+treasury
+investments
+at fair value
+treasury
+investments
+at fair value
+treasury
+investments
+Short-term
+investments
+Short-term
+Other financial
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+358,423
+The preparation of consolidated financial statements requires the use of accounting estimates which, by
+definition, will seldom equal the actual results. Management also needs to exercise judgements in applying
+the Group's accounting policies.
+3.3
+The Group monitors capital (including share capital, share premium and shares held for shares award
+scheme) by regularly reviewing the capital structure. As a part of this review, the Group considers the
+cost of capital and the risks associated with the issued share capital. In the opinion of the Directors of
+the Company, the Group's capital risk is low.
+4
+Depreciation of property, plant and equipment
+8,110,975
+4,202,623
+Amortisation of intangible assets
+817,044
+991,486
+Auditor's remuneration
+47,879
+8,053
+48,889
+1,898
+- Audit and audit-related services
+- Non-audit services
+(i) Transaction costs consist of cost of goods sold and certain costs from various businesses.
+8
+EMPLOYEE BENEFITS EXPENSES
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+Wages, salaries and bonuses
+Share-based compensation expenses (Note 33)
+Other employee benefits
+23,802,907
+15,398,542
+5,193,860
+3,277,476
+3,600,279
+2,133,801
+Pension costs - defined contribution plans (Note i)
+2,170,806
+8,128,968
+22,538,561
+Other outsourcing costs
+11,029,869
+2020
+RMB'000
+54,203,640
+39,116,411
+52,904,757
+34,124,184
+29,085,170
+18,908,045
+42,934,430
+22,645,870
+179,127,997
+114,794,510
+Meituan 2021 Annual Report 237
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+7
+731,702
+EXPENSES BY NATURE
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+Food delivery related costs
+68,183,267
+49,291,318
+Employee benefits expenses (Note 8)
+34,767,852
+21,541,521
+Transaction costs (Note i)
+26,352,193
+15,859,348
+Promotion, advertising and user incentives
+23,200,707
+For the year ended December 31, 2021
+34,767,852
+21,541,521
+(i)
+8,049
+Pension costs and other employee benefits
+652
+521
+Share-based compensation expenses
+523,211
+459,876
+542,487
+476,720
+8
+Meituan 2021 Annual Report 239
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(b) Five highest paid individuals (Continued)
+The emoluments fell within the following bands:
+-
+Emolument bands (in HK dollar)
+HK$53,000,001 – HK$53,500,000
+HK$118,500,001 – HK$119,000,000
+HK$124,000,001 – HK$124,500,000
+HK$132,000,001 – HK$132,500,000
+HK$132,500,001 - HK$133,000,000
+HK$145,000,001 - HK$145,500,000
+HK$147,500,001 – HK$148,000,000
+HK$161,500,001 – HK$162,000,000
+HK$183,000,001 - HK$183,500,000
+For the year ended December 31, 2021
+Number of individuals
+Year ended December 31,
+2021
+2020
+1
+1
+1
+1
+| - - | |--
+1
+1
+864
+Bonuses
+8,274
+17,760
+Pension costs - defined contribution plans
+Employees of the Group companies in the PRC are required to participate in a defined contribution retirement scheme
+administered and operated by the governmental authorities. The Group contributes funds which are calculated on
+certain percentages of the employees' salary subject to certain ceilings imposed by governmental authorities to each
+scheme locally.
+238 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+Cost of revenues
+Selling and marketing expenses
+Research and development expenses
+General and administrative expenses
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+Year ended December 31,
+2021
+RMB'000
+125,111
+692,262
+420,873
+2,617,015
+1,446,846
+1,759,472
+1,329,122
+5,193,860
+3,277,476
+(b) Five highest paid individuals
+The five individuals whose emoluments were the highest in the Group do not include any Director for the
+year ended December 31, 2021 (2020: one). All of these individuals have not received any emolument
+from the Group as an inducement to join or leave the Group or compensation for loss of office during
+the years ended December 31, 2021 and 2020. The emoluments to the highest paid individuals other
+than Directors for the years ended December 31, 2021 and 2020 are as follows:
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+Basic salaries
+80,635
+Further disaggregation of revenues are included in Note 5.
+Other services and sales (including interest revenue)
+Online marketing services
+RMB'000
+Total
+RMB'000
+54,203,640
+52,904,757
+29,085,170
+Other services and sales
+(including interest revenue)
+2,125,931
+63,968
+40,744,531
+42,934,430
+Revenues in total
+96,311,778
+32,530,325
+50,285,894
+179,127,997
+Cost of revenues,
+operating expenses
+and unallocated items
+Including: Food delivery
+related costs
+(90,137,137) (18,437,212)
+(88,679,789)
+(5,001,058) (202,255,196)
+(68,183,267)
+(68,183,267)
+Operating (loss)/profit
+6,174,641
+14,093,113 (38,393,895)
+(5,001,058) (23,127,199)
+Meituan 2021 Annual Report 235
+Unallocated
+items (Note i)
+and others
+RMB'000
+982,816
+8,558,547
+LO
+5
+SEGMENT REPORTING (Continued)
+5.1 Description of segments and principal activities (Continued)
+Food delivery
+The food delivery business primarily helps consumers place orders of food prepared by merchants
+through the Group's online tools, mainly various of mobile apps, and offers on-demand delivery
+services. Revenues from the food delivery segment primarily consist (a) food delivery services from both
+merchants and consumers; and (b) commission from technology service fees charged to merchants and
+third-party agent partners. The cost of revenues and operating expenses for the food delivery segment
+primarily consists of food delivery related costs and promotion, advertising and user incentives.
+In May 2021, the Group rolled out a new fee structure to merchants of food delivery business, in which
+the fees charged to the merchants were split into a food delivery services fee and a technology service
+fee. The revenues derived from these services were separately presented under the food delivery
+segment for the year ended December 31, 2021. The figures for the comparative year were reclassified
+to conform to such presentation as well.
+In-store, hotel & travel
+The in-store, hotel & travel businesses primarily help consumers purchase local consumer services
+provided by merchants in numerous in-store categories or make reservations for hotels and attractions.
+Revenues from the in-store, hotel & travel segment primarily consist (a) commission from technology
+service fees charged to merchants; and (b) online marketing services in various formats provided
+to merchants. The cost of revenues and operating expenses for the in-store, hotel & travel segment
+primarily consists of employee benefits expenses and promotion, advertising and user incentives.
+New initiatives and others
+The Group continually develops various new initiatives to satisfy consumers' diverse needs in different
+consumption scenarios. Revenues from the new initiatives and others segment primarily consist (a)
+Sales of goods primarily from B2B food distribution services and Meituan Grocery; and (b) various
+services rendered by various businesses such as Meituan Instashopping, community e-commerce, bike-
+sharing and electric mopeds and micro-credit. The cost of revenues and operating expenses for the new
+initiatives and others segment primarily consists of (a) transaction costs; (b) other outsourcing costs; (c)
+employee benefits expenses; and (d) promotion, advertising and user incentives.
+There were no separate segment assets and segment liabilities information provided to the CODM,
+as CODM does not use this information to allocate resources to or to evaluate the performance of the
+operating segments.
+The Group's revenue is mainly generated in China.
+234 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+5 SEGMENT REPORTING (Continued)
+5.1 Description of segments and principal activities (Continued)
+The segment information provided to the Group's CODM for the reportable segments for the years
+ended December 31, 2021 and 2020 is as follows:
+Year ended December 31, 2021
+In-store, New initiatives
+Food delivery
+hotel & travel
+RMB'000
+RMB'000
+Food delivery services
+Commission
+54,203,640
+28,547,274
+Online marketing services
+11,434,933
+15,798,936
+16,667,421
+For the year ended December 31, 2021
+1
+5
+5.1 Description of segments and principal activities (Continued)
+114,794,510
+Cost of revenues, operating
+expenses and unallocated
+items
+(63,431,950) (13,071,465) (38,131,789)
+4,170,796 (110,464,408)
+Including: Food delivery
+related costs
+(49,291,318)
+(49,291,318)
+2,833,369
+8,180,933 (10,854,996)
+4,170,796
+4,330,102
+Operating (loss)/profit
+(i)
+Unallocated items mainly include (i) share-based compensation expenses, (ii) amortisation of intangible assets
+resulting from acquisitions, (iii) fair value changes of other financial investments at fair value through profit or
+loss, and (iv) other (losses)/gains, net. They are not allocated to individual segments.
+236 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+5 SEGMENT REPORTING (Continued)
+5.1 Description of segments and principal activities (Continued)
+There is no concentration risk as no revenue from a single external customer was more than 10% of the
+Group's total revenues for the years ended December 31, 2021 and 2020.
+The reconciliation from operating (loss)/profit to (loss)/profit before income tax for the years ended
+December 31, 2021 and 2020 is shown in the consolidated income statement.
+5.2 Segment assets
+As of December 31, 2021 and 2020, substantially all of the non-current assets of the Group were located
+in the PRC.
+6
+REVENUES BY TYPE
+Food delivery services
+Commission
+27,276,793
+21,252,398
+66,265,319
+Revenues in total
+For the year ended December 31, 2021
+Year ended December 31, 2020
+In-store, New initiatives
+Food delivery
+hotel & travel
+RMB'000
+RMB'000
+and others
+RMB'000
+Unallocated
+items (Note i)
+RMB'000
+Total
+RMB'000
+Food delivery services
+39,116,411
+Commission
+SEGMENT REPORTING (Continued)
+18,502,868
+5,428,154
+Online marketing services
+7,565,111
+11,018,337
+324,597
+39,116,411
+34,124,184
+18,908,045
+Other services and sales
+(including interest revenue)
+1,080,929
+40,899
+21,524,042
+22,645,870
+10,193,162
+5
+Meituan 2021 Annual Report 233
+The revenues from customers reported to CODM are measured as revenues in each segment. The
+operating profit or loss in each segment reported to CODM are measured as cost of revenues and
+operating expenses deducted from its revenues. Certain unallocated items are not allocated to each
+segment as they are not directly relevant to the operating results upon performance measurement and
+resource allocation by the CODM.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+230 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.3 Loss allowance for financial and contract assets arising from credit risk
+The loss allowance for financial and contract assets arising from credit risk is based on assumptions
+about risk of defaults and expected loss rates. The Group uses judgements in making these assumptions
+and selecting the inputs to the loss allowance calculation, based on the Group's past history, existing
+market conditions as well as forward-looking estimates at the end of each reporting period. Details of
+the key assumptions and inputs used are disclosed in Note 3.1.2.
+4.4 Recoverability of goodwill
+The Group tests whether goodwill has suffered any impairment, in accordance with the accounting
+policy stated in Note 2.9.1. Management judgement is required in the area of non-financial asset
+impairment particularly in assessing: (i) whether an event has occurred that may indicate that the related
+asset values may not be recoverable; (ii) whether the carrying value of an asset can be supported
+by the recoverable amount, being the higher of fair value less costs to sell and net present value of
+future cash flows which are estimated based upon the continued use of the asset in the business;
+(iii) the selection of the most appropriate valuation technique, e.g. the market approach, the income
+approach, as well as a combination of approaches, including the adjusted net asset method; and (iv) the
+appropriate key assumptions to be applied in preparing cash flow projections including whether these
+cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by
+management in assessing impairment, including the revenue growth rate and margin, terminal growth
+rates and pre-tax discount rates assumptions in the cash flow projections, could materially affect the
+net present value used in the impairment test and as a result affect the Group's financial condition and
+results of operations. If there is a significant adverse change in the projected performance and resulting
+future cash flow projections, it may be necessary to take an impairment charge to the consolidated
+income statement. Management determined the recoverable amounts of these CGU or group of CGUS
+based on the higher of (i) their value in use ("VIU”) and (ii) their fair value less costs of disposal, of which
+VIU is calculated based on discounted cash flows expected to be derived from the respective CGU or
+group of CGUS. The calculations use cash flow projections based on financial budgets approved by
+management covering a 5-year period.
+Cash flows beyond the 5-year period are extrapolated using the estimated growth rates stated in Note
+16. These growth rates are consistent with forecasts included in industry reports specific to the industry
+in which each CGU operates.
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+Meituan 2021 Annual Report 231
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.5 Incentives
+As disclosed in Note 2.27, all incentives given to the accounting customers are recorded as a reduction
+of revenue to the extent of the revenue earned from that customer on a transaction by transaction basis.
+For certain other incentives, management judgement is required to determine whether the incentives
+are in substance payments on behalf of customers and should therefore be recorded as a reduction of
+revenue or selling and marketing expenses. Some of the factors considered in management's evaluation
+if such incentives are in substance payments on behalf of customers include whether the incentives
+are given at the Group's discretion and the objectives, business strategy and design of the incentive
+programmes.
+4
+Determining whether the Group is acting as a principal or as an agent in the provision of certain
+services to its customers requires judgement and consideration of all relevant facts and circumstances.
+In evaluation of the Group's role as a principal or an agent, the Group considers, individually or in
+combination, whether the Group controls the specified good or service before it (i) is transferred to the
+customer, (ii) is primarily responsible for fulfilling the contract, (iii) is subject to inventory risk, and (iv) has
+discretion in establishing prices.
+4.6 Principal versus agent considerations
+The Group's business activities, for which discrete financial information is available, are regularly
+reviewed and evaluated by the CODM. The CODM, who is responsible for allocating resources and
+assessing performance of the operating segments, mainly includes the executive Directors of the
+Company that make strategic decisions. The Group evaluated its operating segments separately or
+aggregately, and determined that it has reportable segments as follows.
+SEGMENT REPORTING
+5
+The Group made certain investments in the form of convertible redeemable preferred shares or ordinary
+shares with preferential rights of investee companies. As the Group has significant influence on these
+investee companies, judgement is required in determining whether these investments are in substance
+existing ownership interests. If not, they are accounted for as hybrid financial instruments, which
+should be measured at fair value through profit or loss. Different conclusions around these judgements
+may affect how these investments presented and measured in the consolidated statement of financial
+position of the Group.
+4.8 Presentation and measurement of investments in associates
+5.1 Description of segments and principal activities
+4
+4.7 Current and deferred income tax
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+The Group is subject to income taxes in several jurisdictions. Significant judgement is required in
+determining the provision for income taxes. There are many transactions and calculations for which
+the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax
+outcome of these matters is different from the amounts that were initially recorded, such differences will
+impact the current and deferred income tax in the period in which such determination is made.
+The CODM assesses the performance of the operating segments mainly based on revenues and
+operating profit or loss of each operating segment. Thus, segment result would present revenues, cost
+of revenues and operating expenses, and operating profit or loss for each segment, which is in line
+with CODM's performance review. There were no material inter-segment sales during the years ended
+December 31, 2021 and 2020.
+Deferred tax assets relating to certain temporary differences or tax losses are recognised when
+management considers that it is probable that future taxable profit will be available against which the
+temporary differences or tax losses can be utilised. The outcome of their actual utilisation may be
+different from management's estimation.
+232 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+(147,172)
+447,541
+416,909
+30,279
+269,737
+The tax on the Group's profit before income tax differs from the theoretical amount that would arise
+using the tax rate of 25% for the years ended December 31, 2021 and 2020, being the tax rate of the
+major subsidiaries of the Group.
+The difference is analysed as follows:
+Year ended December 31,
+(417,262)
+5,891,619
+2020
+RMB'000
+(Loss)/profit before income tax
+(23,566,477)
+4,437,875
+Tax calculated at statutory income tax rate of 25% in mainland China
+Tax effects of:
+(1,109,469)
+- Different tax rates available to different jurisdictions
+(615,429)
+1,509,383
+- Preferential income tax rates applicable to subsidiaries
+(2,316,035)
+Total income tax credits
+2021
+RMB'000
+Deferred income tax credits (Note 18)
+British Virgin Islands
+Pursuant to the CIT Law, a 10% withholding tax is levied on dividends declared by companies
+established in mainland China to foreign investors effective from January 1, 2008. The withholding tax
+rate may be lowered to a minimum of 5% if there is a tax arrangement between mainland China and the
+jurisdiction of the foreign investors. However, the 5% withholding tax rate does not automatically apply
+and certain requirements must be satisfied.
+(41,797)
+(300)
+103,823
+310,978
+(a) Value Added Tax
+The Group is mainly subject to VAT rate of 6%, and relevant surcharges on VAT payments according to
+PRC tax law.
+13 TAXATION (Continued)
+Meituan 2021 Annual Report 247
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+(b) Income tax
+Cayman Islands
+Under the current laws of the Cayman Islands, the Company and its subsidiaries incorporated in the
+Cayman Islands are not subject to tax on their income or capital gains. Additionally, the Cayman Islands
+does not impose a withholding tax on payments of dividends to shareholders.
+(298,412)
+Under the current laws of the British Virgin Islands, entities incorporated in the British Virgin Islands are
+not subject to tax on their income or capital gains.
+Hong Kong
+Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profits
+for the years ended December 31, 2021 and 2020.
+PRC corporate income tax ("CIT")
+CIT provision was made on the estimated assessable profit of entities within the Group incorporated in
+the PRC and was calculated in accordance with the relevant regulations of the PRC after considering the
+available tax benefits from refunds and allowances. The general PRC CIT rate is 25% during the years
+ended December 31, 2021 and 2020.
+Certain subsidiaries of the Group in the PRC are subject to "high and new technology enterprises",
+whose preferential income tax rate was 15% for the years ended December 31, 2021 and 2020.
+Moreover, a subsidiary is entitled to the preferential policy of "2-year exemption and 3-year half rate
+concession". In addition, certain PRC subsidiaries of the Group are subject to "small and thin-profit
+enterprises" under the CIT Law, whose preferential income tax rate was 20% for the years ended
+December 31, 2021 and 2020.
+248 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+13 TAXATION (Continued)
+(b) Income tax (Continued)
+Withholding tax on undistributed dividends
+Current income tax expenses
+- Expenses not deductible for income tax purposes
+(40,982)
+(227,279)
+5,845,354
+(Loss)/profit attributable to equity holders of the Company (RMB'000)
+Weighted average number of ordinary shares in issue (thousands)
+(23,538,379)
+6,037,677
+Basic (loss)/earnings per share (RMB)
+(3.90)
+0.81
+Diluted (loss)/earnings per share is calculated by adjusting the weighted average number of ordinary
+shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has
+three categories of dilutive potential ordinary shares: share options, RSUs and convertible bonds. As the
+Company incurred losses for the year ended December 31, 2021, the dilutive potential ordinary shares
+were not included in the calculation of diluted loss per share as their inclusion would be anti-dilution.
+Accordingly, diluted loss per share for the year ended December 31, 2021 was the same as basic loss
+per share.
+(Loss)/profit attributable to equity holders of the Company (RMB'000)
+Weighted average number of ordinary shares in issue (thousands)
+Adjustments for share options and RSUs (thousands)
+Weighted average number of ordinary shares used as the
+denominator in calculating diluted (loss)/earnings per
+share (thousands)
+Diluted (loss)/earnings per share (RMB)
+Year ended December 31,
+2021
+2020
+(23,538,379)
+4,708,313
+6,037,677
+5,845,354
+158,251
+6,037,677
+6,003,605
+(3.90)
+0.78
+Tianjin Xiaoyi Technology Co., Ltd.
+4,708,313
+2020
+Year ended December 31,
+2021
+(b)
+- Super deduction for research and development expenses
+1,190,896
+1,261,674
+- Changes in deferred tax assets and liabilities mismatched
+with (loss)/profit before income tax
+Tax losses
+Other temporary differences
+- Withholding tax (Note i)
+- Others
+Total income tax credits
+(3,993,860)
+(896,861)
+62,252
+(132,578)
+537,509
+(568,384)
+(15,604)
+61,576
+30,279
+269,737
+(i)
+The Group's subsidiaries outside of PRC recognised withholding tax for their investments in the PRC entities.
+Meituan 2021 Annual Report 249
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+14 (LOSS)/EARNINGS PER SHARE
+(a) Basic (loss)/earnings per share for the years ended December 31, 2021 and 2020 were calculated by
+dividing the (loss)/profit attributable to the Company's equity holders by the weighted average number
+of ordinary shares in issue during the year.
+311,278
+145,620
+246 Meituan 2021 Annual Report
+2021
+RMB'000
+Shanghai, the PRC, limited September 23, 2003
+RMB10,000,000
+100%
+100%
+Merchant information
+liability company
+advisory services in the PRC
+Note (ii)
+The Effective interests held by the Group have no changes since January 1, 2022 until the reporting date.
+The Company does not have directly or indirectly legal ownership in equity of structured entities or their
+subsidiaries. Nevertheless, under certain contractual arrangements entered into with these structured entities
+and their registered owners, the Company and its legally owned subsidiaries have rights to exercise power
+over these structured entities, to receive variable returns from their involvement in these structured entities, and
+have the ability to affect those returns through their power over these structured entities. As a result, they are
+consolidated structured entities of the Company.
+Due to the implementation of the shares award scheme of the Group mentioned in Note 2.10, certain
+structured entity ("Share Scheme Trust”) has been set up. The principal activities of Share Scheme Trust is
+administering and holding the Company's shares issued for Post-IPO Share Award Scheme. As the Company
+has the power to govern the financial and operating policies of the Share Scheme Trust and can derive benefits
+from the contributions of the eligible persons who are awarded with the shares by the schemes, the Directors
+of the Company consider that it is appropriate to consolidate the Share Scheme Trust.
+Meituan 2021 Annual Report 245
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
+Associates (a)
+Joint ventures
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+13,856,036
+13,167,893
+12,752
+13,050
+13,868,788
+13,180,943
+Shanghai Hantao Information
+Consulting Co., Ltd.
+cloud computing in the PRC
+System ("RMS") and
+Restaurant Management
+As of December 31,
+Principal activities
+kind of legal entity
+establishment
+issued capital
+2021
+2020
+and place of operation
+Beijing Sankuai Technology Co., Ltd.
+Beijing, the PRC, limited
+April 10, 2007
+RMB5,480,000,000
+RMB11.5 billion of investments accounted for using the equity method was denominated in USD (2020:
+RMB11.3 billion), and other balances were denominated in RMB.
+100%
+Shanghai Sankuai Technology Co., Ltd.
+Beijing Sankuai Cloud Computing
+Technology Co., Ltd.
+liability company
+Shanghai, the PRC, limited September 19, 2012
+liability company
+Beijing, the PRC, limited
+liability company
+E-commerce service platform
+in the PRC
+RMB5,000,000
+100%
+100%
+Online retail platform in the PRC
+June 17, 2015
+RMB870,000,000
+100%
+100%
+100%
+2020
+RMB'000
+(a) Investments in associates accounted for using the equity method
+2021
+RMB'000
+145,620
+264,105
+Other reserves (Note 27)
+117,125
+(120,986)
+Currency translation differences
+(267,004)
+(532,470)
+At the end of the year
+13,856,036
+13,167,893
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+(a) Investments in associates accounted for using the equity method (Continued)
+(i)
+Dilution gains mainly comprised net gains on dilution of the Group's equity interests in Li Auto Inc. due to the
+public offerings of additional issuance in August 2021 and in December 2020.
+There were no material contingent liabilities relating to the Group's interests in the associates.
+There was no individually material associates that are accounted for using the equity method as of
+December 31, 2021 (as of December 31, 2020: RMB10.4 billion of Li Auto Inc.). Aggregate amounts of
+the Group's share of gains/(losses) of individually immaterial associates accounted for using the equity
+method are as follows:
+- Profit from operations
+- Other comprehensive loss
+Total comprehensive income
+13
+TAXATION
+Year ended December 31,
+Share of gains of investments accounted for using the equity method
+(8,888)
+Disposals
+(5,369)
+2020
+RMB'000
+Investments in associates
+-
+- listed entities
+- unlisted entities
+11,573,568
+2,282,468
+11,361,160
+1,806,733
+13,856,036
+13,167,893
+The quoted fair value of the investments in listed entities was RMB27,228 million and RMB25,224 million
+as of December 31, 2021 and 2020, respectively.
+Year ended December 31,
+As of December 31,
+2021
+RMB'000
+At the beginning of the year
+13,167,893
+2,269,638
+Additions
+Transfer (Note 19)
+2,367,376
+8,071,981
+Dilution gains (Note i)
+716,427
+853,618
+Dividends from associates
+(15,137)
+2020
+RMB'000
+Delivery services in the PRC
+Note (i)
+incorporation/
+through profit or loss (Note 3.3)
+1,152,287
+816,888
+Dilution gains (Note 12)
+716,427
+853,618
+Interest income from treasury investments at amortised cost
+132,694
+386,771
+Fine imposed pursuant to China's Anti-Monopoly Law (Note ii)
+Donations
+(3,442,440)
+(139,689)
+(204,534)
+Foreign exchange losses, net
+(34,977)
+(170,340)
+Others
+(72,941)
+90,067
+(185,734)
+3,160,835
+(i)
+(ii)
+Since April 1, 2019, taxpayers in the manufacturing and consumer services industry are allowed to enjoy additional
+10% of input VAT amount deductible from tax payable. Since October 1, 2019, taxpayers in consumer services
+industry are allowed to enjoy additional 15% of input VAT amount deductible from tax payable. As a result, for the
+year ended December 31, 2021, the Group recognised a gain of RMB1,250.5 million (2020: RMB805.7 million).
+In April 2021, the State Administration for Market Regulation of the People's Republic of China (the "SAMR")
+commenced an investigation on the Company pursuant to the Anti-Monopoly Law of the People's Republic of
+China. Following the investigation, in October 2021, the SAMR issued an administrative penalty decision of the anti-
+monopoly investigation against the Company and imposed a fine of RMB3,442 million.
+10
+FINANCE INCOME/(COSTS)
+Finance income
+Interest income from bank deposits
+Fair value changes of treasury investments at fair value
+1,388,365
+1,502,905
+Subsidies and tax preference (Note i)
+376
+93,039
+108,044
+8
+Meituan 2021 Annual Report 241
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments (Continued)
+(i)
+Directors' termination benefits
+No Directors' termination benefits subsisted at the end of the years or at any time during the years
+ended December 31, 2021 and 2020.
+(ii)
+Consideration provided to or receivable by third parties for making available Directors' services
+No consideration provided to or receivable by third parties for making available Directors' services
+subsisted at the end of the years or at any time during the years ended December 31, 2021 and
+2020.
+Year ended December 31,
+(iii) Information about loans, quasi-loans and other dealings in favour of Directors, controlled bodies
+corporate by and connected entities with such Directors.
+(iv)
+Directors' material interests in transactions, arrangements or contracts
+No significant transactions, arrangements and contracts in relation to the Group's business to
+which the Company was a party and in which a Director of the Company had a material interest,
+whether directly or indirectly, subsisted at the end of the years or at any time during the years
+ended December 31, 2021 and 2020.
+(v)
+Waiver of Directors' emoluments
+The non-executive Directors have not received any emoluments for the years ended December
+31, 2021 and 2020. None of the other Directors waived or have agreed to waive any emoluments
+during the years ended December 31, 2021 and 2020.
+242 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+9
+OTHER (LOSSES)/GAINS, NET
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+There were no loans, quasi-loans and other dealings in favour of Directors, their controlled bodies
+corporate and connected entities subsisted at the end of the years or at any time during the years
+ended December 31, 2021 and 2020.
+6,528
+2021
+RMB'000
+546,037
+Investment holding in
+The British Virgin Islands
+Indirectly held:
+Beijing Sankuai Online Technology Co., Ltd.
+Beijing, the PRC, limited
+May 6, 2011
+USD3,331,660,000
+100%
+100%
+Hanhai Information Technology
+(Shanghai) Co., Ltd.
+Xiamen Sankuai Online Technology Co., Ltd.
+liability company
+Shanghai, the PRC, limited March 16, 2006
+liability company
+Xiamen, the PRC, limited
+E-commerce service platform
+in the PRC
+USD495,000,000
+100%
+100% Multimedia information technology
+services in the PRC
+March 25, 2014
+USD549,049,120
+100%
+100%
+E-commerce service platform
+liability company
+in the PRC
+Shanghai Sankuai Zhisong Technology Co., Ltd. Shanghai, the PRC, limited November 28, 2017
+USD320,000,000
+100%
+100%
+Particulars of
+100%
+100%
+USD50,000
+Inspired Elite Investments Limited
+213,684
+Finance costs
+Interest expenses on bank borrowings and notes payable
+Interest in respect of lease liabilities
+(887,278)
+(253,216)
+(193,420)
+(92,266)
+Others
+(50,237)
+(24,534)
+Total
+(1,130,935)
+(370,016)
+11 SUBSIDIARIES
+2020
+RMB'000
+Meituan 2021 Annual Report 243
+For the year ended December 31, 2021
+The Company's major subsidiaries (including directly held and indirectly held, collectively controlled, and
+structured entities) during the year ended December 31, 2021 are set out below. Unless otherwise stated, they
+have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion
+of ownership interests held equals the voting rights held by the Group.
+Place of incorporation/
+establishment and
+Date of
+Effective interests held (i)
+As of December 31,
+incorporation/
+kind of legal entity
+establishment
+Particulars of
+issued capital
+2021
+2020
+Principal activities
+and place of operation
+Name
+Directly held:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+6,601
+The British Virgin Islands, March 19, 2014
+limited liability company
+1,125
+Orr Gordon Robert Halyburton
+Shum Heung Yeung Harry
+Leng Xuesong
+Total
+Pension costs
+and other
+Share-based
+employee compensation
+Fees
+Basic salaries
+Bonuses
+benefits
+expenses
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+5,040
+152
+4,080
+152
+៩៩
+5,192
+11,957
+16,189
+1,494
+Neil Nanpeng Shen
+Lau Chi Ping Martin
+Mu Rongjun
+Wang Huiwen
+Wang Xing
+Date of
+1,500
+Place of incorporation/
+establishment and
+Effective interests held (i)
+Structured entities (ii):
+Name
+11 SUBSIDIARIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+244 Meituan 2021 Annual Report
+limited liability company
+Micro-credit business in the PRC
+100%
+100%
+RMB5,000,000,000
+153
+November 28, 2016
+Chongqing Meituan Sankuai
+Micro-credit Co., Ltd.
+100%
+100%
+USD500,000,000
+February 13, 2018
+liability company
+Tianjin, the PRC, limited
+240 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments
+The emoluments of Directors and the chief executive is set out below:
+For the year ended December 31, 2021:
+Name
+liability company
+Chongqing, the PRC,
+1,647
+Supply chain services in the PRC
+500
+benefits
+expenses
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+2,520
+2,520
+150
+5,190
+2,041
+2,040
+132
+Bonuses
+19,442
+2,040
+1,968
+94
+75,824
+500
+500
+500
+88
+625
+1,125
+625
+500
+625
+1,125
+23,655
+Basic salaries
+71,722
+Fees
+RMB'000
+៩៩ |
+500
+275
+775
+275
+275
+775
+775
+1,500
+10,614
+57
+457
+12,782
+25,353
+སྐྱེསྐྱེསྒྱེ།
+Pension costs
+employee
+Share-based
+and other
+Total
+Orr Gordon Robert Halyburton
+Shum Heung Yeung Harry
+Leng Xuesong
+compensation
+Lau Chi Ping Martin
+Mu Rongjun
+Wang Huiwen
+Wang Xing
+Name
+Neil Nanpeng Shen
+For the year ended December 31, 2020:
+Meituan 2021 Annual Report 253
+92,266
+16 INTANGIBLE ASSETS
+1,923,104
+Other intangible
+193,420
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+921,846
+The consolidated income statement shows the following amounts relating to leases (excluding the
+depreciation of land use rights):
+31,676,381
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+Depreciation charge of right-of-use assets
+Interest expenses (included in finance costs)
+2,724,917
+4,721,003
+801,813
+assets arising
+1,783,973
+2,043,002
+from business
+37,413,561
+Goodwill
+3,679,085
+2,937,030
+27,647,435
+Net book amount
+(5,737,180)
+(1,542,848)
+(3,992,745)
+(201,587)
+and impairment
+Accumulated amortisation
+Software
+349,861
+7,671,830
+27,849,022
+Cost
+As of January 1, 2021
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+and others
+combinations
+1,892,709
+2020
+RMB'000
+774,271
+As of December 31,
+252 Meituan 2021 Annual Report
+13,917,165
+2,724,917
+241,157
+8,053,191
+2,123,629
+Net book amount
+(8,782,704)
+(444,708)
+(1,031,912)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(546)
+(3,520,901)
+and impairment
+Accumulated depreciation
+22,699,869
+1,218,979
+3,756,829
+241,703
+For the year ended
+11,837,828
+5,644,530
+(3,784,637)
+2021
+RMB'000
+For the year ended December 31, 2021
+Depreciation expenses have been charged to the consolidated income statement as follows:
+Total
+Others
+Offices
+Except for recognition of lease liabilities, the carrying amounts of right-of-use assets (excluding land use
+rights) by category are as follows:
+(a) Leases (excluding land use rights)
+4,202,623
+8,110,975
+302,013
+417,136
+171,073
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+458,030
+846,153
+3,216,094
+6,389,656
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+Research and development expenses
+General and administrative expenses
+Selling and marketing expenses
+Cost of revenues
+513,443
+December 31, 2021
+4,294,663
+27,647,435
+29,568
+32,699,575
+699,311
+29,568
+Additions
+4,294,663
+27,705,601
+Opening net book amount
+December 31, 2020
+For the year ended
+32,699,575
+699,311
+27,705,601
+Net book amount
+(4,698,910)
+(1,178,322)
+(3,377,167)
+(143,421)
+and impairment
+Accumulated amortisation
+37,398,485
+1,877,633
+Disposals
+(3,110)
+(3,110)
+Amortisation charges
+(3,992,745)
+Cost
+(201,587)
+and impairment
+Accumulated amortisation
+37,413,561
+1,892,709
+7,671,830
+27,849,022
+Cost
+7,671,830
+As of December 31, 2020
+349,861
+3,679,085
+27,647,435
+Ending net book amount
+(58,166)
+(58,166)
+Impairment charges
+(991,486)
+(375,908)
+(615,578)
+31,676,381
+Opening net book amount
+27,849,022
+As of January 1, 2020
+(4,488,698)
+(201,587)
+and impairment
+Accumulated amortisation
+37,602,952
+1,956,232
+7,714,630
+27,932,090
+Cost
+As of December 31, 2021
+Ending net book amount
+Amortisation charges
+27,730,503
+63,689
+(80)
+Disposals
+42,800
+83,068
+Additions
+31,676,381
+349,861
+3,679,085
+(1,863,853)
+(6,554,138)
+Net book amount
+27,730,503
+Total
+RMB'000
+and others
+RMB'000
+Software
+RMB'000
+RMB'000
+combinations
+Goodwill
+assets arising
+from business
+Other intangible
+16 INTANGIBLE ASSETS (Continued)
+Cost
+For the year ended December 31, 2021
+254 Meituan 2021 Annual Report
+31,048,814
+92,379
+3,225,932
+189,557
+(80)
+(817,044)
+(321,091)
+(495,953)
+31,048,814
+92,379
+3,225,932
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+As of December 31, 2020
+Depreciation charges
+774,271
+(1,642,390)
+(480,298)
+(78,184)
+(180,590)
+(66,008)
+(136,405)
+(19,111)
+Disposals
+704,673
+(1,920,913)
+1,216,240
+Transfers
+17,540,029
+346,055
+6,737,539
+4,219,704
+2,688,446
+117,425
+3,430,860
+Additions
+13,917,165
+(3,817,909)
+(2,043,002)
+(58,563)
+(549,111)
+6,737,539
+6,830,956
+943,000
+12,385,280
+8,975,712
+Cost
+As of December 31, 2021
+22,814,246
+1,146,261
+6,678,976
+774,271
+4,721,003
+5,432,542
+3,892,988
+Ending net book amount
+(26)
+Currency translation differences
+(51,649)
+(51,443)
+(206)
+Impairment charges
+(8,110,975)
+942,476
+2,036,595
+2,724,917
+8,053,191
+As of January 1, 2021
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Others
+rights
+assets
+construction
+equipment electric mopeds
+RMB'000
+Land use
+Assets under Right-of-use
+Bikes and
+Computer
+15 PROPERTY, PLANT AND EQUIPMENT
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+250 Meituan 2021 Annual Report
+(1,542,848)
+Cost
+5,644,530
+11,837,828
+241,703
+2,123,629
+Opening net book amount
+December 31, 2021
+For the year ended
+13,917,165
+774,271
+2,724,917
+241,157
+8,053,191
+2,123,629
+241,157
+Net book amount
+(444,708)
+(1,031,912)
+(546)
+(3,784,637)
+(3,520,901)
+and impairment
+Accumulated depreciation
+22,699,869
+1,218,979
+3,756,829
+(8,782,704)
+37,909,082
+Accumulated depreciation
+and impairment
+1,734,740
+Transfers
+13,044,253
+180,074
+2,180,516
+2,540,360
+6,951,124
+1,192,179
+Additions
+5,376,217
+187,292
+1,561,014
+133,423
+1,276,847
+2,217,641
+Opening net book amount
+December 31, 2020
+or the year ended
+For
+5,376,217
+187,292
+(2,431,532)
+696,792
+Disposals
+(7,543)
+2,724,917
+241,157
+8,053,191
+2,123,629
+Ending net book amount
+(11)
+(10)
+Currency translation differences
+(29,691)
+(29,691)
+1,561,014
+Impairment charges
+(218,140)
+(921,846)
+(1,783,990)
+(1,278,647)
+Depreciation charges
+(270,980)
+(42,056)
+(94,757)
+(1,094)
+(125,530)
+(4,202,623)
+133,423
+1,276,847
+2,217,641
+Bikes and
+electric mopeds
+equipment
+Computer
+For the year ended December 31, 2021
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 251
+22,814,246
+1,146,261
+6,678,976
+Assets under
+construction
+4,721,003
+5,432,542
+3,892,988
+Net book amount
+(15,094,836)
+(890,334)
+(58,563)
+(2,109,953)
+(524)
+(6,952,738)
+(5,082,724)
+942,476
+13,917,165
+Right-of-use
+RMB'000
+Net book amount
+(7,629,099)
+(222,056)
+(605,780)
+(7,945)
+(4,504,976)
+(2,288,342)
+and impairment
+Accumulated depreciation
+13,005,316
+assets
+409,348
+141,368
+5,781,823
+4,505,983
+Cost
+As of January 1, 2020
+Total
+RMB'000
+Others
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+2,166,794
+(5,737,180)
+349,861
+27,647,435
+Liabilities as per consolidated statement of financial position
+Financial liabilities at fair value through profit or loss:
+- Financial liabilities at fair value through profit or loss
+Financial liabilities at amortised cost:
+- Trade payables
+- Payables to merchants
+- Advances from transacting users
+- Other payables and accruals
+- Other non-current liabilities
+- Borrowings
+- Notes payable
+- Lease liabilities
+114,600
+29
+29
+15,165,619
+11,967,026
+10,950,920
+9,414,936
+5,171,054
+4,307,861
+52,410,888
+74,720,672
+17,093,559
+32,513,428
+- Prepayments, deposits and other assets
+- Long-term treasury investments at amortised cost
+24
+1,793,035
+1,030,948
+- Short-term treasury investments at amortised cost
+~~~
+22
+8,100,619
+10,560,882
+30
+21
+21
+18,321,513
+10,949,832
+- Restricted cash
+25(b)
+13,276,919
+12,775,667
+-
+- Cash and cash equivalents
+25(a)
+715,158
+8,865,695
+7,328,556
+119,512
+314,032
+Total gross deferred tax assets
+2,206,972
+1,323,951
+Set-off of deferred tax assets pursuant to set-off provisions
+(828,504)
+(875,281)
+Net deferred tax assets
+1,378,468
+448,670
+511,208
+Deferred tax assets:
+2021
+RMB'000
+2020
+RMB'000
+- to be recovered after 12 months
+653,820
+176,250
+- to be recovered within 12 months
+724,648
+272,420
+1,378,468
+As of December 31,
+- Trade receivables
+- Others
+1,695,764
+31
+23,784,867
+8,352,472
+32
+30,383,378
+12,966,341
+4,750,785
+2,737,855
+99,072,318
+57,194,559
+1,009,919
+Meituan 2021 Annual Report 259
+18 DEFERRED INCOME TAXES
+For the year ended December 31, 2021
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
+financial position:
+(a) Deferred tax assets
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+The balance comprises temporary differences attributable to:
+- Tax losses
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Financial assets at amortised cost:
+1,571,471
+15,776,546
+26%
+3%
+3%
+3%
+15%-38%
+11%-45%
+services
+3%-33%
+89%-91%
+3%-31%
+19%-20%
+Bike-sharing
+and moped
+26%
+In-store,
+hotel & travel
+Pre-tax discount rate
+Terminal revenue growth rate
+Gross margin
+Annual revenue growth rate for 5-year period
+As of December 31, 2021
+The key assumptions used in the value-in-use calculations for significant group of CGUS allocated with
+goodwill are as follows:
+Impairment review on the goodwill of the Group has been conducted by the management as of December 31,
+2021 and 2020, according to IAS 36 "Impairment of assets".
+The Group carries out its annual impairment test on goodwill by comparing the recoverable amounts of
+CGU to the carrying amounts. The recoverable amount of a CGU was determined based on value-in-use
+calculations. These calculations used pre-tax cash flow projections based on financial budgets approved by
+management covering a 5-year period with a terminal value related to the future cash flows extrapolated using
+the estimated growth rates stated below beyond the 5-year period. The Group believes that it is appropriate to
+cover a 5-year period in its cash flow projections, because it captures the development stage of the Group's
+businesses during which the Group expects to experience a high growth rate. The accuracy and reliability of
+the information is reasonably assured by the appropriate budgeting, forecast and control process established
+by the Group. The management leveraged their extensive experiences in the industries and provided forecast
+based on past performance and their expectation of future business plans and market developments.
+The goodwill balance mainly arose from the strategic transaction of Meituan and Dianping and business
+combination of Mobike. Goodwill is attributable to the acquired transacting volume and economies of scale
+expected to be derived from combining with the operations of the Group.
+Impairment of goodwill (Continued)
+Food delivery
+16 INTANGIBLE ASSETS (Continued)
+27%
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+25%
+25%
+Pre-tax discount rate
+3%
+3%
+3%
+Terminal revenue growth rate
+23%-36%
+90%
+6%-67%
+Meituan 2021 Annual Report 257
+5%-55%
+Gross margin
+Annual revenue growth rate for 5-year period
+services
+Bike-sharing
+and moped
+In-store,
+hotel & travel
+Food delivery
+As of December 31, 2020
+Impairment of goodwill (Continued)
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2021
+5%-50%
+21%-25%
+448,670
+For the year ended December 31, 2021
+256 Meituan 2021 Annual Report
+612,967
+10,256,786
+74,012,638
+42,953,732
+258 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+17 FINANCIAL INSTRUMENTS BY CATEGORY (Continued)
+As of December 31,
+Note
+2021
+RMB'000
+2020
+RMB'000
+3,295,284
+14,299,857
+Financial assets at fair value through other comprehensive income:
+21
+9,543,006
+965,553
+- Loan receivables at fair value through other comprehensive income
+- Other financial investments at fair value through other
+comprehensive income
+22(a)
+4,210,835
+20
+20
+2,022,705
+605,918
+- Short-term treasury investments at fair value through
+other comprehensive income
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+19
+21
+27,647,435
+(58,166)
+27,705,601
+144,132
+(58,166)
+202,298
+sharing and moped services)
+New initiatives and others (excluding bike-
+3,707,427
+New initiatives and others includes different CGUs. Those CGUs cover the business of RMS, B2B food
+distribution services and micro-credit business. As of December 31, 2021 and 2020, the discount rates used
+in the impairment testing for the CGUs in new initiatives and others segment were from 22% to 30% and 24%
+to 28%, while the terminal revenue growth rate were 3% and 3%.
+- Other financial investments at fair value through profit or loss
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+As of December 31,
+Note
+2021
+RMB'000
+2020
+RMB'000
+Assets as per consolidated statement of financial position
+Financial assets at fair value through profit or loss:
+- Short-term treasury investments at fair value through profit or loss
+- Long-term treasury investments at fair value through profit or loss
+21
+56,417,497
+32,083,979
+The Group holds the following financial instruments:
+28%
+The budgeted gross margins used in the goodwill impairment testing were determined by the management
+based on past performance and its expectation for market development. The expected revenue growth rates
+are following the business plan approved by the Group. Discount rates reflect market assessments of the time
+value and the specific risks relating to the industry.
+Opening
+227,200
+83,068
+27,647,435
+83,068
+144,132
+sharing and moped services)
+27,730,503
+New initiatives and others (excluding bike-
+Bike-sharing and moped services
+18,950,647
+18,950,647
+In-store, hotel & travel
+4,845,229
+4,845,229
+3,707,427
+Food delivery
+Year ended December 31, 2020
+RMB'000
+3,707,427
+Bike-sharing and moped services
+18,950,647
+18,950,647
+In-store, hotel & travel
+4,845,229
+RMB'000
+4,845,229
+RMB'000
+RMB'000
+RMB'000
+Ending
+Disposal
+Addition Reallocation Impairment
+RMB'000
+Food delivery
+RMB'000
+3,707,427
+Ending
+2021
+RMB'000
+Year ended December 31,
+Impairment of goodwill
+Research and development expenses
+Cost of revenues
+RMB'000
+2020
+RMB'000
+Selling and marketing expenses
+For the year ended December 31, 2021
+16 INTANGIBLE ASSETS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 255
+31,676,381
+3,679,085
+Amortisation expenses have been charged to the consolidated income statement as follows:
+443,794
+General and administrative expenses
+Disposal
+592,367
+Addition Reallocation Impairment
+RMB'000 RMB'000 RMB'000
+RMB'000
+Year ended December 31, 2021
+Opening
+991,486
+Net book amount
+Management reviews the business performance based on type of business and monitors the goodwill at the
+operating segment level. The following is a summary of goodwill allocation for each operating segment:
+6,148
+19,685
+176,978
+176,000
+215,993
+177,565
+817,044
+129,399
+(750,046)
+income statement
+Credited/(charged) to consolidated
+(25,016) (1,682,600)
+(469,175)
+(438,363)
+As of January 1, 2020
+(10,700)
+(159,147)
+(24,897)
+(1,051,129)
+(489,022)
+As of December 31, 2021
+(10,700)
+Business combination
+(397,361)
+(1,724,195)
+419,146
+(489,022)
+Credited to other comprehensive income
+OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+16,370
+The Company has undistributed earnings which, if paid out as dividends, would be subject to tax in the hands
+of the recipient. An assessable temporary difference exists, but no deferred tax liability has been recognised
+as the Company is able to control the timing of distributions from subsidiaries and is not expected to
+distribute these profits in the foreseeable future.
+The Group only recognises deferred tax assets for cumulative tax losses if it is probable that future taxable
+income will be available to utilise those tax losses. Management will continue to assess the recognition
+of deferred tax assets in future reporting periods. As of December 31, 2021 and 2020, the Group did not
+recognise deferred tax assets of RMB13.7 billion and RMB9.3 billion in respect of cumulative tax losses
+amounting to RMB74.9 billion and RMB43.6 billion including the tax losses arising from the excess deduction
+of share-based payments. These tax losses will expire from 2022 to 2026, and certain subsidiaries of the
+Group may extend to 2031.
+19
+18 DEFERRED INCOME TAXES (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+262 Meituan 2021 Annual Report
+(1,630,975)
+(155,943)
+(50,029)
+(804,356)
+(620,647)
+As of December 31, 2020
+20,257
+31,368
+31,368
+(130,927)
+16,370
+Credited to other comprehensive income
+(98,890)
+2021
+RMB'000
+2020
+RMB'000
+Deferred tax liabilities:
+- to be recovered after 12 months
+(893,459)
+(751,223)
+- to be recovered within 12 months
+(2,232)
+(4,471)
+(895,691)
+(755,694)
+Meituan 2021 Annual Report 261
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+18 DEFERRED INCOME TAXES (Continued)
+The movement on the gross deferred tax assets is as follows:
+For the year ended December 31, 2021
+Tax losses
+RMB'000
+Others
+RMB'000
+Associates (a)
+Total
+RMB'000
+As of January 1, 2021
+As of December 31,
+(755,694)
+(895,691)
+875,281
+- Intangible assets arising from business combinations
+RMB'000
+2020
+RMB'000
+2021
+- Investments accounted for using the equity method or at fair value
+- Deferred revenues
+The balance comprises temporary differences attributable to:
+(b) Deferred tax liabilities
+18 DEFERRED INCOME TAXES (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+1,009,919
+260 Meituan 2021 Annual Report
+(804,356)
+(24,897)
+(50,029)
+- Others
+(159,147)
+(155,943)
+Total gross deferred tax liabilities
+(1,724,195)
+(1,630,975)
+Set-off of deferred tax liabilities pursuant to set-off provisions
+828,504
+(1,051,129)
+(620,647)
+314,032
+Credited to consolidated income statement
+Intangible
+using the
+equity method
+Deferred
+assets or at fair value
+revenues
+Others
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+As of January 1, 2021
+(620,647)
+(804,356)
+(50,029)
+(155,943)
+(1,630,975)
+Credited/(charged) to consolidated
+income statement
+142,325
+(263,143)
+25,132
+(3,204)
+accounted for
+Investments
+The movement on the gross deferred tax liabilities is as follows:
+1,323,951
+349,255
+197,176
+546,431
+Credited to consolidated statement of changes in equity
+336,590
+336,590
+As of December 31, 2021
+1,695,764
+511,208
+2,206,972
+As of January 1, 2020
+1,323,951
+848,365
+884,185
+Credited to consolidated income statement
+118,440
+278,212
+396,652
+Credited to consolidated statement of changes in equity
+43,114
+43,114
+As of December 31, 2020
+1,009,919
+314,032
+35,820
+As of December 31,
+Net deferred tax liabilities
+(166,570)
+At the beginning of the year
+Additions (Note i)
+Changes in fair values (Note 27)
+Transfers (Note 19)
+Currency translation differences
+At the end of the year
+Movement of other financial investments at fair value through other comprehensive income is analysed as
+follows:
+Year ended December 31,
+2020
+RMB'000
+605,918
+450,000
+548,668
+(86,821)
+84,387
+2021
+RMB'000
+1,068,094
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME (Continued)
+Meituan 2021 Annual Report 265
+During the year ended December 31, 2021, the Group's additions to other investments mainly comprised the
+investments in some unlisted entities.
+During the year ended December 31, 2021, an investment of RMB284 million is designated as other financial
+investments at fair value through other comprehensive income due to the conversion of preferred shares into
+ordinary shares.
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+Other financial investments at fair value through other comprehensive income comprise the following:
+Equity investments in listed entities
+Equity investments in unlisted entities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+As of December 31,
+2020
+RMB'000
+532,455
+605,918
+1,490,250
+2,022,705
+605,918
+2021
+RMB'000
+(14,486)
+(27,137)
+2,022,705
+10,949,832
+- Fair value through profit or loss
+56,417,497
+32,083,979
+- Fair value through other comprehensive income
+9,543,006
+18,321,513
+965,553
+43,999,364
+266 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+21 TREASURY INVESTMENTS (Continued)
+Treasury investments at amortised cost were primarily fixed rate certificates of deposit and term deposits.
+Treasury investments at fair value through profit or loss were wealth management products. The principal
+and returns on all of these wealth management products were not guaranteed, hence their contractual cash
+flows did not qualify for solely payments of principal and interest. Therefore, they were measured at fair value
+through profit or loss. Treasury investments at fair value through other comprehensive income were large-
+denomination negotiable certificates of term deposits and other financial products, in which the contractual
+cash flows represented solely payments of principal and interest. The objective of the Group's business model
+was collecting contractual cash flows and selling these financial assets.
+84,282,016
+- Amortised cost
+Short-term treasury investments at
+612,967
+605,918
+(i)
+During the year ended December 31, 2021, the Group made a new investment with the amount of approximately
+RMB450 million that are not held for trading. The Group made an irrevocable election to measure the investment as
+other financial investments at fair value through other comprehensive income.
+21 TREASURY INVESTMENTS
+Long-term treasury investments at
+- Amortised cost
+- Fair value through profit or loss
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+715,158
+3,295,284
+612,967
+4,010,442
+(ii)
+The Group also has interests in certain investee companies in the form of preferred and ordinary shares
+without significant influence, which are managed and whose performance are evaluated on a fair value
+basis. The Group designated these instruments as other financial investments at fair value through profit
+or loss.
+(b) Other investees (Continued)
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+2020
+RMB'000
+At the beginning of the year
+2,690,100
+1,376,375
+Additions (Note i)
+2,393,024
+2021
+RMB'000
+4,717,562
+4,785,089
+Disposals
+(60,000)
+(225,681)
+Transfers (Note 12, 20)
+(783,750)
+Changes in fair values
+Year ended December 31,
+(a) Associates
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+The Group considered that the carrying amount of the trade receivables approximated their fair values as of
+December 31, 2021 and 2020.
+Other investees (b)
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+4,453,450
+2,690,100
+9,846,407
+7,566,686
+14,299,857
+10,256,786
+RMB5.9 billion of other financial investments at fair value through profit or loss was denominated in USD (2020:
+RMB4.0 billion), and other balances were denominated in RMB.
+Meituan 2021 Annual Report 263
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+(7,853,443)
+Treasury investments were denominated in the following currencies:
+Currency translation differences
+(109,802)
+(713,798)
+(88,794)
+Transfers (Note ii) (Note 12, 20)
+(284,344)
+(218,538)
+Currency translation differences
+Disposals
+(86,522)
+At the end of the year
+9,846,407
+7,566,686
+264 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+(218,848)
+170,820
+596,526
+Changes in fair values
+At the end of the year
+4,453,450
+2,690,100
+(i)
+During the year ended December 31, 2021, the Group's additions to investments in associates at fair value
+through profit or loss mainly comprised some investments in food and beverage industry and technology
+industry.
+(b) Other investees
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+At the beginning of the year
+7,566,686
+5,789,747
+Additions (Note i)
+2,767,859
+2,132,299
+(5,145)
+As of December 31,
+2021
+RMB'000
+219,221
+RMB
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+Raw materials
+Finished goods
+139,873
+41,109
+(158,839)
+598,542
+738,415
+480,239
+Less: provisions for impairment
+(56,722)
+(13,747)
+681,693
+439,130
+23 INVENTORIES
+Allowances for impairment losses on loan receivables at fair
+value through other comprehensive income (Note 3.1.2)
+4,210,835
+Loan receivables are derived from micro-credit business and initially measured at fair value. Depending
+on the business models in which the loan receivables are held, the subsequent measurement could be
+at amortised cost or at fair value through other comprehensive income. Breakdown for loan receivables
+including both current and non-current portion is as follows:
+Loan receivables at amortised cost
+Less: allowance for impairment (Note 3.1.2)
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+1,754,928
+7,262,016
+(124,734)
+(354,219)
+1,630,194
+6,907,797
+Loan receivables at fair value through other comprehensive income
+Less: fair value changes of loan receivables
+4,268,063
+(57,228)
+466,492
+(a) Loan receivables
+24
+Meituan 2021 Annual Report 269
+At the end of the year
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+(166,570)
+(155,854)
+Write-off
+(108,231)
+14,852
+54,016
+33,955
+25,232
+USD
+(225,994)
+(89,964)
+Provision
+At the beginning of the year
+Movements on the Group's allowance for impairment of trade receivables are as follows:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+TRADE RECEIVABLES
+Trade receivables
+Less: allowance for impairment
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+2,019,029
+1,197,518
+(225,994)
+(166,570)
+1,793,035
+1,030,948
+The Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to
+be recognised from initial recognition of the assets. The provision matrix is determined based on historical
+observed default rates over the expected life of trade receivables with similar credit risk characteristics and is
+adjusted for forward-looking estimates. At each reporting period end the historical observed default rates are
+updated and changes in the forward-looking estimates are analysed.
+24
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+Reversal
+268 Meituan 2021 Annual Report
+Rental deposits
+1,021,951
+466,232
+903,474
+5,935,077
+409,322
+Prepayments for PP&E
+268,658
+339,044
+297,044
+Deductible value-added tax
+247,226
+334,509
+Others
+Prepayments for investments
+Loan receivables (a)
+Non-current
+2020
+RMB'000
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2020
+54,654,850
+31,828,437
+33,637,608
+12,783,894
+88,292,458
+44,612,331
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+For the year ended December 31, 2021
+As of December 31,
+2021
+RMB'000
+460,255
+268,297
+Meituan 2021 Annual Report 267
+7,569,817
+299,358
+Amounts due from related parties (Note 37)
+516,492
+1,425,059
+Prepayments for purchased goods or services
+469,608
+602,119
+Prepayments on behalf of third parties
+379,799
+Others
+1,377,881
+12,940,125
+3,381,272
+252,614
+15,281,586
+568,026
+Prepayments to merchants
+402,626
+882,395
+Current
+Loan receivables (a)
+4,819,078
+369,744
+Deductible value-added tax
+3,056,071
+2,275,045
+Receivables upon share-based payments vesting or exercise
+6,441,565
+2,258,425
+Deposits in third-party payment processors
+930,984
+Contract assets
+591,646
+303,176
+1,513,938
+(2,283,840)
+3,272,930
+6,835,306
+3,272,930
+(2,283,840)
+(4,447,252)
+(169,459)
+(7,439,014)
+3,161,201
+20
+Total
+RMB'000
+RMB'000
+RMB'000
+(11,899,519)
+Others
+differences
+payments
+Capital reserve
+RMB'000
+20
+translation
+Share-based
+Currency
+(2,866,675)
+683,580
+RMB'000
+-- (120,986)
+(6,262,066)
+(2,920,302)
+Online marketing services and others
+166,700
+2,649
+166,700
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+Current
+Business cooperation agreement with Maoyan
+Non-Current
+28 DEFERRED REVENUES
+For the year ended December 31, 2021
+(120,986)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(53,061)
+(10,359,316)
+4,150,291
+20
+20
+108,195
+108,195
+44,862
+44,862
+84,327
+84,327
+(2,920,302)
+274 Meituan 2021 Annual Report
+535,289
+(53,061)
+1,513,938
+(6,262,066)
+(10,359,316)
+4,150,291
+20
+As of January 1, 2021
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Equity-settled share-based
+Others
+differences
+payments
+reserve
+of convertible
+translation
+Share-based
+Capital
+option
+Currency
+Conversion
+5,263,620
+For the year ended December 31, 2021
+bonds
+payments
+5,193,445
+5,193,445
+- 1,513,938
+81,578
+81,578
+As of December 31, 2020
+Fair value changes of and net provisions for
+impairment losses on financial assets
+Tax benefit from share-based payments
+Appropriations to general reserves
+Exercise of share options and RSUs vesting
+Share of changes in net assets of associates
+Currency translation differences
+Equity-settled share-based payments
+As of January 1, 2020
+As of December 31, 2021
+Appropriations to general reserves
+payments
+Tax benefit from share-based
+(equity component) (Note 32)
+Issuance of convertible bonds
+on financial assets
+provisions for impairment losses
+Fair value changes of and net
+Currency translation differences
+(1,540,203)
+117,125
+(2,508,430)
+(1.540203) 117,125
+associates
+Share of changes in net assets of
+(2,508,430)
+vesting
+Exercise of share options and RSUs
+535,289
+2,649
+4,764,690
+671,597
+157,264
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+276 Meituan 2021 Annual Report
+12,779,429
+18,400,738
+777,375
+765,503
+Others
+61,732
+60,320
+Undue interests accrued for senior notes (Note 32)
+395,785
+280,620
+31 BORROWINGS
+Amounts due to related parties (Note 37)
+631,276
+Taxes and surcharges payables
+312,481
+Accrued expenses
+367,960
+682,029
+Customer advances
+1,106,030
+1,835,104
+Amounts collected on behalf of third parties
+2,422,440
+Unpaid fine imposed pursuant to China's Anti-Monopoly Law
+858,974
+4,903,176
+As of December 31, 2021
+Original
+amount
+'000
+As of December 31, 2020
+Original
+amount
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+As of December 31,
+Included in non-current liabilities:
+32 NOTES PAYABLE
+(b) The floating rates of USD bank borrowings which were subject to LIBOR would be repriced quarterly or
+yearly according to the contract terms and would cease to be published after June 30, 2023.
+As of December 31, 2021, the effective interest rates for bank borrowings were 0.94%-3.75% (2020:
+1.54%-3.85%). For the year ended December 31, 2021, the weighted average effective interest rate was
+1.70% (2020: 3.21%).
+(a)
+6,395,002
+11,565,200
+3,145,002
+USD482,000
+3,250,000
+Amount
+RMB'000
+2,140,000 RMB3,250,000
+9,425,200
+RMB2,140,000
+RMB bank borrowings - unsecured
+Included in current liabilities:
+1,957,470
+12,219,667
+1,957,470
+USD300,000
+12,219,667
+USD bank borrowings - unsecured (b) USD1,916,600
+Included in non-current liabilities:
+Amount
+RMB'000
+'000
+USD bank borrowings - unsecured (b) USD1,478,300
+Business cooperation agreement with Maoyan
+5,188,900
+3,995,916
+29
+3,931,679
+4,368,395
+44,010
+222,267
+209,685
+65,873
+Various packages for bike-sharing and moped services
+Business cooperation agreement with Maoyan
+3,665,402
+4,092,837
+Online marketing services and others
+balance at the beginning of the year
+TRADE PAYABLES
+Revenues recognised that was included in the deferred revenues
+RMB'000
+2021
+Year ended December 31,
+The following table shows how much of the revenues recognised in the current reporting period relates to
+carried-forward deferred revenues:
+5,219,530
+5,478,480
+5,052,830
+5,478,480
+65,873
+57,596
+Various packages for bike-sharing and moped services
+222,267
+2020
+RMB'000
+Deposits from merchants and transacting users
+Meituan 2021 Annual Report 275
+For the year ended December 31, 2021
+5,862,949
+Employee payroll and benefits payables
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+11,967,026
+15,165,619
+63,803
+23,979
+45,876
+88,042
+46,688
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+146,690
+14,906,908
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+30 OTHER PAYABLES AND ACCRUALS
+The majority of the Group's trade payables was denominated in RMB.
+Over 1 year
+6 months to 1 year
+3 to 6 months
+Up to 3 months
+Trade payables
+As of December 31, 2021 and 2020, the aging analysis of the trade payables based on invoice date is as
+follows:
+11,810,659
+Meituan 2021 Annual Report 273
+2021
+RMB'000
+The net proceeds from the subscriptions was about RMB45.3 billion after deducting relevant share issuance costs
+paid and payable, which were incremental costs directly attributable to the issuance of the shares and mainly
+included share underwriting commissions and other related costs.
+24 TRADE RECEIVABLES (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+270 Meituan 2021 Annual Report
+Non-current portion of long-term USD senior notes (i)
+12,682,188
+12,966,341
+Non-current portion of long-term USD convertible bonds (ii)
+17,701,190
+30,383,378
+12,966,341
+Included in current liabilities:
+The Group allows a credit period of 30 to 180 days to its customers. Aging analysis of trade receivables (net
+of allowance for impairment of trade receivables) based on invoice date is as follows:
+Undue interests accrued for senior notes (Note 30)
+61,732
+30,443,698
+13,028,073
+Meituan 2021 Annual Report 277
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+32 NOTES PAYABLE (Continued)
+The notes payable and undue interests were repayable as follows:
+As of December 31,
+2021
+RMB'000
+Within 1 year (Note 30)
+Between 2 and 5 years
+More than 5 years
+60,320
+2020
+RMB'000
+Trade receivables
+3 to 6 months
+11,871,616
+Term deposits with initial terms within three months
+Cash held in other financial institutions (Note i)
+14,927,081
+20,084,162
+Cash on hand and cash in bank
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+(a) Cash and cash equivalents
+25 CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS
+The maximum exposure to credit risk as of December 31, 2021 and 2020 was the carrying value of the trade
+receivables. The Group did not hold any collateral as security.
+The majority of the Group's trade receivables was denominated in RMB.
+Up to 3 months
+1,030,948
+7,583
+3,906
+39,416
+17,861
+94,088
+101,529
+889,861
+1,669,739
+2020
+RMB'000
+As of December 31,
+Over 1 year
+6 months to 1 year
+1,793,035
+1,305,480
+60,320
+22,459,694
+32 NOTES PAYABLE (Continued)
+The liability and equity components of the convertible bonds are presented as follows:
+The face value of convertible bonds issued on the issuance date
+Issuance premium
+Gross proceeds
+Less: issuance costs
+Net proceeds
+Less: equity component for the conversion right (Note 27)
+RMB'000
+19,370,725
+105,953
+19,476,678
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+(184,635)
+Liability component on initial recognition
+Interest expenses
+Currency translation differences
+Liability component as of December 31, 2021
+(1,513,938)
+17,778,105
+250,659
+(327,574)
+17,701,190
+Subsequent to the initial recognition, the liability component of the Bonds was carried at amortised cost using
+the effective interest rate method. The effective interest rates of the liability component of the Series 1 Bonds
+and the Series 2 Bonds were 1.94% per annum and 2.26% per annum, respectively.
+As of December 31, 2021, the fair value of the convertible bonds was RMB17,969 million (2020: nil). The
+respective fair values were assessed based on the quoted market price of these convertible bonds at the
+reporting period end.
+2020
+RMB'000
+19,292,043
+61,732
+Meituan 2021 Annual Report 279
+The Company may at any time redeem in whole, but not in part, the Bonds at the early redemption
+amount, if, immediately prior to the date the notice of redemption is given, 90% or more in principal
+amount of the Bonds originally issued has already been converted, redeemed or purchased and
+cancelled. The early redemption amount is determined by the principal amount with a gross yield of
+negative 0.182% and positive 0.255% per annum calculated on a semi-annual basis for the Series 1
+Bonds and the Series 2 Bonds, respectively.
+4,863,174
+7,923,684
+8,103,167
+30,443,698
+13,028,073
+All of these notes payable issued by the Group were unsecured.
+(i)
+On October 29, 2020, the Company issued senior notes with an aggregate principal amount of
+USD2,000 million on the Hong Kong Stock Exchange. The principal amounts, applicable interest rates
+and due dates of the two tranches set out as below:
+2025 senior notes
+2030 senior notes
+Amount
+(USD million)
+Interest Rate
+(per annum)
+The Company will redeem each bond at 100.00% of its principal amount in respect of the Series 1
+Bonds and 101.80% of its principal amount in respect of the Series 2 Bonds, on April 27, 2027 and April
+27, 2028, respectively, if not previously redeemed, converted or purchased and cancelled.
+Due Date
+1,250
+2.125% October 28, 2025
+3.05% October 28, 2030
+2,000
+As of December 31, 2021, the fair value of the senior notes was RMB12,023 million (2020: RMB13,515
+million). The respective fair values were assessed based on the quoted market price of these senior
+notes at the reporting period end.
+278 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+32 NOTES PAYABLE (Continued)
+(ii)
+On April 27, 2021, the Company completed the issuance of US$1,483,600,000 zero coupon
+convertible bonds (“Series 1 Bonds") due on April 27, 2027 (“Series 1 Bonds maturity date”) and
+US$1,500,000,000 zero coupon convertible bonds ("Series 2 Bonds") due on April 27, 2028 ("Series
+2 Bonds maturity date") (together, the "Bonds" and the "Maturity Date") to third party professional
+investors (the "Bondholders").
+The Bonds will, at the option of the Bondholders, be convertible on or after June 7, 2021 up to the 10
+days prior to the Maturity date (both days inclusive) into Class B ordinary shares of the Company at a
+conversion price of HK$431.24 per Class B share, subject to adjustments.
+The Company will, at the option of the Bondholders, redeem all or some only of such Bondholder's
+Series 1 Bonds on April 27, 2025 at 100.37% of the principal amount of the Series 1 Bonds, and redeem
+all or some only of such Bondholder's Series 2 Bonds on April 27, 2026 at 101.28% of the principal
+amount of the Series 2 Bonds.
+750
+27 OTHER RESERVES
+557,650
+32,513,428
+6,136,145
+As of December 31, 2021
+45,285,900
+45,285,887
+13
+2
+198,353
+subscription (i)
+placement and
+Issuance of shares upon
+(1)
+1
+61
+9,809
+Shares held for shares
+2,780,152
+1
+2,780,149
+- 2
+42,334
+and RSUS vesting
+Exercise of share options
+263,155,596
+263,155,201
+395
+59
+award scheme
+5,885,649
+411
+311,221,648
+In addition, in April 2021, the Company and Tencent entered into the Tencent subscription agreement, pursuant to
+which Tencent has agreed to subscribe for and the Company has agreed to allot and issue 11,352,600 shares at
+the price of HK$273.80 for each share. These shares were allotted and issued to Tencent as all conditions for the
+completion of the subscription have been fulfilled on July 13, 2021.
+In April 2021, pursuant to the terms and conditions of the placing and subscription agreement entered by the
+Company and joint placing bookrunners, an aggregated of 187,000,000 existing shares beneficially owned by
+Tencent Mobility Limited ("Tencent") have been placed to not less than six independent placees at the price of
+HK$273.80 per placing share. These shares were allotted and issued to Tencent as all conditions for the completion
+of the subscription have been fulfilled on April 27, 2021.
+(i)
+263,155,596
+263,155,201
+395
+59
+5,885,649
+As of December 31, 2020
+(1)
+1
+11,207
+311,221,237
+Shares held for shares award
+scheme
+1
+2,795,272
+5
+1
+65,776
+Exercise of share options
+and RSUs vesting
+260,360,318
+260,359,929
+389
+58
+5,808,666
+As of January 1, 2020
+2,795,278
+860,998
+As of January 1, 2021
+RMB'000
+As of December 31,
+Restricted cash are denominated in the following currencies:
+(b) Restricted cash
+17,093,559
+32,513,428
+643,769
+71,628
+7,866,891
+16,507,095
+8,582,899
+15,934,705
+Others
+2021
+RMB'000
+RMB
+USD
+2020
+2021
+RMB'000
+As of December 31,
+Cash and cash equivalents are denominated in the following currencies:
+(a) Cash and cash equivalents (Continued)
+CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 271
+25
+Cash and cash equivalents of the Group primarily represents bank deposits and fixed deposits with maturities
+less than three months. As of December 31, 2021 and 2020, the Group had certain amounts of cash held in
+accounts managed by other financial institutions in connection with the ordinary course of business, which
+have been classified as cash and cash equivalents on the consolidated statement of financial position.
+17,093,559
+RMB'000
+Total
+RMB'000
+2020
+RMB'000
+13,243,107
+22,166
+11,646
+award
+scheme
+Share
+premium
+RMB'000
+RMB'000
+USD'000
+'000
+capital
+shares
+shares
+Share
+ordinary
+for shares
+value of
+RMB
+USD
+Others
+Number of
+ordinary
+Nominal
+Issued and fully paid:
+As of December 31, 2021 and 2020, the authorised share capital of the Company comprised 10,000,000,000
+ordinary shares with par value of USD0.00001 per share.
+26 SHARE CAPITAL, SHARE PREMIUM AND SHARES HELD FOR SHARES AWARD SCHEME
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+272 Meituan 2021 Annual Report
+As of December 31, 2021 and 2020, RMB79 million and RMB217 million (including USD4 million and
+HKD1 million) restricted deposits were held by banks as letter of guarantee. Other restricted cash
+balances were those held in bank accounts subject to certain restriction according to agreement with
+certain parties.
+12,775,667
+13,276,919
+42,427
+3,148
+12,730,092
+Shares held
+2021
+RMB'000
+280 Meituan 2021 Annual Report
+(501,723)
+Meituan 2021 Annual Report 287
+4,750,785
+30,443,698
+23,784,867
+Liabilities as of December 31, 2021
+193,420
+(28)
+(624,229)
+(335,801)
+Currency translation differences
+261,749
+Finance costs
+3,352
+Derecognition of issuance costs
+(1,513,938)
+convertible bonds
+Equity component of
+(208,867)
+(906,000)
+Deductions
+4,219,704
+Additions
+(2,191,299)
+791,400
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+19,288,691
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
+Notes
+Recognition of issuance costs
+(125,346)
+Deductions
+2,180,516
+Additions
+(936,380)
+114,600
+13,337,825
+4,621,559
+Cash flows
+1,526,799
+4,019,263
+Liabilities as of January 1, 2020
+RMB'000
+liabilities
+Lease
+fair value
+through profit
+or loss
+RMB'000
+interests
+RMB'000
+RMB'000
+Borrowings
+and undue
+payable
+Financial
+liabilities at
+(c) Reconciliation of liabilities related to cash flows generated from financing activities (Continued)
+(3,352)
+15,768,196
+2,737,855
+Increase in other payables and accruals
+263,331
+258,899
+Increase in deferred revenues
+452,277
+862,902
+Increase in advances from transacting users
+1,919,674
+1,534,661
+Increase in payables to merchants
+3,991,118
+3,345,963
+Increase in trade payables
+(191,265)
+(40,579)
+Increase in inventories
+(3,261,037)
+(3,163,467)
+Increase in prepayments, deposits and other assets
+(381,667)
+(746,561)
+Increase in trade receivables
+(4,016,150)
+5,708,088
+Cash flows
+3,108,912
+(49,481)
+114,600
+13,028,073
+8,352,472
+Liabilities as of January 1, 2021
+RMB'000
+liabilities
+Lease
+fair value
+through profit
+or loss
+RMB'000
+interests
+RMB'000
+Borrowings
+RMB'000
+and undue
+Financial
+liabilities at
+Notes
+payable
+(c) Reconciliation of liabilities related to cash flows generated from financing activities
+Other than the acquisition of right-of-use assets described in Note 15, the share-based payments
+described in Note 33, there were no other material non-cash transactions during the year ended
+December 31, 2021.
+(b) Major non-cash transactions
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+286 Meituan 2021 Annual Report
+8,561,324
+(3,756,727)
+Cash (used in)/generated from operations
+5,106
+(Decrease)/increase in other non-current liabilities
+Finance costs
+768
+63,606
+Due to related parties
+(ii)
+1,425,059
+516,492
+288,626
+241,542
+One of the Company's shareholders
+1,136,433
+274,950
+Associates of the Group
+Due from related parties
+(i)
+2020
+RMB'000
+RMB'000
+2021
+As of December 31,
+For the year ended December 31, 2021
+(c) Balances with related parties
+37 RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 289
+shares were issued for its placing shares to other independent placees. Please refer to Note 26 for
+details.
+(iii) In 2021, the Company issued 198,352,600 ordinary shares to Tencent of which 187,000,000
+Associates of the Group
+2,813,246
+232,626
+One of the Company's shareholders
+374,391
+425,834
+349,173
+Share-based compensation expenses
+764
+864
+Pension costs and other employee benefits
+12,648
+Bonuses
+12,721
+22,854
+Basic salaries
+1,500
+1,500
+Fees
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+(d) Key management compensation
+395,785
+280,620
+33,077
+47,994
+362,708
+4,175,151
+927,744
+1,885,502
+Relationship
+Dalian Tongda Enterprise Management Co., Ltd.
+AsiaSea Co., Ltd.
+Tencent Group (i)
+Name of related parties
+The following companies are significant related parties of the Group that had transactions and/or
+balances with the Group during the years and/or as of years then ended.
+(a) Names of and the Group's relationship with related parties
+37 RELATED PARTY TRANSACTIONS (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+288 Meituan 2021 Annual Report
+The following significant transactions were carried out between the Group and its related parties during the
+years presented. In the opinion of the Directors of the Company, the related party transactions were carried
+out in the ordinary course of business and at terms negotiated between the Group and the respective related
+parties.
+Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party
+or to exercise significant influence over the other party in making financial and operational decisions. Parties
+are also considered to be related if they are subjected to common control. Members of key management and
+their close family members are also considered as related parties of the Group.
+37 RELATED PARTY TRANSACTIONS
+2,737,855
+114,600
+13,028,073
+8,352,472
+Liabilities as of December 31, 2020
+(370,006)
+(289,118)
+Currency translation differences
+92,266
+One of the Company's shareholders
+Associate of the Group
+Associate of the Group
+Fujian Piaofutong Information Technology Co., Ltd
+Associate of the Group
+2,928,280
+1,246,871
+Associates of the Group
+One of the Company's shareholders
+Purchases of goods and services
+(ii)
+682,828
+946,212
+3,695
+1,497
+One of the Company's shareholders
+679,133
+The Group did not have any material contingent liabilities as of December 31, 2021 and 2020.
+944,715
+Sales of services
+(i)
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+(b) Significant transactions with related parties
+The Group had transactions and balances with affiliates of Tencent Holdings limited ("Tencent Group"), which
+is considered as a related party of the Group.
+Jilin Yillion Bank Co., Ltd.
+Associate of the Group
+Tianjin Maoyan and its subsidiaries
+Associate of the Group
+Associates of the Group
+453,467
+Increase in restricted cash
+(38,217)
+The Company also grants RSUs to the Company's employees, consultants, and Directors under the Pre-IPO
+ESOP and Post-IPO Share Award Scheme. The RSUs awarded vest in tranches from the grant date over a
+certain service period, on condition that employees remain in service without any performance requirements.
+Once the vesting conditions underlying the respective RSUs are met, the RSUs are considered duly and
+validly issued to the holder, and free of restrictions on transfer.
+RSUs
+The weighted average fair value of granted share options was HKD57.52 per share for the year ended
+December 31 2020.
+100.15-195.98
+43.20-72.99
+40%-45%
+6.3-6.5
+0.5%
+Exercise price (HKD)
+Fair value of share options (HKD)
+Expected volatility
+Expected term (years)
+Risk-free interest rates
+2020
+Year ended December 31,
+2021
+The Group had used Black-Scholes model to determine the fair value of the share options as of the grant
+date. Key assumptions are set as below:
+Fair value of share options
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+282 Meituan 2021 Annual Report
+The weighted average remaining contractual life of outstanding share options was 5 years and 6 years as
+of December 31, 2021 and 2020. The weighted average price of the shares at the time these share options
+were exercised was HKD280.10 per share (equivalent to approximately RMB232.80 per share) during the year
+ended December 31, 2021.
+21.60
+Meituan 2021 Annual Report 283
+24,147,385
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+RSUS (Continued)
+Vested during the year
+Granted during the year
+Outstanding as of January 1, 2020
+173.66
+125,367,125
+Outstanding as of December 31, 2021
+173.61
+(9,497,656)
+Forfeited during the year
+66.03
+(42,912,697)
+Vested during the year
+289.67
+51,236,349
+Granted during the year
+90.18
+126,541,129
+Outstanding as of January 1, 2021
+per RSU
+(HKD)
+date fair value
+Number of
+RSUs
+Weighted
+average grant
+Movement in the number of RSUs granted and the respective weighted average grant date fair value are as
+follows:
+33 SHARE-BASED PAYMENTS (Continued)
+Forfeited during the year
+33.95
+26.59
+Granted during the year
+Outstanding as of January 1, 2021
+33.95
+per share
+option
+(HKD)
+share options
+Number of
+average
+exercise price
+Weighted
+Movements in the number of share options granted and their related weighted average exercise prices are as
+follows:
+Share options (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 281
+The share options may be exercised at any time after they have vested subject to the terms of the award
+agreement and are exercisable for a maximum period of 10 years after the date of grant.
+Share options granted typically expire in 10 years from the respective grant dates. The share options have
+graded vesting terms, and vest in tranches from the grant date over the vesting period, on condition that
+employees remain in service without any performance requirements.
+Share options
+As of December 31, 2021, there was a total of 609,679,104 ordinary shares under the Post-IPO Share Option
+Scheme and Post-IPO Share Award Scheme for awards of share options and RSUs of the Company.
+On August 30, 2018, Post-IPO Share Option Scheme and Post-IPO Share Award Scheme had been approved
+by the shareholders of the Company. The total number of Class B Shares which may be issued upon exercise
+of all share options to be granted under the Post-IPO Share Option Scheme and any other schemes is
+475,568,628 Class B Shares. The aggregate number of Class B Shares underlying all grants made pursuant to
+the Post-IPO Share Award Scheme (excluding awards which have been forfeited in accordance with the Post-
+IPO Share Award Scheme) will not exceed 272,336,228 shares without Shareholders' approval (the “Post-
+IPO Share Award Scheme Limit") subject to an annual limit of 3% of the total number of issued shares at the
+relevant time.
+As of August 30, 2018, the Group had authorised and reserved 683,038,063 ordinary shares under the Pre-
+IPO ESOP for awards of share options and RSUs of the Company's ordinary shares. All the share options and
+RSUS under the Pre-IPO ESOP were granted between May 31, 2006 and August 2, 2018 and the Company
+would not grant further share options or RSUs under the Pre-IPO ESOP after the listing of the Class B Shares
+on the Main Board of the Hong Kong Stock Exchange.
+On October 6, 2015, the Board of the Company approved the establishment of the Company's Pre-IPO
+ESOP, an equity-settled share-based compensation plan with the purpose of attracting, motivating, retaining
+and rewarding certain employees, consultants and Directors. The Pre-IPO ESOP was valid and effective for
+10 years from the date of approval by the Board. The Group had reserved 598,483,347 ordinary shares under
+the Pre-IPO ESOP, and permited the awards of share options and RSUs of the Company's ordinary shares.
+33 SHARE-BASED PAYMENTS
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+50,893,174
+50,893,174
+-
+(811,629)
+(21,567,100)
+33.76
+(3,861,049)
+146.22
+2,611,316
+27.81
+73,710,007
+Vested and exercisable as of December 31, 2020
+Outstanding as of December 31, 2020
+Exercised during the year
+Forfeited during the year
+Granted during the year
+Outstanding as of January 1, 2020
+25.34
+21,788,214
+Vested and exercisable as of December 31, 2021
+36.51
+37,988,298
+Outstanding as of December 31, 2021
+26.11
+(12,093,247)
+Exercised during the year
+31.28
+Forfeited during the year
+Outstanding as of December 31, 2020
+142,875,991
+47.26
+(853,618)
+(702,808)
+disposals of subsidiaries and investees
+Net gains arising from disposals or deemed
+3,277,476
+5,193,860
+33
+33
+467,690
+259,953
+Share-based compensation expenses
+financial and contract assets
+Net provisions for impairment losses on
+5,194,109
+8,928,019
+15,16
+Depreciation and amortisation
+Adjusted for:
+4,437,875
+(23,566,477)
+(Loss)/profit before income tax
+2020
+RMB'000
+2021
+RMB'000
+Net provisions for impairment of non-financial assets
+Share of gains of investments accounted for using
+Note
+15,16
+87,857
+48,250
+Net (losses)/gains on sales of non-current assets
+151,198
+34,977
+9
+Foreign exchange losses, net
+384,791
+1,080,698
+10
+Finance costs
+(1,218,122)
+(1,332,183)
+treasury investments and others
+Fair value changes and interest income related to
+(4,955,909)
+(815,747)
+19
+investments at fair value through profit or loss
+Fair value changes of other financial
+(264,105)
+(145,620)
+12
+the equity method
+51,649
+Year ended December 31,
+(a) Cash (used in)/generated from operations
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+284 Meituan 2021 Annual Report
+3,277,476
+5,193,860
+4,546
+415
+170,017
+3,102,913
+2020
+RMB'000
+107,105
+5,086,340
+2021
+RMB'000
+Year ended December 31,
+RSUs
+Others
+Share options
+The total share-based compensation expenses recognised in the consolidated income statement were
+RMB5.2 billion and RMB3.3 billion for the years ended December 31, 2021 and 2020, respectively. The
+following table sets forth a breakdown of the share-based compensation expenses by awards types:
+The fair value of each RSU at the grant dates is determined by reference to the fair value of the underlying
+ordinary shares on the date of grant.
+90.18
+126,541,129
+60.02
+(11,695,041)
+43.67
+(49,436,884)
+167.84
+44,797,063
+For the year ended December 31, 2021
+34 DIVIDENDS
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2021 and 2020.
+35 CAPITAL COMMITMENTS
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 285
+5,242,423
+4,299,871
+733,447
+1,237,344
+Investments
+4,508,976
+3,062,527
+Purchase of property, plant and equipment
+Changes of working capital:
+2020
+RMB'000
+2021
+As of December 31,
+5,242,423
+4,299,871
+235,352
+5,242,423
+4,064,519
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+Within 1 year
+1-2 years
+RMB'000
+38 CONTINGENCIES
+(15,571,500)
+3,120,605
+8,021,710
+(11,388,227)
+for using the equity method
+(163,855)
+273,237
+Loss before income tax
+Income tax credits
+Loss for the period
+(5,344,209)
+5,058
+(10,000,446)
+6,036
+Share of (losses)/gains of investments accounted
+(5,339,151)
+Non-IFRS measures:
+Adjusted EBITDA
+(2,009,748)
+(4,061,659)
+Adjusted net loss
+(3,935,732)
+(5,526,910)
+24 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+(9,994,410)
+Revenues
+(369,942)
+Finance costs
+General and administrative expenses
+(2,435,083)
+(2,387,116)
+Net provisions for impairment losses on financial
+and contract assets
+(52,489)
+(136,884)
+Fair value changes of other financial investments
+at fair value through profit or loss
+(331,672)
+726,955
+Other gains/(losses), net
+594,023
+(2,134,851)
+Operating loss
+(5,005,856)
+(10,102,631)
+Finance income
+157,174
+198,890
+(117,990)
+Our revenues increased by 1.4% to RMB49.5 billion for the fourth quarter of 2021 from RMB48.8 billion for the third
+quarter of 2021. The increase was mainly driven by new initiatives and others.
+The following table sets forth our revenues by segment and type in absolute amount for the fourth quarter of 2021
+and the third quarter of 2021:
+Unaudited
+26,126,641
+8,722,427
+Unaudited
+14,674,065
+49,523,133
+Three Months Ended September 30, 2021
+Food delivery
+In-store,
+hotel & travel
+New initiatives
+and others
+Revenues
+(RMB in thousands)
+Food delivery services
+14,674,501
+Commission
+8,083,678
+Online marketing services
+3,255,079
+4,124,543
+4,480,794
+2,211,138
+285,837
+14,674,501
+14,419,359
+Total
+Total
+12,925,660
+12,025,596
+Three Months Ended December 31, 2021
+In-store, New initiatives
+Food delivery
+hotel & travel
+and others
+(RMB in thousands)
+Total
+Food delivery services
+Commission
+14,254,546
+7,768,614
+Online marketing services
+3,223,472
+4,066,205
+4,636,167
+2,325,479
+14,254,546
+14,160,298
+322,990
+8,182,629
+Other services and sales
+(including interest revenue)
+880,009
+20,055
+(4,715,550)
+(4,581,961)
+Research and development expenses
+(11,239,904)
+As a
+percentage
+As a
+percentage
+Year-over-
+Amount
+of revenues
+Amount
+of revenues
+year change
+(RMB in thousands, except for percentages)
+December 31, 2020
+Food delivery
+6.6%
+In-store, hotel & travel
+3,897,016
+44.7%
+882,352
+2,821,935
+4.1%
+96.7%
+39.5%
+38.1%
+1,735,577
+December 31, 2021
+Three Months Ended
+Unaudited
+20 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+Our cost of revenues increased by 31.9% to RMB37.5 billion for the fourth quarter of 2021 from RMB28.5 billion
+for the same period of 2020, and increased by 0.7 percentage points to 75.8% from 75.1% as a percentage of
+revenues on a year-over-year basis. The increase in amount was primarily attributable to (i) an increase of RMB2.1
+billion in food delivery related costs for our 1P model to RMB18.3 billion, which was in line with the increase in
+related number of transactions, and (ii) the expanded investment in our new initiatives. The increase in cost of
+revenues as a percentage of revenues was mainly due to the change in revenue mix as new initiatives with lower
+gross margin weighed heavier in our entire business portfolio.
+Selling and Marketing Expenses
+Our selling and marketing expenses was RMB11.2 billion for the fourth quarter of 2021 and RMB7.7 billion for the
+same period of 2020, and increased by 2.5 percentage points to 22.7% from 20.2% as a percentage of revenues on
+a year-over-year basis. The increases in both amount and as a percentage of revenues were primarily attributable
+to (i) the increase in marketing campaigns to support the growth of retail businesses and to enhance brand
+recognition, and (ii) the increase in employee benefits expenses driven by the increased number of employees due
+to our business development.
+Research and Development Expenses
+Our research and development expenses increased to RMB4.6 billion for the fourth quarter of 2021 from RMB3.2
+billion for the same period of 2020, and increased by 0.7 percentage points to 9.3% from 8.6% as a percentage of
+revenues on a year-over-year basis. The increases in both amount and as a percentage of revenues were primarily
+attributable to the increase in employee benefits expenses driven by the increased number of employees to support
+business and technology development.
+General and Administrative Expenses
+Our general and administrative expenses increased to RMB2.4 billion for the fourth quarter of 2021 from RMB2.0
+billion for the same period of 2020 and as a percentage of revenues remained flat on a year-over-year basis. The
+increase in amount was primarily attributable to the increase in employee benefits expenses.
+Meituan 2021 Annual Report 21
+MANAGEMENT DISCUSSION AND ANALYSIS
+Net Provisions for Impairment Losses on Financial and Contract Assets
+Our net provisions for impairment losses on financial and contract assets was RMB52.5 million for the fourth quarter
+of 2021, and remained flat on a year-over-year basis.
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+Our fair value changes of other financial investments at fair value through profit or loss was a gain of RMB727.0
+million for the fourth quarter of 2021, compared to a loss of RMB661.9 million for the same period of 2020, mainly
+driven by the fluctuation in the stock price of certain listed entity we invested in.
+Other Gains, Net
+Our other gains, net for the fourth quarter of 2021 decreased by RMB689.1 million to RMB594.0 million compared
+to the same period of 2020, which was primarily due to a decrease in gains from investments.
+Operating Loss
+As a result of the foregoing, our operating loss and margin for the fourth quarter of 2021 was RMB5.0 billion and
+negative 10.1%, compared to operating loss and margin of RMB2.9 billion and negative 7.5% for the same period
+of 2020.
+Operating (loss)/profit and margin by segment are set forth in the table below.
+New initiatives and others
+Other services and sales
+(10,205,238)
+(6,002,831)
+The following table sets forth the comparative figures for the fourth quarter of 2021 and the third quarter of 2021:
+Unaudited
+Three Months Ended
+December 31,
+September 30,
+2021
+2021
+(RMB in thousands)
+Revenues
+The Fourth Quarter of 2021 Compared to the Third Quarter of 2021
+49,523,133
+238,175
+Cost of revenues
+48,829,370
+245,039
+(37,540,530)
+(38,051,383)
+Gross profit
+Selling and marketing expenses
+11,982,603
+10,777,987
+Including: Interest revenue
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2021 Annual Report 23
+As a result of the foregoing, we had loss of RMB5.3 billion for the fourth quarter of 2021, compared to loss of
+RMB2.2 billion for the same period of 2020.
+(64.9%)
+70.0%
+Unallocated items
+(433,211)
+ΝΑ
+(554,152)
+ΝΑ
+(21.8%)
+Total operating loss
+(5,005,856)
+(10.1%) (2,852,696)
+(7.5%)
+75.5%
+22 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our operating profit from the food delivery segment increased by 96.7% to RMB1.7 billion for the fourth quarter of
+2021 from RMB882.4 million for the same period of 2020 and operating margin increased by 2.5 percentage points
+to 6.6% from 4.1% on a year-over-year basis. The increase was primarily attributable to the increase in number of
+transactions, decrease in seasonal food delivery courier incentives and higher online marketing services revenue
+contribution.
+Our operating profit from the in-store, hotel & travel segment increased by 38.1% to RMB3.9 billion for the fourth
+quarter of 2021 from RMB2.8 billion for the same period of 2020, mainly driven by revenue growth. Our operating
+margin for this segment increased by 5.2 percentage points to 44.7% from 39.5% on a year-over-year basis,
+primarily attributed to the improved marketing efficiency and change in revenue mix.
+Our operating loss from the new initiatives and others segment expanded to RMB10.2 billion for the fourth quarter
+of 2021 from RMB6.0 billion for the same period of 2020, and our operating margin for this segment decreased by
+4.6 percentage points to negative 69.5% from negative 64.9% on a year-over-year basis, driven by the continuous
+investment in our new initiatives to satisfy consumers' diverse needs in different consumption scenarios, especially
+the retail businesses with lower operating margin.
+Income Tax Credits
+We had income tax credits of RMB5.1 million for the fourth quarter of 2021, compared to income tax credits of
+RMB571.0 million for the same period of 2020. The change in profit status of certain entities resulted in higher
+income tax credits for the fourth quarter of 2020.
+Loss for the Period
+(69.5%)
+(including interest revenue)
+Revenues
+15,991
+We had income tax credits of RMB5.1 million for the fourth quarter of 2021, compared to income tax credits of
+RMB6.0 million for the third quarter of 2021.
+Loss for the Period
+As a result of the foregoing, we had loss of RMB5.3 billion for the fourth quarter of 2021, compared to loss of
+RMB10.0 billion for the third quarter of 2021.
+Meituan 2021 Annual Report 29
+MANAGEMENT DISCUSSION AND ANALYSIS
+The Year ended December 31, 2021 Compared to the Year ended December 31, 2020
+The following table sets forth the comparative figures for the years ended December 31, 2021 and 2020:
+Revenues
+Including: Interest revenue
+Income Tax Credits
+Cost of revenues
+December 31,
+December 31,
+2021
+2020
+(RMB in thousands)
+179,127,997
+1,000,004
+114,794,510
+884,897
+(136,653,869)
+Year Ended
+Our operating loss from the new initiatives and others segment decreased to RMB10.2 billion for the fourth quarter
+of 2021 from RMB10.9 billion for the third quarter of 2021, and the operating margin for this segment increased by
+10.0 percentage points to negative 69.5% from negative 79.5% on a quarter-over-quarter basis. We continuously
+made efforts to improve the operation strategy for this segment, especially the retail businesses by optimising
+operating efficiency as well as user incentives programs.
+Our operating profit from the in-store, hotel & travel segment increased to RMB3.9 billion for the fourth quarter of
+2021 from RMB3.8 billion for the third quarter of 2021. The operating margin for this segment increased by 0.8
+percentage points to 44.7% on a quarter-over-quarter basis. It was mainly driven by lower promotion expenses
+from our hotel and travel businesses and improved operating efficiency for the whole segment.
+Our operating profit from the food delivery segment increased to RMB1.7 billion for the fourth quarter of 2021 from
+RMB876.1 million for the third quarter of 2021. The operating margin for this segment increased by 3.3 percentage
+points to 6.6% from 3.3% on a quarter-over-quarter basis. Both the increases in operating profit and margin were
+primarily attributable to lower Transacting Users incentives and lower food delivery courier seasonal incentives.
+Unallocated items
+(433,211)
+6.6%
+44.7%
+(69.5%)
+NA
+876,103
+3.3%
+98.1%
+3,784,074
+43.9%
+3.0%
+(10,906,087)
+(3,856,721)
+(79.5%)
+(6.4%)
+ΝΑ
+(88.8%)
+Total operating loss
+(5,005,856)
+(10.1%) (10,102,631)
+(20.7%)
+(50.4%)
+28 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+471,385
+(10,205,238)
+Gross profit
+42,474,128
+213,684
+Finance costs
+(1,130,935)
+(370,016)
+Share of gains of investments accounted for
+using the equity method
+145,620
+264,105
+(Loss)/profit before income tax
+546,037
+Income tax credits
+4,437,875
+269,737
+(Loss)/profit for the year
+Non-IFRS measures:
+(23,536,198)
+4,707,612
+Adjusted EBITDA
+(9,694,076)
+4,737,837
+Adjusted net (loss)/profit
+(23,566,477)
+30,279
+4,330,102
+(23,127,199)
+Finance income
+34,050,142
+(40,683,166)
+(20,882,685)
+Research and development expenses
+(16,675,595)
+(10,892,514)
+General and administrative expenses
+(8,612,626)
+(5,593,895)
+Net provisions for impairment losses on financial
+and contract assets
+(259,953)
+(467,690)
+Fair value changes of other financial investments
+at fair value through profit or loss
+815,747
+4,955,909
+(185,734)
+3,160,835
+Other (losses)/gains, net
+Operating (loss)/profit
+Selling and marketing expenses
+New initiatives and others
+(80,744,368)
+of revenues
+Amount
+change
+(RMB in thousands, except for percentages)
+Cost of revenues
+37,540,530
+75.8%
+38,051,383
+77.9%
+(1.3%)
+of revenues
+Selling and marketing expenses
+22.7%
+11,388,227
+(1.3%)
+Research and development expenses
+4,581,961
+9.3%
+4,715,550
+9.7%
+(2.8%)
+11,239,904
+General and administrative expenses
+Net provisions for impairment losses
+Amount
+As a
+percentage
+3,897,016
+11,226,424
+11,713,800
+Total
+26,484,643
+8,621,328
+13,723,399
+48,829,370
+Meituan 2021 Annual Report 25
+Quarter-
+over-quarter
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues from the in-store, hotel & travel segment increased by 1.2% to RMB8.7 billion for the fourth quarter of
+2021 from RMB8.6 billion for the third quarter of 2021. The increase in online marketing services revenue was driven
+by the increase in the number of Active Merchants. The decrease in commission revenue was mainly attributable to
+hotel and travel businesses, which was adversely affected by the COVID-19 outbreaks.
+Our revenues from the new initiatives and others segment increased by 6.9% to RMB14.7 billion for the fourth
+quarter of 2021 from RMB13.7 billion for the third quarter of 2021, which was primarily driven by the continuing
+growth in retail businesses and B2B food distribution services.
+Costs and Expenses
+The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:
+Costs and Expenses:
+Unaudited
+Three Months Ended
+December 31, 2021
+September 30, 2021
+As a
+percentage
+Our revenues from the food delivery segment decreased by 1.4% to RMB26.1 billion for the fourth quarter of 2021
+from RMB26.5 billion for the third quarter of 2021. In addition to seasonality, the COVID-19 outbreaks during the
+fourth quarter adversely affected people's consumption needs, and cast negative impact on our Transacting User
+activity. Therefore, both our number of transactions and GTV decreased on a quarter-over-quarter basis.
+2,435,083
+23.3%
+2,387,116
+Our fair value changes of other financial investments at fair value through profit or loss was a gain of RMB727.0
+million for the fourth quarter of 2021, compared to a loss of RMB118.0 million for the third quarter of 2021, mainly
+driven by the fluctuation in the valuation of our investment portfolios.
+Other Gains/(Losses), Net
+Our other gains/(losses), net for the fourth quarter of 2021 was a gain of RMB594.0 million, compared to a loss of
+RMB2.1 billion for the third quarter of 2021. The loss in the third quarter comprised the fine imposed pursuant to
+China's Anti-Monopoly Law.
+Operating Loss
+As a result of the foregoing, our operating loss and margin for the fourth quarter of 2021 was RMB5.0 billion and
+negative 10.1% respectively, compared to operating loss and margin of RMB10.1 billion and negative 20.7% for the
+third quarter of 2021.
+Operating (loss)/profit and operating margin by segment are set forth in the table below.
+Unaudited
+4.9%
+December 31, 2021
+September 30, 2021
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+As a
+percentage
+Quarter-
+over-quarter
+Amount
+of revenues
+Amount
+of revenues
+change
+(RMB in thousands, except for percentages)
+Food delivery
+1,735,577
+In-store, hotel & travel
+As a
+percentage
+Our net provisions for impairment losses on financial and contract assets decreased to RMB52.5 million for the
+fourth quarter of 2021 from RMB136.9 million for the third quarter of 2021, which was primarily due to the decrease
+in expected credit losses of financial assets.
+Three Months Ended
+4.9%
+Net Provisions for Impairment Losses on Financial and Contract Assets
+2.0%
+on financial and contract assets
+52,489
+0.1%
+136,884
+(61.7%)
+26 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+0.3%
+Our cost of revenues decreased by 1.3% to RMB37.5 billion for the fourth quarter of 2021 from RMB38.1 billion for
+the third quarter of 2021, decreasing by 2.1 percentage points to 75.8% from 77.9% as a percentage of revenues.
+The decreases in amount and as a percentage of revenues were primarily attributable to a decrease in food delivery
+related costs of RMB733.4 million to RMB18.3 billion resulting from the decrease in number of transactions and
+lower food delivery courier incentives, as well as the improved gross margin for our new initiatives.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+Our general and administrative expenses was RMB2.4 billion and was 4.9% as a percentage of revenues for the
+fourth quarter of 2021, flat on a quarter-over-quarter basis.
+General and Administrative Expenses
+Our research and development expenses decreased to RMB4.6 billion for the fourth quarter of 2021 from RMB4.7
+billion for the third quarter of 2021, and decreased by 0.4 percentage points to 9.3% from 9.7% as a percentage of
+revenues. The decrease was primarily due to the improvement of operating efficiency.
+Meituan 2021 Annual Report 27
+Our selling and marketing expenses decreased to RMB11.2 billion for the fourth quarter of 2021 from RMB11.4
+billion for the third quarter of 2021, decreasing by 0.6 percentage points to 22.7% from 23.3% as a percentage of
+revenues on a quarter-over-quarter basis. Both the decreases in amount and as a percentage of revenues were
+primarily attributable to the decrease in Transacting User incentives in food delivery business.
+Selling and Marketing Expenses
+Research and Development Expenses
+"Hong Kong Share Registrar"
+the director(s) of the Company
+Crown Holdings Asia Limited, a limited liability company incorporated under
+the laws of the BVI, which is indirectly wholly owned by a trust established
+by Wang Xing (as settlor) for the benefit of Wang Xing and his family
+has the meaning ascribed to it under the Listing Rules and unless the context
+otherwise requires, refers to Wang Xing and the directly and indirectly held
+companies through which Wang Xing has an interest in the Company
+"Kevin Sunny"
+"IPO"
+"Independent Third Party(ies)"
+"IFRS"
+"Hong Kong" or "HK"
+Futures Ordinance" or "SFO"
+Meituan 2021 Annual Report 295
+"HK dollars" or "HK$"
+"Hong Kong dollars" or
+"the Group", "we", "us", or "our"
+"Group", "our Group" or
+"Director(s)"
+"Crown Holdings"
+"Controlling Shareholder(s)"
+DEFINITIONS
+the series of contractual arrangements entered into between WFOES,
+Onshore Holdcos and Registered Shareholders (as applicable)
+the Company and its subsidiaries and Consolidated Affiliated Entities from
+time to time
+"Hong Kong Securities and
+Hong Kong dollars, the lawful currency of Hong Kong
+"Articles of Association"
+Computershare Hong Kong Investor Services Limited
+"Model Code"
+the entities we control through the Contractual Arrangements, namely, the
+Onshore Holdcos and their respective subsidiaries (each a "Consolidated
+Affiliated Entity")
+"Mobike Beijing”
+"Mobike"
+"Memorandum of Association"
+"Memorandum" or
+"Meituan Finance"
+"Main Board"
+DEFINITIONS
+296 Meituan 2021 Annual Report
+the Rules Governing the Listing of Securities on The Stock Exchange of
+Hong Kong Limited, as amended, supplemented or otherwise modified from
+time to time
+September 20, 2018
+the listing of the Class B Shares on the Main Board of the Stock Exchange
+"Listing Rules"
+"Listing Date"
+"Listing"
+Kevin Sunny Holding Limited, a limited liability company incorporated
+under the laws of the BVI on May 22, 2018, which is wholly owned by Wang
+Huiwen
+initial public offering
+person(s) or company(ies) which, to the best of the Directors' knowledge
+having made all due and careful enquiries, is/are not connected (within the
+meaning of the Listing Rules) with the Company
+International Financial Reporting Standards, as issued from time to time by
+the International Accounting Standards Board
+the Hong Kong Special Administrative Region of the PRC
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
+Kong), as amended, supplemented or otherwise modified from time to time
+has the meaning ascribed to it under the Listing Rules
+"associate(s)"
+Meituan () (formerly known as Meituan Dianping), an exempted company
+with limited liability incorporated under the laws of the Cayman Islands on
+September 25, 2015, or Meituan (*) and its subsidiaries and Consolidated
+Affiliated Entities, as the case may be
+Beijing Sankuai Technology Co., Ltd. (ĦĦĦÃƑ), a limited
+liability company incorporated under the laws of the PRC on April 10, 2007
+and our Consolidated Affiliated Entity
+Beijing Sankuai Online Technology Co., Ltd. (RESURABÃƑ), a
+limited liability company incorporated under the laws of the PRC on May 6,
+2011 and our indirect wholly-owned subsidiary
+Beijing Sankuai Cloud Computing Co., Ltd. (=R¥Ì¶¶®Â¬), a
+limited liability company incorporated under the laws of the PRC on June 17,
+2015 and our Consolidated Affiliated Entity
+Beijing Mobike Technology Co., Ltd. (2), a limited
+liability company incorporated under the laws of the PRC on January 27,
+2015 and our Consolidated Affiliated Entity
+Beijing Kuxun Technology Co., Ltd. (), a limited liability
+company incorporated under the laws of the PRC on April 27, 2006 and our
+indirect wholly-owned subsidiary
+Beijing Kuxun Interaction Technology Co., Ltd. (ÀÁRA),
+a limited liability company incorporated under the laws of the PRC on March
+29, 2006 and our Consolidated Affiliated Entity
+the external auditor of the Company
+the audit committee of the Company
+has the meaning ascribed to it under the Listing Rules
+the articles of association of the Company adopted on August 30, 2018 with
+effect from the Listing Date, as amended from time to time
+"Beijing Xinmeida"
+"Beijing Sankuai Technology"
+"Beijing Sankuai Online"
+Cloud Computing"
+"Beijing Sankuai
+"Beijing Mobike"
+"Beijing Kuxun Technology"
+"Beijing Kuxun Interaction"
+"Auditor"
+"Audit Committee"
+"New CG Code"
+Beijing Xinmeida Technology Co., Ltd. (★#BÁ¸Â¬]), a limited
+liability company incorporated under the laws of the PRC on March 17, 2016
+and our Consolidated Affiliated Entity
+has the meaning ascribed to it under the Listing Rules
+"Board"
+294 Meituan 2021 Annual Report
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+class B ordinary shares of the share capital of the Company with a par value
+of US$0.00001 each, conferring a holder of a Class B Share one vote per
+share on any resolution tabled at the Company's general meeting
+class A ordinary shares of the share capital of the Company with a par value
+of US$0.00001 each, conferring weighted voting rights in the Company such
+that a holder of a Class A Share is entitled to ten votes per share on any
+resolution tabled at the Company's general meeting, save for resolutions
+with respect to any Reserved Matters, in which case they shall be entitled to
+one vote per share
+Chengdu Meigengmei Information Technology Co., Ltd. (¤¤¤Â
+), a limited liability company incorporated under the laws of the
+PRC on July 18, 2014 and our Consolidated Affiliated Entity
+Charmway Enterprises Company Limited, a limited liability company
+incorporated under the laws of the BVI, which is indirectly wholly owned by
+a trust established by Mu Rongjun (as settlor) for the benefit of Mu Rongjun
+and his family
+The version of corporate governance code as set out in Appendix 14 to the
+Listing Rules valid until December 31, 2021
+the British Virgin Islands
+"Contractual Arrangement(s)❞
+"Consolidated Affiliated Entities"
+"connected transaction(s)"
+"connected person(s)"
+"Company", "our Company",
+"the Company"
+Companies Ordinance"
+"Companies Ordinance" or
+“Hong Kong
+"Class B Shares"
+"Class A Shares"
+"Chengdu Meigengmei"
+"Charmway Enterprises"
+"CG Code"
+"BVI❞
+DEFINITIONS
+the board of Directors
+"Onshore Holdcos," each an
+"Onshore Holdco❞
+(6,405,555)
+the stock exchange (excluding the option market) operated by the Stock
+Exchange, which is independent from and operates in parallel with the GEM
+of the Stock Exchange
+Tianjin Antechu Technology Co., Ltd. (XZBGN), a limited
+liability company incorporated under the laws of the PRC on January 17,
+2018 and our Consolidated Affiliated Entity
+Tencent Holdings Limited (HKEx Stock Code: 700), or Tencent Holdings
+Limited and/or its subsidiaries, as the case may be
+has the meaning ascribed to it in the Listing Rules
+has the meaning ascribed to it in section 15 of the Companies Ordinance
+The Stock Exchange of Hong Kong Limited
+A), a company established in the PRC on November 11, 1998 and a
+wholly owned subsidiary of Tencent
+Shenzhen Tencent Computer Systems Co., Ltd.
+Shenzhen Sankuai Online Technology Co., Ltd. (U=REĦĦĦBA
+), a limited liability company incorporated under the laws of the PRC on
+November 18, 2015 and our indirect wholly-owned subsidiary
+Shared Vision Investment Limited, a limited liability company incorporated
+under the laws of the BVI, which is wholly owned by Mu Rongjun
+Shared Patience Inc., a limited liability company incorporated under the laws
+of the BVI, which is wholly owned by Wang Xing
+holder(s) of the Share(s)
+"Tianjin Xiaoyi Technology"
+"Tianjin Wanlong"
+"Tianjin Hanbo❞
+"Tianjin Antechu Technology"
+"Tencent"
+"substantial shareholder"
+"subsidiary(ies)"
+"Stock Exchange"
+"Shenzhen Tencent Computer"
+"Shenzhen Sankuai Online"
+Tianjin Hanbo Information Technology Co., Ltd. (ĦRA
+]), a limited liability company incorporated under the laws of the PRC on
+September 19, 2014 and our indirect wholly-owned subsidiary
+"Shared Vision"
+Tianjin Wanlong Technology Co., Ltd. (), a limited
+liability company incorporated under the laws of the PRC on August 18,
+2015 and our indirect wholly-owned subsidiary
+Meituan 2021 Annual Report 299
+"Articles" or
+Certain amounts and percentage figures included in this document have been subject to rounding adjustments.
+Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding
+them.
+The English names of the PRC entities, PRC laws or regulations, and the PRC governmental authorities referred
+to in this document are translations from their Chinese names and are for identification purposes. If there is any
+inconsistency, the Chinese names shall prevail.
+Unless otherwise expressly stated or the context otherwise requires, all data in this document is as of the date of
+this document.
+per cent
+"%"
+has the meaning ascribed to it in the Listing Rules
+has the meaning ascribed to it under the Listing Rules and unless the context
+otherwise requires, refers to Wang Xing, Mu Rongjun and Wang Huiwen,
+being the holders of the Class A Shares, entitling each to weighted voting
+rights
+Tianjin Xiaoyi Technology, Shanghai Juzuo, Beijing Kuxun Technology,
+Tianjin Wanlong, Beijing Sankuai Online, Shenzhen Sankuai Online, Shanghai
+Hanhai, Sankuai Cloud Online, Mobike Beijing and Tianjin Hanbo
+has the meaning ascribed to it in the Listing Rules
+variable interest entity(ies)
+"WVR Structure"
+"WVR Beneficiaries"
+"WFOES", each a "WFOE"
+"weighted voting right"
+"VIE(S)"
+United States dollars, the lawful currency of the United States
+the United States of America, its territories, its possessions and all areas
+subject to its jurisdiction
+"US dollars", "U.S. dollars" or
+"US$"
+"United States", "U.S." or "US"
+DEFINITIONS
+Tianjin Xiaoyi Technology Co., Ltd. (\), a limited liability
+company incorporated under the laws of the PRC on February 13, 2018 and
+our indirect wholly-owned subsidiary
+"Shared Patience"
+"Shareholder(s)"
+the Class A Shares and Class B Shares in the share capital of the Company,
+as the context so requires
+"Reporting Period"
+"Registered Shareholders"
+"Prospectus"
+DEFINITIONS
+Meituan 2021 Annual Report 297
+the pre-IPO employee stock incentive scheme adopted by the Company
+dated October 6, 2015, as amended from time to time
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+the People's Republic of China
+"Pre-IPO ESOP"
+"PRC Legal Advisor"
+"PRC"
+the post-IPO share option scheme adopted by the Company on August 30,
+2018
+"Post-IPO Share Option Scheme"
+the post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+Tianjin Antechu Technology, Shanghai Lutuan, Beijing Kuxun Interaction,
+Shanghai Sankuai Technology, Meituan Finance, Beijing Sankuai Cloud
+Computing, Beijing Xinmeida, Chengdu Meigengmei, Beijing Mobike, Beijing
+Sankuai Technology and Shanghai Hantao
+the version of the corporate governance code set out in Appendix 14 to the
+Listing Rules valid from January 1, 2022
+the Model Code for Securities Transactions by Directors of Listed Issuers as
+set out in Appendix 10 to the Listing Rules
+Mobike (Beijing) Information Technology Co., Ltd. (Œ(±À)\RÁR
+A), a limited liability company incorporated under the laws of the PRC on
+January 12, 2016 and our indirect wholly owned subsidiary
+mobike Ltd., an exempted company with limited liability incorporated under
+the laws of the Cayman Islands on April 2, 2015 and our direct wholly owned
+subsidiary
+the memorandum of association of the Company adopted on August 30,
+2018 with effect from the Listing Date, as amended from time to time
+Beijing Meituan Finance Technology Co., Ltd. (À¤ŒÂ¾ÂÁ¬), a
+limited liability company incorporated under the laws of the PRC on August 9,
+2017 and our Consolidated Affiliated Entity
+"Reserved Matters"
+"RMB" or "Renminbi❞
+"RSU(s)"
+"Sankuai Cloud Online"
+"Share(s)"
+DEFINITIONS
+298 Meituan 2021 Annual Report
+Shanghai Sankuai Technology Co., Ltd. (HRGRó), a limited
+liability company incorporated under the laws of the PRC on September 19,
+2012 and our Consolidated Affiliated Entity
+Shanghai Lutuan Technology Co., Ltd. (E), a limited
+liability company incorporated under the laws of the PRC on January 12,
+2017 and our Consolidated Affiliated Entity
+Shanghai Juzuo Technology Co., Ltd. (2), a limited
+liability company incorporated under the laws of the PRC on April 12, 2018
+and our indirect wholly-owned subsidiary
+Shanghai Hantao Information Consultancy Co., Ltd. (DAR
+A), a limited liability company incorporated under the laws of the PRC on
+September 23, 2003 and our Consolidated Affiliated Entity
+A), a limited liability company incorporated under the laws of the PRC
+on March 16, 2006 and our indirect wholly-owned subsidiary
+(E)
+Hanhai Information Technology (Shanghai) Co., Ltd.
+"Post-IPO Share Award Scheme"
+Beijing Sankuai Internet Technology Co., Ltd. (À=A
+) (formerly known as Sankuai Cloud Online Technology Co., Ltd. (=
+())), a limited liability company incorporated under
+the laws of the PRC on November 3, 2015 and our indirect wholly-owned
+subsidiary
+Renminbi, the lawful currency of China
+those matters resolutions with respect to which each Share is entitled to
+one vote at general meetings of the Company pursuant to the Articles of
+Association, being: (i) any amendment to the Memorandum or Articles,
+including the variation of the rights attached to any class of shares, (ii) the
+appointment, election or removal of any independent non-executive Director,
+(iii) the appointment or removal of the Company's auditors, and (iv) the
+voluntary liquidation or winding-up of the Company
+the year ended December 31, 2021
+the registered shareholders of the Onshore Holdcos
+prospectus of the Company dated September 7, 2018
+"Shanghai Sankuai Technology"
+"Shanghai Lutuan"
+"Shanghai Juzuo"
+"Shanghai Hantao❞
+"Shanghai Hanhai"
+restricted share unit(s)
+the forthcoming annual general meeting of the Company to be held on May
+18, 2022
+26
+Meituan 2021 Annual Report 293
+30,383,378
+1,957,470
+10,148,520
+Total equity and liabilities
+Total liabilities
+Other payables and accruals
+Borrowings
+Current liabilities
+12,966,341
+Notes payable
+Non-current liabilities
+LIABILITIES
+130,959,636
+177,802,804
+Total equity
+(6,405,555)
+(125,790,405)
+(4,425,554)
+(128,993,290)
+Accumulated losses
+Borrowings
+40,531,898
+14,923,811
+6,348,284
+Currency
+Conversion
+(b) Other reserves movement of the Company
+39 FINANCIAL POSITION AND OTHER RESERVES MOVEMENT OF THE COMPANY (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 291
+Mu Rongjun
+Director
+Director
+Wang Xing
+The statement of financial position of the Company was approved by the Board of Directors on March
+25, 2022 and was signed on its behalf.
+149,136,743
+232,991,956
+18,177,107
+55,189,152
+3,253,296
+14,657,254
+3,253,296
+8,308,970
+39(b)
+Shares held for shares award scheme
+Other reserves
+263,155,201
+395
+2,579,982
+88,004,538
+Prepayments, deposits and other assets
+Long-term treasury investments
+281
+Intangible assets
+68,519,333
+73,669,047
+2020
+RMB'000
+2021
+RMB'000
+Note
+As of December 31,
+Investments in subsidiaries
+Non-current assets
+ASSETS
+(a) Financial position of the Company
+39 FINANCIAL POSITION AND OTHER RESERVES MOVEMENT OF THE COMPANY
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+290 Meituan 2021 Annual Report
+287
+612,967
+41,208,960
+Capital
+reserve
+RMB'000
+164,253,848
+Current assets
+411
+311,221,237
+26
+Share premium
+26
+Share capital
+EQUITY
+Total assets
+149,136,743
+232,991,956
+38,795,196
+68,738,108
+6,920,635
+302,553
+963,662
+15,699,578
+Cash and cash equivalents
+Prepayments, deposits and other assets
+31,572,008
+DEFINITIONS
+Short-term treasury investments
+110,341,547
+Share-based
+52,074,868
+option of
+convertible
+(4,299,457)
+(4,299,457)
+As of December 31, 2020
+their capacity as owners
+Total transaction with owners in
+(2,283,840)
+RSUS vesting
+Exercise of share options and
+3,272,930
+Equity-settled share-based payments
+capacity as owners
+Transaction with owners in their
+Total other comprehensive loss
+Fair value changes of and net
+provisions for impairment
+losses on financial assets
+Other comprehensive loss
+Currency translation differences
+As of January 1, 2020
+(3,095,017)
+3,161,201 (6,256,238)
+20
+(171)
+20
+(171)
+(171)
+translation
+"AGM"
+Certain comparative figures have been reclassified to conform to the current year presentation.
+RECLASSIFICATION OF COMPARATIVE FIGURES
+There were no material subsequent events during the period from January 1, 2022 to the approval date of
+these consolidated financial statements by the Board on March 25, 2022.
+41
+40 SUBSEQUENT EVENTS
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+292 Meituan 2021 Annual Report
+(171)
+(10,555,695)
+4,150,291
+20
+989,090
+989,090
+(2,283,840)
+3,272,930
+(4,299,628)
+(4,299,457)
+(4,425,554)
+(6,405,555)
+RMB'000
+—— ——— — — —_____ 7,210
+- - (2,226,162) - - 12,
+Transaction with owners in
+Total other comprehensive loss
+Other comprehensive loss
+Currency translation differences
+Fair value changes of and net
+provisions for impairment losses
+on financial assets
+payments
+(171)
+(10,555,695)
+7,210
+4,150,291
+As of January 1, 2021
+RMB'000
+Total
+Others
+RMB'000
+bonds
+RMB'000
+RMB'000
+differences
+7,039
+20
+(2,226,162) - 7,210 (2
+(2,226,162)
+their capacity as owners
+Equity-settled share-based payments
+1,513,938
+6,835,306 (12,781,857)
+20
+4,198,953
+1,513,938
+2,685,015
+1,513,938
+(2,218,952)
+(2,508,430)
+(2,508,430)
+1,513,938
+their capacity as owners
+Total transaction with owners in
+(equity component)
+Issuance of convertible bonds
+RSUS vesting
+Exercise of share options and
+As of December 31, 2021
+5,193,445
+- 5,193,445 - - - 5,
+300 Meituan 2021 Annual Report
+"SKU"
+"monetization rate"
+GLOSSARY
+"DAU"
+"Transacting User"
+"Gross Transaction Volume" or
+"GTV"
+"transaction"
+"Active Merchant"
+daily active user
+the value of paid transactions of products and services on our platform
+by consumers, regardless of whether the consumers are subsequently
+refunded. This includes delivery charges and VAT, but excludes any
+payment-only transactions, such as QR code scan payments and point-of-
+sale payments
+the revenues for the year/period divided by the Gross Transaction Volume
+for the year/period
+the stock keeping unit
+a user account that paid for transactions of products and services on our
+platform in a given period, regardless of whether the account is subsequently
+refunded
+the number of transactions is generally recognized based on the number of
+payments made. (i) With respect to our in-store business, one transaction is
+recognized if a user purchases multiple vouchers with a single payment; (ii)
+with respect to our hotel-booking business, one transaction is recognized
+if a user books multiple room nights with a single payment; (iii) with respect
+to our attraction, movie, air and train ticketing businesses, one transaction
+is recognized if a user purchases multiple tickets with a single payment; (iv)
+with respect to our bike-sharing business, if a user uses a monthly pass,
+then one transaction is recognized only when the user purchases or claims
+the monthly pass, and subsequent rides are not recognized as transactions;
+if a user does not use a monthly pass, then one transaction is recognized for
+every ride
+a merchant that meets any of the following conditions in a given period: (i)
+completed at least one transaction on our platform, (ii) purchased any online
+marketing services from us, (iii) processed offline payment at least once
+through our integrated payment systems, or (iv) generated any order through
+our ERP systems
+(23,127,199)
+Total operating (loss)/profit
+ΝΑ
+ΝΑ
+117.9%
+72.3%
+(39.8%)
+(12.9%)
+38.5%
+4.3%
+2,833,369
+8,180,933
+(10,854,996)
+4,170,796
+253.7%
+4,330,102
+MANAGEMENT DISCUSSION AND ANALYSIS
+ΝΑ
+34 Meituan 2021 Annual Report
+Our operating profit from the food delivery segment increased to RMB6.2 billion in 2021 from RMB2.8 billion in
+2020. The operating margin increased by 2.1 percentage points to 6.4% from 4.3% on a year-over-year basis. This
+was primarily driven by the higher contribution from online marketing services revenue, enhanced economies of
+scale and improved operating efficiency.
+Our operating profit from the in-store, hotel & travel segment increased by 72.3% to RMB14.1 billion in 2021 from
+RMB8.2 billion in 2020. Our operating margin for this segment increased by 4.8 percentage points to 43.3% from
+38.5% on a year-over-year basis. Both the increases in operating profit and margin were mainly due to business
+recovery from the COVID-19 pandemic and enhanced operating leverage.
+Our operating loss from the new initiatives and others segment expanded to RMB38.4 billion in 2021 from RMB10.9
+billion in 2020 and our operating margin for this segment decreased by 36.6 percentage points to negative 76.4%
+from negative 39.8% on a year-over-year basis. The expansion in loss was mainly contributed by the expenditure in
+supply chain and user incentives to support our retail businesses.
+To supplement our consolidated results which are prepared and presented in accordance with IFRS, we also use
+adjusted EBITDA and adjusted net profit/(loss) as additional financial measures, which are not required by, or
+presented in accordance with IFRS. We believe that these non-IFRS measures facilitate comparisons of operating
+performance from period to period and company to company by eliminating potential impacts of items that our
+management does not consider to be indicative of our operating performance such as certain non-cash or one-off
+items, and certain impact of investment transactions. The use of these non-IFRS measures has limitations as an
+analytical tool, and one should not consider them in isolation from, or as a substitute for analysis of our results of
+operations as reported under IFRS. In addition, these non-IFRS financial measures may be defined differently from
+similar terms used by other companies.
+Income Tax Credits
+We had income tax credits of RMB30.3 million in 2021, compared to income tax credits of RMB269.7 million in
+2020. The change in profit status of certain entities resulted in higher income tax credits for the prior year.
+(Loss)/profit for the Year
+As a result of the foregoing, we had loss of RMB23.5 billion in 2021, compared to profit of RMB4.7 billion in 2020.
+Reconciliation of Non-IFRS Measures to the Nearest IFRS Measures
+ΝΑ
+3.8%
+(5,001,058)
+Our gain in fair value changes of other financial investments at fair value through profit or loss was RMB815.7
+million in 2021, compared to a gain of RMB5.0 billion in 2020. This was primarily due to the fluctuation in valuation
+of our investment portfolios, as well as certain one-off valuation adjustment driven by capital transactions of certain
+investee in 2020.
+(76.4%)
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+Meituan 2021 Annual Report 35
+Other (Losses)/Gains, Net
+Our other (losses)/gains, net in 2021 was a loss of RMB185.7 million, compared to a gain of RMB3.2 billion in 2020.
+Both our proceeds from treasury investments and subsidies or tax benefits received remained the same level for
+past two years, but we were imposed a fine pursuant to China's Anti-Monopoly Law in 2021.
+Operating (Loss)/Profit
+As a result of the foregoing, our operating loss and margin in 2021 was RMB23.1 billion and negative 12.9%
+respectively, compared to operating profit and margin of RMB4.3 billion and 3.8% in 2020.
+Operating (loss)/profit and margin by segment are set forth in the table below.
+Year Ended
+December 31, 2021
+December 31, 2020
+As a
+percentage
+As a
+percentage
+Unallocated items
+Year-over-
+of revenues
+Amount
+of revenues
+year change
+(RMB in thousands, except for percentages)
+Food delivery
+6,174,641
+In-store, hotel & travel
+14,093,113
+6.4%
+43.3%
+New initiatives and others
+(38,393,895)
+Amount
+MANAGEMENT DISCUSSION AND ANALYSIS
+(157,174)
+Loss for the period
+121,138
+(176,613)
+123,155
+1,795
+Adjusted net loss
+(3,935,732)
+(1,436,520)
+(5,526,910)
+Adjusted for:
+Income tax credits, except for tax effects
+on non-IFRS adjustments
+(126,196)
+(394,404)
+Tax effects on non-IFRS adjustments
+(7,831)
+accounted for using the equity method not
+adjusted for adjusted net loss
+(107,445)
+(117,398)
+(273,237)
+Finance income
+(69,724)
+(198,890)
+Finance costs
+331,672
+MANAGEMENT DISCUSSION AND ANALYSIS
+149,735
+Share of (losses)/gains of investments
+The following tables set forth the reconciliations of our non-IFRS financial measures for the fourth quarter of 2021
+and 2020, the third quarter of 2021 and the years ended December 31, 2021 and 2020, to the nearest measures
+prepared in accordance with IFRS.
+133,007
+resulting from acquisitions
+Adjusted for:
+Unaudited
+Three Months Ended
+December 31,
+2021
+December 31,
+2020
+September 30,
+2021
+(RMB in thousands)
+(5,339,151)
+(2,244,292)
+(9,994,410)
+Fine imposed pursuant to China's
+121,525
+Anti-Monopoly Law
+1,634,141
+1,041,671
+3,442,440
+1,481,159
+Net gains from investments (1)
+(471,908)
+(191,031)
+(580,615)
+Impairment and expense reversal/(provision)
+(1,477)
+738
+(434)
+Amortisation of intangible assets
+Share-based compensation expenses
+Meituan 2021 Annual Report 33
+80,744,368
+Net Provisions for Impairment Losses on Financial and Contract Assets
+96,311,778
+32,530,325
+50,285,894
+179,127,997
+Year Ended December 31, 2020
+Food delivery
+In-store, New initiatives
+hotel & travel
+and others
+Total
+(RMB in thousands)
+Food delivery services
+Commission
+39,116,411
+18,502,868
+Revenues
+Online marketing services
+10,193,162
+11,018,337
+5,428,154
+324,597
+39,116,411
+34,124,184
+18,908,045
+Other services and sales
+(including interest revenue)
+1,080,929
+40,899
+21,524,042
+22,645,870
+Total
+66,265,319
+7,565,111
+21,252,398
+Total
+40,744,531
+369,942
+30 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Revenues
+Our revenues increased by 56.0% to RMB179.1 billion in 2021 from RMB114.8 billion in 2020. Despite sporadic
+COVID-19 outbreaks, all food delivery and in-store, hotel and travel businesses recovered from the domestic
+pandemic and achieved strong revenue growth on a year-over-year basis. In addition, our committed investment in
+retail businesses and other initiatives drove the revenue increase for new initiatives and others segment.
+The following table sets forth our revenues by segment and type in absolute amount in 2021 and 2020:
+Year Ended December 31, 2021
+Food delivery
+In-store, New initiatives
+hotel & travel
+and others
+Total
+(RMB in thousands)
+Revenues
+42,934,430
+Food delivery services
+Commission
+54,203,640
+28,547,274
+Online marketing services
+11,434,933
+15,798,936
+16,667,421
+8,558,547
+982,816
+52,904,757
+29,085,170
+Other services and sales
+(including interest revenue)
+2,125,931
+63,968
+54,203,640
+Our net provisions for impairment losses on financial and contract assets decreased to RMB260.0 million in 2021
+from RMB467.7 million in 2020, which was primarily due to the decrease in expected credit losses of financial
+assets.
+27,276,793
+Meituan 2021 Annual Report 31
+Research and development expenses
+General and administrative expenses
+Net provisions for impairment losses on
+financial and contract assets
+16,675,595
+9.3%
+10,892,514
+9.5%
+53.1%
+8,612,626
+4.8%
+5,593,895
+4.9%
+54.0%
+259,953
+94.8%
+0.1%
+0.4%
+(44.4%)
+32 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+Our cost of revenues increased by 69.2% to RMB136.7 billion in 2021 from RMB80.7 billion in 2020, and increased
+by 6.0 percentage points to 76.3% from 70.3% as a percentage of revenues on a year-over-year basis. The
+increase in amount was primarily attributable to (i) an increase of RMB18.9 billion in food delivery related costs for
+our 1P model to RMB68.2 billion, which was in line with the increase in related number of transactions, and (ii) the
+development and exploration in our retail businesses and other new initiatives. The increase in the cost of revenues
+as a percentage of revenues was mainly due to our enlarged investment in retail businesses this year as well as the
+change in revenue mix.
+Selling and Marketing Expenses
+Our selling and marketing expenses increased by RMB19.8 billion to RMB40.7 billion in 2021 from RMB20.9
+billion in 2020, increasing by 4.5 percentage points to 22.7% from 18.2% as a percentage of revenues on a year-
+over-year basis. The increase in amount was primarily attributable to the increase in promotion, advertising and
+user incentives expenses and employee benefits expenses. We enlarged branding and promotional campaigns to
+enhance our brand recognition, and increased Transacting Users incentives to stimulate consumption for various
+businesses. In addition, we hired more employees to support the rapid growth of our new initiatives. The increase in
+percentage of revenues was primarily attributable to the new initiatives businesses which incurred more marketing
+expenses at early business stage.
+Research and Development Expenses
+Our research and development expenses increased to RMB16.7 billion in 2021 from RMB10.9 billion in 2020,
+mainly due to the increase in employee benefits expenses driven by our business expansion.
+General and Administrative Expenses
+Our general and administrative expenses increased to RMB8.6 billion in 2021 from RMB5.6 billion in 2020, mainly
+due to the increase in employee benefits expenses.
+467,690
+114,794,510
+18.2%
+22.7%
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues from the food delivery segment increased by 45.3% to RMB96.3 billion in 2021 from RMB66.3 billion
+in 2020. As more merchants embraced digitalization since the COVID-19 pandemic, the supply on our platform
+were improved. Meanwhile, our membership program continued to evolve, and we promoted various online
+consumption scenarios. As a result, both the annual Transacting Users and order frequency increased steadily,
+which drove the solid increase in our GTV and revenues.
+Our revenues from the in-store, hotel & travel segment increased by 53.1% to RMB32.5 billion in 2021 from
+RMB21.3 billion in 2020. Recovering from the COVID-19 pandemic, all the businesses in this segment achieved
+revenue growth in this year. The development of new categories, expanded coverage of low-tier cities and stratified
+merchants operations resulted in the increase in GTV, domestic hotel room nights and online marketing Active
+Merchants, and further the revenues growth.
+Our revenues from the new initiatives and others segment increased by 84.4% to RMB50.3 billion in 2021 from
+RMB27.3 billion in 2020, mainly contributed by our retail businesses, B2B food distribution services and other new
+initiatives, as we expanded these businesses to satisfy consumers' growing needs.
+Costs and Expenses
+The following table sets forth a breakdown of our costs and expenses by function for the years indicated:
+Costs and Expenses:
+Year Ended
+December 31, 2021
+December 31, 2020
+As a
+percentage
+As a
+percentage
+20,882,685
+Year-over-
+of revenues
+Amount
+of revenues
+year change
+(RMB in thousands, except for percentages)
+Cost of revenues
+136,653,869
+76.3%
+70.3%
+69.2%
+Selling and marketing expenses
+40,683,166
+Amount
+Other gains/(losses), net not adjusted for
+Finance costs
+(577,770)
+2020
+(RMB in thousands)
+(4,011,457)
+(58,491,834)
+8,475,013
+(21,232,004)
+78,598,331
+2021
+17,418,081
+16,095,040
+4,661,090
+Cash and cash equivalents at the beginning of the year
+Exchange losses on cash and cash equivalents
+17,093,559
+13,396,185
+(675,171)
+Net increase in cash and cash equivalents
+Cash and cash equivalents at the end of the year
+December 31,
+Year Ended
+Depreciation on property, plant and equipment
+Adjusted EBITDA
+(1)
+(9,694,076)
+4,737,837
+Mainly includes fair value changes related to investees, gains/(losses) on disposal of investees or subsidiaries, dilution gains
+and certain share of (losses)/gains of investments accounted for using the equity method.
+December 31,
+Meituan 2021 Annual Report 37
+Liquidity and Capital Resources
+Historically, our demand for cash was principally funded by capital contribution from Shareholders and financing
+through issuance and sale of equity and debt securities. We had cash and cash equivalents of RMB32.5 billion
+and short-term treasury investments of RMB84.3 billion as of December 31, 2021, compared to the balances of
+RMB17.1 billion and RMB44.0 billion as of December 31, 2020.
+The following table sets forth our cash flows for the years indicated:
+Net cash flows (used in)/generated from operating activities
+Net cash flows used in investing activities
+Net cash flows generated from financing activities
+MANAGEMENT DISCUSSION AND ANALYSIS
+4,202,623
+Net Cash Flows Used in Operating Activities
+17,093,559
+Meituan 2021 Annual Report 39
+MANAGEMENT DISCUSSION AND ANALYSIS
+We manage our investment portfolio with the primary objective to continue to implement the "Retail + Technology"
+strategy. We focus on investments that can broaden our consumer and merchant base, improve our product
+and service offerings, enhance our delivery network, or participate in the development of frontier technology. Our
+investments include hotel chains that would bring additional supply to our platform, merchant-enabling solutions
+that improve the overall efficiency of the service industry, such as payment systems and supply chain management,
+mobility technology that enables future synergies with our platform, and cutting-edge technology, such as Al,
+semiconductor and robotics, to help us strengthen our business and improve efficiency.
+The fair value of our stakes in listed investee entities amounted to RMB30,022 million as of December 31, 2021
+(December 31, 2020: RMB27,954 million). There was no investment of which the carrying amount individually
+constituted 5% or more of our total assets as of December 31, 2021.
+Save as disclosed herein, there are no material changes in our investment portfolio affecting the Company's
+performance that need to be disclosed under paragraph 32 of Appendix 16 to the Listing Rules.
+Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies
+Changes in respective items in the consolidated statement of financial position have been disclosed in the notes to
+the consolidated financial statements in this annual report.
+For the year ended December 31, 2021, we did not have any material acquisitions or disposals of subsidiaries and
+affiliated companies.
+The Group operates mainly in the PRC with most of the transactions settled in RMB. The Group's business is not
+exposed to any significant foreign exchange risk as there are no significant financial assets or liabilities of the Group
+denominated in the currencies other than the respective functional currencies of the Group's entities.
+Pledge of Assets
+As of December 31, 2021, we did not pledge any assets for fund raising and no charge was created on the Group's
+asset.
+Future Plans for Material Investments and Capital Assets
+As of December 31, 2021, we did not have other plans for material investments and capital assets.
+adjusted net loss
+Foreign Exchange Risk
+32,513,428
+other financial investments at fair value through other comprehensive income.
+investments accounted for using the equity method;
+Net cash flows used in operating activities represents the cash used in our operations minus the income tax
+paid. Cash used in our operations primarily consisted of our loss for the year, as adjusted by non-cash items and
+changes in working capital.
+For the year ended December 31, 2021, net cash flows used in operating activities was RMB4.0 billion, which was
+primarily attributable to our loss before income tax, as adjusted by (i) depreciation and amortisation and share-
+based compensation expenses, partially offset by dividend income and interest classified as investing cash flows, (ii)
+net decrease in working capital in line with the business scale expansion and the continuous investment in our new
+initiatives, and (iii) partial payment of the fine imposed pursuant to China's Anti-Monopoly Law.
+38 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Net Cash Flows Used in Investing Activities
+For the year ended December 31, 2021, net cash flows used in investing activities was RMB58.5 billion, which was
+mainly attributable to treasury investments, purchase of property, plant and equipment and investments in some
+entities.
+other financial investments at fair value through profit or loss; and
+Net Cash Flows Generated from Financing Activities
+Gearing ratio
+As of December 31, 2021, our gearing ratio, calculated as total borrowings and notes payable divided by total
+equity attributable to equity holders of the Company, was approximately 43%.
+Contingent Liabilities
+The Group did not have any material contingent liabilities as of December 31, 2021.
+Investments Held
+As of December 31, 2021, our investment portfolio amounted to approximately RMB30,191 million (December 31,
+2020: RMB24,044 million) as recorded in the consolidated statement of financial position under various categories
+including:
+For the year ended December 31, 2021, net cash flows generated from financing activities was RMB78.6 billion,
+which was mainly attributable to proceeds from issuance of shares upon placement and convertible bonds and the
+net increase of borrowings, partially offset by the principal elements of lease payments.
+8,110,975
+(963,716)
+321,090
+MANAGEMENT DISCUSSION AND ANALYSIS
+Year Ended
+December 31,
+2021
+2020
+(RMB in thousands)
+36 Meituan 2021 Annual Report
+(Loss)/Profit for the year
+4,707,612
+Adjusted for:
+Fine imposed pursuant to China's Anti-Monopoly Law
+3,442,440
+Share-based compensation expenses
+5,193,860
+(23,536,198)
+3,277,476
+Mainly includes fair value changes related to investees, gains/(losses) on disposal of investees or subsidiaries, dilution gains
+and certain share of (losses)/gains of investments accounted for using the equity method.
+(2,009,748)
+(430,233)
+375,908
+(608,984)
+Amortisation of software and others
+89,889
+75,597
+(1)
+78,383
+2,473,008
+1,633,819
+2,105,868
+Adjusted EBITDA
+(589,128)
+(4,061,659)
+Depreciation on property, plant and equipment
+Net gains from investments(1)
+December 31,
+(5,809,527)
+Share of gains of investments accounted for using
+the equity method not adjusted for adjusted net (loss)/profit
+(416,920)
+(264,105)
+Finance income
+(546,037)
+(546,309)
+(213,684)
+370,016
+Other (losses)/gains, net not adjusted for adjusted
+net (loss)/profit
+(1,247,255)
+(2,307,217)
+Amortisation of software and others
+1,130,935
+(168,721)
+(2,553,898)
+Income tax credits, except for tax effects on
+non-IFRS adjustments
+Impairment and expense reversal/(provision)
+52,894
+Amortisation of intangible assets resulting from acquisitions
+495,954
+615,578
+Tax effects on non-IFRS adjustments
+(58,743)
+276,572
+Adjusted net (loss)/profit
+(15,571,500)
+3,120,605
+Adjusted for:
+138,442
+6,093,626
+2020
+(in RMB'000)
+(approximate)
+PRINCIPAL ACTIVITIES
+2021
+(in RMB'000)
+(approximate)
+Net proceeds
+unutilised as of
+35% to upgrade our technology
+Expected time
+of use
+and enhance our research and
+development capabilities
+9,980,661
+1,964,198
+3,887,035
+Utilisation as of
+31 December
+31 December
+2021
+(in RMB'000)
+(approximate)
+Use of proceeds
+as stated in
+the Prospectus
+(in RMB'000)
+(approximate)
+The business review and performance analysis of the Group for the Reporting Period are set out in the sections
+headed "Chairman's Statement”, “Management Discussion and Analysis", "Corporate Governance Report" and
+"Environmental, Social and Governance Report" of this annual report.
+The net proceeds from the IPO were approximately RMB28,516.2 million, after deducting the underwriting
+fees, commissions and related total expenses paid and payable by us in connection thereto ("IPO Proceeds”).
+As of December 31, 2021, we have utilised an amount of RMB22,952.3 million out of the IPO proceeds in the
+manner set out in the section headed "Future Plans and Use of Proceeds" in the Prospectus. As of December
+31, 2021, the unutilised net proceeds was in the amount of approximately RMB5,563.9 million. The Company
+intends to apply them in the same manner and proportion as stated in the Prospectus.
+by end of 2022
+The Company was incorporated in the Cayman Islands on September 25, 2015 as an exempted company with
+limited liability under the laws of the Cayman Islands. The Company's Class B Shares were listed on the Main Board
+of the Stock Exchange on the Listing Date.
+The Company is China's leading e-commerce platform for goods and services. It offers diversified daily goods and
+services in the broader retail by leveraging technology, including food delivery, in-store, hotel and travel booking
+and other services and sales. The activities of the principal subsidiaries are set out in Note 11 to the consolidated
+financial statements.
+RESULTS
+The results of the Group for the year ended December 31, 2021 are set out in the consolidated statement of
+comprehensive income contained in this annual report.
+DIVIDEND POLICY AND FINAL DIVIDENDS
+For the year ended December 31, 2021, the Company applied the IPO Proceeds for the following purposes:
+The Company is a holding company incorporated under the laws of the Cayman Islands. As a result, the payment
+and amount of any future dividend will also depend on the availability of dividends received from its subsidiaries.
+PRC laws require that dividends be paid only out of after-tax profits for the year calculated according to PRC
+accounting principles, which differ in many aspects from the generally accepted accounting principles in other
+jurisdictions, including the IFRS. PRC laws also require foreign-invested enterprises to set aside at least 10% of its
+after-tax profits as the statutory common reserve fund until the cumulative amount of the statutory common reserve
+fund reaches 50% or more of such enterprises' registered capital, if any, to fund its statutory common reserves.
+The foreign-owned enterprise may also, at its discretion, allocate a portion of its after-tax profits based on PRC
+accounting principles to discretional fund. These statutory common reserve fund and discretional fund are not
+available for distribution as cash dividends. Dividend distribution to Shareholders is recognized as a liability in the
+period in which the dividends are approved by Shareholders or Directors, where appropriate. Under Cayman law,
+dividends may be distributed from (a) profits (current period or retained) or (b) share premium. We do not currently
+have an expected dividend payout ratio. The determination to pay dividends will be made at the discretion of the
+Board and will be based upon our earnings, cash flow, financial condition, capital requirements, statutory fund
+reserve requirements and any other conditions that our Directors deem relevant.
+BUSINESS REVIEW
+48 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+USE OF NET PROCEEDS
+1.
+Use of Net Proceeds from Listing
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2021.
+35% to develop new services
+Use of Net Proceeds from Issuance of the 2021 Placing and Subscription
+9,980,661
+1,042,831
+by end of 2022
+22,952,251
+5,563,923
+Since we are an offshore holding company, we will need to make capital contributions and loans to our PRC
+subsidiaries or through loans to our Consolidated Affiliated Entities such that the IPO Proceeds can be used
+in the manner described above. Such capital contributions and loans are subject to a number of limitations
+and approval processes under PRC laws and regulations. There are no costs associated with registering
+loans or capital contributions with relevant PRC authorities, other than nominal processing charges. Under
+PRC laws and regulations, the PRC governmental authorities are required to process such approvals, filings
+or registrations or deny our application within a prescribed period, which are usually less than 90 days.
+The actual time taken, however, may be longer due to administrative delay. We cannot assure you that we
+can obtain the approvals from the relevant governmental authorities, or complete the registration and filing
+procedures required to use our the IPO Proceeds as described above, in each case on a timely basis, or at all.
+This is because PRC regulation of loans and direct investment by offshore holding companies to PRC entities
+may delay or prevent us from using the IPO Proceeds to make loans or additional capital contributions to our
+PRC subsidiaries or Consolidated Affiliated Entities, which could materially and adversely affect our liquidity
+and our ability to fund and expand our business.
+Meituan 2021 Annual Report 49
+1,808,786
+REPORT OF DIRECTORS
+Use of Net Proceeds from Issuance of the 2027 Bonds and 2028 Bonds
+3.
+4.
+On April 27, 2021, the Company issued U.S. dollar-denominated zero coupon convertible bonds due 2027
+in an aggregate principal amount of US$1,483,600,000 at an initial conversion price of HK$431.24 per Share
+(subject to adjustments) (the “2027 Bonds") and U.S. dollar-denominated zero coupon convertible bonds
+due 2028 in an aggregate principal amount of US$1,500,000,000 at an initial conversion price of HK$431.24
+per Share (subject to adjustments) (the "2028 Bonds"). The Company intends to use the net proceeds of
+the 2027 Bonds and 2028 Bonds, approximately US$2,971.5 million in total, for technology innovations,
+including the research and development of autonomous delivery vehicles, drones delivery, and other cutting-
+edge technology, and general corporate purposes. As of December 31, 2021, approximately US$385.6
+million of the net proceeds of the 2027 Bonds and 2028 Bonds had been utilised for technology innovations
+and US$2,585.9 million remained unutilised. The Company expects to fully utilise the residual amount of the
+net proceeds in accordance with such intended purposes within 5 years. There has been no change in the
+intended use of net proceeds as previously disclosed. For further details, please refer to the announcements
+of the Company dated April 20, 2021, April 27, 2021 and April 28, 2021.
+GLOBAL OFFERING
+The 2021 Placing and Subscription was completed on April 22, 2021. An aggregate of 187,000,000 placing
+Shares have been successfully placed to not less than six independent placees (the "2021 Placing and
+Subscription") and accordingly 187,000,000 subscription Shares were allotted and issued by the Company
+to Tencent Mobility Limited. The net proceeds raised from the 2021 Placing and Subscription were
+approximately US$6.6 billion. The Company intends to use the net proceeds for technology innovations,
+including the research and development of autonomous delivery vehicles, drones delivery, and other cutting-
+edge technology, and general corporate purposes. As of December 31, 2021, we have not utilised any of the
+net proceeds of the 2021 Placing and Subscription. The Company expects to fully utilise the residual amount
+of the net proceeds in accordance with such intended purposes within 5 years. There has been no change in
+the intended use of net proceeds as previously disclosed. For further details, please refer to the Company's
+announcements Issuance dated April 20, 2021, April 27, 2021 and April 28, 2021.
+2.
+by end of 2022
+310,434
+5,392,801
+1,970,090
+9,657,038
+323,623
+by end of 2022
+20% to selectively pursue acquisitions
+or investments in assets and
+businesses which are complementary
+to our business and are in line
+with our strategies
+5,703,235
+10% for working capital and general
+corporate purpose
+2,851,617
+28,516,174
+3,934,288
+and products
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+Employees
+Meituan 2021 Annual Report 47
+Wang Huiwen has over 11 years of managerial and operational experience in the internet industry. Prior to
+co-founding the Company, he co-founded xiaonei.com (), China's first college social network website, in
+December 2005 and worked there as co-founder from December 2005 to October 2006. xiaonei.com () was
+sold to China InterActive Corp in October 2006 which was later renamed as Renren Inc. (NYSE Ticker: RENN). In
+January 2009, Wang Huiwen co-founded taofang.com () and worked there from June 2008 to October 2010.
+Wang Huiwen has become an independent non-executive director of Kuaishou Technology (HKEx Stock Code:
+1024) since February 2021.
+Wang Huiwen received his bachelor's degree in electronic engineering from Tsinghua University in July 2001.
+42 Meituan 2021 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Non-executive Directors
+Lau Chi Ping Martin (), aged 49, is a non-executive Director. He was appointed as Director in October 2017
+and is responsible for providing advice on business and investment strategies, general market trends, and other
+matters subject to the Board guidance and approval.
+Wang Huiwen (EX), aged 43, is a Co-founder and an executive Director of the Company. He is responsible for
+the on-demand delivery and certain new initiatives of the Company. After withdrawing from his day-to-day duties in
+December 2020, Wang Huiwen has continued to perform his director's duties by devoting himself to the strategic
+planning, organisational growth and talent development of the Company.
+Lau Chi Ping Martin joined Tencent (HKEx Stock Code: 700) in February 2005 as the Chief Strategy and Investment
+Officer. In February 2006, Lau Chi Ping Martin was promoted as the president of Tencent to manage the day-to-day
+operation of Tencent. In March 2007, he was appointed as an executive director of Tencent. Prior to joining
+Tencent, Lau Chi Ping Martin was an executive director at Goldman Sachs (Asia) L.L.C.'s investment banking
+division and the Chief Operating Officer of its Telecom, Media and Technology Group. Prior to that, he worked at
+McKinsey & Company, Inc. as a management consultant.
+In July 2011, Lau Chi Ping Martin was appointed as a non-executive director of Kingsoft Corporation Limited (HKEx
+Stock Code: 3888), an internet based software developer, distributor and software service provider listed in Hong
+Kong. From March 2014 to December 2021, Lau Chi Ping Martin served as a director of JD.com, Inc. (NASDAQ
+Ticker: JD) (HKEx Stock: 9618). In February 2015, Lau Chi Ping Martin was appointed as a director of DiDi Global
+Inc. (NYSE Ticker: DIDI), a mobility technology platform listed on the New York Stock Exchange. In July 2016,
+Lau Chi Ping was appointed as a director of Tencent Music Entertainment Group (formerly known as China Music
+Corporation) (NYSE Ticker: TME). In December 2017, Lau Chi Ping Martin was appointed as a director of Vipshop
+Holdings Limited (NYSE Ticker: VIPS), an online discount retailer company listed on the New York Stock Exchange.
+Neil Nanpeng Shen (), aged 54, is a non-executive Director. He was appointed as Director in October
+2015 and is responsible for providing advice on investment and business strategies, financial discipline, and other
+matters subject to the Board guidance and approval.
+Neil Nanpeng Shen founded Sequoia Capital China in September 2005 and has been serving as the founding
+managing partner since then. Prior to founding Sequoia Capital China, he co-founded Trip.com Group Ltd. (NASDAQ
+Ticker: TCOM; HKEx Stock Code: 9961), formerly Ctrip.com International, Ltd. (NASDAQ Ticker: CTRP), or Ctrip, a
+leading travel service provider in China, in 1999. Neil Nanpeng Shen served as Ctrip's president from August 2003
+to October 2005 and its chief financial officer from 2000 to October 2005. Neil Nanpeng Shen also co-founded and
+served as non-executive Co-Chairman of Homeinns Hotel Group, a leading economy hotel chain in China, which
+commenced operations in July 2002.
+Neil Nanpeng Shen received his bachelor's degree in applied mathematics from Shanghai Jiao Tong University in
+July 1988 and his master's degree from Yale University in November 1992.
+Meituan 2021 Annual Report 43
+DIRECTORS AND SENIOR MANAGEMENT
+Lau Chi Ping Martin received a Bachelor of Science degree in Electrical Engineering from the University of Michigan
+in July 1994, a Master of Science degree in Electrical Engineering from Stanford University in July 1995 and an
+MBA degree from Kellogg Graduate School of Management, Northwestern University in June 1998.
+Mu Rongjun received his bachelor's degree in automation engineering from Tsinghua University in July 2002 and
+his master's degree in computer science and technology from Tsinghua University in July 2005.
+Mu Rongjun has over 11 years of managerial and operational experience in the internet industry. Prior to
+co-founding the Company, he worked as senior software engineer and project manager in Baidu, Inc. (NASDAQ
+Ticker: BIDU), the leading Chinese language internet search provider, from July 2005 to May 2007. Mu Rongjun
+was also a co-founder and the engineering director of fanfou.com (¼), a social media company specializing in
+microblogging, from May 2007 to July 2009.
+Mu Rongjun (1), aged 42, is a Co-founder, an executive Director and a Senior Vice President of the Company.
+He is responsible for the financial services and corporate affairs of the Company.
+40 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Use of Net Proceeds from Issuance of the Tencent Subscription
+As of December 31, 2021, we had a total of approximately 100,033 full-time employees. Substantially all of our
+employees are based in China, primarily at our headquarters in Beijing and Shanghai, with the rest in Xiamen,
+Shijiazhuang, Yangzhou, Chengdu and other cities.
+As part of our recruiting and retention strategy, we offer employees competitive salaries, performance-based cash
+bonuses, and other incentives. We have adopted a training program, pursuant to which employees regularly receive
+trainings from management, technology, regulatory and other internal speakers and external consultants.
+As required under the PRC regulations, we participate in housing fund and various employee social security plans
+that are organised by applicable local municipal and provincial governments, including housing, pension, medical,
+maternity, work-related injury and unemployment benefit plans, under which we make contributions at specified
+percentages of the salaries of our employees. We also purchase commercial health and accidental insurance for
+our employees. Bonuses are generally discretionary and based in part on employee performance and in part on the
+overall performance of our business. We have granted and plan to continue to grant share-based incentive awards
+to our employees in the future to incentivise their contributions to our growth and development.
+More details of the remuneration of employees, remuneration policies, bonus and stock incentive schemes are set
+out in Note 8 and Note 33 to the consolidated financial statements.
+Meituan 2021 Annual Report 41
+DIRECTORS AND SENIOR MANAGEMENT
+The biographical details of the Directors and senior management of the Company are set out as follows:
+DIRECTORS
+Executive Directors
+Wang Xing (E), aged 43, is a Co-founder, an executive Director, the Chief Executive Officer and Chairman of
+the Board. Wang Xing is responsible for the overall strategic planning, business direction and management of the
+Company. He oversees the senior management team. Wang Xing founded meituan.com in 2010 and currently holds
+directorship in various subsidiaries, Consolidated Affiliated Entities and operating entities of the Company.
+Wang Xing has over 11 years of managerial and operational experience in the internet industry. Prior to co-founding
+the Company, he co-founded xiaonei.com (), China's first college social network website in December 2005
+and worked there as chief executive officer from December 2005 to April 2007. xiaonei.com () was sold to
+China InterActive Corp in October 2006 which was later renamed as Renren Inc. (NYSE Ticker: RENN). Wang Xing
+also co-founded fanfou.com (), a social media company specializing in microblogging, in May 2007 and was
+responsible for the management and operation of this company from May 2007 to July 2009. Wang Xing has served
+as a director of Li Auto Inc. (NASDAQ Ticker: LI) since July 2019 and Li Auto Inc. was listed on the Stock Exchange
+since August 12, 2021 (HKEx Stock Code: 2015) of which Wang Xing was appointed as its non-executive director.
+Wang Xing received his bachelor's degree in electronic engineering from Tsinghua University in July 2001 and his
+master's degree in electrical engineering from University of Delaware in January 2005.
+Neil Nanpeng Shen has been an independent non-executive director of Trip.com Group Ltd. (NASDAQ Ticker:
+TCOM; HKEX Stock Code: 9961), formerly Ctrip.com International, Ltd. (NASDAQ Ticker: CTRP) since October
+2008, a non-executive director of Ninebot Limited (SHSE Stock Code: 689009) since July 2015, a non-executive
+director of Noah Holdings Limited (NYSE Ticker: NOAH) since January 2016, a non-executive director of BTG
+Hotels Group Co., Ltd. (SHSE Stock Code: 600258) since January 2017 and an independent non-executive director
+of Pinduoduo Inc. (NASDAQ Ticker: PDD) since April 2018.
+REPORT OF DIRECTORS
+Neil Nanpeng Shen served as a non-executive director of China Renaissance Holdings Limited (HKEx Stock
+Code:1911) from June 2018 to June 2020 and a non-executive director of 360 Security Technology Inc. (SHSE
+Stock Code: 601360) from February 2018 to May 2020.
+Orr Gordon Robert Halyburton, aged 59, is an independent non-executive Director. He was appointed as Director
+in September 2018 is responsible for providing independent advice on financial and accounting affairs and
+corporate governance matters, and other matters subject to the Board guidance and approval.
+Mu Rongjun (), aged 42, is a Co-founder, an executive Director and a Senior Vice President of the Company.
+For further details, please see the section headed "Directors and Senior Management Executive Directors"
+above.
+Wang Huiwen (EX), aged 43, is a Co-founder and an executive Director of the Company. For further details,
+please see the section headed “Directors and Senior Management Executive Directors" above.
+Chen Shaohui (), aged 41, is the Chief Financial Officer and a Senior Vice President of the Company. He is
+responsible for overseeing the Company's finance, strategic planning, investments and capital market activities.
+Before joining the Company in November 2014, Chen Shaohui worked as an analyst in A.T. Kearney from June
+2004 to October 2005, an investment manager in WI Harper from October 2005 to August 2008 and an investment
+director in Tencent (HKEx Stock Code: 700) from January 2011 to October 2014.
+In August 2018, Chen Shaohui was appointed as a director of Beijing Enlight Media Co., Ltd. (SZSE Stock Code:
+300251). In July 2018, Chen Shaohui was appointed as a non-executive director of Maoyan Entertainment (HKEx
+Stock Code: 1896).
+Chen Shaohui received his bachelor's degree in economics from Peking University in June 2004 and his master's
+degree in business administration from Harvard University in May 2010.
+Wang Xing (E), aged 43, is a Co-founder, an executive Director, the Chief Executive Officer and Chairman of
+the Board. For further details, please see the section headed "Directors and Senior Management Executive
+Directors" above.
+46 Meituan 2021 Annual Report
+Chen Liang (), aged 42, is a Senior Vice President and is responsible for overseeing the Company's grocery
+retail business.
+Prior to joining the Company in January 2011, Chen Liang worked as a software engineer in Guangzhou Institute
+of Communications () from August 2002 to November 2004 and the chief technology officer in
+Shenzhen Tianshitong Technology Co., Ltd. (GR&27) from November 2004 to December 2005.
+He co-founded xiaonei.com (¼) in December 2005 and worked there from January 2006 to October 2006.
+xiaonei.com (¼) was subsequently sold to China InterActive Corp in October 2006 which was later renamed
+as Renren Inc. (NYSE Ticker: RENN). Chen Liang worked as the research and development manager of the
+communication division in Beijing Yahoo Network Information Technology Co., Ltd. from May 2007 to June 2008.
+After that, he co-founded taofang.com () in June 2008 and worked there from 2008 to 2010.
+Chen Liang received his bachelor's degree in mechatronic engineering from South China University of Technology
+in July 2002.
+Zhang Chuan (II), aged 46, is a Senior Vice President and is responsible for overseeing the Company's in-store
+services business.
+Before joining the Company in January 2017, Zhang Chuan worked as development manager in the Information
+Centre of Ministry of Education from September 1997 to 2005, senior product manager at Yonyou Software Co.,
+Ltd. (SHSE Stock Code: 600588) from May 2005 to August 2006, product director at Baidu, Inc. (NASDAQ Ticker:
+BIDU) from August 2006 to October 2011, and executive vice president at 58.com Inc. (NYSE Ticker: WUBA) from
+October 2011 to December 2016.
+Zhang Chuan received his bachelor's degree in computer science from Beijing Normal University in July 1997 and
+his master's degree in business administration from Tsinghua University in June 2003.
+DIRECTORS AND SENIOR MANAGEMENT
+SENIOR MANAGEMENT
+Shum Heung Yeung Harry received his Ph.D. in Robotics from Carnegie Mellon University in August 1996. He was
+elected into the National Academy of Engineering of United States in February 2017.
+Shum Heung Yeung Harry has acquired corporate governance experience in his capacity as the executive vice
+president of Microsoft Corporation. His key corporate governance experience includes (i) making recommendations
+as to internal control systems and policies; (ii) regular communication with the board of directors; and (iii)
+implementing corporate governance measures.
+Orr Gordon Robert Halyburton joined McKinsey & Company in 1986 and served as senior partner of McKinsey &
+Company from July 1998 until August 2015 when he retired. He was a member of McKinsey's global shareholder
+board from July 2003 until June 2015.
+Orr Gordon Robert Halyburton acquired extensive corporate governance experience during his position as a senior
+partner of McKinsey & Company, as well as a director and member of board committees in Lenovo Group Limited
+(HKEx Stock Code: 992) and Swire Pacific Limited (HKEx Stock Code: 00019 and 00087). His corporate governance
+experience includes, among others, (i) reviewing, monitoring and making recommendations as to the companies'
+policies, practices and compliance; (ii) proposing measures to ensure effective communication between the board
+and shareholders; (iii) opining on proposed connected transactions; and (iv) understanding requirements of the
+Listing Rules and directors' duty to act in the best interest of the company and the shareholders as a whole.
+Orr Gordon Robert Halyburton received his bachelor's degree in engineering science from Oxford University in June
+1984 and his master's degree in business administration from Harvard University in June 1986.
+Orr Gordon Robert Halyburton has been an independent non-executive director of EQT AB (Stockholm Stock Code:
+EQT) since September 2019. He was appointed as a non-executive director of Lenovo Group Limited (HKEx Stock
+Code: 992) in September 2015 and redesignated as an independent non-executive director in September 2016.
+He has also been an independent non-executive director of Swire Pacific Limited (HKEx Stock Code: 00019 and
+00087) since August 2015. He is also the vice chairman of China-Britain Business Council.
+44 Meituan 2021 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Leng Xuesong (^), aged 53, is an independent non-executive Director. He was appointed as Director in
+September 2018 and is responsible for providing independent advice on finance, executive compensation and
+corporate governance matters, and other matters subject to the Board guidance and approval.
+Leng Xuesong joined Warburg Pincus, an international private equity firm, in September 1999 as an associate and
+served as managing director when he left in August 2007. From September 2007 to December 2014, he served as
+managing director at General Atlantic LLC, where he focused on investment opportunities in North Asia. In January
+2015, Leng Xuesong founded Lupin Capital, a China-focused private equity fund.
+Leng Xuesong acquired extensive corporate governance experience through his position as managing director
+of private equity funds and as non-executive director of various listed companies in Hong Kong and the US. He
+has accumulated corporate governance experience in (i) reviewing, monitoring and providing recommendations
+as to the companies' policies and compliance; (ii) facilitating effective communication between the board and
+shareholders; and (iii) understanding requirements of the Listing Rules and directors' duty to act in the best interest
+of the company and the shareholders as a whole.
+Leng Xuesong received his bachelor's degree in international industrial trade from Shanghai Jiao Tong University
+in July 1992 and his master's degree in business administration from the Wharton School of the University of
+Pennsylvania in May 1999.
+Leng Xuesong served as non-executive director of China Huiyuan Juice Group Limited (HKEx Stock Code: 1886)
+from September 2006 to August 2007 and Zhongsheng Group Holdings Limited (HKEx Stock Code: 881) from
+August 2008 to June 2015. He served as non-executive director of Wuxi Pharmatech (Cayman) Inc. (NYSE Ticker:
+WX) from March 2008 to December 2015 and Soufun Holdings Ltd. (NYSE Ticker: SFUN) from September 2010 to
+December 2014. He also serves as non-executive director of China Index Holdings Limited (NASDAQ Ticker: CIH)
+from July 2019.
+Shum Heung Yeung Harry (), aged 55, is an independent non-executive Director. He was appointed as
+Director in September 2018 and is responsible for providing independent advice on technology innovation, the
+global technology and internet industry trends, and other matters subject to the Board guidance and approval.
+Shum Heung Yeung Harry joined Microsoft Research in November 1996 as a researcher based in Redmond,
+Washington. In November 1998, he moved to Beijing as one of the founding members of Microsoft Research China
+(later renamed Microsoft Research Asia) and spent nine years there first as a researcher, subsequently moving on to
+become managing director of Microsoft Research Asia and a distinguished engineer of Microsoft Corporation. From
+October 2007 to November 2013, Shum Heung Yeung Harry served as the corporate vice president responsible
+for Bing search product development. From November 2013 to February 2020, he served as the executive vice
+president of Microsoft Corporation. He has become an independent non-executive director of Youdao, Inc. (NYSE
+Ticker: DAO) since October 2019.
+Meituan 2021 Annual Report 45
+DIRECTORS AND SENIOR MANAGEMENT
+Independent Non-executive Directors
+The Tencent Subscription was completed on July 13, 2021 and an aggregate of 11,352,600 Shares were
+allotted and issued by the Company to Tencent Mobility Limited (the "Tencent Subscription"). The net
+proceeds raised from the Tencent Subscription were approximately US$400.0 million. The Company intends
+to use the net proceeds for technology innovations, including the research and development of autonomous
+delivery vehicles, drones delivery, and other cutting-edge technology, and general corporate purposes. As of
+December 31, 2021, we have not utilised any of the net proceeds of the Tencent Subscription. The Company
+expects to fully utilise the residual amount of the net proceeds in accordance with such intended purposes
+within 5 years. There has been no change in the intended use of net proceeds as previously disclosed. For
+further details, please refer to the Company's announcements dated April 20, 2021, April 27, 2021, April 28,
+2021 and July 13, 2021.
+Utilisation as of
+31 December
+Sequoia Capital China Funds,
+Sequoia Capital Global
+Growth Funds and Other
+Controlled Entities
+SCEP Master Fund
+5,321,335
+Galileo Space Limited
+Interest in controlled corporation (L)
+Class B Shares
+0.04%
+2,134,660
+Class A Shares
+5.37%
+36,400,000
+Kevin Sunny
+Interest in controlled corporation (L)
+Class B Shares
+0.04%
+2,134,660
+Class A Shares
+5.37%
+36,400,000
+0.10%
+Class B Shares
+Beneficial interest (L)
+12,822,605
+60,000
+Beneficial interest (L)
+ORR Gordon Robert
+Halyburton (6)
+Class B Shares
+0.29%
+15,664,215
+Class B Shares
+0.01%
+Aim Mars Investment Limited
+674,700
+Class B Shares
+4.99%
+272,101,669
+Interest in controlled corporations (L)
+Interest in controlled corporations (L)
+SHEN Nanpeng Neil (5)
+Class B Shares
+0.23%
+Beneficial interest (L)
+Interest in controlled corporation (L)
+Class B Shares
+0.04%
+Beneficial interest (L)
+Class B Shares
+0.01%
+666,668
+Class A Shares
+1.08%
+7,330,000
+Shared Vision
+5,333,332
+Interest in controlled corporation (L)
+17.49%
+118,650,000
+Charmway Enterprises
+Interest in controlled corporation (L)
+Class A Shares
+17.49%
+118,650,000
+Day One Holdings Limited
+Class A Shares
+0.00%
+0.10%
+Name of Director or
+2,134,660
+Class A Shares
+5.37%
+36,400,000
+class of Shares (7)
+interest in each
+percentage of
+Approximate
+Class B Shares
+class of
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 55
+Trust
+Beneficiary and founder of a Trust (L)
+WANG Huiwen (4)
+Relevant company
+Nature of interest(1)
+chief executive
+Number and
+Interest in controlled corporation (L)
+Class B Shares
+Beneficial interest (L)
+72.19%
+489,600,000 Class A Shares
+Trustee (L)
+TMF (Cayman) Ltd.
+Wang Xing
+72.19%
+489,600,000 Class A Shares
+Interest in controlled corporation (L)
+Songtao Limited (2)
+3.87%
+26,269,783 Class A Shares
+Beneficial interest (L)
+Share Patience (2)
+72.19%
+489,600,000 Class A Shares
+Beneficial interest (L)
+Class A Shares- Wang Xing
+Crown Holdings (2)
+Name of Substantial Shareholder
+Beneficiary of a trust (¹) (L)
+489,600,000 Class A Shares
+72.19%
+Founder of a trust (¹) (L)
+72.19%
+26,269,783 Class A Shares
+3.87%
+Class A Shares-Mu Rongjun
+Charmway Enterprises (3)
+Shared Vision (3)
+Beneficial interest (L)
+118,650,000 Class A Shares
+17.49%
+Beneficial interest (L)
+class of Shares (6)
+7,330,000 Class A Shares
+Day One Holdings Limited (3)
+Interest in controlled corporation (L)
+118,650,000 Class A Shares
+17.49%
+TMF (Cayman) Ltd.
+Mu Rongjun
+Trustee (L)
+489,600,000 Class A Shares
+Interest in controlled corporation (1) (L)
+1.08%
+interest in each
+Number and class of
+Shares held
+Capacity/Nature of interest (¹)
+Crown Holdings is wholly owned by Songtao Limited. The entire interest in Songtao Limited is held through a trust which
+was established by Wang Xing (as settlor) for the benefit of Wang Xing and his family. Wang Xing is deemed to be interested
+in the 489,600,000 Class A Shares held by Crown Holdings under the SFO. Shared Patience and WAFO Global Inc. are
+wholly owned by Wang Xing. On June 3, 2021, Shared Patience Inc converted 57,319,000 Class A Shares into Class B
+Shares, which were then transferred to WangXing Foundation, a foundation founded by Wang Xing as an irrevocable
+philanthropic foundation devoted exclusively to philanthropic purposes. On the same day, WangXing Foundation transferred
+9,354,458 Class B Shares to an independent third party for philanthropic purpose.
+(4)
+(3)
+(2)
+The letter "L" denotes the person's Long Position in such Shares.
+(1)
+Notes:
+REPORT OF DIRECTORS
+Charmway Enterprises is wholly owned by Day One Holdings Limited. The entire interest in Day One Holdings Limited is
+held through a trust which was established by Mu Rongjun (as settlor) for the benefit of Mu Rongjun and his family. Mu
+Rongjun is deemed to be interested in the 118,650,000 Class A Shares held by Charmway Enterprises under the SFO.
+Shared Vision is wholly owned by Mu Rongjun. Mu Rongjun was granted RSUs equivalent to 1,000,000 Class B Shares and
+options with respect to 5,000,000 Class B Shares under the Pre-IPO ESOP subject to vesting/exercise. As at December
+31, 2021, 666,668 Class B Shares were issued to Shared Vision with respect to the vesting of 666,668 RSUs granted to Mu
+Rongjun under the Pre-IPO ESOP.
+56 Meituan 2021 Annual Report
+Yeung Harry(6)
+0.00%
+60,000
+Beneficial interest (L)
+SHUM Heung
+Class B Shares
+0.00%
+60,000
+Class B Shares
+LENG Xuesong (6)
+Kevin Sunny is wholly owned by Aim Mars Investment Limited. The entire interest in Aim Mars Investment Limited is held
+through a trust established by Wang Huiwen (as settlor) for the benefit of Wang Huiwen and his family. Wang Huiwen is
+deemed to be interested in the 36,400,000 Class A Shares held by Aim Mars Investment Limited under the SFO. Galileo
+Space Limited is wholly-controlled by Wang Huiwen. Wang Huiwen was granted RSUs equivalent to 15,700,000 Class
+B Shares, and options with respect to 7,578,600 Class B Shares under the Pre-IPO ESOP. As at December 31, 2021, (i)
+972,160 Class B Shares were issued to Kevin Sunny with respect to the exercise of 972,160 share options; and 1,162,500
+Class B Shares were issued to Kevin Sunny with respect to the vesting 1,162,500 RSUs under the Pre-IPO ESOP; (ii)
+1,550,500 Class B Shares were issued to Galileo Space Limited with respect to the exercise of 1,550,500 share options;
+and 6,770,835 Class B Shares were issued to Galileo Space Limited with respect to the vesting 6,770,835 RSUs under the
+Pre-IPO ESOP.
+Sequoia Capital China Funds refers to Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P., Sequoia
+Capital China Principals Fund I, L.P., Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P., Sequoia
+Capital China Principals Fund II, L.P., Sequoia Capital 2010 CV Holdco, Ltd., SCC Venture V Holdco I, Ltd., SCC Venture
+VI Holdco, Ltd., SCC Venture VI Holdco B, Ltd., SCC Growth 2010-Top Holdco, Ltd., SCC Growth IV Holdco A, Ltd. and
+Sequoia Capital China Growth Fund IV, L.P. (which hold approximately 0.52%, 0.06%, 0.08%, 1.60%, 0.04%, 0.27%,
+0.41%, 0.005%, 0.02%, 0.01%, 0.63%, 0.02% and 0.08%, respectively, of the outstanding Shares), and Sequoia Capital
+Global Growth Funds refers to Sequoia Capital Global Growth Fund, L.P., Sequoia Capital Global Growth Principals Fund,
+L.P. and SC GGFII Holdco, Ltd. (which hold approximately 0.26%, 0.01% and 0.37%, respectively, of the outstanding
+Shares). The Sequoia Capital China Funds and the Sequoia Capital Global Growth Funds may act together with respect of
+the holding, disposal and casting of voting rights of the Shares.
+percentage of
+Approximate
+As of December 31, 2021, to the best knowledge of the Directors, the following persons had interests or short
+positions in the Shares or underlying Shares which fall to be disclosed to the Company under the provisions of
+Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept by the Company pursuant to
+section 336 of the SFO:
+SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND
+UNDERLYING SHARES
+REPORT OF DIRECTORS
+58 Meituan 2021 Annual Report
+Save as disclosed above, as of December 31, 2021, none of the Directors or the chief executives of the Company had or
+was deemed to have any interest or short position in the Shares, underlying shares or debentures of the Company or its
+associated corporations (within the meaning of Part XV of the SFO) that was required to be notified to the Company and
+the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which
+they were taken or deemed to have taken under such provisions of the SFO), or required to be recorded in the register
+required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange
+pursuant to the Model Code.
+None of the Directors or chief executives of the Company had interests and short positions in shares, underlying shares
+or debentures in associated corporations of the Company as of December 31, 2021.
+(5)
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+Each of the independent non-executive Directors, namely Orr Gordon Robert Halyburton, Leng Xuesong and Shum Heung Yeung
+Harry was granted RSUs equivalent to 60,000 Class B Shares under the Post-IPO Share Award Scheme.
+Neil Nanpeng Shen is deemed to be interested in the shares held by SCEP Master Fund through its deemed interests in the
+investment manager of SCEP Master Fund pursuant to Part XV of the SFO.
+In view of the above, the Sequoia Capital China Funds and the Sequoia Capital Global Growth Funds are deemed to be interested
+in the Shares held by each other and by Neil Nanpeng Shen and Other Controlled Entities and vice versa; and is therefore each
+deemed to be interested in 4.70% interest in the share capital of the Company (or 5.29% of the total issued Class B Shares).
+The general partner of each of Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P. and Sequoia Capital
+China Principals Fund I, L.P. is Sequoia Capital China Management I, L.P. ("SCC Management I"). The general partner of each
+of Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P. and Sequoia Capital China Principals Fund II,
+L.P. is Sequoia Capital China Management II, L.P. ("SCC Management II"). The sole shareholder of Sequoia Capital 2010 CV
+Holdco, Ltd. is Sequoia Capital China Venture 2010 Fund, L.P., whose general partner is SC China Venture 2010 Management,
+L.P. ("SCCV 2010 Management"). The sole shareholder of SCC Venture V Holdco I, Ltd. is Sequoia Capital China Venture Fund
+V, L.P., whose general partner is SC China Venture V Management, L.P. ("SCCV V Management"). The sole shareholder of
+each of SCC Venture VI Holdco, Ltd. and SCC Venture VI Holdco B, Ltd. is Sequoia Capital China Venture Fund VI, L.P., whose
+general partner is SC China Venture VI Management, L.P. ("SCCV VI Management”). The controlling shareholder of SCC Growth
+2010-Top Holdco, Ltd. and the sole shareholder of Sequoia Capital 2010 CGF Holdco, Ltd. is Sequoia Capital China Growth
+2010 Fund, L.P. ("China Growth Fund 2010"), whose general partner is SC China Growth 2010 Management, L.P. ("SCCGF
+2010 Management”). In respect of the casting of votes held by China Growth Fund 2010 in SCC Growth 2010-Top Holdco,
+Ltd., China Growth Fund 2010 is accustomed to act in accordance with the instructions of Sequoia Capital China Growth Fund
+I, L.P., whose general partner is Sequoia Capital China Growth Fund Management I, L.P. ("SCCGF Management I"). The sole
+shareholder of SCC Growth IV Holdco A, Ltd. is Sequoia Capital China Growth Fund IV, L.P., whose general partner is SC China
+Growth IV Management, L.P. ("SCCGF IV Management" and, together with SCC Management I, SCC Management II, SCCV
+2010 Management, SCCV V Management, SCCV VI Management, SCCGF 2010 Management and SCCGF Management I,
+collectively, the "General Partners"). The general partner of each of the General Partners is SC China Holding Limited, which is a
+wholly owned subsidiary of SNP China Enterprises Limited. Neil Nanpeng Shen is the sole shareholder of SNP China Enterprises
+Limited, and has a beneficial interest of 15,664,215 Class B Shares. Other Controlled Entities refers to URM Management Limited
+and N&J Investment Holdings Limited (which hold approximately 0.0014% and 0.14%, respectively, of the outstanding Shares)
+and are controlled by Neil Nanpeng Shen.
+(7)
+(6)
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 57
+As at December 31, 2021, the Company had 6,135,944,107 issued Shares in total, comprising of 678,249,783 Class A Shares
+and 5,457,694,324 Class B Shares. The above calculation is based on the total number of relevant class of Shares or the total
+number of Shares in issue as of December 31, 2021.
+Class A Shares
+securities
+118,650,000
+MAJOR CUSTOMERS AND SUPPLIERS
+REPORT OF DIRECTORS
+50 Meituan 2021 Annual Report
+118,650,000 Class A Shares
+17.49%
+Beneficiary of a trust(2) (L)
+118,650,000 Class A Shares
+17.49%
+Founder of a trust(2) (L)
+118,650,000 Class A Shares
+17.49%
+17.49%
+7,330,000 Class A Shares
+1.08%
+Class B Shares - Tencent
+Huai River Investment Limited (4)
+Tencent Mobility Limited (4)
+Morespark Limited (4)
+Beneficial interest (L)
+623,420,905 Class B Shares
+Major Customers
+11.42%
+For the year ended December 31, 2021, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+For the year ended December 31, 2021, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+DIRECTORS
+On April 27, 2021, the Company issued the 2027 Bonds and 2028 Bonds. The 2027 Bonds and 2028 Bonds are
+listed on the Hong Kong Stock Exchange. For further details, please refer to the announcements of the Company
+dated April 20, 2021, April 27, 2021 and April 28, 2021.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 51
+ISSUANCE OF DEBT SECURITIES
+Particulars of bank loans and other borrowings of the Group as of December 31, 2021 are set out in Note 31 to the
+consolidated financial statements.
+BANK LOANS AND OTHER BORROWINGS
+As of December 31, 2021, the Company's reserves available for distribution, amounted to approximately RMB311.2
+billion.
+DISTRIBUTABLE RESERVES
+Details of movements in the reserves of the Group during the Reporting Period are set out in Note 27 to the
+consolidated financial statements.
+RESERVES
+Details of movements in the share capital of the Group during the Reporting Period are set out in Note 26 to the
+consolidated financial statements.
+The Company completed the allotment and issue of 11,352,600 Shares to Tencent Mobility Limited on July 13, 2021
+at HK$273.80 per Shares under a specific mandate approved by independent Shareholders at the annual general
+meeting of the Company on June 23, 2021. For further details, please refer to the Company's announcement dated
+April 20, 2021, April 27, 2021, April 28, 2021 and July 13, 2021.
+On April 22, 2021, the Company completed a placing of a total of 187,000,000 placing Shares at HK$ 273.80 for
+each placing Share to not less than six independent placees and, on April 27, 2021, the Company allotted and
+issued 187,000,000 subscription Shares under the general mandate to Tencent Mobility Limited at HK$273.80 per
+subscription Share. For further details, please refer to the Company's announcements dated April 20, 2021, April
+27, 2021 and April 28, 2021.
+SHARE CAPITAL
+Details of movements in the property, plant and equipment of the Group during the Reporting Period are set out in
+Note 15 to the consolidated financial statements.
+PROPERTY, PLANT AND EQUIPMENT
+Major Suppliers
+Beneficial interest (L)
+395,308,305 Class B Shares
+7.24%
+Number and class of
+Shares held
+percentage of
+interest in each
+class of Shares (6)
+Class B Shares - Sequoia
+Sequoia Capital China Funds,
+Sequoia Capital Global Growth
+Funds and Other Controlled
+Entities (5)
+Notes:
+Beneficial interest (L)
+Other (L)
+272,776,369 Class B Shares
+15,664,215 Class B Shares
+5.00%
+0.29%
+(1)
+The letter "L" denotes the person's Long Position in such Shares.
+(2)
+(4)
+(5)
+Crown Holdings is wholly owned by Songtao Limited which is in turn wholly owned by TMF (Cayman) Ltd. The entire
+interest in Songtao Limited is held by TMF (Cayman) Ltd. as trustee for a trust established by Wang Xing (as settlor) for
+the benefit of Wang Xing and his family. Wang Xing is deemed to be interested in the 489,600,000 Class A Shares held by
+Crown Holdings under the SFO. Shared Patience is wholly owned by Wang Xing.
+Charmway Enterprises is wholly owned by Day One Holdings Limited which is in turn wholly owned by TMF (Cayman)
+Ltd. The entire interest in Day One Holdings Limited is held by TMF (Cayman) Ltd. as trustee for a trust established by Mu
+Rongjun (as settlor) for the benefit of Mu Rongjun and his family. Mu Rongjun is deemed to be interested in the 118,650,000
+Class A Shares held by Charmway Enterprises under the SFO. Shared Vision is wholly owned by Mu Rongjun.
+Huai River Investment Limited, a company incorporated under the laws of the British Virgin Islands, Tencent Mobility
+Limited, a company incorporated under the laws of Hong Kong, Morespark Limited, a company incorporated under the
+laws of Hong Kong and Great Summer Limited, a company incorporated under the laws of the British Virgin Islands, are
+direct wholly owned subsidiaries of Tencent. THL A Limited and THL A25 Limited and Distribution Pool Limted, companies
+incorporated under the laws of the British Virgin Islands, are beneficially owned by Tencent.
+Sequoia Capital China Funds refers to Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P., Sequoia
+Capital China Principals Fund I, L.P., Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P., Sequoia
+Capital China Principals Fund II, L.P., Sequoia Capital 2010 CV Holdco, Ltd., SCC Venture V Holdco I, Ltd., SCC Venture
+VI Holdco, Ltd., SCC Venture VI Holdco B, Ltd., SCC Growth 2010-Top Holdco, Ltd., SCC Growth IV Holdco A, Ltd. and
+Sequoia Capital China Growth Fund IV, L.P. (which hold 0.52%, 0.06%, 0.08%, 1.60%, 0.04%, 0.27%, 0.41%, 0.005%,
+0.02%, 0.01%, 0.63%, 0.02% and 0.08%, respectively, of the outstanding Shares), and Sequoia Capital Global Growth
+Funds refers to Sequoia Capital Global Growth Fund, L.P., Sequoia Capital Global Growth Principals Fund, L.P. and SC
+GGFII Holdco, Ltd. (which hold approximately 0.24%, 0.01% and 0.34%, respectively, of the outstanding Shares). The
+Sequoia Capital China Funds and the Sequoia Capital Global Growth Funds may act together with respect of the holding,
+disposal and casting of voting rights of the Shares.
+Capacity/Nature of interest(¹)
+Name of Substantial Shareholder
+Approximate
+REPORT OF DIRECTORS
+Beneficial interest (L)
+8,850,245 Class B Shares
+0.16%
+Great Summer Limited (4)
+Beneficial interest (L)
+25,000,000 Class B Shares
+0.46%
+THL A Limited (4)
+THL A25 Limited (4)
+The Directors during the Reporting Period and up to date of this annual report are:
+Beneficial interest (L)
+Beneficial interest (L)
+0.01%
+12,912 Class B Shares
+0.00%
+Distribution Pool Limited (4)
+Beneficial interest (L)
+1,018,420 Class B Shares
+0.019%
+Meituan 2021 Annual Report 59
+559,594 Class B Shares
+Executive Directors
+Interest in controlled corporation (2) (L)
+Mr. Mu Rongjun (1)
+Crown Holdings
+Interest in controlled corporation (L)
+72.19%
+72.19%
+Approximate
+percentage of
+interest in each
+class of Shares (7)
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+Songtao Limited
+Trust
+Beneficiary and founder of a Trust (L)
+WANG Xing (2)
+class of
+securities
+Relevant company
+Nature of interest(1)
+chief executive
+Name of Director or
+Number and
+Interests of Directors and Chief Executives in the Company
+489,600,000
+Class A Shares
+72.19%
+Interest in controlled corporation (L)
+Shared Patience
+Interest in controlled corporation (L)
+WAFO Global Inc.
+1,121
+0.00%
+Class B Shares
+Interest in controlled corporation (L)
+WangXing Foundation
+47,952,542
+Class B Shares
+As of December 31, 2021, the interests and short positions of the Directors and the chief executives of the
+Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations
+(within the meaning of Part XV of the SFO) which have been notified to the Company and the Stock Exchange
+pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or
+deemed to have been taken under such provisions of the SFO), or which were recorded in the register required
+to be kept pursuant to section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange
+pursuant to the Model Code as set out in Appendix 10 of the Listing Rules were as follows:
+0.88%
+Beneficiary and founder of a Trust (L)
+Trust
+Mr. Wang Xing (E) (Chairman of the Board)
+Class B Shares
+0.00%
+318
+3.87%
+26,269,783
+Class A Shares
+MU Rongjun (3)
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+Interest in controlled corporation (L)
+54 Meituan 2021 Annual Report
+Each of the non-executive Directors has entered into an appointment letter with the Company. Their appointment
+as a Directors shall continue for three years after the Listing Date or until the third annual general meeting of
+the Company after the Listing Date, whichever is earlier, (subject to retirement as and when required under the
+Articles of Association) unless terminated in accordance with the terms and conditions of the appointment letter
+or by either party giving to the other not less than one month's prior notice in writing. On April 12, 2021, each of
+the non-executive Directors entered into an appointment letter with the Company on similar terms for three years.
+Under these appointment letters, the non-executive Directors are not entitled to receive annual salaries in their
+capacity as non-executive Directors. The non-executive Directors have not received any remuneration for the year
+ended December 31, 2021.
+DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
+REPORT OF DIRECTORS
+52 Meituan 2021 Annual Report
+The Company has received an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules from
+each of the independent non-executive Directors, and the Company considers such Directors to be independent
+during the Reporting Period.
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS
+Mr. Lau Chi Ping Martin ()
+Mr. Neil Nanpeng Shen ()
+Independent Non-executive Directors
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (2)
+REPORT OF DIRECTORS
+Biographical details of the Directors and senior management of the Company are set out in the section headed
+"Directors and Senior Management" of this annual report.
+Dr. Shum Heung Yeung Harry (¥)
+In accordance with Article 17.18 of the Articles of Association, Wang Xing, Mu Rongjun and Shum Heung Yeung
+Harry shall retire by rotation, and being eligible, have offered themselves for re-election at the AGM.
+Details of the Directors to be re-elected at the AGM are set out in the circular to the Shareholders to be dispatched
+before the AGM.
+DIRECTORS AND SENIOR MANAGEMENT
+Each of the independent non-executive Directors has entered into an appointment letter with the Company. The
+initial term of their appointments shall be three years from the date of the Prospectus or until the third annual
+general meeting of the Company after the Listing Date, whichever is earlier, (subject to retirement as and when
+required under the Articles of Association) unless terminated in accordance with the terms and conditions of the
+appointment letter or by either party giving to the other not less than three months' prior notice in writing. On April
+12, 2021, each of the independent non-executive Directors entered into an appointment letter with the Company
+for three years, under which each of the independent non-executive Directors will receive 1) an annual fixed cash
+compensation of RMB500,000 per annum, 2) 15,000 RSUs for the first year under the new term and 3) a share
+based compensation in the form of RSUs in the amount of RMB1,000,000 per annum for the second and third year.
+None of the Directors has entered into a service contract which is not determinable by the Group within one year
+without payment of compensation (other than statutory compensation).
+Each of the executive Directors has entered into a service contract with the Company. Pursuant to this contract,
+they agreed to act as executive Directors for an initial term of three years with effect from the date the appointment
+is approved by the Board or until the third annual general meeting of the Company after the Listing Date (whichever
+is earlier), upon which the service contracts were automatically renewed. Either party has the right to give not less
+than three months' written notice to terminate the contract. No annual director's fees are payable to the executive
+Directors under the current arrangement.
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+Details of the retirement and employee benefits scheme of the Company are set out in Note 8 to the consolidated
+financial statements.
+RETIREMENT AND EMPLOYEE BENEFITS SCHEME
+Details of the emoluments of the Directors, and five highest paid individuals during the Reporting Period are set out
+in Note 8 to the consolidated financial statements.
+None of the Directors waived or agreed to waive any remuneration and there were no emoluments paid by the
+Group to any of the Directors as an inducement to join, or upon joining the Group, or as compensation for the loss
+of office.
+The Directors and the senior management personnel are eligible participants of the Pre-IPO ESOP, Post-IPO Share
+Option Scheme and Post-IPO Share Award Scheme.
+A remuneration committee was set up for reviewing the Group's emolument policy and structure for all
+remuneration of the Directors and senior management of the Group, having regard to the Group's operating results,
+individual performance of the Directors and senior management and comparable market practices. As for the
+independent non-executive Directors, their remuneration is determined by the Board upon recommendation from
+the Remuneration Committee.
+Details of the emoluments of the Directors during the Reporting Period are set out in Note 8 to the consolidated
+financial statements.
+Save as otherwise disclosed in this annual report, at no time during the Reporting Period was the Company or
+any of its subsidiaries a party to any arrangement that would enable the Directors to acquire benefits by means of
+acquisition of shares in, or debentures of, the Company or any other body corporate, and none of the Directors
+or any of their spouses or children under the age of 18 was granted any right to subscribe for the equity or debt
+securities of the Company or any other body corporate or had exercised any such right.
+EMOLUMENT POLICY
+No contracts concerning the management and administration of the whole or any substantial part of the business of
+the Company were entered into or existed during the Reporting Period.
+Mr. Wang Huiwen (X)
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 53
+MANAGEMENT CONTRACTS
+Non-executive Directors
+Saved as disclosed in this annual report, no Director had a material interest, either directly or indirectly, in any
+transaction, arrangement or contract of significance to the business of the Group to which the Company or any of
+its subsidiaries or fellow subsidiaries was a party during the Reporting Period.
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+2028 CB Bondholders
+0.43%
+1.93%
+ii.
+Time and conditions of exercise
+The Committee shall determine the time or times at which an Option may be exercised in whole or in part,
+including exercise prior to vesting; provided, however, that the term of any Option granted under the Pre-IPO
+ESOP shall not exceed ten years, except as amended, modified or terminated by the Board or the Committee.
+The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an
+Option may be exercised. The Option may not be exercised until vested.
+iii.
+26,734,628
+623,420,905
+0
+1.93%
+0
+118,650,000
+118,650,000
+1.92%
+Huai River Investment Limited
+623,420,905
+10.16%
+0.00%
+10.12%
+10.11%
+623,420,905
+10.07%
+2027 CB Bondholders
+0
+0.00%
+26,734,628
+0.43%
+623,420,905
+0.00%
+The Pre-IPO ESOP is administered by the Board or the Committee to whom the Board shall delegate the authority
+to grant or amend Awards to Participants other than any of the Committee members, independent Directors
+and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the
+Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office, shall conduct
+the general administration of the Pre-IPO ESOP if required by applicable laws, and with respect to Awards granted
+to the Committee members, independent Directors and executive officers of the Company and for purposes of such
+Awards the term "Committee" as used in the Pre-IPO ESOP shall be deemed to refer to the Board.
+Other Shareholders
+PRE-IPO ESOP
+The Pre-IPO ESOP was approved and adopted pursuant to the written resolutions of all the then shareholders of
+the Company dated October 6, 2015. The Pre-IPO ESOP commenced on October 6, 2015 and will expire on the
+tenth anniversary of the commencement date. The following is a summary of certain principal terms of the Pre-IPO
+ESOP.
+Purpose
+The purpose of the Pre-IPO ESOP is to promote the success and enhance the value of the Company by linking
+the personal interests of the Directors, employees and consultants to those of the shareholders of the Company
+and by providing such individuals with an incentive for outstanding performance to generate superior returns to
+the shareholders of the Company. The Pre-IPO ESOP is further intended to provide flexibility to the Company in its
+ability to motivate, attract and retain the services of Directors, employees and consultants upon whose judgment,
+interest, contribution and special effort the successful conduct of the Company's operation is largely dependent.
+Eligible Participants
+Those eligible to participate in the Pre-IPO ESOP include employees, consultants and Directors, as determined
+by a committee authorized by the Board (the "Committee”). Subject to the provisions of the Pre-IPO ESOP, the
+Committee may, from time to time, select from among all eligible individuals (the "Participants") to whom awards
+in the form of options ("Options"), restricted share awards ("Restricted Shares") and restricted share units ("RSU”)
+(collectively "Awards") shall be granted and shall determine the nature and amount of each option. No individual
+shall have any right to be granted an Award pursuant to the Pre-IPO ESOP.
+Maximum Number of Shares
+The maximum aggregate number of Shares which may be issued is 683,038,063, subject to any adjustments for
+other dilutive issuances. No share options or RSUs may be granted under the Pre-IPO ESOP after the Listing.
+REPORT OF DIRECTORS
+Administration
+Meituan 2021 Annual Report 63
+REPORT OF DIRECTORS
+The Committee is authorized to grant Awards to Participants in accordance with the terms of the Pre-IPO
+ESOP. Awards granted will be evidenced by an agreement ("Award Agreement") between the Company and the
+Participant. The Award Agreement includes additional provisions specified by the Committee. The Committee can
+determine the terms and conditions of the Award, including the grant or purchase price of Awards.
+Options
+i.
+118,650,000
+The Committee shall determine the exercise price per Share subject to an Option, which may be either a fixed
+price or a variable price related to the fair market value of the Shares. The exercise price per Share shall be
+set forth in the Award Agreement. The exercise price per Share subject to an Option may be adjusted in the
+absolute discretion of the Committee, the determination of which shall be final, binding and conclusive. For
+the avoidance of doubt, to the extent not prohibited by applicable laws, a re-pricing of Options mentioned
+in the preceding sentence shall be effective without the approval of the Shareholders or the approval of the
+relevant Participants. Notwithstanding the foregoing, the exercise price per Share subject to an Option under
+an Award Agreement shall not be increased without the approval of the relevant Participants.
+Exercise price
+Grant of Awards
+62 Meituan 2021 Annual Report
+It would be equally financially advantageous for the holders of 2027 Bonds and 2028 Bonds to convert or redeem
+the convertible securities based on the implied internal rate of return of the outstanding 2027 Bonds and 2028
+Bonds, when the Company's share price approximates to the conversion price.
+To the best of the Directors' knowledge, having made all reasonable enquiries, having considered the financial
+position of the Group, the Directors expect that the Company will be able to meet its redemption obligations under
+all outstanding 2027 Bonds and 2028 Bonds when they become due.
+4,904,273,202
+79.93%
+4,904,273,202
+0.00%
+79.58%
+27,030,158
+4,904,273,202
+0.44%
+27,030,158
+0.44%
+79.58%
+4,904,273,202
+79.23%
+Total:
+6,135,944,107
+100.00% 6,162,678,735
+100.00% 6,162,974,265
+100.00%
+6,189,708,893
+100.00%
+Due to the loss for the year ended December 31, 2021, the conversion of the convertible bonds would have anti-
+dilutive effect on the diluted loss per share. Therefore, basic and diluted loss per share for the year ended December
+31, 2021 were the same. For further details, please refer to Note 14 to the consolidated financial statements.
+0
+1.93%
+price
+Charmway Enterprises
+0
+0
+3,714 HKD323.7872
+0
+1,255,316
+HK$195.98
+4 years
+HK$191.1
+904,000
+0
+0
+226,000 HKD250.0000
+0
+1,130,000
+HK$100.15
+1,251,602
+5.2 years(2)
+Total
+0
+The general partner of each of Sequoia Capital China I, L.P., Sequoia Capital China Partners Fund I, L.P. and Sequoia
+Capital China Principals Fund I, L.P. is Sequoia Capital China Management I, L.P. ("SCC Management I"). The general
+partner of each of Sequoia Capital China II, L.P., Sequoia Capital China Partners Fund II, L.P. and Sequoia Capital China
+Principals Fund II, L.P. is Sequoia Capital China Management II, L.P. ("SCC Management II"). The sole shareholder of
+Sequoia Capital 2010 CV Holdco, Ltd. is Sequoia Capital China Venture 2010 Fund, L.P. ("China Venture 2010 Fund"),
+whose general partner is SC China Venture 2010 Management, L.P. ("SCCV 2010 Management"). The sole shareholder
+of SCC Venture V Holdco I, Ltd. is Sequoia Capital China Venture Fund V, L.P. ("China Venture Fund V"), whose general
+partner is SC China Venture V Management, L.P. ("SCCV V Management"). The sole shareholder of each of SCC Venture VI
+Holdco, Ltd. and SCC Venture VI Holdco B, Ltd. is Sequoia Capital China Venture Fund VI, L.P. ("China Venture Fund VI"),
+whose general partner is SC China Venture VI Management, L.P. ("SCCV VI Management"). The controlling shareholder of
+SCC Growth 2010-Top Holdco, Ltd. and the sole shareholder of Sequoia Capital 2010 CGF Holdco, Ltd. is Sequoia Capital
+China Growth 2010 Fund, L.P. ("China Growth Fund 2010"), whose general partner is SC China Growth 2010 Management,
+L.P. ("SCCGF 2010 Management”). In respect of the casting of votes held by China Growth Fund 2010 in SCC Growth
+2010-Top Holdco, Ltd., China Growth Fund 2010 is accustomed to act in accordance with the instructions of Sequoia
+Capital China Growth Fund I, L.P. ("China Growth Fund I"), whose general partner is Sequoia Capital China Growth Fund
+Management I, L.P. ("SCCGF Management I"). The sole shareholder of SCC Growth IV Holdco A, Ltd. is Sequoia Capital
+China Growth Fund IV, L.P., whose general partner is SC China Growth IV Management, L.P. ("SCCGF IV Management"
+and, together with SCC Management I, SCC Management II, SCCV 2010 Management, SCCV V Management, SCCV VI
+Management, SCCGF 2010 Management and SCCGF Management I, collectively, the "General Partners"). The general
+partner of each of the General Partners is SC China Holding Limited, which is a wholly owned subsidiary of SNP China
+Enterprises Limited. Neil Nanpeng Shen is the sole shareholder of SNP China Enterprises Limited, and has a beneficial
+interest of 15,664,215 Class B Shares. In addition, Neil Nanpeng Shen is interested in more than 33.3% limited partnership
+interest in Sequoia Capital China Partners Fund I, L.P. Other Controlled Entities refers to URM Management Limited and
+N&J Investment Holdings Limited (which hold approximately 0.0014% and 0.14%, respectively, of the outstanding Shares)
+and are controlled by Neil Nanpeng Shen. Therefore, each of China Venture 2010 Fund, China Venture Fund V, China
+Venture Fund VI, China Growth Fund I, China Growth Fund 2010, the General Partners, SC China Holding Limited, SNP
+China Enterprises Limited and Neil Nanpeng Shen is deemed to be interested in 4.70% interest in the share capital of the
+Company (or 5.29% of the total issued Class B Shares).
+(6)
+REPORT OF DIRECTORS
+60 Meituan 2021 Annual Report
+The share options are exercisable in instalments from the commencement of the relevant vesting period until July 20, 2030.
+Subject to the terms of the Post-IPO Share Option Scheme and the share option award agreements signed by the grantees,
+the first 10% of the options can be exercised on June 30, 2021, 20% of the options can be exercised on June 30, 2022,
+30% of the options can be exercised on June 30, 2023, 40% of the options can be exercised on June 30, 2024.
+Payment
+The share options are exercisable in instalments from the commencement of the relevant vesting period until April 24, 2030.
+Subject to the terms of the Post-IPO Share Option Scheme and the share option award agreements signed by the grantees,
+the first 1/6 of the options can be exercised on June 30, 2020 and each 1/6 of the total options will become exercisable in
+each subsequent year.
+The share options are exercisable in installments from the commencement of the relevant vesting period until July 5, 2029.
+Subject to the terms of the Post-IPO Share Option Scheme and the share option award agreements signed by the grantees,
+the first 25% of the options can be exercised 1 year after the grant date, and each 25% of the total options will become
+exercisable in each subsequent year.
+(2)
+(1)
+Notes:
+2,865,602
+0
+0
+229,714 HKD251.1930
+3,095,316
+HK$100
+Other Employees April 24, 2020
+Other Employees July 20, 2020
+710,000
+Assuming the 2027 Bonds
+and the 2028 Bonds are fully
+converted into Class B Shares
+(subject to adjustment) at the
+initial 2027 CB Conversion Price of
+HK$431.24 per Share and
+2028 CB Conversion Price of
+HK$431.24 per Share, respectively
+Approximately Number of Shares Approximately
+Assuming the 2027 Bonds are fully
+converted into Class B Shares converted into Class B Shares
+(subject to adjustment) at the initial (subject to adjustment) at the initial
+2027 CB Conversion Price of
+2028 CB Conversion Price of
+HK$431.24 per Share
+HK$431.24 per Share
+Approximately Number of Shares Approximately Number of Shares
+%
+%
+%
+%
+Shareholders
+As at the date of 31 December 2021
+Number of Shares
+Crown Holdings
+489,600,000
+7.98%
+489,600,000
+7.94%
+489,600,000
+7.94%
+489,600,000
+7.91%
+Assuming the 2028 Bonds are fully
+If all outstanding 2027 Bonds and 2028 Bonds were converted as at December 31, 2021, the dilutive impact on the
+then number of issued shares of the Company and the respective shareholdings of the substantial shareholders of
+the Company will be as follows:
+On April 27, 2021, The Company issued the 2027 Bonds and 2028 Bonds. For further details, please refer to the
+announcements of the Company dated April 20, 2021, April 27, 2021 and April 28, 2021.
+REPORT OF DIRECTORS
+0
+0
+0
+0
+0
+710,000
+HK$69.1
+118,650,000
+4 years (1)
+Other Employees July 5, 2019
+2021
+Period
+Neil Nanpeng Shen is deemed to be interested in the shares held by SCEP Master Fund through its deemed interests in the
+investment manager of SCEP Master Fund pursuant to Part XV of the SFO.
+As at December 31, 2021, the Company had 6,135,944,107 issued Shares in total, comprising of 678,249,783 Class A
+Shares and 5,457,694,324 Class B Shares. The above calculation is based on the total number of relevant class of Shares
+or the total number of Shares in issue as of December 31, 2021.
+DILUTION EFFECT OF THE CONVERSION OF CONVERTIBLE BOND
+Meituan 2021 Annual Report 61
+HK$70.0
+The Committee shall determine the methods by which the exercise price of an Option may be paid and the
+methods by which Shares will be delivered or deemed to be delivered to the Participants. Forms of payment
+may include, without limitation, (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible
+under the applicable laws, cash or check in Renminbi, (iii) cash or check denominated in any other local
+currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the
+Committee in order to avoid adverse financial accounting consequences and having a fair market value on
+the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) the
+delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares
+then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of
+the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided, however,
+that payment of such proceeds is then made to the Company upon settlement of such sale, (vi) other property
+acceptable to the Committee with a fair market value equal to the exercise price or (vii) any combination of the
+foregoing.
+66 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+The overall limit on the number of Class B Shares which may be issued upon exercise of all outstanding options
+granted and yet to be exercised under the Post-IPO Share Option Scheme and any other share option schemes
+of the Company at any time (and to which the provisions of Chapter 17 of the Listing Rules are applicable) must
+not exceed 30% of the Class B Shares in issue from time to time (the "Option Scheme Limit"). No options may be
+granted under any schemes of the Company (or its subsidiaries) if this will result in the Option Scheme Limit being
+exceeded.
+Meituan 2021 Annual Report 67
+REPORT OF DIRECTORS
+The Option Scheme Mandate Limit may be refreshed at any time by obtaining prior approval of our Shareholders
+in general meeting and/or such other requirements prescribed under the Listing Rules from time to time. However,
+the refreshed Option Scheme Mandate Limit cannot exceed 10% of the Class B Shares in issue as at the date of
+such approval. Options previously granted under the Post-IPO Share Option Scheme and any other share option
+schemes of the Company (and to which provisions of Chapter 17 of the Listing Rules are applicable) (including
+those outstanding, cancelled or lapsed in accordance with its terms or exercised), shall not be counted for the
+purpose of calculating the refreshed Option Scheme Mandate Limit.
+The Company may also grant options in excess of the Option Scheme Mandate Limit, provided such grant is to
+specifically identified selected participant and is first approved by Shareholders in a general meeting.
+As of December 31, 2021, a total of 3,351,316 options had been granted pursuant to the Post-IPO Share Option
+Scheme. None of the grantees of the aforesaid options granted is a director, chief executive or substantial
+shareholder of the Company, nor an associate of any of them. For further details, please refer to the announcement
+of the Company.
+Maximum Entitlement of a Participant
+Unless approved by our Shareholders, the total number of Class B Shares issued and to be issued upon exercise
+of the options granted and to be granted under the Post-IPO Share Option Scheme and any other share option
+scheme(s) of the Company to each selected participant (including both exercised and outstanding options) in any
+12-month period shall not exceed 1% of the total number of Class B Shares in issue (the "Individual Limit"). Any
+further grant of options to a selected participant which would result in the aggregate number of Class B Shares
+issued and to be issued upon exercise of all options granted and to be granted to such selected participant (including
+exercised, cancelled and outstanding options) in the 12-month period up to and including the date of such further
+grant exceeding the Individual Limit shall be subject to separate approval of our Shareholders (with such selected
+participant and his associates abstaining from voting).
+Exercise Price
+The amount payable for each Class B Share to be subscribed for under an option in the event of the option being
+exercised shall be determined by the Board, provided that it shall be at least the highest of:
+(i)
+The total number of Class B Shares which may be issued upon exercise of all options to be granted under the
+Post-IPO Share Option Scheme and any other schemes is 475,568,628 Class B Shares (the "Option Scheme
+Mandate Limit"), representing 7.75% of the issued share capital of the Company (on a one share one vote basis)
+as of the date of this annual report. Options which have lapsed in accordance with the terms of the rules of the
+Post-IPO Share Option Scheme (or any other share option schemes of the Company) shall not be counted for the
+purpose of calculating the Option Scheme Mandate Limit.
+the closing price of a Class B Share as stated in the daily quotations sheet issued by the Stock Exchange on
+the date of grant;
+the average closing price of the Class B Shares as stated in the daily quotations sheets issued by the Stock
+Exchange for the five business days immediately preceding the date of grant; and
+(iii) the nominal value of a Class B Share on the date of grant.
+68 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+Grant Offer Letter and Notification of Grant of Options
+An offer shall be made to selected participants by a letter in duplicate which specifies the terms on which the option
+is to be granted and an offer shall be deemed to have been accepted and the option to which the offer relates
+shall be deemed to have been granted and to have taken effect when the duplicate of the offer letter comprising
+acceptance of the offer duly signed by the grantee with the number of Class B Shares in respect of which the
+offer is accepted clearly stated therein, together with a remittance in favor of the Company of HK$1.00 by way of
+consideration for the grant thereof, which must be received by the Company within 20 business days from the date
+on which the offer letter is delivered to the grantee.
+Time of Exercise of an Option
+An option may, subject to the terms and conditions upon which such option is granted, be exercised in whole or
+in part by the grantee giving notice in writing to the Company in such form as the Board may from time to time
+determine stating that the option is thereby exercised and the number of Class B Shares in respect of which is
+exercised. The expiry of the period within which an option may be exercised is to be determined and notified by
+the Board to each grantee at the time of making an offer, and shall not expire later than ten years from the date of
+grant.
+Duration
+The Post-IPO Share Option Scheme shall be valid and effective for a period of ten years commencing on the Listing
+Date, but in all other respects the provisions of the Post-IPO Share Option Scheme shall remain in full force and
+effect to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may
+be required in accordance with the provisions of the rules of the Post-IPO Share Option Scheme.
+Meituan 2021 Annual Report 69
+(ii)
+REPORT OF DIRECTORS
+Maximum Number of Class B Shares
+Qualifying Participants
+7,766,665
+Other Employees
+December 29, 2010 to
+August 2, 2018
+0 to 6 years
+41,764,788
+23,898,116
+1,324,330
+0
+16,542,342
+Total
+Note:
+Any individual, being an employee, director, officer, consultant, advisor, distributor, contractor, customer, supplier,
+agent, business partner, joint venture business partner or service provider of any member of the Group or any
+affiliate who the Board or its delegate(s) considers, in their sole discretion, to have contributed or will contribute
+to the Group is entitled to be offered and granted options. However, for any individual who is resident in a place
+where the grant, acceptance or exercise of options pursuant to the Post-IPO Share Option Scheme is not permitted
+under the laws and regulations of such place or where, in the view of the Board or its delegate(s), compliance with
+applicable laws and regulations in such place makes it necessary or expedient to exclude such individual, such
+individual is not eligible to be offered or granted options.
+(1)
+24,064,783
+1,324,330
+0
+24,642,339
+Including RSUs which have been vested before the Reporting Period but which Shares were issued to the grantees during
+the Reporting Period.
+The general partner of Sequoia Capital Global Growth Fund, L.P. and Sequoia Capital Global Growth Principals Fund, L.P.
+is SCGGF Management, L.P., whose general partner is SC US (TTGP), Ltd. Therefore, each of SCGGF Management, L.P.
+and SC US (TTGP), Ltd. is deemed to be interested in the 0.25% interest in the share capital of the Company (or 0.28% of
+the total issued Class B Shares).
+REPORT OF DIRECTORS
+POST-IPO SHARE OPTION SCHEME
+The Post-IPO Share Option Scheme was approved and adopted by all the then shareholders of the Company on
+August 30, 2018. The Post-IPO Share Option Scheme commenced on the Listing Date and will expire on the tenth
+anniversary of the commencement date. The following is a summary of certain principal terms of the Post-IPO
+Share Option Scheme:
+Purpose
+The purpose of the Post-IPO Share Option Scheme is to provide selected participants with the opportunity to
+acquire proprietary interests in the Company and to encourage selected participants to work towards enhancing the
+value of the Company and its Shares for the benefit of the Company and Shareholders as a whole. The Post-IPO
+Share Option Scheme will provide the Company with a flexible means of retaining, incentivising, rewarding,
+remunerating, compensating and/or providing benefits to selected participants.
+50,031,452
+Outstanding Options Granted under the Post-IPO Share Option Scheme
+The table below shows the details of options granted under the Post-IPO Share Option Scheme:
+Weighted
+granted
+Reporting
+immediately
+lapsed
+cancelled
+outstanding
+which the
+Date of
+options were
+Vesting
+Name
+outstanding
+Grant
+Period
+as of
+Exercise January 1,
+Price
+2021
+during the Period and
+before the
+during the
+during the
+as of
+Reporting the exercise
+Period
+date of
+Reporting
+Reporting December 31,
+granted
+date on
+options
+options
+Closing price
+Number of Number of
+Number of
+Average
+Number of
+of the Shares
+Shares
+Shares
+options
+price of
+Shares
+immediately
+underlying
+underlying
+exercised
+Class B
+Number of
+Number of
+underlying
+before the
+options
+options
+during the
+Shares
+options
+0
+0
+0
+333,332
+during
+as of
+exercise
+Name
+Date of Grant
+Vesting
+Period (¹)
+Exercise
+Price
+of January 1,
+2021
+the exercise before the date
+Reporting
+during the
+the Reporting
+price
+of exercise
+Period
+Period
+2021
+Directors
+Mu Rongjun
+July 1, 2017 to
+July 1, 2018
+6 years
+US$3.86-
+US$5.18
+5,000,000
+0
+December 31,
+Shares
+underlying
+options
+outstanding
+options
+cancelled
+Shares options lapsed
+immediately
+RSUs
+i. Performance objectives and other terms
+The Committee, in its discretion, may set performance objectives or other vesting criteria which, depending
+on the extent to which they are met, will determine the number or value of RSUs that will be paid out to the
+Participants.
+ii.
+Form and timing of payment of RSUs
+At the time of grant, the Committee shall specify the date or dates on which the RSUs shall become fully
+vested and non-forfeitable. Upon vesting, the Committee, in its sole discretion, may pay RSUs in the form of
+cash, Shares or a combination thereof.
+Outstanding Share Options Granted under the Pre-IPO ESOP
+Up to the Listing Date, the Company has granted share options under the Pre-IPO ESOP to 4,584 grantees (including
+Directors, senior management, other connected persons of the Company and other employees of the Company)
+to subscribe for an aggregate of 259,325,919 Shares and the Company has not granted further share options
+under the Pre-IPO ESOP after the Listing Date. The exercise price of the share options under the Pre-IPO ESOP is
+between nil to US$5.18.
+The table below shows the details of share options granted to the Directors and other employees under the Pre-IPO
+ESOP.
+Number of
+Number of
+options
+Number of
+Shares
+exercised
+Weighted
+Average price
+Number of
+Period
+underlying
+during the
+of Class B
+Number of
+options
+Reporting
+outstanding as
+Period and
+0
+64 Meituan 2021 Annual Report
+0
+5,000,000
+(1)
+The exercise period of the share options granted under the Pre-IPO ESOP shall be any time after the end of the vesting
+period and before the 10th anniversary of the grant date, subject to the terms of the Pre-IPO ESOP and the share option
+award agreements signed by the grantees.
+Outstanding RSUs Granted under the Pre-IPO ESOP
+Up to the Listing Date, the Company has granted RSUs under the Pre-IPO ESOP representing an aggregate of
+252,774,461 Shares and the Company has not granted further RSUs under the Pre-IPO ESOP after the Listing Date.
+The table below shows the details of RSUs granted to the Directors and other employees under the Pre-IPO ESOP.
+Number of Shares
+Name
+Date of Grant
+Vesting Period
+Number of Shares
+underlying RSUs
+outstanding as of
+January 1, 2021
+RSUs vested
+during the
+Reporting Period (1)
+REPORT OF DIRECTORS
+RSUS cancelled
+during the
+Reporting Period
+underlying RSUs
+during the
+outstanding as of
+Reporting Period December 31, 2021
+Directors
+Mu Rongjun
+Wang Huiwen
+July 1, 2017
+6 years
+January 1, 2016 to
+July 1, 2018
+4 to 6 years
+499,999
+7,766,665
+166,667
+0
+0
+RSUS lapsed
+Meituan 2021 Annual Report 65
+Note:
+US$5.18
+Wang Huiwen
+February 1, 2015 to 4-6 years
+July 1, 2018
+US$1.005-
+5,055,940
+0
+0
+0
+5,055,940
+US$5.18
+Other Employees
+May 31, 2006 to
+August 1, 2018
+0.5 to
+6 years
+US$0.000017-
+US$5.18
+37,781,674
+11,874,178 HKD280.7018
+US$0.000017-
+176
+818,515
+25,088,805
+US$5.18
+Total
+47,837,614
+11,874,178 HKD280.7018
+US$0.000017-
+176
+818,515
+35,144,745
+0
+The controlling shareholder of SC GGFII Holdco, Ltd. is Sequoia Capital Global Growth Fund II, L.P. The general partner
+of Sequoia Capital Global Growth Fund II, L.P is SC Global Growth II Management, L.P., whose general partner is SC US
+(TTGP), Ltd. Therefore, each of Sequoia Capital Global Growth Fund II, L.P., SC Global Growth II Management, L.P. and SC
+US (TTGP), Ltd. is deemed to be interested in the 0.34% interest in the share capital of the Company (or 0.38% of the total
+issued Class B Shares).
+We have followed the pricing policies as disclosed in the Prospectus in respect of the above continuing connected
+transactions. Before entering into any service agreement pursuant to the above framework agreements, we
+assessed our business needs and compared the service fees proposed by Tencent with the fees offered by at least
+one other comparable service providers. We only entered into a service agreement with Tencent if (i) the fees rates
+and quality of service provided by Tencent were no less favorable than those from other independent third party
+service provider; and (ii) it was in the best interest of the Company and the Shareholders as a whole.
+RSUs vested
+Meituan 2021 Annual Report 71
+REPORT OF DIRECTORS
+The Board or the committee of the Board or person(s) to which the Board has delegated its authority may, from time
+to time, at their absolute discretion, grant an Award to a selected participant (in the case of the Board's delegate(s),
+to any selected participant other than a Director or an officer of the Company) by way of an award letter ("Award
+Letter"). The Award Letter will specify the Grant Date, the number of Award Shares underlying the Award, the
+vesting criteria and conditions, the Vesting Date and such other details as the Board or its delegate(s) may consider
+necessary.
+Each grant of an Award to any Director or the chairman of the Company shall be subject to the prior approval of
+the independent non-executive Directors (excluding any independent non-executive Director who is a proposed
+recipient of an Award). The Company will comply with the relevant requirements under Chapter 14A of the Listing
+Rules for any grant of Shares to connected persons of the Company.
+Maximum Number of Shares to Be Granted
+The aggregate number of Class B Shares underlying all grants made pursuant to the Post-IPO Share Award
+Scheme (excluding Award Shares which have been forfeited in accordance with the Post-IPO Share Award
+Scheme) will not exceed 272,336,228 Shares, representing 4.44% of the issued share capital of the Company (on a
+one share one vote basis) as of the date of this annual report, without Shareholders' approval subject to an annual
+limit of 3% of the total number of issued Shares at the relevant time.
+As of December 31, 2021, 157,010,394 RSUs had been granted under the Post-IPO Share Award Scheme since
+Listing Date (including RSUs which have been cancelled or forfeited in accordance with the Post-IPO Share
+Award Scheme) and the total number of Shares available for grant under the Post-IPO Share Award Scheme
+was 137,461,792 Shares (including Award Shares which have been cancelled or forfeited in accordance with the
+Post-IPO Share Award Scheme), representing 2.24% of the issued share capital of the Company (on a one share
+one vote basis) as of the date of this annual report.
+Termination
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+(i)
+(ii)
+the end of the period of ten years commencing on the Listing Date except in respect of any non-vested Award
+Shares granted hereunder prior to the expiration of the Post-IPO Share Award Scheme, for the purpose of
+giving effect to the vesting of such Award Shares or otherwise as may be required in accordance with the
+provisions of the Post-IPO Share Award Scheme; and
+such date of early termination as determined by the Board, provided that such termination shall not affect
+any subsisting rights of any selected participant under the rules of the Post-IPO Share Award Scheme,
+provided further that for the avoidance of doubt, the change in the subsisting rights of a selected participant
+in this paragraph refers solely to any change in the rights in respect of the Award Shares already granted to a
+selected participant.
+72 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+Outstanding RSUs Granted under the Post-IPO Share Award Scheme
+The table below shows the details of RSUs granted to the Directors and other employees under the Post-IPO Share
+Award Scheme:
+Number of
+Shares
+Number of
+Number of
+Shares
+Grant of Award
+An Award includes all cash income from dividends in respect of those Shares from the date the Award is granted
+(the "Grant Date") to the date the Award vests (the "Vesting Date"). For the avoidance of doubt, the Board at its
+discretion may from time to time determine that any dividends declared and paid by the Company in relation to the
+Award Shares be paid to the selected participant even though the Award Shares have not yet vested.
+An Award gives a selected participant a conditional right, when the Award Shares vest, to obtain the Award Shares
+or, if in the absolute discretion of the Board or its delegate(s), it is not practicable for the selected participant to
+receive the Award in Shares, the cash equivalent from the sale of the Award Shares.
+Awards
+8,176,876
+18,979,135
+51,236,349
+76,617,626
+2018 until September 20, 2022
+2 to 6 years
+October 4, 2018 to
+October 22, 2021
+Other Employees
+commencing from December 20,
+11,250
+0
+Shares
+0
+0
+26,250
+70 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+POST-IPO SHARE AWARD SCHEME
+The Post-IPO Share Award Scheme was approved and adopted by all the then shareholders of the Company
+on August 30, 2018. The Company may appoint a trustee to administer the Post-IPO Share Award Scheme with
+respect to the grant of any award ("Award") by the Board which may vest in the form of Class B Shares ("Award
+Shares") or the actual selling price of the Award Shares in cash in accordance with the Post-IPO Share Award
+Scheme. The following is a summary of certain principal terms of the Post-IPO Share Award Scheme.
+Purpose
+The purpose of the Post-IPO Share Award Scheme is to align the interests of eligible persons with those of the
+Group through ownership of Class B Shares, dividends and other distributions paid on Shares and/or the increase
+in value of the Shares, and to encourage and retain eligible persons to make contributions to the long-term growth
+and profits of the Group.
+Eligible Participants
+Any individual, being an employee, director (including executive Directors, non-executive Directors and independent
+non-executive Directors), officer, consultant, advisor, distributor, contractor, customer, supplier, agent, business
+partner, joint venture business partner or service provider of any member of the Group or any affiliate (an "Eligible
+Person" and collectively "Eligible Persons") who the Board or its delegate(s) considers, in its sole discretion, to
+have contributed or will contribute to the Group is eligible to receive an Award, subject to the applicable laws and
+regulations.
+15,000
+underlying
+RSUs
+underlying
+underlying
+Period (¹)
+Period
+Period
+2021
+Directors
+Orr Gordon Robert
+Halyburton
+November 23, 2018 6.25% to vest in each quarter
+commencing from December 20,
+26,250
+0
+15,000
+Period
+0
+11,250
+Leng Xuesong
+2018 until September 20, 2022
+November 23, 2018 6.25% to vest in each quarter
+26,250
+0
+15,000
+0
+0
+11,250
+commencing from December 20,
+0
+0 100,697,964
+2021
+Date of Grant
+RSUS
+RSUs
+RSUs
+RSUS
+outstanding
+granted
+November 23, 2018 6.25% to vest in each quarter
+cancelled
+lapsed
+outstanding
+Vesting Period
+as of
+during the
+during the
+during the
+as of
+January 1,
+Reporting
+Reporting
+Reporting
+Reporting December 31,
+Name
+during the
+Total
+76,696,376
+51,236,349 19,024,135
+Management and
+consulting services
+Service
+Fees
+Registered Shareholders (1)
+100%
+Onshore Holdcos and their subsidiaries
+(1) Registered Shareholders refer to the registered shareholders of the Onshore Holdcos, namely, (i) Tianjin Antechu
+Technology; (ii) Shanghai Lutuan; (iii) Beijing Kuxun Interaction; (iv) Shanghai Sankuai Technology; (v) Meituan Finance; (vi)
+Beijing Sankuai Cloud Computing; (vii) Beijing Xinmeida; (viii) Chengdu Meigengmei; (ix) Beijing Mobike; (x) Beijing Sankuai
+Technology; and (xi) Shanghai Hantao.
+(i)
+Tianjin Antechu Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(ii) Shanghai Lutuan is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(iii)
+WFOES
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(v)
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vi)
+Beijing Sankuai Cloud Computing is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vii) Beijing Xinmeida is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(viii) Chengdu Meigengmei is owned as to 50% and 50% by Li Huijuan () and Fu Dongping (1), respectively,
+both of whom are current employees of the Company. The arrangement was the result of a commercial decision
+as agreed between Chengdu Meigengmei and its investee companies when Chengdu Meigengmei commenced
+operations;
+(ix)
+(x)
+Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Meituan 2021 Annual Report 79
+(iv) Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+REPORT OF DIRECTORS
+100%
+Our Company
+NON-EXEMPT CONNECTED TRANSACTIONS
+Issue of Class B Shares to Connected Person
+Reference is made to the announcement of the Company dated April 20, 2021, in which the Company announced,
+among other things, that on April 19, 2021 (after trading hours), the Company and Tencent Mobility Limited entered
+into the a subscription agreement, pursuant to which Tencent Mobility Limited has agreed to subscribe for and the
+Company has agreed to allot and issue 11,352,600 new Class B Shares (the "Subscription Shares"), representing
+in aggregate approximately 0.2% of the then issued share capital of the Company, at HK$273.80 for each Class B
+Share. The aggregate market value of the Subscription Shares is approximately HK$3.1 billion. The Subscription
+Shares would be issued under a specific mandate to be approved by the Independent Shareholders at the annual
+general meeting of the Company of year 2021.
+Meituan 2021 Annual Report 77
+REPORT OF DIRECTORS
+Tencent Mobility Limited is a subsidiary of Tencent, which is a substantial shareholder of the Company and hence
+a connected person of the Company under the Listing Rules. Accordingly, the Tencent Subscription constitutes a
+connected transaction of the Company and is subject to the announcement, circular, Independent Shareholders'
+approval and reporting requirements under Chapter 14A of the Listing Rules. Mr. Lau Chi Ping Martin has or
+is deemed to have a material interest in the Tencent Subscription Agreement or the respective transaction
+contemplated thereunder and has abstained from voting on the resolutions of the Board approving the same.
+The Tencent Subscription and the specific mandate were approved by independent Shareholders at the annual
+general meeting of the Company on June 23, 2021 and the Tencent Subscription completed on July 13, 2021.
+Annual Review by the Independent Non-executive Directors and the Auditor
+The independent non-executive Directors have reviewed the continuing connected transactions outlined above, and
+confirmed that such continuing connected transactions had been entered into:
+(a) in the ordinary and usual course of business of the Group;
+Notes:
+(b)
+(၁)
+in accordance with the relevant agreements governing them on terms that were fair and reasonable and in the
+interests of the Company and the Shareholders as a whole.
+The auditor of the Company was engaged to report on the Group's continuing connected transactions in
+accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) "Assurance Engagements
+Other Than Audits or Reviews of Historical Financial Information" and with reference to Practice Note 740 (Revised)
+"Auditor's Letter on Continuing Connected Transactions under the Hong Kong Listing Rules" issued by the
+Hong Kong Institute of Certified Public Accountants. The auditor of the Company has issued its unqualified letter
+containing its findings and conclusions in respect of the continuing connected transactions disclosed by the Group
+in this annual report in accordance with Rule 14A.56 of the Listing Rules.
+Certain connected party transactions mentioned in Note 37 to the consolidated financial statements constituted the
+connected transactions or continuing connected transactions as defined in Chapter 14A of the Listing Rules and
+are in compliance with the disclosure requirements in Chapter 14A of the Listing Rules.
+Save as disclosed in this annual report, during the Reporting Period, the Company had no connected transactions
+or continuing connected transactions which are required to be disclosed in accordance with the provisions under
+Chapter 14A of the Listing Rules in relation to the disclosure of connected transactions and continuing connected
+transactions.
+78 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+CONTRACTUAL ARRANGEMENTS
+The WFOES, the Onshore Holdcos and the Registered Shareholders of such Onshore Holdcos have entered
+into a series of Contractual Arrangements, pursuant to which the Company obtained effective control over, and
+received all the economic benefits generated by, the businesses operated by the Consolidated Affiliated Entities.
+Accordingly, through the Contractual Arrangements, the Company's Consolidated Affiliated Entities' results of
+operations, assets and liabilities, and cash flows are consolidated into the Company's financial statements.
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the Contractual Arrangements:
+on normal commercial terms or better; and
+2018 until September 20, 2022
+Beijing Sankuai Technology is owned by Wang Xing as to 50.97% and Mu Rongjun as to 49.03%; and
+Shanghai Hantao is owned by Wang Xing as to 95% and Mu Rongjun as to 5%.
+Shenzhen Tencent Computer is a subsidiary of Tencent, which is a substantial shareholder of the Company, and
+therefore a connected person of the Company.
+On September 30, 2020, Meituan (for itself and on behalf of other members of the Group) entered into a new
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent)
+("2020 Marketing and Promotion Services Framework Agreement"), pursuant to which Tencent would provide
+marketing and promotional services for the Company on Tencent's relevant platforms (including but not limited
+to joint-membership services, traffic services, standard marketing and promotion services, provision of links
+and downloads to our products, content and services and other similar marketing services). In return for these
+marketing and promotional services, the Company would provide marketing and promotion services for Tencent
+on the Company's platform. The service fees will be determined after arm's length negotiation between the parties
+with reference to the market rates, according to one or more of the following manners including cost-per-time,
+cost-per-click, cost-per-mille, cost-per-sale and cost-per-download. The term of the 2020 Marketing and Promotion
+Services Framework Agreement commenced on January 1, 2021 and expires on December 31, 2023. For further
+details, please refer to the announcement of the Company dated September 30, 2020.
+On September 1, 2018, Meituan (for itself and on behalf of other members of the Group) entered into a framework
+agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent), pursuant to
+which Tencent would provide marketing and promotional services for the Company (including but not limited to
+advertisement solicitation services on Tencent's social media network, provision of links to the Company's platform,
+technical support to enable the Company to give virtual “red packets" to its users via its platform and mobile apps,
+and grant of access to Tencent's platform to provide its services to Tencent's clients). In return for these marketing
+and promotional services, the Company would pay certain promotional service fees in one or more of the following
+manners including cost-per-time, cost-per-click, cost-per-mille, cost-per-sale and cost-per-download. The term
+of the Marketing and Promotion Services Framework Agreement commenced on the Listing Date and expired on
+December 31, 2020.
+Marketing and Promotion Services Framework Agreement
+The Group has entered into the following partially-exempt continuing connected transactions during the Reporting
+Period.
+PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+74 Meituan 2021 Annual Report
+Save as otherwise disclosed, as at the date of this annual report, none of the Directors and their respective
+associate(s) was interested in any business which competes or is likely to compete, either directly or indirectly, with
+the business of the Group during the Reporting Period.
+In addition, investment funds affiliated with Sequoia Capital China are minority shareholders of one or more
+companies which may compete, directly or indirectly, with the Company. For each of these companies, Neil
+Nanpeng Shen (i) is not a director; and (ii) neither he nor Sequoia Capital China participates in its day-to-day
+management.
+The annual cap payable by the Company to Tencent for the year ended December 31, 2021 is RMB1,290 million,
+while the actual transaction amount for the year ended December 31, 2021 is approximately RMB563 million. The
+annual cap payable by Tencent to the Company for the year ended December 31, 2021 is RMB50 million, while the
+actual transaction amount for the year ended December 31, 2021 is approximately RMB2 million.
+Neil Nanpeng Shen, our non-executive Director, is a non-executive director of Trip.com Group Ltd. (NASDAQ
+Ticker: TCOM; HKEx Stock Code: 9961), formerly known as Ctrip.com International, Ltd. (NASDAQ Ticker: CTRP),
+a travel service provider in China. The Company is of the view that such competing interest will not result in any
+material conflict of interest because, in his capacity as our non-executive Director, Neil Nanpeng Shen does not
+participate in the day-to-day management of Trip.com Group Ltd.
+There is no provision for pre-emptive rights under the Articles of Association or the laws of the Cayman Islands that
+would oblige the Company to offer new shares on a pro rata basis to existing Shareholders.
+PRE-EMPTIVE RIGHTS
+During the Reporting Period, neither the Company nor any of its subsidiaries or Consolidated Affiliated Entities has
+purchased, sold or redeemed any of the Company's listed securities.
+PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
+Other than the Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award Scheme, and save as
+disclosed in the section headed “Issuance of Debt Securities”, no equity-linked agreements that will or may result in
+the Company issuing shares, or that require the Company to enter into any agreements that will or may result in the
+Company issuing shares, were entered into by the Company during the Reporting Period or subsisted at the end of
+2021.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 73
+EQUITY-LINKED AGREEMENTS
+0 100,731,714
+8,176,876
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+(xi)
+Meituan 2021 Annual Report 75
+Cloud Services and Technical Services Framework Agreement
+(2)
+(3)
+(4)
+denotes a direct legal and beneficial ownership in the equity interest.
+denotes a contractual relationship.
+“----” denotes the control by WFOES over the Registered Shareholders and the Onshore Holdcos through (a) powers of
+attorney to exercise all shareholders' rights in the Onshore Holdcos, (b) exclusive options to acquire all or part of the equity
+interests in the Onshore Holdcos and (c) equity pledges over the equity interests in the Onshore Holdcos.
+These include certain companies which do not currently carry out any business operations but are intended to carry out
+businesses which are subject to foreign investment restrictions in accordance with the Special Administrative Measures for
+Entry of Foreign Investment (Negative List) (2021 Version). For further details of the subsidiaries of the Onshore Holdcos,
+see the section headed "History, Reorganization and Corporate Structure - Corporate Structure" of the Prospectus.
+A brief description of the specific agreements that comprises the Contractual Arrangements entered into by each of
+the WFOES, the Onshore Holdcos and relevant Registered Shareholders is set out as follows:
+Exclusive Business Cooperation Agreements
+Under the exclusive business cooperation agreements entered into between each Onshore Holdco (other than
+Shanghai Hantao and Beijing Sankuai Technology) and the relevant WFOE on August 21, 2018, the exclusive
+business cooperation agreement entered into by and between Shanghai Hantao and the relevant WFOE on
+November 13, 2018 and the exclusive business cooperation agreement entered into by and between Beijing
+Sankuai Technology and the relevant WFOE on November 30, 2020 (collectively, the "Exclusive Business
+Cooperation Agreements"), pursuant to which, in exchange for a monthly service fee, the Onshore Holdcos agreed
+to engage the WFOES as each of their exclusive provider of technical support, consultation and other services,
+including the use of any relevant software legally owned by the WFOEs; development, maintenance and updating
+of software in respect of the Onshore Holdcos' business; design, installation, daily management, maintenance
+and updating of network systems, hardware and database design; providing technical support and staff training
+services to relevant employers of the Onshore Holdcos; providing assistance in consultancy, collection and
+research of technology and market information (excluding market research business that wholly foreign-owned
+enterprises are prohibited from conducting under the PRC laws); providing business management consultation;
+providing marketing and promotional services; providing customer order management and customer services;
+transfer, leasing and disposal of equipment or properties; and other relevant services requested by the Onshore
+Holdcos from time to time to the extent permitted under the PRC laws.
+REPORT OF DIRECTORS
+Since the highest of the applicable percentage ratios of the annual caps under the 2020 Payment Services
+Framework Agreement calculated under Chapter 14A of the Listing Rules will be 0.1% or more but less than
+5%, the transactions contemplated under the 2020 Payment Services Framework Agreement will be exempt
+from the independent shareholders' approval requirements, but are subject to the announcement requirements
+under Chapter 14A of the Listing Rules, and will constitute partially-exempt continuing connected transactions
+of the Company for the financial years ended December 31, 2021, December 31, 2022 and December 31, 2023,
+respectively. For further details, please refer to the announcement of the Company dated September 30, 2020.
+REPORT OF DIRECTORS
+76 Meituan 2021 Annual Report
+On September 1, 2018, Meituan (for itself and on behalf of other members of the Group) entered into a framework
+agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent) ("2018
+Payment Services Framework Agreement”), pursuant to which Tencent agreed to provide the Company with
+payment services in order to enable its consumers to make online payments for the Company's service offerings
+through Tencent payment channels on both mobile devices and personal computers or directly on the Tencent
+payment interface embedded on its mobile apps and websites. The Company shall in return pay payment service
+commissions to Tencent. The precise scope of service, commission rate, the applicable payment channel and other
+details of the arrangement shall be agreed between the relevant parties. The payment service commissions will be
+determined after arm's length negotiation between the parties with reference to the market rates. The commission
+rate and calculation method shall be agreed between the parties separately. The term of the Payment Services
+Framework Agreement commenced on the Listing Date and expired on December 31, 2020.
+Payment Services Framework Agreement
+The Group has entered into the following non-exempt continuing connected transactions during the Reporting
+Period.
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+The annual cap for the year ended December 31, 2021 is RMB2,620 million, while the actual transaction amount for
+the year ended December 31, 2021 is approximately RMB2,306 million.
+The annual cap payable by the Company to Tencent for the year ended December 31, 2021 is RMB340 million,
+while the actual transaction amount for the year ended December 31, 2021 is approximately RMB235 million. The
+annual cap payable by Tencent to the Company for the year ended December 31, 2021 is RMB50 million, while the
+actual transaction amount for the year ended December 31, 2021 is nil.
+On September 30, 2020, Meituan (for itself and on behalf of other members of the Group) entered into a new
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent) ("2020
+Technical Services Cooperation Framework Agreement"), on terms substantially the same as the 2018 Cloud
+Services and Technical Services Framework Agreement. The term of the 2020 Technical Services Cooperation
+Framework Agreement commenced on January 1, 2021 and expires on December 31, 2023. For further details,
+please refer to the announcement of the Company dated September 30, 2020.
+On September 1, 2018, Meituan (for itself and on behalf of other members of the Group) entered into a framework
+agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent) ("2018 Cloud
+Services and Technical Services Framework Agreement"), pursuant to which Tencent agreed to provide cloud
+services, cloud storage and cloud services-related technical support to the Group for service fees. The precise
+scope of service, service fee calculation, method of payment and other details of the service arrangement will be
+agreed between the relevant parties separately. The service fees will be determined after arm's length negotiation
+between the parties with reference to the market rates. The term of the Cloud Services and Technical Services
+Framework Agreement commenced on the Listing Date and expired on December 31, 2020.
+On September 30, 2020, Meituan (for itself and on behalf of other members of the Group) entered into a new
+framework agreement with Shenzhen Tencent Computer (for itself and on behalf of other members of Tencent)
+("2020 Payment Services Framework Agreement"), on terms substantially the same as the 2018 Payment Services
+Framework Agreement. The term of the 2020 Payment Services Framework Agreement commenced on January 1,
+2021 and expires on December 31, 2023.
+Shum Heung
+Yeung Harry
+REPORT OF DIRECTORS
+The Company has also adopted its own code of conduct regarding employees' securities transactions on terms
+no less exacting than the standards set out in the Model Code for the compliance by its relevant employees who
+are likely to be in possession of unpublished inside information of the Company in respect of their dealings in the
+Company's securities.
+Since the FIL remains relatively new, uncertainties exist with respect to the interpretation and implementation
+of the FIL and how it may impact the viability of the Company's current corporate structure, corporate
+governance and business operations.
+The Company's contractual arrangements may not be as effective in providing operational control as direct
+ownership, and its VIE shareholders may fail to perform their obligations under its contractual arrangements.
+84 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+.
+•
+The Company may lose the ability to use, or otherwise benefit from, the licences, approvals and assets held
+by its VIES, which could render it unable to conduct some or all of its business operations and constrain its
+growth.
+The Contractual Arrangements with the Company's VIES may be subject to scrutiny by the tax authorities in
+China. Any adjustment of related party transaction pricing could lead to additional taxes, and therefore could
+substantially reduce its consolidated profit and the value of your investment.
+The equity holders, directors and executive officers of the VIES may have potential conflicts of interest with
+the Company.
+The Company conducts its business operations in China through its VIES by way of Contractual
+Arrangements, but certain terms of the Contractual Arrangements may not be enforceable under PRC laws.
+If the Company exercises the option to acquire equity ownership of its VIES, the ownership transfer may
+subject us to certain limitations and substantial costs.
+The Group has adopted measures to ensure the effective operation of the Group's businesses with the
+implementation of the Contractual Arrangements and its compliance with the Contractual Arrangements, including:
+If the PRC government finds that the agreements that establish the structure for operating the Company's
+business do not comply with PRC laws and regulations, or if these regulations or their interpretations change
+in the future, the Company could be subject to severe penalties or be forced to relinquish its interests in those
+operations.
+(i)
+(iii)
+(iv)
+major issues arising from the implementation and compliance with the Contractual Arrangements or any
+regulatory enquiries from government authorities will be submitted to the Board, if necessary, for review and
+discussion on an occurrence basis;
+the Board will review the overall performance of and compliance with the Contractual Arrangements at least
+once a year;
+the Company will disclose the overall performance and compliance with the Contractual Arrangements in its
+annual reports; and
+the Company will engage external legal advisers or other professional advisers, if necessary, to assist the
+Board to review the implementation of the Contractual Arrangements, review the legal compliance of WFOE
+and its Consolidated Affiliated Entities to deal with specific issues or matters arising from the Contractual
+Arrangements.
+Meituan 2021 Annual Report 85
+REPORT OF DIRECTORS
+Listing Rules Implications and Waivers from the Stock Exchange
+For the purposes of Chapter 14A of the Listing Rules, and in particular the definition of "connected person", the
+Consolidated Affiliated Entities will be treated as the Company's wholly owned subsidiaries, and their directors,
+chief executives or substantial shareholders (as defined in the Listing Rules) and their respective associates will be
+treated as the Company's "connected persons" as applicable under the Listing Rules (excluding for this purpose,
+the Consolidated Affiliated Entities), and transactions between these connected persons and our Group (including
+for this purpose, the Consolidated Affiliated Entities), other than those under the Contractual Arrangements, will be
+subject to requirements under Chapter 14A of the Listing Rules.
+The transactions contemplated under the Contractual Arrangements constitute continuing connected transactions
+of the Company.
+In relation to the Contractual Arrangements, the Stock Exchange has granted a waiver from strict compliance with
+(i) the announcement, circular and independent shareholders' approval requirements under Chapter 14A of the
+Listing Rules in respect of the transactions contemplated under the Contractual Arrangements pursuant to Rule
+14A.105 of the Listing Rules, (ii) the requirement of setting an annual cap for the transactions under the Contractual
+Arrangements under Rule 14A.53 of the Listing Rules and (iii) the requirement of limiting the term of the Contractual
+Arrangements to three years or less under Rule 14A.52 of the Listing Rules, for so long as the Shares are listed on
+the Stock Exchange subject however to the following conditions:
+(ii)
+(a)
+•
+Risks Relating to the Contractual Arrangements
+Under the Exclusive Business Cooperation Agreements, the service fee shall consist of 100% of the total
+consolidated profit of the Onshore Holdcos, after the deduction of any accumulated deficit of the Consolidated
+Affiliated Entities in respect of the preceding financial year(s), operating costs, expenses, taxes and other statutory
+contributions and subject to any necessary adjustment by the WFOES of the scope and amount of service fees
+according to the PRC tax law and tax practices.
+Exclusive Option Agreements
+Under the exclusive option agreements entered into among each Onshore Holdco (other than Shanghai Hantao,
+Beijing Sankuai Cloud Computing and Beijing Sankuai Technology), relevant WFOE and the relevant Registered
+Shareholders on August 21, 2018, the exclusive option agreement entered into among Shanghai Hantao, relevant
+WFOE and the relevant Registered Shareholders on November 13, 2018, the exclusive option agreement entered
+into among Beijing Sankuai Cloud Computing, relevant WFOE and the relevant Registered Shareholders on
+December 1, 2019 and the exclusive option agreement entered into among Beijing Sankuai Technology, relevant
+WFOE and the relevant Registered Shareholders on November 30, 2020 (collectively, the "Exclusive Option
+Agreements"), the WFOES have the rights to require the Registered Shareholders to transfer any or all their equity
+interests in the Onshore Holdcos to the WFOES and/or a third party designated by it, in whole or in part at any time
+and from time to time, for considerations equivalent to the respectively outstanding loans owed to the Registered
+Shareholders (or part of the loan amounts in proportion to the equity interests being transferred) or, if applicable,
+for a nominal price, unless the relevant government authorities or the PRC laws request that another amount be
+used as the purchase price, in which case the purchase price shall be the lowest amount under such request.
+The Exclusive Option Agreements shall remain effective unless terminated in the event that the entire equity
+interests held by the Registered Shareholders in the Onshore Holdcos have been transferred to the WFOES or their
+appointee(s).
+Equity Pledge Agreements
+Under the equity pledge agreements entered into among each Onshore Holdco (other than Shanghai Hantao,
+Beijing Sankuai Cloud Computing and Beijing Sankuai Technology), the relevant WFOE and the relevant Registered
+Shareholders on August 21, 2018, the equity pledge agreement entered into among Shanghai Hantao, relevant
+WFOE and the relevant Registered Shareholders on November 13, 2018, the equity pledge agreement entered into
+among Beijing Sankuai Cloud Computing, relevant WFOE and the relevant Registered Shareholders on December
+1, 2019 and the equity pledge agreement entered into among Beijing Sankuai Technology, relevant WFOE and
+the relevant Registered Shareholders on November 30, 2020 (collectively, the "Equity Pledge Agreements"),
+the Registered Shareholders agreed to pledge all their respective equity interests in the Onshore Holdcos that
+they own, including any interest or dividend paid for the shares, to the WFOEs as a security interest to guarantee
+the performance of contractual obligations and the payment of outstanding debts. The pledge in respect of the
+Onshore Holdcos takes effect upon the completion of registration with the relevant administration for industry and
+commerce and shall remain valid until after all the contractual obligations of the Registered Shareholders and the
+Onshore Holdcos under the relevant Contractual Arrangements have been fully performed and all the outstanding
+debts of the Registered Shareholders and the Onshore Holdcos under the relevant Contractual Arrangements have
+been fully paid.
+Meituan 2021 Annual Report 81
+REPORT OF DIRECTORS
+Powers of Attorney
+Pursuant to the powers of attorney executed by the Registered Shareholders in connection with their rights in the
+Onshore Holdcos (other than Shanghai Hantao, Beijing Sankuai Cloud Computing and Beijing Sankuai Technology)
+on August 21, 2018, the powers of attorney executed by the Registered Shareholders in connection with their rights
+in Shanghai Hantao on November 13, 2018, the powers of attorney executed by the Registered Shareholders in
+connection with their rights in Beijing Sankuai Cloud Computing on December 1, 2019 and the powers of attorney
+executed by the relevant Registered Shareholders in connection with their rights in Beijing Sankuai Technology
+on November 30, 2020 (collectively, the "Powers of Attorney"), the relevant Registered Shareholders irrevocably
+appointed the WFOEs and their designated persons (including but not limited to Directors and their successors
+and liquidators replacing the Directors but excluding those who are non-independent or may give rise to conflicts
+of interest) as their attorneys-in-fact to exercise on their behalf, and agreed and undertook not to exercise without
+such attorneys-in-fact's prior written consent, any and all right that they have in respect of their equity interests in
+the Onshore Holdcos. The Powers of Attorney shall remain effective for so long as each Registered Shareholder
+holds equity interest in the Onshore Holdcos.
+Loan Agreements
+Pursuant to the loan agreements entered into between the relevant WFOES (other than in the case of Beijing
+Mobike, Shanghai Hantao, Beijing Sankuai Cloud Computing, Beijing Sankuai Technology and Chengdu
+Meigengmei) and the Registered Shareholders on August 21, 2018, and the loan agreements entered into between
+Shanghai Hanhai, being the WFOE, and the Registered Shareholders of Shanghai Hantao on November 13,
+2018, and the loan agreements entered into between Sankuai Cloud Online, being the WFOE, and the Registered
+Shareholders of Beijing Sankuai Cloud Computing on December 1, 2019, and the loan agreements entered into
+between Tianjin Hanbo, being the WFOE, and the Registered Shareholders of Beijing Sankuai Technology on
+November 30, 2020 (collectively, the "Loan Agreements"), the WFOES agreed to provide loans to the Registered
+Shareholders, to be used exclusively as investment in the relevant Onshore Holdcos. The loans must not be used
+for any other purposes without the relevant lender's prior written consent. The term of each loan commences from
+the date of the agreement and ends on the date the lender exercises its exclusive call option under the relevant
+Exclusive Option Agreement, or when certain defined termination events occur, such as if the lender sends a written
+notice demanding repayment to the borrower, or upon the default of the borrower, whichever is earlier.
+82 Meituan 2021 Annual Report
+These are the certain risks that are associated with the Contractual Arrangements, including:
+REPORT OF DIRECTORS
+On January 1, 2020, the Foreign Investment Law ()(the "FIL") and the Regulations for Implementation
+of the Foreign Investment Law of the People's Republic of China (the "Implementation Regulations") came into
+effect and, replaced the previous laws regulating foreign investment in PRC, namely, the Sino-foreign Equity Joint
+Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested
+Enterprise Law, together with their implementation rules and ancillary regulations. The FIL and its Implementation
+Regulations embody an expected regulatory trend in PRC to rationalize its foreign investment regulatory regime in
+line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both
+foreign and domestic investments.
+The FIL does not explicitly stipulate the contractual arrangements as a form of foreign investment. The FIL does
+not mention concepts including "de facto control" and "controlling through contractual arrangements" nor does it
+specify the regulation on controlling through contractual arrangements. Furthermore, the FIL does not specifically
+stipulate rules on the Relevant Businesses. Instead, the FIL stipulates that "foreign investors invest in PRC through
+any other methods under laws, administrative regulations, or provisions prescribed by the State Council", which
+leaves leeway for future laws, administrative regulations or provisions promulgated by the Stale Council to provide
+for contractual arrangements as a method of foreign investment. On December 26, 2019, the Supreme People's
+Court issued the Interpretations on Certain Issues Regarding the Applicable of Foreign Investment Law ("FIL
+Interpretations"), which came into effect on January 1, 2020. In accordance with the FIL Interpretations, where
+a party concerned claims an investment agreement to be invalid on the basis that it is for an investment in the
+prohibited or restricted industries under the negative list and violates the restrictions set out therein, the courts
+should support such claim. In addition, the FIL does not specify what actions shall be taken with respect to the
+existing companies with a VIE structure, whether or not these companies are controlled by PRC entities and/or
+citizens.
+Therefore, there are possibilities that future laws, administrative regulations or provisions of the State Council may
+stipulate contractual arrangements as a way of foreign investment, and then whether our Contractual Arrangements
+will be recognized as foreign investment, whether our Contractual Arrangements will be deemed to be in violation of
+the foreign investment access requirements and how our Contractual Arrangements will be handled are uncertain.
+Save as disclosed above, there were no other new contractual arrangements entered into, renewed and/or
+reproduced between the Group and the Onshore Holdcos and/or Consolidated Affiliated Entities during the
+Reporting Period. There was no material change in the Contractual Arrangements and/or the circumstances under
+which they were adopted during the Reporting Period.
+During the Reporting Period, none of the Contractual Arrangements had been unwound on the basis that none of
+the restrictions that led to the adoption of the Contractual Arrangements had been removed. As of December 31,
+2021, the Company had not encountered interference or encumbrance from any PRC governing bodies in operating
+its businesses through its Consolidated Affiliated Entities under the Contractual Arrangements.
+The revenue of the Onshore Holdcos and their respective subsidiaries amounted to RMB7.5 billion for the year
+ended December 31, 2021, representing approximately 4.2% of the total revenue for the year of the Group. The
+total assets of the Onshore Holdcos and their respective subsidiaries amounted to RMB31.0 billion as of December
+31, 2021, representing approximately 12.9% of the total assets of the Group.
+Meituan 2021 Annual Report 83
+REPORT OF DIRECTORS
+Reasons for Adopting the Contractual Arrangements
+Our Consolidated Affiliated Entities conduct internet information platform services, cloud storage service, other
+value-added telecommunications service businesses, online culture business and radio and television program
+services, which are subject to foreign investment restrictions in accordance with the Special Administrative
+Measure for Entity of Foreign Investment (Negative List) (2021 Version). After consultation with the Company's PRC
+Legal Advisor, Han Kun Law Offices, the Company determined that it was not viable for it to hold its Consolidated
+Affiliated Entities directly through equity ownership. Instead, we decided that, in line with common practice in
+industries in the PRC subject to foreign investment restrictions, we would gain effective control over, and receive
+all the economic benefits generated by the businesses currently operated by our Consolidated Affiliated Entities
+through the Contractual Arrangements between the WFOES, on the one hand, and our Consolidated Affiliated
+Entities and the Registered Shareholders, on the other hand.
+The Directors (including independent non-executive Directors) are of the view that the continuing connected
+transactions set out above have been entered into in the Company's ordinary and usual course of business on
+normal commercial terms or better which are fair and reasonable and in the interests of the Company and the
+Shareholders as a whole.
+Accordingly, notwithstanding that the transactions contemplated under the Contractual Arrangements technically
+constitute continuing connected transactions under Chapter 14A of the Listing Rules, the Directors consider that it
+would be unduly burdensome and impracticable and would add unnecessary administrative costs to the Company,
+for all the transactions contemplated under the Contractual Arrangements to be subject to strict compliance with
+the requirements set out under Chapter 14A of the Listing Rules, including, among other things, the announcement
+and approval of independent Shareholders.
+The Foreign Investment Law
+80 Meituan 2021 Annual Report
+no change without independent non-executive Directors' approval;
+no change without independent Shareholders' approval;
+The Company is committed to maintaining high standards of corporate governance practices. Information on the
+corporate governance practices adopted by the Company is set out in the Corporate Governance Report of this
+annual report.
+SUFFICIENCY OF PUBLIC FLOAT
+Based on information publicly available to the Company and to the best knowledge of the Directors, at least 25%
+of the Company's total issued shares, the prescribed minimum percentage of public float approved by the Stock
+Exchange and permitted under the Listing Rules, was held by the public at all times during the Reporting Period
+and as of the date of this annual report.
+88 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+CLOSURE OF THE REGISTER OF MEMBERS
+The Company will hold the AGM on May 18, 2022. The register of members of the Company will be closed from
+May 13, 2022 to May 18, 2022, both days inclusive, in order to determine the identity of the Shareholders who are
+entitled to attend the AGM, during which period no share transfers will be registered. To be eligible to attend the
+AGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged for
+registration with the Company's share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited
+(for both holders of Class A Shares and holders of Class B Shares), at Shops 1712-1716, 17th Floor, Hopewell
+Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:30 p.m. on May 12, 2022.
+PROFESSIONAL TAX ADVICE RECOMMENDED
+If the shareholders are unsure about the taxation implications of purchasing, holdings, disposing of, dealing in, or
+the exercise of any rights (including entitlements to any relief of taxation) in relation to, the Shares, they are advised
+to consult an expert.
+AUDITOR
+PricewaterhouseCoopers was appointed as the Auditor during the Reporting Period. The accompanying financial
+statements prepared in accordance with IFRSS have been audited by PricewaterhouseCoopers.
+PricewaterhouseCoopers shall retire at the forthcoming AGM and, being eligible, will offer itself for re-appointment.
+A resolution for the re-appointment of PricewaterhouseCoopers as Auditor will be proposed at the AGM.
+CORPORATE GOVERNANCE
+On behalf of the Board
+Chairman
+Hong Kong, March 25, 2022
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 89
+CORPORATE GOVERNANCE REPORT
+The Board is pleased to present the corporate governance report of the Company for the Reporting Period.
+CORPORATE GOVERNANCE PRACTICES
+The Board is committed to ensuring the Company adhere to a high standard of corporate governance.
+The Board believes that good corporate governance standards are essential in providing a framework for the
+Company to safeguard the interests of shareholders, enhance corporate value, formulate its business strategies
+and policies, and enhance its transparency and accountability.
+The Company has adopted and applied the principles as set out in the CG Code. The Board is of the view that
+during the Reporting Period, the Company has complied with all the applicable code provisions as set out in the
+CG Code, except for code provision A.2.1 (code provision C.2.1 of the New CG Code) described in the paragraph
+headed "Board of Directors - Chairman and Chief Executive Officer".
+MODEL CODE FOR SECURITIES TRANSACTIONS
+The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its own code of
+conduct regarding Directors' securities transactions. Having made specific enquiries of all Directors, each of the
+Directors has confirmed that he has complied with the required standards as set out in the Model Code for the
+Reporting Period.
+Wang Xing
+(b)
+The Audit Committee, together with the Auditor, reviewed the accounting principles and policies adopted by the
+Group and the consolidated financial statements during the Reporting Period.
+There were no important events affecting the Company and its subsidiaries which occurred after December 31,
+2021 and up to the date of this annual report.
+(c)
+(d)
+(e)
+the Contractual Arrangements shall continue to enable the Group to receive the economic benefits derived by
+the Consolidated Affiliated Entities;
+the Contractual Arrangements may be renewed and/or reproduced (i) upon expiry or (ii) in relation to any
+existing, newly established or acquired wholly foreign-owned enterprise or operating company (including
+a branch company), engaging in the same business as that of our Group, without obtaining Shareholders'
+approval, on substantially the same terms and conditions as the Contractual Arrangements; and
+the Group will disclose details relating to the Contractual Arrangements on an ongoing basis.
+86 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+Annual Review by the Independent Non-executive Directors and the Auditor
+The independent non-executive Directors have reviewed the Contractual Arrangements outlined above, and
+confirmed that:
+(b)
+no dividends or other distributions had been made by the Company's Consolidated Affiliated Entities to the
+holders of its equity interests which were not otherwise subsequently assigned or transferred to the Group;
+and
+AUDIT COMMITTEE
+(c)
+The Auditor has carried out review procedures in accordance with Hong Kong Standard on Assurance
+Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial
+Information" and with reference to Practice Note 740 (Revised) “Auditor's Letter on Continuing Connected
+Transactions under the Hong Kong Listing Rules" issued by the Hong Kong Institute of Certified Public Accountants
+annually on the transactions carried out pursuant to the Contractual Arrangements. The Auditor has confirmed in
+a letter to the Board that the transactions carried out pursuant to the Contractual Arrangements during the year
+ended December 31, 2021 had received the approval of the Board, had been entered into in accordance with the
+relevant provisions of the Contractual Arrangements and that no dividends or other distributions had been made
+by the Company's Consolidated Affiliated Entities to the holders of its equity interests which were not otherwise
+subsequently assigned or transferred to the Group.
+DONATIONS
+During the Reporting Period, the charitable and other donations made by the Group amounted to approximately
+RMB139.7 million.
+LEGAL PROCEEDINGS AND COMPLIANCE
+From time to time the Company may become involved in legal proceedings or be subject to claims arising in the
+ordinary course of its business.
+The Company is not presently a party to any legal proceedings that, if determined adversely to the Company,
+would individually or taken together have a material adverse effect on its business, results of operations, financial
+condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of
+defense and settlement costs, diversion of management resources and other factors.
+As far as the Board is aware, the Group has complied with the relevant laws and regulations that have a significant
+impact on the Group in all material respects.
+PERMITTED INDEMNITY PROVISION
+Meituan 2021 Annual Report 87
+REPORT OF DIRECTORS
+Under the Articles of Association, every Director or other officers of the Company acting in relation to any of the
+affairs of the Company shall be entitled to be indemnified against all actions, costs, charges, losses, damages and
+expenses which he may incur or sustain in or about the execution of his duties in his office. The Company has
+arranged appropriate insurance coverage in respect of legal action against its directors and officers.
+IMPORTANT EVENTS AFTER THE REPORTING PERIOD
+any new contracts entered into, renewed and/or reproduced between the Group and the Consolidated
+Affiliated Entities during the Reporting Period are fair and reasonable, or advantageous to the Shareholders,
+so far as the Group is concerned and in the interest of the Shareholders as a whole.
+(a) the transactions carried out during the Reporting Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;