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+AUDITOR
+No. 168 Xizhimenwai Street
+Haidian District
+Beijing
+China
+STOCK CODE
+3690
+COMPANY'S WEBSITE
+about.meituan.com
+2018 Annual Report
+3
+CORPORATE INFORMATION
+WEIGHTED VOTING RIGHTS
+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.
+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.
+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.
+4
+Meituan Dianping
+CORPORATE INFORMATION
+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:
+(i)
+(ii)
+(iii)
+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;
+1/F, Tengda Building
+Shouti Sub-branch
+China Merchants Bank, Beijing Branch,
+PRINCIPAL BANKER
+Oriental Plaza
+No. 1 East Chang An Ave
+Beijing 100738, the PRC
+As to Cayman Islands law:
+Maples and Calder (Hong Kong) LLP
+53rd Floor, The Center
+99 Queen's Road Central
+Hong Kong
+COMPLIANCE ADVISOR
+Guotai Junan Capital Limited
+27/F, Low Block
+Grand Millennium Plaza
+181 Queen's Road Central
+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;
+Hong Kong
+Computershare Hong Kong Investor Services Limited
+Shops 1712-1716, 17th Floor
+Hopewell Center
+183 Queen's Road East
+Wanchai
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+Maples Fund Services (Cayman) Limited
+PO Box 1093, Boundary Hall
+Cricket Square
+Grand Cayman KY1-1102
+Cayman Islands
+HONG KONG SHARE REGISTRAR
+9/F, Office Tower C1
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+2018 Annual Report
+(11,774,342)
+(8,637,836) (15,487,131)
+(123,281,091)
+CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+ASSETS
+Non-current assets
+Current assets
+2015
+As of December 31,
+2016
+(RMB in thousands)
+2017
+2018
+21,015,464
+28,082,028
+29,196,028
+47,512,119
+21,874,383
+23,634,532
+54,438,135
+73,149,392
+42,889,847
+51,716,560
+83,634,163
+120,661,511
+(5,789,900) (18,916,617) (115,477,171)
+(8,642,934) (15,558,395) (123,296,397)
+(11,774,342)
+(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)
+5
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
+Revenues
+Gross profit
+Loss before income tax
+Loss for the year
+Loss for the year attributable to equity holders
+of the Company
+Total comprehensive loss for the year
+Total comprehensive loss for the year attributable to
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+equity holders of the Company
+2015
+2016
+2017
+2018
+(RMB in thousands)
+4,018,959
+12,988,077
+33,927,987
+65,227,278
+2,779,455
+(9,242,729)
+(10,519,338)
+Year ended December 31,
+Total assets
+Beijing office
+As to the PRC law:
+Consolidated Statement of Comprehensive Loss
+124
+Consolidated Statement of Financial Position
+125
+Consolidated Statement of Changes in Equity
+127
+Consolidated Statement of Cash Flows
+129
+Notes to the Consolidated Financial Statements
+131
+Definitions
+Glossary
+253
+258
+CORPORATE INFORMATION
+BOARD OF DIRECTORS
+Executive Directors
+Mr. Wang Xing (E) (Chairman of the Board)
+Mr. Mu Rongjun ()
+Mr. Wang Huiwen (X)
+Non-executive Directors
+Mr. Lau Chi Ping Martin ()
+Mr. Neil Nanpeng Shen ()
+123
+Consolidated Income Statement
+117
+Independent Auditor's Report
+Meituan Dianping
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+Stock Code: 3690
+2018
+Annual Report
+...............
+20°
+CONTENTS
+Corporate Information
+Financial Summary and Operation Highlights
+Chairman's Statement
+Independent Non-executive Directors
+2
+6
+Management Discussion and Analysis
+14
+Directors and Senior Management
+33
+Report of Directors
+39
+Corporate Governance Report
+75
+Environmental, Social and Governance Report
+96
+6
+Han Kun Law Offices
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+AUDIT COMMITTEE
+Block B&C, Hengjiweiye Building
+No.4 Wang Jing East Road
+Chaoyang District
+Beijing 100102
+China
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+Level 54, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+2
+Meituan Dianping
+CORPORATE INFORMATION
+LEGAL ADVISORS
+As to Hong Kong law (in alphabetical order):
+Davis Polk & Wardwell
+18/F, The Hong Kong Club Building
+3A Chater Road
+Hong Kong
+Skadden, Arps, Slate, Meagher & Flom
+42/F, Edinburgh Tower
+The Landmark
+15 Queen's Road Central
+Hong Kong
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+Cayman Islands
+Grand Cayman, KY1-1104
+PO Box 309, Ugland House
+Mr. Orr Gordon Robert Halyburton (Chairman)
+Mr. Leng Xuesong (A)
+Dr. Shum Heung Yeung Harry (Á¥)
+REMUNERATION COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Mu Rongjun ()
+NOMINATION COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Wang Huiwen (X)
+CORPORATE GOVERNANCE COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Mr. Orr Gordon Robert Halyburton
+Dr. Shum Heung Yeung Harry (¥)
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Wang Yixiang ()
+Ms. Lau Yee Wa ()
+AUTHORIZED REPRESENTATIVES
+Mr. Wang Xing()
+Mr. Wang Huiwen (X)
+(40,559,116)
+PricewaterhouseCoopers
+Certified Public Accountants
+22/F, Prince's Building
+Central
+Hong Kong
+REGISTERED OFFICE
+JOINT COMPANY SECRETARIES
+EQUITY
+Equity attributable to equity holders of the Company
+9
+38,143,083
+Revenues
+(RMB in thousands, except for percentages)
+and others
+New initiatives
+In-store,
+hotel & travel
+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
+2,720,830
+415,989
+15,840,361
+11,243,834
+21,031,933
+10,852,810
+December
+Year-over-
+December
+December
+Year Ended
+Three Months Ended
+OPERATING METRICS
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+8
+7
+2018 Annual Report
+(978,985)
+2,043,244
+940,606
+46.0%
+8.1%
+(37.9%)
+89.0%
+13.8%
+Gross margin
+9,579,479
+1,699,419
+(4,258,594)
+14,095,355
+5,268,197
+Gross profit/(loss)
+88.3%
+December
+3,988,258
+Gross profit/(loss)
+Gross margin
+124,135,545
+77,291,911
+60,559,519
+Total liabilities
+31,825,056
+20,517,370
+12,475,947
+10,242,723
+Current liabilities
+2,326,683
+103,618,175
+64,815,964
+50,316,796
+Non-current liabilities
+LIABILITIES
+86,509,772
+(17,669,672) (25,575,351) (40,501,382)
+Total Equity
+5,438
+57,734
+47,035
+Non-controlling interests
+86,504,334
+34,151,739
+Total equity and liabilities
+42,889,847
+51,716,560
+747,771
+3,103,191
+6,624,416
+4,203,043
+4,594,132
+11,006,277
+Revenues
+and others Food delivery
+(RMB in thousands, except for percentages)
+hotel & travel
+Food delivery
+New initiatives
+1,471,721
+December 31, 2018
+In-store,
+hotel & travel
+New initiatives
+December 31, 2017
+In-store,
+Three Months Ended
+Unaudited
+FINANCIAL INFORMATION BY SEGMENT
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Meituan Dianping
+6
+120,661,511
+83,634,163
+and others
+31, 2018
+31, 2017
+(RMB in billions)
+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%
+59.2
+74.4
+56.3%
+4,089.7
+6,393.4
+4.4
+32.1%
+(units)
+(in percentages)
+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.
+Total Gross Transaction Volume (GTV) on our platform grew by 44.3% to RMB515.6 billion in 2018 from
+RMB357.2 billion in 2017.
+In the year ended December 31, 2018:
+35.3%
+OPERATING HIGHLIGHTS
+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:
+CHAIRMAN'S STATEMENT
+26.5%
+18.8
+23.8
+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.
+1,354.0
+1,832.3
+(in percentages)
+82.5%
+7.2
+13.1
+New Initiatives and others
+11.8%
+158.1
+176.8
+11.9%
+39.9
+44.7
+In-store, hotel & travel
+56.0
+65.3%
+282.8
+40.6%
+57.0
+80.2
+Food delivery
+Gross transaction volume:
+Year-over-
+year change
+(in percentages)
+(RMB in billions)
+31, 2017
+31, 2018
+year change
+(in percentages)
+171.1
+美团点评
+28.0
+Total
+(in millions)
+(in percentages)
+(in millions)
+Year-over-
+year change
+31, 2017
+31, 2018
+December
+December
+Year-over-
+year change
+31, 2017
+31, 2018
+99.8%
+December
+Three Months Ended
+December
+Number of Active Merchants
+Number of Transacting Users
+Number of domestic hotel room nights
+Number of food delivery transactions
+44.3%
+357.2
+515.6
+32.5%
+104.1
+138.0
+Year Ended
+......
+(17,669,672) (25,622,386)
+Users
+and Anti-corruption
+Employment, Health and Safety,
+Development and Training, and Labour
+Standards
+Product Responsibility
+Product Responsibility and Anti-
+corruption
+Supply Chain Management and Anti-
+Corruption
+Emissions, Use of Resources,
+The Environment and Natural
+Resources, Employment, Supply
+Chain Management and Product
+Responsibility
+(iii) Materiality Assessment
+Emissions, Use of Resources, The
+Environment and Natural Resources,
+and Community Investment
+Policy consultation, incident reporting,
+information disclosure and participation
+in governmental meetings
+Shareholders' meeting, regular
+announcement and official website
+Communication meetings, social media
+and face-to-face communication
+Customer service hotline, social media
+and information disclosure
+Customer service hotline, meetings and
+merchant assessment
+Supplier assessment and supplier
+conference
+Social media, official website, press
+conference, exchange meeting and
+dedicated customer service
+Main communication channels
+Community interaction, public welfare
+activities, social media and poverty
+alleviation projects
+Community
+Suppliers
+96
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+1.
+PROFILE
+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.
+2.
+Meituan Dianping
+Media and non-
+governmental
+organisations
+(i)
+Main stakeholders
+Main ESG concerns
+Government and regulators Employment, Supply Chain
+Management, Product Responsibility,
+Anti-corruption, and Community
+Investment
+Shareholders and Investors Employment, Product Responsibility
+Employees
+Platform merchants
+The key stakeholders, concerns and communication channels we identified are listed in the table below.
+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.
+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.
+2018 Annual Report
+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.
+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.
+Promote Environmental Protection in the 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.
+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.
+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 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.
+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.
+2018 Annual Report
+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
+99
+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.
+97
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+3.
+ENVIRONMENT
+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.
+(i) Measures for Green Operation
+1. Green office
+Electricity and water are the main resources we consume in the Company's operations.
+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.
+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".
+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.
+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.
+2.
+Green Data Centres
+98
+Meituan Dianping
+We take into account the environmental impact and resource consumption arising from the
+deployment and operation of the data centers.
+96
+95
+ESG STRATEGY
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+CORPORATE GOVERNANCE REPORT
+Effectiveness of Risk Management and Internal Control
+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.
+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.
+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. 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
+92
+Meituan Dianping
+2018 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
+yixiang.wang@dianping.com.
+91
+JOINT COMPANY SECRETARIES
+2018 Annual Report
+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.
+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.
+Crisis Management and Reputation Risk
+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
+Internal Control
+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.
+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 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.
+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 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.
+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.
+CORPORATE GOVERNANCE REPORT
+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.
+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:
+Type of Services
+Amount
+(RMB'000)
+Audit and audit related services
+Non-audit services
+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.
+94
+AUDITOR'S REMUNERATION
+Meituan Dianping
+3,899
+52,669
+CORPORATE GOVERNANCE REPORT
+CHANGE IN CONSTITUTIONAL DOCUMENTS
+The Memorandum and Articles of Association of the Company has been amended and restated with effect from
+September 20, 2018.
+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.
+48,770
+The statement of the Auditors about their reporting responsibilities on the financial statements is set out in the
+section headed "Independent Auditor's Report".
+Total
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+App 14 0.(a)
+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.
+93
+CORPORATE GOVERNANCE REPORT
+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, 2018.
+2018 Annual Report
+Remuneration band (RMB)
+0
+1 - 5,000,000
+>5,000,000
+Number of individual
+2
+4
+5
+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:
+Notes:
+•
+•
+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.
+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.
+The Company's hazardous wastes mainly include waste fluorescent tubes, which are disposed of by qualified
+institutions.
+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.
+Energy and resources consumption
+Meituan Dianping
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Total energy consumption (MWh)
+Total energy consumption per capita (MWh per employee)
+Total energy consumption per floor area (MWh per square meter)
+Running water consumption (tonnes)
+Running water consumption per capita (in tonnes per employee)
+0.08
+100
+Non-hazardous waste per capita (tonnes per employee)
+5.
+Total non-hazardous waste (tonnes)
+12,762.02
+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.
+Environmental Key Performance Indicators
+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)
+0,000001
+1,840.39
+0.59
+0.09
+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.
+7.82
+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.
+Quality of In-Store Dining, Hotel and Travel Services
+(ii)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping
+106
+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.
+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
+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.
+(i)
+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.
+164,846.40
+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 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.
+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
+6.
+Meituan Dianping
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+104
+(iii) Safety of Online Car-hailing
+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.
+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
+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".
+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.
+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)
+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.
+Meituan Dianping
+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.
+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.
+We encrypt user data in network transmissions. For data storage, we use encryption techniques at
+software and hardware levels to protect sensitive user data.
+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.
+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.
+(iv) Data Security and User Privacy
+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.
+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.
+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.
+PRODUCT RESPONSIBILITY
+Rider Protection
+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.
+Compensation and Benefits
+Our food delivery services require a large number of delivery personnel (whom we refer to as "delivery
+riders") to assist in the services.
+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.
+نه
+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 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.
+We objectively and fairly evaluate our employees' performances and help them improve their ability
+through performance management.
+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.
+Work-life Balance
+(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.
+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 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%.
+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 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.
+(iii) Training and development of employees
+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.
+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.
+(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.
+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.
+Sunshine Committee
+Construction of integrity culture
+3.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+4.
+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
+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.
+(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.
+2018 Annual Report (113)
+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 (111)
+Whistle-blowing and inspection mechanism
+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%.
+Scope of report
+Code of Conduct for "Sunny Workplace"
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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 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.
+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.
+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.
+110) Meituan Dianping.
+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.
+Risk management and internal control policy
+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.
+2.
+7.
+8. COMMUNITY INVESTMENT
+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.
+(i) Public welfare platform
+Impairment assessments of goodwill
+•
+Revenue recognition
+.
+Key audit matters identified in our audit are summarised as follows:
+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
+INDEPENDENT AUDITOR'S REPORT
+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.
+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.
+Independence
+Key Audit Matter
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR 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.
+Our opinion
+the notes to the consolidated financial statements, which include a summary of significant accounting
+policies.
+the consolidated statement of cash flows for the year then ended; and
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of comprehensive loss for the year then ended;
+•
+•
+•
+the consolidated income statement for the year then ended;
+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.
+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.
+2018 Annual Report (119)
+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.
+We performed retrospective assessment through
+comparing historical results to the budgeted results, to
+assess the reliability of the management's forecast.
+We assessed the appropriateness of the valuation models,
+with the involvement of our internal valuation experts.
+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 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
+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.
+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, 2018, the net carrying amount of
+goodwill amounted to RMB27.7 billion.
+Refer to Notes 2.9, 2.10, 4.4 and 16 to the consolidated
+financial statements
+Impairment assessments of goodwill
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+118) Meituan Dianping.
+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.
+Our procedures in relation to the revenue recognition
+included:
+How our audit addressed the Key Audit Matter
+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 consolidated statement of financial position as at December 31, 2018;
+2018 Annual Report (117)
+The consolidated financial statements of Meituan Dianping (the “Company”) and its subsidiaries (together, the
+"Group") set out on pages 123 to 252, which comprise:
+Internet + travel
+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.
+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.
+2.
+Internet + ecology
+1.
+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".
+(iii) Poverty alleviation
+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.
+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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2.
+•
+114) Meituan Dianping.
+Nutritious lunch program for preschool children
+1.
+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.
+Public welfare projects
+(ii)
+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.
+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.
+Urban New Youth Program
+2018 Annual Report (115)
+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.
+3.
+What we have audited
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+INDEPENDENT AUDITOR'S REPORT
+OPINION
+(incorporated in the Cayman Islands with limited liability)
+To the shareholders of Meituan Dianping
+116) Meituan Dianping.
+Email: legal.compliance@meituan.com
+Response to the report
+The report was approved by the Board on March 11, 2019.
+Approval
+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.
+9. PREPARATION INSTRUCTIONS
+Unless otherwise specified, the disclosure of this report covers domestic business of the Company, excluding
+the Meituan Bike (formerly Mobike) business.
+Period of report
+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.
+Source of information
+This report is prepared in accordance with the ESG Reporting Guide set out in Appendix 27 to the Listing
+Rules by the Stock Exchange.
+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.
+Basis of report
+For the period from January 1 to December 31, 2018.
+Internet + food consumption
+Share premium
+Share capital
+EQUITY
+83,634,163
+120,661,511
+54,438,135
+Total assets
+Other reserves
+9,338,529
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+26
+(5,741,347)
+(166,039,390)
+25
+73,149,392
+384
+98
+25
+258,284,687
+Accumulated losses
+88,087
+20
+19,408,839
+Assets classified as held for sale
+432,494
+466,340
+23
+88,374
+400,244
+2222222
+466,103
+19
+25,099
+9,064,945
+4,186,391
+41,829,964
+25,838,177
+24
+4,256,120
+4,458,761
+24
+17,043,692
+31
+(50,363,846)
+81,963
+(40,559,116)
+Sub-total
+losses
+RMB'000
+controlling
+Accumulated
+Other
+reserves
+RMB'000
+Share
+premium
+RMB'000
+RMB'000
+capital
+Note
+Share
+Non-
+Attributable to equity holders of the Company
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Issue of shares
+their capacity as owners
+Transaction with owners in
+Total comprehensive loss
+Meituan Dianping
+Mu Rongjun
+Director
+As of January 1, 2018
+Adjustment on adoption of
+IFRS9, net of tax
+As of January 1, 2018
+interests
+Comprehensive loss
+Other comprehensive loss
+Items that may not be classified
+to profit or loss
+Preferred shares fair value change
+due to own credit risk
+Currency translation differences
+Loss for the year
+126
+Total
+RMB'000
+Cash and cash equivalents
+(609,744) 248,944,691
+609,744
+231,736
+36
+Business combinations
+248,944,408
+283
+(15,306) (123,296,397)
+(7,803,920) (115,477,171) (123,281,091)
+218 (7,617,689)
+(186,013)
+(186,013)
+(7,617,907)
+(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)
+RMB'000
+98
+9,338,529
+466,103 (50,363,846) (40,559,116)
+57,734
+(40,501,382)
+RMB'000
+2.1.1
+411,371
+(12,360)
+(12,360)
+98
+9,338,529
+42,372
+(423,731)
+Wang Xing
+Director
+The consolidated financial statements on pages 123 to 252 were approved by the Board on March 11, 2019 and
+were signed on its behalf:
+The notes on pages 131 to 252 are an integral part of these consolidated financial statements.
+103,618,175
+2,326,683
+470,056
+32
+Borrowings
+316,264
+35,759
+Other non-current liabilities
+833,500
+101,418,292
+28
+Convertible redeemable preferred shares
+624,999
+27
+Deferred revenues
+1,050,119
+1,195,869
+18
+57,734
+86,509,772
+(40,501,382)
+2018 Annual Report
+125
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Current liabilities
+LIABILITIES
+Deferred tax liabilities
+As of December 31,
+2018
+Note
+RMB'000
+2017
+RMB'000
+Non-current liabilities
+Trade payables
+Payables to merchants
+Advance from transacting users
+2,114,215
+Deposit from transacting users
+2.14
+3,341,276
+Liabilities directly associated with assets classified as held for sale
+31
+3,102,882
+55,510
+20,517,370
+Total liabilities
+Total equity and liabilities
+34,151,739 124,135,545
+120,661,511
+83,634,163
+31,825,056
+86,504,334
+5,438
+27
+1,800,000
+Other payables and accruals
+Borrowings
+Deferred revenues
+29
+5,340,963
+2,666,799
+162,000
+7,596,388
+3,226,407
+2,290,160
+30
+7,361,630
+3,920,323
+32
+9,363,873
+Restricted cash
+6
+21
+(2,171,408)
+(5,831,692)
+7
+General and administrative expenses
+(3,646,634)
+(7,071,900)
+7
+(10,908,688)
+(15,871,901)
+7
+12,219,504
+15,104,958
+(50,122,320) (21,708,483)
+7
+33,927,987
+65,227,278
+248,944,691
+Research and development expenses
+Selling and marketing expenses
+Fair value changes on investments measured
+Gross profit
+at fair value through profit or loss
+1,836,382
+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)
+(11,085,797)
+Fair value changes of convertible redeemable preferred shares
+Finance costs
+Finance income
+Operating loss
+208,260
+748,356
+9
+Other gains, net
+472,874
+19
+Cost of revenues
+Revenues
+2017
+RMB'000
+The Audit committee are 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.
+INDEPENDENT AUDITOR'S REPORT
+Meituan Dianping
+120
+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
+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.
+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 opinion on the consolidated financial statements does not cover the other information and we do not express
+any form of assurance conclusion thereon.
+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.
+OTHER INFORMATION
+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.
+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
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+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.
+RMB'000
+2018
+Note
+Year ended December 31,
+CONSOLIDATED INCOME STATEMENT
+Meituan Dianping
+122
+Hong Kong, March 11, 2019
+PricewaterhouseCoopers
+Certified Public Accountants
+60,885
+The engagement partner on the audit resulting in this independent auditor's report is Jack Li.
+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.
+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.
+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.
+(19,214)
+(15,138,824)
+(10,418)
+Intangible assets
+915,682
+3,978,815
+15
+Property, plant and equipment
+2017
+RMB'000
+2018
+RMB'000
+Note
+As of December 31,
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Non-current assets
+ASSETS
+Meituan Dianping
+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
+16
+33,876,004
+19,852,974
+Deferred tax assets
+Prepayments, deposits and other assets
+Financial assets at fair value through profit or loss
+Trade receivables
+Inventories
+Current assets
+29,196,028
+47,512,119
+312,340
+866,884
+(15,487,131)
+21
+6,241,972
+19
+Financial assets at fair value through profit or loss
+Prepayments, deposits and other assets
+1,952,175
+12
+Investments accounted for using the equity method
+243,263
+445,041
+18
+5,919,594
+Short-term investments
+(123,281,091)
+Total comprehensive loss for the year attributable to:
+(12.37)
+(42.40)
+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
+Loss for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Loss for the year
+Income tax expenses
+The notes on pages 131 to 252 are an integral part of these consolidated financial statements.
+2018 Annual Report (123)
+124
+CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
+(15,558,395)
+(123,296,397)
+3,429,486
+(7,803,702)
+(186,013)
+28
+3,429,486
+(7,617,689)
+26
+Equity holders of the Company
+RMB'000
+2018
+RMB'000
+Note
+Year ended December 31,
+Total comprehensive loss for the year
+Other comprehensive (loss)/income for the year, net of tax
+Preferred shares fair value change due to own credit risk
+Currency translation differences
+Items that may not be reclassified to profit or loss
+Other comprehensive (loss)/income:
+2017
+231,736
+2,103,403
+Repurchase of ordinary shares
+(40,501,382)
+128
+Meituan Dianping
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+2018
+Note
+RMB'000
+Cash flows from operating activities
+57,734
+Cash used in operations
+Net cash flows used in operating activities
+2017
+RMB'000
+37
+(8,981,189)
+(291,640)
+(198,629)
+(18,560)
+(9,179,818)
+(310,200)
+Income tax paid
+466,103 (50,363,846) (40,559,116)
+9,338,529
+98
+Disposal of a subsidiary
+Transaction with
+| |
+82,829
+82,829
+82,829
+1,363
+1,363
+20,810
+20,810
+67,652
+88,462
+non-controlling interests
+Total transaction with owners in
+their capacity as owners
+5
+770,907
+(220,511)
+550,401
+632,364
+As of December 31, 2017
+Cash flows from investing activities
+Purchase of property, plant and equipment
+(2,210,249)
+(737,680)
+Proceeds from disposal of investments measured at fair value
+2,566,010
+13,185
+Cash inflow/(outflow) arising from disposal of subsidiaries,
+net of cash disposed
+Interest income received
+Dividends received
+Increase in prepayments for investments
+Net cash flows used in investing activities
+11
+231
+(26,362)
+533,068
+346,375
+65,954
+(247,673)
+11,989
+(2,284)
+(23,438,686)
+(15,157,090)
+2018 Annual Report (129)
+231,736
+887,885
+(379,577)
+an associate
+(1,599,549)
+887,906
+Proceeds from disposals of property, plant and equipment
+24,698
+3,731
+Purchase of intangible assets
+(8,251)
+Proceeds from disposals of intangible assets
+3,897
+Payments for business combinations, net of cash acquired
+(7,260,087)
+173
+(320,801)
+Purchase of short-term investments
+(91,205,155)
+(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)
+(785,568)
+Proceeds from disposal of investments accounted for
+using the equity method
+Acquisition of investments measured at fair value
+Share of equity movement in
+(69,712)
+227,036
+47,969
+(32,990)
+14,979
+their capacity as owners
+As of December 31, 2018
+286
+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
+5,438 86,509,772
+2018 Annual Report (127)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+As of January 1, 2017
+Comprehensive loss
+Loss for the year
+Other comprehensive loss
+Items that may not be
+classified to profit or loss
+Currency translation differences
+47,969
+Total comprehensive loss
+Total transaction with owners in
+(4,000)
+25
+227,036
+(811,142)
+(811,144)
+(811,144)
+Share-based compensation expenses
+33
+1,816,453
+1,816,453
+1,816,453
+Exercise of option and RSU vesting
+5
+842,199
+(685,701)
+156,503
+156,503
+Cancellation of ordinary shares
+(29,307)
+(29,307)
+(29,307)
+Dividends
+(4,000)
+Transaction with owners in
+Transaction with non-controlling interests
+Attributable to equity holders of the Company
+3,429,486
+(18,916,617)
+(15,487,131)
+(71,264) (15,558,395)
+12,948
+12,948
+Repurchase of ordinary shares
+25
+33
+(526,738)
+(526,739)
+(526,739)
+33
+746,465
+746,465
+746,465
+Exercise of option and RSU vesting
+6
+their capacity as owners
+Business combinations
+1,297,645
+(1,070,615)
+3,429,486
+3,429,486
+Share-based compensation expenses
+Accumulated
+losses
+RMB'000
+Share
+Note
+3,429,486
+capital
+RMB'000
+Share
+premium
+RMB'000
+Other
+reserves
+RMB'000
+controlling
+Sub-total
+interests
+Total
+Non-
+RMB'000
+(71,264) (18,987,881)
+(18,916,617) (18,916,617)
+(2,742,872) (31,447,229) (25,622,386)
+8,567,622
+47,035 (25,575,351)
+RMB'000
+RMB'000
+93
+2.2.1 Subsidiaries controlled through Contractual Arrangements (Continued)
+138
+•
+.• liabilities incurred to the former owners of the acquired business
+Meituan Dianping
+• 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:
+2.2.2 Business combinations
+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.
+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.
+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
+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.
+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 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,
+2.2.1 Subsidiaries controlled through Contractual Arrangements
+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.
+equity interests issued by the Group
+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.
+2.2 Subsidiaries (Continued)
+• fair value of any asset or liability resulting from a contingent consideration arrangement, and
+2.1.1 Changes in accounting policies (Continued)
+fair value of any pre-existing equity interest in the subsidiary.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2.2 Subsidiaries
+2018 Annual Report (133)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.1
+Basis of preparation (Continued)
+134
+Meituan Dianping
+(a)
+New and amended standards adopted by the Group (Continued)
+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
+•
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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
+curtailment or settlement
+IAS19 - Employee benefits on plan amendment,
+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:
+(b) New standards and amendments not yet adopted by the management of the Group
+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
+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
+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.
+(a)
+January 1, 2019
+January 1, 2019
+on long term interests in associates and joint ventures
+IFRS 17 - Insurance contracts Annual Improvements to
+IFRS Standards 2015-2017 Cycle
+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
+(i)
+Meituan Dianping
+136
+(b) New standards and amendments not yet adopted by the management of the Group
+(Continued)
+2.1.1 Changes in accounting policies (Continued)
+2
+Basis of preparation (Continued)
+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
+2.1
+prepayments, deposits and other assets (excluding tax prepayments and loan
+receivables)
+2
+loan receivables
+(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
+New and amended standards adopted by the Group
+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.
+The Financial Information is presented in Renminbi ("RMB”), unless otherwise stated.
+The Company's shares have been listed on the Main Board of the Stock Exchange since September 20,
+2018 (the "Listing").
+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.
+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.
+1.1 General information
+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
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+24
+132) Meituan Dianping.
+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.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 Group has applied IFRS 9 Financial Instruments for the first time commencing January 1,
+2018.
+(ii)
+12,360
+(ii)
+Increase in provision for loan receivables, net of tax
+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.
+Increase in provision for trade receivables, net of tax
+24
+(51,524)
+(8,227)
+2018
+Year ended December 31,
+Meituan Dianping
+130
+Cash and cash equivalents at the end of the year
+the assets classified as held for sale
+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
+Net cash flows generated from financing activities
+Payment for acquisitions of non-controlling interests
+Dividends paid
+Proceeds from disposals of non-controlling interests
+Note
+Repurchase of ordinary shares
+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
+Proceeds from borrowings,
+CONSOLIDATED STATEMENT OF CASH FLOWS
+(ii)
+Exercise of option and RSU vesting
+RMB'000
+2017
+RMB'000
+2,305,000
+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
+28,516,174
+(9,783)
+(62,043)
+470,000
+(151,000)
+(1,057,000)
+312,000
+2.1
+trade receivables
+Impairment of financial assets (Continued)
+(a)
+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)
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.12 Financial assets
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2018
+2.9.2 Other intangible assets
+2018 Annual Report (145)
+2.12.1Accounting policies applied from January 1, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(i) Classification
+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").
+From January 1, 2018, 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
+those to be measured at amortized cost.
+The classification depends on the entity's business model for managing the financial assets
+and the contractual terms of the cash flows.
+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 Group reclassifies debt investments when and only when its business model for
+managing those assets changes.
+Recognition
+(ii)
+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.
+2.10 Impairment of non-financial assets
+•
+5 years
+2-8 years
+When determing the length of useful life of an intangible asset, management take into account the
+(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.
+144
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+the amount determined in accordance with the expected credit loss model under IFRS 9 Financial
+Instruments, and
+2
+2.9 Intangible assets (Continued)
+2.9.3 Research and development
+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.
+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.
+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.
+2.11 Financial guarantee contracts
+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:
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(iii) Derecognition
+2
+146
+2.12.1Accounting policies applied from January 1, 2018 (Continued)
+(iv) Measurement (Continued)
+148
+Meituan Dianping
+Debt instruments
+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:
+•
+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.
+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.
+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.
+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)
+2.12.1Accounting 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)
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2-5 years
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12 Financial assets (Continued)
+2.12.1Accounting policies applied from January 1, 2018 (Continued)
+(iii) Derecognition (Continued)
+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.
+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:
+the carrying amount of the financial asset transferred, and
+the sum of the consideration received from the transfer and any cumulative gain or loss
+that has been recognized directly in equity.
+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.
+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.
+(iv) Measurement
+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.
+Financial assets with embedded derivatives are considered in their entirety when determining
+whether their cash flows are solely payment of principal and interest.
+-
+years
+15
+5 years
+3-10 years
+•
+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)
+computer equipment (including servers)
+2.7 Foreign currency translation (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+The Group amortizes intangible assets with a limited useful life using the straight-line method over
+the following periods:
+all resulting exchange differences are recognized in other comprehensive income.
+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
+. 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
+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:
+2.7.3 Group companies
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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".
+•
+•
+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)
+furniture and appliances
+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.
+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
+3 years
+5
+• bike and vehicle
+leasehold improvements
+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.
+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.
+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.
+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.
+2.3 Associates
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+trade name
+•
+user generated content
+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.
+•
+online payment license
+•
+technology and licenses
+•
+user list
+•
+supplier relationship
+2 - 25 years
+software and others
+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.
+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
+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.
+2.4 Joint arrangements (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+140
+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.
+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.
+142) Meituan Dianping.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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.
+2018 Annual Report (149)
+prepayments, deposits and other assets (excluding tax prepayment and loan receivables)
+•
+trade receivables
+•
+•
+The Group has three types of financial assets that are subject to IFRS 9's new ECL model (Note 3.1
+(b)):
+loan receivables
+(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)
+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.
+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.
+Trade receivables are amounts due from customers for services performed in the ordinary course of
+business.
+Trade and other receivables are generally due for settlement within 1 year and therefore are all classified
+as current.
+2.16 Trade and other receivables
+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.
+2.15 Inventories
+2.14 Deposit from transacting users
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.13 Offsetting financial instruments
+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.
+As a practical expedient, the Group may measure impairment on the basis of an instrument's
+fair value using an observable market price.
+(iv) Impairment (Continued)
+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.
+2.12.2Accounting policies applied before January 1, 2018 (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 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.
+152) Meituan Dianping.
+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).
+2
+2018 Annual Report (153)
+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.
+2.21 Convertible redeemable preferred shares ("Preferred Shares")
+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.
+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.
+2.20 Borrowings
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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.
+2.12 Financial assets (Continued)
+2.18 Share capital
+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.
+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.
+2.17 Cash and cash equivalents and restricted cash
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.19 Trade and other payables
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(iii) Measurement
+2018 Annual Report (151)
+Financial assets at fair value through profit or loss
+(a)
+Meituan Dianping
+150
+The classification depends on the purpose for which the financial assets were acquired.
+Management determines the classification at initial recognition.
+loans and receivables
+(b)
+• financial assets at fair value through profit or loss
+(i) Classification
+2.12.2Accounting policies applied before January 1, 2018
+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
+2.23 Current and deferred income tax (Continued)
+The Group classifies its financial assets into the following categories:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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.
+Loans and receivables
+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.
+(iv) Impairment
+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.
+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".
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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.
+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.
+2.12.2Accounting policies applied before 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
+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.
+(ii) Recognition and derecognition
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Loans and receivables are subsequently carried at amortized cost using the effective interest
+method.
+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 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.
+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.
+156
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.25 Share-based payments
+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.
+2.25.1 Share options
+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:
+•
+including any market performance conditions
+•
+excluding the impact of any service and non-market performance vesting conditions, and
+including the impact of any non-vesting conditions
+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.
+2.25.2 RSUs
+2.24.2Pension obligations and other social welfare benefits
+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.
+2.24.1Employee leave entitlement
+2.24 Employee benefits
+2.23.1Current income tax
+2.21 Convertible redeemable preferred shares ("Preferred Shares") (Continued)
+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
+(a) Inside basis differences
+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.
+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.
+(b) Outside basis differences
+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.
+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.
+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
+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.
+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.
+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.
+2.24.3Bonus plan
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+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.
+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.
+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.
+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.
+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.
+2018 Annual Report (159)
+2
+2
+Meituan Dianping
+154
+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.
+2.23 Current and deferred income tax
+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.
+2.22 Redemption liability
+2018 Annual Report (157)
+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.
+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
+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.
+Meituan Dianping
+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.
+2.25 Share-based payments (Continued)
+2.25.3 Modifications and Cancellations
+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.
+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.
+2.26 Provisions
+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.
+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 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.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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:
+•
+provides all of the benefits received and consumed simultaneously by the customer;
+•
+creates and enhances an asset that the customer controls as the Group performs; or
+•
+158
+2.27 Revenue recognition
+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.
+2.29 Dividend income
+Dividends are recognized when the right to receive payment is established.
+2.30 Lease
+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.
+166
+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.
+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
+2.28.2Accounting policies applied before January 1, 2018
+(a) Market risk
+2.32 Government subsides
+2.28 Interest income (Continued)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+i)
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.3Incentives (Continued)
+(c)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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 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 Interest income
+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).
+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".
+2018 Annual Report (165)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Foreign exchange risk
+2018 Annual Report (169)
+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.
+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
+•
+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 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.
+Macroeconomic information (such as market interest rates or growth rates) is incorporated as part
+of the internal rating model.
+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
+Meituan Dianping
+168
+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.
+ii)
+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
+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.
+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
+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.
+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.
+FINANCIAL RISK MANAGEMENT (Continued)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+(c)
+(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.
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+(b)
+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)
+Online marketing services
+New initiatives and others
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+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
+(a)
+Commissions
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2.27 Revenue recognition (Continued)
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+2.27 Revenue recognition (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.
+(a) On-demand delivery services (including food and non-food delivery)
+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.
+2018 Annual Report (163)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27.3 Incentives (Continued)
+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:
+(a) On-demand delivery services (including food and non-food delivery) (Continued)
+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.
+(b) In-store, hotel & travel services
+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.
+164
+Meituan Dianping
+(b) Online marketing services (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.
+2.27.3Incentives
+2.27 Revenue recognition (Continued)
+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.
+162
+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.
+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.
+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)
+2.27.2Principal 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.
+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.
+5,944,693
+4,105,320
+1,839,373*
+profit or loss (Note 19)
+17,030,574
+17,030,574
+through profit or loss (Note 20)
+Financial assets at fair value through
+Level 1
+RMB'000
+Level 3
+RMB'000
+Level 2
+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.
+Total
+RMB'000
+1,839,373*
+3.3.1 Fair value hierarchy (Continued)
+Financial liabilities
+3.3.2 Valuation techniques used to determine fair values
+•
+The use of quoted market prices or dealer quotes for similar instruments; and
+•
+•
+•
+The discounted cash flow model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate; and
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+2018 Annual Report (179)
+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
+preferred shares (Note 28)
+Convertible redeemable
+21,135,894 22,975,267
+3.3 Fair value estimation (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+to Stage 1
+532
+(532)
+Transfer from Stage 2
+to Stage 3
+(28,645)
+28,645
+Transfer from Stage 3
+Transfer from Stage 2
+to Stage 1
+to Stage 2
+Loan receivables derecognized
+during the period other
+than write-off
+New loan receivables
+originated/purchased
+Write-off
+Gross carrying amount as
+Transfer from Stage 3
+117,430
+(117,430)
+to Stage 3
+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 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
+of December 31, 2018
+The gross carrying amount of the loan receivables explains their significance to the changes
+in the loss allowance as discussed above:
+(6,839,372)
+(6,240)
+Loss allowance as
+of December 31, 2017
+Transfers:
+(19,230)
+(27,673)
+(10,171)
+(57,074)
+Transfer from Stage 1
+to Stage 2
+Total
+RMB'000
+1,091
+(64,409)
+Transfer from Stage 1
+to Stage 3
+1,401
+(117,430)
+(116,029)
+Transfer from Stage 2
+to Stage 1
+(65,500)
+Stage 3
+Lifetime ECL
+RMB'000
+12-month ECL Lifetime ECL
+RMB'000
+RMB'000
+(6,864,031)
+9,190,832
+9,190,832
+(114,410)
+(114,410)
+3,870,816
+81,658
+35,596
+3,988,070
+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)
+ii)
+Loss allowance (Continued)
+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:
+Stage 1
+FINANCIAL RISK MANAGEMENT (Continued)
+Stage 2
+(18,419)
+Loss allowance (Continued)
+ii)
+174) Meituan Dianping.
+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)
+The Group terminate its
+corporation with merchants
+(b) Credit risk (Continued)
+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.
+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.
+Repayments are 180 days past
+due and there is no reasonable
+expectation of recovery
+due
+There is a significant increase
+in credit risk is presumed if
+repayment are 30 days past due
+Repayments are 90 days past
+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
+Customers have a low risk of default and a strong capacity to meet
+contractual cash flows
+Basis for
+recognition of
+expected credit
+loss provision
+Underperforming
+Non-performing
+Write-off
+2018 Annual Report (171)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+3
+(4)
+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.
+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.
+(5) Grouping of instruments for losses measured on a collective basis
+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)
+ECL model for loan receivables, as summarized below: (Continued)
+Forward-looking information incorporated in the ECL models
+(6)
+i)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(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)
+(b) Credit risk (Continued)
+406
+Specific valuation techniques used to value financial instruments include:
+Transfer from Stage 2
+36,096
+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)
+(excluding salaries and benefits
+400
+3,341,276
+3,226,407
+7,596,388
+Financial guarantee contracts
+(Note 2.11)
+769,230
+22,164
+and 2 year
+1 year
+Between 1
+Less than
+(c) Liquidity risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+5,340,963
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+176) Meituan Dianping.
+26,622,461
+32,760
+495,556
+26,094,145
+791,394
+For the year ended December 31, 2018
+Between 2
+and 5 year
+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
+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.
+iv)
+Modification
+Advance from transacting users
+7,596,388
+Payables to merchants
+5,340,963
+Trade payables
+As of December 31, 2018
+Total
+RMB'000
+Deposit from transacting users
+RMB'000
+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.
+Between 2
+and 5 year
+(13,935)
+Total
+RMB'000
+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)
+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.
+The following table presents the Group's assets and liabilities that are measured at fair value as of
+December 31, 2018.
+As of December 31, 2018
+Financial assets
+Short-term investments at fair value
+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)
+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.
+Financial assets at fair value through
+15,067,960
+Total
+RMB'000
+Level 3
+RMB'000
+Level 2
+RMB'000
+Level 1
+RMB'000
+178) Meituan Dianping.
+through profit or loss (Note 20)
+15,067,960
+RMB'000
+Maintain an optimal capital structure to reduce the cost of capital.
+for shareholders and benefits for other stakeholders; and
+payable, and tax payable)
+(excluding salaries and benefits
+Other payables and accruals
+2,290,160
+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
+1,400,989
+1,400,989
+Borrowings
+162,000
+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
+1,235,097
+(Note 2.11)
+Financial guarantee contracts
+399,275
+399,275
+Redemption liabilities
+162,000
+88,804
+(9,611)
+Other payables and accruals
+(109,426)
+(4,324)
+114,410
+114,410
+(109,426)
+Accrual and reversal
+Write-off
+originated/purchased
+6,240
+14,055
+81,430
+New loan receivables
+101,725
+during the period other
+to Stage 3
+21,993
+than write-off
+(6,652)
+Transfer from Stage 3
+(28,645)
+Transfer from Stage 3
+to Stage 2
+Loan receivables derecognized
+to Stage 1
+Total
+RMB'000
+Year ended December 31, 2017
+and others
+RMB'000
+RMB'000
+RMB'000
+New initiatives
+In-store,
+hotel & travel
+Food delivery
+23.2%
+at December 31,
+2018
+89.0%
+13.8%
+Gross margin
+15,104,958
+(4,258,594)
+14,095,355
+5,268,197
+Commission
+(37.9%)
+20,283,964
+Revenues in total
+589,196
+(1,102,638)
+33,927,987
+2,043,244
+10,852,810
+(1,273,331)
+(19,332,514)
+Cost of revenues
+21,031,933
+Gross profit/(loss)
+1,217,182
+1,112,572
+4,701,675
+341,476
+3,649,996
+66,844
+710,203
+37,766
+Other services and sales
+Online marketing services
+28,009,130
+7,135,970
+15,840,361 11,243,834 65,227,278
+(1,745,006) (15,502,428) (50,122,320)
+Online marketing services
+Cost of revenues
+In-store,
+hotel & travel
+Food delivery
+New initiatives
+Year ended December 31, 2018
+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:
+5.1 Segment reporting (Continued)
+SEGMENT REPORTING (Continued)
+5
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (187)
+The revenue is mainly generated in China.
+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.
+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 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 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 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.
+and others
+Total
+RMB'000
+RMB'000
+38,143,083
+Revenues in total
+8,823,623
+8,671,590
+9,391,406
+321,506
+6,734,901
+63,157
+88,876
+(32,874,886)
+Other services and sales
+(21,708,483)
+47,012,249
+2,250,738
+9,042,303
+35,719,208
+Commission
+RMB'000
+RMB'000
+2,334,999
+Gross profit
+5
+1,699,419
+As of January 1, 2018
+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
+Total
+RMB'000
+consideration
+RMB'000
+companies
+RMB'000
+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
+(29,307)
+4,208
+at fair value
+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
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+Gross margin
+(66,948,151)
+Currency translation differences
+5.2 Segment assets
+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.
+statement.
+The reconciliation of gross profit to loss before income tax is shown in the consolidated income
+5.1 Segment reporting (Continued)
+SEGMENT REPORTING (Continued)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+188
+36.0%
+46.0%
+88.3%
+8.1%
+12,219,504
+940,606
+9,579,479
+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
+(287,837)
+61,632
+(226,205)
+As of December 31, 2018
+15,067,960
+65,227,278
+1,217,182
+8,823,623
+2,649,192
+4,701,675
+28,009,130
+47,012,249
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+Further disaggregation of revenues are included in Note 5.
+Other services and sales
+Online marketing services
+9,391,406
+Unobservable
+inputs
+New initiatives and others
+In-store, hotel & travel
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (183)
+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.
+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).
+4.2 Estimation of the fair value of financial assets and financial liabilities
+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.
+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.
+4.1 Recognition of share-based compensation expenses
+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 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+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.
+4
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+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.
+There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the years ended
+December 31, 2018 and 2017.
+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.
+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.
+volatility, the lower the fair value
+The higher the expected
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+40%
+4.3 Impairment provision for trade receivables and prepayments, deposits and other assets
+RMB'000
+Net unrealized gains for the year
+83,241
+351,422
+25,099
+459,762
+3.3.4 Valuation process, inputs and relationships to fair value
+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.
+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.
+2018 Annual Report (181)
+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).
+182
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+N/A
+Expected Volatility
+the lower the fair value
+2.01%-3.86%
+2.01%-8.10%
+the lower the fair value
+The higher the DLOM,
+10%-20%
+10%-28%
+Discount for lack
+of marketability
+("DLOM")
+Risk-free rate
+volatility, the lower the fair value
+unlisted companies
+The higher the risk-free rate,
+the higher the fair value
+The higher the expected
+35%-50%
+Expected volatility
+4,080,221
+4,904,247
+Investment in
+to fair value
+2017
+unobservable inputs
+Relationship of
+40%-48%
+Short-term investments
+15,067,960
+17,030,574
+The higher the DLOM,
+13%
+N/A
+DLOM
+the lower the fair value
+The higher the risk-free rate,
+2.5%
+N/A
+Risk-free rate
+the lower the fair value
+The higher the discount rate,
+28%
+N/A
+Discount rate
+25,099
+Contingent consideration
+The higher the expected rate of
+return, the higher the fair value
+1.62%-4.9%
+2.1%-6.6%
+Expected rate
+of return
+2017
+RMB'000
+21,135,894
+25,099
+4,080,221
+17,030,574
+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.
+4.6 Business combinations
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+184
+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.
+4.5 Incentives
+4.7 Useful lives and amortization of intangible assets
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+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.
+4.4 Recoverability of non-financial assets
+4,904,247
+Net unrealized gains for the year
+107,609
+1,190,333
+19,972,207
+1,297,942
+180
+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'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.
+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.
+Food delivery
+5.1 Segment reporting (Continued)
+SEGMENT REPORTING (Continued)
+5
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+186
+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.
+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:
+5.1 Segment reporting
+SEGMENT REPORTING
+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.
+4.10 Presentation and measurement of investments in associates
+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 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.
+4.9 Current and deferred income tax
+5
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2018 Annual Report (185)
+Meituan Dianping
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+FINANCIAL RISK MANAGEMENT (Continued)
+Business combinations
+7,000
+7,000
+Disposals and
+transfers/Settlements
+(51,651,590)
+(14,500)
+(563,000)
+(52,229,090)
+57,030,471
+Change in fair value
+351,422
+(61,000)
+25,099
+644,869
+Currency translation differences
+(644,606)
+(132,587)
+(777,193)
+As of December 31, 2017
+329,348
+647,921
+56,382,550
+Acquisitions
+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
+through
+profit or loss
+in unlisted
+RMB'000
+companies
+RMB'000
+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
+3
+at fair value through
+profit or loss
+2018 Annual Report (189)
+33,927,987
+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.
+(3,690,373)
+276,121
+(2,202,664)
+21,846
+(3,414,252)
+(2,180,818)
+Loss for the period
+Non-IFRS measures:
+Adjusted EBITDA
+Adjusted net loss
+Revenues
+(854,601)
+(1,861,856)
+(1,358,685)
+(1,385,447)
+Income tax credits
+Loss before income tax
+(31,263)
+(56,875)
+241,006
+Other gains, net
+156,792
+302,857
+Operating loss
+Finance income
+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.
+Finance costs
+(1,530,599)
+116,427
+36,179
+(15,407)
+(13,200)
+Fair value changes of convertible redeemable preferred shares
+Share of losses of investments accounted for using equity method
+(3,734,518)
+Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+Revenues by Segment
+Total
+7.2%
+747,771
+21.2%
+4,203,043
+New initiatives and others
+29.6%
+3,103,191
+23.2%
+4,594,132
+In-store, hotel & travel
+63.2%
+6,624,416
+55.6%
+11,006,277
+Food delivery
+Revenues:
+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:
+Unaudited
+Three Months Ended
+December 31, 2018
+December 31, 2017
+As a
+990,653
+As a
+percentage of
+Amount
+total revenues
+Amount
+total revenues
+(RMB in thousands, except for percentages)
+percentage of
+at fair value through profit or loss
+Fair value changes on investments measured
+(914,441)
+CHAIRMAN'S STATEMENT
+Meituan Dianping
+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
+2.
+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.
+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.
+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
+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.
+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.
+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.
+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%.
+CHAIRMAN'S STATEMENT
+BUSINESS REVIEW AND OUTLOOK
+1. Company Business Highlights
+Food delivery
+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.
+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.
+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.
+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.
+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.
+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.
+10
+Meituan Dianping
+CHAIRMAN'S STATEMENT
+In-store, hotel & travel
+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.
+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.
+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.
+APPRECIATION
+Selling and marketing expenses
+19,803,452
+10,475,378
+(15,322,458)
+(7,123,869)
+4,480,994
+Gross profit
+3,351,509
+(3,362,229)
+Research and development expenses
+(1,981,826)
+(1,149,301)
+General and administrative expenses
+(2,846,080)
+(4,535,051)
+19,803,452
+Cost of revenues
+(RMB in thousands)
+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
+Revenues
+14
+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
+MANAGEMENT DISCUSSION AND ANALYSIS
+100.0%
+(663,781)
+100.0%
+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:
+Gross profit/(loss):
+Unaudited
+Three Months Ended
+December 31, 2018
+December 31, 2017
+Gross Profit and Gross Margin
+As a
+percentage of
+percentage of
+Amount
+total revenues
+Amount
+total revenues
+As a
+(RMB in thousands, except for percentages)
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+87.1%
+382,361
+5.4%
+New initiatives and others
+5,182,028
+33.8%
+2018 Annual Report 17
+533,081
+Total
+15,322,458
+100.0%
+7,123,869
+100.0%
+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.
+7.5%
+6,208,427
+Food delivery
+13.4%
+Selling and Marketing Expenses
+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.
+18
+Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+Research and Development Expenses
+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.
+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.
+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.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+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.
+Other Gains, Net
+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.
+2018 Annual Report (19
+General and Administrative Expenses
+1,471,721
+32.0%
+22.6%
+415,989
+6.3%
+In-store, hotel & travel
+3,988,258
+86.8%
+2,720,830
+10,475,378
+87.7%
+(978,985)
+(23.3%)
+214,690
+28.7%
+Total
+4,480,994
+New initiatives and others
+62.2%
+4.0%
+3,351,509
+In-store, hotel & travel
+total revenues
+Amount
+total revenues
+(RMB in thousands, except for percentages)
+Commission
+13,150,122
+Amount
+66.4%
+81.6%
+Online marketing services
+3,071,073
+15.5%
+1,488,935
+14.2%
+8,548,567
+Other services and sales
+percentage of
+As a
+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.
+605,874
+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 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.
+2018 Annual Report
+15
+percentage of
+MANAGEMENT DISCUSSION AND ANALYSIS
+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:
+Unaudited
+Three Months Ended
+December 31, 2018
+December 31, 2017
+As a
+Revenues by Type
+3,582,257
+Revenues:
+437,876
+Three Months Ended
+December 31, 2018
+December 31, 2017
+As a
+percentage of
+total cost of
+Unaudited
+As a
+percentage of
+total cost of
+Amount
+revenues
+(RMB in thousands, except for percentages)
+9,534,556
+18.1%
+Food delivery
+revenues
+Cost of revenues:
+Amount
+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:
+19,803,452
+100.0%
+100.0%
+4.2%
+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.
+10,475,378
+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.
+Cost of Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+Total
+Meituan Dianping
+16
+(20,131)
+(17,290)
+Total
+(1,924)
+Interest expense
+(44,732)
+(19,214)
+2018 Annual Report (195)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+(24,601)
+Place of
+incorporation/
+SUBSIDIARIES
+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.
+Name
+Effective interest held (b)
+establishment
+Date of
+incorporation/
+establishment
+Particulars of
+issued/paid-in
+As of December 31,
+2018
+Bank charges and others
+Principal
+capital
+11
+Finance costs
+(61,000)
+294,047
+Change in fair value from contingent consideration (Note 3.3)
+104,758
+2017
+4,208
+25,099
+Foreign exchange loss, net
+(1,485)
+(7,819)
+Government subsidies
+198,762
+45,585
+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
+(222,264)
+(9,329)
+(3,641)
+748,356
+208,260
+(i)
+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.
+10 FINANCE INCOME/(COSTS)
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+Finance income
+Interest income from bank deposits
+60,885
+activities and
+place of operation
+Cayman
+Directly held:
+Investment holding
+mobike Ltd ("Mobike")
+April 2, 2015
+USD50,000
+100%
+NA
+in Cayman
+Investment holding
+in Cayman
+Indirectly held:
+Beijing SanKuai On-line
+Technology Co., Ltd.
+100%
+Beijing,
+the PRC
+USD1,176,260,000
+100%
+100%
+E-commerce service
+Beijing Kuxun Technology Co., Ltd. Beijing,
+Hanhai Information Technology
+April 27, 2006
+USD54,665,694
+100%
+(Shanghai) Co., Ltd.
+(6,294)
+May 6, 2011
+Subsidiaries
+100%
+April 1, 2016
+Meituan Corporation
+Cayman
+July 29, 2010
+USD50,000
+100%
+100%
+Investment holding
+in Cayman
+DianPing Holdings
+Cayman
+December 20, 2005
+USD50,000
+USD50,000
+100%
+Investment holding
+Limited ("DianPing")
+in Cayman
+Internet Plus (HongKong) Limited
+Hong Kong
+November 27, 2015 HKD1
+100%
+100%
+Investment holding
+in Hong Kong
+Kangaroo Technology Corporation Cayman
+100%
+Dilution (loss)/gain (Note i) (Note 12)
+For the year ended December 31, 2018
+Gains from the disposal of subsidiaries (Note 11)
+18,164
+726
+176,574
+195,887
+For the year ended December 31, 2017:
+Name
+Zhang Tao
+Wang Huiwen
+Ye Shuhong
+Wang Xing
+Total
+Pension costs
+423
+Wages, salaries
+Share-based
+compensation
+and bonuses
+benefits
+RMB'000
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Total
+RMB'000
+1,800
+104
+and other
+employee
+742
+601
+742
+the PRC
+Shanghai,
+the PRC
+4,072
+154
+35,261
+39,487
+3,695
+154
+139,510
+143,359
+4,072
+133
+4,205
+Lau, Chi Ping Martin
+Shen, Nanpeng Neil
+Orr Gordon Robert
+Halyburton
+141
+Shum Heung Yeung Harry
+141
+Leng Xuesong
+141
+Total
+601
+742
+601
+1,904
+125,649
+2,715
+50,292
+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.
+vi)
+Inducement to join the Group and compensation for loss of office
+194
+Meituan Dianping
+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.
+9
+OTHER GAINS, NET
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Year ended December 31,
+Waiver of Director's emoluments
+2018
+2017
+RMB'000
+Fair value changes of short-term investments measured
+at fair value through profit or loss (Note 3.3)
+306,954
+329,348
+Interest income from short-term investments measured at amortized cost
+226,114
+17,027
+Gains/(losses) from the disposal of investments
+29,426
+(144,482)
+RMB'000
+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
+53,137
+2,305
+104
+45,924
+48,333
+2,056
+130
+2,186
+8,876
+468
+96,216
+105,560
+2018 Annual Report (193)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments (Continued)
+i) Directors' termination benefits
+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.
+Consideration provided to third parties for making available Directors' services
+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.
+iii) Information about loans, quasi-loans and other dealings in favor of Directors, controlled bodies
+corporate by and connected entities with such Directors.
+iv)
+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.
+130
+platform in the PRC
+100% Online hotel and travel
+services in the PRC
+26,362
+USD195,000,000
+- 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
+9,895
+- Other payables and accruals
+Goodwill
+- Non-controlling interests disposed
+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)
+- Deferred tax liabilities
+(56,234)
+- Trade receivables
+2,824
+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.
+Note (b): The Effective interest held has no change after December 31, 2018 until the report date.
+2018 Annual Report (197)
+198
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+11 SUBSIDIARIES (Continued)
+Disposal of subsidiaries
+Year ended December 31,
+2018
+RMB'000
+1,917
+2017
+RMB'000
+- 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
+- Cash and cash equivalents
+Total consideration received or receivable
+services in the PRC
+(858)
+130,897
+1,363
+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.
+2018
+RMB'000
+2017
+RMB'000
+1,939,107
+2,384,674
+163,675
+772,500
+50,000
+(6,294)
+104,758
+(14,675)
+(11,989)
+As of December 31,
+(563)
+82,829
+(48,267)
+6,694
+(6,747)
+2,089,677
+1,939,107
+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.
+(ii):
+Dilution gain in 2017 was mainly from Maoyan (Note 9).
+(iii):
+Other reserves in 2017 arose from the equity pick up of the shareholder's contribution to Maoyan.
+2018 Annual Report (199)
+(1,386,918)
+125,649
+1,952,175
+13,068
+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
+2,103,403
+Disposals
+Share of losses of investments accounted for
+using equity method
+Currency translation differences
+At the end of the year
+(i):
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+2,089,677
+1,939,107
+13,726
+Other reserves (Note iii)
+Online payment
+100%
+100%
+100% Multimedia information
+technology services in
+the PRC
+Mobike (Beijing) Information
+Technology Co., Ltd.
+Shanghai Sankuai Zhisong
+Technology Co., Ltd.
+Beijing,
+the PRC
+January 12, 2016
+USD99,000,000
+100%
+NA Bike-sharing services
+in the PRC
+Shanghai,
+the PRC
+November 27, 2018 USD320,000,000
+100%
+100%
+NA
+in the PRC
+196
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+11 SUBSIDIARIES (Continued)
+Name
+Structured entities(a):
+Place of
+incorporation/
+establishment
+Date of
+incorporation/
+establishment
+Particulars of
+issued/paid-in
+Delivery services
+Principal activities
+USD200,000,000
+Shanghai,
+the PRC
+100%
+100% Multimedia information
+technology services in
+the PRC
+Tianjin Sankuai Technology Co., Ltd Tianjin,
+July 12, 2013
+RMB1,090,000,000
+100%
+100%
+E-commerce service
+the PRC
+January 11, 2016
+platform in the PRC
+Xiamen,
+March 25, 2014
+USD549,049,120
+100%
+100%
+E-commerce service
+Technology Co., Ltd.
+the PRC
+platform in the PRC
+Hucheng Information Technology
+(Shanghai) Co., Ltd.
+Xiamen Sankuai On-line
+As of December 31,
+and place of
+capital
+the PRC
+cloud computing in
+the PRC
+Beijing Kuxun Interation
+Technology Co., Ltd.
+Beijing,
+the PRC
+March 29, 2006
+RMB2,000,000
+100%
+100% Multimedia information
+technology services
+RMS system and
+in the PRC
+Shanghai,
+the PRC
+September 23, 2003 RMB10,000,000
+100%
+100%
+Merchant information
+advisory services
+in the PRC
+Beijing Qiandaibao Payment
+Technology Co., Ltd.
+Beijing,
+the PRC
+November 25, 2008 RMB404,000,000
+Shanghai Hantao Information
+Consulting Co., Ltd.
+100%
+100%
+RMB10,000,000
+2018
+2017
+operation
+Beijing SanKuai Technology
+Beijing,
+April 10, 2007
+RMB1,090,000,000
+100%
+100%
+E-commerce service
+Co., Ltd.
+the PRC
+platform in the PRC
+Shanghai SanKuai Technology
+Shanghai,
+September 19, 2012 RMB5,000,000
+100%
+100%
+Online retail platform
+Co., Ltd.
+the PRC
+in the PRC
+Beijing Sankuai Cloud Computing
+Technology Co., Ltd.
+Beijing,
+June 17, 2015
+March 16, 2006
+117
+expenses
+RMB'000
+4,693
+3,899
+25,718
+48,770
+216,208
+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
+Professional fees
+3,636,593
+358,790
+1,037,868
+78,897,813
+10,695,178
+Wages, salaries and bonuses
+2017
+RMB'000
+RMB'000
+2018
+Year ended December 31,
+EMPLOYEE BENEFITS EXPENSES
+For the year ended December 31, 2018
+1,800
+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
+Total cost of revenues, selling and marketing expenses, research and
+development expenses and general and administrative expenses
+6,163,000
+Mobike restructuring plan (Note ii)
+265,177
+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
+Promotion and advertising
+Impairment provision and restructuring expense for
+3,272,934
+Cost of goods sold
+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)
+1,023,889
+1,524,853
+Payment processing costs
+126,434
+2,087,398
+Other outsourcing labor costs
+301,010
+3,133,770
+2,277,969
+Other employee benefits
+Effective interest held (b)
+899,364
+3
+4
+1
+1
+1
+1
+1
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+1
+2017
+2018
+Number of individuals
+Year ended 31 December,
+Meituan Dianping
+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
+1
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments
+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
+Wang Xing
+Zhang Tao
+Name
+For the year ended December 31, 2018:
+The remuneration of every Director and the chief executive is set out below:
+HK$60,000,001 - HK$70,000,000
+4,525
+Emolument bands (in HK dollar)
+HK$50,000,001 - HK$60,000,000
+180,932
+967,943
+General and administrative expenses
+333,438
+664,068
+Research and development expenses
+105,567
+184,628
+518,564
+Selling and marketing expenses
+48,474
+Cost of revenues
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+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.
+1,602,448
+13,531
+1,865,113
+971,100
+2018 Annual Report (191)
+302,282
+251
+174,871
+283,524
+Share-based compensation expenses
+617
+Pension costs and other employee benefits
+5,810
+18,141
+Wages, salaries and bonuses
+2017
+RMB'000
+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
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The emoluments fell within the following bands:
+168
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+1,865,113
+Pension costs - defined contribution plans
+(i)
+Pension costs - defined contribution plans (Note i)
+Share-based compensation expenses (Note 33)
+1,063,796
+8,650,917
+617,453
+15,226,535
+971,100
+(59,946)
+Income tax
+(17,230)
+(602,067)
+At January 1, 2018
+Accumulated depreciation
+8,827,256
+Depreciation
+(649,209)
+(39,518)
+(3,543,866)
+At December 31, 2018
+116,598
+as held for sale
+Assets classified
+(379)
+5
+33
+differences
+Currency translation
+1,666
+6,670
+9,414
+19,601
+Disposal
+(19,699)
+194,512
+182,058
+5,152,325
+100,342
+(48,578)
+(12,860)
+(33,273)
+(52,049)
+Disposal
+5,349,198
+178,458
+9,750
+5,111,531
+40,523
+8,936
+(Note 36)
+Business combinations
+2,351,690
+174,698
+(48,982)
+(1,231,642)
+(195,742)
+215
+3,198,019
+At December 31, 2018
+(274,142)
+(274,142)
+as held for sale
+Assets classified
+1,327
+1,153
+65
+109
+differences
+Currency translation
+(122,840)
+19,050
+103,575
+Transfers
+(47,329) (3,420,977)
+(77,979)
+(679,243)
+Additions
+875,923
+4,158
+119,196
+19,730
+732,839
+714,568
+At January 1, 2017
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+construction
+Cost
+1,349
+8,585
+13,178
+(4,158)
+4,158
+Transfers
+(18,911)
+(394)
+(505)
+(18,012)
+Disposal
+233
+175
+5
+53
+(Note 36)
+Business combinations
+737,680
+equipment appliances improvements
+70,116
+Computer Furniture and Leasehold Assets under
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+141,950
+(212,464)
+Net carrying amount
+At 31 December 2018
+as held for sale
+Assets classified
+(70,514)
+Addition
+Impairment
+(4,777,927)
+116,598
+--(341)
+37,351
+(4,252,292)
+At 1 January 2018
+(212,464)
+141,950
+(70,514)
+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
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+223,068
+1,594,925
+1,811,575
+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
+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.
+Current income tax
+Deferred income tax (Note18)
+Total income tax expenses - Net
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+(251,390)
+(18,560)
+249,502
+(35,658)
+(1,888)
+(54,218)
+28,872,702
+Tax calculated at statutory income tax rate of 25%
+in mainland China
+(18,933,663)
+(115,490,807)
+Loss before tax
+2017
+RMB'000
+PRC corporate income tax ("CIT")
+Year ended December 31,
+2018
+RMB'000
+b) Income tax (Continued)
+13 TAXATION (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (201)
+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.
+The difference is analyzed as follows:
+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.
+Hong Kong
+b) Income tax (Continued)
+1,939,107
+Aggregate amounts of the Group's share of:
+- Loss from operations
+(48,267)
+(6,747)
+- Share-based payment reserve
+2,089,677
+(3,671)
+(48,267)
+(10,418)
+13 TAXATION
+a) Value Added Tax
+The Group is mainly subject to 6% VAT, and surcharges on VAT payments according to PRC tax law.
+b)
+Share of losses of investments accounted for using equity method
+4,733,416
+Aggregate carrying amount of individually immaterial associates
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+13 TAXATION (Continued)
+Meituan Dianping
+200
+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.
+British Virgin Islands
+2017
+RMB'000
+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.
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Tax effects of:
+- Different tax rates available to different jurisdictions
+(26,036,837)
+equipment
+Leasehold Assets under
+Bike and
+Computer Furniture and
+15 PROPERTY, PLANT AND EQUIPMENT
+For the year ended December 31, 2018
+appliances
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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.
+Loss per share
+(115,477,171)
+2,723,795
+Loss attributable to equity holders of the Company (RMB'000)
+Weighted average number of shares in issue (thousand)
+(12.37)
+(42.40)
+2018 Annual Report (203)
+(18,916,617)
+1,528,826
+vehicle improvements
+Total
+Additions
+Cayman Islands
+13,178
+131,720
+20,579
+1,429,448
+construction
+At January 1, 2018
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Cost
+72,233
+2017
+Year ended December 31,
+- Tax losses for which no deferred income
+tax assets were recognized
+144,808
+213,025
+- Utilization of previously unrecognized tax losses
+37,471
+97,397
+(2,728,131)
+- Super deduction for research and development expenses
+(18,409)
+- Expenses not deductible for income tax purposes
+(20,456)
+17,289
+- Preferential income tax rates applicable to subsidiaries
+(3,866,256)
+(7,634)
+2018
+(839,040)
+income tax assets was recognized), net
+(b)
+(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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+LOSS PER SHARE
+14
+Meituan Dianping
+- Temporary differences utilized/(for which no deferred
+At December 31, 2017
+Total income tax expenses
+(34,627)
+(170,579)
+- Withholding tax
+(201,900)
+(248,345)
+(1,888)
+1,429,448
+At January 1, 2017
+131,720
+Net carrying amount
+88
+(88)
+(3,238)
+(2,433)
+(805)
+(1,510)
+At December 31, 2017
+(460)
+At January 1, 2017
+(1,050)
+Impairment
+(901,984)
+(3,433)
+(30,150)
+(36,833) (100,812)
+(201,111)
+(309,145) (220,500)
+At December 31, 2017
+At January 1, 2017
+Additions
+3,234,710
+367,500
+23,516
+2018 Annual Report
+25,179 14,869,597 19,852,974
+6,610 14,953,503 19,148,840
+(160,258)
+(155,422)
+(13,266)
+(12,001)
+(146,992)
+(143,421)
+།།
+༅། ༅།༔།
+36,850
+82,310
+1,120,726 353,167
+3,095,645 269,500
+At December 31, 2017
+50,250
+133,584
+379,167
+1,131
+385
+(516,619)
+(2,831)
+19,682,328
+7,300 15,096,924
+67,000
+390,000 188,460
+34,244
+1,289,400
+490,000
+3,408,400
+At January 1, 2017
+Additions
+Cost
+Total
+RMB'000
+Goodwill
+RMB'000
+User list relationship
+RMB'000
+RMB'000
+licenses
+RMB'000
+Supplier
+and
+payment
+license
+RMB'000
+and others
+RMB'000
+content
+RMB'000
+1,289,400
+207
+Business combinations
+Disposal
+(386,496)
+(602)
+(10,833) (52,443) (16,750)
+(26,000) (48,754) (13,400)
+(10,728)
+(190,744)
+361
+385
+Disposal
+(172,640) (122,500)
+(136,890)
+(98,000)
+Amortization
+At January 1, 2017
+Accumulated amortization
+28,700 15,025,019 20,915,216
+390,000 186,360 67,000
+490,000 1,321,837
+3,406,300
+At December 31, 2017
+58,992 80,392
+(130,897) (136,904)
+(2,100)
+(1,807)
+(2,100)
+21,400
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+16 INTANGIBLE ASSETS (Continued)
+RMB'000
+RMB'000
+Closing
+Disposal
+Addition Impairment
+RMB'000 RMB'000
+Opening
+RMB'000
+Year ended December 31, 2017
+27,705,601
+Food delivery
+14,869,597 12,836,004
+(119,576)
+7,264
+314,610
+(excluding bike-sharing services)
+New initiatives and others
+- 3,707,427
+3,707,427
+Bike-sharing services
+202,298
+3,116,702
+3,116,702
+In-store, hotel & travel
+(54,218)
+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
+New initiatives and others
+11,438,285
+11,438,285
+18,950,647
+119,576
+7,392,786
+11,438,285
+516,619
+1,114,509
+1,724
+1,827
+75,962
+167,093
+157,544
+288,860
+281,389
+656,729
+2017
+RMB'000
+RMB'000
+2018
+Year ended December 31,
+Research and development expenses
+Cost of revenues
+General and administrative expenses
+Selling and marketing expenses
+Amortization expenses have been charged to the consolidated income statement as follows:
+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.
+For the year ended December 31, 2018
+Impairment of goodwill
+208
+In-store, hotel & travel (Note a)
+--- 4,845,229
+1,728,527
+3,116,702
+Food delivery
+Closing
+RMB'000
+Disposal
+RMB'000
+Impairment
+RMB'000
+Reallocation
+RMB'000
+RMB'000
+RMB'000
+Addition
+Opening
+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
+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.
+20,579
+name
+Online Technology
+Supplier
+and
+payment
+Software
+generated
+content
+RMB'000
+Trade
+name
+RMB'000
+Online Technology
+User
+and others
+Cost
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (205)
+327,696
+4,252,292
+23,269
+29,556
+39,361
+16 INTANGIBLE ASSETS
+license
+RMB'000
+RMB'000
+69,712
+69,712
+Additions
+20,915,216
+15,025,019
+28,700
+67,000
+186,360
+390,000
+1,321,837
+3,406,300 490,000
+At January 1, 2018
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+User list relationship Goodwill
+licenses
+RMB'000
+7,065
+19,475
+267,806
+4,158,424
+(327,696)
+(364,693)
+(59,946)
+(17,230)
+(602,067)
+At December 31, 2017
+168
+12,978
+Disposal
+(23,522)
+(1,394)
+(302,780)
+Depreciation
+(36,424)
+(16,004)
+(312,265)
+Accumulated depreciation
+1,594,925
+13,178
+13,146
+Business combinations (Note 36)
+(679,243)
+At January 1, 2017
+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
+71,774
+3,349
+827,381
+511,230
+4,158
+82,772
+3,726
+420,574
+At December 31, 2017
+Net carrying amount
+Software
+1,600,000
+663,470
+(1,506,258)
+(155,422)
+(88)
+(1,346,000)
+(160,258)
+(88) (155,422)
+(3,238)
+(1,347,510)
+Net carrying amount
+At December 31, 2018
+Additions (Note 7 (i))
+(3,238)
+(1,510)
+At January 1, 2018
+Impairment
+(2,016,279)
+(7,453)
+(240,174) (169,616)
+(1,346,000)
+At January 1, 2018
+3,095,645
+269,500 1,120,726
+User
+generated
+Trade
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan Dianping
+206
+27,705,601 33,876,004
+21,159
+737,384
+606,418
+327,167
+171,500 1,213,550
+3,093,225
+At December 31, 2018
+25,179 14,869,597 19,852,974
+36,850
+82,310
+353,167
+(62,833)
+(318,500) (652,138)
+(565,565)
+At December 31, 2018
+27,861,023
+28,700
+907,000
+849,830
+390,000
+1,865,688
+490,000
+5,006,300
+At December 31, 2018
+(20)
+(4,106)
+| |
+(20)
+Assets classified as held for sale
+(4,106)
+Disposal
+16,417,739
+12,836,004
+840,000
+37,398,541
+478,265
+Accumulated amortization
+(309,145)
+5
+5
+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)
+(201,111)
+(220,500)
+(256,420) (98,000) (451,241)
+Amortization
+At January 1, 2018
+35,032
+202
+2018 Annual Report (219)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+18 DEFERRED INCOME TAXES (Continued)
+(b) Deferred tax liabilities
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+The balance comprises temporary differences attributable to:
+- Intangible assets arising from business combinations
+(886,398)
+(582,895)
+- Investments using the equity method or at fair value
+(416,830)
+(418,791)
+- Deferred revenue
+- Others
+Total gross deferred tax liabilities
+Set-off of deferred tax liabilities pursuant to set-off provisions
+Net deferred tax liabilities
+(862,290)
+(584,567)
+(100,955)
+(2,266,473)
+(1,586,253)
+1,070,604
+(1,195,869)
+536,134
+(1,050,119)
+Deferred tax liabilities:
+(212) Meituan Dianping.
+- to be recovered after 12 months
+243,263
+243,263
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+The balance comprises temporary differences attributable to:
+- Tax losses
+1,373,351
+768,674
+- Others
+142,294
+10,723
+Total gross deferred tax assets
+1,515,645
+779,397
+Set-off of deferred tax assets pursuant to set-off provisions
+(1,070,604)
+(536,134)
+Net deferred tax assets
+445,041
+243,263
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Deferred tax assets:
+- to be recovered after 12 months
+208,424
+- to be recovered within 12 months
+236,617
+445,041
+- to be recovered within 12 months
+The movement on the gross deferred income tax assets is as follows:
+As of December 31,
+(127,925)
+As of December 31, 2017
+768,674
+10,723
+779,397
+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:
+Investments
+using the
+equity
+Intangible method or at
+Deferred
+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
+7,750
+(135,675)
+the consolidated income statement
+(Charged)/credited to
+2018
+RMB'000
+2017
+RMB'000
+(839,227)
+(1,050,119)
+(356,642)
+(1,195,869)
+(1,050,119)
+Tax losses
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+As of January 1, 2018
+768,674
+10,723
+(a) Deferred tax assets
+779,397
+599,743
+599,743
+Credited to consolidated income statement
+4,934
+131,571
+136,505
+As of December 31,2018
+1,373,351
+142,294
+1,515,645
+As of January 1, 2017
+904,349
+2,973
+907,322
+Business combinations
+(775,789)
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
+financial position:
+For the year ended December 31, 2018
+10%-90%
+15%-25%
+15%-50%
+85%-90%
+2.5%
+2.5%
+33%
+33%
+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.
+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.
+Impairment losses of RMB12 million has been charged in "General and administrative expenses" for the year
+ended December 31, 2017.
+(210) Meituan Dianping.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+The Group holds the following financial instruments:
+Assets as per consolidated statement of financial position
+Financial assets at fair value through profit or loss:
+- Financial assets at fair value through profit or loss
+- Short-term investments at fair value through profit or loss
+Financial assets at amortized costs:
+- Trade receivables
+As of December 31,
+Note
+2018
+RMB'000
+2017
+RMB'000
+7 20
+19
+6,241,972
+5,944,693
+hotel & travel
+15,067,960
+Food delivery
+Pre-tax discount rate (%)
+4,186,391
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+16 INTANGIBLE ASSETS (Continued)
+Impairment of goodwill (Continued)
+As of December 31, 2018
+Annual revenue growth rate
+Food delivery
+In-store,
+hotel & travel
+Bike-sharing
+services
+for the 5-year period (%)
+5%-36%
+Gross profit rate
+16%-30%
+5%-35%
+87%-90%
+10%-77%
+(8%)-64%
+Terminal revenue growth rate (%)
+2.5%
+2.5%
+2.5%
+Pre-tax discount rate (%)
+30%
+32%
+30%
+As of December 31, 2017
+Annual revenue growth rate for the 5-year period (%)
+Gross profit rate
+Terminal revenue growth rate (%)
+In-store,
+17,030,574
+21,309,932
+22,975,267
+- Deposit from transacting users
+29
+5,340,963
+2,666,799
+7,596,388
+9,363,873
+3,226,407
+2,290,160
+3,341,276
+- Other payables (excluding salaries and
+benefits payable and other tax payable)
+30
+4,019,499
+1,400,989
+- Redemption liabilities
+- Other non-current liabilities
+- Borrowings
+- Liabilities directly associated with
+assets classified as held for sale
+316,264
+32
+32
+35,759
+2,270,056
+162,000
+55,510
+25,885,858
+16,200,085
+2018 Annual Report (211)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+- Advance from transacting users
+- Payables to merchants
+- Trade payables
+-
+23
+466,340
+432,494
+- Prepayments, deposits and other assets
+(excluding tax prepayments)
+21
+6,895,162
+- Short-term investments measured at amortized cost
+20
+26,762,004
+8,807,603
+- Restricted cash
+24
+4,256,120
+18 DEFERRED INCOME TAXES
+4,458,761
+24
+17,043,692
+19,408,839
+- Assets classified as held for sale
+88,087
+55,511,405
+36,776,769
+Liabilities as per consolidated statement of financial position
+Financial liabilities at fair value through profit or loss:
+- Convertible redeemable preferred shares
+28
+101,418,292
+101,418,292
+Financial liabilities at amortized costs:
+- Cash and cash equivalents
+(10,467)
+3,669,072
+(786,256)
+-Fair value through profit or loss
+a)
+Short-term investments measured at amortized cost
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+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
+HKD
+218
+Meituan Dianping
+2017
+RMB'000
+34,050,792
+7,340,865
+22,132,640
+3,705,537
+438,307
+-Amortized cost
+41,829,964
+Short-term investments measured at
+For the year ended December 31, 2018
+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
+1,851,128
+450,419
+Disposals and transfers
+Currency translation differences
+At the end of the year
+(2,976,754)
+(8,250)
+53,376
+(125,581)
+4,226,015
+4,311,296
+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.
+2018 Annual Report (217)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+20 SHORT-TERM INVESTMENTS
+25,838,177
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+21 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+Prepayments for channel marketing fee
+346,834
+93,864
+Prepayments to merchants (Note ii)
+220,454
+107,808
+Amounts due from related parties (Note 38)
+195,202
+89,216
+Deposits
+155,826
+83,285
+Prepayments for rental
+153,427
+163,951
+Receivables from third-party payment service providers
+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
+829,659
+3,036,667
+1,592,997
+3,762,455
+For the year ended December 31, 2018
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+Non-current
+Receivables from investment disposal
+282,919
+Prepayments for investments
+249,957
+2,284
+Rental deposits
+147,678
+85,785
+FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+Prepayments for fixed assets
+-
+Loan receivables (Note i)
+74,625
+137,968
+Long term receivables
+12,215
+83,778
+Others
+1,570
+866,884
+312,340
+Current
+Loan receivables (Note i)
+Tax prepayments
+97,920
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+2,525
+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.
+(582,895)
+(418,791)
+(584,567)
+(1,586,253)
+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.
+214
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+19
+FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+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
+25,099
+6,241,972
+5,944,693
+Year ended of December 31,
+2018
+RMB'000
+2017
+RMB'000
+At the beginning of the year
+5,919,594
+4,945,886
+As of December 31, 2017
+7,897
+92,267
+(367,864)
+Credited/(charged) to consolidated
+income statement
+19
+472,286
+8,922 (267,256)
+(100,955)
+112,997
+Charged to other comprehensive loss
+(6,961)
+(6,961)
+As of December 31,2018
+(886,398)
+(416,830)
+(862,290) (100,955)
+Additions
+(2,266,473)
+(628,247)
+(836,975)
+(216,703)
+(1,681,925)
+(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
+As of January 1, 2017
+1,616,220
+Business combinations
+Business combinations (Note 36)
+4,311,296
+6,241,972
+5,919,594
+(i)
+Investments in associates at fair value through profit or loss
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+At the beginning of the year
+1,608,298
+1,016,755
+Additions
+Business combinations
+634,551
+4,226,015
+582,344
+Change in fair value
+(14,746)
+Disposals and transfers
+Currency translation differences
+At the end of the year
+(227,982)
+(6,250)
+8,256
+(7,006)
+2,015,957
+647,921
+Meituan Dianping
+1,608,298
+216
+7,580
+through profit or loss (Note ii)
+22,455
+1,608,298
+1,836,382
+472,874
+Change in fair value
+12,880
+Other investments at fair value
+Disposals and transfers (Note (i))
+(3,204,736)
+(14,500)
+61,632
+(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)).
+Currency translation differences
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Investments in associates at fair
+2018 Annual Report (215)
+RMB'000
+2017
+RMB'000
+2018
+value through profit or loss (Note i)
+As of December 31,
+a) Investments at fair value through profit or loss (Continued)
+19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+For the year ended December 31, 2018
+2,015,957
+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).
+4,458,761
+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
+shares
+Nominal
+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:
+Number of
+value of
+ordinary
+ordinary
+Share
+4,256,120
+shares
+Share
+25 SHARE CAPITAL AND SHARE PREMIUM
+7,319
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Others
+11,247,166
+5,629,279
+88,196
+13,776,847
+capital
+2017
+RMB'000
+5,624,311
+1,759
+79,051
+5,922
+17,043,692
+19,408,839
+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
+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
+625,935
+1,566
+premium
+Cancellation of ordinary shares
+'000
+(811,142)
+(811,144)
+(1,005)
+(29,307)
+(29,307)
+At December 31, 2018
+5,727,447
+57
+384
+(2)
+258,284,687
+At January 1, 2017
+1,483,996
+14
+93
+93
+8,567,622
+2018
+RMB'000
+8,567,715
+Exercise of option and RSU vesting
+258,285,071
+(24,667)
+Repurchase of ordinary shares
+842,204
+USD'000
+RMB'000
+RMB'000
+RMB'000
+At January 1, 2018
+1,548,664
+15
+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
+Total
+As of December 31,
+At the end of the year
+224
+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
+Year ended December 31,
+23
+2018
+RMB'000
+(29,461)
+(47,693)
+(131,472)
+(23,173)
+14,600
+8,011
+8,433
+14,253
+32,972
+2017
+RMB'000
+(124,069)
+Meituan Dianping
+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.
+As of December 31,
+86,664
+2018
+RMB'000
+2017
+RMB'000
+51,814
+348,430
+88,374
+400,244
+88,374
+222
+As of December 31,
+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.
+2018
+Meituan Dianping
+(29,461)
+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:
+2018
+2017
+RMB'000
+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
+As of December 31,
+3,279,367
+1,837,808
+1,349,127
+17,043,692
+19,408,839
+Cash and cash equivalents are denominated in the following currencies:
+USD
+RMB
+JPY
+Others
+(i) :
+Cash held by financial institutions (Note i)
+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.
+(a) Cash and cash equivalents
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+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
+24 CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS
+281,353
+126,376
+84,428
+56,574
+56,958
+2,037
+7,459
+432,494
+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.
+2018 Annual Report (223)
+283,649
+1
+Online marketing services
+1,297,645
+Business cooperation agreement with Maoyan
+611,233
+833,500
+Others
+13,766
+624,999
+833,500
+Current
+2,856,343
+Non-Current
+1,891,948
+222,267
+222,267
+Mobike monthly pass
+24,221
+Others
+51
+3,102,882
+2,114,215
+3,727,881
+Business cooperation agreement with Maoyan
+2,947,715
+2017
+RMB'000
+2018
+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
+RMB'000
+20
+1,232,234
+(500,154)
+(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,
+20
+Movements on the Group's deferred revenues are as follows:
+Year ended December 31,
+2018
+RMB'000
+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
+(4,077)
+(64)
+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 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)
+Less: allowance for impairment
+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.
+Liabilities directly associated with assets classified as held for sale
+Other revenue recognition
+(491,398)
+2017
+RMB'000
+2,947,715
+2,072,548
+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:
+Business cooperation agreement with Maoyan amortization
+(222,267)
+Online marketing revenue recognition
+(9,627,170)
+(235,567)
+(4,879,599)
+Mobike monthly pass revenue recognition
+20,810
+6
+Transaction with non-controlling interests
+(1,070,615)
+Capital compensation
+translation
+reserve
+reserve
+reserve
+Others
+Total
+RMB'000
+RMB'000
+Currency
+RMB'000
+RMB'000
+As of December 31, 2017
+20
+20
+1,232,234
+(500,154)
+(265,997)
+466,103
+Adjustment on adoption of IFRS9 (net of tax)
+RMB'000
+As of January 1, 2018
+Share-based
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+1,297,651
+Repurchase of ordinary shares
+(21,996)
+(1)
+(526,738)
+(526,739)
+At December 31, 2017
+1,548,664
+15
+For the year ended December 31, 2018
+98
+9,338,627
+Share Repurchases
+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.
+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
+9,338,529
+20
+Issuance of ordinary shares
+Business combinations
+(186,013)
+(7,617,907)
+(7,617,907)
+As of December 31, 2018
+20
+20
+2,594,722
+(8,118,061)
+(218,028)
+(186,013)
+(5,741,347)
+20
+1,556,384
+(3,929,640)
+(369,636)
+(2,742,872)
+Share-based compensation expenses
+746,465
+746,465
+Exercise of option and RSU vesting
+As of January 1, 2017
+47,969
+47,969
+(685,701)
+Share-based compensation expenses
+(423,731)
+(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
+| | |
+231,736
+1,816,453
+(685,701)
+231,736
+1,816,453
+(1,070,615)
+Trade receivables
+RMB'000
+466,340
+(iii)
+Movements on the Group's allowance for impairment of prepayments to merchants are as follows:
+(a) Majority of loss allowance are related to the non-performing balances for which 100% provision have been
+provided.
+107,808
+220,454
+(277,582)
+(77,674)
+At the beginning of the year
+385,390
+RMB'000
+2017
+2018
+RMB'000
+As of December 31,
+Less: allowance for impairment(a)
+Prepayments to merchants
+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.
+298,128
+Reversal
+Receivables written off during the year as uncollectable
+At the end of the year
+Spare parts
+22 INVENTORIES
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (221)
+As of December 31, 2018 and 2017, the carrying value of prepayments, deposits and other assets was primarily
+denominated in RMB.
+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)).
+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.
+(277,582)
+(77,674)
+39,689
+58
+180,657
+19,251
+(317,329)
+2017
+RMB'000
+2018
+RMB'000
+Year ended December 31,
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+Merchandise
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+21
+(44,714)
+(150,990)
+1,775,679
+3,988,070
+RMB'000
+2017
+2018
+RMB'000
+3,837,080
+As of December 31,
+Unsecured loan receivables
+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:
+(i)
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+21
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Less: allowance for impairment
+1,730,965
+Movements on the Group's allowance for impairment of loan receivables are as follows:
+At the beginning of the year
+Meituan Dianping
+220
+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)).
+(44,714)
+(150,990)
+13,614
+114,410
+(55,014)
+(3,314)
+(57,074)
+(208,326)
+RMB'000
+2017
+2018
+Year ended December 31,
+At the end of the year
+Receivables written off during the year as uncollectable
+Provision
+21
+23 TRADE RECEIVABLES
+(277,582)
+470,056
+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
+3.86
+31,381,500
+Granted during the year
+1.14
+159,405,915
+Outstanding as of December 31, 2016
+1.51
+44,792,530
+0.65
+Vested and exercisable as of December 31, 2018
+The weighted average remaining contractual life of outstanding share options was 7 years and 7 years as of
+December 31, 2018 and 2017.
+2,523
+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
+Others
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+5,067,050
+168,162
+1,995,402
+662,168
+102,764
+2018 Annual Report (239)
+2.90
+2,270,056
+Outstanding as of December 31, 2018
+Share options (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Meituan Dianping
+238
+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.
+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.
+Share options
+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
+2018 Annual Report (237)
+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.
+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.
+6,706
+5,340,963
+Movements in the number of share options granted and their related weighted average exercise prices are as
+follows:
+Weighted
+average
+exercise price
+Number of
+2,987
+0.60
+(41,429,635)
+Exercised during the year
+1.71
+(9,581,909)
+Forfeited during the year
+1.34
+21,290,122
+3 to 6 months
+4.71
+1.94
+121,961,415
+Mobike option replacement
+Granted during the year
+Outstanding as of December 31, 2017
+(USD)
+option
+share options
+per share
+24,081,670
+2,666,799
+Up to 3 months
+As of December 31, 2018 and 2017, the aging analysis of the trade payables based on invoice date were as
+follows:
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Dividends
+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.
+Voting rights
+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:
+As of January 1, 2018
+Change in fair value
+Issuance of Series A-12 preferred shares
+Includes: change in fair value due to own credit risk
+Currency translation differences
+Transfer to ordinary shares
+As of December 31, 2018
+As of January 1, 2017
+RMB'000
+101,418,292
+5,888,472
+104,792,071
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+186,013
+2018 Annual Report (231)
+Redemption features
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Conversion (Continued)
+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:
+(i)
+the closing of a Qualified IPO, or
+(ii)
+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.
+"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.
+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.
+230
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Liquidation preference
+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.
+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.
+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.
+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.
+8,336,605
+(220,435,440)
+Issuance of Series C Preferred Shares
+3%
+2.5%
+4%
+13%
+40%
+40%
+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.
+29
+TRADE PAYABLES
+Trade payables
+As of December 31,
+2018
+RMB'000
+2017
+RMB'000
+5,340,963
+2,666,799
+2018 Annual Report (233)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+29 TRADE PAYABLES (Continued)
+28%
+23%
+As of
+December 31,
+2017
+2018
+Change in fair value
+Currency translation differences
+As of December 31, 2017
+232
+Meituan Dianping
+63,687,007
+27,109,363
+15,138,824
+(4,516,902)
+Trade payables
+101,418,292
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Voting rights (Continued)
+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:
+Discount rate
+Risk-free interest rate
+DLOM
+Volatility
+As of
+September 20,
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+As of December 31,
+116,321,663
+RMB'000
+1,548
+2017
+RMB'000
+1,200,000
+600,000
+162,000
+2018
+15
+2018
+162,000
+Total assets classified as held for sale
+(a)
+Bank borrowings of RMB1.8 billion will be repayable in 2019 and bear annual average interest rate of
+5.597% (2017: 4.785%).
+(i) The amount of RMB300 million are borrowed from China Merchants Bank Co., Ltd. and secured
+by domestic loan under overseas guarantee.
+(ii)
+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
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+(b)
+33 SHARE-BASED PAYMENTS
+88,087
+Trade payables
+As of December 31,
+Asset-backed securities
+Bank loan secured
+-
+Bank loan unsecured
+32 BORROWINGS
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (235)
+Liabilities directly associated with assets classified as held for sale
+(55,510)
+(64)
+Deferred revenue
+(17,824)
+Deposit from transacting users
+(12,257)
+Other payables and accruals
+(1,238)
+Advance from transacting users
+(24,127)
+Total liabilities directly associated with assets classified as held for sale
+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.
+RMB'000
+271
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+31 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
+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.
+The following assets and liabilities were reclassified as held for sale as at December 31, 2018:
+2018
+RMB'000
+Assets classified as held for sale
+Cash and cash equivalents
+15,594
+19,013
+122
+51,524
+Inventories
+Intangible assets
+Property, plant and equipment
+Prepayments, deposits and other assets
+Trade receivables
+Restricted cash
+Meituan Dianping
+234
+As of
+December 31,
+3,920,323
+2,598,340
+1,443,877
+37,305
+Except for RMB1.4 billion payables for acquisition of Mobike, which is denominated in USD, the majority of
+other balances are denominated in RMB.
+1,183,676
+2017
+RMB'000
+665,013
+1,691,320
+828,014
+743,791
+407,248
+212,984
+347,315
+239,217
+637,383
+246,470
+7,361,630
+2.2%-3.1%
+5.9-6.4
+5.18-6.21
+0-5.18
+2.87-3.85
+40.0%-55.0%
+3.86
+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.
+240
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+33 SHARE-BASED PAYMENTS (Continued)
+RSUs
+3.2% 3.8%
+2.8-6.8
+45.0% 50.0%
+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.
+2017
+34
+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
+Movement in the number of RSUs granted and the respective weighted average grant date fair value are as
+follows:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+242
+Year ended December 31,
+2018
+Weighted
+average grant
+date fair value
+Granted during the year
+of RSUs
+a)
+35 COMMITMENTS
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2018 and 2017.
+3.34
+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.
+2018 Annual Report (241)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+33 SHARE-BASED PAYMENTS (Continued)
+RSUS (Continued)
+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:
+Year ended December 31,
+2018
+RMB'000
+2017
+RMB'000
+Share options
+373,874
+141,055
+RSUs
+1,442,579
+605,410
+Incremental fair value for repurchase of ordinary shares (Note 25)
+Others
+48,660
+223,154
+1,481
+1,865,113
+971,100
+Capital commitments
+Within 1 year
+1-2 years
+114,505,992
+per RSU
+(USD)
+Outstanding as of December 31, 2017
+DIVIDENDS
+114,505,992
+3.34
+87,668,245
+5.76
+Vested during the year
+(26,219,723)
+2.95
+Forfeited during the year
+(11,820,544)
+4.77
+Number
+Outstanding as of December 31, 2018
+4.59
+Outstanding as of December 31, 2016
+71,260,265
+2.39
+Granted during the year
+80,815,301
+3.71
+Vested during the year
+(24,714,694)
+2.27
+Forfeited during the year
+2.45
+Outstanding as of December 31, 2017
+164,133,960
+(12,854,880)
+384,149
+38,776
+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
+101,580,292
+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.
+38 RELATED PARTY TRANSACTIONS
+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.
+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.
+248
+Issuance of Preferred Shares
+Meituan Dianping
+25,963,523
+161,000
+Meituan Dianping
+(220,435,440)
+2,270,056
+2018 Annual Report (247)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+a)
+Cash used in operations (Continued)
+Liabilities from financing activities
+Convertible
+redeemable
+preferred
+Borrowings
+RMB'000
+shares
+RMB'000
+Total
+RMB'000
+Liabilities from financing activities as of
+January 1, 2017
+Cash flow
+1,000
+63,687,007
+63,688,007
+25,802,523
+2018 Annual Report (249)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+RELATED PARTY TRANSACTIONS (Continued)
+RMB'000
+2017
+RMB'000
+(i)
+Sales of service
+Associate of the Group
+414,204
+384,149
+One of the Company's shareholders
+3
+414,207
+(ii)
+Purchase of goods and service
+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
+2018
+38
+Year ended December 31,
+Core connected person
+a)
+Names and relationships with 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
+Relationship
+One of the Company's shareholders
+Associate of the Group
+Tianjing Maoyan and its subsidiaries
+Changsha Xiangjiang Longzhu Private Equity
+Associate of the Group
+Investment Fund Enterprise (Limited Partnership)
+Jilin billion-Allians Bank Co., Ltd.
+Beijing Wisdom Map Technology Co., Ltd.
+Dalian Sen Cheng Logistics Co., Ltd.
+Shanghai Shang Mi Technology Co., Ltd.
+Wang Xing
+Mu Rongjun
+b) Significant transactions with related parties
+Associate of the Group
+Associate of the Group
+Dalian Tongda Enterprise Management Co., Ltd.
+Associate of the Group
+Associate of the Group
+Associate of the Group
+Core connected person
+Gain from business and investments disposals
+9
+2,111,477
+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
+2017
+RMB'000
+Operating lease commitments
+RMB'000
+As of December 31,
+Increase in inventories
+(168,664)
+(38,179)
+Increase in trade payables
+2,100,697
+1,353,493
+(Decrease)/increase in payables to merchants
+(1,767,485)
+5,058,537
+Increase in advance from transacting users
+439,578
+246,409
+2018
+Increase in deferred revenue
+As of December 31,
+2017
+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.
+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
+299,185
+2018
+RMB'000
+223,965
+1,281,789
+268,529
+605,723
+2017
+RMB'000
+RMB'000
+2018
+As of December 31,
+Over 5 years
+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
+529,647
+745,054
+875,167
+Increase in other payables and accruals
+Cash flow
+1,248,000
+470,000
+1,718,000
+Business combinations
+390,000
+5,888,472
+6,278,472
+Fair value changes of
+convertible redeemable
+preferred shares
+Currency translation
+differences
+101,580,292
+Recognization of issuance cost
+ordinary shares, net
+Liabilities from financing
+activities as of December 31,
+2018
+-- 104,792,071
+104,792,071
+8,336,605
+8,336,605
+56
+56
+1,800,000
+470,056
+(220,435,440)
+Proceeds from issuance of
+101,418,292
+162,000
+RMB'000
+1,676,265
+1,870,925
+Increase in other non-current liabilities
+16,906
+Decrease in deposit from transacting users
+(4,765,957)
+Cash used in operations
+(8,981,189)
+(291,640)
+246
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+a)
+Cash used in operations (Continued)
+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.
+Reconciliation of liabilities generated from financing activities
+Liabilities from financing activities
+Liabilities from financing
+activities as of January 1,
+2018
+Convertible
+Borrowings
+due within
+1 year
+RMB'000
+Borrowings
+due after
+1 year
+RMB'000
+redeemable
+preferred
+shares
+RMB'000
+Total
+Issuance of preferred shares (167.7 million shares) (Note 28) (i)
+5,888,472
+Acquisition of Mobike (Continued)
+231,736
+Increase in trade receivables
+(135,879)
+(182,024)
+Increase in prepayments, deposits and other assets
+(3,722,048)
+(2,538,454)
+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)
+2017
+RMB'000
+RMB'000
+Note
+2018
+Year ended December 31,
+Option replacement (ii)
+Depreciation and amortization
+Adjustments for
+Loss before income tax
+Cash used in operations
+(4,133,474)
+a)
+594,744
+Change in working capital
+(23,132)
+(85,925)
+Fair value changes of convertible redeemable
+preferred shares
+28
+104,606,058
+15,138,824
+Impairment provision and restructuring expense for
+Mobike restructuring plan
+Impairment provision for Mobike tradename
+Impairment provision for other intangible assets
+358,790
+1,346,000
+13,266
+Share of losses of investments accounted for
+using equity method
+12
+48,267
+10,418
+Change in fair value from investments measured
+at fair value through profit or loss
+Dividend income and interest classified
+9,19
+(1,836,382)
+(497,973)
+as investing cash flows
+Finance costs
+Net exchange differences
+(584,347)
+62,099
+1,485
+(346,375)
+9,783
+7,819
+Decrease/(increase) in restricted cash
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS
+Provision for doubtful accounts
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+1,918,191
+Prepayments, deposits and other assets
+5,349,198
+Property, plant and equipment
+478,265
+For the year ended December 31, 2018
+660,000
+- Technology
+840,000
+1,600,000
+- User list
+Trade name
+Intangible assets
+Deferred tax assets
+12,880
+21,550
+Trade receivables
+159,115
+Inventories
+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
+Financial assets at fair value through profit or loss
+599,743
+- Others
+(414,715)
+245
+2018 Annual Report
+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.
+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.
+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.
+Acquisition of Mobike (Continued)
+36 BUSINESS COMBINATIONS (Continued)
+Trade payables
+Meituan Dianping
+244
+15,563,979
+2,742,501
+12,821,478
+Goodwill
+Total identifiable net assets
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+Borrowings
+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
+(785,467)
+has the meaning ascribed to it in the Listing Rules
+per cent
+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.
+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
+Unless otherwise expressly stated or the context otherwise requires, all data in this document is as of the date of
+this document.
+Tianjin Xiaoyi Technology, Shanghai Juzuo, Beijing Kuxun Technology,
+Tianjin Wanlong, Beijing Sankuai Online, Shenzhen Sankuai Online,
+Shanghai Hanhai, Sankuai Cloud Online and Mobike Beijing
+The Stock Exchange of Hong Kong Limited
+United States dollars, the lawful currency of the United States
+variable interest entity(ies)
+the United States of America, its territories, its possessions and all areas
+subject to its jurisdiction
+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
+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.
+has the meaning ascribed to it in the Listing Rules
+2018 Annual Report (257)
+107,119
+"Active Merchant"
+"Gross Transaction Volume"
+or "GTV"
+"monetization rate"
+"Transacting User"
+"transaction"
+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
+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
+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
+258
+Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2018
+a wholly owned subsidiary of Tencent
+GLOSSARY
+), a company established in the PRC on November 11, 1998 and
+A
+Shenzhen Tencent Computer Systems Co., Ltd.
+Prepayments, deposits and other assets
+18,819,750
+33,105,050
+Short-term investments
+66,791,769
+90,346,561
+20,104
+21,107,233
+45,684,536
+63,064,966
+RMB'000
+2017
+2018
+RMB'000
+Note
+27,281,595
+(2,175,504)
+124,422
+3,960,689
+Non-current liabilities
+LIABILITIES
+Equity attributable to equity holders of the Company
+Accumulated losses
+Other reserves
+Share premium
+Cash and cash equivalents
+Share capital
+88,727,973
+127,432,404
+Total assets
+21,936,204
+37,085,843
+2,992,032
+EQUITY
+Convertible redeemable preferred shares
+(7,841,497)
+Currency translation differences
+DEFINITIONS
+"AGM"
+"Articles" or "Articles of Association"
+"associate(s)"
+"Audit Committee❞
+"Auditor"
+Meituan Dianping
+"Beijing Kuxun Interaction"
+"Beijing Sankuai Cloud Computing"
+"Beijing Sankuai Technology"
+"Beijing Xinmeida"
+"Board"
+"BVI❞
+"CG Code"
+"Beijing Mobike"
+(15,236,311)
+252
+SUBSEQUENT EVENTS
+3,534,313
+Total comprehensive loss
+1,358,809
+(23,077,808)
+Transaction with owners in their capacity as owners
+Share-based compensation expenses
+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.
+746,465
+(1,070,615)
+Total transaction with owners in their capacity as owners
+(324,150)
+As of December 31, 2017
+1,034,659
+(23,077,808)
+Exercise of option and RSU vesting
+Current liabilities
+Other payables and accruals
+Total liabilities
+(5,244,707)
+(186,013)
+(104,263,335)
+610,928 (22,654,077)
+423,731
+(23,077,808)
+Total comprehensive loss
+1,034,659
+(423,731)
+RMB'000
+losses
+Other reserve
+Accumulated
+Currency translation differences
+Preferred shares fair value change due to own credit risk
+RMB'000
+Other comprehensive loss
+Transaction with owners in their capacity as owners
+Business combinations
+(685,701)
+(609,744)
+609,744
+231,736
+(48,660)
+(4,819,792) (126,917,412)
+Share-based compensation expenses
+Other comprehensive loss
+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
+(4,712,673) (127,527,156)
+Loss for the year
+Loss for the year
+Comprehensive loss
+As of January 1, 2018
+28
+(12,704,522)
+126,045,242
+(23,077,808)
+1,034,659
+(4,712,673)
+(127,527,156)
+101,418,292
+40(b)
+258,284,687
+25
+98
+384
+25
+Total equity and liabilities
+9,338,529
+1,387,162
+14,203
+1,387,162
+Adjustment on adoption of IFRS9, net of tax
+As of December 31, 2017
+41
+(b) Reserve movement of the Company
+40 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+For the year ended December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2018 Annual Report (251)
+Mu Rongjun
+Director
+Director
+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.
+88,727,973
+127,432,404
+101,432,495
+"Charmway Enterprises"
+"Chengdu Meigengmei❞
+"Class A Shares"
+the forthcoming annual general meeting of the Company to be held on
+May 17, 2019
+"PRC"
+"PRC Legal Advisor"
+"Pre-IPO ESOP"
+"Prospectus"
+"Registered Shareholders"
+"Relevant Period"
+"Post-IPO Share Option Scheme"
+"Reporting Period"
+"RMB" or "Renminbi❞
+"RSU(s)"
+"SFC"
+"Shanghai Hantao"
+"Shanghai Lutuan”
+"Shanghai Sankuai Technology"
+"Reserved Matters"
+"Share(s)"
+DEFINITIONS
+the post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+International Financial Reporting Standards, as issued from time to time
+by the International Accounting Standards Board
+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
+September 20, 2018
+2018 Annual Report (255)
+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
+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
+the memorandum of association of the Company adopted on August 30,
+2018 as amended from time to time
+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
+Mobike (Beijing) Information Technology Co., Ltd. (À)
+), 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
+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 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
+"Shareholder(s)"
+"Shared Patience"
+the post-IPO share option scheme adopted by the Company on August
+30, 2018
+"Stock Exchange"
+"subsidiary(ies)"
+"substantial shareholder"
+"Tianjin Antechu Technology"
+"Tencent"
+"United States", "U.S." or "US"
+"Shenzhen Tencent Computer"
+"US dollars", "U.S. dollars" or "US$"
+"weighted voting right"
+"WFOES", each a "WFOE"
+"WVR Beneficiaries"
+"WVR Structure"
+"%"
+Shared Vision Investment Limited, a limited liability company incorporated
+under the laws of the BVI, which is wholly owned by Mu Rongjun
+"VIE(s)"
+"Shared Vision"
+DEFINITIONS
+Meituan Dianping
+the People's Republic of China
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+the pre-IPO employee stock incentive scheme adopted by the Company
+dated October 6, 2015, as amended from time to time
+prospectus of the Company dated September 7, 2018
+the registered shareholders of the Onshore Holdcos
+the period from the Listing Date to December 31, 2018
+the year ended December 31, 2018
+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
+Renminbi, the lawful currency of China
+restricted share unit(s)
+the Securities and Futures Commission of Hong Kong
+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
+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
+the Class A Shares and Class B Shares in the share capital of the
+Company, as the context so requires
+holder(s) of the Share(s)
+Shared Patience Inc., a limited liability company incorporated under the
+laws of the BVI, which is wholly owned by Wang Xing
+256
+"Post-IPO Share Award Scheme"
+(609,744)
+"Onshore Holdcos", each an
+"Onshore Holdco❞
+"Mobike Beijing"
+"Companies Ordinance"
+"Company", "our Company",
+"the Company"
+"connected person(s)"
+"connected transaction(s)"
+"Consolidated Affiliated Entities"
+"Contractual Arrangement(s)"
+"CODM"
+"Controlling Shareholder(s)"
+"Director(s)"
+"Group", "our Group" or "the Group",
+"we", "us", or "our"
+"Hong Kong dollars" or "HK dollars"
+or "HK$"
+"Hong Kong Securities and
+Futures Ordinance" or "SFO"
+"Hong Kong Share Registrar❞
+"Crown Holdings"
+"Hong Kong" or "HK"
+"Class B Shares"
+2018 Annual Report (253)
+the articles of association of the Company adopted on August 30, 2018
+with effect from Listing, as amended from time to time
+has the meaning ascribed to it under the Listing Rules
+the audit committee of the Company
+the external auditor 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
+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
+DEFINITIONS
+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 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
+the board of Directors
+the British Virgin Islands
+the corporate governance code as set out in Appendix 14 to the Listing
+Rules
+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
+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
+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
+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
+the chief operating decision-maker who is responsible for allocating
+resources and assessing performance of the operating segments
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+As of December 31,
+Current assets
+Prepayments, deposits and other assets
+Investments in subsidiaries
+Non-current assets
+ASSETS
+"IPO"
+"Kevin Sunny"
+“Listing Date"
+“Listing Rules"
+"Main Board"
+"Meituan Finance"
+"Memorandum" or "Memorandum
+of Association"
+"Mobike"
+"Listing"
+"Independent Third Party(ies)"
+"IFRS"
+DEFINITIONS
+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
+has the meaning ascribed to it under the Listing Rules
+has the meaning ascribed to it under the Listing Rules
+the entities we control through the Contractual Arrangements, namely,
+the Onshore Holdcos and their respective subsidiaries (each a
+"Consolidated Affiliated Entity")
+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
+Crown Holdings Asia Limited, a limited liability company incorporated
+under the laws of the BVI, which is controlled by Wang Xing
+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
+Computershare Hong Kong Investor Services Limited
+the Hong Kong Special Administrative Region of the PRC
+254
+Meituan Dianping
+"Model Code"
+Issuance of ordinary shares
+40 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+RMB'000
+Wages, salaries and bonuses
+Key management compensation
+212,984
+407,248
+18,790
+28,276
+One of the Company's shareholders
+194,194
+378,972
+Associate of the Group
+Other payables to related parties
+(ii)
+89,216
+195,202
+10,000
+47,976
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Core connected person
+One of the Company's shareholders
+Associate of the Group
+Other receivables from related parties
+RMB'000
+175,548
+Pension costs and other employee benefits
+Share-based compensation expenses
+Others
+2017
+As of December 31,
+Balances with related parties
+d)
+c)
+38 RELATED PARTY TRANSACTIONS (Continued)
+For the year ended December 31, 2018
+2018
+19,654
+Year ended December 31,
+2017
+RMB'000
+2018
+RMB'000
+(a) Financial position of the Company
+Meituan Dianping
+250
+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).
+130,235
+31,240
+39 CONTINGENCIES
+14,461
+375
+54
+9,281
+457
+120,443
+233,504
+88
+248,428
+2017
+(RMB in thousands)
+Operating Loss
+(3,734,518)
+(1,530,599)
+Add:
+Fair value changes on investments measured at fair value
+through profit or loss
+(990,653)
+(156,792)
+Other gains, net
+(302,857)
+Depreciation of property, plant and equipment
+1,361,812
+Amortization of intangible assets
+317,537
+151,460
+Share-based compensation expenses
+(241,006)
+104,320
+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.
+643,223
+358,790
+1,346,000
+Adjusted net loss
+(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
+MANAGEMENT DISCUSSION AND ANALYSIS
+Year Ended
+December 31,
+December 31,
+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
+Impairment and expense provision for Mobike restructuring plan
+Impairment of intangible assets *
+December 31,
+81,661
+Amortization of intangible assets resulting from acquisitions
+459,997
+Impairment and expense provision for Mobike restructuring plan
+358,790
+Impairment of intangible assets
+*
+1,346,000
+Adjusted EBITDA
+(854,601)
+(1,358,685)
+Loss for the period
+(3,414,252)
+(2,180,818)
+Add:
+Fair value changes of convertible redeemable preferred shares
+663,781
+Share-based compensation expenses
+643,223
+459,997
+Fair value gains on investments **
+(984,359)
+(285,684)
+Gains on disposal of investments and subsidiaries ***
+(124,384)
+188,742
+(1,836,382)
+2018
+Unaudited
+89.1%
+1,745,006
+3.5%
+1,273,331
+5.9%
+15,502,428
+30.9%
+1,102,638
+5.0%
+50,122,320
+100.0%
+21,708,483
+100.0%
+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.
+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 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.
+24 Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+Gross Profit and Gross Margin
+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/(loss):
+Year Ended
+December 31, 2018
+December 31, 2017
+As a
+As a
+percentage of
+19,332,514
+percentage of
+65.6%
+(RMB in thousands, except for percentages)
+33,927,987
+100.0%
+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.
+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 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.
+2018 Annual Report
+23
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+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.
+The following table sets forth our cost of revenues by segment in 2018 and 2017:
+Cost of revenues:
+Food delivery
+In-store, hotel & travel
+New initiatives and others
+Total
+Year Ended
+December 31, 2018
+December 31, 2017
+As a
+percentage of
+total cost of
+As a
+percentage of
+total cost of
+Amount
+revenues
+Amount
+revenues
+32,874,886
+Three Months Ended
+December 31,
+Amount
+Amount
+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.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+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.
+Other Gains, Net
+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.
+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.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Income Tax Expenses
+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
+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.
+RECONCILIATION OF NON-IFRS MEASURES TO THE NEAREST IFRS MEASURES
+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.
+2018 Annual Report (27
+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.
+General and Administrative Expenses
+total revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+2018 Annual Report
+total revenues
+(RMB in thousands, except for percentages)
+Food delivery
+5,268,197
+13.8%
+1,699,419
+8.1%
+In-store, hotel & travel
+14,095,355
+89.0%
+9,579,479
+88.3%
+New initiatives and others
+(4,258,594)
+(37.9%)
+940,606
+46.0%
+Total
+15,104,958
+23.2%
+12,219,504
+36.0%
+As a result of the foregoing, our gross profit in 2018 and 2017 was RMB15.1 billion and RMB12.2 billion,
+respectively.
+Selling and Marketing Expenses
+Total
+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.
+25
+(472,874)
+104,606,058
+(748,356)
+(18,987,881)
+(115,492,695)
+Loss for the year
+(54,218)
+(1,888)
+Income tax expenses
+(18,933,663)
+(115,490,807)
+Loss before income tax
+(10,418)
+(48,267)
+accounted for using equity method
+Share of losses of investments
+(15,138,824)
+(104,606,058)
+redeemable preferred shares
+(19,214)
+(44,732)
+60,885
+294,047
+(3,826,092)
+Non-IFRS measures:
+(11,085,797)
+Adjusted EBITDA
+(4,733,831)
+Food delivery
+(RMB in thousands, except for percentages)
+As a
+percentage of
+total revenues
+Amount
+total revenues
+Amount
+percentage of
+As a
+December 31, 2017
+December 31, 2018
+Year Ended
+Revenues:
+The following table sets forth our revenues by segment in absolute amount and as a percentage of our total
+revenues in 2018 and 2017:
+Revenues by Segment
+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
+MANAGEMENT DISCUSSION AND ANALYSIS
+2018 Annual Report (21
+(2,852,716)
+(8,517,188)
+(2,691,811)
+Adjusted net loss
+38,143,083
+Fair value changes of convertible
+Finance income
+Gross profit
+Cost of revenues
+Revenues
+The following table sets forth the comparative figures for the years ended December 31, 2018 and 2017:
+YEAR ENDED DECEMBER 31, 2018 COMPARED TO YEAR ENDED DECEMBER 31, 2017
+MANAGEMENT DISCUSSION AND ANALYSIS
+2.
+Meituan Dianping
+20
+20
+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.
+Loss For the Period
+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.
+Income Tax Credits
+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.
+Loss Before Income Tax
+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.
+Fair Value Changes of Convertible Redeemable Preferred Shares
+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.
+Operating Loss
+MANAGEMENT DISCUSSION AND ANALYSIS
+Selling and marketing expenses
+Research and development expenses
+Finance costs
+Year Ended
+December 31,
+Operating loss
+208,260
+472,874
+1,836,382
+748,356
+Other gains, net
+through profit or loss
+investments measured at fair value
+General and administrative expenses
+Fair value changes on
+(2,171,408)
+(5,831,692)
+(3,646,634)
+(7,071,900)
+(15,871,901) (10,908,688)
+12,219,504
+15,104,958
+(50,122,320) (21,708,483)
+33,927,987
+65,227,278
+(RMB in thousands)
+2017
+2018
+December 31,
+Other gains, net
+58.5%
+62.0%
+971,100
+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)
+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
+1,865,113
+3.5%
+15,138,824
+Fair value changes of convertible redeemable preferred shares
+Share-based compensation expenses
+(208,260)
+Depreciation of property, plant and equipment
+4,252,292
+327,696
+Amortization of intangible assets
+1,114,509
+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 *
+1,346,000
+Adjusted EBITDA
+(4,733,831)
+(2,691,811)
+Loss for the year
+(115,492,695)
+(18,987,881)
+Add:
+100.0%
+21,031,933
+1,217,182
+8,823,623
+Revenues by Type
+MANAGEMENT DISCUSSION AND ANALYSIS
+22 Meituan Dianping
+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.
+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 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%.
+100.0%
+33,927,987
+100.0%
+65,227,278
+Total
+6.0%
+2,043,244
+17.2%
+11,243,834
+New initiatives and others
+32.0%
+10,852,810
+24.3%
+15,840,361
+In-store, hotel & travel
+The following table sets forth our revenues by type in absolute amount and as a percentage of our total
+revenues in 2018 and 2017:
+13.5%
+Revenues:
+December 31, 2018
+Other services and sales
+13.9%
+4,701,675
+14.4%
+9,391,406
+Online marketing services
+82.6%
+28,009,130
+72.1%
+Year Ended
+47,012,249
+(RMB in thousands, except for percentages)
+total revenues
+Amount
+total revenues
+Amount
+percentage of
+percentage of
+As a
+As a
+December 31, 2017
+Commission
+65,227,278
+DIRECTORS AND SENIOR MANAGEMENT
+33
+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.
+10,040,491
+Cash and cash equivalents at the beginning of the year
+Exchange gain/(loss) on cash and cash equivalents
+19,408,839
+9,376,575
+1,009,587
+(8,227)
+Cash and cash equivalents at the end of the year
+(51,524)
+17,043,692
+19,408,839
+Net Cash Used in Operating Activities
+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.
+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.
+Meituan Dianping
+MANAGEMENT DISCUSSION AND ANALYSIS
+(3,323,210)
+Net Cash Used in Investing Activities
+Net (decrease)/increase in cash and cash equivalents
+29,295,294
+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)
+Net cash generated from financing activities
+25,507,781
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+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.
+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
+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.
+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.
+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.
+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.
+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.
+2018 Annual Report
+32
+Net Cash Generated from Financing Activities
+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.
+Employees
+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.
+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
+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.
+Significant Investment and Material Acquisition
+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.
+2018 Annual Report
+31
+MANAGEMENT DISCUSSION AND ANALYSIS
+Foreign Exchange Risk
+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.
+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.
+4.
+Cash and cash equivalents included in the assets classified
+as held for sale
+30
+Zhang Chuan (II), aged 42, is a Senior Vice President and is responsible for overseeing the Company's in-store
+services business.
+Chen Liang received his bachelor's degree in mechatronic engineering from South China University of Technology
+in July 2002.
+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 (), aged 38, is a Senior Vice President and was responsible for overseeing the Company's hotel
+and travel businesses during the Reporting Period.
+DIRECTORS AND SENIOR MANAGEMENT
+37
+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.
+2018 Annual Report
+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).
+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.
+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.
+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.
+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.
+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.
+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.
+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.
+REPORT OF DIRECTORS
+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.
+30
+38 Meituan Dianping
+DIVIDEND POLICY AND FINAL DIVIDENDS
+RESULTS
+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.
+PRINCIPAL ACTIVITIES
+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.
+GLOBAL OFFERING
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+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.
+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.
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+Independent Non-executive Directors
+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.
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+Meituan Dianping
+34
+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.
+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.
+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.
+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.
+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 (), 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.
+Non-executive Directors
+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.
+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.
+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.
+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.
+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 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.
+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.
+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.
+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 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 (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 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.
+36
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+2018 Annual Report
+35
+Meituan Dianping
+36
+Beneficiary of a trust(¹)
+489,600,000 Class A Shares
+489,600,000 Class A Shares
+Founder of a trust(1)
+489,600,000 Class A Shares
+66.56%
+66.56%
+Interest in controlled corporation (1)
+83,588,783 Class A Shares
+11.36%
+Class A Shares-Mu Rongjun
+Charmway Enterprises (2)
+Shared Vision (2)
+Beneficial interest
+66.56%
+Interest in a controlled corporation
+16.13%
+Beneficial interest
+7,330,000 Class A Shares
+1.00%
+Day One Holdings Limited (2)
+118,650,000 Class A Shares
+16.13%
+TMF (Cayman) Ltd
+Mu Rongjun
+Trustee
+118,650,000 Class A Shares
+Trustee
+Beneficiary of a trust (2)
+16.13%
+118,650,000 Class A Shares
+TMF (Cayman) Ltd.
+Wang Xing
+Approximate
+percentage of
+489,600,000 Class A Shares
+118,650,000 Class A Shares
+Meituan Dianping
+46
+46
+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.
+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.
+REPORT OF DIRECTORS
+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)
+66.56%
+Capacity/Nature of interest
+interest in each
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+of Shares held
+class of Shares
+Beneficial interest
+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
+Number and class
+16.13%
+• approximately 35% to development new services and products;
+118,650,000 Class A Shares
+REPORT OF DIRECTORS
+Notes:
+(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.
+(2)
+(3)
+(4)
+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. 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.
+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).
+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
+48
+Meituan Dianping
+REPORT OF DIRECTORS
+2018 Annual Report (47
+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).
+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).
+PRE-IPO ESOP
+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.
+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.
+2018 Annual Report
+49
+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.
+REPORT OF DIRECTORS
+USE OF NET PROCEEDS FROM LISTING
+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:
+•
+approximately 35% to upgrade our technology and enhance our research and development capabilities;
+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).
+Founder of a trust(2)
+12.05%
+Beneficial interest
+16.13%
+Interest in controlled corporation (2)
+7,330,000 Class A Shares
+1.00%
+Class B Shares - Tencent
+Huai River Investment Limited (3)
+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
+573,097,093 Class B Shares
+8,850,245 Class B Shares
+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
+0.07%
+TPP Follow-on I Holding C Limited (3)
+Beneficial interest
+4,473,024 Class B Shares
+0.09%
+Class B Shares-Sequoia
+Sequoia Capital China Funds and
+Sequoia Capital Global Growth Funds (4)
+0.19%
+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).
+0.00%
+(6)
+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.
+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.
+EMOLUMENT POLICY
+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.
+43
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+MANAGEMENT CONTRACTS
+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.
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+REPORT OF DIRECTORS
+Meituan Dianping
+42
+Details of the emoluments of the Directors during the Reporting Period are set out in Note 8 to the consolidated
+financial statements.
+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 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.
+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.
+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.
+REPORT OF DIRECTORS
+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:
+Interest in controlled corporation (L)
+66.56%
+66.56%
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+Songtao Limited
+Interest in controlled corporation (L)
+Trust
+Beneficiary and founder of a Trust (L)
+WANG Xing(2)
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+each class
+of Shares
+Relevant company
+Nature of interest(1)
+Number and class
+chief executive
+Name of Director or
+of interest in
+percentage
+Approximate
+Interests of Directors and Chief Executives in the Company
+of securities
+Crown Holdings
+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.
+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.
+As of December 31, 2018, the Company's reserves available for distribution, amounted to approximately RMB258.3
+billion.
+DISTRIBUTABLE RESERVES
+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
+BANK LOANS AND OTHER BORROWINGS
+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.
+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
+For the year ended December 31, 2018, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+Major Customers
+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).
+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.
+approximately 10% for working capital and general corporate purpose.
+•
+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
+PROPERTY, PLANT AND EQUIPMENT
+DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
+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.
+The Directors during the Relevant Period and up to date of this annual report are:
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE 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.
+DIRECTORS AND SENIOR MANAGEMENT
+REPORT OF DIRECTORS
+41
+2018 Annual Report
+App 16 para
+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.
+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.
+DIRECTORS
+Dr. Shum Heung Yeung Harry (#)
+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
+Mr. Leng Xuesong (A)
+489,600,000
+Class A Shares
+MAJOR CUSTOMERS AND SUPPLIERS
+Interest in controlled corporation (L)
+Beneficial interest (L)
+REPORT OF DIRECTORS
+Relevant company
+Sequoia Capital China Funds
+and Sequoia Capital
+Number and class
+of securities
+Approximate
+percentage
+of interest in
+each class
+of Shares
+573,097,093
+12.05%
+Class B Shares
+Global Growth Funds
+60,000
+Class B Shares
+60,000
+45
+2018 Annual Report
+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.
+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.
+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.
+(4)
+Notes:
+(2)
+(1)
+Class B Shares
+0.00%
+60,000
+Class B Shares
+0.00%
+The letter "L" denotes the person's Long Position in such Shares.
+REPORT OF DIRECTORS
+SHUM Heung
+Yeung Harry (6)
+LENG Xuesong (6)
+6,000,000
+WANG Huiwen (4)
+Beneficiary and founder of a Trust (L)
+Trust
+36,400,000
+4.95%
+Class A Shares
+Interest in controlled corporation (L)
+Aim Mars Investment Limited
+36,400,000
+4.95%
+Class A Shares
+Interest in controlled corporation (L)
+Kevin Sunny
+36,400,000
+4.95%
+Class A Shares
+Halyburton (6)
+Beneficial interest (L)
+ORR Gordon Robert
+Interest in controlled corporations (L)
+SHEN Nanpeng Neil (5)
+Nature of interest(1)
+Beneficial interest (L)
+chief executive
+Meituan Dianping
+44
+Class B Shares
+0.49%
+23,278,600
+Beneficial interest (L)
+Name of Director or
+0.13%
+Class B Shares
+Shared Vision
+66.56%
+(5)
+Beneficial interest (L)
+Class A Shares
+1.00%
+7,330,000
+Interest in controlled corporation (L)
+16.13%
+118,650,000
+Class A Shares
+Interest in controlled corporation (L)
+16.13%
+Charmway Enterprises
+Day One Holdings Limited
+Interest in controlled corporation (L)
+16.13%
+118,650,000
+Class A Shares
+Trust
+Beneficiary and founder of a Trust (L)
+MU Rongjun (3)
+11.36%
+83,588,783
+Class A Shares
+Shared Patience
+118,650,000
+Class A Shares
+POST-IPO SHARE AWARD SCHEME
+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.
+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.
+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.
+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
+Eligible Participants
+Duration
+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.
+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.
+Meituan Dianping
+REPORT OF DIRECTORS
+Awards
+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.
+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.
+Grant of Award
+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 4.81% 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.
+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.
+2018 Annual Report
+57
+REPORT OF DIRECTORS
+56
+Grant Offer Letter and Notification of Grant of Options
+(iii) the nominal value of a Class B Share 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
+231,247,680
+252,774,461 89,316,913
+6,142,069
+3,367,084
+542
+Total
+Notes:
+(1) Including Shares that have not been issued pursuant to RSUs that had been vested as of the Listing Date.
+(2)
+The Shares underlying the vested RSUs were issued to the grantees in March 2019.
+(3)
+0
+Including the RSUs which have vested but the Shares have not been issued as of December 31, 2018.
+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:
+2018 Annual Report
+53
+REPORT OF DIRECTORS
+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.
+Qualifying Participants
+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.
+Maximum Number of Class B Shares
+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.
+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.
+POST-IPO SHARE OPTION SCHEME
+54
+3,367,084
+86,708,579
+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
+5,754,569
+6 years
+4 to 6 years
+0
+0
+0
+1,000,000
+387,500
+0
+0
+15,700,000
+Other Employees
+December 29, 2010 to 0 to 6 years
+August 2, 2018
+236,074,461
+1,000,000 166,667
+15,700,000 2,441,667
+0 247,947,680
+outstanding
+as of
+July 1, 2017
+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
+options
+outstanding
+Listing Date
+and the
+December 31,
+2018 and
+price
+2018
+price
+December 31,
+the exercise
+December 31,
+the exercise
+Number of
+exercise
+price(3)
+Vesting
+Period (¹)
+Date of Grant
+Name
+options
+outstanding
+as of
+December 31,
+2018 and
+Date to
+from the
+Listing Date
+to
+as of the
+Exercise Price Listing Date(2)
+2018(4)
+Number of
+options
+exercised
+Number of
+50
+50
+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
+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
+Meituan Dianping
+ii.
+Time and conditions of exercise
+REPORT OF DIRECTORS
+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
+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.
+Form and timing of payment of RSUs
+Number of
+ii.
+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.
+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.
+January 1, 2016 to
+July 1, 2018
+Directors
+Mu Rongjun
+6 years
+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
+Meituan Dianping
+52
+42
+(4) Including the options which have been exercised but the Shares have not been issued as of December 31, 2018.
+lapsed
+RSUs vested
+during the
+during the
+Mu Rongjun
+Wang Huiwen
+Directors
+2018 (3)
+2018
+2018
+2018 (2)
+December 31, December 31, December 31, December 31,
+The Shares underlying the exercised options were issued to the grantees in March 2019.
+Termination
+the Listing
+the Listing
+Date to
+to
+Shares
+underlying
+RSUs
+period from
+period from
+from the
+Listing Date
+Date to
+July 1, 2017 to
+July 1, 2018
+(3)
+(2)
+7,578,600
+0
+0
+0
+2,522,660
+5,000,000
+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
+(US$1.005-
+US$3.86)
+Other Employees
+May 31, 2006 to
+August 1, 2018
+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
+259,325,919 139,991,339(3)
+Total
+Including Shares that have not been issued pursuant to options that had been exercised as of the Listing Date.
+US$3.86)
+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-
+(US$0.0708-
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+quarter commencing from
+(ii)
+(1)
+Notes:
+Total
+10,746,663
+0
+2,620,121
+0
+13,366,784
+December 20, 2018 until
+September 20, 2022
+4 years
+October 4, 2018
+to November 23,
+2018
+Other Employees
+quarter commencing from
+60,000
+0
+0
+3,750
+60,000
+6.25% to vest in each
+November 23,
+2018
+13,546,784
+Shum Heung
+Yeung Harry
+11,250
+0
+(i)
+59
+2018 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 Relevant Period.
+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.
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+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 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.
+PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
+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.
+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.
+EQUITY-LINKED AGREEMENTS
+REPORT OF DIRECTORS
+Meituan Dianping
+58
+(2) Including the RSUs which have vested but the Shares have not been issued as of December 31, 2018.
+The Shares underlying the vested RSUs were issued to the grantees in March 2019.
+10,926,663
+2,620,121
+September 20, 2022
+0
+60,000
+during the
+year ended
+December 31,
+RSUS lapsed
+cancelled
+during the
+year ended
+December 31,
+during the
+year ended
+December 31,
+2018 (1)
+2018
+Vesting Period
+Date of Grant
+during the
+year ended
+December 31,
+RSUs vested
+RSUs
+RSUs granted
+underlying
+Number of
+Number of
+Shares
+Directors
+The table below shows the details of RSUs granted to the Directors and other employees under the Post-IPO Share
+Award Scheme:
+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.
+December 20, 2018 until
+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
+Shares
+underlying
+RSUs
+outstanding
+as of
+December 31,
+Name
+2018
+2018
+0
+3,750
+0
+6.25% to vest in each
+November 23,
+2018
+Leng Xuesong
+September 20, 2022
+December 20, 2018 until
+quarter commencing from
+60,000
+0
+60,000
+Orr Gordon Robert
+Halyburton
+November 23,
+2018
+2018 (2)
+6.25% to vest in each
+60,000
+3,750
+0
+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;
+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.
+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.
+(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.
+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
+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.
+CONTRACTUAL ARRANGEMENTS
+(a)
+(c)
+(b)
+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:
+REPORT OF DIRECTORS
+Meituan Dianping
+62
+nothing has come to its attention that causes it to believe that the disclosed continuing connected
+transactions have not been approved by the Board;
+2018 Annual Report
+100%
+REPORT OF DIRECTORS
+62
+(iii)
+(ii) Shanghai Lutuan is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Tianjin Antechu Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(i)
+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.
+(1)
+63
+Notes:
+Registered Shareholders(1)
+Service
+Fees
+Management and
+consulting services
+WFOES
+100%
+Our Company
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the Contractual Arrangements:
+Onshore Holdcos and their subsidiaries
+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.
+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.
+(c)
+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.
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+Meituan Dianping
+60
+60
+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.
+Payment Services Framework Agreement
+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 RMB450 million, while the actual transaction amount for
+the year ended December 31, 2018 is approximately RMB368.4 million.
+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
+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.
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+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.
+on normal commercial terms or better; and
+(b)
+in the ordinary and usual course of business of the Group;
+(a)
+The independent non-executive Directors have reviewed the continuing connected transactions outlined above, and
+confirmed that such continuing connected transactions had been entered into:
+Annual Review by the Independent Non-executive Directors and the Auditor
+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.
+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.
+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.
+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.
+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.
+D. Pre-IPO ESOP
+Issue of Class B Shares to Connected Grantees of Restricted Share Units
+NON-EXEMPT CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+(iv)
+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.
+(v)
+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.
+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.
+The Foreign Investment Law
+REPORT OF DIRECTORS
+67
+2018 Annual Report
+For further details in relation to the New VIE Structure, please refer to the announcement of the Company dated
+November 13, 2018.
+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.
+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.
+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.
+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").
+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
+(3)
+(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;
+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"):
+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.
+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.
+69
+2018 Annual Report
+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.
+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.
+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.
+•
+These are the certain risks that are associated with the Contractual Arrangements, including:
+New VIE Structure in Relation to Shanghai Hantao
+Risks Relating to the Contractual Arrangements
+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
+REPORT OF DIRECTORS
+Meituan Dianping
+80
+68
+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.
+REPORT OF DIRECTORS
+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.
+Loan Agreements
+64
+' denotes a contractual relationship.
+(3)
+>” denotes a direct legal and beneficial ownership in the equity interest.
+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.
+Beijing Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%; and
+(xi)
+Meituan Dianping
+(x)
+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;
+(viii)
+Beijing Xinmeida is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vii)
+Beijing Sankuai Cloud Computing is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vi)
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(ix) Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+REPORT OF DIRECTORS
+"----" 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.
+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.
+Powers of Attorney
+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.
+Equity Pledge Agreements
+REPORT OF DIRECTORS
+Meituan Dianping
+99
+(4)
+66
+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.
+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.
+Exclusive Business Cooperation Agreements
+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:
+65
+(2)
+Wang Xing
+REPORT OF DIRECTORS
+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.
+76
+76
+Meituan Dianping
+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.
+CORPORATE GOVERNANCE REPORT
+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
+Continuous Professional Development of Directors
+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.
+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.
+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.
+CORPORATE GOVERNANCE REPORT
+CORPORATE GOVERNANCE REPORT
+The Board is pleased to present the corporate governance report of the Company for the Relevant 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 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".
+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
+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
+BOARD OF DIRECTORS
+Responsibilities
+Wang Xing
+74 Meituan Dianping
+Mu Rongjun
+Non-executive Directors
+78
+Meituan Dianping
+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
+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.
+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 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
+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.
+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.
+A list of Directors and their respective biographies are set out in the section headed "Directors and Senior
+Management" of this annual report.
+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.
+Lau Chi Ping Martin
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+Leng Xuesong
+Shum Heung Yeung Harry
+V
+V
+Note: (1)
+Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+App 14 1.0)
+2018 Annual Report (77
+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
+Wang Huiwen
+Hong Kong, March 11, 2019
+CORPORATE GOVERNANCE REPORT
+On behalf of the Board
+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:
+(a)
+no change without independent non-executive Directors' approval;
+(b)
+Listing Rules Implications and Waivers from the Stock Exchange
+no change without independent Shareholders' approval;
+(d)
+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 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
+(e)
+the Group will disclose details relating to the Contractual Arrangements on an ongoing basis.
+2018 Annual Report (71
+(c)
+REPORT OF DIRECTORS
+Meituan Dianping
+70
+Chairman
+•
+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.
+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 of the 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.
+For further details, please refer to the section headed "Risk Factors-Risks Relating to Our Contractual
+Arrangements" of the Prospectus.
+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:
+(i)
+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
+(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.
+REPORT OF DIRECTORS
+Annual Review by the Independent Non-executive Directors and the Auditor
+(iii)
+(a) the transactions carried out during the Relevant Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+AUDIT COMMITTEE
+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.
+CORPORATE GOVERNANCE
+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.
+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
+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 independent non-executive Directors have reviewed the Contractual Arrangements outlined above, and
+confirmed that:
+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.
+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.
+IMPORTANT EVENTS AFTER THE REPORTING PERIOD
+2018 Annual Report (73
+PERMITTED INDEMNITY PROVISION
+(c)
+(b)
+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.
+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
+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.
+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.
+During the Reporting Period, the charitable and other donations made by the Group amounted to approximately
+RMB12 million.
+LEGAL PROCEEDINGS AND COMPLIANCE
+DONATIONS
+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.
+72
+Meituan Dianping
+REPORT OF DIRECTORS
+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.
+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;
+CORPORATE GOVERNANCE REPORT
+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;
+(j)
+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;
+(k) making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+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;
+84
+Meituan Dianping
+(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;
+(d)
+(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)
+(e)
+(f)
+(g)
+reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+(h)
+the re-appointment of the Company's compliance advisor;
+(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
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+CORPORATE GOVERNANCE REPORT
+(h)
+the Board Diversity Policy;
+the disclosure in the Corporate Governance Report and the Company's compliance with the CG Code;
+(b) the structure, size and composition of the Board;
+(၁)
+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 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)
+(g)
+(i)
+the Conflict of Interest Declaration Policy of the Company and any potential conflict of interest between the
+Company and the WVR beneficiaries;
+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.
+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
+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.
+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.
+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.
+88
+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.
+Meituan Dianping
+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.
+2018 Annual Report
+(a)
+CORPORATE GOVERNANCE REPORT
+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.
+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 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
+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.
+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 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.
+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;
+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:
+CORPORATE GOVERNANCE REPORT
+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.
+Executive Directors
+Name of Director
+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:
+Board Activity
+89
+2/2
+2/2
+2/2
+1/2
+2/2
+Wang Xing
+||
+(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.
+80
+Meituan Dianping
+Notes:
+Mu Rongjun
+Wang Huiwen
+Non-executive Directors
+2/2
+222
+2/2
+2/2
+2/2
+222
+2/2
+Committee(3)
+Committee(2)
+Committee(1)
+Committee
+Board
+Governance
+Nomination
+Audit Remuneration
+Corporate
+Attendance/No. of Meetings held during the Relevant Period
+Shum Heung Yeung Harry
+Leng Xuesong
+Orr Gordon Robert Halyburton
+Independent Non-executive Directors
+Neil Nanpeng Shen
+Lau Chi Ping Martin
+CORPORATE GOVERNANCE REPORT
+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.
+BOARD COMMITTEES
+Audit Committee
+(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;
+(c)
+(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
+(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;
+Meituan Dianping
+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.
+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
+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.
+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
+81
+CORPORATE GOVERNANCE REPORT
+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.
+22
+2/2
+56.0
+4,018,959 12,988,077 33,927,987 65,227,278
+2,779,455 5,941,236 12,219,504 15,104,958
+(9,242,729) (10,631,096) (18,933,663) (115,490,807)
+(10,519,338) (5,794,998) (18,987,881) (115,492,695)
+97,528,531
+32,320,388
+2,762,388
+2,236,165
+(10,519,338) (5,789,900) (18,916,617) (115,477,171) 2,238,769
+(11,774,342) (8,642,934) (15,558,395) (123,296,397) 2,919,043
+(11,774,342) (8,637,836) (15,487,131) (123,281,091)
+2,921,721
+CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+2015
+2016
+As of December 31,
+2017
+(RMB in thousands)
+2018
+2019
+ASSETS
+(RMB in thousands)
+Non-current assets
+2019
+Year ended December 31,
+2016
+2017
+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;
+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;
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+2019 Annual Report Meituan Dianping
+5
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
+Revenues
+Gross profit
+Profit/(loss) before income tax
+Profit/(loss) for the year
+Profit/(loss) for the year attributable to equity
+holders of the Company
+Total comprehensive income/(loss) for the year
+Total comprehensive income/(loss) for the year
+attributable to equity holders of the Company
+2015
+2018
+Current assets
+21,015,464 28,082,028 29,196,028 47,512,119 49,877,870
+21,874,383 23,634,532 54,438,135 73,149,392 82,135,045
+42,889,847 51,716,560 83,634,163 120,661,511
+42,889,847
+51,716,560 83,634,163 120,661,511 132,012,915
+6
+Meituan Dianping 2019 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+FINANCIAL INFORMATION BY SEGMENT
+Unaudited
+Three Months Ended
+December 31, 2019
+Food
+delivery
+In-store,
+hotel &
+New
+December 31, 2018
+In-store,
+initiatives
+travel
+Total equity and liabilities
+60,559,519 77,291,911 124,135,545 34,151,739 39,958,521
+50,316,796 64,815,964 103,618,175 2,326,683 3,365,958
+10,242,723 12,475,947 20,517,370 31,825,056 36,592,563
+Total liabilities
+132,012,915
+Total assets
+EQUITY
+Equity attributable to equity holders
+of the Company
+Non-controlling interests
+Total Equity
+(17,669,672) (25,622,386)
+(iii)
+47,035
+86,504,334
+5,438
+92,112,445
+(58,051)
+(17,669,672) (25,575,351) (40,501,382)
+86,509,772
+92,054,394
+LIABILITIES
+Non-current liabilities
+Current liabilities
+(40,559,116)
+57,734
+and others
+(ii)
+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:
+42/F, Edinburgh Tower
+The Landmark
+Computershare Hong Kong Investor Services Limited
+Shops 1712-1716, 17th Floor
+Hopewell Center
+183 Queen's Road East
+Wanchai
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+15 Queen's Road Central
+Hong Kong
+As to the PRC law:
+Han Kun Law Offices
+Beijing office
+9/F, Office Tower C1
+Oriental Plaza
+Skadden, Arps, Slate, Meagher & Flom
+No. 1 East Chang An Ave
+Beijing 100738, the PRC
+Hong Kong
+18/F, The Hong Kong Club Building
+No. 4 Wang Jing East Road
+Chaoyang District
+Beijing 100102
+China
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Wang Huiwen (X)
+CORPORATE GOVERNANCE COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Orr Gordon Robert Halyburton
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+Level 54, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+Meituan Dianping 2019 Annual Report
+LEGAL ADVISORS
+CORPORATE INFORMATION
+HONG KONG SHARE REGISTRAR
+As to Hong Kong law (in alphabetical order):
+Davis Polk & Wardwell
+3A Chater Road
+As to Cayman Islands law:
+Maples and Calder (Hong Kong) LLP
+26th Floor, Central Plaza
+STOCK CODE
+3690
+COMPANY'S WEBSITE
+about.meituan.com
+2019 Annual Report Meituan Dianping
+3
+CORPORATE INFORMATION
+WEIGHTED VOTING RIGHTS
+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.
+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 46.08% 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 10.13% 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 2.93% 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.
+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 14.47% the total number of issued Class B Shares as at
+the date of this annual report.
+4
+Meituan Dianping 2019 Annual Report
+CORPORATE INFORMATION
+Hong Kong
+181 Queen's Road Central
+Grand Millennium Plaza
+27/F, Low Block
+18 Harbour Road, Wanchai
+Hong Kong
+Maples Fund Services (Cayman) Limited
+PO Box 1093, Boundary Hall
+Cricket Square
+Grand Cayman KY1-1102
+Cayman Islands
+(i)
+PRINCIPAL BANKER
+Shouti Sub-branch
+1/F, Tengda Building
+No. 168 Xizhimenwai Street
+Haidian District
+Beijing
+China
+COMPLIANCE ADVISOR
+Guotai Junan Capital Limited
+China Merchants Bank, Beijing Branch,
+Food
+delivery
+hotel &
+travel
+New
+initiatives
+Number of food
+delivery transactions
+Year Ended
+December 31,
+December 31,
+2019
+2018
+(in millions)
+Year-over-
+year change
+(in percentages)
+450.5
+6.2
+400.4
+12.5%
+5.8
+7.1%
+(units)
+annual Transacting User
+27.4
+Average number of transactions per
+32.3%
+222.1
+176.8
+25.6%
+New initiatives and others
+17.4
+13.1
+31.0%
+67.3
+20.3%
+Total
+189.9
+138.0
+37.6%
+682.1
+515.6
+Number of Transacting Users
+Number of Active Merchants
+(in percentages)
+23.8
+15.4%
+hotel room nights
+110.0
+74.4
+47.9%
+392.4
+283.9
+2019 Annual Report Meituan Dianping
+In the year ended December 31, 2019, we achieved strong revenues growth and profitability improvement across
+all major business segments. Moreover, we achieved an important milestone of turning both operating profit and
+operating cash flow positive first time in our history. Total revenues increased by 49.5% year-over-year to RMB97.5
+billion from RMB65.2 billion in 2018. Total gross profit increased by 114.0% year-over-year to RMB32.3 billion from
+RMB15.1 billion in 2018, and operating profit turned to positive RMB2.7 billion from negative RMB11.1 billion in
+2018. Adjusted EBITDA and adjusted net profit were RMB7.3 billion and RMB4.7 billion in 2019, respectively. Our
+operating cash flow turned to positive RMB5.6 billion in 2019 from negative RMB9.2 billion in 2018. We had cash
+and cash equivalents of RMB13.4 billion and short-term investments of RMB49.4 billion as of December 31, 2019,
+compared to the balance of RMB17.0 billion and RMB41.8 billion, respectively, as of December 31, 2018.
+FINANCIAL PERFORMANCE HIGHLIGHTS
+On behalf of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2019.
+Thanks to our steadfast investments over the past few years, we have successfully built the world's largest, most
+efficient, and most responsive on-demand delivery network. During the pandemic lockdown, our delivery network
+has become a crucial infrastructure for local services, and has played an indispensable role on the timely delivery
+of food and daily necessities to residents in China. Meanwhile, we have increasingly realized the significance
+of improving our platform capabilities and further enriching our products and services, the opportunities and
+responsibilities entrusted to us in this era of digital transformation. While the digitization of the entire industry
+value chain is still at its early stage, we shall continue to be a leading promoter and long-term beneficiary of this
+underlying trend. We are committed to providing consumers with better local services, maximizing value for all
+participants in our ecosystem, and fulfilling our mission of helping people eat better, live better.
+As we entered into a new decade, the world has confronted the severe outbreak of coronavirus and challenges that
+lie ahead. As near-term impacts of coronavirus subside, we believe the growth of local services shall gradually pick
+up and reaccelerate over the long run. Furthermore, the pandemic has raised public awareness of the urgency and
+importance of digitizing the service industry on both the demand and supply sides, which has strengthened our
+determination to strive for continuous improvements in the core elements of our business model.
+Meituan Dianping's performance in 2019 was a testament to our strategy and determination to build China's leading
+e-commerce platform for local services. It has proven the potency of both our operational philosophy and business
+model as we move along the path towards sustainable growth.
+To our Shareholders:
+CHAIRMAN'S STATEMENT
+Number of domestic
+36.4%
+6,393.4
+8,722.1
+Three Months Ended
+December 31, December 31,
+Year Ended
+Year-over- December 31, December 31,
+Year-over-
+2019
+(in millions)
+2018
+35.3%
+year change
+2019
+(in millions)
+2018
+year change
+(in percentages)
+2,505.3
+1,832.3
+36.7%
+(in percentages)
+44.7
+60.4
+In-store, hotel & travel
+Year Ended
+December 31, 2019
+December 31, 2018
+Food
+delivery
+In-store,
+hotel &
+New
+initiatives
+travel
+and others
+Food
+delivery
+In-store,
+hotel &
+travel
+New
+initiatives
+and others
+(RMB in thousands, except for percentages)
+20,409,854 38,143,083 15,840,361
+2,340,845
+11,243,834
+(23.3%)
+86.8%
+(978,985)
+3,988,258
+and others
+(RMB in thousands, except for percentages)
+Revenues
+15,715,710
+6,356,945
+6,085,598
+11,006,277
+11.5%
+4,594,132
+Gross profit/(loss)
+Gross margin
+2,786,936
+17.7%
+5,642,495
+88.8%
+1,288,698
+21.2%
+1,471,721
+13.4%
+4,203,043
+Block B&C, Hengjiweiye Building
+5,268,197
+13.8%
+89.0%
+year change
+(RMB in billions)
+(in percentages)
+2019
+(RMB in billions)
+2018
+year change
+(in percentages)
+Gross transaction volume:
+Food delivery
+112.1
+80.2
+39.9%
+392.7
+282.8
+38.9%
+2018
+2019
+Year-over-
+Year-over- December 31, December 31,
+(4,258,594)
+(37.9%)
+Revenues
+54,843,205
+22,275,472
+Gross profit/(loss)
+10,233,188
+19,746,355
+14,095,355
+Gross margin
+88.6%
+2019 Annual Report Meituan Dianping
+8
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+OPERATING METRICS
+Three Months Ended
+December 31, December 31,
+Year Ended
+18.7%
+Meituan Dianping 2019 Annual Report
+NOMINATION COMMITTEE
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+Report of Directors
+48
+Corporate Governance Report
+86
+Environmental, Social and Governance Report
+110
+Independent Auditor's Report
+144
+Consolidated Income Statement
+150
+Consolidated Statement of
+Comprehensive Income/(Loss)
+151
+Consolidated Statement of Financial Position
+152
+Consolidated Statement of Changes in Equity
+154
+42
+Consolidated Statement of Cash Flows
+Directors and Senior Management
+Management Discussion and Analysis
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Mu Rongjun ()
+美团 美团点评
+Meituan Dianping
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+Stock Code: 3690
+HOTEL
+Δ
+ANNUAL REPORT 2019
+100000
+0000
+000
+CONTENTS
+Corporate Information
+Financial Summary and Operation Highlights
+Chairman's Statement
+2
+6
+9
+17
+156
+38.2%
+158
+AUTHORIZED REPRESENTATIVES
+Mr. Wang Xing ()
+Mr. Wang Huiwen (X)
+AUDITOR
+PricewaterhouseCoopers
+Certified Public Accountants and
+Registered PIE Auditor
+22/F, Prince's Building
+Central
+Hong Kong
+Mr. Orr Gordon Robert Halyburton (Chairman)
+Mr. Leng Xuesong (A)
+Dr. Shum Heung Yeung Harry (¥)
+REMUNERATION COMMITTEE
+PO Box 309, Ugland House
+Grand Cayman, KY1-1104
+Cayman Islands
+Notes to the Consolidated Financial Statements
+Ms. Lau Yee Wa ()
+Mr. Wang Yixiang (1)
+REGISTERED OFFICE
+Dr. Shum Heung Yeung Harry (Á¥)
+Glossary
+Definitions
+AUDIT COMMITTEE
+口口
+273
+280
+CORPORATE INFORMATION
+BOARD OF DIRECTORS
+JOINT COMPANY SECRETARIES
+2
+Mr. Wang Xing (E) (Chairman of the Board)
+Mr. Mu Rongjun ()
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+Mr. Wang Huiwen (X)
+Non-executive Directors
+Mr. Lau Chi Ping Martin ()
+Independent Non-executive Directors
+Executive Directors
+Mr. Neil Nanpeng Shen ()
+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.
+(a)
+The Nomination Committee's major work during the Reporting Period include:
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+94
+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.
+reviewing and monitoring the implementation of the board diversity policy;
+During the Reporting Period, the Nomination Committee met once. Individual attendance of each Nomination
+Committee member is set out on page 91.
+(b)
+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.
+(c)
+reviewing the re-election of Directors and its schedule; and
+(d) reviewing and assessing the independence of the independent non-executive Directors.
+In accordance with the board diversity policy of the Company, the Nomination Committee considered the gender,
+age, cultural and educational background, professional experience, knowledge and length of service of the
+candidates for re-election of the retiring executive Directors, Wang Xing, Mu Rongjun and Wang Huiwen, in 2019.
+After due consideration of the aforementioned factors and the previous contributions of the executive Directors,
+the Nomination Committee was satisfied that Wang Xing, Mu Rongjun and Wang Huiwen would continue to bring
+valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning
+and diversity.
+Ensures that the Company has
+established and maintained effective
+risk management and internal control
+systems
+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.
+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) developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+(b) reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+(c) reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory
+requirements;
+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.
+reviewing and assessing the structure, size, composition and diversity of the Board;
+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, make recommendations on changes
+to the Board to complement the Company's corporate strategy.
+(a) review compensation and benefits framework and structure; and
+developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+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;
+(c) 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
+(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 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.
+During the Reporting Period, the Remuneration Committee met once. Individual attendance of each Remuneration
+Committee member is set out on page 91.
+The Remuneration Committee's major work during the Reporting Period include:
+(d) developing, reviewing and monitoring the code of conduct and compliance manual (if any) applicable to
+employees and Directors;
+(b)
+review of director and management compensation scheme;
+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.
+2019 Annual Report Meituan Dianping
+93
+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)
+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.
+2019 Annual Report Meituan Dianping
+(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
+96
+reviewing the disclosure in the Corporate Governance Report and the Company's compliance with the CG
+Code;
+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;
+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;
+(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;
+(h)
+(i)
+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.
+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.
+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. 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.
+2019 Annual Report Meituan Dianping
+97
+98
+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 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, 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 consisting
+of policies and procedures that it considers to be appropriate for its business operations, and it is dedicated to
+continuously improving these systems.
+Organizational Structure for Risk Management
+The Company is committed to continuously improving the risk management system by optimizing the organizational
+structure for risk management, standardizing the risk management process and enhancing the risk management
+ability, with an aim 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.
+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 organizational structure for risk management across all divisions, details of which are set
+out below.
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+The Board of Directors
+Assesses and determines the nature
+and level of the risks that are acceptable
+to the Company in achieving its
+strategic objectives
+(f)
+95
+(e)
+CORPORATE GOVERNANCE REPORT
+96
+CORPORATE GOVERNANCE REPORT
+(e)
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+(f) reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+(g)
+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;
+(h)
+(i)
+(j)
+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 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;
+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;
+(k)
+making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+(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;
+Remuneration Committee
+(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.
+During the Reporting Period, the Corporate Governance Committee met three times. Individual attendance of each
+Corporate Governance Committee member is set out on page 91.
+The Corporate Governance Committee's major work during the Reporting Period include:
+(a)
+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);
+(b) reviewing the code of conduct applicable to employees and Directors;
+(c) assessing, reviewing and making recommendation to the Board for the re-appointment of the Company's
+compliance advisor;
+Meituan Dianping 2019 Annual Report
+(d)
+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.
+(c)
+(f)
+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.
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+Board Activity
+The Board has met five 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:
+Name of Director
+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.
+Attendance/No. of Meetings Held during the Reporting Period
+Board
+Committee
+Remuneration
+Committee
+Nomination
+Corporate
+Governance
+Committee
+Committee
+Executive Directors
+Wang Xing
+5/5
+Mu Rongjun
+Audit
+Appointments and Re-election of Directors
+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.
+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.
+99
+2019 Annual Report Meituan Dianping
+The Second Line of Defence mainly consists of, among others, the internal control department, finance department,
+legal department, business transaction security team, safety affairs department and business compliance team
+of the Company. This line of defence 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, 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 Second Line of Defence Risk Management
+The First Line of Defence is mainly formed by the business groups and functional departments of the Company who
+are responsible for the daily operation and management. It is responsible for designing and implementing mitigation
+measures to address the risks.
+The First Line of Defence - Operation and Management
+<<<
+The Third Line of Defence
+The Second Line of Defence
+The First Line of Defence
+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
+Internal Audit and Fraud
+Investigation Team
+Internal control, finance, legal,
+information security, business
+transaction security, safety affairs,
+business compliance and other teams
+conduct daily supervision on the first
+line of defence and make regular
+compliance inspection
+Risk Management Team
+Each of the business teams
+undertake daily business operation
+management and internal control
+functions
+Business Team
+Designs, implements and supervises the risk management and internal control systems, and provides confirmation to the Audit Committee on the
+effectiveness of the risk management and internal control systems
+The Senior 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
+Formulates, reviews and evaluates the corporate governance
+policies of the Company and review the Company's compliance
+with the corporate governance code and related disclosure
+Corporate Governance Committee
+00
+90
+CORPORATE GOVERNANCE REPORT
+5/5
+Wang Huiwen
+5/5
+1/1
+CORPORATE GOVERNANCE REPORT
+BOARD COMMITTEES
+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) 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 Reporting Period, the Audit Committee met four times. Individual attendance of each Audit Committee
+member is set out on page 91. The Audit Committee also met the external auditor four times without the presence
+of the executive Directors.
+The Audit Committee's major work during the Reporting Period include:
+92
+92
+(a)
+reviewing the 2019 interim report;
+(b) reviewing the Company's quarterly results announcements for the first quarter ended March 31, 2019 and the
+third quarter ended September 30, 2019, respectively;
+(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
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+(e) reviewing the Company's continuing connected transactions; and
+91
+reviewing the terms of engagement, independence and remuneration of the external auditor.
+2019 Annual Report Meituan Dianping
+During the Reporting Period, the Chairman met once with the independent non-executive Directors without the
+presence of executive Directors.
+-- 1/1
+Non-executive Directors
+Lau Chi Ping Martin
+5/5
+Neil Nanpeng Shen
+5/5
+55
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+5/5
+4/4
+Leng Xuesong
+5/5
+on the design, implementation and
+supervision of the risk management and
+internal control systems on an ongoing basis
+1/1
+Shum Heung Yeung Harry
+4/4
+1/1
+3/3
+ངང
+1/1
+3/3
+1/1
+3/3
+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.
+On May 17, 2019, 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 May 17, 2019. 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.
+5/5
+4/4
+Monitors the management of the Company
+CORPORATE GOVERNANCE REPORT
+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
+August 2019.
+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.
+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; (ii) increasing investment in building the "Internet Plus
+University" and developing the "panoramic learning map" in order to establish a 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.
+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.
+Crisis Management and Reputation Risk
+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 its clients 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 optimize 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, so that
+they can make timely and appropriate responses to any crisis that arises in accordance with established policies
+and working procedures.
+2019 Annual Report Meituan Dianping
+103
+CORPORATE GOVERNANCE REPORT
+Fraud Risk
+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. With the ongoing expansion and
+development of the Company, together with the increasing complexity of its business, fraud risk is likely to increase.
+For example, fraudulent activities engaged by business partners, employees or third parties may exert a negative
+impact on the operations, finance and reputation of the Company.
+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 optimizes such systems to
+identify and mitigate fraud risk. The Company conducts comprehensive and thorough investigation on any identified
+fraudulent conduct. The employees who are found to have engaged in 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 laws and regulations. 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 behaviors and to build a
+healthy, orderly and civilized internet ecosystem through technological cooperation and information sharing.
+The Outbreak Risk of the Novel Coronavirus (COVID-19)
+In December 2019, a novel strain of coronavirus temporarily named COVID-19 by the World Health Organization
+was reported to have surfaced in Wuhan, China. After the outbreak of the COVID-19 epidemic in China, strict
+epidemic prevention and control measures were adopted in China in order to prevent further spread of the disease.
+Commercial activities were restricted, tourism activities and public transportation were controlled and public places
+were closed in the affected regions. The aforementioned restrictive measures and consumers' concerns about
+hygiene have drastically reduced consumers' demands for local lifestyle services, and a considerable number of
+local lifestyle merchants have suspended their operations or postponed to resume operations. The above situations
+may cause serious interference to the Company's operations and adversely affect the Company's business. At
+the same time, the further outbreak of the COVID-19 epidemic around the world may exacerbate market volatility
+and have continuous negative economic impact on China and the global market, and may raise concerns about
+China's economic and global economic prospects. The degree of impact of the above COVID-19 on the Company's
+business will depend on future evolvement of the situation, including, among other things, the latest news about
+the severity of the coronavirus and the effect of suppressing or treating the coronavirus on the human body. Due
+to the significant uncertainty and unpredictability of these factors, it is currently difficult to reasonably estimate the
+duration of interference with the Company's business and its related financial impact.
+The Company has adopted a number of positive measures to address COVID-19 epidemic. For details of the
+relevant information, please see section headed "Environmental, Social and Governance Report - We Take Action
+to Combat Coronavirus" of this annual report.
+104
+Meituan Dianping 2019 Annual Report
+Internal Control
+CORPORATE GOVERNANCE REPORT
+Based on the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring
+Organizations 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 its operational, reporting and compliance requirements.
+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 involved in its business operations.
+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 and the senior
+management. Members of the internal audit department hold regular meetings with the management to discuss
+about 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 issues identified be delivered to the
+committee in a timely manner. The Audit Committee then discusses the reported issues and reports to the Board
+when necessary.
+The Company has designed and adopted strict internal procedures to ensure its business operation complies
+with the relevant rules and regulations. Its internal control team works closely with its business units to (i) perform
+risk assessments and provide advice on risk management strategies, (ii) improve business process efficiency and
+monitor internal control effectiveness 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 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.
+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 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'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.
+2019 Annual Report Meituan Dianping
+Meituan Dianping 2019 Annual Report
+102
+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 minimize the risk of user data loss. For its site reliability, Engineering Department
+establishes protocols for the design, implementation and monitoring of offsite backups.
+The Third Line of Defence mainly consists of the functions of internal audit and fraud investigation of the Company.
+The internal audit department 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 fraud investigation function is responsible for receiving
+whistle-blower reports through various channels and for following up and carrying out independent investigations
+on alleged fraudulent activities.
+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 misstatements or losses.
+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 optimized such process constantly.
+During the Reporting Period, in order to further improve the coverage and depth of risk assessment, the Company's
+internal control department established a risk assessment project team, which 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.
+In conducting risk assessments, the Company comprehensively utilized 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.
+With regard to daily operations, the business and functional departments of each business group 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 senior
+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.
+The Company's risk management team 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.
+100
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+Major Risks
+In 2019, the management of the Company identified six major risks through the above risk management process
+and in light of the rapid development of the internet industry and the rising incidence of fraud cases, fraud risk
+has been added as a major risk category of the Company, as compared with 2018. Furthermore, the outbreak of
+the novel coronavirus (COVID-19) epidemic occurred at the end of 2019 may also have an adverse impact on the
+Company, as further disclosed below.
+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.
+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, 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, financial compliance, etc. Any
+changes in governance policies and regulations could have a negative impact on the business, financial condition
+and operating results of the Company.
+105
+The Company has several professional departments and teams that work closely with management of business
+groups 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.
+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,
+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.
+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
+time.
+2019 Annual Report Meituan Dianping
+101
+CORPORATE GOVERNANCE REPORT
+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 senior management for reference, and supports them to
+formulate timely and effective countermeasures to market competition risk.
+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.
+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.
+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. It collects personal information and data from users with their prior consent, and
+implement company-wide policies on data collection, usage, disclosure, transfer and storage. The Company
+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.
+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.
+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.
+Market Competition Risk
+The Third Line of Defence - Independent Assurance
+106
+The business compliance teams of the Company consist of various professional functions, among which (i)
+the content compliance team 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 team
+is responsible for the food safety risk management, conducts study on regulations and industry trend, optimizes
+the internal control policy of food safety, guides and supervises the implementation of food safety compliance
+measures, and enables merchants to jointly mitigate food safety risks; (iii) the compliance team 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.
+>5,000,000
+Number of individuals
+2
+3
+6
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+The Directors acknowledge their responsibility for preparing the financial statement of the Company for the year
+ended December 31, 2019, 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".
+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, 2019 was approximately as follows:
+Type of Services
+Audit and audit-related services
+Non-audit services (1)
+Total
+Note:
+Amount
+(RMB'000)
+41,281
+4,108
+45,389
+(1) The non-audit services conducted by the Auditor mainly include tax retainer services, and enterprise risk management
+assessment services.
+CHANGES IN CONSTITUTIONAL DOCUMENTS
+No changes to the Memorandum and Articles of Association of the Company during the Reporting Period.
+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.
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+2019 Annual Report Meituan Dianping
+109
+1 - 5,000,000
+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, 2019 are set out below:
+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 business transaction security team of the Company mitigates internet fraud 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 rules as well as
+resolving the risk events.
+Effectiveness of Risk Management and Internal Control
+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 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 Reporting Period, the risk management and internal
+control systems of the Company are effective and adequate.
+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 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
+employees qualifications and experience, training programs and budgets are sufficient.
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+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 May 17, 2019. Notice of the meeting
+was sent to the Shareholders on April 12, 2019, 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.
+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.
+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
+CORPORATE GOVERNANCE REPORT
+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.
+2019 Annual Report Meituan Dianping
+107
+108
+CORPORATE GOVERNANCE REPORT
+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
+yixiang.wang@dianping.com.
+JOINT COMPANY SECRETARIES
+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.
+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.
+For the year ended December 31, 2019, 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.
+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, 2019.
+As regards proposing a person for election as a Director, the procedures are available on the website of the
+Company.
+CORPORATE GOVERNANCE REPORT
+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.
+1. Measures by Meituan Food Delivery to promote environmental protection in the industry
+0.41
+Total GHG emissions per employee in office (tonnes per employee)
+Total GHG emissions per square meter floor area of the office
+11,688.84
+Total greenhouse gas (GHG) emissions (tonnes)
+HQ offices
+1. Emission
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+118
+117
+2019 Annual Report Meituan Dianping
+"Kuailv's warehouses" are warehouses used by Kuailv Jinhuo for the storage of goods.
+"Regional offices" are mainly offices used by sales personnel and other supporting personnel,
+which are distributed in 22 provinces, five autonomous regions, and four municipalities in Mainland
+China;
+(tonnes per square meter)
+"Headquarters (HQ) offices" include headquarters-level offices in Beijing and Shanghai with
+integrated resources, and customer service and R&D center offices mainly used by customer
+service and R&D personnel. Among them, the headquarters-level workplaces are mainly Beijing
+Hengdian (), R&D park and surrounding workplaces, and Shenya office in Shanghai;
+customer service and R&D centers mainly include offices in Shijiazhuang, Yangzhou, Chengdu and
+Xiamen;
+110
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+I.
+OVERVIEW
+II.
+This report aims to reflect the performance of Meituan Dianping (hereinafter referred to as "the Company",
+"Company" or "We") on Environmental, Social and Governance ("ESG") for 2019 on an objective and fair
+basis. It is recommended to read the part on governance in conjunction with the Corporate Governance
+Report contained in this annual report.
+Basis of Preparation
+This ESG report is prepared in accordance with the ESG Reporting Guide set out in Appendix 27 to the Listing
+Rules of The Stock Exchange of Hong Kong Limited.
+Sources of Information
+The information and data in this report were extracted mainly from the Company's statistical reports and
+relevant internal communication documents. The Company undertakes that there is no false record or
+misleading statement in this report, and assumes liabilities for the authenticity, accuracy and completeness of
+its content.
+Approval of the Report
+This report was approved by the Board of Directors on March 30, 2020.
+The Company's environmental performance covers offices and warehouses used by Kuaily Jinhuo (
+進貨).
+Response to the Report
+Total hazardous waste (tonnes)
+Total non-hazardous waste (tonnes)
+In 2019, the green data center we rented in Zhongwei City of Ningxia Hui Autonomous Region
+(hereinafter referred to as "Ningxia Zhongwei") was put into full use. We have migrated some
+servers to Ningxia Zhongwei Data Center from other data centers with high energy consumption
+and low efficiency. Ningxia Zhongwei Data Center mainly uses clean energy (hydropower, wind
+power, photovoltaic power, etc.), and its PUE (Power Usage Effectiveness) reaches 1.1, which is at
+the forefront of the industry'.
+Our data center in Ningxia Zhongwei achieves the following advantages for environmental
+protection: (i) Ningxia Zhongwei has a high altitude, and the average annual temperature is about
+8°C, 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 used in data center operations is clean energy, which can indirectly reduce
+carbon dioxide emissions and reduce environmental impact.
+Ningxia Zhongwei Data Center is our large-scale natural cooling data center, which is currently
+in large-scale operation, it uses high-efficiency direct natural cooling and indirect evaporative
+cooling technology (also known as "Free Cooling Technology"), and adopts a wind wall system to
+form a cold air channel and a hot air channel in the machine room, improving the cooling effect
+thereby. Ningxia Zhongwei Data Center has achieved a high level of technology in terms of its
+machine room structure, server layout, temperature control, heat recovery mechanisms, etc.
+Ningxia Zhongwei Data Center has a significant advantage in energy preservation over traditional
+large-scale data centers' cooling solutions.
+1 According to National Data Center Application Development Guidelines (2018) issued by The Information and Communication
+Development Department of the Ministry of Industry and Information Technology of the People's Republic of China in May 2019,
+as of the end of 2017, the average PUE of hyperscale data centers was 1.63, and the average PUE of large-scale data centers
+was 1.54. The national target of the average design PUE of data centers under construction nationwide was about 1.5, and the
+national target of average design PUES of hyperscale and large-scale data centers were 1.41 and 1.48, respectively.
+114
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Ningxia Zhongwei Data Center has also adopted multiple energy-saving and emission reduction
+measures adapted to the site environment, including (i) adjusting compressors' start and stop
+parameters according to the site environment; (ii) adjusting the rotation speed of the indoor and
+outdoor wind turbines according to the needs of the server room; (iii) adjusting the start-stop
+states of the external wind turbines and compressor in line with seasonal changes; (iv) maintaining
+the evaporative cooling module timely with an optimized plan to ensure it operates at the highest
+efficiency to reduce activation of the compressor system; and (v) using LED tube lighting while
+optimizing its lighting schedule.
+We actively work with other industry peers to promote the development of technology related
+to green data Centers. In 2019, we actively took part in the Ice River project (liquid cooling) of
+the Open Data Center Committee ("ODCC") and was the major drafter of the Cold Plate Liquid
+Cooling, which explores the production, deployment, operation and maintenance technologies of
+cold plate liquid cooling systems in data centers. 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 explore the application in business scenarios.
+(II) Promoting environmental protection in the industry
+With a focus on the environmental impact of the industries of our major businesses, we analyse the
+environmental risks of these industries, implement measures relevant to environmental protection and
+seek solutions to environmental problems caused by these industries.
+Research on environment-friendly ways: We carried out subject research, formulated
+objective scientific working standards and paths through quantitative research and qualitative
+analysis on environmental protection work of the food delivery industry, and formulated
+action plans and solutions to key problems. We published the Popularization Report on
+General Knowledge of Food Delivery Packaging, which contains specialized interpretation
+from dimensions of basic knowledge, industry trends and innovative plans.
+Hazardous waste per capita (tonnes per employee)
+On August 31, 2017, Meituan Food Delivery launched the "Lush Mountain Plan", dedicated to
+promoting solutions to environmental problems in the food delivery industry. It is the first action
+plan focusing on environmental protection in the industry. The plan advocates the concept of
+environmental protection, research on environment-friendly ways, exploration of a scientific
+closed-loop and promotion of public welfare activities to promote the environmental protection
+progress of the food delivery industry.
+Environmental protection concept advocacy: We set the last day of each month as “Meituan
+Food Delivery Environmental Protection Day". On "Meituan Food Delivery Environmental
+Protection Day" and other environment-related festivals, we launch online and offline
+environmental protection activities for enhancing consumer awareness, and carry out public
+experience activities of reusing plastic lunch box in cooperation with the China Environmental
+Protection Foundation, the United Nations Environment Programme, the World Wide Fund
+for Nature, and other organisations.
+2019 Annual Report Meituan Dianping
+115
+116
+Total greenhouse gas (GHG) emissions (tonnes)
+Regional offices
+0.08
+2,351.26
+0.00
+0.33
+0.05
+Non-hazardous waste per capita (tonnes per employee)
+•
+We take into account the environmental impact and resource consumption arising from the
+deployment and operation of data centers.
+We value the opinions of our stakeholders and welcome readers to contact us via the contact details below.
+Your comments will help us further improve this report and improve the Company's ESG performance.
+ESG STRATEGIES
+Protect employees' rights and interests
+.
+Promote talent development
+Community:
+•
+Assist in providing solutions to more social problems
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Supply Chain Management and Anti-
+Corruption
+Emissions, Use of Resources,
+Environment and Natural
+Resources, Employment, Supply
+Chain Management and Product
+Responsibility
+Emissions, Use of Resources,
+Environment and Natural Resources,
+and Community Investment
+Policy consultation, incident
+reporting, information disclosure
+and participation in governmental
+meetings
+Shareholders' meetings, regular
+announcements, official website and
+•
+emails
+Below are the key environmental performance indicators of the Company. The Company currently
+does not have a self-built data center. Third-party operators are in charge of the emissions, resources
+and energy consumption of the rented data center, and such data is not included in the scope of the
+Company's disclosure for the time being.
+(III) Environmental Performance Indicators
+In 2019, while maintaining the existing bikes, Meituan Bike innovatively replaced the damaged
+fenders with environment-friendly fenders made from recycled food delivery meal boxes, which
+is an exploration of the recycling economy of food delivery meal box in combination with the
+"Lush Mountain Plan". We have also cooperated with suppliers and government departments and
+recycled more than 7,800 used Meituan Bike's tires. After detoxification, the recyclable materials
+that met relevant standards were donated to Wanhua School in Yan'an City, Shaanxi Province
+to build a plastic sports venue, which helped upgrade the campus hardware while promoting
+environmental protection awareness.
+Meituan Bike proactively implements the full-cycle green concept and sticks to the "3R Principles"
+(Reduce, Reuse and Recycle) in design, procurement, manufacturing, placement, operation,
+scrapping, etc., ensuring 100% recycling and reuse of scrapped bikes. During the design process,
+the components are designed as universally adaptable and easy to maintain, and the bike frame
+is lightweight designed. We choose environment-friendly suppliers in the procurement phase and
+produce more durable products in the manufacturing process to extend product life and reduce
+waste. In terms of bike placement, we have adopted a scientific and standardised method for
+intelligent dispatchment and for the recycling of bikes, we have cooperated with the recycling
+industry for recycling and reusing scrapped bikes, forming a closed-loop of the supply chain.
+Meituan Bike's full-cycle green concept
+2.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+In 2019, the "Lush Mountain Plan" won the 4th "ai Social Value Co-Creation Award" as one of the
+Outstanding CSR Practices in China.
+As of the end of 2019, Lush Mountain Plan had reached over 1 billion person-times online in
+popularizing environmental protection concepts, and more than 180,000 people participated in
+the public experience activities of reusing plastic meal boxes. Over 200 meal box classification
+and recycle trials across the country had been carried out, and more than 17 million environment
+friendly packages were supplied to merchants across the country. As of the end of 2019, more
+than 120,000 merchants became "Lush Mountain Public Welfare Merchants", to whom 120 million
+users placed nearly 500 million orders, and the merchants donated over RMB6.35 million for public
+welfare in environmental protection.
+Public welfare activities with a focus on environmental protection: We participated in
+the setup of "Lush Mountain Plan Dedicated Fund", which focuses on the research on
+environmentally friendly paths and corresponding solutions together with the China
+Environmental Protection Foundation, and launched the "Lush Mountain Public Welfare
+Action" in 2018, in which the platform merchants can voluntarily participate and become
+a "Merchants of Lush Mountain Public Welfare" with a tag displayed in its food delivery
+merchant profile and the food ordering interface. For the progress of the "Lush Mountain
+Public Welfare Action” in 2019, please refer to the section titled “Community Investment –
+Poverty alleviation" of this report.
+Exploration of a scientific closed-loop: We have taken various measures to reduce the
+generation of waste throughout the life cycle of food delivery: (i) In 2017, we added a "no
+tableware needed" option in delivery ordering, and formulated a set of “no cutlery" rules for
+merchants. For merchants with better implementation of these rules, we offer promotional
+incentives on the "Meituan Food Delivery Environmental Protection Day" to promote
+the reduction in disposable tableware usage. In 2019, we launched an online function of
+environment-friendly practice energy donation, which largely increased user engagement; (ii)
+we set up an optional "green package zone" for merchants in our platform service market on
+the merchant end, to meet merchants' needs of purchasing environment-friendly materials.
+We allocated green materials in many cities, and designed and developed new types of
+packaging such as plastic-free pizza boxes with partners; (iii) we have proactively taken a
+part in the national standards formulation of General Technical Requirements of Disposable
+Degradable/Non-Degradable Plastic Tableware and the promotion of green packaging; and
+(iv) we have launched the garbage classification inquiry function based on the big data of
+popular food delivery dishes and opened more than 200 pilot sites of food delivery garbage
+classification and recycle across the country in various scenarios such as stores, campuses,
+office buildings and communities. In Shanghai, we worked with reputable merchants in the
+catering business to launch the "Garbage Classification Green Campaign" and explored and
+expanded the scenarios for using reusable plastic items made from meal boxes together with
+a series of other brands.
+Communication meetings,
+Email: ir@meituan.com
+Promote integrity
+Operation:
+(1)
+ESG concept and management
+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".
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Focusing on the Company's mission and values, we have enhanced the ESG concept integration, and
+formulated our ESG strategies from the following aspects:
+1. Environment:
+2.
+3.
+•
+Advocate green consumption
+•
+5.
+social media and face-to-face
+communication
+Promote environmental protection in the industry
+Customers:
+Be customer-centric
+Strive for excellence, continuously optimize, and build a good reputation among customers
+•
+Create greater value for people's life
+Partnership:
+.
+Cooperate and pursue a win-win situation with our eco-system partners
+Guarantee interests of different parties in the cooperation
+• Promote sustainable development in the industry
+4.
+Promote the harmonious coexistence of corporate development and environmental sustainability
+Green data centers
+•
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Total energy consumption (MWh)
+6,251.95
+0.25
+0.04
+64,573.19
+6.93
+Kuaily's warehouses
+Total energy consumption per square meter (MWh per square meter)
+Running water consumption (tonnes)
+Notes:
+9,047.79
+0.03
+50,904.09
+0.17
+• Electricity costs of some of the offices are included in property management fees. Electricity
+consumption cannot be counted separately and is not included in the total energy consumption.
+Running water consumption per square meter (tonnes per square meter)
+Running water consumption per capita (tonnes per employee)
+Total energy consumption per square meter floor area (MWh per square meter)
+Running water consumption (tonnes)
+Total energy consumption per capita (MWh per employee)
+•
+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 equipments are recycled and disposed of by
+recyclable waste collectors.
+2.
+Energy and resources consumption
+HQ offices
+Total energy consumption (MWh)
+17,067.53
+Total energy consumption per capita (MWh per employee)
+Total energy consumption per square meter floor area (MWh per square meter)
+Running water consumption (tonnes)
+0.60
+0.08
+191,920.31
+Running water consumption per capita (tonnes per employee)
+7.09
+Regional offices
+Total energy consumption (MWh)
+The water resources used by the Company come from municipal water supply. Water fees of some of
+the offices are included in property fees, and water consumption cannot be counted separately, and is
+not included in running water consumption.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+•
+2019 Annual Report Meituan Dianping
+Main ESG concerns
+Main stakeholders
+The main stakeholders we identified, their main concerns and main communication channels are
+presented in the table below.
+We actively listen to and respond to the demands of stakeholders. We identify key stakeholders and
+understand their main concerns through various communication channels based on the characteristics
+of actual businesses, management and operations.
+(II) Stakeholder Engagement
+We have built an ESG organizational structure to put our ESG concept and strategies into practice.
+The Board of Directors is responsible for guiding and reviewing the Company's ESG performance.
+The Company's relevant functions and business units are responsible for strategy-making and
+implementation of strategies on environment, employee, supply chain, operation and community. We
+also have a Corporate Social Responsibility (CSR) Department to carry out work related to corporate
+social responsibility.
+Main communication channels
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2019 Annual Report Meituan Dianping
+Encourage employees to take part in public welfare activities
+•
+Promote the development of new categories of social enterprises
+•
+• Create greater social value
+111
+Government and
+regulators
+Shareholders and
+119
+Product Responsibility and Anti-
+corruption
+Product Responsibility
+Development and Training, and Labour
+Standards
+Employment, Health and Safety,
+and Anti-corruption
+Employment, Product Responsibility,
+Environment and Natural Resources
+Employment, Supply Chain
+Management, Product Responsibility,
+Environment and Natural Resources,
+Anti-corruption, and Community
+Investment
+Community
+Media and non-
+governmental
+organisations
+Suppliers
+Platform merchants
+Users
+Employees
+investors
+The packaging data is not applicable to the Company.
+2.
+Meituan Dianping 2019 Annual Report
+Kuaily's warehouses
+Total GHG emissions per square meter floor area of the office
+(tonnes per square meter)
+The Company's hazardous wastes mainly include waste fluorescent tubes, toner cartridges and ink
+cartridges from various types of offices, which are disposed of by qualified institutions. In 2019, the
+actual hazardous waste per capita in the HQ offices is 0.000012 tonnes, and the actual hazardous waste
+per capita in regional offices is 0.00013 tonnes. The data listed in the table above is rounded to two
+decimal places.
+GHG emissions include carbon dioxide, methane and nitrous oxide. GHG emissions data is presented
+in carbon dioxide equivalent and calculated based on the 2017 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.
+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.
+With the improvement of the Company's environmental data statistics capabilities, data of regional
+offices and Kuaily's warehouses has been disclosed since 2019.
+•
+0.02
+Notes:
+(tonnes per square meter)
+Total greenhouse gas (GHG) emissions (tonnes)
+Total greenhouse gas (GHG) emissions per square meter
+5,757.45
+Total hazardous waste (tonnes)
+0.08
+2,159.44
+0.00
+3.22
+0.02
+Non-hazardous waste per capita (tonnes per employee)
+0.16
+Total non-hazardous waste (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+Customer service hotline, social
+media and information disclosure
+Customer service hotline, meetings
+and merchant assessment
+Supplier assessment and supplier
+conferences
+113
+2019 Annual Report Meituan Dianping
+We also adopt other measures to reduce the use of resources, such as (i) setting all printer devices
+to double-sided printing by default, and posting an eye-catching tip next to the printing devices
+to encourage employees to prioritise double-sided printing to save paper; and (ii) installing direct
+drinking water systems to replace bottled water in certain office areas, in order to reduce the use
+of plastics.
+We conduct analyses on water and electricity usage in office area, check unusual conditions, and
+take improvement actions to improve efficiency of resource use.
+In order to save water resources, we install inductive water-saving sanitary wares in some office
+areas, post "saving water" tips on the sink, and arrange regular inspections to avoid having water
+left running all the time.
+For reasonable use of electricity, we use LED energy-saving lights in office areas and arrange
+personnel to conduct regular inspections in office areas to avoid lights that are never turned off in
+unmanned office areas. Meanwhile, we pay special attention to cultivating our staff's energy-saving
+habits, for instance, by posting tips such as "turn off the lights in time" in an eye-catching area in
+the office.
+Electricity and water are the main resources we consume in office area and in the Company's
+operations.
+1. Green office
+(1) Measures for green operation
+The Company understands the environmental risks it faces in its operations, and acknowledges the
+importance of seeking harmony with the environment. In the operation and development of the Company, 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 behaviours. We implement green operation management as described below to reduce
+the impact of our operations on the environment.
+III. ENVIRONMENT
+The material aspects we identified include "Product Responsibility", "Employment", "Supply Chain
+Management", "Environment and Natural Resources" and "Anti-corruption"; and relevant aspects
+include "Emissions", "Use of Resources", "Community Investment", "Health and Safety", "Development
+and Training" and "Labour Standards". We will discuss these aspects respectively in this report.
+In 2019, we conducted a materiality assessment on the 11 aspects of ESG concerns listed in the ESG
+Reporting Guide as a reference for our actions and reports, based on continuous communication with
+key stakeholders and the Company's operational characteristics.
+(III) Materiality Assessment
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+112
+Community interaction, public welfare
+activities, social media and poverty
+alleviation projects
+Social media, official website, press
+conferences, exchange meetings and
+dedicated customer service
+3,944.30
+Hazardous waste per capita (tonnes per employee)
+(1) Employment and labour standards
+121
+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 Rights and the
+Interests of Women and Labour Protection Regulations for Women Workers, so as to protect employee
+legitimate rights and prohibit child labour and forced labour. We have established a number of internal
+policies and standardised management of employee recruitment, resignation, compensation, benefits,
+performance and promotion in accordance with the measures described below.
+1. Recruitment and dismissal
+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. We continue to optimise the recruitment process, improve
+recruitment efficiency and ensure recruitment compliance by training employees involved in
+recruitment and regular reviews.
+We strictly abide by relevant laws and regulations to deal with employee dismissal, and formulated
+Dismissal Management Regulations. We also detail the instructions for termination of employment
+in the labour contract and Employee Handbook.
+Compensation and benefits
+We provide competitive compensation and benefits to attract and retain talents. We provide
+supplementary medical insurance and various types of subsidies for our employees. In addition,
+we also enhance employee happiness by holding themed activities on festivals, such as the
+Mid-Autumn Festival.
+نه
+We have founded a love fund and formulated the Love Fund Management Measures to help
+employees and their families in need.
+120
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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. For information on employee management, please read the "Management
+Discussion and Analysis-Employees" section of this annual report.
+3. Promotion and development
+We objectively and fairly evaluate our employees' performances and help them improve their ability
+through performance management.
+Based on values, 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.
+4.
+Work-life balance
+5.
+We have established the Attendance Management Policy and Holiday Management Policy and
+other policies to manage the working hours of employees and provide employees with legal annual
+leave, additional leave and full-pay sick leave.
+We created employee clubs of various types. Employees are free to join these clubs and
+participate in employee activities to relieve work stress and enrich their spare time.
+Communication
+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. We also proactively communicated and explained the general
+concerns of employees through online and offline channels.
+In 2019, we received a number of honours related to human resources management, such as
+"Annual TOP Employer for 2019" from lagou.com, "2019 Best Employers of College Students" by
+liepin.com, "Cross-cutting Pioneer Employer" and "Popular Employer "by maimai.cn and “Annual
+Top 50 Outstanding Employers" by 58.com.
+2019 Annual Report Meituan Dianping
+We have established a career development system with the “Professional Development Channel"
+and "Management Development Channel” for our employees, and have established a series of
+systems including the Performance Management Policy, Management Rank Specifications and
+Professional Promotion Evaluation Program, to improve the performance management process,
+standardise the rank management system, and set up promotion channels.
+IV. WORKPLACE
+-
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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
+management 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.
+We set up a dedicated food safety supervision team to track and manage the activities of platform
+merchants. We also established an intelligent food and beverage delivery system, controlling key
+elements 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 on
+consumers' review based on big data technology, to quantify and categorize content related to food
+safety, providing a reference for carrying out offline supervision.
+We have formulated a series of regulations such as Food Safety Management Measures for Meituan
+Dianping Online Food Ordering, the Online Catering Service Provider Review and Registration
+Specifications and the Meituan Food Delivery Merchant Service Specifications to manage food safety
+of delivery food and beverages. We regularly organise merchants to learn about food safety regulations
+and policies, and strengthen the promotion of various food safety knowledge. We also use big data
+technology and artificial intelligence to support intelligent management of platform merchants and
+continuously improve our service quality. In 2019, we conducted comprehensive cooperation on food
+safety with third-party testing and certification agencies around various aspects such as delivery food
+safety sampling tests and food safety technology audits on self-operated business to improve the level
+of food safety management.
+We attach great importance to food safety. In accordance with the Food Safety Law of the People's
+Republic of China, the Implementation Rules 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
+Treatment of Illegal Acts in Online Food Safety and other laws and rules, we are responsible for the
+supervision and review of the merchants on the food delivery platform, and in strict compliance with
+food safety-related regulations in the business of Kuaily Jinhuo.
+Food safety
+(1)
+In addition, we manage product responsibilities, protect user privacy, safeguard intellectual property, review
+advertisements, and handle customer complaints in a timely manner, as described below.
+2019 Annual Report Meituan Dianping
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+126
+We attach great importance to the quality and accuracy of POIs, have established and implemented control
+for POI information review, and clean up untrue POI information.
+We have built a rich UGC (user-generated content, which refers to information or content provided by users)
+database providing consumers with 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.
+In compliance with the requirements of the Administrative Regulations on Mobile Internet Application
+Information Services and Administrative Measures for Internet Information Services, we have adopted various
+measures to improve the quality of UGC, including: (i) establishing an automatic identification system to filter
+inappropriate and illegal UGC; (ii) building a manual review team to perform quality review and spot checks;
+and (iii) establishing communication channels with regulators to agilely respond to and continuously optimise
+management in accordance with regulatory requirements.
+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 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. In accordance with the relevant requirements of the Electronic 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 cooperative
+merchants and check the accuracy of their qualifications and service descriptions.
+122
+Moreover, in response to the country's requirements for the strategic integration of production
+and education, we have cooperated with more than 30 colleges and institutions, including Beijing
+International Studies University, Shenzhen Polytechnic and Beijing Changping Vocational School,
+to develop vocational education resources, improve personnel training models and build up training
+bases jointly, which incorporate relevant concepts, standards, and norms of the Internet life service
+industry in vocational education. We provide new solutions and new practices to resolve the major
+structural contradiction between the supply and industrial demand of talent education in the modern
+life service industry through production and education activities such as vocational certification, training
+cooperation, and transformation of innovative achievements. In December 2019, in cooperation with
+Shenzhen Polytechnic and Beijing Changping Vocational School, “Meituan Digital Life College" of
+Shenzhen Polytechnic and "Meituan Digital Life College” of Beijing Changping Vocational School were
+unveiled.
+cities nationwide.
+Meituan Dianping 2019 Annual Report
+lecturers in the life service industry, and developed more than 2,000 courses in practical operations,
+business operations, management, and industry dynamics, with a cumulative training of 30 million
+person-times and a cumulative output of 5 million hours of classes. The offline course has covered 455
+127
+We provide catering merchants with a variety of commodity categories, including grains and oils,
+beverages, seasonings, fresh ingredients, and kitchen supplies through the business of Kuaily Jinhuo,
+and provide distribution services. In order to ensure food safety in respect of the business of Kuailv
+Jinhuo, in addition to establishing a sound management system, forming a professional quality
+control team, strengthening daily training, increasing investigation and handling, and improving
+emergency response capabilities, we attach great importance to the daily management of all aspects
+of the business, including: (i) checking and retaining the vouchers when the food is put into storage,
+and conducting quick detection against prevalent food safety issues, such as pesticide residues in
+vegetables, lean meat powder, rice moisture and freshness of meat and poultry, to reduce the risk of
+food safety issues; (ii) systematically managing food storage to ensure food shelf life; (iii) checking and
+controlling the temperature of refrigerated and frozen food during receiving, storage and distribution;
+and (iv) handling returned food and expired food in compliance with relevant regulations to ensure that
+the rights and interests of customers are effectively protected.
+129
+2019 Annual Report Meituan Dianping
+In order to regulate the operating service of car-hailing and ensure passenger safety, vehicles and
+drivers engaged in the service are registered and reviewed in accordance with the Interim Measures
+for the Management of Online Taxi Booking Service. We demand that vehicles participating in the
+car-hailing service shall conform to technical security standards. Drivers shall satisfy the requirements
+of driving experience, comply with safety operating rules and have no record of serious traffic violation,
+criminal offence or violent crime.
+In 2019, we set up a travel safety committee and a number of policies, such as the Partner Safety
+Production Responsibility Policy and Safety Emergency Handling Guidelines, to strengthen the safety
+management of online car-hailing. We have established a process for dealing with traffic accidents and
+safety incidents, and are equipped with full-time safety personnel to handle safety and accidents. All
+online car safety management personnel have passed the training and assessment of the competent
+department and hold safety officer qualification certificates. In addition, safety-related management and
+personnel in key positions are regularly trained by external security experts.
+areas.
+Abiding by the Interim Measures for the Management of Online Taxi Booking Service, the Company and
+our cooperative car-hailing service providers have obtained network taxi booking licenses in the above
+As of the end of 2019, we offered pilot car-hailing service in Nanjing and Shanghai, China. In addition,
+we have cooperated with a number of car-hailing service providers to provide pilot car-hailing
+information matching service under an aggregated model in 54 cities in China, including Chengdu,
+Suzhou, Hangzhou, and Wenzhou etc.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(III) Safety of car-hailing service and Meituan Bike
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+128
+In accordance with relevant laws and regulations, such as the Tourism Law of the People's Republic of
+China and Regulations on Travel Agencies, we conduct management on platform merchants of hotel
+and travel services. We set up the Merchant Integrity Management Policy and other internal policies
+to manage the business and services of merchants from the hospitality industry on the platform. For
+merchants' violations, we take punitive measures such as adjustment of their search engine rankings,
+suspension of operations or taking the business offline. We lead platform merchants to provide
+customers with green, healthy and reassuring travel products and services. In 2019, we conducted the
+"Jingfangxin ()" program cooperating with hotels and high-quality washing plants to improve
+traceability of linen washing and replacement processes. When a consumer checks into the hotel, he/
+she will be able to know the replacement and washing conditions of bed sheets and other hotel linen in
+his/her room, by scanning the smart chip "Jingfangxin" using a mobile phone.
+(II) Quality of hotel, travel and in-store dining services
+We actively participate in social co-governance of food safety, strengthen governance coordination with
+food safety supervision departments, industry associations and other organisations, and jointly promote
+the healthy development and online and offline collaborative governance of the catering industry. In
+2019, in cooperation with market regulators and catering merchants in various places, we launched
+a series of activities themed "Innovated Catering, Redefined Food Safety", and won "Top 10 Cases
+of Corporate Social Co-governance" in the Second Social Co-governance Conference in the Field of
+Market Regulation in 2019.
+We jointly carry out research on food safety topics with colleges and universities and actively participate
+in the formulation and release of group standards. As of the end of 2019, we have established
+cooperation mechanisms with a number of institutions, including China Cuisine Association, China
+Animal Health and Food Safety Alliance, China Chain Store & Franchise Association, and China Food
+Information Center, and, as their governing unit or member unit, actively participate in various food
+safety work.
+We have policies such as the Management Regulations for the Release of Merchant Information
+and Convention on Merchant Integrity and Management Measures, and have established a catering
+merchant marketing power rating system and conduct monthly assessments. We manage and evaluate
+the in-store dining platform merchants, as well as carry out punishment to merchants who violate
+these regulations to promote the service quality of in-store dining merchants. Through the continuous
+development of the “Listening Project", we monitor the violations of in-store dining merchants. We
+continue to improve the quality of our services, and we launched the "No Chinese New Year Break"
+project before Chinese New Year in February 2019, and guided platform merchants to actively report
+on the business status and time during the Chinese New Year. We collected a total of 345,000 stores'
+operation hours to reduce customers' bad experience of visiting unopened stores.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+VI. PRODUCT RESPONSIBILITY
+2019 Annual Report Meituan Dianping
+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 incorruptible
+procurement for employees in charge of procurement demand and procurement execution. At the
+same time, we require suppliers to sign the Anti-Commercial Bribery Agreement and Confidentiality
+Agreement and abide by the terms contained therein before engaging in business cooperation with the
+Company or providing the Company with products and services. We also issue a supplier questionnaire
+to all suppliers registered in the procurement system, through which suppliers can report any corruption
+issues identified during their cooperation to our supervision department.
+We attach importance to the ethics risk management involved in various activities during the
+procurement period, and have established a clear procurement process. As of the end 2019, we have
+formulated policies such as the Procurement Management Process and Procurement Compliance
+and Code of Conduct in the procurement system management. We also set up policies such as
+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 in key links of the procurement
+process, aiming at conducting more comprehensive standardised management for the activities of the
+whole procurement process of the Company.
+125
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+V. SUPPLY CHAIN MANAGEMENT
+As of the end of 2019, we had 1,754 internal courses and 2,563 internal lecturers. In 2019, the average
+internal training hour (including online learning and face-to-face learning) per employee was 24.8 hours.
+Since 2019, we conduct compliance inspections on all the procurement projects on a monthly basis. All
+staff of the procurement department must take exams and tests to enhance compliance awareness on a
+monthly basis. Procurement activities are also subject to supervision and inspection by the Company's
+supervision department and internal audit department, so as to reduce the ethics risk in the procurement
+process.
+In addition, we help employees broaden their visions and enhance their innovation capabilities through a
+variety of topic sharing. Taking product training as an example, we continue to link high-quality learning
+resources, empower employees through public product classes, product specialist shows and product
+private exchange, and share good practices with employees. We have a course lecturer system to
+manage, train and motivate lecturers. We encourage the precipitation and dissemination of knowledge
+and experience, and the selection and training of lecturers within the Company to promote the joint
+improvement of employees' and organisational capabilities.
+Meituan Dianping 2019 Annual Report
+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; we train the management to further enhance their leadership. Taking technical talent
+training as an example, we provide a half-year training path for new technical staff to help them improve
+professionalism, and provide key technical staff with offline training courses focusing on technical
+planning, technical vision, role transition and project management to broaden their technical vision and
+enhance their technical planning capabilities.
+We are committed to providing our employees with trainings anytime, anywhere and as they want.
+We established the talent training platform “Internet Plus University" and developed a "panoramic
+learning map". We have built a training system that focuses on culture, general ability, professionalism
+and leadership, so as to improve various types of learning and development projects, and conduct
+face-to-face classes, online courses and various practical activities, covering different positions, ranks
+and development stages.
+(III) Employee training and development
+We care about the physical and mental health of our employees. We have set up gymnasiums in some
+offices, providing free fitness equipment, promoting regular exercise and taking a rest after work.
+Employees can get health counselling service 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 irregularly to improve employees' health awareness. We cooperate with external
+professional organisations to set up a mental health consultation hotline and organise regular mental
+health training to help employees relieve stress.
+We provide a safe working environment for our employees. We abide by the Labour 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 policies including the
+Administrative Measures for Access Control of Office Areas, Fire Safety Management Policy of Meituan
+Dianping and No-smoking Management Policy 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 in office area; (ii) regularly conducting fire safety inspections on office premises
+and rectifying identified hazards thereof; and (iii) conducting fire safety training and drills to enhance
+employees' awareness of fire prevention. Also, we have established an emergency handling process to
+ensure timely and compliant handling of accidental injuries of employees.
+(II) Occupational health and safety
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2019 Annual Report Meituan Dianping
+(1) Transparent procurement
+124
+We have formulated the Meituan University Charter, integrating experience and resources from the
+existing training college courses, instructors, government cooperation, and vocational colleges, and
+set up multiple schools for different segments of the life service industry with a training scope covering
+catering, food delivery, beauty care, hairdressing, wedding service, parent-child services, hotel
+management, household retail and other categories. As of the end of 2019, we had more than 1,400
+In 2019, we proactively responded to the Guiding Opinions on Promoting Standardised and Healthy
+Development of Platform Economy and Implementation Plan of National Vocational Education Reform
+and other policies by establishing the digital talent development platform "Meituan University" in the
+life service industry. Meituan University embraces the vision to build itself into the base camp of digital
+talents in the life service industry. It is committed to creating values by "improving occupational skills,
+supporting industry development, promoting integration of production and education and expanding
+social employment" and enabling every practitioner in this industry to keep pace with the digital era.
+We pay attention to the improvement of overall quality of practitioners in the life service industry and
+their overall development. Since 2016, we have successively established the training academy regarding
+segmented areas in the life service industry to help practitioners improve their digital skills and build
+long-term development channels.
+(IV) Capacity building for life service industry
+123
+We pay attention to the environmental and social risks of our suppliers.
+(III) Supply chain environmental and social risks review
+We also pay attention to the protection of riders' rights and require our partners to purchase personal
+accident insurance, third-party personal injury and property damage insurance for each delivery rider.
+The Company also adopts a variety of measures to convey our care for riders. These measures include:
+(i) establishing communication channels and a problem follow-up and resolution mechanism for riders
+to collect and respond to their questions in a timely manner; (ii) providing material and spiritual care
+for riders during important festivals and other specific time periods; (iii) carrying out arts and sports
+activities for riders such as “717 Riders' Day" and "National Riders' Basketball League”, etc., to
+enrich their spiritual life; (iv) cooperating with professional organisations to provide free psychological
+counselling for riders; (v) launching the "Rider Protection Plan", providing a RMB50,000 Rider Care Fund
+for 100 specific serious diseases; and (vi) the "Kangaroo Baby Public Welfare Program” launched by
+the Meituan Public Welfare Foundation to provide assistance to riders' children when they have serious
+illnesses or accidental injuries.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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
+suppliers cease to operate due to environmental and social risks and problems, we will resort to the
+alternate suppliers to ensure that the products or services are delivered on time.
+In addition, the Company has implemented a number of measures to help address and mitigate the
+safety risks of the riders when delivering food. These measures include: (i) developing an intelligent
+dispatch system using advanced big data and artificial intelligence (AI) technology, which optimises
+orders for the riders based on their real-time locations, and rationalises 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) popularising fire safety, first-aid knowledge, electricity safety and
+public traffic safety knowledge and cultivating the safety awareness and self-protection awareness for
+the riders through a streaming media information publishing platform; (v) conducting facial recognition
+for each rider on an irregular basis to confirm the rider's true identity; and (vi) establishing a response
+process for handling traffic accidents and safety incidents, and assigning full-time safety personnel to
+handle safety incidents and accidents.
+However, the safety of delivery riders is of great importance to us. We have implemented various
+measures to oversee our delivery partners to ensure the safety of delivery riders. We require delivery
+partners to establish a fire and traffic safety management system compliant with standards and provide
+regular training to delivery riders. We help our partners to establish training systems according to
+regulatory requirements and industry standards. These trainings mainly include: (i) basic knowledge
+trainings for new delivery riders before they engage in work for our partners, including riding safety,
+dress code, traffic police gestures and traffic signs, etc. All riders must complete the trainings and
+pass tests before they can take orders; and (ii) advanced training in traffic safety, fire safety, and social
+stability for riders during their service for the partners. Partners in some cities also spontaneously
+cooperated with the traffic police to organise riders to participate in safety promotion meetings and
+safety seminar training activities.
+The delivery riders are full-time employees or contract workers of delivery partners. We require
+distribution partners to set strict rider recruitment standards and exercise supervision over delivery
+riders in accordance with our standards. We license 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.
+Our food delivery services require a large number of delivery personnel (whom we refer to as "delivery
+riders") to assist in the services.
+Protection of delivery riders
+(II)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+Party member public welfare: We organise employees who are members of the Party to help
+schools for migrant workers' children in Picun, Beijing through various means;
+Sunny Bazaar: All kinds of gifts declared through the Sunny Workplace are sold in charity
+bazaars and all the proceeds are donated to public welfare projects.
+(II) Poverty alleviation
+We actively responded to the CPC Central Committee and the State Council's policy of "Targeted
+Poverty Alleviation and Targeted Poverty Lift", and conducted preliminary exploration and practice in
+poverty alleviation in respect of employment, training, consumption, public welfare and tourism, based
+on actual conditions and business characteristics.
+2019 Annual Report Meituan Dianping
+Employment poverty alleviation
+The booming new Internet platform business has become the main force to absorb employment.
+Under the influence of our platform, being a delivery rider has become the first job that many
+workers choose when they come to a city, which brings them opportunities to improve their lives,
+and help them get rid of poverty and become rich. In 2019, there were a total of 3.987 million
+delivery riders who received income on our platform, among whom 257,000 came from poor
+households listed in the national poverty registration system. Statistics show that 253,000 out
+of 257,000 delivery riders have already boosted their family income and got rid of poverty with a
+poverty alleviation rate as high as 98.4%. Taking up a career as a delivery rider has become an
+effective way of employment for poverty alleviation, and it is unlikely for them to return to poverty
+afterwards.
+139
+Blood donation: We regularly organise employee blood donations in some areas to support
+local medical care;
+1.
+•
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Family Day: We set up a public welfare programme on the Family Day. Family members of
+employees create paintings for public welfare projects and donate all proceeds from love
+auctions to public welfare projects;
+We strengthen the construction of the advertising review team, and organise learning and training
+to publicise compliance knowledge and cases of violations in order to increase the awareness of
+advertising risks and compliance capabilities. At the same time, we developed a sensitive thesaurus
+filtering system 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, so as to ensure that the published content conforms to relevant laws
+and regulations, and that risks of violations of the law are properly controlled.
+Additionally, in order to protect the rights and interests of consumers, we set up relevant special
+advertising review regulations and focus on review 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.
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+(VII) Customer service
+We continuously strive to improve customers' satisfaction by offering high-quality customer service. We
+set up operation centers of customer service, equipped with professional customer service teams, in
+Beijing, Shanghai, Shijiazhuang and Yangzhou. 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 have a standardised 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 also provide our customer service staff with the authority and flexibility needed 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 the merchant's refusal to serve the customer, the staff has the
+right to suspend the merchant's online operation once such complaint is confirmed until rectification
+work is successfully completed.
+Our management team regularly evaluates customer feedback, and 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 2019, we obtained the COPC (Customer Operations Performance Center) certification, an international
+authoritative standard for customer service performance and management, and won the annual
+championship of "Golden Headset", a selection activity of the best customer center in China for two
+consecutive years, issued by the CCM World Group.
+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 and relevant laws and
+regulations, we have set up an advertising business acceptance, review and file management system,
+developed advertising review specifications, and continuously improve advertising review standards and
+processes.
+VII. ANTI-CORRUPTION
+We pay attention to anti-fraud work, strictly follow relevant national laws and regulations against
+corruption, bribery and unfair competition, strengthen anti-fraud management, promote integrity, nip
+risks in the bud, and foster an integrity culture to ensure the healthy development of enterprises.
+1.
+Code of Conduct for "Sunny Workplace"
+Our internal rules 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, regulations and policies, as well
+as internal rules and regulations, such as the Code of Conduct for Employees.
+2019 Annual Report Meituan Dianping
+133
+In addition, the Employee Manual and Code of Conduct has been formulated and distributed to
+all employees. The Manual contains internal rules and guidelines on professional ethics, anti-fraud
+mechanisms, negligence of duty in management, and corruption.
+2.
+Integrity management system
+We have set up the Sunshine Committee to deal with corruption and uphold the value of integrity.
+The chairman of the Sunshine Committee is Mr. Mu Rongjun, an executive director of the
+Company. The Department of Supervision and other departments of the Company are members of
+the Committee. The Committee reports to the CEO.
+(1) Anti-fraud
+The Committee's main responsibilities include: (i) formulating and amending the Company's
+professional conduct system; (ii) building the Company's integrity culture system and constantly
+deepening the development of the Company's integrity culture; (iii) formulating and implementing
+integrity strategies to identify and prevent integrity risks comprehensively; (iv) presiding over and
+leading the Company's investigation and handling of disciplinary breaches, and making qualitative
+decisions on major, difficult and complex cases; (v) accepting and making a decision on appeals
+on disciplinary treatment from employees; and (vi) coordinating the establishment of the Reporting
+Platform, Investigation and Handling Platform, Adjudication Platform, Grievance Platform,
+Enforcement Platform and Document and File Management Platform, which were integrated
+into the Case Investigation Platform. The Committee adopts a three-in-one mode, consisting of
+prevention, publicity and investigation, to promote the stable operation of the anti-fraud system.
+(VI) Compliance in advertisement
+We strengthened our intellectual property accumulation to cope with external challenges. Respecting
+and encouraging originality, we have internal policies to encourage employees to be dedicated
+to innovation and creation, and to protect innovation achievements. We also respect 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. Once receiving an infringement
+complaint, we will delete and block the suspected infringement item in accordance with relevant
+laws and regulations and the complaint materials. We have taken various measures to strengthen the
+protection of IPR owners, including: (i) handling valid complaints and deleting violation items on both
+platforms at the same time; (ii) formulating an infringement determination manual and conducting internal
+publicity to improve the quality of complaint handling; and (iii) developing an "IPR Protection Platform"
+to integrate complaint channels and improve transparency.
+• Clothes donation: We organise donation activities for employees' clothes, and put a
+collection box in office area to collect employees' unused items for donation;
+130
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We also performed daily management and monitoring over the service quality and safety in the
+operation stage of car-hailing. The measures we take include: (i) conducting facial recognition for drivers
+before daily operation; (ii) establishing patrol measures and irregularly sending patrol tasks to check
+information of drivers and vehicles; (iii) actively undertaking online and offline safety trainings for drivers;
+(iv) establishing an offline service network of “safe houses" that provides safety training, psychological
+counselling, offline taxi validation and other integrated services for drivers; (v) developing functions such
+as travel recording, one-click emergency call, and setting up a 24-hour duty system with security officers
+and customer service staff to ensure timely identification of travel anomaly; and (vi) strengthening
+cooperation with public security organisations by setting up special lines in some pilot cities, so that the
+police can directly access the customer service process to reduce response time.
+We also attach great importance to the safety management of bike sharing service. We manage
+the operation of shared bikes in line with relevant regulations issued by different cities for Internet
+bike-renting service. We increase bike operation and maintenance and maintain rapid response. In order
+to ensure the safety of riding, we have established and implemented strict quality inspection standards
+for Meituan Bike in terms of the whole bike and parts, which apply to production and maintenance
+processes.
+(IV) Data security and user privacy
+Data security and user privacy protection is critical to our business. Pursuant to the Cybersecurity
+Law of the People's Republic of China, the Cryptography Law of the People's Republic of China,
+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, and other relevant laws and
+regulations, as well as the national standard requirements stated in the Basic Requirements for Network
+Security Graded Protection Regarding Information Security Technology, we have implemented various
+internal procedures and controls to protect user data and reduce the risk of data leakage.
+We have developed the Meituan Dianping Privacy Policy, which clarifies regulations on the collection
+and use of personal information, the use of cookies and similar technologies, the storage and protection
+of personal information, information sharing and public disclosure, and the protection of personal
+information of minors. The policy is posted on our official website for public reference.
+We have a dedicated team to enforce our privacy policies and set up coordination mechanisms with
+third parties to deal with various information security threats in a timely manner. We comply with the
+industry standards for information security and user privacy protection, and our main operating system
+has obtained the ISO 27001 certification and passed the National Information System Security Level 3
+Testing.
+At the enterprise level, we have established a systematic and general user account authorisation and
+management mechanism that regularly checks the status of user accounts and related authorisation
+information. In 2019, we carried out SSO (Single Sign-On System) integration and conducted access
+management on network access equipment to further strengthen the security of corporate data
+assets. On that basis, we regularly evaluate the security configuration of the database and server.
+Meanwhile, we continue to improve the prevention and control system. We classify information security
+vulnerabilities to achieve effective management.
+We actively participate in communication and research activities targeted at protection and use of
+Internet IPRs. We are the vice president unit of the Patent Protection Association of China (PPAC),
+and have been awarded the titles of "National Outstanding Intellectual Property Enterprise" and
+"Zhongguancun's Intellectual Property Leading Model Enterprise". In 2019, we also won the "21st China
+Patent Excellence Award" issued by the National Intellectual Property Administration, PRC and the
+World Intellectual Property Organization.
+Meituan Dianping 2019 Annual Report
+We encrypt user data in network transmission. In 2019, we further strengthened access and passage
+safety work. For data storage, we use encryption techniques at software and hardware levels to protect
+sensitive user data.
+We have put in place a series of backup management procedures. For our Al and cloud platforms, we
+deploy different backup mechanisms, including local backup and offsite backup, depending on the
+needs of our business, to minimize the risk of loss of user data. We also have an emergency response
+mechanism to evaluate critical risks, formulate disaster response plans and perform emergency drills on
+a regular basis.
+We sign confidentiality agreements with our employees and provide ongoing information security
+training. All new employees are required to receive information security awareness education when they
+join the Company. Employees in some high-risk positions receive training immediately after they join
+the Company and must pass an exam before starting to work. In daily work, we provide information
+security awareness education and security management regulations education to all employees through
+online training. In our Code of Conduct for "Sunny Workplace”, we stipulate relevant requirements for
+the information security management, information interaction security, and information release control of
+employee departure and transfer, and severely punish employees for data leakage.
+While ensuring the protection of our own data security and user privacy, we actively promote the
+improvement of industry data security and user privacy management capabilities. As a member of the
+National Information Security Standardization Technical Committee, we actively participated in the
+discussion and formulation of national standards for data management and user privacy management.
+(V) Intellectual Property Rights
+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 IPR in accordance with the Copyright Law of the
+People's Republic of China, the Trademark Law of the People's Republic of China, the Patent Law of
+the People's Republic of China, the Measures for the Administration of Internet Domain Names of China,
+the Measures for the Registration of Computer Software Copyright, and relevant laws and regulations of
+intellectual property in China and other jurisdictions.
+We have established effective mechanisms to control intellectual property risks in various business
+links, such as: (i) clarifying intellectual property evaluation procedures in the tendering polices to
+provide intellectual property protection for major projects; and (ii) setting up trademark pre-examination
+regulations in the new brand design process, and carrying out pre-registration protection for prevention
+and control of infringement risks, etc. Through training and publicity, we have raised the awareness of
+intellectual property risks in business departments. In 2019, we joined the LOT (License on Transfer)
+Network to reduce risks related to patents and ensure smooth operation of domestic and international
+businesses.
+131
+132
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In addition, we have established three lines of defence mechanism to reduce the risk of fraud.
+The first line of defence mainly includes the business and functional departments of the
+Company's business groups, responsible for daily operations and management, and the design
+and implementation of relevant controls to risks. The second line of defence is mainly composed
+of the Company's Internal Control Department and other relevant departments, which are
+responsible for formulating risk management and internal control policies and implementing a
+comprehensive control system. The third line of defence mainly consists of the Company's Internal
+Audit Department and Fraud Investigation Team. The Internal Audit Department is responsible
+for providing independent assessments of the effectiveness of the Company's risk management
+and internal control systems, and supervising the management to continuously improve the risk
+management and internal control. The Fraud Investigation Team is responsible for receiving clues
+from multiple channels, following up in a timely manner and independently investigating suspected
+fraud.
+2019 Annual Report Meituan Dianping
+Development of integrity culture
+In June 2018, we officially launched gongyi.meituan.com, an information platform of the second batch of
+Internet fund raising information platforms of charitable organizations designated by the Ministry of Civil
+Affairs. We have made full use of our own business advantages and the characteristics of the "Internet +
+public welfare" model to drive businesses in the life service industry to innovate public welfare products,
+create closed-loops of online and offline scenarios, and diversify their participation in the cause of public
+welfare to help effectively solve social problems.
+1.
+Join forces with platform merchants
+We launched the "Public Welfare Merchant Program", which aims to build bridges, provide tools to
+drive life service merchants to participate in public welfare activities, and integrate public welfare
+into the daily business behaviour of merchants relying on the advantages and capabilities of our
+rich life service scenarios. As of the end of 2019, the plan has covered catering, hotel, takeaway,
+ticketing, education and training, parent-child, and other businesses, with a total of 130,000
+participating merchants. Based on the resource advantages and operating characteristics of
+various industries, it focuses on supporting different social issues.
+Join forces with the hotel business: During the China Charity Day 2019 event, we worked
+with well-known hotel groups such as Wyndham and Country Garden to jointly launch
+the hotel industry's first charity action “Check-in with Love", focusing on the problem of
+left-behind children, and nearly 5,000 hotels under these hotel groups became one of the
+first hotel public welfare merchants. On one hand, the plan calls on the community to pay
+attention to the problem of left-behind children through joint advocacy with merchants. On
+the other hand, merchants who join the above plan will donate a small amount of money
+through each order completed on the Meituan Dianping platform to support professional
+public welfare projects targeted at left-behind children. We also help left-behind children
+grow up healthily through the improvement of hardware education facilities, children's
+psychological counseling, urban interaction and integration, etc. As of the end of 2019,
+10,000 hotel merchants have joined the action.
+Join forces with the catering business: During the World Food Day 2019 event, the Company
+and the United Nations World Food Programme jointly launched the healthy living theme
+action "Reject Hidden Hunger”, driving 57 leading Chinese restaurant chains and 3,000
+stores in China to launch the "Rainbow Charity Package" where every time a loving merchant
+completes a sale through Meituan, a donation is made to the World Food Programme's
+"Nutrition Meal for Preschool Children" charity project.
+2019 Annual Report Meituan Dianping
+137
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+نه
+Join forces with the ticket business: On the eve of the International Autism Day in 2019, we
+launched the "Blink with the Stars - Autism Family Care Program" with Haichang Ocean
+Park and One Foundation. On one hand, through the advantages of our online platform, it
+can popularize the overall situation of autism to users and improve the public awareness of
+autism. On the other hand, by combining the advantages of offline resources of each theme
+park under Haichang Ocean Park, we build scenarios and opportunities for autistic families
+and the general public to understand and interact with each other and promote the public's
+comprehensive understanding of the autism group through offering the autistic families free
+entry to the park and organising interactive activities such as parent-child charity runs in
+the park. Through online and offline linkage and connection, the concept of public welfare
+has been more comprehensively popularised to the public and has received recognition and
+good feedback from multiple parties.
+Drive users to participate
+We integrate public welfare into users' lives through various channels and guide users to
+participate in public welfare:
+Combining with consumption scenarios: Based on user consumption habits, we actively
+push various types of high-quality public welfare projects into user consumption scenarios
+through big data analysis, forming a “scenario + public welfare” innovation model. We hope
+to match the project with consumption scenarios that can arouse the public's emotional
+resonance, and then guide the users to participate in public welfare. During the Chinese
+New Year in 2019, we launched a charity activity on the theme of "Warming the New Year".
+In the consumption scene during the Chinese New Year, we combined the elements of
+family reunion, Chinese New Year's Eve feast, new clothes and other emotional resonance
+in the traditional customs of Chinese New Year, advocating users to help those who are in
+difficulties to have a warm new year. A total of 850,000 users participated in this project.
+Integrating user behavior: We combine public welfare with user behaviour, and guide users
+to participate in public welfare in various forms when enjoying life services. We use "energy
+donation" to guide users to pay attention to environmental protection behaviours in takeaway
+consumption. Users who choose the "no tableware" option during takeaway ordering
+can get corresponding energy for public welfare funds, and donate such funds to support
+environmental public welfare projects. We use "donations by answering questions" to enable
+users to participate in online public welfare questions answering every day, promoting
+online participation of users through public welfare funds and disseminating public welfare
+knowledge in the answers.
+Engaging with public welfare festivals: We organise events and promote public welfare
+concepts during important public welfare festivals, including the World Environment Day,
+Earth Day, the Chinese Charity Day and the World Food Day. For example, in 2019, during
+the Environmental Day, we launched a promotion campaign themed "Beautiful China, I am
+an Actor - Happy Life, Green Consumption" to raise users' environmental awareness.
+138
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+3.
+Call for employee participation
+We actively encourage employees to participate in public welfare activities and pass on the power
+of public welfare.
+•
+Public welfare platform and projects
+(1)
+3.
+VIII. COMMUNITY INVESTMENT
+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 2019, we clarified our integrity concept as “making anti-corruption as one of our organisational
+capabilities and core competitiveness", and completed the oath taking on “Seven Clean and
+Self-discipline Declarations of Meituan” for all management and employees level by level.
+134
+Meituan Dianping 2019 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+4.
+We conducted online and offline training on integrity and policies for all employees, and all of
+them need to pass the test after training, so that all employees understand and follow the Code of
+Conduct for "Sunny Workplace”. In 2019, we conducted a total of 335 integrity training sessions
+and pushed 101 integrity-related articles. The coverage rate of online integrity training is 100%.
+Whistle-blowing and inspection mechanism
+We set up the Sunny Platform to guide our employees to take the initiative to report receiving
+of gifts and conflicts of interest. We also accept employees' reports of violations of laws and
+discipline through a whistle-blowing mechanism. With a protection policy for whistleblowers,
+we have taken a number of measures to protect whistleblowers and their legitimate rights
+and interests from infringement. The Department of Supervision accepts reports on fraud in a
+timely manner and forms a 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 transfer the case to the judicial authorities for
+matters that violate national laws.
+We continuously participate in the activities of the "Sunshine Integrity Alliance" (the first
+anti-corruption voluntary organisation of Internet enterprises) and carry out anti-corruption
+joint actions through an inter-enterprise information sharing mechanism. We disclosed our
+achievements of ecological anti-corruption work in 2019, and cooperated with all relevant parties
+to supervise corporate compliance operations.
+(II) Anti-money laundering and counter-terrorism financing
+We abide by anti-money laundry laws and regulations such as the Anti-Money Laundering Law of the
+People's Republic of China, the Provisions on Anti-money Laundering through Financial Institutions,
+the Measures for the Administration of Financial Institutions' Reporting of Large-sum Transactions
+and Suspicious Transactions, the Measures for Administration of Client Identity Identification and
+Preservation of Client Identity Information and Trading Records of Financial Institutions, the Measures
+for the Administration of the Reporting by Financial Institutions of Suspicious Transactions Involving
+Terrorist Financing, the Administrative Measures for Anti-money Laundering and Counter-terrorism
+Financing of Payment Institutions and the Administrative Measures for Anti-money Laundering and
+Counter-Terrorism Financing of Internet Financial Institutions (Trial). We enhance client identification
+management through increasing investment in anti-money laundering professionals, improving
+anti-money laundering monitoring and analysis capabilities, and continuously improving the construction
+of mechanisms and systems in all aspects of anti-money laundering.
+2019 Annual Report Meituan Dianping
+135
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We set April 28 each year as the Values Day to promote the value of integrity across the Company.
+Since 2017, we have taken the employees' integrity index survey for three consecutive years,
+which includes the research on employees' perception of integrity and attitude to integrity, integrity
+behaviour, and integrity policies, and have shared the survey results with the whole Company.
+Meituan Dianping 2019 Annual Report
+136
+We maintain good communication and interaction with anti-money laundering authorities, regulators and
+industrial self-regulatory organisations, and actively assist the above departments and organisations
+in popularizing anti-money laundering knowledge to the public. For example, in 2019, we promoted
+anti-money laundering knowledge through Qiandai's official website, and cooperated with the People's
+Bank of China, Tianjin Branch to distribute leaflets with anti-money laundering knowledge to the public
+during food delivery. In Nanjing, we worked with schools to promote students' knowledge about
+anti-money laundering. Through the above interactions, we not only maintained a good relationship with
+regulators, but also promoted anti-money laundering knowledge to the public.
+In accordance with the "Know Your Customer" and "risk-based” principles, we verified the authenticity
+of qualifications and license information input by all merchants when they joined the platform, and
+verified merchant identities through verification channels such as banks and third parties. Through the
+combination of system screening and manual analysis, we have established a suspicious transaction
+supervising, monitoring, analysing and screening mechanism to monitor and identify possible money
+laundering and terrorism financing risks related to our business, and reported confirmed suspicious
+transactions (behaviours) to relevant authorities in a timely manner. We continuously improve the
+accuracy and efficiency of monitoring and screening of money laundering through regular evaluation and
+system optimization.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We established an anti-money laundering center and specified competent anti-money laundering
+departments and their responsibilities. We enhanced our anti-money laundering workforce by setting
+up anti-money laundering compliance staff, suspicious transaction supervising staff, and an anti-money
+laundering supporting group. Each branch is also equipped with anti-money laundering work groups
+and a responsible department to guarantee uniform implementation and centralized management of
+anti-money laundering and counter-terrorism financing measures.
+In 2019, in accordance with the latest regulatory documents, the Company formulated and revised
+policies to continuously improve its basic management system, including the Administrative Measures
+for the Organizational Structure and Job Responsibilities Regarding Anti-money Laundering,
+Administrative Measures for Customer Risk Rating and Classification and Administrative Measures
+for Customer Identity Identification, Administrative Measures for Money Laundering Risk Assessment,
+Administrative Measures for the Reporting of Large-sum Transactions and Suspicious Transactions,
+Administrative Measures for Emergency Disposal of Major Money Laundering Risks, Administrative
+Measures for Performance Evaluation of Anti-money Laundering Work and Administrative Measures for
+Internal Audit and Inspection Regarding Anti-money Laundering, etc. In managing the process of anti-
+money laundering and counter-terrorism financing, the Company put in place different policies based on
+different nodes, including the Administrative Measures for Monitoring the Anti-money Laundering and
+Counter-Terrorism Financing List, Administrative Measures for Internal Reporting of Money Laundering
+and Terrorism Financing Activities, Administrative Measures for Internal Sharing of Information on
+Money Laundering Risk, Administrative Measures for Assisting Anti-money Laundering Investigation,
+Administrative Measures for the Reporting of Money Laundering Risk and Administrative Measures for
+Documents Regarding Anti-money Laundering Work, so as to further improve the anti-money laundering
+system.
+As at December 31, 2019, the net carrying amount of
+goodwill amounted to RMB27.7 billion.
+Refer to Notes 2.9, 2.10, 4.4 and 16 to the consolidated
+financial statements.
+Impairment assessments of goodwill
+We assessed the appropriateness of the valuation
+models, with the involvement of our internal valuation
+experts.
+INDEPENDENT AUDITOR'S REPORT
+146
+145
+2019 Annual Report Meituan Dianping
+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.
+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.
+Key Audit Matter
+How our audit addressed the Key Audit Matter
+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.
+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 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 Dianping 2019 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+How our audit addressed the Key Audit Matter
+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 independently tested, on a sample basis, the
+accuracy of mathematical calculation applied in the
+valuation models and the calculation of impairment
+charges.
+We understood and tested management's process
+and controls in respect of revenue recognition and
+calculation derived from different services.
+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.
+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.
+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:
+We performed retrospective assessment through
+comparing historical results to the budgeted results, to
+assess the reliability of the management's forecast.
+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 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.
+KEY AUDIT MATTERS
+Our procedures in relation to the revenue recognition
+included:
+OTHER INFORMATION
+•
+the consolidated statement of financial position as at December 31, 2019;
+•
+the consolidated income statement for the year then ended;
+.
+•
+.
+the consolidated statement of comprehensive income/(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 consolidated financial statements of Meituan Dianping (the “Company”) and its subsidiaries (the "Group") set
+out on pages 150 to 272, which comprise:
+the notes to the consolidated financial statements, which include a summary of significant accounting
+policies.
+Our opinion
+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. Revenue
+of RMB97.5 billion was recognised for the current year.
+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, 2019, 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.
+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 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.
+Meituan Dianping 2019 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+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 2.26, 4.5, 4.8 and 6 to the consolidated
+financial statements.
+How our audit addressed the Key Audit Matter
+BASIS FOR OPINION
+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.
+With an organic integration of characteristics of local tourism and the Company's internet traffic
+and channel advantages, we developed a practical poverty alleviation model through tourism
+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 "coming in" of tourists to achieve effective poverty alleviation. In
+2019, we signed a strategic cooperation agreement with the Department of Culture and Tourism of
+Gansu Province, to carry out in-depth cooperation on the development and marketing of tourism
+products in poverty-stricken areas under the cooperation framework of "Internet + Tourism Poverty
+Alleviation".
+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.
+We took full advantages of the e-commerce platform for life services in combination with the characteristics
+of our businesses, to live up to our commitment as a corporate citizen through the following initiatives: (i)
+Meituan Charity Foundation donated RMB200 million and we established a national medical care support
+fund. An online fundraising channel for combating the pandemic was launched for charitable organisations
+through gongyi.meituan.com, providing a convenient channel for donations from Meituan Dianping users and
+merchants; (ii) online merchant resources were united to provide free psychological counselling assistance
+services to front-line medical staff, diagnosed patients, quarantined suspected patients and their families
+in Hubei; (iii) we worked with online merchants and delivery resources to provide free meals for front-line
+pandemic prevention workers; (iv) Kuailv Jinhuo established the "Green Channel” for medical institutions to
+ensure the supply of food for the front-line medical staff; (v) 300,000 Meituan Bike's bikes were deployed
+in Hubei for public use for free, and an “undifferentiated disinfection" initiative was launched to disinfect all
+shared bikes in areas where the Company is responsible for in many cities; (vi) the "Return Plan in Spring"
+was launched to facilitate employment, recruiting 1,000 graduates, and 200,000 delivery riders through
+partners; and (vii) we launched a real-name riding system by adding QR codes to public transportation (subway
+and trams) and taxis in many cities, to support the traceability of pandemic prevention and control. As of
+early March 2020, the system has been launched in Shenyang, Changchun, Xiamen, Dongguan, Nanjing,
+Zhangzhou, Foshan and other places, and the list of cities is growing.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+We provided support to delivery riders who persisted in serving during the pandemic, including: (i) collecting
+daily health information such as body temperature; (ii) providing protection subsidies to delivery riders for an
+amount up to a RMB300,000; and (iii) providing free masks to them.
+We assisted business partners to reduce the negative impact of the pandemic, and launched a number of
+merchant protection and assistance programs, including: (i) exempting monthly commission for all catering
+takeaway merchants in Wuhan until the lockdown on the city is lifted, and returning 3% to 5% of the
+commission to high-quality takeaway merchants nationwide for online promotion and marketing; (ii) exempting
+monthly commission for dine-in catering and local life service merchants in Hubei in February and March
+2020; (iii) providing free insurance products for catering merchants in the Wuhan area; (iv) donating 10,000
+sets of cashier systems for catering merchants in Hubei; (v) launching RMB350 million of special support
+funds for nationwide merchants to resume operations; (vi) cooperating with bank partners to provide more
+than RMB20 billion loans with preferential interest rates to merchants; (vii) providing RMB1 billion subsidies
+to hotels, B&B and scenic spot merchants, mainly for online promotion and marketing; and (viii) providing
+more than 1,000 online courses for free by relying on Meituan University, and launching a “business refueling
+plan" to provide targeted training to merchants in pandemic response, food safety, store operation and
+post-pandemic reserve.
+We put great efforts into consumer service protection, including: (i) extending the emergency service
+guarantee policy for travel orders, and accelerating the refund process for hotels, travel, train and air
+tickets orders; (ii) cooperating with supermarkets, drug stores, convenience stores, and fruit and vegetable
+stores in Wuhan to provide instant delivery of foodstuffs, medicines, daily-use consumer goods, etc.; (iii)
+launching "contactless delivery" service, releasing "contactless restaurant service specifications" and piloting
+unmanned-automobile delivery in some cities to improve the health protection of delivery riders and users in
+multiple scenarios such as take-out, dining at restaurants and shopping; (iv) releasing the "Online Information
+Disclosure Guide of Catering Merchants' Sanitary Services", and launching the "Reassuring" series of service
+labels to guide merchants for streamlined, standardised and online pandemic prevention and safety measures
+for safe resumption of work. Users can find relevant tags on the platform or scan the "Reassurance Code"
+offline to view detailed information for reassured consumption; (v) launching the "Reassuring Consumption
+Month" plan, delaying the expiring date of vouchers for Meituan delivery service, and providing RMB400
+million of vouchers for consumption in March 2020; and (vi) launching the "Reassuring Booking" service,
+which allows users to book online with discounts in advance and with more convenience.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+142
+141
+2019 Annual Report Meituan Dianping
+We value employees' health and safety, and have adopted various measures to ensure employees' safety,
+including: (i) delaying the resumption of work in accordance with local policies, and encouraging employees
+to adopt flexible working hours and locations after resuming work to avoid crowds; (ii) transforming
+densely populated office areas, regularly disinfecting all office areas, providing masks and measuring body
+temperature of employees in office area, and advocating staggered meal breaks among employees; (iii)
+establishing an information collection system to keep track of employees' daily physical conditions, and
+handling in updates on abnormal situations in a timely manner; and (iv) launching a psychological counselling
+hotline and psychological training courses to help to relieve tension and anxiety of employees. We provided
+more support to employees in Hubei Province where the pandemic is more severe, including arranging a local
+senior manager in charge, providing protective supplies to employees and their families, providing employees
+with special assistance funds and insurance, and integrating local resources to provide assistance channels.
+Since the outbreak of COVID-19, we have actively responded to national calls to fight against the pandemic.
+We have established a high-level anti-pandemic headquarter to formulate strategies, prevented and controlled
+risks, protected employees' health and safety, and actively shouldered social responsibilities. In combating the
+outbreak of coronavirus, we took proactive measures in assisting and supporting merchants and continued
+to launch measures and tools to support merchants' operation and provide assurance to our customers. After
+the outbreak is contained, we launched the "Spring Wind Project: Recovery Assistance" and "Return Plan in
+Spring" for coronavirus prevention and work resumption to facilitate economic recovery.
+IX. WE TAKE ACTION TO COMBAT CORONAVIRUS
+Our public welfare and poverty alleviation practices have received widespread attention from the
+society. In 2019, we won the "Public Welfare Innovation Award of the Fourteenth People's CSR
+Award" hosted by People's Daily, and the "Targeted Poverty Alleviation Award at the Twelfth China
+CSR Summit" organised by Xinhuanet.
+2019 Annual Report Meituan Dianping
+Tourism poverty alleviation
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Dianping 2019 Annual Report
+We support various public welfare poverty alleviation projects through gongyi.meituan.com. In
+2018, we initiated "Lush Mountain Public Welfare Action" with the Lush Mountain Fund, and 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
+food delivery order for environmental protection and public welfare. As of the end of 2019, more
+than 120,000 merchants became "Merchants of Lush Mountain Public Welfare", to whom 120
+million users placed nearly 500 million orders, and the merchants donated over RMB6.35 million
+for public welfare in environmental protection. The funds have supported five economic crop
+plantations for ecological poverty alleviation in Yunnan and Gansu provinces, including Sichuan
+pepper, Orah mandarin, Chinese aralis (), toon (), piteguo (*) and mango. Thanks
+to gongyi.meituan.com, we also raise funds for poverty alleviation projects. In 2019, a total of
+RMB29 million was raised for poverty alleviation projects from 2.8 million person-times donations.
+140
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2.
+Training poverty alleviation
+We carried out the "New Young Dreamers Plan” based on industry analysis, experience sharing,
+case sharing, discussion and exchange, on-site practice, etc. provided by the Hotel School
+of Meituan University with the focus on six core courses, namely new catering, food delivery
+operations, homestay hotel services, hotel management, rural tourism, and Internet marketing.
+The plan provides poverty alleviation entrepreneurship and employment training for entrepreneurs
+in catering and homestay hotel services and employees in the service industry in poverty-stricken
+areas. As of the end of 2019, we completed 26 on-site teaching sessions for a total of 4,194
+trainees.
+3.
+Consumption poverty alleviation
+Through the "Must-Eat List • Helping Tibetan Area and Xinjiang “food consumption poverty
+alleviation project, we have explored an effective way to "build a direct platform for consumption
+between poverty-stricken areas and consumers". With the help of Kuailv Jinhuo and other
+business segments, we have taken ingredients from poverty-stricken areas out of the mountains,
+and advocated restaurants to purchase high-quality ingredients from poverty-stricken areas and
+make dishes to enhance the added value of these agricultural products; we have also encouraged
+consumers to go to restaurants for indirect alleviation. We have united relevant parties such as
+farmers, consumers, merchants, riders and platforms to form a win-win ecosystem and drive the
+supply-side reform of agricultural production in poverty-stricken areas.
+4.
+Public welfare poverty alleviation
+OPINION
+5.
+143
+144
+INDEPENDENT AUDITOR'S REPORT
+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.
+2019 Annual Report Meituan Dianping
+147
+INDEPENDENT AUDITOR'S REPORT
+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 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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+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.
+To the shareholders of Meituan Dianping
+(incorporated in the Cayman Islands with limited liability)
+149
+2019 Annual Report Meituan Dianping
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, March 30, 2020
+The engagement partner on the audit resulting in this independent auditor's report is Jack Li.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express
+any form of assurance conclusion thereon.
+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 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
+Meituan Dianping 2019 Annual Report
+148
+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.
+What we have audited
+(7,260,087)
+159
+129,552
+Other non-current liabilities
+992,233
+2.29
+Lease liabilities
+470,056
+466,676
+31
+Borrowings
+624,999
+389,028
+27
+Deferred revenues
+1,195,869
+1,388,469
+18
+2018
+RMB'000
+2019
+RMB'000
+Note
+35,759
+As of December 31,
+3,365,958
+Current liabilities
+3,855,559
+7,596,388
+7,495,262
+5,340,963
+6,766,253
+29
+29
+Total equity and liabilities
+Total liabilities
+Liabilities directly associated with assets classified as held for sale
+Income tax liabilities
+Lease liabilities
+Deferred revenues
+Borrowings
+Other payables and accruals
+Deposits from transacting users
+Advances from transacting users
+Payables to merchants
+Trade payables
+2,326,683
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Deferred tax liabilities
+Non-current liabilities
+Equity attributable to equity holders of the Company
+Accumulated losses
+Other reserves
+Share premium
+Share capital
+EQUITY
+Total assets
+88,087
+17,043,692
+13,396,185
+24
+4,256,120
+8,760,115
+24
+Assets classified as held for sale
+Cash and cash equivalents
+Restricted cash
+41,829,964
+49,435,599
+Non-controlling interests
+Total equity
+Meituan Dianping 2019 Annual Report
+82,135,045
+LIABILITIES
+86,509,772
+92,054,394
+5,438
+86,504,334
+92,112,445
+(166,039,390)
+(163,800,621)
+(5,741,347)
+3,226,407
+(4,447,252)
+258,284,687
+260,359,929
+25
+384
+389
+25
+120,661,511
+132,012,915
+73,149,392
+26
+20
+2.14
+3,341,276
+3,905
+-
+12,26
+(2,604) 2,236,165
+2,238,769
+2,238,769
+86,509,772
+5,438
+86,504,334
+(5,741,347) (166,039,390)
+258,284,687
+384
+RMB'000
+RMB'000
+RMB'000
+Total
+interests
+Sub-total
+losses
+RMB'000
+3,905
+Non-controlling
+3,905
+— —
+(1,614,957)
+2,075,242
+5
+Exercise of option and RSU vesting
+2,181,436
+2,181,436
+2,181,436
+32
+Share-based compensation expenses
+as owners
+2,919,043
+(2,678)
+2,921,721
+2,238,769
+682,952
+678,973
+(74)
+679,047
+679,047
+26
+Other Accumulated
+Share
+premium reserves
+RMB'000 RMB'000
+RMB'000
+132,012,915
+34,151,739
+39,958,521
+31,825,056
+36,592,563
+55,510
+58,223
+91,806
+534,566
+2.29
+3,102,882
+4,567,171
+27
+1,800,000
+3,552,587
+31
+7,303,407
+7,237,412
+30
+120,661,511
+The notes on pages 158 to 272 are an integral part of these consolidated financial statements.
+The consolidated financial statements on pages 150 to 272 were approved by the Board of Directors on March 30,
+2020 and were signed on its behalf:
+Wang Xing
+capital
+Note
+Share
+Attributable to equity holders of the Company
+Transaction with owners in their capacity
+Total comprehensive income
+Currency translation differences
+equity method
+investments accounted for using the
+2,491,947
+Share of other comprehensive income of
+Profit/(loss) for the year
+Comprehensive income
+As of January 1, 2019
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+154
+153
+2019 Annual Report Meituan Dianping
+Mu Rongjun
+Director
+Director
+Other comprehensive income
+460,290
+Short-term investments
+9,591,157
+(44,732)
+(191,042)
+294,047
+(11,085,797)
+2,679,860
+166,217
+10 00
+Income tax expenses
+Profit/(loss) before income tax
+using equity method
+Share of gains/(losses) of investments accounted for
+Fair value changes of convertible redeemable preferred shares
+Finance costs
+Finance income
+Operating profit/(loss)
+748,356
+2,531,143
+9
+Other gains, net
+1,836,382
+28
+77,699
+(104,606,058)
+107,353
+(115,492,695)
+2,236,165
+(15,524)
+(115,477,171)
+2,238,769
+(2,604)
+Diluted earnings/(loss) per share (RMB)
+Basic earnings/(loss) per share (RMB)
+attributable to the equity holders of the Company
+Earnings/(loss) per share for profit/(loss) for the year
+Non-controlling interests
+Equity holders of the Company
+Profit/(loss) for the year attributable to:
+Profit/(loss) for the year
+(115,492,695)
+2,236,165
+(115,490,807)
+(1,888)
+2,762,388
+(526,223)
+13
+(48,267)
+12
+19
+through profit or loss
+Fair value changes on investments measured at fair value
+8,367,546
+456,077
+786,032
+15,376,424
+9,391,406
+47,012,249
+65,525,997
+15,840,078
+6666
+Other services and sales
+Interest revenue
+Online marketing services
+Commission
+Revenues
+RMB'000
+2018
+RMB'000
+Note
+2019
+Year ended December 31,
+CONSOLIDATED INCOME STATEMENT
+97,528,531
+65,227,278
+Cost of revenues
+7
+(285,655)
+(645,685)
+Net provision for impairment losses on financial assets
+(5,546,037)
+(4,338,954)
+7
+General and administrative expenses
+(7,071,900)
+(8,445,664)
+14
+7
+(15,871,901)
+(18,819,067)
+7
+15,104,958
+32,320,388
+Selling and marketing expenses
+Gross profit
+(50,122,320)
+(65,208,143)
+Research and development expenses
+9,064,945
+0.39
+14
+12
+Investments accounted for using the equity method
+445,041
+590,054
+18
+Deferred tax assets
+3,978,815
+33,876,004
+5,376,217
+32,699,575
+56
+16
+Intangible assets
+15
+Property, plant and equipment
+2018
+RMB'000
+RMB'000
+Note
+2019
+As of December 31,
+Non-current assets
+2,283,590
+ASSETS
+2,103,403
+19
+21
+Prepayments, deposits and other assets
+466,340
+676,762
+23
+Trade receivables
+400,244
+275,227
+22
+Inventories
+Current assets
+47,512,119
+49,877,870
+866,884
+1,762,312
+21
+Prepayments, deposits and other assets
+6,241,972
+7,166,122
+Financial assets at fair value through profit or loss
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+152
+151
+Items that may not be reclassified to profit or loss
+3,905
+12,26
+for using the equity method
+Share of other comprehensive income of investments accounted
+Items that may be reclassified to profit or loss
+Other comprehensive income/(loss):
+RMB'000
+2018
+RMB'000
+Note
+2019
+Year ended December 31,
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
+Meituan Dianping 2019 Annual Report
+150
+The notes on pages 158 to 272 are an integral part of these consolidated financial statements.
+(42.40)
+0.38
+Currency translation differences
+Preferred shares fair value change due to own credit risk
+200
+26
+2019 Annual Report Meituan Dianping
+The notes on pages 158 to 272 are an integral part of these consolidated financial statements.
+(123,296,397)
+2,919,043
+(15,306)
+(2,678)
+Non-controlling interests
+(123,281,091)
+2,921,721
+(42.40)
+Total comprehensive income/(loss) for the year attributable to:
+Equity holders of the Company
+2,919,043
+Total comprehensive income/(loss) for the year
+(7,803,702)
+682,878
+Other comprehensive income/(loss) for the year, net of tax
+(186,013)
+28
+(7,617,689)
+678,973
+(123,296,397)
+460,290
+(58,051)
+11
+Note
+Year ended December 31,
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Meituan Dianping 2019 Annual Report
+156
+(23,438,686)
+2019
+RMB'000
+(10,174,018)
+(20,954)
+(35,365)
+Net cash flows used in investing activities
+Increase in prepayment for investments
+Loan to related party
+65,954
+(247,673)
+2018
+RMB'000
+Cash flows from financing activities
+Proceeds from borrowings,
+28,516,174
+Proceeds from issuance of ordinary shares, net
+(62,043)
+(218,692)
+Finance costs paid
+(107,969)
+467,000
+Repayments of ABS
+Proceeds from ABS, net
+(1,057,000)
+(2,250,000)
+2,305,000
+3,640,000
+Repayments of borrowings, excluding ABS
+excluding asset-backed securities ("ABS")
+13,761
+Dividends received
+533,068
+1,315,886
+1,938
+Proceeds from disposals of intangible assets
+(69,712)
+(16,760)
+Purchase of intangible assets
+24,698
+62,334
+Proceeds from disposals of property, plant and equipment
+(2,210,249)
+(2,984,976)
+Purchase of property, plant and equipment
+Cash flows from investing activities
+(9,179,818)
+5,574,220
+(198,629)
+3,897
+Proceeds from exercise of option and RSU vesting
+Payments for business combinations, net of cash acquired
+Purchase of investments of term deposits with initial
+term over three months and wealth management products
+Proceeds from disposals of term deposits with initial
+over three months and wealth management products
+Gains received from investments of term deposits with initial term
+231
+35,808
+3,453,916
+(1,599,549)
+323,377
+(455,987)
+(163,675)
+(141,025)
+75,235,650
+170,248,473
+net of cash disposed
+Cash inflow arising from disposal of subsidiaries,
+refund of prepayment for investments
+Acquisition of investments measured at fair value
+term over three months and wealth management products
+Acquisition of investments accounted for using the equity method
+Proceeds from disposal of equity investments and
+(177,154,553) (91,205,155)
+(1,365,975)
+(463,304)
+444,915
+Repurchase of ordinary shares
+Basis of preparation (Continued)
+2.1
+Disposal of a subsidiary
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2.1.1 Changes in accounting policies
+Meituan Dianping 2019 Annual Report
+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, which are
+carried at fair value.
+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.
+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.
+(a)
+New and amended standards adopted by the Group
+The Group has applied the following standards and amendments for the first time
+commencing January 1, 2019:
+2019 Annual Report Meituan Dianping
+On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had
+previously been classified as 'operating leases' under the principles of IAS 17 Leases. These
+liabilities were measured at the present value of the remaining lease payments, discounted
+using the lessee's incremental borrowing rate as of January 1, 2019. The weighted average
+lessee's incremental borrowing rate applied to the lease liabilities on January 1, 2019 was
+5.7%.
+The Group has adopted IFRS 16 retrospectively from January 1, 2019, but has not restated
+comparatives for the 2018 reporting period, as permitted under the specific transitional
+provisions in the standard. The reclassifications and the adjustments arising from the new
+leasing rules are therefore recognised in the opening balance sheet on January 1, 2019.
+The Group had to change its accounting policies as a result of adopting IFRS 16. The Group
+elected to adopt the new rules retrospectively but recognised the cumulative effect of initially
+applying the new standard on January 1, 2019. The other amendments listed above did
+I not have any impact on the amounts recognised in prior periods and are not expected to
+significantly affect the current or future periods.
+Annual Improvements to IFRS Standards 2015 - 2017 Cycle
+Plan amendment, curtailment or settlement
+Long-term Interests in Associates and Joint Ventures
+Prepayment features with negative compensation
+Uncertainty over income tax treatments
+Leases
+IAS 19 (Amendment)
+IFRSS (Amendment)
+IAS 28 (Amendment)
+IFRS 9 (Amendment)
+IFRIC 23
+IFRS 16
+The Company's Class B shares have been listed on the Main Board of the Hong Kong Stock Exchange
+since September 20, 2018 (the “Listing”).
+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.
+Meituan Dianping (formerly known as 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 PO Box 309, Ugland House, Grand Cayman, KYI-1104, Cayman Islands.
+1.1 General information
+as held for sale/(included in the assets classified as held for sale)
+Cash and cash equivalents reclassified from the assets classified
+Cash and cash equivalents at the beginning of the year
+Exchange (loss)/gain on cash and cash equivalents
+Net decrease in cash and cash equivalents
+29,295,294
+1,114,267
+Net cash flows generated from financing activities
+(4,000)
+Dividends paid to non-controlling interests
+(785,825)
+Lease payments
+(176,261)
+(75,162)
+Payment for acquisitions of non-controlling interests
+(854,630)
+Cash and cash equivalents at the end of the year
+158,054
+(3,485,531)
+17,043,692
+GENERAL INFORMATION, REORGANIZATION AND BASIS OF PRESENTATION
+1
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+158
+157
+2019 Annual Report Meituan Dianping
+17,043,692
+13,396,185
+24
+(51,524)
+11,466
+1,009,587
+(173,442)
+19,408,839
+(3,323,210)
+(8,981,189)
+470,000
+35
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Sub-total
+losses
+reserves
+premium
+capital
+Note
+Non-controlling
+Other Accumulated
+Share
+Share
+RMB'000
+Attributable to equity holders of the Company
+RMB'000
+98
+(40,513,742)
+57,734
+42,372 (49,952,475) (40,571,476)
+9,338,529
+98
+88
+(12,360)
+(12,360)
+411,371
+(423,731)
+(40,501,382)
+57,734
+(50,363,846) (40,559,116)
+466,103
+9,338,529
+RMB'000
+(115,477,171) (115,477,171)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+as owners
+34,047
+(61,197)
+(27,150)
+Total transaction with owners in their capacity
+as owners
+5 2,075,242
+611,143
+2,686,390
+(60,811)
+2,625,579
+As of December 31, 2019
+389 260,359,929
+(4,447,252) (163,800,621) 92,112,445
+(58,051)
+92,054,394
+34,047
+Issuance of ordinary shares
+Meituan Dianping 2019 Annual Report
+11,003
+Transaction with owners in their capacity
+Total comprehensive loss
+Currency translation differences
+own credit risk
+Preferred shares fair value change due to
+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
+6,037,524
+10,617
+10,617
+386
+Transaction with non-controlling interests
+(15,524) (115,492,695)
+interests
+(186,013)
+Cash generated from/(used in) operations
+Income tax paid
+Net cash flows generated from/(used in) operating activities
+As of December 31, 2018
+as owners
+Total transaction with owners in their capacity
+Cash flows from operating activities
+Transaction with non-controlling interests
+(32,990)
+47,969
+(4,000)
+(4,000)
+Dividends
+(29,307)
+14,979
+2018
+RMB'000
+2019
+RMB'000
+Note
+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
+5,438
+86,509,772
+286
+2019 Annual Report Meituan Dianping
+155
+(186,013)
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+(29,307)
+(29,307)
+47,969
+156,503
+231,736
+231,736
+231,736
+Cancellation of ordinary shares
+248,944,691
+(609,744) 248,944,691
+609,744
+Repurchase of ordinary shares
+248,944,408
+83
+(15,306) (123,296,397)
+(7,803,920) (115,477,171) (123,281,091)
+(186,013)
+(7,617,689)
+218
+(7,617,907)
+(7,617,907)
+283
+25
+Business combinations
+(811,142)
+156,503
+(685,701)
+842,199
+(2)
+Exercise of option and RSU vesting
+1,816,453
+1,816,453
+1,816,453
+5
+Share-based compensation expenses
+(811,144)
+(811,144)
+32
+2.6 Segment reporting
+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 recognised 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 recognised in consolidated income
+statement on a net basis within "Other gains, net".
+2.7.2 Transactions and balances
+Items included in the consolidated financial statements 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 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.
+2.7.1 Functional and presentation currency
+2.7 Foreign currency translation
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+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.
+Meituan Dianping 2019 Annual Report
+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.
+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.
+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.
+2.7.3 Group companies
+2
+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
+leasehold improvements
+•
+3 years
+5 years
+the shorter of the term of the lease or
+the estimated useful lives of the assets
+2-4 years
+Property, plant and equipment arising from business acquisition is depreciated over the remaining useful
+life.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+•
+2
+2.8 Property, plant and equipment (Continued)
+The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
+reporting period.
+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.
+Gains and losses on disposals are determined by comparing proceeds with carrying amount, and are
+recognised in "Other gains, net" in the consolidated income statement.
+2.9 Intangible assets
+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.
+2.9.1 Goodwill
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+furniture and appliances
+computer equipment (including servers)
+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 exchange differences are recognised in other comprehensive income.
+2019 Annual Report Meituan Dianping
+167
+168
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+2.7 Foreign currency translation (Continued)
+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 recognised 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".
+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.
+2.8 Property, plant and equipment
+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.
+Subsequent costs are included in the asset's carrying amount or recognised 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 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:
+•
+2.7.3 Group companies (Continued)
+2.5 Separate financial statements
+January 1, 2020
+Under the equity method of accounting, interests in joint ventures are initially recognised at cost
+and adjusted thereafter to recognise 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 recognise further losses, unless it has incurred obligations or made payments on
+behalf of the joint ventures.
+January 1, 2021
+IAS 1 (Amendment)
+Classification of liabilities as
+current or non-current
+January 1, 2022
+The Group is in the process of assessing potential impact of the above new standards and
+amendments to standards that is relevant to the Group upon initial application. According
+to the preliminary assessment made by the Directors of the Company, 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.
+162
+Meituan Dianping 2019 Annual Report
+for Financial Reporting
+Insurance Contracts
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.2 Subsidiaries
+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.
+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.
+Non-controlling interests in the results and equity of subsidiaries are shown separately in the
+consolidated income statement, consolidated statement of comprehensive income/(loss), consolidated
+statement of changes in equity and consolidated statement of financial position respectively.
+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:
+2
+•
+IFRS 17
+Revised Conceptual Framework
+(b) New standards and amendments not yet adopted by the management of the Group
+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, 2019, and have not been early
+adopted by the Group's management. These standards are not expected to have a material
+impact on the entity in the current or future reporting periods and on foreseeable future
+transactions.
+2019 Annual Report Meituan Dianping
+IAS 28 and IFRS 10 (Amendment) Sale or Contribution of Assets
+Between an Investor and its
+Associate or Joint Venture
+Effective for
+accounting
+Revised Conceptual Framework
+year beginning
+A date to be
+determined by
+the IASB
+IAS 1 and IAS 8 (Amendment)
+IFRS 3 (Amendment)
+Definition of material
+January 1, 2020
+Definition of a business
+January 1, 2020
+on or after
+fair values of the assets transferred
+•
+liabilities incurred to the former owners of the acquired business
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.3 Associates
+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 recognised at cost and adjusted thereafter to recognise 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 recognised 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 recognise 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.
+Meituan Dianping 2019 Annual Report
+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 recognises the amount in "Other gains, net" in the consolidated income statement.
+2019 Annual Report Meituan Dianping
+165
+166
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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 recognised in other
+comprehensive income are reclassified to profit or loss where appropriate.
+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
+recognised 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 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.
+2.2.3 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 recognised in a separate
+reserve within equity attributable to owners of the Company.
+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 interest 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 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.
+2019 Annual Report Meituan Dianping
+163
+164
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.2 Subsidiaries (Continued)
+2.2.1 Business combinations (Continued)
+Acquisition-related costs are expensed as incurred.
+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.
+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 recognised
+in profit or loss. Amounts classified as equity is not re-measured, and its subsequent settlement is
+accounted for within equity.
+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 recognised in profit or
+loss.
+2.2.2 Changes in ownership interests in subsidiaries without change of control
+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.
+169
+2.1.1 Changes in accounting policies (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Meituan Dianping 2019 Annual Report
+1,846,656
+1,846,656
+512,833
+1,333,823
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.1
+Basis of preparation (Continued)
+2.1.1 Changes in accounting policies (Continued)
+New and amended standards adopted by the Group (Continued)
+(iii) Measurement of right-of-use assets
+The right-of-use assets were measured on a simplified transition approach without
+restating comparative amounts, and were measured at the amount equal to the lease
+liability, adjusted by the amount of any prepaid or accrued lease payments relating
+to that lease recognised in the consolidated statement of financial position as of
+December 31, 2018. There were no onerous lease contracts that would have required
+an adjustment to the right-of-use assets at the date of initial application.
+(iv) Adjustments recognised in the balance sheet on January 1, 2019
+The change in accounting policy affected the following items in the consolidated
+balance sheet on January 1, 2019:
+.
+right-of-use assets - increased by RMB2.0 billion
+prepayments - decreased by RMB174.5 million
+lease liabilities - increased by RMB1.8 billion
+The net impact on retained earnings as of January 1, 2019 was nil.
+2019 Annual Report Meituan Dianping
+161
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+Non-current lease liabilities
+Current lease liabilities
+(a)
+Lease liabilities recognised as of January 1, 2019
+Of which are:
+2.1
+160
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.1
+Basis of preparation (Continued)
+2.1.1 Changes in accounting policies (Continued)
+(a)
+New and amended standards adopted by the Group (Continued)
+(i)
+Practical expedients applied
+Basis of preparation (Continued)
+Operating lease commitments disclosed as of December 31, 2018
+•
+applying a single discount rate to a portfolio of leases with reasonably similar
+characteristics
+The Group has also elected not to reassess whether a contract is, or contains a lease
+at the date of initial application. Instead, for contracts entered into before the transition
+date the group relied on its assessment made applying IAS 17 and Interpretation 4
+Determining whether an Arrangement contains a Lease.
+(ii)
+Measurement of lease liabilities
+2019
+RMB'000
+In applying IFRS 16 for the first time, the Group has used the following practical
+expedients permitted by the standard:
+2,111,477
+Discounted using the lessee's incremental borrowing rate at
+the date of initial application
+Financial guarantee contracts are recognised 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:
+Research expenditures are recognised 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, 2019 and 2018.
+the amount determined in accordance with the expected credit loss model under IFRS 9 Financial
+Instruments; and
+.
+2.11 Financial guarantee contracts
+Meituan Dianping 2019 Annual Report
+2.10 Impairment of non-financial assets
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+the amount initially recognised less, where appropriate, the cumulative amount of income
+recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
+Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events
+or changes in circumstances indicate that it 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 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 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.
+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.
+2.12 Financial assets
+171
+172
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Classification
+The Group classifies its financial assets in the following measurement categories:
+(b)
+(c)
+•
+those to be measured subsequently at fair value (either through other comprehensive income
+or through profit or loss), and
+•
+2019 Annual Report Meituan Dianping
+2.9.3 Research and development
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2-8 years
+those to be measured at amortized cost.
+•
+software and others
+online payment license
+•
+technology and licenses
+•
+user list
+•
+supplier relationship
+2-25 years
+5 years
+3-10 years
+When determining the length of useful life of an intangible asset, management take into account
+the (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.
+15 years
+5 years
+170
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.9 Intangible assets (Continued)
+2.9.2 Other intangible assets
+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 recognised 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.
+The Group amortizes intangible assets with a limited useful life using the straight-line method over
+the following periods:
+•
+trade name
+•
+2-5 years
+The classification depends on the entity's business model for managing the financial assets and
+the contractual terms of the cash flows.
+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 Group reclassifies debt investments when and only when its business model for managing
+those assets changes.
+176
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 recognised 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.
+2.14 Deposits from transacting users
+Deposits 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
+Trade receivables are amounts due from customers for services performed in the ordinary course of
+business.
+175
+Trade and other receivables are generally due for settlement within 1 year and therefore are all classified
+as current.
+Other receivables are recognised initially at fair value and subsequently measured at amortized cost
+using the effective interest method, less allowance for impairment.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+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 statements of financial position, and is not included in the total cash and cash equivalents
+in the consolidated statements of cash flows.
+2.18 Share capital
+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).
+2.19 Trade and other payables
+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. They are
+subsequently measured at amortised cost using the effective interest method, less loss allowance.
+2019 Annual Report Meituan Dianping
+While cash and cash equivalents, restricted cash, short-term investments measured at amortized
+cost and long-term investments measured at amortized cost are also subject to the impairment
+requirements of IFRS 9, the identified impairment loss was immaterial.
+prepayment, deposits and other assets (excluding tax prepayment, loan receivables and
+long-term investments measured at amortized cost)
+2.12 Financial assets (Continued)
+(d) Measurement (Continued)
+Debt instruments
+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:
+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 recognised 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.
+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 recognised in profit or loss. When the financial asset is
+derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
+equity to profit or loss and recognised 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.
+•
+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
+recognised in profit or loss and presented net within "Other gains, net” in the period in which
+it arises.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.12 Financial assets (Continued)
+(d) Measurement (Continued)
+Equity instruments
+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 recognised in
+profit or loss when the Group's right to receive payments is established.
+Changes in the fair value of financial assets measured at FVPL are recognised 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.
+(e) Impairment
+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.
+The Group has three types of financial assets that are subject to IFRS 9's new ECL model (Note 3.1
+(b)):
+.
+loan receivables
+•
+trade receivables
+•
+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 recognised initially at
+their fair value and subsequently measured at amortized cost using the effective interest method.
+2.20 Borrowings
+Borrowings are initially recognised 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 recognised in profit or loss over the period of the borrowings using
+the effective interest method.
+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.
+179
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+174
+173
+2019 Annual Report Meituan Dianping
+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 ("FVPL”), 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.
+Measurement
+(d)
+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 derecognised in
+their entirety and a new financial asset or liabilities is recognised 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 derecognised, 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 recognised between the derecognised portion and the retained portion based on their
+respective relative 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.
+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.
+the sum of the consideration received from the transfer and any cumulative gain or loss that
+has been recognised directly in equity.
+the carrying amount of the financial asset transferred; and
+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:
+(c) Derecognition (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, 2019
+Meituan Dianping 2019 Annual Report
+asset.
+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 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
+Derecognition
+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.
+Recognition
+2019 Annual Report Meituan Dianping
+For the year ended December 31, 2019
+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 utilized.
+Outside basis differences
+2019 Annual Report Meituan Dianping
+177
+178
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+The Group designated the Preferred Shares as financial liabilities at fair value through profit or loss.
+They are initially recognised at fair value. Any directly attributable transaction costs are recognised as
+finance costs in profit or loss. Before January 1, 2018, all fair value changes is recognised 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 recognised 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 realized. Fair value changes
+relating to market risk are recognised 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 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.
+2.22.1 Current 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.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.22 Current and deferred income tax (Continued)
+2.22.2 Deferred income tax
+(a)
+(b)
+Inside basis differences
+Deferred income tax is recognised, 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 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 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.
+Deferred income tax assets are recognised 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 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 recognised.
+user generated content
+2.28 Dividend income
+(c) Incentives to vendors
+2.26 Revenue recognition (Continued)
+2.26.1 The accounting policy for the Group's principal revenue sources (Continued)
+(d)
+Other services and sales (Continued)
+186
+The Group's B2B food distribution services provide supply chain solution to merchants in the
+catering industry mainly through sales of food ingredients. The Group recognises goods sold
+revenue on a gross basis when the control of inventories is transferred.
+In certain cases, the Group also provides loan facilitation services to borrowers and lenders,
+and provides post-origination services (e.g. cash process, collection and SMS services)
+to lenders and regard facilitation services and post origination services as two distinctive
+performance obligations. The borrowers are commonly merchants or individual users who
+utilize the Group's online platform. For loan facilitation services, the Group determines that it
+is not the legal lender or borrower in the loan origination and repayment process, but acting
+as an intermediary to bring both parties together. Therefore, the Group does not record
+the loans receivable or payable arising from the loan facilitation activities. Loan facilitation
+services are recognised at point of time when the loan contract established between
+borrowers and lenders and post-origination services are recognised over the loan contract
+period.
+The Group also generates other revenues from a long-term business cooperation agreement
+with Maoyan, which provides that Maoyan shall be the Group's exclusive business partner
+for the movie ticketing business. Through this cooperation agreement, the Group provides
+Maoyan with user traffic and other sources over the cooperation period in a straight line
+basis. Please refer to Note 27 for further details.
+2.26.2 Contract Balances
+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.
+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. The Group's contract assets are
+mainly trade receivables due from online marketing services and loan facilitation services.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.26 Revenue recognition (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2019 Annual Report Meituan Dianping
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.26 Revenue recognition (Continued)
+2.26.1 The accounting policy for the Group's principal revenue sources (Continued)
+(b)
+Online marketing services (Continued)
+(c)
+The Group also offers display-based marketing services in the form of key words search,
+banners, and textual or graphical marketer's link. The marketers pay the Group based
+on the period their advertisements are displayed on the Group's websites and/or mobile
+applications. The revenue is recognised on a pro-rata basis over the contractual service
+period, which is normally less than 1 year, starting on the date when the advertisement is first
+displayed on the Group's websites and/or mobile applications.
+For certain merchants, the Group provides value-added marketing services under an annual
+plan, and charges an annual fee for such plan. The Group recognises revenue ratably as the
+value-added marketing services are provided over the plan period.
+Interest revenue
+The Group directly offers loans, including joint loans together with other institutions, through
+its online platform to merchants or individual users via qualified subsidiary. The loan principal
+is funded entirely or partially by the Group, and loan receivables due from such loan
+facilitation are recorded on the statement of financial position. Interest revenue is calculated
+by applying the effective interest rate to the gross carrying amount of a loan receivable
+except for loan receivables that subsequently become credit-impaired. For credit-impaired
+loan receivables, the effective interest rate is applied to the net carrying amount of the
+financial asset (after deduction of the loss allowance).
+(d)
+Other services and sales
+Other services and sales comprise primarily revenue generated from business to business
+food distribution services ("B2B food distribution services"), car-hailing services, bike-
+sharing services, loan facilitation and relative post-origination services and other products
+or services. The Group recognises revenues when the respective services are rendered, or
+when the control of the products are transferred to the customers.
+185
+Meituan Dianping 2019 Annual Report
+2.26.2 Contract Balances (Continued)
+The Group generally expenses contract acquisition cost when incurred because the amortization
+period would have been 1 year or less.
+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 revenues (Note 27).
+188
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Interest income
+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).
+189
+2019 Annual Report Meituan Dianping
+Lease terms are negotiated on an individual basis and contain a wide range of different terms and
+conditions. The lease agreements do not impose any covenants other than the security interests
+in the leased assets that are held by the lessor. Leased assets may not be used as security for
+borrowing purposes.
+The Group leases various offices, warehouses and retail stores. Rental contracts are typically
+made for fixed periods of 1 to 10 years.
+2.29.1 Accounting policies applied since January 1, 2019
+2.29 Leases
+Dividends are recognised 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. Interest income is presented as interest revenue where it is calculated
+using the effective interest rate method and earned from financial assets that are held for micro loan
+business. Any other gains from short term and long term investment is included in "Other gains, net".
+2.26.4 Practical Expedients and Exemptions
+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 business cooperation agreement with
+Tianjin Maoyan Culture Media Co., Ltd. (the "Maoyan"), and online marketing services, which are
+recorded as deferred revenues.
+The total incentives recorded as selling and marketing expenses have been included in Note 7-
+Transacting User incentives.
+For certain business partners in certain regions within the PRC in food delivery business,
+they setup the incentive plans via the Group's system to maintain local market and manage
+the daily operation. The Group receives and pays the incentives on behalf of such business
+partners to transacting users, which is not treated as the Group's incentives.
+2.26.3 Incentives
+The Group provides various types of incentives to transacting users, delivery riders, borrowers,
+drivers and merchants under online marketing services or supply chain solution service, including
+discounted coupons (with a minimum value to use), direct payment deduction, red packet, interest
+reduction/exemption coupons and discounts on goods or services. The major accounting policy
+for incentives is described as follows.
+(a) Incentives to customers
+The Group records such incentives as deduction of revenue, to the extent of the revenue
+collected from the customers. The exceeded amount is recorded as selling and marketing
+expenses. The incentives on delivery service or local transporting service to transacting
+users, the incentives to crowdsourced delivery riders on behalf of merchants or individual
+users, the interest favorable offered to borrowers, and discounts on online marketing services
+or supply chain solution service to merchants are classified as such.
+(b)
+Incentives to transacting users
+If the substantial services to transacting users are provided by the third parties, the incentives
+at the Group's discretion in order to stimulate the transaction volume on the online platform
+are recorded as selling and marketing expenses. The incentives to transacting users where
+the Group is not responsible for delivery and substantially all of the incentives for in-store,
+hotel & travel services are classified as such.
+2019 Annual Report Meituan Dianping
+187
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.26 Revenue recognition (Continued)
+2.26.3 Incentives (Continued)
+In circumstance where the Group is responsible for the delivery service, the incentive to
+delivery riders is recognised as cost of revenue as it is part of the Group's fulfilment costs for
+completion of the delivery performance obligation. In connection with car-hailing services,
+the incentives to drivers are recorded as cost of revenue.
+(d) Incentives on behalf of third parties
+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.
+The Group provides online marketing services to merchants or marketers. Some of the
+merchants or marketers pay the Group for performance-based marketing 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. The Group recognises
+revenue each time a user clicks on the marketer's link or when its information is viewed by
+pre-determined number of users.
+The Group's local transportation services mainly provide car-hailing and bike-sharing
+services to its transacting users. Currently, for bike-sharing services and car-hailing services
+other than aggregated model, the Group recognises revenues substantially for the fees
+collected from transacting users. Revenues from car-hailing services of aggregated model
+are immaterial to the Group. 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 recognises no revenue.
+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 recognised at the point in time as determined above,
+the amounts to be remitted to third-party merchants are recorded as payables to merchants.
+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 recognised as an expense in the consolidated income statement.
+2.24.1 Share options
+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 Black-Scholes models:
+•
+including any market performance conditions;
+•
+excluding the impact of any service and non-market performance vesting conditions; and
+including the impact of any non-vesting conditions.
+The total expense is recognised 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 recognises the impact of the revision to original estimates, if any, in profit or
+loss, with a corresponding adjustment to equity.
+2.24.2 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 purposes of recognizing the expense
+during the period between service commencement period and grant date.
+2019 Annual Report Meituan Dianping
+181
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.24 Share-based payments
+2.24 Share-based payments (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+180
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.22 Current and deferred income tax (Continued)
+2.22.2 Deferred income tax (Continued)
+(c) Offsetting
+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.
+2.23 Employee benefits
+2.23.1 Employee leave entitlement
+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.
+Online marketing services
+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.
+2.23.3 Bonus plan
+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 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.
+Meituan Dianping 2019 Annual Report
+2
+2.24.3 Modifications and Cancellations
+2.23.2 Pension obligations and other social welfare benefits
+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.
+Under certain circumstances, the Group provides delivery service mainly to transacting users
+as a principal, and earns the delivery service fee collecting from transacting users as revenue
+on a gross basis.
+On-demand delivery services (including food and non-food delivery)
+The on-demand delivery services facilitate food and non-food ordering and offer delivery
+service to transacting users through the Group's platform. Meanwhile, the Group provides
+platform service to merchants and certain business partners in certain regions within the PRC,
+displaying the food or other goods information to transacting users. Upon the completion
+of a transaction, both the delivery service and the platform service are rendered. The Group
+recognises the delivery service fees collected from transaction users and the commissions
+as revenue at the same time. The amounts to be remitted to third-party merchants, after
+netting the commission revenue from the cash payments by transacting users, are recorded
+as payables to merchants. In instances where the Group is not responsible for delivery, only
+commission revenue is recognised once a transaction is completed.
+2019 Annual Report Meituan Dianping
+183
+184
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.26 Revenue recognition (Continued)
+(a)
+Commissions (Continued)
+(b)
+In-store, hotel & travel services
+The Group's in-store, hotel & travel services provides merchants platform to display their
+own services or goods. Transacting users can purchase the vouchers or make reservations
+offered by merchants via the Group's platform. When the vouchers are redeemed at
+merchants site, upon room check-in for hotel reservations, or on the departure date of the
+packaged tours, commission revenues are recognised.
+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 recognised for the services received over
+the remainder of the vesting period.
+The Group provides an e-commerce platform that enables merchants to sell their services or
+products to transacting users through the platform. Acting as an agent, the Group generates
+revenue from commission fees, which are generally charged as a percentage of the value of
+transactions placed by transacting users on the Group's platform.
+(a) Commissions
+2.26.1 The accounting policy for the Group's principal revenue sources (Continued)
+In accordance with the principal versus agent considerations prescribed by IFRS 15, the Group
+evaluates whether it acts as the principal or agent in each of its revenue streams to determine whether
+revenue should be recorded on a gross or net basis. The Group is acting as the principal if, individually
+or in combination, it controls the specified good or service before being transferred to the customer,
+is primarily responsible for fulfilling the contract, is subject to inventory risk, and has discretion in
+establishing prices. An agent arranges for goods or services to be provided by the principal to its end
+customer, which normally receives a commission or fee for these activities.
+2.25 Provisions
+2.26.1 The accounting policy for the Group's principal revenue sources
+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 losses.
+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.
+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
+recognised as interest expense.
+Revenue is principally comprised of commissions, online marketing services, interest revenue and other
+services and sales. The Group recognises revenue when or as the control of the promised goods or
+services is transferred to a customer, netting of value-added taxes ("VAT"). Depending on the terms
+of the contract and the laws that apply to the contract, if control of the goods and services transfers
+over time, revenue is recognised over the period of the contract by reference to the progress towards
+complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time
+when the customer obtains control of the goods or services.
+182
+Meituan Dianping 2019 Annual Report
+2.26 Revenue recognition
+revenue.
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.26 Revenue recognition (Continued)
+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.
+Revenue arrangements with multiple performance obligations are not significant to the Group's total
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+(18,440,124)
+197,759
+134,325
+Other services and sales
+4,664,988
+Cost of revenues
+3,447,932
+28,158,253
+3,071,073
+19,803,452
+(15,322,458)
+4,937,769
+(RMB in thousands)
+13,150,122
+18,357,737
+Commission
+Finance costs
+Revenues
+2018
+December 31,
+2019
+Gross profit
+Three Months Ended
+December 31,
+Online marketing services
+9,718,129
+990,653
+Selling and marketing expenses
+Unaudited
+116,427
+53,519
+Finance income
+(3,734,518)
+1,423,860
+Operating profit/(loss)
+156,792
+786,746
+Other gains, net
+72,443
+4,480,994
+at fair value through profit or loss
+(120,793)
+(332,004)
+Net provision for impairment losses on financial assets
+(2,725,287)
+(1,232,474)
+General and administrative expenses
+(1,981,826)
+(2,239,885)
+Research and development expenses
+(4,535,051)
+(5,349,095)
+Fair value changes on investments measured
+The following table sets forth the comparative figures for the fourth quarter of 2019 and 2018:
+Interest revenue
+MANAGEMENT DISCUSSION AND ANALYSIS
+With respect to our hotel booking business, we further strengthened our leading position in 2019. The number
+of domestic room nights consumed on our platform in 2019 increased by 38.2% year-over-year to 392.4 million.
+Average daily rate per room night also experienced a steady year-over-year growth. More notably, the growth of
+domestic room nights in the fourth quarter of 2019 further accelerated and increased by 47.9% year-over-year,
+reaching 110 million quarterly room nights for two consecutive quarters. In 2019, we further solidified our leading
+position in lower-tier cities and low-star hotel segment because of our increased efforts on exploring offline traffic
+conversion and new traffic channels. Meanwhile, our high-star hotel booking business maintained healthy growth
+in 2019. Our "Hotel + X" strategy has enabled us to develop deeper relationships with an increasing number of
+high-star hotel groups by helping them increase their non-lodging revenues streams. Revenues contribution from
+high-end hotels further increased year-over-year for the fourth quarter of 2019.
+CHAIRMAN'S STATEMENT
+Meituan Dianping 2019 Annual Report
+12
+First, we reorganized our sales team and expanded our coverage for high-quality restaurant merchants in 2019.
+By dividing restaurant merchants into different categories, our sales team has gained a better understanding of
+each merchant category and is increasingly capable of providing more personalized product solutions. Second,
+our continuous enhancement of location-based algorithms was key in helping local service merchants maximize
+the impact of their online marketing and further refine their marketing precision via user-generated local search
+queries. We were also able to further leverage the user profiles generated from our database to gauge user
+demand on our platform across different service categories and promote additional cross-selling opportunities.
+Third, we continued to diversify our affordable marketing products and tools for merchants. Merchant base
+penetration rate of our cost-per-click advertising products and subscription-based services increased steadily
+throughout 2019. Our interest-based feeds, which were rolled out in late 2018 and have barely been monetized
+at the current stage, also enabled merchants to tailor and promote their content within the editorial feed, display
+their content to a larger audience, and achieve a higher click-through-rate. Fourth, we continued to advance our
+operational capabilities through the execution of numerous promotional activities and campaigns in 2019. These
+promotional activities and campaigns included, to name a few, "Super Brand Food Festival," "2019 Parent-Child
+Fantasy Day," "Chinese Valentine's Day Special Campaign," "Double 11 Carnival," and "Double 12 Carnival." All of
+these theme-based promotional campaigns were exceptionally well received by the market. Lastly, we continued
+to make good progress in the development of our content ecosystem in 2019, which has also helped improve
+the marketing efficiency of merchants on our platform. As of December 31, 2019, we had accumulated over
+7.7 billion user-generated reviews on our platform for millions of merchants in China. Moreover, our refinement
+of interest-based feeds within the Dianping app has resulted in a more visually appealing user interface, an
+increasingly personalized content delivery system, and the rapid growth of both DAUS and user time spent on the
+application for the full year of 2019. Meanwhile, our enhanced Black Pearl Restaurant Guide, Must List Series, and
+other initiatives have risen in popularity among consumers. Importantly, these features enable consumers to not
+only discover and explore a broad range of local service categories, but also allow our recommended merchants to
+generate higher sales, augment their brand influence, streamline their operations, and bolster their product offerings
+through consumer reviews that are both authentic and dynamic.
+For our in-store business, the year-over-year growth rate of commission revenues from transaction-based products
+re-accelerated in the beginning of the second half of 2019 and continued to accelerate during the fourth quarter of
+2019. Online marketing revenues also maintained strong growth momentum throughout the year, with around 55%
+increase year-over-year in 2019. The impressive results achieved in 2019 were mainly due to the refinement in our
+business operations, our strengthened content creation capabilities, expansion in the range of product and service
+offerings and enhanced location-based algorithms.
+Our in-store, hotel & travel businesses continued to solidify its market leadership and further demonstrated strong
+monetization capability in 2019. GTV of our in-store, hotel & travel businesses grew by 25.6% year-over-year to
+RMB222.1 billion in 2019. Revenues from our in-store, hotel & travel businesses increased by 40.6% year-over-year
+to RMB22.3 billion in 2019. Gross profit of our in-store, hotel & travel businesses increased by 40.1% year-over-year
+to RMB19.7 billion in 2019, while gross margin remained relatively flat year-over-year. GTV growth of our in-store,
+hotel & travel businesses continued to accelerate for the fourth quarter of 2019, growing by 35.3% year-over-year
+to RMB60.4 billion. Revenues from our in-store, hotel & travel businesses increased by 38.4% year-over-year to
+RMB6.4 billion for the fourth quarter of 2019. Gross profit from our in-store, hotel & travel businesses increased to
+RMB5.6 billion for the fourth quarter of 2019, while gross margin increased to 88.8% from 86.8% year-over-year.
+In-store, hotel & travel
+CHAIRMAN'S STATEMENT
+11
+2019 Annual Report Meituan Dianping
+New initiatives and others
+On the delivery front, we further solidified our advantages in delivery efficiency attributable to higher order density,
+refinement of our proprietary dispatching system algorithms, and optimization of our operational capabilities in
+2019. In addition, we began to fine-tune our delivery service segmentation and our delivery network mobilization
+capacity, especially during off-peak hours, extreme weather conditions and holidays in the second half of 2019,
+which enabled us to further lower our delivery cost per order while ensuring a consistent level of user experience
+over the past two quarters. At the same time, to maintain the consistency in our delivery service quality, we
+require our delivery partners to set and continuously refine strict delivery riders recruitment standards and closely
+monitor their adherence to our service standards. In addition, we helped our partners establish legally compliant
+management systems to ensure fire safety and driving safety, and required them to provide regular training to
+delivery riders to promote their awareness of safety compliance. We continued to exert efforts on improving delivery
+riders' corporate affinity and attaining increasing social respect through the "717 Riders' Day" celebration, "Delivery
+Riders Guardian Program" and offering free counseling to delivery riders, among others.
+CHAIRMAN'S STATEMENT
+Meituan Dianping 2019 Annual Report
+Monetization rate equals the revenues for the year/period divided by the Gross Transaction Volume for the year/period.
+1
+10
+10
+Meanwhile, as we continued to expand the quality food supply, delivery categories, available hours and delivery
+distance to better satisfy consumer demand, purchase frequency of our repeat consumers continued to improve.
+The successful rollout of our Food Delivery Membership Program in 2019 further enabled us to improve the order
+frequency and loyalty of these repeat consumers. Moreover, our Food Delivery Membership Program effectively
+boosted consumer impulse consumptions during off-peak hours. Consumer demand during off-peak hours,
+including breakfast, afternoon tea and late night snacks, continued to grow rapidly in the fourth quarter of 2019,
+with increasing needs for more personalized and high-quality online food supplies. In particular, delivery volume of
+healthy light meals, salad, desserts and beverages all achieved strong growth in the fourth quarter of 2019.
+On the consumer front, owing to our early, forceful expansion into lower-tier cities, we currently enjoy a significant
+first-mover advantage and stand to benefit from the ongoing trend that demand in lower-tier cities continues
+to grow alongside the rising levels of consumption. Our food delivery business in lower-tier cities made a
+larger contribution and exhibited higher growth in terms of GTV in full year 2019 as well as the fourth quarter of
+2019. Moreover, lower-tier cities continued to be the main driver of our user growth in 2019. Attributable to our
+improvements to operational teams, delivery network and marketing capabilities as well as positive word-of-mouth,
+we continued to acquire new users, the majority of which came from third-tier cities and below.
+As the world's leading food delivery service provider, we further strengthened our market-leading position in terms
+of consumer base, merchant base and delivery network during 2019. As we grow our business, we have also
+improved the unit economics of our food delivery business on a year-over-year basis consecutively over the past
+four quarters due to increasing economies of scale. In 2019, GTV of our food delivery business increased by 38.9%
+to RMB392.7 billion. The daily average number of food delivery transactions increased by 36.4% to 23.9 million.
+The average value per order of our food delivery business increased by 1.8% year-over-year. Monetization Rate¹
+of our food delivery business increased to 14.0% from 13.5% in 2018. As a result, revenues increased by 43.8%
+year-over-year to RMB54.8 billion in 2019. Gross profit from our food delivery business increased by 94.2% to
+RMB10.2 billion in 2019, while gross margin expanded to 18.7% from 13.8% year-over-year. In the fourth quarter
+of 2019, total GTV of our food delivery business increased by 39.9% year-over-year to RMB112.1 billion and the
+daily average number of food delivery transactions increased by 36.7% year-over-year to 27.2 million. The average
+value per order of our food delivery business increased by 2.3% year-over-year to RMB44.8, and Monetization
+Rate of our food delivery business increased to 14.0%. As a result, revenues from food delivery increased by
+42.8% year-over-year to RMB15.7 billion in the fourth quarter of 2019. Gross profit from our food delivery business
+increased by 89.4% year-over-year to RMB2.8 billion for the fourth quarter of 2019, while gross margin expanded
+to 17.7% from 13.4% year-over-year.
+(45,095)
+Food delivery
+On the merchant front, as the leading platform with sufficient user traffic, we helped millions of restaurants
+maximize their exposure to online channels and increase online sales in 2019. In addition to cost-effective
+on-demand delivery infrastructure, we continued to optimize our comprehensive set of solutions to empower local
+merchants in 2019. These include solutions for online marketing, production and operation digitalization, integrated
+payment, food distribution and financing services. For example, we introduced dish-based recommendation feeds
+for restaurants in August 2019 and continued to optimize this marketing solution for merchants in the fourth quarter
+of 2019. This dish-based recommendation feeds provide more opportunities to merchants to showcase their
+popular local dishes and attract new consumers while increasing their conversion ratios. More notably, because
+of our continuous efforts in developing innovative online marketing products to help food delivery merchants
+enhance their exposure to potential consumers and further boost their marketing efficiency, increasingly more food
+delivery merchants have adopted our online marketing services in 2019. Online marketing revenues of food delivery
+business grew robustly, increasing by 118.6% year-over-year. Moreover, we continued to improve our marketplace
+products to provide restaurants with more useful tools for enhancing their operating efficiency. For example, we
+introduced an intelligent diagnosis tool for restaurant merchants on their product quality and guidance on product
+mix optimization. Furthermore, in the fourth quarter of 2019, we released four targeted solutions, including digital
+business solution, specialized production solution, diversified marketing solution, and intelligent service solution.
+Through these solutions, our goal is to help millions of merchants build next generation stores, identify and resolve
+online operation pain points, achieve seamless integration between online and offline operations, and enhance
+service and product quality.
+Revenues from the new initiatives and others segment increased by 81.5% year-over-year to RMB20.4 billion in
+2019. Gross profit of the new initiatives and others segment increased to positive RMB2.3 billion in 2019 from
+negative RMB4.3 billion in 2018, while gross margin improved to positive 11.5% in 2019 from negative 37.9% in
+2018. In the fourth quarter of 2019, revenues in this segment increased by 44.8% year-over-year to RMB6.1 billion
+in 2019. Gross profit increased to positive RMB1.3 billion in 2019 from negative RMB1.0 billion in 2018, while gross
+margin further expanded to positive 21.2% in 2019 from negative 23.3% in 2018.
+For our bike-sharing and car-hailing services, we successfully reduced our losses during 2019 while improving
+operation efficiencies and developing synergies with other businesses on our platform. With respect to our
+bike-sharing services, most of our older bikes reached the end of their useful lives in the third quarter of 2019. As
+such, we have gradually replaced the remaining older bikes with new Meituan Bikes, which are painted in Meituan
+yellow, have a longer life span, are modified for a better user experience and may only be unlocked through the
+Meituan app. We believe that the new Meituan Bikes would have better unit economics and could create more
+synergies with our platform as compared to the old Mobike model. With respect to our car-hailing services, we
+have improved our control of operating losses after rolling out the "aggregated model” in 2019. We operated our
+car-hailing services in 54 cities as of the end of 2019.
+In 2019, we continued to drive supply side digitization by investing in our restaurant management system and B2B
+food distribution services. With respect to our restaurant management system services, emphasis on merchant
+quality has become a priority in 2019, and both the number and percentage of high-quality merchants have
+increased. Continuous investment in R&D, product upgrade, as well as a higher standard of post-sale service
+quality further strengthened our position in this space. For the B2B food distribution services, we prioritized
+merchant development, product selection, and core capabilities in 2019. We focused on the development and
+maintenance of high-quality merchants as well as the growth of average revenue per user through an increase in
+their wallet share, purchase frequency, and ticket size. In addition, we adjusted our product structure according
+to the geographic distribution and purchase frequency of merchants. Notably, fresh produce and meat products
+accounted for a higher proportion of our product selection in 2019. We have also bolstered our quality control and
+pricing management capabilities for fresh products.
+Meituan Dianping 2019 Annual Report
+Hong Kong, March 30, 2020
+Chairman
+Wang Xing
+As March 2020 marks the 10th anniversary of Meituan Dianping, I would like to take this important opportunity to
+express my sincere gratitude to our consumers, merchants, partners and investors for their continuous trust and
+support. I would also like to thank our delivery riders and the entire staff for their commitment, great determination
+and remarkable contributions. In the new decade, we strive to increase our investment in science and technology
+to facilitate development and promote digitization of the service industry. We will also continue to advance our
+corporate governance and talent development programs. We promise to remain customer-centric in the decades to
+come and focus on using technology and innovation to make life better for all.
+APPRECIATION
+Although many businesses would be adversely impacted by the pandemic in 2020, we believe that many industries
+will re-accelerate towards a better direction in the long run. The pandemic has also made the society more aware of
+the urgency and importance of digitizing the service industry on both the demand and supply sides. As the leading
+e-commerce platform for services, we will be an important promoter, leader and long-term beneficiary of this
+long-term trend. In 2020, we will continue to execute our "Food + Platform" strategy and fulfill our mission of "We
+help people eat better, live better". We will live up to the challenges throughout this pandemic, create more value
+for consumers and merchants, enhance consumer stickiness and deepen merchant relationship. Meanwhile, we
+will continue to actively invest in the areas in our ecosystem that we believe will drive the growth of our business,
+including merchants, consumers, delivery network, and technology.
+Meanwhile, we are providing additional support to our delivery riders who remain committed to providing delivery
+services during the pandemic. For example, we are implementing strict health management systems for our delivery
+riders, distributing pandemic prevention and control knowledge, upgrading anti-septic and pandemic prevention
+measures at delivery stations across the country, and providing insurance to our delivery riders. We will continue to
+implement and refine these measures to support every player in our ecosystem.
+We also launched a series of campaigns to further promote the gradual recovery of consumption. By establishing
+"Safe-dining Restaurants,” “Safe-stay Hotels," and other services, we utilized our online capabilities to guide
+merchants in the process of streamlining, standardizing, and digitizing their pandemic and safety measures to
+help merchants attract customers. In addition, we launched “Safe Consumption Month" to provide consumers
+with subsidies and other benefits as well as our "Safe Reservation" services in cooperation with more than 50,000
+in-store dining restaurants and tens of thousands of hotels and attractions across the country.
+CHAIRMAN'S STATEMENT
+16
+15
+2019 Annual Report Meituan Dianping
+At the same time, we have launched a series of assistance programs to help small and medium-sized merchants in
+the local service industry overcome the severe difficulties that they are facing during the pandemic. For example,
+we established a special fund to support the resumption of operations for merchants across the country. Further,
+we are working with our bank partners to provide RMB20 billion of loans with preferential interest rates to various
+merchants while providing free online courses to merchants on the best practices in pandemic response, food
+safety, storefront operations and other topics. With respect to our food delivery business, we have waived
+commissions for all food delivery restaurant merchants in Wuhan until after the city lockdown is over. Also, we have
+returned a portion of commissions to high-quality food delivery restaurant merchants nationwide to be used for
+online promotion and marketing in the future while providing free traffic support and subsidies to these merchants.
+With respect to our in-store business, we have waived commissions for the months of February and March for
+in-store dining restaurant merchants and local service merchants in Hubei as well as February commissions for
+in-store dining restaurant merchants and local service merchants across the country. In addition, we have extended
+the validity period of subscription-based services for two additional months for recently on-boarded in-store
+dining restaurant merchants and local service merchants as well as for those who have renewed their contracts
+with us within a specified period. With respect to our hotel and travel businesses, we provide subsidies to hotels,
+guesthouses and tourist attractions nationwide that worth a total of RMB1 billion, primarily to be used for online
+promotion and marketing. We also provide free insurance products to restaurant merchants in Wuhan and their
+employees, restaurant management systems to eligible restaurant merchants in Hubei, and anti-pandemic supplies
+and hotel management systems to hotels and guesthouses in Hubei.
+At the very early stage of the pandemic, we established a special support fund of RMB200 million for medical staff
+across the country, with a focus on supporting medical staff in key areas of pandemic prevention and control,
+such as Wuhan, as well as medical teams who have come to Wuhan from other parts of the country to support
+local medical staff. We were the first to introduce "contact-free" delivery services in Wuhan, which has now been
+rolled out nationwide. Our Meituan Instashopping business continues to cooperate with supermarkets, pharmacies,
+convenience stores, fruit and vegetable stores in Wuhan and other regions to provide consumers with on-
+demand delivery of food, medicines, daily consumer goods and other products. Our grocery shopping business
+also continues to increase its number of high-quality suppliers, strengthen its food safety management, increase
+its procurement capabilities, and ensure the supply of groceries during the pandemic. During the pandemic, we
+extended the emergency service guarantee policy for travel orders to speed up the refund process for hotels, travel
+as well as train and air tickets. Our B2B food distribution services have also opened green channels for medical
+institutions in 34 cities while overcoming inventory and capacity challenges to ensure adequate supply of food
+during the pandemic. We have also suspended fee collection for the use of our bikes in Hubei during the pandemic,
+while donating more than 2.15 million free ride passes to medical professionals fighting against the coronavirus
+across the country. Our car-hailing services have rolled out the first real-name public transport system in China to
+assist the government to track pandemic information. We are also providing job matching services for millions of
+local service providers and tens of millions of participants. To date, we have released 200,000 delivery riders job
+openings and thousands of other job openings across campuses and throughout the country.
+CHAIRMAN'S STATEMENT
+Meituan Dianping 2019 Annual Report
+14
+In face of such a severe pandemic, the first thing that comes across our mind is our position as an industry leader
+and the social responsibilities attached to our position. Therefore, we have been proactively providing supply
+assistance and helping to secure people's livelihood in pandemic-stricken areas. Additionally, we have continued
+to provide our services to people nationwide to ensure that their normal lives are not adversely affected during the
+pandemic.
+Since the beginning of 2020, the coronavirus outbreak has resulted in tremendous near-term shocks to many
+industries in China. Local services, which are the focus of our e-commerce platform, have been impacted by this
+pandemic in many ways. Especially, the pandemic has already caused severe disruptions to the daily operations
+of our merchants, including restaurants, local services merchants and hotels, which in turn resulted in downward
+pressure on our own operations for the first quarter of 2020. Business segments such as food delivery and
+in-store, hotel and travel are all facing significant challenges on the demand side and supply side. As a result of
+the pandemic, we estimate that we would experience negative year-over-year revenues growth and operating loss
+for the first quarter of 2020. Due to the high uncertainty of the evolving situation, we are unable to fully ascertain
+the expected impact on full year 2020 at this stage; however, if it takes longer for user demand and merchant
+operations to recover to normal levels as the pandemic continues, the results of our operations for the following
+quarters could also be adversely impacted.
+Company Outlook for 2020 and Potential Adverse Impact of the Recent Coronavirus Outbreak
+With respect to our grocery retail services, we continued to explore both our self-operated model and marketplace
+model while improving the operational efficiencies of both. With respect to our self-operated Meituan Grocery
+model, we have increased our warehouse density by setting up 96 warehouses in Beijing, Shanghai, and Shenzhen,
+as well as by establishing more than 30 locations for self-pickup in Wuhan as of the end of 2019. With respect to
+our marketplace model, Meituan Instashopping is positioned to be an online marketplace with tens of thousands
+of SKUs. These SKUs range from items that meet the daily needs of consumers to specialty items from selected
+vertical service categories, such as medical products and flowers. Notably, GTV growth of both medical products
+and flowers on our platform achieved robust growth in 2019.
+CHAIRMAN'S STATEMENT
+13
+2019 Annual Report Meituan Dianping
+Fourth Quarter of 2019 Compared to Fourth Quarter of 2018
+(15,407)
+percentage
+using equity method
+Revenues:
+(RMB in thousands, except for percentages)
+revenues
+Amount
+revenues
+Amount
+of total
+of total
+BUSINESS REVIEW AND OUTLOOK
+percentage
+As a
+Commission
+As a
+December 31, 2019
+Three Months Ended
+Unaudited
+The following table sets forth our revenues by type in absolute amount and as a percentage of total revenues for the
+fourth quarter of 2019 and 2018:
+Revenues by Type
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+18
+Our revenues from the new initiatives and others segment increased by 44.8% to RMB6.1 billion for the fourth
+quarter of 2019 from RMB4.2 billion for the same period of 2018, primarily due to the increases in the revenues from
+the B2B food distribution services, micro loan business, Meituan Instashopping and integrated payment services,
+partly offset by the decrease in the revenues from car-hailing services.
+Our revenues from the in-store, hotel & travel segment increased by 38.4% to RMB6.4 billion for the fourth quarter
+of 2019 from RMB4.6 billion for the same period of 2018, primarily due to (i) the increases in the number of Active
+Merchants and the average revenue per Active Merchant of our in-store and travel businesses, and (ii) the increase
+in the number of domestic room nights consumed on our platform.
+Our revenues from the food delivery segment increased by 42.8% to RMB15.7 billion for the fourth quarter of 2019
+from RMB11.0 billion for the same period of 2018, primarily due to the increase in GTV driven by (i) the increase in
+the number of food delivery transactions, as a result of the increase in food delivery user base and their purchase
+frequency, and (ii) the increase in average order value.
+December 31, 2018
+100.0%
+Online marketing services
+65.2%
+19
+2019 Annual Report Meituan Dianping
+Our cost of revenues increased by 20.3% to RMB18.4 billion for the fourth quarter of 2019 from RMB15.3 billion in
+the same period of 2018, 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
+Our other services and sales revenues increased by 35.7% to RMB4.9 billion for the fourth quarter of 2019 from
+RMB3.6 billion for the same period of 2018, primarily due to the growth of revenues from our B2B food distribution
+services and micro loan business, partially offset by the decrease in the revenues from our car-hailing services.
+Our online marketing services revenues increased by 60.8% to RMB4.9 billion for the fourth quarter of 2019 from
+RMB3.1 billion for the same period of 2018, primarily due to the increase in the number of online marketing Active
+Merchants.
+Our commission revenues increased by 39.6% to RMB18.4 billion for the fourth quarter of 2019 from RMB13.2
+billion for the same period of 2018, primarily attributable to the substantial growth of our GTV, especially from our
+food delivery business.
+100.0%
+19,803,452
+100.0%
+28,158,253
+18,357,737
+Total
+3,582,257
+17.3%
+4,862,747
+(including interest revenue)
+Other services and sales
+15.5%
+3,071,073
+17.5%
+4,937,769
+66.4%
+13,150,122
+18.1%
+Share of gains/(losses) of investments accounted for
+19,803,452
+28,158,253
+Unaudited
+Three Months Ended
+The following table sets forth our revenues by segment in absolute amount and as a percentage of total revenues
+for the fourth quarter of 2019 and 2018:
+Revenues by Segment
+Our revenues increased by 42.2% to RMB28.2 billion for the fourth quarter of 2019 from RMB19.8 billion in the
+same period of 2018. The increase was primarily driven by (i) the increase in Gross Transaction Volume on our
+platform to RMB189.9 billion for the fourth quarter of 2019 from RMB138.0 billion in the same period of 2018, which
+was driven by the increase in the number of Transacting Users, their purchase frequency and average order value,
+and (ii) the increase in Monetization Rate to 14.8% for the fourth quarter of 2019 from 14.3% in the same period of
+2018.
+Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+17
+2019 Annual Report Meituan Dianping
+(854,601)
+(1,581,682)
+2,270,219
+2,178,650
+December 31, 2019
+Adjusted net profit/(loss)
+(3,414,252)
+1,460,285
+Profit/(loss) for the period
+276,121
+(29,645)
+Income tax (expenses)/credits
+(3,690,373)
+1,489,930
+Profit/(loss) before income tax
+(56,875)
+57,646
+Non-IFRS measures:
+Adjusted EBITDA
+100.0%
+December 31, 2018
+As a
+Total
+21.2%
+4,203,043
+21.6%
+6,085,598
+New initiatives and others
+23.2%
+4,594,132
+22.6%
+6,356,945
+In-store, hotel & travel
+As a
+55.6%
+55.8%
+15,715,710
+Food delivery
+Revenues:
+revenues
+Amount
+(RMB in thousands, except for percentages)
+revenues
+Amount
+percentage
+of total
+of total
+percentage
+11,006,277
+CHAIRMAN'S STATEMENT
+199
+2019 Annual Report Meituan Dianping
+The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses
+a lifetime expected loss allowance for all trade receivables and contract assets.
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+193
+2019 Annual Report Meituan Dianping
+To manage 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 150 days and the credit quality of these customers is
+assessed, which takes into account their financial position, past experience and other factors.
+To manage risk arising from cash and cash equivalents, restricted cash, short-term investments
+measured at amortized cost and long-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.
+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.
+3.1 Financial risk factors (Continued)
+(b) Credit risk
+Price risk
+(iii)
+(a) Market risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+3
+Meituan Dianping 2019 Annual Report
+192
+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.
+As of December 31, 2019, the Group's borrowings were borrowings that carried at fixed
+rates, which did not expose the Group to cash flow interest rate risk.
+(b) Credit risk (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 which continue operation for less than 3
+years before December 31, 2019 or January 1, 2019 respectively and the corresponding historical
+credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forwardlooking information on macroeconomic factors affecting the ability of the customers
+to settle the receivables. The Group has identified the urban per capita disposable income and
+the total retail sales of consumer goods of the countries in which it sells its goods and services to
+be the most relevant factors, and accordingly adjusts the historical loss rates based on expected
+changes in these factors.
+significant changes in the value of the collateral supporting the obligation or in the quality of
+third-party guarantees or credit enhancements
+significant increases in credit risk on other financial instruments of the same counter party
+actual or expected significant changes in the operating results of the counter party
+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
+3 FINANCIAL RISK MANAGEMENT
+•
+• external credit rating (as far as available)
+internal credit rating
+•
+To measure the expected credit losses, trade receivables and contract assets have been grouped
+based on shared credit risk characteristics and the days past due. 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.
+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:
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+194
+For prepayments, deposits and other assets (excluding loan receivables, tax prepayments and
+long-term investments measured at amortized cost), 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.
+Impairment on prepayments, deposits and other assets is measured as either 12-month expected
+credit losses or lifetime expected credit loss, depending on whether there has been a significant
+increase in credit risk since initial recognition. If a significant increase in credit risk of a receivable
+has occurred since initial recognition, then impairment is measured as lifetime expected credit
+losses.
+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.
+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.
+(b) Credit risk (Continued)
+The Group's exposure to changes in interest rates is also attributable to its borrowings,
+details of which has been disclosed in Note 31. 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.
+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.
+Cash flow and fair value interest rate risk
+2.29 Leases (Continued)
+2.29.1 Accounting policies applied since January 1, 2019 (Continued)
+The Group considers the lease as a single transaction in which the asset and liabilities are
+integrally linked. There is no net temporary difference at inception. Subsequently, the differences
+arisen on settlement of the liability and the amortisation of leased assets, there will be a net
+temporary difference on which deferred tax is recognised.
+Right-of-use assets are presented in "Property, plant and equipment” on face of the Group's
+consolidated statement of financial position.
+2.29.2 Accounting policies applied before January 1, 2019
+Leases in which a significant portion of the risks and rewards of ownership were not transferred to
+the Group as lessee were classified as operating leases. Payments made under operating leases
+(net of any incentives received from the lessor) were 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 recognised as income on a
+straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease
+are added to the carrying amount of the underlying asset and recognised as expense over the
+lease term on the same basis as lease income. The respective leased assets are included in the
+balance sheet based on their nature. The Group did not need to make any adjustments to the
+accounting for assets held as lessor as a result of adopting the new leasing standard.
+2.30 Dividends distribution
+Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial
+statements in the period in which the dividends are approved by the Company's shareholders or
+Directors, where appropriate.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.31 Government subsidies
+2019 Annual Report Meituan Dianping
+191
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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 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.
+Foreign exchange risk
+(i)
+(a) Market risk
+3.1 Financial risk factors
+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.
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+190
+(ii)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.29 Leases (Continued)
+2.29.1 Accounting policies applied since January 1, 2019 (Continued)
+Until the 2018 financial year, leases of property, plant and equipment were classified as either
+finance leases or operating leases. From January 1, 2019, leases are recognised as a right-of-use
+asset and a corresponding liability at the date at which the leased asset is available for use by the
+Group.
+Assets and liabilities arising from a lease are initially measured on a present value basis.
+Lease liabilities include the net present value of the fixed payments (including in-substance fixed
+payments).
+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.
+To determine the incremental borrowing rate, the Group 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.
+Lease payments are allocated between the liability and finance cost. The finance cost is 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 liability for each period.
+Right-of-use assets are measured at cost comprising the following:
+the amount of the initial measurement of lease liability;
+•
+any lease payments made at or before the commencement date;
+●•
+any initial direct costs; and
+•
+restoration costs.
+Right-of-use assets are generally depreciated over the shorter of the asset's 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 asset is depreciated over the underlying asset's useful life.
+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.
+Macroeconomic information (such as market interest rates or growth rates) is incorporated as part
+of the internal rating model.
+.
+195
+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.
+(3)
+Definition of default and credit-impaired assets
+(2)
+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 are considered to have experienced a significant increase in credit risk if
+the borrower is past due more than 1 day on its contractual payments.
+Significant increase in credit risk (SICR)
+(1)
+The key judgments and assumptions adopted by the Group in addressing the requirements
+of the standard are discussed below:
+The impairment of loan receivables was provided based on the 'three-stages' model by
+referring to the changes in credit quality since initial recognition.
+ECL model for loan receivables, as summarized below: (Continued)
+(i)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+197
+2019 Annual Report Meituan Dianping
+2019 Annual Report Meituan Dianping
+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.
+Measuring ECL - Explanation of inputs, assumptions and estimation techniques
+is then moved to 'Stage 3'. The expected credit loss is measured on lifetime basis.
+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.
+198
+Loan receivables derecognised and write-offs of allowances related to assets that were
+written off during the period.
+Additional allowances for new financial instruments recognised, as well as releases for
+loan receivables derecognised in the period;
+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;
+The loss allowance recognised in the 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
+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.
+(5)
+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 expected credit
+losses.
+Forward-looking information incorporated in the ECL models
+(4)
+(ii)
+ECL model for loan receivables, as summarized below: (Continued)
+(i)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+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.
+If the financial instrument is credit-impaired (as defined below), the financial instrument
+For the year ended December 31, 2019
+•
+months, expected losses
+are measured at its
+expected lifetime
+asset is less than 12
+expected lifetime of an
+losses. Where the
+12 months expected
+The Group terminates its
+corporation with merchants
+of expected credit loss
+provision
+Basis for recognition
+Write-off
+Non-performing
+A significant increase in credit
+risk is presumed if repayments
+are 30 days past due
+Underperforming
+Lifetime expected losses
+Customers have a low risk of default and a strong capacity to meet
+contractual cash flows
+merchants
+Other receivables excluding loan Prepayment to merchants
+receivables and prepayments to
+Group definition of category
+Category
+Credit risk (Continued)
+(b)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+196
+Performing
+Repayments are 90 days past
+due
+Repayments are 180 days past
+due and there is no reasonable
+expectation of recovery
+The Group terminates its
+corporation with merchants for
+more than 60 days
+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.
+ECL model for loan receivables, as summarized below:
+(i)
+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 monitors 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, 2019 was RMB15
+million, the majority of which were not credit-impaired on initial recognition and not significant
+increase in credit risk subsequently. The Group has recognised guarantee liability at each of the
+reporting date.
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+Asset is written off
+Lifetime expected losses
+•
+The Group terminates its
+corporation with merchants for
+more than 180 days and there
+is no reasonable expectation of
+recovery
+FINANCIAL RISK MANAGEMENT (Continued)
+3,847
+than write-off
+16,854
+335,960
+250,614
+originated
+(359,358)
+(359,358)
+Write-off
+250,614
+during the period other
+New loan receivables
+315,259
+19,972,207 21,309,932
+(87,088)
+Less than
+1 year
+Between 1
+and 2 years
+Between 2
+and 5 years
+Over
+5 years
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+The table below analyzes the Group's non-derivative financial liabilities. The amount disclosed in
+the table is the contractual undiscounted cash flows.
+As of December 31, 2019
+6,766,253
+Payables to merchants
+7,495,262
+Advances from transacting users
+3,855,559
+| | | |
+6,766,253
+Deposits from transacting users
+2,491,947
+Loan receivables derecognised
+Trade payables
+Accrual and reversal
+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.
+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.
+1,659
+(85,429)
+Loss allowance as of
+December 31, 2019
+(172,630)
+(103,491)
+(59,377)
+(335,498)
+2019 Annual Report Meituan Dianping
+201
+(c) Liquidity risk
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+(iii)
+Write-off policy
+(iv)
+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
+For the year ended December 31, 2019
+Stage 2
+25
+Stage 1
+Transfer from Stage 1
+to Stage 3
+(220,960)
+220,960
+Transfer from Stage 2
+to Stage 1
+7,495,262
+(25)
+Transfer from Stage 2
+to Stage 3
+(57,282)
+57,282
+Transfer from Stage 3
+to Stage 1
+Transfer from Stage 3
+to Stage 2
+Loan receivables derecognised
+during the period other
+than write-off
+New loan receivables
+originated
+Write-off
+Gross carrying amount as
+126,514
+(126,514)
+to Stage 2
+Transfer from Stage 1
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+(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
+at December 31, 2019
+12-month ECL Lifetime ECL
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+Gross carrying amount as
+at December 31, 2018
+3,870,816
+81,658
+35,596
+3,988,070
+Transfers:
+Stage 3
+Lifetime ECL
+200
+Meituan Dianping 2019 Annual Report
+(14,372,029)
+(35,596)
+(150,990)
+Transfers:
+Transfer from Stage 1
+to Stage 2
+2,775
+(101,774)
+(98,999)
+Transfer from Stage 1 to
+Stage 3
+4,847
+(66,330)
+(220,960)
+Transfer from Stage 2 to
+Stage 1
+(1)
+20
+19
+Transfer from Stage 2 to
+Stage 3
+46,080
+(57,282)
+(11,202)
+Transfer from Stage 3 to
+(216,113)
+Transfer from Stage 3 to
+(49,064)
+Loss allowance as at
+(20,950)
+(3,847) (14,396,826)
+16,382,420
+(250,614)
+16,382,420
+(250,614)
+5,533,758
+129,915
+59,377
+5,723,050
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+3
+December 31, 2018
+FINANCIAL RISK MANAGEMENT (Continued)
+(b) Credit risk (Continued)
+(ii)
+Loss allowance (Continued)
+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:
+Stage 1
+Stage 2
+RMB'000
+12-month ECL Lifetime ECL
+RMB' 000
+Stage 3
+Lifetime ECL
+RMB'000
+Total
+RMB'000
+3.1 Financial risk factors (Continued)
+3,855,559
+Other non-current liabilities
+Other payables and accruals (excluding salaries
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+•
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+There was no change to valuation techniques during the year ended December 31, 2019.
+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.
+2019 Annual Report Meituan Dianping
+205
+The discounted cash flow model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate; and
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+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 and contingent consideration for
+the year ended December 31, 2019 and 2018.
+Short-term
+investments at
+Financial assets at
+fair value through
+For the year ended December 31, 2019
+fair value
+•
+The use of quoted market prices or dealer quotes for similar instruments; and
+4,019,881
+4,019,881
+benefits payable, and other tax payable)
+Other payables and accruals (excluding salaries and
+3,341,276
+3,226,407
+7,596,388
+•
+3,341,276
+3,226,407
+Advances from transacting users
+7,596,388
+The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels as
+at the end of the reporting period.
+3.3.2 Valuation techniques used to determine fair values
+Specific valuation techniques used to value financial instruments include:
+•
+Deposits from transacting users
+through
+profit or loss
+profit or loss
+Change in fair value
+637,410
+(661,571)
+(24,161)
+Currency translation differences
+100,063
+51,394
+319,373
+151,457
+23,988,182
+5,089,127
+2,491,947
+Net unrealized gains/(losses) for the year
+147,157
+(661,790)
+(514,633)
+As of December 31, 2019
+319,373
+Reclassification
+(134,898,314)
+Investments
+in unlisted
+companies
+Total
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2019
+15,067,960
+4,904,247
+19,972,207
+Acquisitions
+143,080,844
+475,903
+143,556,747
+Disposals/settlements
+(134,898,095)
+(219)
+Borrowings
+1,800,000
+470,056
+2,270,056
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+204
+31,154,304
+29,077,309
+7,166,122
+5,089,127
+3
+2,076,995*
+through profit or loss (Note 19)
+23,988,182
+- - 23,988,182
+Financial assets at fair value
+value through profit or loss
+(Note 20)
+Short-term investments at fair
+As of December 31, 2019
+Financial assets
+2,076,995*
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.1 Fair value hierarchy (Continued)
+6,241,972
+4,904,247
+15,067,960
+15,067,960
+1,337,725*
+1,337,725*
+through profit or loss (Note 19)
+Financial assets at fair value
+Total
+RMB'000
+Level 3
+RMB'000
+Level 2
+RMB'000
+Level 1
+RMB'000
+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 that are measured at fair value as of December 31,
+2018.
+Total
+RMB'000
+Short-term
+investments at fair
+Level 3
+RMB'000
+Level 1
+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
+26,622,461
+32,760
+495,556
+.
+26,094,145
+22,164
+769,230
+Financial guarantee contracts (Note 2.11)
+36,096
+32,760
+3,336
+Other non-current liabilities
+791,394
+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.
+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 of the Company, the Group's capital risk is low.
+The following table presents the Group's assets that are measured at fair value as of December 31,
+2019.
+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 analyzes the Group's financial instruments carried at fair value as of December
+31, 2019 and 2018 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 recognised 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
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+203
+2019 Annual Report Meituan Dianping
+Level 2
+RMB'000
+Financial assets at fair value through
+29,077,309
+Investments
+4.3 Impairment provision for trade receivables and prepayments, deposits and other assets
+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).
+4.4 Recoverability of non-financial assets
+The Group tests whether goodwill has suffered any impairment, in accordance with the accounting
+policy stated in Note 2.9. 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.
+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.
+2019 Annual Report Meituan Dianping
+Upon the Listing on September 20, 2018, all the outstanding Preferred Shares of the Company have
+been converted into ordinary shares.
+209
+5,340,963
+Payables to merchants
+Trade payables
+As of December 31, 2018
+RMB'000
+Total
+5 years
+RMB'000
+--- 5,340,963
+RMB'000
+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.
+4.2 Estimation of the fair value of financial assets and financial liabilities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+profit or loss
+3.3.4 Valuation process, inputs and relationships to fair value (Continued)
+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,
+deposits from transacting users, advances from transacting users, other payables and accruals, lease
+liabilities and other non-current liabilities, approximate their fair values.
+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).
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+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 is determined by the Black-Sholes 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 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
+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.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+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.
+RMB'000
+RMB'000
+Over
+126,311
+3,336
+This presents an investment of listed company with observable quoted price.
+1,692,713
+9,361
+586,922
+491,197
+129,647
+605,233
+4,133,271
+466,676
+3,666,595
+Borrowings
+3,474,669
+3,474,669
+and benefits payable, and other tax payable)
+Lease liabilities
+Financial guarantee contracts (Note 2.11)
+14,977
+14,977
+Between 2
+and 5 years
+and 2 years
+1 year
+Between 1
+Less than
+(c) Liquidity risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+Meituan Dianping 2019 Annual Report
+202
+9,361 30,054,298
+713,233
+961,209
+28,370,495
+208
+207
+3.3 Fair value estimation (Continued)
+There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the
+years ended December 31, 2019 and 2018.
+Disposals/settlements
+(63,714,108)
+12,880
+(3,154,736)
+392,880
+(29,307)
+(66,898,151)
+Reclassification
+380,000
+Change in fair value
+306,954
+(287,837)
+(50,000)
+2,338,030
+61,632
+2019 Annual Report Meituan Dianping
+4,208
+2,649,192
+(226,205)
+As of December 31, 2018
+Currency translation differences
+15,067,960
+Business combinations
+1,616,220
+value through
+in unlisted
+profit or loss
+companies
+Contingent
+consideration
+RMB'000
+RMB'000
+62,968,597
+RMB'000
+As of January 1, 2018
+17,030,574
+4,080,221
+25,099
+21,135,894
+Acquisitions
+61,352,377
+Total
+RMB'000
+4,904,247
+(50,000)
+Net unrealized gains for the year
+Relationship of
+unobservable inputs
+to fair value
+Investment in unlisted
+companies
+5,089,127 4,904,247 Expected volatility
+19,972,207
+35%-50%
+The higher the expected volatility,
+the lower the fair value
+2018
+Short-term investments
+at fair value through
+profit or loss
+Discount for lack of
+marketability ("DLOM")
+Expected rate of return
+15%-25%
+10%-28%
+The higher the DLOM, the lower
+the fair value
+1.7%-7% 2.1%-6.6%
+The higher the expected rate of
+return, the higher the fair value
+If the fair values of financial assets at fair value through profit or loss held by the Group had been
+10% higher/lower, the profit/loss before income tax for the years ended December 31, 2019 and
+2018 would have been approximately RMB717 million higher/lower and RMB624 million lower/
+higher, respectively.
+23,988,182 15,067,960
+Range of inputs
+at December 31,
+2019
+40%-55%
+2018
+RMB'000
+107,609
+1,190,333
+Unobservable
+inputs
+1,297,942
+206
+Meituan Dianping 2019 Annual Report
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+3.3.4 Valuation process, inputs and relationships to fair value
+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.
+The valuation of the level 3 instruments mainly included Preferred Shares in 2018 (Note 28),
+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.
+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.
+Fair value
+at December 31,
+Description
+2019
+RMB'000
+3.3 Fair value estimation (Continued)
+Directors' material interests in transactions, arrangements or contracts
+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, 2019 and
+2018.
+(iii) Information about loans, quasi-loans and other dealings in favor of Directors, controlled bodies
+corporate by and connected entities with such Directors
+(iv)
+Except as disclosed in Note 36, 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, 2019 and 2018.
+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 year or at any time during the year ended
+December 31, 2019 and 2018.
+Consideration provided to third parties for making available Directors' services
+Waiver of Director's emoluments
+The non-executive Directors have not received any remuneration for the year ended December 31,
+2019. None of the other directors waived or has agreed to waive any emoluments during the year
+ended December 31, 2019 and 2018.
+(vi) Inducement to join the Group and compensation for loss of office
+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, 2019 and 2018.
+2019 Annual Report Meituan Dianping
+219
+(v)
+(ii)
+742
+Directors' termination benefits
+RMB'000
+Commission
+65,525,997
+47,012,249
+Online marketing services
+15,840,078
+9,391,406
+Other services and sales (including interest revenue)
+16,162,456
+8,823,623
+97,528,531
+2018
+65,227,278
+214
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+7
+EXPENSES BY NATURE
+For the year ended December 31, 2019
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Food delivery rider costs
+41,041,513
+Further disaggregation of revenues are included in Note 5.
+30,516,055
+2019
+RMB'000
+6 REVENUES BY TYPE
+9,391,406
+Other services and sales (including
+interest revenue)
+Revenues in total
+Cost of revenues
+Gross profit/(loss)
+Gross margin
+13.8%
+88,876
+63,157
+8,671,590
+Year ended December 31,
+8,823,623
+15,840,361 11,243,834 65,227,278
+(1,745,006) (15,502,428) (50,122,320)
+5,268,197
+14,095,355
+(4,258,594) 15,104,958
+89.0%
+(37.9%)
+23.2%
+The reconciliation of gross profit before income tax is shown in the consolidated income statement.
+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, 2019 and 2018.
+5.2 Segment assets
+As of December 31, 2019 and 2018, substantially all of the non-current assets of the Group were located
+in the PRC.
+38,143,083
+(32,874,886)
+Employee benefits expenses (Note 8)
+17,754,642
+15,226,535
+215,215
+Rental, facility and utilities
+271,012
+970,058
+Tax surcharge expenses
+247,989
+215,178
+Professional fees
+218,732
+340,714
+Impairment provision and restructuring expense for Mobike
+509,581
+restructuring plan
+358,790
+Auditor's remuneration
+- Audit and audit-related services
+41,281
+48,770
+- Non-audit services
+4,108
+3,899
+Impairment provision on Mobike tradename (Note i)
+1,346,000
+Others (Note ii)
+88,612
+Online traffic costs
+484,494
+726,443
+Transacting User incentives
+8,149,976
+5,400,781
+Cost of goods sold
+7,492,322
+3,133,770
+Depreciation of property, plant and equipment
+3,654,793
+4,252,292
+Car-hailing driver related costs
+3,119,491
+4,463,320
+Other outsourcing labor costs
+2,991,197
+2,087,398
+Payment processing costs
+Promotion and advertising
+2,189,646
+1,524,853
+2,126,910
+3,272,934
+Amortization of intangible assets
+1,191,007
+1,114,509
+Bandwidth and server custody fees
+321,506
+6,734,901
+2,334,999
+Online marketing services
+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 of the
+Company 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.
+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) food 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 the
+Group's platform; and (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 segment are primarily derived from (a) B2B food distribution
+services; (b) micro loan business; (c) car-hailing services; (d) Meituan Instashopping.
+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.
+212
+5.1 Segment reporting
+Meituan Dianping 2019 Annual Report
+LO
+5
+SEGMENT REPORTING (Continued)
+5.1 Segment reporting (Continued)
+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) online traffic costs; (d)
+bandwidth and server custody fees; (e) employee benefits expenses.
+The Group's cost of revenues for the new initiatives and others segment primarily consists of (a) cost
+of goods sold; (b) car-hailing driver related costs; (c) other outsourcing labor costs; (d) depreciation of
+property, plant and equipment; (e) payment processing costs.
+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.
+The revenue is mainly generated in China.
+The segment information provided to the Group's CODM for the reportable segments for the years
+ended December 31, 2019 and 2018 is as follows:
+Year ended December 31, 2019
+In-store, New initiatives
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+SEGMENT REPORTING
+5
+For the year ended December 31, 2019
+No Director's termination benefit subsisted at the end of the year or at any time during the year
+ended December 31, 2019 and 2018.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.5 Incentives
+As disclosed in Note 2.26, the Group provides incentives to its transacting users in various forms
+including discounted coupons (with a minimum value to use), direct payment deduction, red packet,
+interest reduction/exemption coupons and discounts on goods or services. 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 payment 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.
+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.
+210
+Meituan Dianping 2019 Annual Report
+4
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+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.
+4.9 Current and deferred income tax
+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.
+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 utilized. As of December 31, 2019, the Group did not
+recognise deferred income tax asset of RMB6.6 billion in respect of cumulative tax losses. The outcome
+of their actual utilization may be different from management's estimation.
+4.10 Presentation and measurement of investments in associates
+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.
+2019 Annual Report Meituan Dianping
+211
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Food delivery
+4,992,573
+hotel & travel
+RMB'000
+11.5%
+33.1%
+2019 Annual Report Meituan Dianping
+213
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+5
+SEGMENT REPORTING (Continued)
+5.1 Segment reporting (Continued)
+In-store,
+Year ended December 31, 2018
+88.6%
+New initiatives
+hotel & travel
+and others
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+Commission
+35,719,208
+9,042,303
+2,250,738
+47,012,249
+Food delivery
+18.7%
+32,320,388
+2,340,845
+RMB'000
+RMB'000
+Total
+RMB'000
+Commission
+49,646,589
+11,679,344
+4,200,064
+65,525,997
+Online marketing services
+5,103,794
+10,516,428
+219,856
+15,840,078
+Other services and sales (including
+interest revenue)
+92,822
+79,700
+15,989,934
+16,162,456
+Cost of revenues
+Gross profit
+Gross margin
+54,843,205 22,275,472 20,409,854 97,528,531
+(44,610,017) (2,529,117) (18,069,009) (65,208,143)
+10,233,188
+19,746,355
+and others
+3,636,593
+Revenues in total
+development expenses and general and administrative expenses
+500
+Total
+1,264
+1,764
+1,264
+1,764
+1,264
+1,764
+1,500
+6,601
+6,563
+Leng Xuesong
+480
+201,230
+For the year ended December 31, 2018:
+Name
+Wang Xing
+Zhang Tao
+Mu Rongjun
+Wang Huiwen
+Ye Shuhong
+Pension costs
+Fees
+RMB'000
+Basic
+salaries
+RMB'000
+and other
+employee
+186,086
+Share-based
+188
+Shum Heung Yeung Harry
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+2,520
+2,772
+169
+5,461
+| | |
+2,041
+1,796
+500
+155
+41,363
+2,040
+1,995
+156
+144,923
+149,114
+Wang Huiwen
+LAU, Chi Ping Martin
+SHEN, Nanpeng Neil
+Orr Gordon Robert Halyburton
+500
+37,371
+compensation
+Bonuses
+RMB'000
+benefits
+Shum Heung Yeung Harry
+141
+Leng Xuesong
+141
+Total
+218
+Meituan Dianping 2019 Annual Report
+601
+742
+601
+601
+141
+742
+10,240
+7.924
+726
+176,574
+195,887
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments (Continued)
+Total cost of revenues, selling and marketing expenses, research and
+(i)
+423
+Orr Gordon Robert Halyburton
+SHEN, Nanpeng Neil
+LAU, Chi Ping Martin
+expenses
+RMB'000
+RMB'000
+Total
+RMB'000
+2,440
+2,085
+168
+4,693
+1,800
+-
+117
+1,917
+2,000
+2,072
+154
+39,487
+2,000
+1,695
+154
+139,510
+143,359
+2,000
+2,072
+133
+4,205
+RMB'000
+Total
+35,261
+benefits
+(i)
+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 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.
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Cost of revenues
+60,498
+48,474
+15,226,535
+Selling and marketing expenses
+184,628
+Research and development expenses
+838,746
+664,068
+General and administrative expenses
+1,027,089
+967,943
+2,190,871
+1,865,113
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+264,538
+17,754,642
+1,865,113
+2,190,871
+96,811,828
+78,612,158
+expenses
+(i)
+Impairment loss on Mobike tradename has been recognised based on management's further business plan change.
+Others mainly comprise travelling and entertainment expenses, bike maintenance and bike relocation fees,
+transportation fees and message and verification fees.
+2019 Annual Report Meituan Dianping
+215
+216
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+8
+EMPLOYEE BENEFITS EXPENSES
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Wages, salaries and bonuses
+12,416,342
+10,695,178
+Other employee benefits
+1,602,448
+Pension costs - defined contribution plans (Note i)
+Share-based compensation expenses (Note 32)
+1,197,133
+1,063,796
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+1,950,296
+The five individuals whose emoluments were the highest in the Group include one Director whose
+emolument is reflected in the analysis shown in Note 8(c) for the year ended December 31, 2019 (2018:
+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 year ended December 31, 2019 and
+2018. The emoluments payable to the remaining individuals for the years ended December 31, 2019 and
+2018 are as follows:
+1
+HK$140,000,001 – HK$150,000,000
+1
+1
+4
+4
+2019 Annual Report Meituan Dianping
+217
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+HK$130,000,001 - HK$140,000,000
+The remuneration of every Director and the chief executive is set out below:
+Name
+Wang Xing
+Mu Rongjun
+Pension costs
+and other
+Share-based
+Basic
+employee compensation
+(b) Five highest paid individuals
+Fees
+RMB'000
+salaries
+For the year ended December 31, 2019:
+HK$110,000,001 – HK$120,000,000
+(c) Directors' and chief executive's emoluments
+HK$70,000,001 - HK$80,000,000
+Bonus
+Year ended December 31,
+HK$100,000,001 – HK$110,000,000
+2019
+RMB'000
+8,274
+10,358
+2018
+RMB'000
+7,955
+10,186
+623
+363,067
+617
+283,524
+382,322
+302,282
+Pension costs and other employee benefits
+Share-based compensation expenses
+Basic salaries
+2
+Bonuses
+Emolument bands (in HK dollar)
+HK$60,000,001 – HK$70,000,000
+Number of individuals
+1
+Year ended December 31,
+2019
+The emoluments fell within the following bands:
+2018
+1
+1
+Beijing SanKuai Technology Co., Ltd.
+September 19, 2012 RMB5,000,000
+2018
+2019
+Shanghai SanKuai Technology Co., Ltd.
+Beijing Sankuai Cloud Computing
+Technology Co., Ltd.
+Beijing Kuxun Interation Technology
+Co., Ltd.
+100%
+RMB2,940,000,000
+100%
+E-commerce service platform
+100%
+Principal
+activities and
+place of operation
+100%
+Beijing, the PRC, limited April 10, 2007
+liability company
+Shanghai, the PRC,
+limited liability company
+Beijing, the PRC, limited June 17, 2015
+liability company
+As of December 31,
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+capital
+Supply chain service
+100%
+in the PRC
+in the PRC
+Online retail platform
+2019 Annual Report Meituan Dianping
+221
+222
+For the year ended December 31, 2019
+11 SUBSIDIARIES (Continued)
+Name
+Structured entities(a):
+Place of incorporation/ Date of
+establishment and
+kind of legal entity
+Particulars of
+incorporation/
+establishment
+issued/paid-in
+Effective interest held (b)
+in the PRC
+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.
+100%
+Online payment services
+in the PRC
+Note (b) The Effective interest held has no change after December 31, 2019 until the report date.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+11 SUBSIDIARIES (Continued)
+Disposal of subsidiaries
+Total consideration received or receivable
+- Cash consideration received
+- Equity interests received
+Total disposal consideration
+Total net assets disposed
+100%
+- Restricted cash
+- Cash and cash equivalents
+100%
+100%
+RMB404,000,000
+services in the PRC
+100%
+RMS system and cloud
+computing in the PRC
+Shanghai Hantao Information Consulting
+Co., Ltd.
+Beijing Qiandaibao Payment Technology
+Co., Ltd.
+Beijing, the PRC, limited March 29, 2006
+liability company
+Shanghai, the PRC,
+limited liability company
+Beijing, the PRC, limited November 25, 2008
+liability company
+RMB52,000,000
+RMB870,000,000
+100%
+Multimedia information
+technology services in the PRC
+September 23, 2003
+RMB10,000,000
+100%
+100%
+Merchant information advisory
+100%
+USD500,000,000
+100%
+100%
+Cayman, limited liability April 2, 2015
+company
+USD50,000
+100%
+Investment holding in Cayman
+Indirectly held:
+Beijing SanKuai On-line Technology
+Co., Ltd.
+Beijing, the PRC, limited May 6, 2011
+USD2,676,260,000
+100%
+100%
+liability company
+E-commerce service platform
+in the PRC
+Beijing Kuxun Technology Co., Ltd.
+Hanhai Information Technology
+(Shanghai) Co., Ltd.
+Tianjin Sankuai Technology Co., Ltd
+Beijing, the PRC, limited April 27, 2006
+liability company
+Shanghai, the PRC,
+limited liability company
+Tianjin, the PRC, limited July 12, 2013
+liability company
+mobike Ltd ("Mobike")
+USD54,665,694
+Investment holding in Cayman
+100%
+Cayman, limited liability December 20, 2005
+company
+Hong Kong, limited
+liability company
+-
+USD50,000
+100%
+100%
+Investment holding in Cayman
+November 27, 2015
+HKD1
+100%
+100%
+Investment holding in
+Hong Kong
+Kangaroo Technology Corporation
+Cayman, limited liability April 1, 2016
+company
+USD50,000
+100%
+Delivery services in the PRC
+100%
+in the PRC
+Shanghai, the PRC,
+limited liability company
+January 11, 2016
+USD200,000,000
+100%
+100%
+Multimedia information
+technology services in the PRC
+Tianjin Xiaoyi Technology Co., Ltd.
+Beijing, the PRC, limited January 12, 2016
+liability company
+Shanghai, the PRC,
+limited liability company
+Tianjin, the PRC, limited February 13, 2018
+liability company
+USD199,000,000
+100%
+100% Bike-sharing services in the PRC
+November 27, 2018
+USD320,000,000
+100%
+Shanghai Sankuai Zhisong Technology
+Co., Ltd.
+100% Online hotel and travel services
+Mobike (Beijing) Information Technology
+Co., Ltd.
+in the PRC
+March 16, 2006
+USD195,000,000
+100%
+100%
+Multimedia information
+technology services in the PRC
+RMB2,940,000,000
+100%
+100%
+Xiamen Sankuai On-line Technology
+Co., Ltd.
+Xiamen, the PRC, limited March 25, 2014
+liability company
+USD549,049,120
+100%
+100%
+E-commerce service platform
+in the PRC
+E-commerce service platform
+Hucheng Information Technology
+(Shanghai) Co., Ltd.
+- Trade receivables
+- Profit/(loss) from operations
+Year ended December 31,
+In 2019, the Group reclassified an investment from investment accounted for using equity method to
+investment at fair value through profit or loss due to certain contractual rights attached to the investment have
+been changed. The Group remeasured the investment at fair value of RMB319.4 million based on the valuation
+result.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+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,
+2,089,677
+2019
+RMB'000
+RMB'000
+Aggregate carrying amount of individually immaterial associates
+2,269,638
+2,089,677
+Aggregate amounts of the Group's share of:
+- Other comprehensive income
+2018
+2,269,638
+At the end of the year
+6,694
+(6,294)
+Dividends from an associate
+(4,953)
+(14,675)
+Disposals
+(33,116)
+(563)
+Share of gains/(losses) of investments accounted for using
+equity method
+107,353
+(48,267)
+Share of other comprehensive income
+3,905
+Currency translation differences
+16,880
+107,353
+3,905
+(48,267)
+Total comprehensive income/(loss)
+111,258
+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% during the years
+ended December 31, 2019 and 2018.
+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, 2019 and 2018. In
+addition, certain PRC subsidiaries of the Group are subject to "small and thin-profit enterprises" under
+the EIT Law, and accordingly, a preferential income tax rate of 20% for the years ended December 31,
+2019 and 2018. 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
+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
+years ended December 31, 2019 and 2018, the Group has incurred net accumulated operating losses
+and does not have any profit distribution plan.
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Current income tax
+(482,154)
+(251,390)
+Deferred income tax (Note18)
+(44,069)
+Internet Plus (HongKong) Limited
+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,
+2019 and 2018.
+91,360
+Hong Kong
+13 TAXATION (Continued)
+(48,267)
+13
+RMB1.1 billion of investments accounted for using equity method is denominated in USD, other
+balances are denominated in RMB(2018:1.0 billion).
+TAXATION
+(a) Value Added Tax
+The Group is mainly subject to 6% VAT, and surcharges on VAT payments according to PRC tax law.
+(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 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.
+2019 Annual Report Meituan Dianping
+225
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+(b) Income tax (Continued)
+Dilution gain/(loss)
+50,000
+(142,493)
+200,235
+2,167
+16,148
+60
+- Trade payables
+- Other payables and accruals
+(166,443)
+(27,936)
+- Advance from paying users
+(15,532)
+- Deposit from transacting users
+(9,249)
+- Non-controlling interests disposed
+386
+Gain on disposal before income tax (Note 9)
+- Intangible assets
+40,177
+- Property, plant and equipment
+- Prepayments, deposits and other assets - current
+2019
+RMB'000
+2018
+RMB'000
+35,808
+3,055
+19,819
+55,627
+3,055
+15,450
+3,055
+12,997
+2,824
+2,231
+386
+239
+- Inventories
+For the year ended December 31, 2019
+Income tax expense on gain
+Gain on disposal after income tax
+2,283,590
+2,103,403
+(a)
+Investments in associates using the equity method
+As of December 31,
+2019
+RMB'000
+2018
+RMB'000
+At the beginning of the year
+Additions
+2,089,677
+1,939,107
+141,025
+163,675
+Reclassification (Note i)
+13,726
+(117)
+13,952
+2,269,638
+40,060
+(8)
+In 2019, the Group entered into a number of agreements to sell the Mobike subsidiaries overseas. The
+transactions were all completed in 2019 and the assets and liabilities classified as held for sale were nil at the
+year ended December 31, 2019.
+In October 2019, the Group sold approximately 64% shares of one subsidiary and held remaining 5% of
+equity interest of this company in form of ordinary shares. Consequently, the Group derecognised the assets
+and liabilities of the company and respective non-controlling interests at their carrying amount at the date of
+transfer, and recognised the remaining equity interests in this company at fair value on the date of transfer.
+2019 Annual Report Meituan Dianping
+223
+224
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
+As of December 31,
+2019
+Associates
+Joint ventures
+RMB'000
+2018
+RMB'000
+2,089,677
+DianPing Holdings Limited ("DianPing")
+1
+100%
+1,377,383
+Additions
+2,021,192 10,848,448
+194,512
+182,058
+100,342
+104,468
+3,198,019
+2,021,192 2,021,192
+Adjustment on adoption of IFRS16
+8,827,256
+194,512
+182,058
+5,152,325
+At January 1, 2019
+920,527
+6,604
+516,624
+Currency translation differences
+(54,819)
+(563,745)
+154,041
+354,885
+Transfers
+(1,312,711)
+(449,094)
+(6,023)
+(20,061)
+(650,009)
+(118,105)
+(69,419)
+Disposal
+594,696 3,520,302
+100,342
+3,198,019
+At December 31, 2018
+Cost
+(42.40)
+0.38
+2,723,795
+5,922,910
+Diluted earnings/(loss) per share (RMB)
+per share (thousand)
+denominator in calculating diluted earnings/(loss)
+Weighted average number of ordinary shares used as the
+155,004
+2,723,795
+5,767,906
+Weighted average number of ordinary shares in issue (thousand)
+Adjustments for RSUs and share options granted to employees
+(thousand)
+(115,477,171)
+2,238,769
+the Company (RMB' 000)
+Meituan Dianping 2019 Annual Report
+4,095
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+15 PROPERTY, PLANT AND EQUIPMENT
+RMB'000
+RMB'000
+Total
+Right-of-use
+assets
+construction
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+vehicle improvements
+appliances
+equipment
+Assets under
+Bike and Leasehold
+Computer Furniture and
+For the year ended December 31, 2019
+4,096
+4,505,983
+86,706
+(15,442)
+(7,945)
+(7,497)
+At December 31, 2019
+77,251
+(6,023)
+71,198
+30
+Disposal
+(22,179)
+(13,968)
+(8,181)
+(30)
+Additions
+(70,514)
+Net carrying amount
+(70,514)
+At January 1, 2019 on adoption
+1,966,377
+249,502
+229
+2019 Annual Report Meituan Dianping
+Right-of-use assets of the Group are offices, warehouses and retail stores.
+133,423 1,561,014 5,376,217
+116,391
+1,276,847
+70,901
+2,217,641
+At December 31, 2019
+2,021,192 6,000,007
+194,512
+104,079
+1,660,834
+53,013
+of IFRS16
+Earnings/(loss) attributable to equity holders of
+At January 1, 2019
+(7,613,657)
+(1,105,763)
+Depreciation
+(4,777,927)
+--
+(77,979)
+(3,420,977)
+(47,329)
+(1,231,642)
+At January 1, 2019
+Accumulated depreciation
+At December 31, 2019
+13,005,316
+141,368 2,166,794
+322,642
+5,781,823
+(42,485)
+Impairment
+(1,554,568)
+(820,908) (3,654,793)
+(605,780)
+(15,805) (4,497,479) (206,251)
+(2,288,342)
+At December 31, 2019
+(3,334)
+(3,333)
+(1)
+Currency translation differences
+822,397
+215,128
+2,797
+481,399
+74,010
+49,063
+Disposal
+(131,069)
+2018
+Year ended December 31,
+2019
+(b) Diluted earnings/(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 for 2018, share options and
+RSUs. As the Group incurred losses for the years ended December 31, 2018, 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 was the same
+as basic loss per share.
+4,208
+39,925
+(9,329)
+2,531,143
+748,356
+(i)
+(ii)
+Since April 1, 2019, taxpayers in producer services and consumer services industry are allowed to enjoy additional
+10% of input VAT amount to deduct from tax payable. As a result, the Group recognised a gain of RMB299.9 million.
+Certain contractual rights attached to an investment previously classified as investment accounted for using equity
+method have been changed, thus the Group remeasured the investment with RMB176.9 million gains and reclassified
+the investment to financial assets at fair value through profit or loss.
+10 FINANCE INCOME/(COSTS)
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Finance income
+Change in fair value from contingent consideration (Note 3.3)
+Others
+Interest income from bank deposits
+40,177
+(1,485)
+306,954
+Subsidies and tax preference (Note i)
+589,912
+198,762
+Gains from remeasurement of investments (Note ii) (Note 12)
+176,880
+-
+Gains from the disposal of investments
+160,884
+29,426
+Dilution gain/(loss) (Note 12)
+91,360
+(6,294)
+Foreign exchange loss, net
+(81,872)
+Gains from the disposal of subsidiaries (Note 11)
+637,410
+166,217
+Finance costs
+incorporation/
+issued/paid-in
+Name
+kind of legal entity
+establishment
+capital
+As of December 31,
+Principal
+activities and
+place of operation
+2019
+2018
+Subsidiaries
+Directly held:
+Meituan Corporation
+Cayman, limited liability July 29, 2010
+company
+USD50,000
+100%
+Particulars of
+294,047
+Place of incorporation/ Date of
+establishment and
+The Company's major subsidiaries (including controlled and structured entities) during the year ended
+December 31, 2019 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.
+Interest expense on bank borrowings
+(91,199)
+(24,601)
+Interest in respect of lease liabilities
+(85,028)
+Bank charges and others
+(14,815)
+(20,131)
+Total
+(191,042)
+(44,732)
+220
+Meituan Dianping 2019 Annual Report
+11 SUBSIDIARIES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Effective interest held (b)
+Investment holding in Cayman
+through profit or loss (Note 3.3)
+226,114
+(1,888)
+(526,223)
+Total income tax expenses
+(170,579)
+- Withholding tax
+(248,345)
+996,996
+- Temporary differences utilized/(for which no deferred income
+tax assets was recognised), net
+(2,728,131)
+(1,768,349)
+- Tax losses for which no deferred income tax assets were
+recognised
+213,025
+432,959
+- Utilization of previously unrecognised tax losses
+97,397
+2019 Annual Report Meituan Dianping
+498,142
+227
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(42.40)
+0.39
+Basic earnings/(loss) per share (RMB)
+(115,477,171)
+2,723,795
+2,238,769
+5,767,906
+Weighted average number of ordinary shares in issue (thousand)
+the Company (RMB'000)
+Earnings/(loss) attributable to equity holders of
+2018
+2019
+Year ended December 31,
+Basic earnings/(loss) per share for the years ended December 31, 2019 and 2018 were calculated
+by dividing the earnings/(loss) attributable to the Company's equity holders by the weighted average
+number of ordinary shares in issue during the year.
+(a)
+14 EARNINGS/(LOSS) PER SHARE
+For the year ended December 31, 2019
+228
+Fair value changes of short-term investments measured at fair value
+- Super deduction for research and development expenses
+(37,581)
+13 TAXATION (Continued)
+Meituan Dianping 2019 Annual Report
+226
+(1,888)
+(526,223)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+9
+OTHER GAINS, NET
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Interest income from investments measured at amortized cost
+876,467
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+(18,409)
+(b) Income tax (Continued)
+The difference is analyzed as follows:
+- Expenses not deductible for income tax purposes
+17,289
+502,450
+- Preferential income tax rates applicable to subsidiaries
+(460,243) (26,036,837)
+· Different tax rates available to different jurisdictions
+(690,597) 28,872,702
+(115,490,807)
+2,762,388
+Tax effects of:
+Tax calculated at statutory income tax rate of 25% in
+mainland China
+Profit/(loss) before tax
+RMB'000
+2018
+Year ended December 31,
+2019
+RMB'000
+The tax on the Group's profit or loss before income tax differs from the theoretical amount that would
+arise using the tax rate of 25% for the years ended December 31, 2019 and 2018, being the tax rate of
+the major subsidiaries of the Group.
+5,152,325
+Total income tax expenses - net
+100,342
+3,707,427
+3,707,427
+202,298
+27,705,601
+(i)
+In 2018, the Group decided to reallocate certain goodwill of Restaurant Management System ("RMS") from new
+initiatives and others segment to in-store hotel and travel due to business structure adjustment.
+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 review on the goodwill of the Group has been conducted by the management as at December
+31, 2019 and 2018, 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.
+2019 Annual Report Meituan Dianping
+235
+236
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+16 INTANGIBLE ASSETS (Continued)
+Impairment of goodwill (Continued)
+The key assumptions used in the significant CGU value-in-use calculations are as follows:
+As of December 31, 2019
+Annual revenue growth rate
+Food delivery
+18,950,647
+In-store,
+hotel & travel
+119,576
+1,728,527
+RMB'000
+(Note i)
+RMB'000
+Impairment
+Disposal
+Closing
+RMB'000
+RMB'000
+RMB'000
+Food delivery
+In-store, hotel & travel
+Bike-sharing services
+New initiatives and others (excluding
+bike-sharing services)
+314,610
+7,264
+(119,576)
+14,869,597
+12,836,004
+3,116,702
+11,438,285 7,392,786
+4,845,229
+RMB'000
+Bike-sharing
+for the 5-year period (%)
+2.5%
+30%
+32%
+30%
+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.
+New initiatives and others includes different small CGUs. Those CGUs cover the business of RMS, B2B food
+distribution services and micro loan business. The discount rate used in the impairment testing for the CGUS
+in new initiatives and others segments is from 27% to 31%, while the terminal revenue growth rate is 3.0%
+and 2.5% respectively for the years ended December 31, 2019 and 2018.
+Reasonable possible changes in key assumptions would not lead to impairment as of December 31, 2019 and
+2018, respectively.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+The Group holds the following financial instruments:
+Assets as per consolidated statements of financial position
+Financial assets at fair value through profit or loss:
+- Financial assets at fair value through profit or loss
+- Short-term investments at fair value through profit or loss
+Financial assets at amortized cost:
+- Trade receivables
+As of December 31,
+Note
+2.5%
+services
+2.5%
+5%-35%
+87%-90%
+5%-31%
+Gross profit rate
+20%-27%
+Terminal revenue growth rate (%)
+3.0%
+Pre-tax discount rate (%)
+28%
+13%-32%
+88%-90%
+3.0%
+27%
+11%-166%
+29%-49%
+3.0%
+31%
+As of December 31, 2018
+Annual revenue growth rate
+for the 5-year period (%)
+Gross profit rate
+Terminal revenue growth rate (%)
+Pre-tax discount rate (%)
+Food delivery
+In-store,
+hotel & travel
+Bike-sharing
+services
+5%-36%
+16%-30%
+10%-77%
+(8%)-64%
+2019
+RMB'000
+Addition
+Year ended December 31, 2018
+At December 31, 2018
+3,093,225
+171,500 1,213,550
+327,167
+606,418
+737,384
+21,159 27,705,601
+33,876,004
+2019 Annual Report Meituan Dianping
+233
+234
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+16 INTANGIBLE ASSETS (Continued)
+Amortization expenses have been charged to the consolidated income statement as follows:
+Selling and marketing expenses
+General and administrative expenses
+Cost of revenues
+Research and development expenses
+25.179 14.869.597 19,852,974
+Year ended December 31,
+36.850
+353,167
+At January 1, 2018
+(1,510)
+(3,238)
+Additions
+(1,346,000)
+At December 31, 2018
+(1,347,510)
+(3,238)
+ཝ།
+(155,422)
+(160,258)
+(1,346,000)
+(155,422)
+(1,506,258)
+Net carrying amount
+At January 1, 2018
+3,095.645
+269,500
+1,120,726
+82,310
+Opening
+2019
+2018
+RMB'000
+Closing
+RMB'000
+RMB'000
+Food delivery
+4,845,229
+4,845,229
+In-store, hotel & travel
+18,950,647
+18,950,647
+Bike-sharing services
+3,707,427
+3,707,427
+New initiatives and others (excluding
+bike-sharing services)
+202,298
+27,705,601
+202,298
+27,705,601
+Reallocation
+Disposal
+RMB'000
+Addition Reallocation Impairment
+RMB'000 RMB'000 RMB'000
+Opening
+768,079
+656,729
+242,504
+288,860
+176,636
+167,093
+3,788
+1,827
+1,191,007
+1,114,509
+The addition of the goodwill arose from the business combination in each year. Majority of the Group's
+goodwill are related to the strategic transaction of Mobike in 2018. 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.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+16 INTANGIBLE ASSETS (Continued)
+Impairment of goodwill (Continued)
+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:
+Year ended December 31, 2019
+RMB'000
+Impairment
+2018
+7 20
+The balance comprises temporary differences attributable to:
+- Intangible assets arising from business combinations
+(750,046)
+(886,398)
+- Investments using the equity method or at fair value
+- Deferred revenues
+(438,363)
+(416,830)
+(469,175)
+(862,290)
+- Others
+Total gross deferred tax liabilities
+(25,016)
+(100,955)
+(1,682,600)
+(2,266,473)
+Set-off of deferred tax liabilities pursuant to set-off provisions
+294,131
+1,070,604
+Net deferred tax liabilities
+RMB'000
+(1,388,469)
+2018
+2019
+445,041
+As of December 31,
+2019
+RMB'000
+RMB'000
+- to be recovered after 12 months
+154,255
+208,424
+- to be recovered within 12 months
+435,799
+236,617
+Meituan Dianping 2019 Annual Report
+590,054
+445,041
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+18 DEFERRED INCOME TAXES (Continued)
+(b) Deferred tax liabilities
+As of December 31,
+RMB'000
+590,054
+(1,195,869)
+- to be recovered after 12 months
+At December 31,2019
+848,365
+35,820
+884,185
+At January 1, 2018
+Business combinations
+Credited to consolidated income statement
+At December 31, 2018
+768,674
+10,723
+779,397
+599,743
+599,743
+4,934
+131,571
+136,505
+1,373,351
+142,294
+1,515,645
+(631,460)
+Deferred tax liabilities:
+(106,474)
+Charged to consolidated income statement
+- to be recovered within 12 months
+The movement on the gross deferred tax assets is as follows:
+As of December 31,
+2019
+RMB'000
+2018
+RMB'000
+(859,574)
+(839,227)
+(528,895)
+(356,642)
+(1,388,469)
+(1,195,869)
+Tax losses
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+At January 1, 2019
+1,373,351
+142,294
+1,515,645
+(524,986)
+RMB'000
+(1,070,604)
+1,515,645
+24
+8,760,115
+4,256,120
+24
+13,396,185
+17,043,692
+88,087
+Liabilities as per consolidated statement of financial position
+57,127,557
+55,511,405
+Financial liabilities at amortized cost:
+- Trade payables
+- Payables to merchants
+- Advances from transacting users
+- Deposits from transacting users
+29
+6,766,253
+5,340,963
+7,495,262
+6,895,162
+26,762,004
+7,596,388
+25,447,417
+222
+19
+7,166,122
+6,241,972
+20
+23,988,182
+15,067,960
+31,154,304
+21,309,932
+23
+23
+676,762
+466,340
+- Prepayments, deposits and other assets (excluding tax
+prepayments)
+21
+8,847,078
+-
+- Short-term investments measured at amortized cost
+- Restricted cash
+- Cash and cash equivalents
+- Assets classified as held for sale
+20
+(294,131)
+3,855,559
+2,491,947
+For the year ended December 31, 2019
+18 DEFERRED INCOME TAXES
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statements of
+financial position:
+(a) Deferred tax assets
+As of December 31,
+2019
+2018
+RMB'000
+RMB'000
+The balance comprises temporary differences attributable to:
+Tax losses
+- Others
+848,365
+35,820
+1,373,351
+142,294
+Total gross deferred tax assets
+Set-off of deferred tax assets pursuant to set-off provisions
+Net deferred tax assets
+Deferred tax assets:
+884,185
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3,226,407
+238
+2019 Annual Report Meituan Dianping
+3,341,276
+- Other payables and accruals (excluding salaries and
+benefits payable and other tax payable)
+30
+3,474,669
+4,019,499
+- Other non-current liabilities
+129,552
+- Borrowings
+31
+4,019,263
+35,759
+2,270,056
+- Lease liabilities
+1,526,799
+- Liabilities directly associated with assets classified as
+held for sale
+55,510
+29,759,304
+25,885,858
+237
+2019 Annual Report Meituan Dianping
+(2,016,279)
+(169,616)
+915,682
+At December 31, 2018
+1,966,377
+53,013
+1,660,834
+104,079
+194,512
+3,978,815
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+Depreciation expenses have been charged to the consolidated income statement as follows:
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Cost of revenues
+2,717,465
+4,158,424
+13,178
+Selling and marketing expenses
+71,774
+827,381
+At December 31, 2018
+(1,231,642)
+(47,329)
+(3,420,977)
+(77,979)
+(4,777,927)
+Impairment
+At January 1, 2018
+Additions
+Assets classified as held for sale
+At December 31, 2018
+(212,464)
+141,950
+(70,514)
+(212,464)
+141,950
+(70,514)
+Net carrying amount
+At January 1, 2018
+3,349
+116,598
+516,988
+Research and development expenses
+content
+others
+license
+and licenses
+User list
+relationship
+Goodwill
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Cost
+At January 1, 2019
+name
+19,475
+Supplier
+payment
+233,764
+39,361
+General and administrative expenses
+186,576
+35,032
+3,654,793
+4,252,292
+2019 Annual Report Meituan Dianping
+231
+232
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+16 INTANGIBLE ASSETS
+User
+Software
+Online
+Trade
+generated
+and
+Technology
+5,006,300
+116,598
+(341)
+131,720
+13,178
+1,594,925
+Additions
+1,811,575
+72,233
+223,068
+70,116
+174,698
+2,351,690
+Business combinations
+8,936
+40,523
+5,111,531
+9,750
+178,458
+5,349,198
+Disposal
+(52,049)
+20,579
+(33,273)
+1,429,448
+Cost
+230
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+Computer
+Furniture and
+equipment
+appliances
+Bike and
+vehicle
+Leasehold
+improvements
+Assets under
+construction
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+At January 1, 2018
+Assets classified as held for sale
+(12,860)
+(48,982)
+(17,230)
+(59,946)
+(679,243)
+Depreciation
+(649,209)
+(39,518)
+(3,543,866)
+(19,699)
+(4,252,292)
+Disposal
+19,601
+9,414
+6,670
+1,666
+37,351
+Currency translation differences
+33
+5
+(379)
+(602,067)
+(48,578)
+At January 1, 2018
+At December 31, 2018
+(195,742)
+Transfers
+215
+103,575
+19,050
+(122,840)
+Currency translation differences
+109
+65
+1,153
+1,327
+Assets classified as held for sale
+(274,142)
+(274,142)
+3,198,019
+5,152,325
+182,058
+194,512
+8,827,256
+Accumulated depreciation
+(7,453)
+490,000
+390,000
+Cost
+At January 1, 2018
+3,406,300
+490,000
+1,321,837
+390,000
+186,360
+67,000
+28,700
+15.025,019
+20,915,216
+Additions
+69,712
+69,712
+Business combinations
+1,600,000
+478,265
+663,470
+840,000
+RMB'000
+12,836,004
+RMB'000
+RMB'000
+Trade
+generated
+Software
+payment
+Technology
+Supplier
+name
+content
+and others
+license
+and licenses
+User list relationship
+Goodwill
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Online
+16,417,739
+(4,106)
+(256,420)
+(98,000)
+(451,241)
+(26,000) (139,362) (139,466)
+(4,020)
+(1,114,509)
+Disposal
+209
+209
+Assets classified as held
+for sale
+5
+5
+At December 31, 2018
+(565,565)
+(318,500)
+(652,138)
+(62,833)
+(240,174)
+Amortization
+Disposal
+(901,984)
+(100,812) (30,150)
+(4,106)
+Assets classified as held
+for sale
+(20)
+At December 31, 2018
+5,006,300
+490,000
+1,865,688
+390,000
+849,830
+907,000
+28,700
+27,861,023 37,398,541
+Accumulated amortization
+At January 1, 2018
+(309,145)
+(220,500)
+(201,111)
+(36,833)
+(3,433)
+1,865,688
+User
+For the year ended December 31, 2019
+At January 1, 2019
+(565,565)
+(318,500)
+(652,138)
+(62,833)
+(240,174)
+(169,616)
+(7,453)
+(2,016,279)
+Amortization
+(203,419)
+(98,000)
+(528,817)
+(26,000)
+(149,351)
+(181,400)
+(4,020)
+(1,191,007)
+Disposal
+Accumulated amortization
+2,633
+37,398,485
+28,700
+849,830
+907,000
+28,700
+27,861,023
+37,398,541
+Additions
+22,746
+22,746
+Disposal
+(10,801)
+(12,001)
+(22,802)
+At December 31, 2019
+5,006,300
+490,000
+1,877,633
+390,000
+849,830
+907,000
+27,849,022
+16 INTANGIBLE ASSETS (Continued)
+2,633
+(768,984)
+3,093,225
+171,500
+1,213,550
+327,167
+606,418
+737,384
+21,159
+27,705,601
+33,876,004
+At December 31, 2019
+2,889,806
+73,500
+699,311
+301,167
+457,067
+555,984
+17,139 27,705,601 32,699,575
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+At January 1, 2019
+At December 31, 2019
+Net carrying amount
+(143,421)
+(416,500)
+(1,178,322) (88,833)
+(389,525)
+(351,016)
+(11,473)
+(3,204,653)
+Impairment
+At January 1, 2019
+(1,347,510)
+(3,238)
+Disposal
+(88)
+(155,422)
+(1,506,258)
+12,001
+12,001
+At December 31, 2019
+(1,347,510)
+(3,238)
+(1,494,257)
+239
+2018
+Others
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+21
+Meituan Dianping 2019 Annual Report
+(150,990)
+(335,498)
+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
+recognises 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
+advances from transacting users.
+At the end of the year
+250,614
+Receivables written off during the year as uncollectable
+(208,326)
+(435,122)
+Provision
+(57,074)
+114,410
+Prepayments to merchants
+Less: allowance for impairment(a)
+As of December 31,
+(77,674)
+At the beginning of the year
+2018
+RMB'000
+2019
+RMB'000
+Year ended December 31,
+Movements on the Group's allowance for impairment of prepayments to merchants are as follows:
+(a) Majority of loss allowance are related to the non-performing balances for which 100% provision have been
+provided.
+220,454
+408,248
+(77,674)
+(65,113)
+298,128
+473,361
+2018
+RMB'000
+2019
+RMB'000
+(150,990)
+(277,582)
+At the beginning of the year
+RMB'000
+246
+245
+2019 Annual Report Meituan Dianping
+9,064,945
+9,591,157
+826,520
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+720,737
+153,427
+Prepayments for rental
+346,834
+102,593
+Prepayments for channel marketing fee
+155,826
+Others
+For the year ended December 31, 2019
+21 PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+(i)
+2019
+Year ended December 31,
+Movements on the Group's allowance for impairment of loan receivables are as follows:
+3,837,080
+5,387,552
+(150,990)
+(335,498)
+3,988,070
+5,723,050
+2018
+RMB'000
+2019
+RMB'000
+As of December 31,
+Less: allowance for impairment
+Unsecured loan receivables
+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 are generally within 12 months. Breakdown for
+loan receivables included both current and non-current portion as follows:
+2018
+RMB'000
+(Provision)/reversal
+(11,502)
+19,251
+(124,069)
+At the beginning of the year
+2018
+RMB'000
+RMB'000
+2019
+Year ended December 31,
+(29,461)
+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, 2019
+Meituan Dianping 2019 Annual Report
+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 the contract assets and trade receivables with similar credit
+risk characteristics and is adjusted for forward-looking estimates. At each reporting date the historical
+observed default rates are updated and changes in the forward-looking estimates are analyzed.
+466,340
+676,762
+(124,069)
+23 TRADE RECEIVABLES (Continued)
+Provision
+(86,664)
+(131,472)
+The Group allows a credit period of 30 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:
+The Group considered that the carrying amounts of the trade receivables balances approximated their fair
+value as of December 31, 2019 and 2018.
+(124,069)
+(155,854)
+At the end of the year
+14,253
+35,431
+Receivables written off during the year as uncollectable
+8,011
+26,478
+Reversal
+14,600
+(7,030)
+classified as held for sale
+Assets (transferred from derecognition of held for sale)/
+(155,854)
+590,409
+832,616
+2018
+RMB'000
+Less: provision for impairment
+Finished goods
+Raw materials
+22 INVENTORIES
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+248
+247
+2019 Annual Report Meituan Dianping
+(77,674)
+(65,113)
+At the end of the year
+180,657
+24,063
+Receivables written off during the year as uncollectable
+23 TRADE RECEIVABLES
+147,940
+Trade receivables
+As of December 31,
+2019
+RMB'000
+As of December 31,
+400,244
+275,227
+(111,030)
+(88,795)
+511,274
+364,022
+370,079
+265,975
+141,195
+98,047
+2018
+RMB'000
+RMB'000
+2019
+Less: allowance for impairment
+Trade receivables
+Deposits
+287,577
+(2,976,754)
+(219)
+319,373
+1,851,128
+747,019
+At the end of the year
+Currency translation differences
+47,656
+Reclassification
+981,669
+449,903
+4,311,296
+4,226,015
+Disposals
+Change in fair value
+5,300
+53,376
+5,789,747
+4,226,015
+25,447,417
+RMB'000
+2018
+2019
+RMB'000
+As of December 31,
+- Fair value through profit or loss
+- Amortized cost
+Short-term investments measured at
+20 SHORT-TERM INVESTMENTS
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+243
+2019 Annual Report Meituan Dianping
+RMB3.4 billion of investments at fair value through profit or loss is denominated in USD, other
+balances are denominated in RMB (2018: RMB3.0 billion).
+The Group also has interests in certain investee companies in the form of ordinary shares without
+significant influence, which are managed and whose performance are evaluated on a fair value
+basis. The Group designated these instruments as financial assets at fair value through profit or
+loss.
+Business combinations
+26,762,004
+Additions
+2018
+RMB'000
+26,000
+1,608,298
+2,015,957
+2018
+RMB'000
+RMB'000
+2019
+634,551
+Year ended December 31,
+Currency translation differences
+Reclassification
+Disposals
+Change in fair value
+Business combinations
+Additions
+At the end of the year
+7,580
+(669,320)
+(14,746)
+2019
+RMB'000
+Year ended December 31,
+Other investments at fair value through profit or loss
+(ii)
+(a) Investments at fair value through profit or loss (Continued)
+19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+For the years ended December 31, 2019 and 2018, 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.
+2,015,957
+1,376,375
+8,256
+3,738
+(50,000)
+(177,982)
+At the beginning of the year
+23,988,182
+15,067,960
+49,435,599
+Current
+866,884
+1,762,312
+13,785
+12,378
+Others
+Loan receivables (Note i)
+74,625
+282,919
+Receivables from investment disposal
+147,678
+135,813
+Rental deposits
+97,920
+Loan receivables (Note i)
+5,387,552
+3,762,455
+Tax prepayments
+Receivables from investment disposal
+131,568
+303,868
+Receivables from third-party payment service providers
+195,202
+324,741
+Amounts due from related parties (Note 36)
+105,630
+373,609
+Contract assets
+220,454
+408,248
+Prepayments to merchants (Note ii)
+3,036,667
+1,534,292
+159,703
+Prepayment for fixed assets
+200,275
+Long-term investments measured at amortized cost
+7,340,865
+34,050,792
+32,630,495
+16,805,104
+2018
+RMB'000
+2019
+RMB'000
+USD
+RMB
+HKD
+As of December 31,
+(c) Short-term investments are denominated in the following currencies:
+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
+recognised in "Other gains, net" in the consolidated income statement.
+(b) Short-term investments measured at fair value through profit or loss
+There is also no exposure to price risk as the investments will be held to maturity.
+Note 3.1 (b) sets out information about the impairment of financial assets and the Group's exposure to
+credit risk.
+Short-term investments measured at amortized cost are fixed rate certificate of deposit and term deposit
+above 3 months and within 1 year.
+(a) Short-term investments measured at amortized cost
+41,829,964
+438,307
+130,362
+49,435,599
+The majority of short-term investments denominated in USD currency units are held by the companies
+with the same functional currency, therefore, there is no exposure to foreign currency risk.
+249,957
+282,044
+Prepayment for investments
+972,099
+Recoverable value-added tax
+Non-current
+2018
+RMB'000
+RMB'000
+2019
+As of December 31,
+For the year ended December 31, 2019
+21 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan Dianping 2019 Annual Report
+244
+41,829,964
+Up to 3 months
+3 to 6 months
+6 months to 1 year
+472,286
+income statement
+Credited/(charged) to consolidated
+(786,256)
+(10,467)
+(775,789)
+8,922
+Business combinations
+(584,567)
+(418,791)
+(582,895)
+At January 1, 2018
+(1,682,600)
+(25,016)
+(1,586,253)
+(267,256)
+(100,955)
+112,997
+Non-current
+As of December 31,
+19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+The Group only recognises 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 at December 31, 2019 and 2018,
+the Group did not recognise deferred income tax assets of RMB6.6 billion and RMB5.1 billion in respect of
+cumulative tax losses amounting to RMB28.7 billion and RMB22.8 billion. These tax losses will expire from
+2020 to 2024, and certain subsidiaries of the Group may extend to 2029 if they can maintain the "high and
+new technology enterprises” qualification at that time.
+(2,266,473)
+(100,955)
+(862,290)
+(416,830)
+(886,398)
+At December 31, 2018
+(6,961)
+(6,961)
+Charged to other comprehensive loss
+(469,175)
+2019
+RMB'000
+(438,363)
+At December 31,2019
+RMB'000
+revenues
+fair value
+assets
+Deferred
+using the
+equity
+method or at
+RMB'000
+Intangible
+The movement on the gross deferred tax liabilities is as follows:
+18 DEFERRED INCOME TAXES (Continued)
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+240
+At the beginning of the year
+Investments
+RMB'000
+RMB'000
+Total
+RMB'000
+(3,518)
+(3,518)
+Charged to other comprehensive loss
+587,391
+75,939
+393,115
+(18,015)
+136,352
+income statement
+Credited/(charged) to consolidated
+(100,955) (2,266,473)
+(862,290)
+(416,830)
+(886,398)
+At January 1, 2019
+(750,046)
+2018
+RMB'000
+Investments in associates at fair value through profit or loss
+7,166,122
+6,241,972
+7,166,122
+4,226,015
+5,789,747
+2,015,957
+1,376,375
+(i)
+Investments in associates at fair value through profit or loss (Note i)
+Other investments at fair value through profit or loss (Note ii)
+RMB'000
+2018
+2019
+As of December 31,
+(a) Investments at fair value through profit or loss (Continued)
+19 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+RMB'000
+2019 Annual Report Meituan Dianping
+The maximum exposure to credit risk as of December 31, 2019 and 2018 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 were denominated in RMB.
+Investments at fair value through profit or loss (Note a)
+Over 1 year
+As of December 31,
+2019
+RMB'000
+2018
+RMB'000
+544,784
+281,353
+87,114
+126,376
+34,574
+56,574
+10,290
+2,037
+676,762
+466,340
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+249
+241
+RMB'000
+2019
+Year ended of December 31,
+(i)
+At the end of the year
+Reclassification (Note 12)
+Disposals (Note i)
+Change in fair value
+Business combinations
+Additions
+At the beginning of the year
+Investments at fair value through profit or loss
+6,241,972
+242
+(a)
+2018
+RMB'000
+6,241,972
+Currency translation differences
+51,394
+5,919,594
+6,241,972
+7,166,122
+61,632
+(50,000)
+319,373
+During the year ended December 31, 2018, the Group disposed several investments at fair value through profit
+or loss with the aggregate amount of RMB3.2 billion.
+(3,154,736)
+1,836,382
+77,699
+12,880
+1,616,220
+475,903
+(219)
+2019 Annual Report Meituan Dianping
+Amounts due to related parties (Note 36)
+685,568
+104,252
+351,249
+Other tax payable
+881,567
+407,248
+Advance from customers
+312,191
+15,653
+Accrued expenses
+205,715
+347,315
+1,183,676
+Amounts collected for third parties
+1,803,783
+5,067,050
+2,598,340
+52,916
+2018
+RMB'000
+6,353,368
+237,151
+168,162
+119,630
+102,764
+56,104
+Deposits
+2,987
+5,340,963
+As of December 31,
+2019
+RMB'000
+2018
+RMB'000
+Salaries and benefits payable
+2,881,176
+6,766,253
+Payables for acquisition
+For the year ended December 31, 2019, the weighted average effective interest rate was 5.242% (2018:
+5.980%).
+1,443,877
+2018
+RMB'000
+466,676
+470,056
+3,190,000
+1,200,000
+600,000
+362,587
+3,552,587
+1,800,000
+(a) Bank borrowings of RMB3.2 billion will be repayable in 2020 and bear annual average interest rate of
+5.199% (2018: 5.597%).
+(b)
+2019
+RMB' 000
+The Group has securitized certain loan receivables and issued RMB500 million ABS in 2019. During
+2019, the Group issued ABS of RMB500 million, of which RMB467 million represented senior tranche
+and RMB33 million represented subordinate tranches, which were fully acquired by the Group. These
+ABS bore interest at 4.59%-5.3% per annum in 2019.
+2019 Annual Report Meituan Dianping
+259
+2019
+RMB'000
+As of December 31,
+Asset-backed securities
+secured
+Others
+641,761
+568,814
+7,237,412
+7,303,407
+258
+Meituan Dianping 2019 Annual Report
+55,718
+31 BORROWINGS
+For the year ended December 31, 2019
+Included in non-current liabilities
+Asset-backed securities
+Included in current liabilities
+Bank loan
+unsecured
+Bank loan
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+As of December 31,
+Each Preferred share has voting rights equivalent to the number of ordinary shares into which such Preferred
+shares could be then convertible.
+The majority of the Group's trade payables were denominated in RMB.
+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.
+"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 recognised 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.
+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.
+2019 Annual Report Meituan Dianping
+255
+256
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Liquidation preference
+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.
+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.
+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.
+Redemption features
+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.
+(ii)
+Meituan Dianping 2019 Annual Report
+the closing of a Qualified IPO, or
+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:
+For the year ended December 31, 2019
+27 DEFERRED REVENUES (Continued)
+Majority of the deferred revenues balance at the beginning of 2019 has been recognised as revenue during
+2019.
+28 CONVERTIBLE REDEEMABLE 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.
+Upon issuance of Series A-12 Preferred shares, a total of 2,121,921,600 shares were issued (Series A-1
+through A-12, "Series A Preferred Shares").
+Upon the Listing on September 20, 2018, all the 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 period ended September 20,
+2018 are as follows:
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+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.
+(i)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+28 CONVERTIBLE REDEEMABLE PREFERRED SHARES (Continued)
+Dividends
+2019
+RMB'000
+2018
+RMB'000
+6,766,253
+5,340,963
+2019 Annual Report Meituan Dianping
+257
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+29 TRADE PAYABLES (Continued)
+As of December 31, 2019 and 2018, 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
+As of December 31,
+Trade payables
+29 TRADE PAYABLES
+At December 31, 2018
+Non-cumulative dividends of 8% per annum when and if declared by the board of the Company (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.
+Voting rights
+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:
+RMB'000
+At January 1, 2018
+Issuance of Series A-12 preferred shares
+30 OTHER PAYABLES AND ACCRUALS
+Change in fair value
+Currency translation differences
+Transfer to ordinary shares
+101,418,292
+5,888,472
+104,792,071
+186,013
+8,336,605
+(220,435,440)
+Includes: change in fair value due to own credit risk
+On October 6, 2015, the Company issued a total of 1,954,217,809 shares of Series A-1 through A-11
+Preferred Shares.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Exercise of option and RSU vesting
+Share-based compensation expenses
+2,856,343
+Business cooperation agreement with Maoyan
+222,267
+222,267
+Mobike monthly pass
+44,010
+24,221
+Others
+1,703
+51
+4,567,171
+250
+3,102,882
+Transaction with non-controlling interests
+4,956,199
+Disposal of a subsidiary
+investments accounted for using
+2,594,722
+20
+RMB'000
+RMB'000
+Total
+Others
+reserve
+RMB'000
+reserve
+RMB'000
+reserve
+RMB'000
+Currency
+translation
+Capital compensation
+Share-based
+As of December 31, 2019
+Currency translation differences
+the equity method
+Share of other comprehensive income of
+3,727,881
+Movements on the Group's deferred revenues are as follows:
+At the beginning of the year
+(535,571)
+(491,398)
+Other revenue recognition
+(5,273)
+(4,077)
+Liabilities directly associated with assets classified as held for sale
+(64)
+At the end of the year
+4,956,199
+3,727,881
+(i)
+In July 2016, as part of the Group's disposal of Maoyan, the Group entered into a business cooperation agreement
+with Maoyan for a 5-year period. Subsequently in September 2017, the agreement was extended for another 14
+months to September 30, 2022. The Group recognises the revenue over the contract period.
+2019 Annual Report Meituan Dianping
+253
+254
+Mobike monthly pass revenue recognition
+(222,267)
+(9,627,170)
+(16,596,552)
+Online marketing revenue recognition
+Add:
+Receipt from online marketing customers
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+3,727,881
+2,947,715
+(8,118,061)
+Receipt from Mobike monthly pass
+18,028,480
+555,360
+4,141
+10,586,871
+515,620
+22,651
+Less:
+Business cooperation agreement with Maoyan amortization (Note i)
+(222,267)
+Receipt from others
+624,999
+(218,028)
+| | |
+2,594,722
+20
+(186,013)
+(7,617,907)
+(7,617,907)
+(186,013)
+As of December 31, 2018
+Currency translation differences
+own credit risk
+Preferred shares fair value change due to
+47,969
+47,969
+Transaction with non-controlling interests
+(685,701)
+(685,701)
+Exercise of option and RSU vesting
+(8,118,061)
+1,816,453
+(218,028) (5,741,347)
+Meituan Dianping 2019 Annual Report
+389,028
+Current
+13,766
+61
+611,233
+388,967
+Business cooperation agreement with Maoyan
+Others
+2018
+RMB'000
+2019
+RMB'000
+As of December 31,
+4,299,191
+Non-Current
+27 DEFERRED REVENUES
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+252
+1,816,453
+Share-based compensation expenses
+231,736
+(169,459) (4,447,252)
+(7,439,014)
+3,161,201
+20
+3,905
+679,047
+679,047
+3,905
+10,617
+10,617
+34,047
+--- 34,047
+(1,614,957)
+2,181,436
+(1,614,957)
+2,181,436
+As of December 31, 2017
+20
+1,232,234
+(500,154)
+231,736
+Business combinations
+609,744
+609,744
+Issuance of ordinary shares
+42,372
+(689,728)
+(5,741,347)
+(500,154)
+20
+As of January 1, 2018
+(423,731)
+(423,731)
+Adjustment on adoption of IFRS9 (net of tax)
+466,103
+(265,997)
+1,232,234
+Issuance of ordinary shares
+Online marketing services
+98
+Issuance of ordinary shares
+15
+1,548,664
+At January 1, 2018
+260,360,318
+260,359,929
+389
+58
+5,808,666
+At December 31, 2019
+258,285,071
+2,075,247
+258,284,687
+2,075,242
+5
+1
+81,219
+Exercise of option and RSU vesting
+57
+5,727,447
+At January 1, 2019
+Total
+RMB'000
+premium
+RMB'000
+Share
+Share
+capital
+RMB'000
+USD'000
+'000
+shares
+shares
+4,136,806
+ordinary
+41
+9,338,529
+248,944,408
+As of January 1, 2019
+26 OTHER RESERVES
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+251
+2019 Annual Report Meituan Dianping
+384 258,284,687 258,285,071
+40
+57
+5,727,447
+At December 31, 2018
+(29,307)
+(29,307)
+(1,005)
+Cancellation of ordinary shares
+(811,144)
+(811,142)
+(24,667)
+Repurchase of ordinary shares
+842,204
+842,199
+5
+1
+67,649
+Exercise of option and RSU vesting
+248,944,691
+9,338,627
+283
+Nominal
+value of
+384
+Issued:
+RMB'000
+RMB'000
+2018
+2019
+As of December 31,
+17,043,692
+13,396,185
+Others
+JPY
+USD
+Number of
+ordinary
+Cash and cash equivalents are denominated in the following currencies:
+1,837,808
+7,578,796
+353,587
+5,576,350
+6,294,862
+Term deposit with initial terms within three months
+9,629,534
+6,747,736
+Cash in hand and cash in bank
+RMB'000
+RMB'000
+2018
+2019
+As of December 31,
+(a) Cash and cash equivalents
+24 CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS
+Cash held in other financial institutions (Note i)
+5,629,279
+RMB
+11,247,166
+As at December 31, 2019 and 2018, the authorized share capital of the Company comprises 10,000,000,000
+ordinary shares with par value of USD0.00001 per share.
+25 SHARE CAPITAL AND SHARE PREMIUM
+5,660,813
+As of December 31, 2019, RMB231 million and USD6 million (equivalent to approximately RMB42
+million) restricted deposits were held by bank as letter of guarantee. Other restricted cash balances are
+those held in bank account which are subject to certain restriction according to agreement with certain
+parties.
+4,256,120
+8,760,115
+1,566
+625,935
+3,628,619
+8,704,305
+55,810
+RMB
+USD
+Others
+2018
+RMB'000
+2019
+RMB'000
+As of December 31,
+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.
+(b) Restricted cash
+Restricted cash are dominated in the following currencies:
+60,863
+95,713
+79,051
+13,396,185
+17,043,692
+(i)
+88,196
+Meituan Dianping 2019 Annual Report
+24
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS (Continued)
+Cash and cash equivalents of the Group primarily represent bank deposits and fixed deposits with maturities less
+than three months. As of December 31, 2019 and 2018, 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 RMB354 million and RMB1,838 million, respectively, which have been classified as cash
+and cash equivalents on the consolidated statements of financial position.
+As of December 31, 2019, the Group has authorised and reserved a total of 912,013,581 ordinary shares
+under the 2015 Share Incentive Plan, Post-IPO Share Option Scheme and Post-IPO Share Award Scheme for
+awards of options and RSUs of the Company's ordinary shares.
+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 authorized 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.
+On October 6, 2015, the board of Directors of the Company 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 of Directors. 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.
+32 SHARE-BASED PAYMENTS (Continued)
+In addition, according to the merger agreement with Mobike, RSUs of the Company with a total valuation
+of USD60 million shall 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.
+Meituan Dianping 2019 Annual Report
+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 recognised for
+the services received over the remainder of the vesting period, and is recognised in the Group's consolidated
+income statement as share-based compensation expenses.
+A total of 21,290,122 share options were assumed by the Group in the acquisition of Mobike. The Mobike
+option replacement has been analyzed 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
+recognised as compensation expenses attributable to post-combination services.
+On April 4, 2018, the Company and Mobike entered into a strategic transaction, 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.
+Share options
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+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 2018 and 2019, 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.
+Share options (Continued)
+2019 Annual Report Meituan Dianping
+261
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+32 SHARE-BASED PAYMENTS (Continued)
+Movements in the number of share options granted and their related weighted average exercise prices are as
+follows:
+Weighted
+average
+exercise price
+Number of
+per share
+option
+share options
+32 SHARE-BASED PAYMENTS
+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.
+For the year ended December 31, 2019
+Cash generated from/(used in) operations
+260
+(HKD)
+(1,703,120)
+(3,722,048)
+Decrease/(increase) in inventories
+94,966
+(168,664)
+Increase in trade payables
+1,291,272
+2,100,697
+Decrease in payables to merchants
+(101,126)
+(1,767,485)
+Increase in advances from transacting users
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+640,892
+Increase in deferred revenues
+1,228,319
+745,054
+Increase in other payables and accruals
+1,508,703
+1,676,265
+Increase in other non-current liabilities
+34,955
+16,906
+Decrease in deposits from transacting users
+(866,003)
+(4,765,957)
+Decrease in assets classified as held for sale
+439,578
+(209,241)
+Outstanding as of December 31, 2018
+116,321,663
+Incremental fair value for repurchase of ordinary shares (Note 25)
+Others
+48,660
+9,435
+2,190,871
+1,865,113
+264
+Meituan Dianping 2019 Annual Report
+33 DIVIDENDS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2019 and 2018.
+34 COMMITMENTS
+(a) Capital commitments
+Within 1 year
+1 - 2 years
+As of December 31,
+2019
+RMB'000
+2018
+RMB'000
+23,658
+91
+37,426
+3,628
+373,874
+1,442,579
+23,749
+1,879,868
+Decrease in liabilities directly associated with assets
+classified as held for sale
+87,668,245
+45.16
+Vested during the year
+(26,219,723)
+23.09
+Forfeited during the year
+(11,820,554)
+37.40
+Outstanding as of December 31, 2018
+164,133,960
+35.87
+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.
+The total share-based compensation expenses recognised in the consolidated income statement are
+RMB2.2 billion and RMB1.9 billion for the years ended December 31, 2019 and 2018, respectively. The
+following table sets forth a breakdown of the share-based compensation expenses by nature:
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+Share options
+301,568
+RSUs
+Granted during the year
+41,054
+2018
+RMB'000
+35 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS
+(a) Cash used in operations
+Year ended December 31,
+2019
+Note
+RMB'000
+2018
+RMB'000
+Profit/(Loss) before income tax
+Adjustments for
+2,762,388
+(115,490,807)
+Depreciation and amortization
+15,16
+4,845,800
+5,366,801
+Provision for doubtful accounts
+7
+266
+(8,981,189)
+6,037,524
+For the year ended December 31, 2019
+As of December 31,
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2019 Annual Report Meituan Dianping
+23,749
+41,054
+Purchase of other property, plant and equipment
+2019
+RMB'000
+(b) Operating lease commitments
+The Group leases office under non-cancelable operating lease agreements.
+From January 1, 2019, the Group has recognised right-of-use assets for these leases:
+As of December 31,
+Within 1 year
+1 - 5 years
+Over 5 years
+2019
+RMB'000
+2018
+RMB'000
+605,723
+1,281,789
+223,965
+2,111,477
+265
+26.18
+114,505,992
+Outstanding as of December 31, 2017
+21,290,122
+10.50
+(9,581,909)
+13.38
+Exercised during the year
+Outstanding as of December 31, 2018
+Vested and exercisable as of December 31, 2018
+(41,429,635)
+4.71
+116,321,663
+44,792,530
+22.69
+11.86
+The weighted average remaining contractual life of outstanding share options was 7 years and 7 years as
+of December 31, 2019 and 2018. The weighted average price of the shares at the time these options were
+exercised was HKD68.56 per share (equivalent to approximately RMB60.64 per share) during the year ended
+December 31, 2019.
+262
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+32 SHARE-BASED PAYMENTS (Continued)
+Fair value of share options
+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.
+Forfeited during the year
+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:
+Mobike option replacement
+24,081,670
+22.69
+740,000
+69.10
+Forfeited during the year
+(7,484,459)
+25.45
+Exercised during the year
+(35,867,197)
+13.18
+Outstanding as of December 31, 2019
+73,710,007
+27.81
+Vested and exercisable as of December 31, 2019
+32,713,923
+21.23
+Outstanding as of December 31, 2017
+121,961,415
+15.23
+Granted during the year
+36.90
+Risk-free interest rates
+Expected term - years
+Expected volatility
+Weighted
+average grant
+Number of
+RSUs
+date fair value
+per RSU
+(HKD)
+211,905
+164,133,960
+35.87
+Granted during the year
+47,430,198
+69.43
+Vested during the year
+(45,351,471)
+31.23
+Forfeited during the year
+(23,336,696)
+43.41
+Outstanding as of December 31, 2019
+142,875,991
+47.26
+Movement in the number of RSUs granted and the respective weighted average grant date fair value are as
+follows:
+RSUS (Continued)
+32 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2019
+Fair value of ordinary shares (HKD)
+Exercise price (HKD)
+Dividend yield
+Year ended December 31,
+2019
+2018
+1.5%
+3.2% -3.8%
+6.3
+2.8-6.8
+Granted during the year
+40% 45.0% - 50.0%
+40.60 - 48.67
+69.10
+0-40.60
+The weighted average fair value of granted options was HKD28.41 and HKD28.92 per share, for the years
+ended December 31, 2019 and 2018, respectively.
+RSUs
+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.
+2019 Annual Report Meituan Dianping
+263
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+28.41
+Outstanding as of December 31, 2018
+December 31, 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+12,656
+3
+1,082,554
+414,207
+(ii)
+Purchase of goods and service
+One of the Company's shareholders
+1,849,435
+963,941
+One of the Company's shareholders
+Associate of the Group
+532,984
+2,388,353
+1,496,925
+(iii)
+Sales of investments
+Associate of the Group
+38,776
+2019 Annual Report Meituan Dianping
+269
+538,918
+(272,974)
+414,204
+Associate of the Group
+Associate of the Group
+Beijing Wisdom Map Technology Co., Ltd.
+Associate of the Group
+Dalian Tongda Enterprise Management Co., Ltd.
+Associate of the Group
+Dalian Sen Cheng Logistics Co., Ltd.
+Associate of the Group
+AsiaSea Co., Ltd.
+Hefei Haizhitun Technology Co., Ltd.
+1,069,898
+(b) Significant transactions with related parties
+Acewill information Technology (Beijing) Co., Ltd.
+Associate of the Group
+Associate of the Group
+Year ended December 31,
+2019
+RMB'000
+2018
+RMB'000
+(i)
+Sales of service
+Associate of the Group
+Increase in trade receivables
+594,744
+(4,504,029)
+104,606,058
+28
+preferred shares
+Fair value changes of convertible redeemable
+(176,880)
+9
+(23,132)
+(292,421)
+9
+Impairment provision and restructuring expense for
+1,865,113
+88
+Gains from business and investments disposals
+Gains from the remeasurement of investments
+payments
+share-based
+-
+Non-cash employee benefits expense
+285,655
+645,685
+Increase in prepayments, deposits and other assets
+2,190,871
+Mobike restructuring plan
+88,612
+Impairment provision for Mobike tradename
+(Increase)/decrease in restricted cash
+Change in working capital
+Meituan Dianping 2019 Annual Report
+111,045
+Net exchange differences
+62,099
+(584,347)
+(1,527,405)
+220,362
+Finance costs
+cash flows
+Dividend income and interest classified as investing
+(1,836,382)
+(77,699)
+19
+Change in fair value from investments measured at
+fair value through profit or loss
+48,267
+(107,353)
+12
+using equity method
+Share of (gains)/losses of investments accounted for
+358,790
+1,346,000
+Jilin billion-Allians Bank Co., Ltd.
+Associate of the Group
+1,485
+Relationship
+December 31, 2019
+1,749,031
+(785,825)
+963,206
+465,968
+465,968
+176
+176
+4,019,263
+Liabilities from financing activities as of
+1,526,799
+2019 Annual Report Meituan Dianping
+267
+268
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+35 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
+(c) Reconciliation of liabilities generated from financing activities (Continued)
+Liabilities from financing activities
+Convertible
+Borrowings
+5,546,062
+Recognization of issuance cost
+Acquisitions - leases
+Cash flow
+35 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
+One of the Company's shareholders
+Associate of the Group
+(b) Major non-cash transactions
+Other than the acquisition of right-of-use assets described in Note 15, the share based awards
+described in Note 32, there were no other material non-cash transactions during the year ended
+December 31, 2019.
+(c) Reconciliation of liabilities generated from financing activities
+Liabilities from financing activities
+Borrowings
+RMB' 000
+Leases
+RMB'000
+Total
+RMB'000
+Liabilities from financing activities as of
+2,270,056
+2,270,056
+Recognised on adoption of IFRS 16 (Note 2)
+1,846,656
+1,846,656
+Liabilities from financing activities as of
+January 1, 2019
+2,270,056
+1,846,656
+4,116,712
+Borrowings
+redeemable
+(135,879)
+due after
+1 year
+56
+(220,435,440) (220,435,440)
+Proceeds from issuance of ordinary shares, net
+Liabilities from financing activities as of
+December 31, 2018
+36 RELATED PARTY TRANSACTIONS
+1,800,000
+470,056
+2,270,056
+The following significant transactions were carried out between the Group and its related parties during the
+periods presented. In the opinion of the Directors of the Company, 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.
+Meituan Dianping 2019 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+36 RELATED PARTY TRANSACTIONS (Continued)
+(a) Names and relationships with related parties
+The following companies are significant related parties of the Group that had transactions and/or
+balances with the Group during the year.
+Name of related parties
+Tencent Group
+Changsha Xiangjiang Longzhu Private Equity
+Tianjing Maoyan and its subsidiaries
+Investment Fund Enterprise (Limited Partnership)
+due within
+1 year
+56
+8,336,605
+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.
+104,792,071
+RMB'000
+8,336,605
+preferred
+RMB'000
+shares
+RMB'000
+Total
+RMB'000
+Liabilities from financing activities as of
+162,000
+101,418,292 101,580,292
+Cash flow
+1,248,000
+January 1, 2018
+Currency translation differences
+1,718,000
+Business combinations
+390,000
+5,888,472 6,278,472
+Fair value changes of convertible redeemable
+preferred shares
+470,000
+Recognization of issuance cost
+104,792,071
+"connected person(s)"
+"connected transaction(s)"
+"Consolidated Affiliated Entities"
+"Contractual Arrangement(s)"
+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
+the entities we control through the Contractual Arrangements, namely, the
+Onshore Holdcos and their respective subsidiaries (each a "Consolidated
+Affiliated Entity")
+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
+has the meaning ascribed to it under the Listing Rules
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+"Charmway Enterprises"
+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. (¾¤¤¤à♣
+#), 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
+"Company", "our Company",
+"the Company"
+"Companies Ordinance"
+"Class B Shares"
+"Class A Shares"
+"Chengdu Meigengmei”
+the corporate governance code as set out in Appendix 14 to the Listing
+Rules
+the British Virgin Islands
+274
+class B ordinary shares of the share capital of the Company with a par
+value of US$0.00001 each, conferring a holder of a Class B Share one
+vote per share on any resolution tabled at the Company's general meeting
+Meituan Dianping 2019 Annual Report
+"Listing Date"
+"Controlling Shareholder(s)"
+the Hong Kong Special Administrative Region of the PRC
+Computershare Hong Kong Investor Services Limited
+“Listing Rules"
+"CG Code"
+"Listing"
+"Kevin Sunny"
+"IPO"
+"Independent Third Party(ies)"
+"IFRS"
+"Hong Kong" or "HK"
+"Hong Kong Share Registrar"
+time
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
+Kong), as amended, supplemented or otherwise modified from time to
+Hong Kong dollars, the lawful currency of Hong Kong
+the Company and its subsidiaries and Consolidated Affiliated Entities from
+time to time
+the director(s) of the Company
+Crown Holdings Asia Limited, a limited liability company incorporated under
+the laws of the BVI, which is indirectly wholly owned by a trust established
+by Wang Xing (as settlor) for the benefit of Wang Xing and his family
+has the meaning ascribed to it under the Listing Rules and unless the
+context otherwise requires, refers to Wang Xing and the directly and
+indirectly held companies through which Wang Xing has an interest in the
+Company
+"Hong Kong Securities and Futures
+Ordinance" or "SFO"
+"Hong Kong dollars" or "HK dollars"
+or "HK$"
+"Group", "our Group" or "the Group",
+"we", "us", or "our"
+"Director(s)"
+"Crown Holdings"
+DEFINITIONS
+"BVI❞
+"Audit Committee"
+273
+Meituan Dianping 2019 Annual Report
+272
+After the outbreak of Coronavirus Disease 2019 ("COVID-19 outbreak") in early 2020, a series of precautionary
+and control measures have been and continued to be implemented across the country. The pandemic has
+already caused severe disruptions to the daily operations of the Group's merchants, including restaurants,
+local services merchants and hotels, which in turn resulted in downward pressure on the Group's operations.
+The Group will pay close attention to the development of the COVID-19 outbreak and continuously evaluate
+its impact on the financial position and operating results of the Group.
+39 SUBSEQUENT EVENTS
+(127,527,156)
+(4,712,673)
+As of December 31, 2018
+(609,744)
+107,119
+Total transaction with owners in their capacity as owners
+(685,701)
+Exercise of option and RSU vesting
+(609,744)
+609,744
+Issuance of ordinary shares
+231,736
+Business combinations
+Share-based compensation expenses
+Transaction with owners in their capacity as owners
+Total comprehensive loss
+(126,917,412)
+(4,819,792)
+(186,013)
+(5,244,707)
+DEFINITIONS
+DEFINITIONS
+"AGM"
+the forthcoming annual general meeting of the Company to be held on
+May 20, 2020
+2019 Annual Report Meituan Dianping
+the board of Directors
+"Board"
+Beijing Xinmeida Technology Co., Ltd. (±À¾¾¾), 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 Online Technology Co., Ltd. (ESARORA),
+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. (À), 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. (ÀÆSONA
+]), 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
+"Beijing Xinmeida"
+"Beijing Sankuai Technology"
+"Beijing Sankuai Online"
+"Beijing Sankuai Cloud Computing"
+"Beijing Mobike"
+"Beijing Kuxun Technology"
+"Beijing Kuxun Interaction"
+"Auditor"
+the audit committee of the Company
+"associate(s)"
+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
+"Articles" or "Articles of Association"
+(48,660)
+65,246,403
+610,928 (22,654,077)
+38 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2019
+Meituan Dianping 2019 Annual Report
+270
+The Group did not have any material contingent liabilities as of December 31, 2019 and 2018, except for the
+financial guarantee amount, disclosed in Note 3.1(c).
+37 CONTINGENCIES
+248,428
+516,455
+88
+190
+Others
+375
+233,504
+488,139
+758
+Pension costs and other employee benefits
+Share-based compensation expenses
+(a) Financial position of the Company
+ASSETS
+Non-current assets
+Investments in subsidiaries
+33,105,050
+27,676,401
+Short-term investments
+90,346,561
+97,672,579
+27,281,595
+32,426,176
+8,491
+63,064,966
+RMB'000
+2018
+2019
+RMB'000
+Note
+As of December 31,
+Current assets
+Prepayments, deposits and other assets
+International Financial Reporting Standards, as issued from time to time
+by the International Accounting Standards Board
+Prepayments, deposits and other assets
+13,147
+5,970
+33,824
+One of the Company's shareholders
+19,654
+290,917
+Associate of the Group
+Other receivables from related parties
+(i)
+2018
+RMB'000
+RMB'000
+2019
+As of December 31,
+(c) Balances with related parties
+36 RELATED PARTY TRANSACTIONS (Continued)
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+175,548
+324,741
+195,202
+(ii)
+12,721
+1,500
+Basic salaries
+Fees
+2018
+RMB'000
+Year ended December 31,
+2019
+RMB'000
+(d) Key management compensation
+Bonuses
+407,248
+28,276
+79,547
+One of the Company's shareholders
+378,972
+271,702
+Associate of the Group
+Other payables to related parties
+351,249
+(104,263,335)
+Cash and cash equivalents
+20,104
+As of January 1, 2019
+(127,527,156)
+(4,712,673)
+losses
+RMB'000
+RMB'000
+Other reserves
+Accumulated
+(b) Reserve movement of the Company
+38 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+For the year ended December 31, 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+271
+2019 Annual Report Meituan Dianping
+Mu Rongjun
+Director
+Director
+Comprehensive income
+Profit for the year
+Other Comprehensive income
+Currency translation differences
+Total comprehensive loss
+(126,520,961)
+(3,095,017)
+Preferred shares fair value change due to own credit risk
+Currency translation differences
+Other Comprehensive loss
+Loss for the year
+Comprehensive loss
+As of January 1, 2018
+Wang Xing
+566,479
+(3,661,496) (126,520,961)
+1,051,177
+1,006,195
+As of December 31, 2019
+Total transaction with owners in their capacity as owners
+Exercise of option and RSU vesting
+Transaction with owners in their capacity as owners
+Share-based compensation expenses
+2,181,436
+(1,614,957)
+93,317
+6,151,379
+The statement of financial position of the Company was approved by the Board of Directors on March
+30, 2020 and was signed on its behalf.
+131,593,676
+Other payables and accruals
+Current liabilities
+LIABILITIES
+Equity attributable to equity holders of the Company
+Accumulated losses
+Other reserves
+Share premium
+Share capital
+EQUITY
+127,432,404
+131,593,676
+Total assets
+37,085,843
+33,921,097
+3,960,689
+Total liabilities
+Total equity and liabilities
+25
+389
+1,387,162
+849,336
+1,387,162
+849,336
+126,045,242
+130,744,340
+(127,527,156)
+127,432,404
+(126,520,961)
+(4,712,673)
+(3,095,017)
+38(b)
+258,284,687
+260,359,929
+25
+384
+38(b)
+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
+278
+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
+Shenzhen Tencent Computer Systems Co., Ltd. (UKRÁ
+RA), a company established in the PRC on November 11, 1998 and a
+wholly owned subsidiary of Tencent
+Shenzhen Sankuai Online Technology Co., Ltd. (U=RESNB
+), 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
+"United States", "U.S." or "US"
+"Tencent"
+"Tianjin Xiaoyi Technology"
+"Tianjin Wanlong"
+"Tianjin Antechu Technology"
+"substantial shareholder"
+"subsidiary(ies)"
+"Stock Exchange"
+"Shenzhen Tencent Computer"
+"Shenzhen Sankuai Online"
+"Shared Vision❞
+DEFINITIONS
+277
+2019 Annual Report Meituan Dianping
+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 Lutuan Technology Co., Ltd. (UNRRA), 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. (^), 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. (EOXD
+Ħ), 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
+The Stock Exchange of Hong Kong Limited
+(E)
+has the meaning ascribed to it in section 15 of the Companies Ordinance
+Tianjin Antechu Technology Co., Ltd. (XŒZĦĦĦ), a limited
+liability company incorporated under the laws of the PRC on January 17,
+2018 and our Consolidated Affiliated Entity
+initial public offering
+279
+2019 Annual Report Meituan Dianping
+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.
+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 and Mobike Beijing
+DEFINITIONS
+"WVR Structure"
+"WVR Beneficiaries"
+"WFOES", each a "WFOE"
+Meituan Dianping 2019 Annual Report
+has the meaning ascribed to it in the Listing Rules
+"weighted voting right"
+"VIE(S)"
+"US dollars", "U.S. dollars" or "US$"
+variable interest entity(ies)
+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
+Tencent Holdings Limited (HKEx Stock Code: 700), or Tencent Holdings
+Limited and/or its subsidiaries, as the case may be
+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
+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
+has the meaning ascribed to it in the Listing Rules
+Hanhai Information Technology (Shanghai) Co., Ltd.
+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.
+restricted share unit(s)
+Mobike (Beijing) Information Technology Co., Ltd. (À) EARN
+Ħ), a limited liability company incorporated under the laws of the
+PRC on January 12, 2016 and our indirect 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¤¶Ð¾ĦĦABA
+]), a limited liability company incorporated under the laws of the PRC on
+August 9, 2017 and our Consolidated Affiliated Entity
+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
+"Registered Shareholders"
+"Prospectus"
+"Pre-IPO ESOP"
+"PRC Legal Advisor"
+"PRC"
+"Post-IPO Share Option Scheme"
+"Post-IPO Share Award Scheme"
+"Onshore Holdcos," each an
+"Onshore Holdco"
+"Model Code"
+"Mobike Beijing"
+"Mobike"
+"Memorandum" or "Memorandum
+of Association"
+"Meituan Finance"
+"Main Board"
+DEFINITIONS
+275
+Sankuai Cloud Online Technology Co., Ltd. (K(UÀ) ĦĦARA
+]), a limited liability company incorporated under the laws of the PRC on
+November 3, 2015 and our indirect wholly-owned subsidiary
+2019 Annual Report Meituan Dianping
+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
+the Model Code for Securities Transactions by Directors of Listed Issuers
+as set out in Appendix 10 to the Listing Rules
+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
+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 post-IPO share option scheme adopted by the Company on August
+30, 2018
+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
+"Shared Patience"
+“Shareholder(s)”
+"Share(s)"
+"Shanghai Sankuai Technology"
+"Shanghai Lutuan"
+"Shanghai Juzuo"
+"
+the post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+"Shanghai Hanhai"
+"Sankuai Cloud Online"
+"RSU(s)"
+"Shanghai Hantao'
+"
+"Reserved Matters'
+DEFINITIONS
+Meituan Dianping 2019 Annual Report
+276
+"Reporting Period"
+the year ended December 31, 2019
+the registered shareholders of the Onshore Holdcos
+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
+"RMB" or "Renminbi❞
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+the People's Republic of China
+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
+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
+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
+Meituan Dianping 2019 Annual Report
+the stock keeping unit
+"transaction"
+GLOSSARY
+"SKU"
+"monetization rate"
+Volume" or "GTV"
+"Gross Transaction
+"DAU"
+"Active Merchant"
+"Transacting User"
+280
+Cost of revenues:
+The following table sets forth our cost of revenues by segment for the fourth and third quarter of 2019:
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+Our cost of revenues increased by 3.0% to RMB18.4 billion for the fourth quarter of 2019 from RMB17.9 billion for
+the third quarter of 2019, attributable to higher delivery rider costs in the winter season and the growth of our new
+initiatives and others businesses.
+Cost of Revenues
+Our other services and sales revenues increased by 7.8% to RMB4.9 billion for the fourth quarter of 2019 from
+RMB4.5 billion for the third quarter of 2019, primarily due to the revenues growth of our B2B food distribution
+services, micro loan business and grocery retail business, partially offset by the decrease in the revenues from
+bike-sharing services.
+Our online marketing services revenues increased by 12.0% to RMB4.9 billion for the fourth quarter of 2019 from
+RMB4.4 billion for the third quarter of 2019, primarily due to the increases in the number of online marketing Active
+Merchants and the average revenue per online marketing Active Merchant.
+100.0%
+100.0%
+27,493,629
+Food delivery
+28,158,253
+Total
+26
+26
+16.4%
+4,510,389
+Our commission revenues decreased by 1.2% to RMB18.4 billion for the fourth quarter of 2019, mainly due to
+the change of food delivery order mix and a decrease in the demand for attraction ticketing, both caused by
+seasonality.
+In-store, hotel & travel
+Three Months Ended
+Total
+17.3%
+12,531,750
+70.1%
+3.9%
+26.0%
+4,796,900
+714,450
+12,928,774
+of total cost
+of revenues
+70.0%
+(RMB in thousands, except for percentages)
+Amount
+of revenues
+Amount
+As a
+percentage
+September 30, 2019
+of total cost
+percentage
+As a
+December 31, 2019
+Unaudited
+New initiatives and others
+4,862,747
+(RMB in thousands, except for percentages)
+Other services and sales
+New initiatives and others
+22.5%
+6,181,117
+22.6%
+6,356,945
+In-store, hotel & travel
+56.7%
+15,576,972
+55.8%
+15,715,710
+Food delivery
+Revenues
+revenues
+revenues
+Amount
+Amount
+percentage
+of total
+of total
+704,900
+December 31, 2019
+(including interest revenue)
+September 30, 2019
+percentage
+16.0%
+4,409,272
+17.5%
+4,937,769
+Online marketing services
+67.6%
+18,573,968
+65.2%
+18,357,737
+Commission
+Revenues
+(RMB in thousands, except for percentages)
+revenues
+Amount
+revenues
+Amount
+of total
+of total
+As a
+percentage
+As a
+3.9%
+Income Tax Expenses
+26.1%
+percentage
+Primarily as a result of the foregoing, our profit before income tax for the fourth quarter of 2019 was RMB1.5 billion,
+compared to a profit of RMB1.5 billion for the third quarter of 2019.
+Profit before Income Tax
+As a result of the foregoing, our operating profit for the fourth quarter of 2019 was RMB1.4 billion, compared to an
+operating profit of RMB1.4 billion for the third quarter of 2019.
+Operating Profit
+Our other gains, net for the fourth quarter of 2019 increased by RMB175.5 million compared to the third quarter of
+2019, mainly attributable to an increase in subsidies and tax preference.
+Other Gains, Net
+Our fair value changes on investments measured at fair value through profit or loss for the fourth quarter of 2019
+decreased by RMB91.2 million compared to the third quarter of 2019, primarily due to less fair value gain from
+certain investments.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+Our net provision for impairment losses on financial assets was RMB332.0 million for the fourth quarter of 2019,
+compared to RMB112.0 million for the third quarter of 2019 and increased by 0.8 points to 1.2% as a percentage
+of revenues quarter-over-quarter, primarily due to the increase in loan loss provision and impairment of certain
+financial instruments.
+Net Provision for Impairment Losses on Financial Assets
+Our general and administrative expenses increased to RMB1.2 billion for the fourth quarter of 2019 from RMB1.1
+billion for the third quarter of 2019 and increased to 4.4% from 3.8% as a percentage of revenues. This increase
+was primarily attributable to the increase in share-based compensation expenses.
+General and Administrative Expenses
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+28
+Our research and development expenses increased to RMB2.2 billion for the fourth quarter of 2019 from RMB2.1
+billion for the third quarter of 2019 and increased to 8.0% from 7.8% as a percentage of revenues. This increase
+was primarily attributable to an increase of RMB67.1 million in employee benefits expenses.
+Research and Development Expenses
+Our selling and marketing expenses decreased to RMB5.3 billion for the fourth quarter of 2019 from RMB5.6 billion
+for the third quarter of 2019 and decreased to 19.0% from 20.4% as a percentage of revenues. This decrease
+was primarily attributable to (i) a decrease of RMB416.5 million in Transacting User incentives, mainly driven by
+the reduction of subsidies for the food delivery business, as our Food Delivery Membership Program yielded
+better marketing efficiency, and (ii) a decrease of RMB56.6 million in employee benefits expenses, which was
+partially offset by an increase of RMB171.0 million in promotion and advertising expenses as we invested more in
+promotional and branding campaigns at year end.
+We had income tax expenses of RMB29.6 million for the fourth quarter of 2019, compared to income tax expenses
+of RMB127.2 million for the third quarter of 2019, primarily due to the recognition of deferred tax assets arising from
+a previously unrecognized temporary difference with the change of certain entities' profit position.
+Selling and Marketing Expenses
+Profit for the Period
+2019 Annual Report Meituan Dianping
+Unaudited
+Three Months Ended
+The following table sets forth our revenues by type in absolute amount and as a percentage of total revenues for the
+fourth and third quarter of 2019:
+Revenues by Type
+MANAGEMENT DISCUSSION AND ANALYSIS
+25
+25
+2019 Annual Report Meituan Dianping
+Our revenues from the new initiatives and others segment increased by 6.1% to RMB6.1 billion for the fourth
+quarter of 2019 from RMB5.7 billion for the third quarter of 2019, primarily due to the increases in the revenues from
+the B2B food distribution services, micro loan business, grocery retail business and Meituan Instashopping, partly
+offset by the decrease in the revenues from bike-sharing services and car-hailing services.
+Our revenues from the in-store, hotel & travel segment increased by 2.8% to RMB6.4 billion for the fourth quarter
+of 2019 from RMB6.2 billion for the third quarter of 2019, primarily due to the increase in the number of Active
+Merchants from our in-store, hotel & travel businesses.
+Our revenues from the food delivery segment increased by 0.9% to RMB15.7 billion for the fourth quarter of 2019,
+relatively stable compared to the third quarter of 2019, mainly due to the expansion of our online marketing service
+offering to merchants, partially offset by the change of delivery order mix due to seasonality.
+100.0%
+27,493,629
+100.0%
+28,158,253
+Total
+20.8%
+5,735,540
+21.6%
+29
+As a result of the foregoing, we had profits of RMB1.5 billion and RMB1.3 billion for the fourth and third quarter of
+2019, respectively.
+4,664,695
+As a result of the foregoing, our gross profit for the fourth quarter of 2019 and the third quarter of 2019 was RMB9.7
+billion and RMB9.6 billion, respectively. The gross margin of our food delivery business reduced by 1.8 points on a
+quarter-over-quarter basis, due to seasonality as we paid more subsidies to delivery riders in the winter season. The
+gross margin of our in-store, hotel & travel businesses remained relatively stable on a quarter-over-quarter basis.
+The gross margin of our new initiatives and others businesses improved by 2.5 points on a quarter-over-quarter
+basis, mainly due to product and service mix change.
+9,592,284
+Amount
+As a
+percentage
+September 30, 2019
+December 31, 2019
+Three Months Ended
+Unaudited
+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:
+Gross Profit and Gross Margin
+MANAGEMENT DISCUSSION AND ANALYSIS
+27
+6,085,598
+27
+2019 Annual Report Meituan Dianping
+Cost of revenues for the new initiatives and others businesses increased by 2.8% to RMB4.8 billion for the fourth
+quarter of 2019 from RMB4.7 billion for the third quarter of 2019, mainly due to the increase in cost of goods sold
+resulting from the growth of our B2B food distribution services and grocery retail business, partially offset by the
+decrease in depreciation expenses in our bike-sharing services and car-hailing driver-related costs.
+Cost of revenues for our in-store, hotel & travel businesses slightly increased by 1.4% to RMB714.5 million for the
+fourth quarter of 2019 from RMB704.9 million for the third quarter of 2019, mainly in line with revenues growth.
+Cost of revenues for our food delivery business increased by 3.2% to RMB12.9 billion for the fourth quarter of 2019
+from RMB12.5 billion for the third quarter of 2019, primarily attributable to the increase in food delivery rider costs
+as a result of the increase of winter subsidies paid to delivery riders for working during the cold weather conditions.
+17,901,345
+100.0%
+18,440,124
+of revenues
+34.9%
+Amount
+(RMB in thousands, except for percentages)
+34.5%
+9,718,129
+Total
+18.7%
+1,070,845
+21.2%
+1,288,698
+New initiatives and others
+88.6%
+5,476,217
+88.8%
+5,642,495
+In-store, hotel & travel
+19.5%
+3,045,222
+17.7%
+2,786,936
+Food delivery
+Gross profit:
+As a
+percentage
+of revenues
+As a
+100.0%
+September 30, 2019
+(23.3%)
+(978,985)
+21.2%
+1,288,698
+New initiatives and others
+86.8%
+3,988,258
+88.8%
+5,642,495
+In-store, hotel & travel
+13.4%
+1,471,721
+17.7%
+2,786,936
+Food delivery
+(RMB in thousands, except for percentages)
+of revenues
+Amount
+of revenues
+Amount
+As a
+percentage
+Total
+percentage
+9,718,129
+4,480,994
+Our other gains, net for the fourth quarter of 2019 increased by RMB630.0 million compared to the same period of
+2018, primarily attributable to (i) an increase of RMB307.3 million in subsidies and tax preference, (ii) an increase
+of RMB126.6 million in gains from investments in term deposits with initial terms of over three months and wealth
+management products, and (iii) less foreign exchange loss.
+Other Gains, Net
+Our fair value changes on investments measured at fair value through profit or loss for the fourth quarter of 2019
+decreased by RMB918.2 million compared to the same period of 2018, primarily due to less fair value gain from our
+investee companies.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+22
+22
+Our net provision for impairment losses on financial assets was RMB332.0 million for the fourth quarter of 2019,
+compared to RMB120.8 million for the same period of 2018, and increased by 0.6 points to 1.2% as a percentage
+of revenues year-over-year, primarily due to the increase in loan loss provision as our micro loan business grew.
+Net Provision for Impairment Losses on Financial Assets
+Our general and administrative expenses decreased to RMB1.2 billion for the fourth quarter of 2019 from RMB2.7
+billion in the same period of 2018, and decreased to 4.4% from 13.8% as a percentage of revenues. Excluding the
+effect of RMB1.3 billion of impairment provision of intangible assets, which resulted from the change in our branding
+strategy for the bike-sharing services, and RMB132.0 million of impairment provision for Mobike's overseas
+restructuring in the fourth quarter of 2018, our general and administrative expenses remained flat year-over-year.
+General and Administrative Expenses
+Our research and development expenses increased to RMB2.2 billion for the fourth quarter of 2019 from RMB2.0
+billion in the same period of 2018, and decreased to 8.0% from 10.0% as a percentage of revenues. The increase
+was primarily attributable to an increase of RMB226.5 million in employee benefits expenses, due to the increase
+in both average salaries and benefits and share-based compensation expenses of our research and development
+personnel.
+Research and Development Expenses
+Our selling and marketing expenses increased to RMB5.3 billion for the fourth quarter of 2019 from RMB4.5 billion
+in the same period of 2018, and decreased to 19.0% from 22.9% as a percentage of total revenues. The increase
+in amount was primarily attributable to (i) an increase of RMB823.6 million in Transacting User incentives, as we
+extended more subsidies to support business growth, especially for our hotel booking business, and (ii) an increase
+of RMB101.0 million in employee benefits expenses, due to the increase in average salaries and benefits of our
+selling and marketing personnel. Promotion and advertising expenses decreased by RMB78.4 million, mainly due to
+our reduced spending on holiday campaigns. The decrease in percentage of total revenues was attributable to our
+improved sales productivity and marketing efficiency.
+Selling and Marketing Expenses
+MANAGEMENT DISCUSSION AND ANALYSIS
+21
+2019 Annual Report Meituan Dianping
+As a result of the foregoing, our gross profit for the fourth quarter of 2019 and 2018 was RMB9.7 billion and RMB4.5
+billion, respectively. The gross margin of our food delivery business improved by 4.3 points on a year-over-year
+basis as we enhanced our delivery network efficiency through economy of scale and expanded our service offering
+to merchants, including online marketing services. The gross margin of our in-store, hotel & travel businesses
+increased by 2.0 points on a year-over-year basis, primarily attributable to economy of scale of our hotel booking
+business. The gross margin of our new initiatives and others businesses turned to positive 21.2% for the fourth
+quarter of 2019, representing an improvement of 44.5 points on a year-over-year basis, mainly due to (i) improved
+gross margin of our bike-sharing services as we gradually phased out the old bikes and replaced them with new
+Meituan Bikes, (ii) improved gross margin of Meituan Instashopping benefiting from a higher delivery network
+efficiency, and (iii) change in product and service mix.
+22.6%
+34.5%
+As a
+December 31, 2018
+December 31, 2019
+In-store, hotel & travel
+As a
+12,928,774
+Food delivery
+Cost of revenues:
+(RMB in thousands, except for percentages)
+of revenues
+Amount
+of revenues
+Amount
+of total cost
+of total cost
+As a
+percentage
+percentage
+As a
+December 31, 2018
+December 31, 2019
+Three Months Ended
+Unaudited
+The following table sets forth our cost of revenues by segment for the fourth quarter of 2019 and 2018:
+MANAGEMENT DISCUSSION AND ANALYSIS
+714,450
+New initiatives and others
+4,796,900
+70.1%
+3.9%
+26.0%
+Three Months Ended
+Unaudited
+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 for the periods indicated:
+Gross Profit and Gross Margin
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+Cost of revenues for our new initiatives and others businesses decreased by 7.4% to RMB4.8 billion for the fourth
+quarter of 2019 from RMB5.2 billion for the same period of 2018, mainly due to the decreases in our car-hailing
+driver-related costs and depreciation expenses of our bike-sharing service, partially offset by the increases in the
+cost of goods sold, payment processing costs, and delivery rider costs, resulting from the growth of our B2B food
+distribution services, integrated payment services, and Meituan Instashopping, respectively.
+Cost of revenues for our in-store, hotel & travel businesses increased by 17.9% to RMB714.5 million for the fourth
+quarter of 2019 from RMB605.9 million for the same period of 2018. The increase was primarily attributable to the
+increases in online traffic costs, which was in line with the growth of our online marketing revenues, bandwidth
+and server custody fees relating to our data storage improvement project, and depreciation of property, plant and
+equipment.
+Cost of revenues for our food delivery business increased by 35.6% to RMB12.9 billion for the fourth quarter of
+2019 from RMB9.5 billion for the same period of 2018, primarily attributable to the increase in food delivery rider
+costs as a result of the increase in the volume of orders delivered.
+Operating Profit/(Loss)
+100.0%
+100.0%
+18,440,124
+20
+20
+Total
+33.8%
+5,182,028
+4.0%
+605,874
+62.2%
+15,322,458
+As a result of the foregoing, our operating profit for the fourth quarter of 2019 was RMB1.4 billion, compared to an
+operating loss of RMB3.7 billion in the same period of 2018.
+9,534,556
+Primarily as a result of the foregoing, our profit before income tax for the fourth quarter of 2019 was RMB1.5 billion,
+compared to a loss of RMB3.7 billion in the same period of 2018.
+Income tax expenses
+Profit before income tax
+24,329
+57,646
+using equity method
+Share of gains of investments accounted for
+(49,011)
+(45,095)
+Finance costs
+38,235
+53,519
+Finance income
+1,447,064
+1,423,860
+611,223
+786,746
+Other gains, net
+163,615
+72,443
+at fair value through profit or loss
+Fair value changes on investments measured
+Profit for the period
+Non-IFRS measures:
+Adjusted EBITDA
+Adjusted net profit
+Profit/(Loss) before Income Tax
+Three Months Ended
+Unaudited
+The following table sets forth our revenues by segment in absolute amount and as a percentage of total revenues
+for the fourth and third quarter of 2019:
+Revenues by Segment
+Our revenues increased by 2.4% to RMB28.2 billion for the fourth quarter of 2019 from RMB27.5 billion for the third
+quarter of 2019, primarily driven by the increase in Monetization Rate to 14.8% from 14.1%.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Revenues
+1,942,049
+2,270,219
+(111,990)
+2,285,301
+1,333,382
+1,460,285
+(127,235)
+(29,645)
+December 31, 2019
+1,460,617
+1,489,930
+Meituan Dianping 2019 Annual Report
+24
+24
+2,178,650
+(332,004)
+Operating profit
+(1,055,969)
+4,937,769
+Online marketing services
+Income Tax (Expenses)/Credits
+We had income tax expenses of RMB29.6 million for the fourth quarter of 2019, compared to income tax credits of
+RMB276.1 million in the same period of 2018, primarily due to the increase in net profits from some of our taxable
+entities.
+Net provision for impairment losses on financial assets
+Profit/(Loss) for the Period
+18,573,968
+As a result of the foregoing, we had a profit of RMB1.5 billion for the fourth quarter of 2019, compared to a loss of
+RMB3.4 billion in the same period of 2018.
+2019 Annual Report Meituan Dianping
+23
+23
+MANAGEMENT DISCUSSION AND ANALYSIS
+Fourth Quarter of 2019 Compared to Third Quarter of 2019
+18,357,737
+Commission
+Revenues
+(RMB in thousands)
+2019
+September 30,
+2019
+December 31,
+Unaudited
+Three Months Ended
+Interest revenue
+4,409,272
+197,759
+(1,232,474)
+General and administrative expenses
+(2,137,349)
+(2,239,885)
+Research and development expenses
+(5,614,750)
+(5,349,095)
+Selling and marketing expenses
+9,592,284
+9,718,129
+(18,440,124)
+(17,901,345)
+28,158,253
+Gross profit
+Cost of revenues
+4,282,589
+4,664,988
+Other services and sales
+227,800
+27,493,629
+The following table sets forth the comparative figures for the fourth and third quarter of 2019:
+Adjusted for:
+Share-based compensation expenses
+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 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.
+(3,414,252)
+1,333,382
+December 31,
+Profit/(loss) for the period
+(RMB in thousands)
+2019
+September 30,
+December 31,
+2018
+2019
+Three Months Ended
+Unaudited
+The following tables set forth the reconciliations of our non-IFRS financial measures for the fourth quarter of 2019
+and 2018, the third quarter of 2019 and the years ended December 31, 2019 and 2018, to the nearest measures
+prepared in accordance with IFRS.
+MANAGEMENT DISCUSSION AND ANALYSIS
+36
+Meituan Dianping 2019 Annual Report
+700,133
+1,460,285
+643,223
+investments and subsidiaries
+(72,443)
+(4,724)
+280,174
+(18,415)
+Adjusted net profit/(loss)
+2,270,219
+(1,581,682)
+1,942,049
+Adjusted for:
+Tax effects on non-IFRS adjustments (4)
+Income tax expenses/(credits), except for
+tax effects on non-IFRS adjustments
+Share of (gains)/losses of investments
+accounted for using equity method
+Finance income
+Other (gains) except for (gains)/losses
+related to fair value change,
+disposal and remeasurement of
+Reconciliation of Non-IFRS Measures to the Nearest IFRS Measures
+34,369
+(556,295)
+145,650
+(57,646)
+Finance costs
+Fair value (gains) on investments(¹)
+57,333
+Net provision for impairment losses on
+(984,359)
+537,169
+(163,615)
+(Gains)/losses on disposal of
+investments and subsidiaries(2)
+(43,889)
+2,222
+Amortization of intangible assets
+resulting from acquisitions
+financial assets
+165,547
+165,547
+Impairment and expense provision for
+Mobike restructuring plan
+7,977
+358,790
+85,759
+Impairment of intangible assets (3)
+1,346,000
+188,742
+Details of the important events after Reporting Date are set forth in the section headed "Report of Directors
+Important Events after Reporting Period" of this annual report.
+2,340,845
+As a result of the foregoing, we had a profit of RMB2.2 billion in 2019, compared to a loss of RMB115.5 billion in
+2018.
+33
+MANAGEMENT DISCUSSION AND ANALYSIS
+Gross Profit and Gross Margin
+The following table sets forth our gross profit both in absolute amount and as a percentage of revenues, or gross
+margin, by segment in 2019 and 2018:
+Year Ended
+December 31, 2019
+December 31, 2018
+As a
+percentage
+As a
+percentage
+Amount
+of revenues
+Amount
+of revenues
+(RMB in thousands, except for percentages)
+Gross profit/(loss):
+Food delivery
+33
+2019 Annual Report Meituan Dianping
+Cost of revenues for our new initiatives and others businesses increase by 16.6% to RMB18.1 billion in 2019
+from RMB15.5 billion in 2018, mainly attributable to the increases in cost of goods sold, resulting from the growth
+of our B2B food distribution services and grocery retail business, delivery rider costs relating to the growth of
+Meituan Instashopping, and payment processing costs from our integrated payment services, partially offset by the
+decrease in depreciation expenses in our bike-sharing services and car-hailing driver-related costs.
+Cost of revenues for our in-store, hotel & travel businesses increased by 44.9% to RMB2.5 billion in 2019 from
+RMB1.7 billion in 2018. This increase was primarily attributable to the increases in online traffic costs, which was
+in line with the growth of our online marketing revenues, depreciation of property, plant and equipment, bandwidth
+and server custody fees relating to our data storage improvement project, and payment processing costs.
+New initiatives and others
+Total
+(53,519)
+(RMB in thousands, except for percentages)
+44,610,017
+2,529,117
+18,069,009
+68.4%
+3.9%
+27.7%
+32,874,886
+10,233,188
+65.6%
+3.5%
+15,502,428
+30.9%
+65,208,143
+100.0%
+50,122,320
+100.0%
+Cost of revenues for our food delivery business increased by 35.7% to RMB44.6 billion in 2019 from RMB32.9
+billion in 2018, primarily attributable to the increase in food delivery rider costs as a result of the increase in the
+volume of orders delivered.
+1,745,006
+18.7%
+In-store, hotel & travel
+19,746,355
+Net Provision for Impairment Losses on Financial Assets
+Our net provision for impairment losses on financial assets was RMB645.7 million in 2019, compared to RMB285.7
+million in 2018, primarily due to the increase in loan loss provision as our micro loan business grew.
+Fair Value Changes on Investments Measured at Fair Value Through Profit or Loss
+Our fair value changes on investments measured at fair value through profit or loss in 2019 decreased by RMB1.8
+billion compared to 2018, primarily due to less fair value gain from our investee companies.
+Other Gains, Net
+Our other gains, net in 2019 increased by RMB1.8 billion compared to 2018, primarily attributable to (i) an increase
+of RMB980.8 million in gains from investments in term deposits with initial terms of over three months and wealth
+management products, (ii) an increase of RMB391.2 million in subsidies and tax preference, (iii) gains of RMB176.9
+million from the remeasurement of investments, and (iv) an increase of RMB131.5 million in gains from the disposal
+of investments.
+Operating Profit/(Loss)
+As a result of the foregoing, our operating profit in 2019 was RMB2.7 billion, compared to an operating loss of
+RMB11.1 billion in 2018.
+Our general and administrative expenses decreased to RMB4.3 billion in 2019 from RMB5.5 billion in 2018 and
+decreased to 4.4% from 8.5% as a percentage of revenues. Excluding the effect of RMB1.3 billion of impairment
+provision of intangible assets, which resulted from the change in our branding strategy for the bike-sharing services,
+and RMB132.0 million and RMB14.9 million of impairment provision for Mobike's overseas restructuring in 2018 and
+2019, respectively, our general and administrative expenses increased by RMB256.0 million on a year-over-year
+basis, primarily attributable to an increase of RMB398.2 million in employee benefits expenses.
+Fair Value Changes of Convertible Redeemable Preferred Shares
+2019 Annual Report Meituan Dianping
+35
+MANAGEMENT DISCUSSION AND ANALYSIS
+Profit/(Loss) before Income Tax
+Primarily as a result of the foregoing, our profit before income tax in 2019 was RMB2.8 billion, compared to a loss
+of RMB115.5 billion in 2018.
+Income Tax Expenses
+We had income tax expenses of RMB526.2 million in 2019, compared to income tax expenses of RMB1.9 million in
+2018, primarily due to the increase in net profits from some of our taxable entities.
+Profit/(Loss) for the Year
+Fair value changes of convertible redeemable preferred shares were nil in 2019 as a result of the completion of our
+initial public offering in September 2018, compared to a loss of RMB104.6 billion in the same period of 2018.
+Important Events after Reporting Date
+General and Administrative Expenses
+Research and Development Expenses
+88.6%
+5,268,197
+14,095,355
+13.8%
+89.0%
+New initiatives and others
+11.5%
+(4,258,594)
+(37.9%)
+Total
+Our research and development expenses increased to RMB8.4 billion in 2019 from RMB7.1 billion in 2018, and
+decreased to 8.7% from 10.8% as a percentage of revenues. This increase was primarily attributable to an increase
+of RMB1.2 billion in employee benefits expenses.
+32,320,388
+15,104,958
+23.2%
+As a result of the foregoing, our gross profit in 2019 and 2018 was RMB32.3 billion and RMB15.1 billion,
+respectively. The gross margin of our food delivery business improved by 4.9 points on a year-over-year basis
+as we enhanced our delivery network efficiency through economy of scale and expanded our service offering
+to merchants, including online marketing services. The gross margin of our in-store, hotel & travel businesses
+remained relatively stable on a year-over-year basis. The gross margin of our new initiatives and others businesses
+turned to positive 11.5% in 2019, representing an improvement of 49.4 points on a year-over-year basis, mainly
+due to (i) improved gross margin of our bike-sharing services as we phased out the old bikes and replaced them
+with new Meituan Bikes with longer useful lives, (ii) narrowed losses of our car-hailing services as we reduced the
+incentives paid to drivers, (iii) positive gross margin of Meituan Instashopping benefiting from the improvement of
+our delivery network efficiency, and (iv) change in product and service mix.
+Selling and Marketing Expenses
+Our selling and marketing expenses increased to RMB18.8 billion in 2019 from RMB15.9 billion in 2018, and
+decreased to 19.3% from 24.3% as a percentage of total revenues. This increase in amount was primarily
+attributable to (i) an increase of RMB2.7 billion in Transacting User incentives, as we extended more subsidies to
+support business growth, especially for hotel booking and food delivery businesses, (ii) an increase of RMB755.1
+million in employee benefits expenses, due to the increase in both average salaries and benefits and share-based
+compensation expenses of our selling and marketing personnel, and (iii) an increase of RMB240.4 million in
+depreciation and rental expenses, mainly driven by the growth of our grocery retail and B2B food supply chain
+businesses. Promotion and advertising expenses decreased by RMB1.1 billion on a year-over-year basis, mainly
+resulting from our efforts on exploring more effective marketing channels. The decrease in percentage of total
+revenues was attributable to our improved sales productivity and marketing efficiency.
+34
+Meituan Dianping 2019 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+33.1%
+56,875
+(116,427)
+(169,679)
+(38,235)
+4,252,292
+Adjusted EBITDA
+7,253,634
+(4,733,831)
+Represents gains or losses from fair value changes on investments, including (i) fair value changes on investments
+measured at fair value through profit or loss and (ii) dilution gain.
+(2)
+Represents gains or losses from disposal of investments and subsidiaries.
+(3)
+Certain contractual rights attached to an investment previously classified as investment accounted for using equity method
+have been changed, so we remeasured the investment with RMB176.9 million gains and re-designated the investment to
+financial assets at fair value through profit or loss in 2019.
+Meituan Dianping 2019 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+(4)
+Represents impairment provision of intangible assets resulting from the change in the branding strategy for our bike-sharing
+services.
+(5)
+(6)
+3,654,793
+Represents income tax effects on non-IFRS adjustments.
+Depreciation on property, plant and equipment (6)
+528,817
+Share of (gains)/losses of investments accounted for
+using equity method
+(107,353)
+48,267
+Finance income
+(166,217)
+(294,047)
+191,042
+44,732
+Finance costs
+Other (gains) except for (gains)/losses related to
+fair value change, disposal and remeasurement of
+investments and subsidiaries
+(2,061,842)
+Amortization of software and others
+(721,016)
+451,241
+The RMB3.7 billion depreciation on property, plant and equipment in 2019 included RMB820.9 million depreciation of
+right-of-use assets as a result of the adoption of IFRS16 Leases. This expense was used to be recognized as rental,
+facilities and utilities in prior years.
+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 RMB13.4 billion and
+short-term investments of RMB49.4 billion as of December 31, 2019, compared to the balance of RMB17.0 billion
+and RMB41.8 billion as of December 31, 2018.
+19,408,839
+Exchange (loss)/gain on cash and cash equivalents
+(173,442)
+1,009,587
+Cash and cash equivalents reclassified from the
+assets classified as held for sale/
+(included in the assets classified as held for sale)
+11,466
+(51,524)
+Cash and cash equivalents at the end of the year
+13,396,185
+17,043,692
+2019 Annual Report Meituan Dianping
+39
+In-store, hotel & travel
+17,043,692
+Cash and cash equivalents at the beginning of the year
+(3,323,210)
+(3,485,531)
+The following table sets forth our cash flows for the years indicated:
+Year Ended
+December 31,
+December 31,
+2019
+2018
+(RMB in thousands)
+557,709
+Net cash generated from/(used in) operating activities
+Net cash used in investing activities
+(10,174,018)
+(9,179,818)
+(23,438,686)
+Net cash generated from financing activities
+1,114,267
+29,295,294
+Net decrease in cash and cash equivalents
+5,574,220
+tax effects on non-IFRS adjustments
+Income tax expenses/(credits), except for
+Adjusted for:
+(2)
+Represents gains or losses from disposal of investments and subsidiaries.
+(3)
+Represents impairment provision of intangible assets resulting from the change in the branding strategy for our bike-sharing
+services.
+(4)
+Represents income tax effects on non-IFRS adjustments.
+(5)
+The RMB547.2 million depreciation on property, plant and equipment for the fourth quarter of 2019 included RMB194.6
+million depreciation of right-of-use assets as a result of the adoption of IFRS16 Leases. This expense was used to be
+recognized as rental, facilities and utilities in prior years.
+2019 Annual Report Meituan Dianping
+37
+38
+88
+(1)
+MANAGEMENT DISCUSSION AND ANALYSIS
+Year Ended
+Represents gains or losses from fair value changes on investments, including (i) fair value changes on investments
+measured at fair value through profit or loss and (ii) dilution gain.
+(1)
+2,285,301
+(854,601)
+45,095
+15,407
+49,011
+(742,857)
+(163,086)
+(613,445)
+Amortization of software and others
+December 31,
+135,776
+131,037
+Depreciation on property, plant and equipment (5)
+547,213
+1,361,812
+693,563
+Adjusted EBITDA
+2,178,650
+128,795
+(24,329)
+2019
+(RMB in thousands)
+663,268
+Impairment and expense provision for
+Mobike restructuring plan
+88,612
+358,790
+Impairment of intangible assets (4)
+1,346,000
+Net provision for impairment losses on financial assets
+57,333
+Tax effects on non-IFRS adjustments (5)
+(31,486)
+171,567
+Adjusted net profit/(loss)
+4,656,685
+(8,345,621)
+662,190
+Amortization of intangible assets resulting from acquisitions
+(176,880)
+(Gains) from the remeasurement of investments (3)
+Profit/(loss) for the year
+Adjusted for:
+Fair value changes of convertible redeemable preferred shares
+2,236,165
+(115,492,695)
+-
+104,606,058
+December 31,
+2018
+Share-based compensation expenses
+1,865,113
+Fair value (gains) on investments (1)
+(169,059)
+(1,834,296)
+(Gains) on disposal of investments and subsidiaries (2)
+(201,061)
+(29,426)
+2,190,871
+Food delivery
+Other gains, net
+of revenues
+Profit/(loss) for the year
+Income tax expenses
+(115,490,807)
+2,762,388
+Profit/(loss) before income tax
+(48,267)
+107,353
+Share of gains/(losses) of investments accounted for
+(526,223)
+294,047
+(44,732)
+(104,606,058)
+166,217
+(191,042)
+Finance costs
+Finance income
+(11,085,797)
+2,679,860
+Operating profit/(loss)
+748,356
+2,531,143
+Fair value changes of convertible redeemable preferred shares
+(1,888)
+2,236,165
+(115,492,695)
+percentage
+As a
+December 31, 2018
+December 31, 2019
+Year Ended
+The following table sets forth our revenues by segment in absolute amount and as a percentage of total revenues in
+2019 and 2018:
+Revenues by Segment
+Our revenues increased by 49.5% to RMB97.5 billion in 2019 from RMB65.2 billion in 2018. The increase was
+primarily driven by (i) the increase in Gross Transaction Volume on our platform to RMB682.1 billion in 2019 from
+RMB515.6 billion in 2018, which was in turn driven by the increase in the number of Transacting Users and their
+purchase frequency, (ii) the increase in Monetization Rate to 14.3% in 2019 from 12.6% in 2018, and (iii) our
+exploration of new initiatives.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Revenues
+(8,345,621)
+4,656,685
+(4,733,831)
+7,253,634
+Meituan Dianping 2019 Annual Report
+30
+Adjusted net profit/(loss)
+Adjusted EBITDA
+Non-IFRS measures:
+1,836,382
+As a
+percentage
+77,699
+Fair value changes on investments measured
+786,032
+Interest revenue
+47,012,249
+9,391,406
+15,840,078
+Online marketing services
+65,525,997
+Commission
+Revenues
+Other services and sales
+(RMB in thousands)
+2019
+December 31,
+December 31,
+Year Ended
+The following table sets forth the comparative figures for the years ended December 31, 2019 and 2018:
+Year ended December 31, 2019 Compared to Year ended December 31, 2018
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of revenues:
+2018
+15,376,424
+456,077
+8,367,546
+97,528,531
+(285,655)
+(645,685)
+Net provision for impairment losses on financial assets
+(5,546,037)
+(4,338,954)
+General and administrative expenses
+(7,071,900)
+(8,445,664)
+Research and development expenses
+(15,871,901)
+(18,819,067)
+Selling and marketing expenses
+15,104,958
+32,320,388
+Gross profit
+(50,122,320)
+(65,208,143)
+Cost of revenues
+65,227,278
+at fair value through profit or loss
+of total
+using equity method
+Amount
+97,528,531
+Total
+13.5%
+8,823,623
+16.6%
+16,162,456
+(including interest revenue)
+14.4%
+100.0%
+9,391,406
+15,840,078
+72.1%
+47,012,249
+67.2%
+65,525,997
+Other services and sales
+Online marketing services
+Commission
+16.2%
+65,227,278
+100.0%
+Our commission revenues increased by 39.4% to RMB65.5 billion in 2019 from RMB47.0 billion in 2018, primarily
+due to the substantial growth of our GTV, especially from our food delivery business.
+Amount
+of revenues
+Amount
+of total cost
+of total cost
+As a
+percentage
+As a
+percentage
+December 31, 2018
+December 31, 2019
+Year Ended
+The following table sets forth our cost of revenues by segment in 2019 and 2018:
+of total
+Meituan Dianping 2019 Annual Report
+32
+32
+Our cost of revenues increased by 30.1% to RMB65.2 billion in 2019 from RMB50.1 billion in 2018. This increase
+was attributable to our revenues growth in 2019, especially the strong growth of our food delivery segment and our
+new initiatives and others segment.
+Cost of Revenues
+Our other services and sales revenues increased by 83.2% to RMB16.2 billion in 2019 from RMB8.8 billion in 2018,
+primarily due to the growth of revenues from our B2B food distribution services, micro loan business, grocery retail
+business, bike-sharing services and car-hailing services.
+Our online marketing services revenues increased by 68.7% to RMB15.8 billion in 2019 from RMB9.4 billion in
+2018, primarily due to the increase in the number of online marketing Active Merchants and the average revenue
+per online marketing Active Merchant.
+Revenues:
+(RMB in thousands, except for percentages)
+MANAGEMENT DISCUSSION AND ANALYSIS
+Amount
+11,243,834
+21.0%
+20,409,854
+New initiatives and others
+24.3%
+15,840,361
+22.8%
+22,275,472
+In-store, hotel & travel
+58.5%
+38,143,083
+56.2%
+Food delivery
+Revenues:
+(RMB in thousands, except for percentages)
+revenues
+Amount
+of total
+revenues
+revenues
+17.2%
+Total
+54,843,205
+100.0%
+Amount
+97,528,531
+of total
+As a
+percentage
+December 31, 2018
+December 31, 2019
+Year Ended
+The following table sets forth our revenues by type in absolute amount and as a percentage of total revenues in
+2019 and 2018:
+Revenues by Type
+As a
+percentage
+revenues
+31
+65,227,278
+2019 Annual Report Meituan Dianping
+Our revenues from the new initiatives and others segment increased by 81.5% to RMB20.4 billion in 2019 from
+RMB11.2 billion in 2018, primarily due to the increases in the revenues from the B2B food distribution services,
+micro loan business, Meituan Instashopping and integrated payment services.
+Our revenues from the in-store, hotel & travel segment increased by 40.6% to RMB22.3 billion in 2019 from
+RMB15.8 billion in 2018, primarily due to (i) the increase in the average revenue per Active Merchant of our in-store
+and travel businesses, and (ii) the increase in the number of domestic room nights consumed on our platform.
+Our revenues from the food delivery segment increased by 43.8% to RMB54.8 billion in 2019 from RMB38.1 billion
+in 2018, 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 their purchase frequency, and the increase in
+average order value, and (ii) the increase in Monetization Rate.
+MANAGEMENT DISCUSSION AND ANALYSIS
+100.0%
+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.
+Mu Rongjun (), aged 40, 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.
+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.
+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 (E), aged 41, 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.
+The biographical details of the Directors and senior management of the Company are set out as follows:
+DIRECTORS
+DIRECTORS AND SENIOR MANAGEMENT
+42
+41
+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.
+2019 Annual Report Meituan Dianping
+Executive Directors
+Wang Huiwen (EX), aged 41, 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. He will
+withdraw from his day-to-day management duties in the Company in December 2020. Wang Huiwen will continue
+to perform his director's duties by devoting himself to the strategic planning, organizational growth and talent
+development of the Company after withdrawing from his day-to-day duties.
+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.
+Wang Huiwen received his bachelor's degree in electronic engineering from Tsinghua University in July 2001.
+Meituan Dianping 2019 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Non-executive Directors
+Lau Chi Ping Martin (), aged 47, 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.
+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 52, 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), 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.
+2019 Annual Report Meituan Dianping
+43
+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 and external consultants.
+43
+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.
+As of December 31, 2019, we had a total of approximately 54,580 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.
+Net Cash Generated from Financing Activities
+As of December 31, 2019, we did not have other plans for material investments and capital assets.
+DIRECTORS AND SENIOR MANAGEMENT
+49
+2019 Annual Report Meituan Dianping
+For the year ended December 31, 2019, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+Major Suppliers
+For the year ended December 31, 2019, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+Major Customers
+MANAGEMENT DISCUSSION AND ANALYSIS
+Net Cash Generated from/(Used in) Operating Activities
+Net cash generated from/(used in) operating activities primarily consists of our profit for the year and non-cash
+items, such as depreciation and amortization, share based payments, and adjusted by changes in working capital.
+For the year ended December 31, 2019, net cash generated from operating activities was RMB5.6 billion, which
+was primarily attributable to our profit before income tax of RMB2.8 billion, as adjusted by (i) non-cash items,
+which primarily comprised depreciation and amortization of RMB4.8 billion and share-based payments of RMB2.2
+billion, partially offset by dividend income and interest classified as investing cash flows of RMB1.5 billion, and (ii)
+changes in working capital, which primarily comprised an increase in restricted cash of RMB4.5 billion, an increase
+in prepayments, deposits and other assets of RMB1.7 billion, a decrease in deposit from transacting users of
+RMB866.0 million, and an increase in trade receivables of RMB273.0 million, partially offset by an increase in other
+payables and accruals of RMB1.5 billion, an increase in trade payables of RMB1.3 billion, an increase in deferred
+revenues of RMB1.2 billion, and an increase in advance from transacting users of RMB640.9 million.
+Net Cash Used in Investing Activities
+For the year ended December 31, 2019, net cash used in investing activities was RMB10.2 billion, which was mainly
+attributable to purchase of short-term investments of RMB177.2 billion, purchase of property, plant and equipment
+of RMB3.0 billion and payments for business combinations, net of cash acquired of RMB1.4 billion, partially offset
+by proceeds from disposals of short-term investments of RMB170.2 billion, and interest income received of RMB1.3
+billion.
+For the year ended December 31, 2019, net cash generated from financing activities was RMB1.1 billion, which was
+mainly attributable to proceeds from borrowings of RMB4.1 billion and proceeds from the exercise of options and
+vested RSUs of RMB444.9 million, partially offset by repayments of borrowings of RMB2.4 billion, lease payments
+of RMB785.8 million and finance costs paid of RMB218.7 million.
+Gearing ratio
+As of December 31, 2019, our gearing ratio, calculated as total borrowings divided by total equity attributable to
+equity holders of the Company was approximately 4.4%.
+Contingent Liabilities
+Future Plans for Material Investments and Capital Assets
+As of December 31, 2019, the Company had securitized certain loan receivables for asset-backed securities.
+Details are set out in Note 31 to the consolidated financial statements.
+Pledge of Assets
+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.
+Foreign Exchange Risk
+For the year ended December 31, 2019, we did not have any material acquisitions or disposals of subsidiaries and
+affiliated companies.
+Employees
+Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies
+Significant Investments Held
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan Dianping 2019 Annual Report
+40
+40
+The Group did not have any material contingent liabilities as of December 31, 2019, except for the financial
+guarantee contracts in the total amount of RMB15.0 million as disclosed in Note 3.1(c) to the consolidated financial
+statements.
+As of December 31, 2019, we did not hold any significant investments in the equity interests of any other
+companies.
+Neil Nanpeng Shen has been an independent non-executive director of Trip.com Group Ltd. (NASDAQ Ticker:
+TCOM), formerly Ctrip.com International, Ltd. (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.
+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.
+Orr Gordon Robert Halyburton, aged 57, 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.
+Zhang Chuan (II), aged 44, 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.
+2019 Annual Report Meituan Dianping
+47
+48
+48
+REPORT OF DIRECTORS
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+GLOBAL OFFERING
+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.
+PRINCIPAL ACTIVITIES
+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.
+RESULTS
+The results of the Group for the year ended December 31, 2019 are set out in the consolidated statement of
+comprehensive income contained in this annual report.
+DIVIDEND POLICY AND FINAL DIVIDENDS
+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.
+Independent Non-executive Directors
+MAJOR CUSTOMERS AND SUPPLIERS
+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.
+approximately 10% for working capital and general corporate purpose.
+•
+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
+Chen Liang received his bachelor's degree in mechatronic engineering from South China University of Technology
+in July 2002.
+approximately 35% to upgrade our technology and enhance our research and development capabilities;
+USE OF NET PROCEEDS FROM LISTING
+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.
+REPORT OF DIRECTORS
+BUSINESS REVIEW
+Meituan Dianping 2019 Annual Report
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2019.
+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, 2019, 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, namely:
+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.
+approximately 35% to development new services and products;
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+Chen Liang (), aged 40, is a Senior Vice President and is responsible for overseeing the Company's grocery
+retail business.
+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.
+Meituan Dianping 2019 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Leng Xuesong (^), aged 51, 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 till now.
+Shum Heung Yeung Harry (), aged 53, 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.
+2019 Annual Report Meituan Dianping
+44
+45
+45
+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.
+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).
+Chen Shaohui (), aged 39, 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.
+Meituan Dianping 2019 Annual Report
+Wang Huiwen (±), aged 41, 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.
+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.
+Wang Xing (E), aged 41, 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.
+✓ DIRECTORS AND SER
+Mu Rongjun (), 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.
+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.
+46
+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.
+SENIOR MANAGEMENT
+(2)
+The letter "L" denotes the person's Long Position in such Shares.
+4,985,269
+Notes:
+Beneficial interest (L)
+SHUM Heung
+Yeung Harry (6)
+Beneficial interest (L)
+LENG Xuesong (6)
+Beneficial interest (L)
+ORR Gordon Robert
+Halyburton (6)
+(1)
+Interest in controlled corporations (L) Sequoia Capital China Funds,
+Growth Funds and Other
+Controlled Entities
+Class B Shares
+Sequoia Capital Global
+9.14%
+463,634,336
+SHEN Nanpeng Neil(5)
+Class B Shares
+0.30%
+15,180,939
+Beneficial interest (L)
+0.10%
+Class B Shares
+0.12%
+Beneficial interest (L)
+Class B Shares
+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, 2019, (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 4,412,501 Class B Shares were issued to Galileo Space Limited with respect to the vesting 4,412,501 RSUs under the
+Pre-IPO ESOP.
+0.00%
+SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND
+UNDERLYING SHARES
+5,963,001
+Save as disclosed above, as of December 31, 2019, 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, 2019.
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+As at December 31, 2019, the Company had 5,808,400,069 issued Shares in total, comprising of 735,568,783 Class A
+Shares and 5,072,831,286 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, 2019.
+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.
+(7)
+(6)
+REPORT OF DIRECTORS
+Meituan Dianping 2019 Annual Report
+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 8.07% interest in the share capital of the Company (or 9.24% 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 4,985,269 Class B Shares. Other Controlled Entities refers to URM Management Limited and
+N&J Investment Holdings Limited (which hold approximately 0.0007% and 0.05%, respectively, of the outstanding Shares)
+and are controlled by Neil Nanpeng Shen.
+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. and Sequoia Capital China Growth Fund IV, L.P. (which hold approximately 0.96%,
+0.11%, 0.15%, 2.93%, 0.07%, 0.49%, 0.75%, 0.01%, 0.04%, 0.01%, 0.91%, 0.25%, 0.02% and 0.15%, 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 0.44%, 0.01%
+and 0.62%, 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.
+(4)
+REPORT OF DIRECTORS
+56
+55
+2019 Annual Report Meituan Dianping
+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, 2019, 333,334 Class B Shares were issued to Shared Vision with respect to the vesting of 333,334 RSUs granted to Mu
+Rongjun under the Pre-IPO ESOP.
+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.
+0.00%
+60,000
+Class B Shares
+Class B Shares
+0.00%
+60,000
+Class B Shares
+60,000
+Galileo Space Limited
+Class A Shares
+Class B Shares
+4.95%
+36,400,000
+Beneficiary and founder of a Trust (L) Trust
+WANG Huiwen (4)
+Class B Shares
+0.11%
+5,666,666
+Beneficial interest (L)
+Class B Shares
+0.01%
+333,334
+Class A Shares
+As of December 31, 2019, 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:
+1.00%
+118,650,000
+Class A Shares
+7,330,000
+Shared Vision
+Interest in controlled corporation (L)
+Charmway Enterprises
+Interest in controlled corporation (L)
+Class A Shares
+16.13%
+118,650,000
+Day One Holdings Limited
+Interest in controlled corporation (L)
+Class A Shares
+16.13%
+16.13%
+2,134,660
+0.04%
+Class B Shares
+0.04%
+Class A Shares
+4.95%
+36,400,000
+of Shares (7)
+in each class
+of interest
+Approximate
+percentage
+of securities
+Number and class
+Kevin Sunny
+Interest in controlled corporation (L)
+Relevant company
+Nature of interest(1)
+chief executive
+Name of Director or
+REPORT OF DIRECTORS
+Meituan Dianping 2019 Annual Report
+5.4
+54
+Class B Shares
+0.04%
+2,134,660
+Class A Shares
+4.95%
+36,400,000
+Interest in controlled corporation (L) Aim Mars Investment Limited
+Interest in controlled corporation (L)
+Approximate
+percentage of
+REPORT OF DIRECTORS
+Capacity/Nature of interest
+THL A Limited
+0.09%
+4,473,024 Class B Shares
+Beneficial interest
+TPP Follow-on I Holding C Limited (3)
+0.06%
+3,150,931 Class B Shares
+Beneficial interest
+TPP Follow-on I Holding B Limited (3)
+0.49%
+25,000,000 Class B Shares
+Beneficial interest
+Beneficial interest
+Great Summer Limited (3)
+8,850,245 Class B Shares
+Beneficial interest
+7.68%
+389,413,655 Class B Shares
+Beneficial interest
+12.29%
+623,420,905 Class B Shares
+Beneficial interest
+Huai River Investment Limited (3)
+Tencent Mobility Limited (3)
+Morespark Limited (3)
+Class B Shares - Tencent
+1.00%
+7,330,000 Class A Shares
+0.17%
+Interest in controlled corporation (2)
+149,261 Class B Shares
+Beneficial interest
+118,650,000
+59
+2019 Annual Report Meituan Dianping
+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 0.62% interest in the share capital of the Company (or 0.71% 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 0.45% interest in the share capital of the Company (or 0.52% 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. ("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 4,985,269 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 0.0007% and 0.05%, 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 8.07% interest in the share capital of the
+Company (or 9.24% of the total issued Class B Shares).
+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. and Sequoia Capital China Growth Fund IV, L.P. (which hold approximately 0.96%,
+0.11%, 0.15%, 2.93%, 0.07%, 0.49%, 0.75%, 0.01%, 0.04%, 0.01%, 0.91%, 0.25%, 0.02% and 0.15%, 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 0.44%, 0.01%
+and 0.62%, 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.
+(4)
+REPORT OF DIRECTORS
+Meituan Dianping 2019 Annual Report
+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. THL A Limited and THL
+A25 Limited, companies incorporated under the laws of the British Virgin 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.
+0.00%
+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.
+(2)
+(1)
+Notes:
+0.10%
+9.14%
+463,634,336 Class B Shares
+4,985,269 Class B Shares
+Beneficial interest
+Other
+Sequoia Capital Global Growth
+Funds and Other Controlled
+Entities (4)
+Class B Shares- Sequoia
+Sequoia Capital China Funds,
+THL A25 Limited
+0.00%
+1,927 Class B Shares
+(3)
+16.13%
+118,650,000 Class A Shares
+Founder of a trust (2)
+83,588,783 Class A Shares
+Interest in controlled corporation (1)
+66.56%
+489,600,000 Class A Shares
+Founder of a trust(1)
+66.56%
+489,600,000 Class A Shares
+Beneficiary of a trust (1)
+66.56%
+489,600,000 Class A Shares
+Trustee
+TMF (Cayman) Ltd.
+Wang Xing
+11.36%
+66.56%
+Interest in controlled corporation
+Songtao Limited (1)
+11.36%
+83,588,783 Class A Shares
+Beneficial interest
+66.56%
+489,600,000 Class A Shares
+Beneficial interest
+Class A Shares- Wang Xing
+Crown Holdings (1)
+Share Patience (1)
+class of Shares (5)
+interest in each
+Number and class of
+Shares held
+489,600,000 Class A Shares
+2019 Annual Report Meituan Dianping
+57
+40
+16.13%
+118,650,000 Class A Shares
+Beneficiary of a trust(2)
+Mu Rongjun
+16.13%
+118,650,000 Class A Shares
+Trustee
+TMF (Cayman) Ltd
+16.13%
+118,650,000 Class A Shares
+Interest in controlled corporation
+Day One Holdings Limited (2)
+1.00%
+7,330,000 Class A Shares
+Beneficial interest
+16.13%
+118,650,000 Class A Shares
+Beneficial interest
+Class A Shares-Mu Rongjun
+Charmway Enterprises (2)
+Shared Vision (2)
+class of Shares(5)
+interest in each
+Number and class of
+Shares held
+Capacity/Nature of interest
+Name of Substantial Shareholder
+percentage of
+Approximate
+58
+Name of Substantial Shareholder
+Beneficiary and founder of a Trust (L) Trust
+2,134,660
+Class B Shares
+Dr. Shum Heung Yeung Harry (¥)
+In accordance with Article 17.18 of the Articles of Association, Orr Gordon Robert Halyburton, Leng Xuesong 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.
+Reference is also made to our announcement dated January 20, 2020 in connection with the change of executive
+responsibilities of our executive Director, Wang Huiwen. In December 2020, Wang Huiwen will withdraw from his
+day-to-day management duties in the Company. Thereafter, he will remain as a director of the Company and hence
+there will be no change to his weighted voting rights in the Company. Wang Huiwen will continue to perform his
+duties as Director by devoting himself to the strategic planning, organizational growth and talent development of
+the Company after withdrawing from his day-to-day management duties.
+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 Reporting Period.
+2019 Annual Report Meituan Dianping
+Mr. Leng Xuesong (A)
+51
+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, 2019.
+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
+RMB500,000 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.
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+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.
+MANAGEMENT CONTRACTS
+REPORT OF DIRECTORS
+Independent Non-executive Directors
+REPORT OF DIRECTORS
+Meituan Dianping 2019 Annual Report
+MU Rongjun (3)
+REPORT OF DIRECTORS
+PROPERTY, PLANT AND EQUIPMENT
+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.
+SHARE CAPITAL
+Details of movements in the share capital of the Group during the Reporting Period are set out in Note 25 to the
+consolidated financial statements.
+RESERVES
+Details of movements in the reserves of the Group during the Reporting Period are set out on page 154 in the
+consolidated statement of changes in equity.
+DISTRIBUTABLE RESERVES
+As of December 31, 2019, the Company's reserves available for distribution, amounted to approximately RMB260.4
+billion.
+BANK LOANS AND OTHER BORROWINGS
+Particulars of bank loans and other borrowings of the Group as of December 31, 2019 are set out in Note 31 to the
+consolidated financial statements.
+DIRECTORS
+The Directors during the Reporting Period and up to date of this annual report are:
+Executive Directors
+Mr. Wang Xing (E) (Chairman of the Board)
+Mr. Mu Rongjun ()
+Mr. Wang Huiwen (EX)
+Non-executive Directors
+Mr. Lau Chi Ping Martin ()
+Mr. Neil Nanpeng Shen ()
+50
+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.
+52
+Mr. Orr Gordon Robert Halyburton
+Meituan Dianping 2019 Annual Report
+Relevant company
+of securities
+of Shares (7)
+WANG Xing(2)
+Beneficiary and founder of a Trust (L) Trust
+489,600,000
+Class A Shares
+66.56%
+Interest in controlled corporation (L) Songtao Limited
+66.56%
+Class A Shares
+Interest in controlled corporation (L)
+Crown Holdings
+489,600,000
+66.56%
+Class A Shares
+Interest in controlled corporation (L)
+Shared Patience
+83,588,783
+Class A Shares
+11.36%
+318
+52
+Nature of interest(1)
+of interest
+in each class
+489,600,000
+Number and class
+0.00%
+REPORT OF DIRECTORS
+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
+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.
+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.
+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.
+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.
+RETIREMENT AND EMPLOYEE BENEFITS SCHEME
+Details of the retirement and employee benefits scheme of the Company are set out in Note 8 to the consolidated
+financial statements.
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+As of December 31, 2019, 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:
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+chief executive
+percentage
+Approximate
+Interests of Directors and Chief Executives in the Company
+Name of Director or
+53
+2019 Annual Report Meituan Dianping
+REPORT OF DIRECTORS
+as of
+RSUs
+RSUs
+outstanding
+RSUs vested
+cancelled
+lapsed
+RSUs
+RSUs
+outstanding
+during the
+Reporting
+during the
+as of
+January 1,
+Reporting
+Reporting
+December 31,
+Name
+Date of Grant
+Vesting Period
+underlying
+during the
+underlying
+62,912,454
+Number of
+54,144 7,430,315
+2019
+US$5.18
+Total
+256,313,002
+175,860,149 HKD59.5918
+US$0.000017-
+54,144 7,430,315
+72,968,394
+US$5.18
+62
+Shares
+62
+REPORT OF DIRECTORS
+Notes:
+(1)
+(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.
+Including the options which have been exercised before the Reporting Period but the Shares were issued to the grantees
+during the Reporting Period. The Shares underlying such exercised options were issued to the grantees in March 2019.
+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
+Meituan Dianping 2019 Annual Report
+Period (1)
+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.
+Period
+247,947,680
+138,531,318
+16,982,191
+0
+92,434,171
+Including the RSUs which have vested before the Reporting Period but the Shares were issued to the grantees during the
+Reporting Period. The Shares underlying such vested RSUs were issued to the grantees in March 2019.
+2019 Annual Report Meituan Dianping
+63
+64
+REPORT OF DIRECTORS
+(1)
+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.
+Qualifying Participants
+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.
+Maximum Number of Class B Shares
+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 8.17% 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.
+173,337,489 HKD59.6229
+US$0.000017-
+Meituan Dianping 2019 Annual Report
+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 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:
+Note:
+Total
+81,642,506
+2019
+Directors
+Mu Rongjun
+Wang Huiwen
+July 1, 2017
+6 years
+January 1, 2016 to
+July 1, 2018
+4 to 6 years
+1,000,000
+15,700,000
+333,334
+0
+0
+666,666
+5,575,001
+0
+0
+10,124,999
+Other Employees
+December 29, 2010 to
+August 2, 2018
+0 to 6 years
+231,247,680
+132,622,983
+16,982,191
+0
+Period
+US$5.18
+Name
+US$0.000017-
+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.
+2019 Annual Report Meituan Dianping
+61
+REPORT OF DIRECTORS
+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.
+Payment
+Outstanding Share Options Granted under the Pre-IPO ESOP
+The table below shows the details of share options granted to the Directors and other employees under the Pre-IPO
+ESOP.
+Number of
+Shares
+Number of
+underlying
+options
+exercised
+Weighted
+Average price
+Number of
+options
+during the
+outstanding Reporting Period
+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.
+of Class B
+Shares
+immediately
+iii.
+Time and conditions of exercise
+As at December 31, 2019, the Company had 5,808,400,069 issued Shares in total, comprising of 735,568,783 Class A
+Shares and 5,072,831,286 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, 2019.
+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.
+Administration
+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.
+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.
+60
+Meituan Dianping 2019 Annual Report
+Grant of Awards
+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.
+Exercise price
+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.
+60
+Number of
+Number of
+options
+July 1, 2017 to
+6 years
+July 1, 2018
+US$3.86-
+US$5.18
+5,000,000
+0
+N/A
+0
+0
+5,000,000
+Mu Rongjun
+Wang Huiwen
+US$1.005-
+7,578,600
+US$5.18
+2,522,660 HKD57.4509
+US$1.005-
+0
+0
+5,055,940
+US$3.86
+Other Employees
+May 31, 2006 to 0.5 to 6 years
+August 1, 2018
+February 1, 2015 4-6 years
+to July 1, 2018
+Directors
+2019
+Period
+options
+lapsed
+cancelled
+Shares
+underlying
+options
+outstanding
+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.
+Date of Grant
+Vesting
+Period (¹)
+as of
+January 1,
+and the
+before the
+during the
+during the
+as of
+exercise
+date of
+Reporting
+Reporting
+December 31,
+Exercise Price
+2019
+price(2)
+exercise
+Period
+243,734,402
+As of December 31, 2019, a total of 740,000 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 dated July 5, 2019.
+Shares
+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).
+(ii) 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.
+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 Number of
+Shares Shares
+underlying
+RSUs
+Number of
+Shares
+underlying
+underlying
+RSUS
+RSUS
+RSUs
+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
+RSUs
+granted
+RSUs vested
+cancelled
+as of
+during the
+during the
+during the
+lapsed
+during the
+outstanding
+as of
+outstanding
+January 1,
+(i)
+Termination
+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.
+2019 Annual Report Meituan Dianping
+67
+68
+88
+REPORT OF DIRECTORS
+Eligible Participants
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+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.
+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.
+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.
+Grant of Award
+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 4.68% 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.
+Meituan Dianping 2019 Annual Report
+REPORT OF DIRECTORS
+As of December 31, 2019, 60,976,982 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
+220,333,872 Shares (including Award Shares which have been cancelled or forfeited in accordance with the Post-
+IPO Share Award Scheme), representing 3.79% of the issued share capital of the Company (on a one share one
+vote basis) as of the date of this annual report.
+Awards
+Reporting
+Reporting
+Reporting
+18,750
+00 41,250
+Shum Heung
+Yeung Harry
+November 23,
+2018
+Other Employees
+October 4, 2018
+to October 18, 2019
+commencing from December 20,
+2018 until September 20, 2022
+6.25% to vest in each quarter
+commencing from December 20,
+2018 until September 20, 2022
+4 years
+60,000
+0
+18,750
+0
+0 0
+10,746,663
+47,430,198
+1,237,590 6,354,505
+0 50,584,766
+Total
+10,926,663 47,430,198
+1,293,840 6,354,505
+0 50,708,516
+2019 Annual Report Meituan Dianping
+69
+41,250
+60,000
+6.25% to vest in each quarter
+November 23,
+2018
+Reporting December 31,
+Name
+Date of Grant
+Vesting Period
+2019
+Period
+Period (1)
+Period
+Period
+2019
+Directors
+Orr Gordon Robert
+Halyburton
+November 23,
+2018
+6.25% to vest in each quarter
+60,000
+0
+18,750
+0
+0
+41,250
+commencing from December 20,
+2018 until September 20, 2022
+Leng Xuesong
+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.
+Maximum Entitlement of a Participant
+740,000
+0
+immediately
+before the
+date on
+Number of Number of
+Shares
+options
+Average
+Number of
+Shares
+exercised
+price of
+of the Shares
+Shares
+during the
+Class B
+Number of
+Number of
+underlying
+options options
+Reporting
+(5)
+options
+options
+underlying underlying
+options
+Closing price
+Number of
+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 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)
+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.
+2019 Annual Report Meituan Dianping
+65
+REPORT OF DIRECTORS
+Weighted
+Grant Offer Letter and Notification of Grant of Options
+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.
+99
+66
+Meituan Dianping 2019 Annual Report
+REPORT OF DIRECTORS
+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:
+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.
+outstanding
+granted
+Period immediately
+Period
+Period
+2019
+Other Employees
+July 5, 2019
+HK$70.0
+years
+HK$69.1
+0
+740,000
+exercise)
+0
+0
+0
+740,000
+Total
+Note:
+(1)
+0
+740,000
+0
+N/A
+N/A
+price
+Period
+2019
+lapsed
+cancelled outstanding
+which the
+during the
+and the
+before the
+during the
+during the as of
+Date of
+options were
+Vesting
+Exercise
+January 1,
+Reporting
+exercise
+date of
+Reporting
+Reporting December 31,
+Name
+Grant
+granted
+Period (¹)
+Price
+0
+REPORT OF DIRECTORS
+as of
+Shanghai Lutuan 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)
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(xi) Shanghai Hantao is owned by Wang Xing as to 95% and Mu Rongjun as to 5%.
+>" denotes a direct legal and beneficial ownership in the equity interest.
+"--->" denotes a contractual relationship.
+2019 Annual Report Meituan Dianping
+75
+75
+Beijing Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%; and
+(v)
+(iv) Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+ล
+Notes:
+Management and
+consulting services _
+100%
+WFOES
+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)
+(iii)
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+REPORT OF DIRECTORS
+(4)
+(5)
+"----” 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.
+Pursuant to the loan agreements entered into between the relevant WFOES (other than in the case of Beijing
+Mobike, Shanghai Hantao 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 on
+November 13, 2018 (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.
+Capital Injection to Beijing Sankuai Technology
+On December 1, 2019, Beijing Sankuai Online, being the WFOE, and Wang Xing and Mu Rongjun, being the
+Registered Shareholders of Beijing Sankuai Technology, entered into new loan agreements for the amount of
+approximately RMB1,757 million and RMB92.5 million, respectively (the "New BSO Loan Agreements”). Pursuant
+to the New BSO Loan Agreements, Beijing Sankuai Online agreed to provide loans to Wang Xing and Mu Rongjun
+to be used exclusively for the purpose of injecting to Beijing Sankuai Technology as share capital. The terms of the
+New BSO Loan Agreements are identical to the terms of the existing Loan Agreements entered into between the
+Registered Shareholders and Beijing Sankuai Online on August 21, 2018 save for the loan amount, and the existing
+Loan Agreements remain valid and in full force. The loans provided by Beijing Sankuai Online under the New BSO
+Loan Agreements only covered the amount of this injection. The reason for such injection of additional capital was
+to provide general working capital for the business of Beijing Sankuai Technology.
+Upon completion of the capital injection under the New BSO Loan Agreements, the relevant parties, including
+the Beijing Sankuai Online, Beijing Sankuai Technology and its Registered Shareholders, entered into a new
+set of Contractual Arrangements, including the powers of attorney, the amended and restated exclusive option
+agreement, the amended and restated equity pledge agreement, the New BSO Loan Agreements, the confirmations
+from such Registered Shareholder and the spouse undertakings on December 1, 2019 (collectively known as the
+“Beijing Sankuai Technology VIE Agreements”). The terms of the Beijing Sankuai Technology VIE Agreements are
+identical to the terms of the original Contractual Arrangements of Beijing Sankuai Technology, save for the loan
+amount and some conforming changes to reflect the capital injection.
+78
+Meituan Dianping 2019 Annual Report
+REPORT OF DIRECTORS
+Capital Injection to Beijing Sankuai Cloud
+On December 1, 2019, Sankuai Cloud Online, being the WFOE, and Wang Xing and Mu Rongjun, being the
+Registered Shareholders of Beijing Sankuai Cloud, entered into new loan agreements for the amount of
+approximately RMB817 million and RMB43 million, respectively (the "New SCO Loan Agreements"). Pursuant to
+the New SCO Loan Agreements, Sankuai Cloud Online agreed to provide loans to Wang Xing and Mu Rongjun
+to be used exclusively for the purpose of injecting to Beijing Sankuai Cloud as share capital. The terms of the
+New SCO Loan Agreements are identical to the terms of the existing Loan Agreements entered into between the
+Registered Shareholders and Sankuai Cloud Online on August 21, 2018 save for the loan amount, and the existing
+Loan Agreements remain valid and in full force. The loans provided by Sankuai Cloud Online under the New SCO
+Loan Agreements only covered the amount of this injection. The reason for such injection of additional capital was
+to provide general working capital for the business of Beijing Sankuai Cloud.
+Upon completion of the capital injection under the New SCO Loan Agreements, the relevant parties, including the
+Sankuai Cloud Online, Beijing Sankuai Cloud and its Registered Shareholders, entered into a new set of Contractual
+Arrangements, including the powers of attorney, the amended and restated exclusive option agreement, the
+amended and restated equity pledge agreement, the New SCO Loan Agreements, the confirmations from such
+Registered Shareholders and the spouse undertakings on December 1, 2019 (collectively known as the "Beijing
+Sankuai Cloud VIE Agreements"). The terms of the Beijing Sankuai Cloud VIE Agreements are identical to the terms
+of the original Contractual Arrangements of Beijing Sankuai Cloud, save for the loan amount and some conforming
+changes to reflect the capital injection.
+Pursuant to the above, both the New BSO Loan Agreements and the New SCO Loan Agreements constitute
+reproduction of the original Contractual Arrangements with loan arrangements, hence, are fully exempt from strict
+compliance with Chapter 14A of the Listing Rules (including but not limited to announcement and independent
+shareholders' requirements).
+The Foreign Investment Law
+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, replace 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
+2019 Annual Report Meituan Dianping
+Loan Agreements
+Our Company
+REPORT OF DIRECTORS
+2019 Annual Report Meituan Dianping
+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) (2019 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 comprise 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 dated August 21, 2018 entered into among the Onshore
+Holdcos and the WFOES on August 21, 2018 and the exclusive business cooperation agreement entered into
+among Shanghai Hantao and the WFOE on November 13, 2018 (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.
+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.
+16
+76
+Meituan Dianping 2019 Annual Report
+REPORT OF DIRECTORS
+Exclusive Option Agreements
+Under the exclusive option agreements entered into among the Onshore Holdcos, the WFOES and the Registered
+Shareholders on August 21, 2018 and the exclusive option agreement entered into among Shanghai Hantao, WFOE
+and the Registered Shareholders on November 13, 2018 (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 the WFOES, the Registered Shareholders and the Onshore
+Holdcos on August 21, 2018 and the equity pledge agreement entered into among Shanghai Hantao, WFOE and
+the Registered Shareholders on November 13, 2018 (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.
+Powers of Attorney
+Pursuant to the powers of attorney executed by the Registered Shareholders in connection with their rights in the
+Onshore Holdcos on August 21, 2018 and the powers of attorney executed by the Registered Shareholders in
+connection with their rights in Shanghai Hantao on November 13, 2018 (collectively, the "Powers of Attorney"),
+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.
+77
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the Contractual Arrangements:
+REPORT OF DIRECTORS
+Meituan Dianping 2019 Annual Report
+Shenzhen Tencent Computer is a subsidiary of Tencent, which is a substantial shareholder of the Company, and
+therefore a connected person of the Company.
+The annual cap for the year ended December 31, 2019 is RMB500 million, while the actual transaction amount for
+the year ended December 31, 2019 is approximately RMB386.1 million.
+Cloud Services and Technical Services Framework Agreement
+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, 2019 is RMB320 million, while the actual transaction amount for
+the year ended December 31, 2019 is approximately RMB132.4 million.
+2019 Annual Report Meituan Dianping
+71
+REPORT OF DIRECTORS
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+The Group has entered into the following non-exempt continuing connected transactions during the Reporting
+Period.
+Payment Services Framework Agreement
+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 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 expires on December 31, 2020.
+The annual cap for the year ended December 31, 2019 is RMB1.7 billion, while the actual transaction amount for
+the year ended December 31, 2019 is approximately RMB1,327.1 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
+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-mile, 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.
+Issue of Class B Shares to Connected Grantees of Restricted Share Units
+Marketing and Promotion Services Framework Agreement
+REPORT OF DIRECTORS
+(1) Including the RSUs which have vested before the Reporting Period but the Shares were issued to the grantees during the
+Reporting Period. The Shares underlying such vested RSUs were issued to the grantees in March 2019.
+EQUITY-LINKED AGREEMENTS
+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 the Reporting Period or subsisted at the end of 2019.
+PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
+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.
+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 Trip.com Group Ltd. (NASDAQ
+Tricker: TCOM), 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.
+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.
+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.
+10
+70
+Meituan Dianping 2019 Annual Report
+PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+The Group has entered into the following partially-exempt continuing connected transactions during the Reporting
+Period.
+79
+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.
+REPORT OF DIRECTORS
+The Auditor has performed agreed upon procedures regarding the continuing connected transactions entered into
+by the Group during the year ended December 31, 2019 as set out above and states that:
+(a)
+(b)
+(c)
+nothing has come to its attention that causes it to believe that the disclosed continuing connected
+transactions have not been approved by the Board;
+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;
+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;
+(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; and
+(e)
+nothing has come to its attention that causes it to believe that dividends or other distributions have been
+made by Consolidated Affiliated Entities to the registered shareholders which are not otherwise subsequently
+assigned or transferred to the Group.
+Certain related party transactions as disclosed in Note 36 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.
+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.
+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.
+74
+D. Pre-IPO ESOP
+33
+2019 Annual Report Meituan Dianping
+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.
+72
+Meituan Dianping 2019 Annual Report
+REPORT OF DIRECTORS
+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 0.38%
+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 32 (Share-based payments) and Note 36 (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.
+73
+Note:
+REPORT OF DIRECTORS
+REPORT OF DIRECTORS
+Chairman and
+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.
+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.
+86
+Meituan Dianping 2019 Annual Report
+BOARD OF DIRECTORS
+_
+CORPORATE GOVERNANCE REPORT
+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.
+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.
+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.
+Responsibilities
+2019 Annual Report Meituan Dianping
+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 described in the paragraph headed “Board of Directors
+Chief Executive Officer".
+The Board is committed to ensuring the Company adhere to a high standard of corporate governance.
+The Company will hold the AGM on May 20, 2020. The register of members of the Company will be closed from
+May 15, 2020 to May 20, 2020, 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 14, 2020.
+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.
+On behalf of the Board
+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.
+Wang Xing
+Hong Kong, March 30, 2020
+2019 Annual Report Meituan Dianping
+85
+CORPORATE GOVERNANCE REPORT
+CORPORATE GOVERNANCE REPORT
+The Board is pleased to present the corporate governance report of the Company for the Reporting Period.
+CORPORATE GOVERNANCE PRACTICES
+Chairman
+88
+87
+88
+√
+√
+√
+V
+√
+√
+Chairman and Chief Executive Officer
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+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.
+2019 Annual Report Meituan Dianping
+89
+Pursuant to 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.
+Note: (1) Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+Shum Heung Yeung Harry
+Leng Xuesong
+88
+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
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+CLOSURE OF THE REGISTER OF MEMBERS
+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.
+SUFFICIENCY OF PUBLIC FLOAT
+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.
+2019 Annual Report Meituan Dianping
+81
+REPORT OF DIRECTORS
+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:
+(i) 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 Board will review the overall performance of and compliance with the Contractual Arrangements at least
+once a year;
+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 Company will disclose the overall performance and compliance with the Contractual Arrangements in its
+annual reports; and
+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:
+(a) no change without independent non-executive Directors' approval;
+32
+82
+(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.
+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.
+Meituan Dianping 2019 Annual Report
+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) (2019). 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.
+Reasons for Adopting the Contractual Arrangements
+Risks Relating to the Contractual Arrangements
+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,
+2019, 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.
+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.
+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.
+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.
+REPORT OF DIRECTORS
+80
+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.
+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.
+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.
+Meituan Dianping 2019 Annual Report
+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.
+(b)
+(c)
+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
+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
+REPORT OF DIRECTORS
+On January 20, 2020, the Company announced that Wang Huiwen, co-founder, executive Director and senior vice
+president of the Company, will withdraw from his day-to-day management duties in the Company in December
+2020 to allow more time for his personal pursuit. Thereafter, he will remain as a director of the Company and hence,
+there will be no change to his weighted voting rights in the Company. Wang Huiwen will continue to perform his
+director's duties by devoting himself to the strategic planning, organizational growth and talent development of the
+Company after withdrawing from his day-to-day management duties.
+Saved as disclosed above, there were no important events affecting the Company and its subsidiaries which
+occurred after December 31, 2019 and up to the date of this annual report.
+AUDIT COMMITTEE
+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.
+84
+Meituan Dianping 2019 Annual Report
+CORPORATE GOVERNANCE
+REPORT OF DIRECTORS
+Since the beginning of 2020, the outbreak of coronavirus has resulted in tremendous near-term shocks to many
+industries in China. The Company has actively responded to national calls to combat coronavirus. We have been
+proactively providing assistance and offering help to secure people's livelihood in pandemic-stricken areas. In
+addition, we continue to provide our services to the nation and offer timely delivery of food and daily necessities to
+the locked-down residents during the pandemic. The Company has also adopted a number of positive measures
+to address the coronavirus outbreak. For further details of the relevant information, please see section headed
+"Environmental, Social and Governance Report - We Take Action to Combat Coronavirus" of this annual report.
+83
+83
+2019 Annual Report Meituan Dianping
+REPORT OF DIRECTORS
+(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 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 Group will disclose details relating to the Contractual Arrangements on an ongoing basis.
+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:
+(a)
+(b)
+the transactions carried out during the Reporting Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+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
+(၁)
+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.
+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, 2019 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
+RMB4.9 million.
+no change without independent Shareholders' approval;
+The revenue of the Onshore Holdcos and their respective subsidiaries amounted to RMB5.4 billion for the year
+ended December 31, 2019, representing approximately 5.5% of the total revenue for the year of the Group. The
+total assets of the Onshore Holdcos and their respective subsidiaries amounted to RMB24.3 billion as of December
+31, 2019, representing approximately 18.4% of the total assets of the Group.
+(ii)
+Gross profit
+FINANCIAL PERFORMANCE HIGHLIGHTS
+On behalf of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2020.
+2020 was indeed an unusual year. COVID-19 has significantly impacted the world, changed the way people eat,
+travel, and shop, and brought lots of challenges and uncertainties around. During this very tough period, our
+most important tasks were helping the broader society fight COVID-19, meeting the daily needs of consumers
+and facilitating business owners recover. As a leading online platform, we also took this chance to accelerate the
+digitization process for the industry, increased our investments in business areas that will bring benefit to everyone,
+and explored opportunities in frontier technology and innovations that will fuel the long-term development of the
+society. Going forward, we remain committed to our mission that "We help people eat better, live better" and will
+stay focused on our "Food + Platform" strategy.
+CHAIRMAN'S STATEMENT
+To our Shareholders:
+2020 Annual Report
+Meituan
+(9.7%)
+392.5
+354.5
+16.3%
+8,722.1
+10,147.4
+24.5%
+392,722.5
+488,851.2
+(in millions, except for percentages)
+December 31, Year-over-year
+2019
+change
+2020
+As China's economic recovery accelerated as a result of the effective containment of the COVID-19 pandemic,
+our businesses recovered steadily during 2020. Total revenues increased by 17.7% year over year to RMB114.8
+billion from RMB97.5 billion in 2019. Although the operating loss for new initiatives and others segment expanded
+as we further accelerated our business expansion efforts to satisfy consumers' growing needs, our food delivery
+and in-store, hotel & travel segments achieved an aggregate operating profit by segment of RMB11.0 billion in
+2020, an increase from RMB9.8 billion in 2019. Both adjusted EBITDA and adjusted net profit experienced negative
+year-over-year growth and decreased to RMB4.7 billion and RMB3.1 billion in 2020, respectively. Our operating
+cash flow increased to RMB8.5 billion in 2020 from RMB5.6 billion in 2019. We had cash and cash equivalents of
+RMB17.1 billion and short-term treasury investments of RMB44.0 billion as of December 31, 2020, compared to the
+balances of RMB13.4 billion and RMB49.4 billion, respectively, as of December 31, 2019.
+2020 Annual Report Meituan
+美 美
+Meituan
+Chairman's Statement
+153
+Comprehensive Income
+Consolidated Statement of
+6
+Financial Summary and Operation Highlights
+152
+Consolidated Income Statement
+2
+December 31,
+Corporate Information
+2020
+ANNUAL REPORT
+"
+"
+"
+"
+HOTEL
+Stock Code: 3690
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+CONTENTS
+Year Ended
+Gross Transaction Volume of food delivery
+Number of food delivery transactions
+Number of domestic hotel room nights
+8.8%
+2020
+Twelve Months Ended
+December 31,
+Average number of transactions per annual Transacting User
+Beijing 100738, the PRC
+8
+Number of Active Merchants
+Number of Transacting Users
+OPERATING METRICS
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+December 31, Year-over-year
+2019
+2020 Annual Report Meituan
+61.6%
+2,679,860
+4,330,102
+ΝΑ
+(390,164)
+4,170,796
+60.8%
+(6,749,149)
+(10,854,996)
+Unallocated items include (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from
+acquisitions, (iii) fair value changes on other financial investments at fair value through profit or loss, (iv) other gains, net,
+(v) impairment of goodwill, (vi) impairment and expense provision/(reversal) for Mobike restructuring plan, and (vii) net
+provision for impairment losses on financial assets.
+9
+change
+510.6
+6.8
+110.0
+119.7
+33.0%
+39.4%
+112,138.1
+2,505.3
+156,287.3
+3,331.3
+Profit/(loss) before income tax
+(in millions, except for percentages)
+2019
+(in millions, except for percentages)
+2020
+Three Months Ended
+Gross Transaction Volume of food delivery
+Number of food delivery transactions
+Number of domestic hotel room nights
+2.5%
+27.4
+28.1
+(units, except for percentages)
+10.1%
+13.3%
+450.5
+6.2
+December 31, December 31, Year-over-year
+(2.6%)
+Consolidated Statement of Financial Position
+Management Discussion and Analysis
+CORPORATE GOVERNANCE COMMITTEE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Wang Huiwen (X)
+China
+Beijing 100102
+Chaoyang District
+No.4 Wang Jing East Road
+Block B&C, Hengjiweiye Building
+NOMINATION COMMITTEE
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Mu Rongjun ()
+Mr. Leng Xuesong (A) (Chairman)
+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)
+Mr. Orr Gordon Robert Halyburton (Chairman)
+REGISTERED OFFICE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Orr Gordon Robert Halyburton
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+Level 54, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+CORPORATE INFORMATION
+HONG KONG SHARE REGISTRAR
+As to Hong Kong law (in alphabetical order):
+Davis Polk & Wardwell
+18/F, The Hong Kong Club Building
+3A Chater Road
+Central
+Hong Kong
+Skadden, Arps, Slate, Meagher & Flom
+Hong Kong
+42/F, Edinburgh Tower
+15 Queen's Road Central
+Hong Kong
+As to the PRC law:
+Han Kun Law Offices
+Beijing office
+9/F, Office Tower C1
+Oriental Plaza
+No. 1 East Chang An Ave
+Meituan
+The Landmark
+Central
+22/F, Prince's Building
+Certified Public Accountants and
+Registered PIE Auditor
+146
+Independent Auditor's Report
+Definitions
+114
+Environmental, Social and
+Governance Report
+160
+Statements
+Notes to the Consolidated Financial
+88
+Glossary
+Corporate Governance Report
+Consolidated Statement of Cash Flows
+46
+Report of Directors
+156
+Equity
+40
+Directors and Senior Management
+Consolidated Statement of Changes in
+16
+158
+154
+273
+CORPORATE INFORMATION
+PricewaterhouseCoopers
+AUDITOR
+Mr. Wang Huiwen (X)
+Mr. Wang Xing (1)
+AUTHORIZED REPRESENTATIVES
+Ms. Lau Yee Wa ()
+Ms. Xu Sijia ()
+JOINT COMPANY SECRETARIES
+AUDIT COMMITTEE
+280
+Dr. Shum Heung Yeung Harry (Á¥)
+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
+BOARD OF DIRECTORS
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+8,403,293
+change
+100.1%
+97,634,275
+92,054,394
+(25,575,351) (40,501,382) 86,509,772
+97,693,027
+(58,752)
+92,112,445
+(58,051)
+(40,559,116) 86,504,334
+57,734
+5,438
+47,035
+(25,622,386)
+Total Equity
+of the Company
+Non-controlling interests
+Equity attributable to equity holders
+EQUITY
+Total assets
+132,012,915 166,574,802
+51,716,560 83,634,163 120,661,511
+49,877,870 78,268,647
+82,135,045 88,306,155
+28,082,028 29,196,028 47,512,119
+23,634,532 54,438,135 73,149,392
+Current assets
+Non-current assets
+ASSETS
+2020
+2019
+As of December 31,
+2018
+(RMB in thousands)
+2017
+2016
+CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+60
+1,729,681
+2,921,721
+LIABILITIES
+Non-current liabilities
+Current liabilities
+Total liabilities
+Total equity and liabilities
+51.9%
+6,085,598
+9,244,159
+12.2%
+6,356,945
+7,135,360
+37.0%
+15,715,710
+21,537,985
+(RMB in thousands, except for percentages)
+change
+2019
+8,180,933
+2020
+(8,637,836) (15,487,131) (123,281,091)
+December 31, December 31, Year-over-year
+Food delivery
+Operating profit/(loss):
+Total revenues
+New initiatives and others
+In-store, hotel & travel
+Food delivery
+Revenues:
+FINANCIAL INFORMATION BY SEGMENT
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+2020 Annual Report
+Meituan
+51,716,560 83,634,163 120,661,511 132,012,915 166,574,802
+77,291,911 124,135,545 34,151,739 39,958,521 68,940,527
+64,815,964 103,618,175 2,326,683 3,365,958 17,792,886
+12,475,947 20,517,370 31,825,056 36,592,563 51,147,641
+Unaudited Three Months Ended
+37,917,504
+2,238,769 4,708,313
+2,919,043 1,728,980
+Total comprehensive income/(loss) for the year
+Total comprehensive income/(loss) for the year
+attributable to equity holders of the Company
+Grand Millennium Plaza
+181 Queen's Road Central
+Hong Kong
+3690
+COMPANY'S WEBSITE
+about.meituan.com
+2020 Annual Report Meituan
+CORPORATE INFORMATION
+WEIGHTED VOTING RIGHTS
+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.
+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 45.82% 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 10.07% 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 2.91% 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.
+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 14.27% the total number of issued Class B Shares as at
+the date of this annual report.
+Meituan 2020 Annual Report
+CORPORATE INFORMATION
+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:
+(i)
+(ii)
+(iii)
+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;
+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;
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+2020 Annual Report Meituan
+5
+LO
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Revenues
+27/F, Low Block
+Guotai Junan Capital Limited
+STOCK CODE
+China
+Profit/(loss) for the year attributable to equity
+holders of the Company
+2,762,388 4,437,875
+2,236,165 4,707,612
+12,988,077 33,927,987 65,227,278 97,528,531 114,794,510
+5,941,236 12,219,504 15,104,958 32,320,388 34,050,142
+(10,631,096) (18,933,663) (115,490,807)
+(5,794,998) (18,987,881) (115,492,695)
+2020
+2019
+Year ended December 31,
+2017
+2018
+(RMB in thousands)
+2016
+Profit/(loss) for the year
+As to Cayman Islands law:
+Maples and Calder (Hong Kong) LLP
+26th Floor, Central Plaza
+18 Harbour Road, Wanchai
+Hong Kong
+COMPLIANCE ADVISOR
+Computershare Hong Kong Investor Services Limited
+(5,789,900) (18,916,617) (115,477,171)
+(8,642,934) (15,558,395) (123,296,397)
+Shops 1712-1716, 17th Floor
+183 Queen's Road East
+Wanchai
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+Maples Fund Services (Cayman) Limited
+PO Box 1093, Boundary Hall
+Cricket Square
+Grand Cayman KY1-1102
+Cayman Islands
+PRINCIPAL BANKER
+China Merchants Bank, Beijing Branch,
+Shouti Sub-branch
+1/F, Tengda Building
+No. 168 Xizhimenwai Street
+Haidian District
+Beijing
+Hopewell Centre
+28,158,253
+2020 Annual Report
+882,352
+34.7%
+21,252,398
+(554,152)
+(4.6%)
+LEGAL ADVISORS
+(71,801)
+NA
+Total operating (loss)/profit
+(2,852,696)
+1,423,860
+(300.3%)
+New initiatives and others
+Year Ended
+December 31, Year-over-year
+2020
+2019
+change
+(RMB in thousands, except for percentages)
+Revenues:
+Food delivery
+66,265,319
+54,843,205
+20.8%
+In-store, hotel & travel
+December 31,
+27,276,793
+22,275,472
+33.6%
+New initiatives and others
+Unallocated items¹
+1
+Total operating profit
+2,833,369
+Unallocated items¹
+355.3%
+(1,318,445)
+(6,002,831)
+1,415,880
+New initiatives and others
+21.0%
+2,331,277
+2,821,935
+In-store, hotel & travel
+82.7%
+482,829
+In-store, hotel & travel
+20,409,854
+Food delivery
+17.7%
+Total revenues
+97,528,531
+114,794,510
+Operating profit/(loss):
+2020 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+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 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 93.
+The Nomination Committee's major work during the Reporting Period includes:
+(a) reviewing and monitoring the implementation of the board diversity policy;
+(b) reviewing and assessing the structure, size, composition and diversity of the Board;
+(c) reviewing the re-election of Directors and its schedule; and
+(d) reviewing and assessing the independence of the independent non-executive Directors.
+2020 Annual Report Meituan
+46
+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 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.
+(d) reviewing the disclosure in the Corporate Governance Report and the Company's compliance with the CG
+Code;
+99
+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;
+(k)
+(1)
+making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+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;
+(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
+(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.
+During the Reporting Period, the Corporate Governance Committee met two times. Individual attendance of each
+Corporate Governance Committee member is set out on page 93.
+The Corporate Governance Committee's major work during the Reporting Period includes:
+(a) 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);
+(b)
+reviewing the code of conduct applicable to employees and Directors;
+(c) assessing, reviewing and making recommendation to the Board for the re-appointment of the Company's
+compliance advisor;
+Meituan
+2020 Annual Report Meituan
+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.
+developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+review compensation and benefits framework and structure; and
+(d) making recommendations to the Board on the appointment or re-appointment of Directors and succession
+planning for Directors; and
+reviewing the Company's continuing connected transactions;
+(e)
+(d) reviewing the Company's cybersecurity structure and the effectiveness of the Company's cybersecurity
+management and technology framework;
+reviewing compliance with CG Code, Listing Rules and relevant laws;
+(c)
+(b) reviewing the Company's quarterly result announcements for the first quarter ended March 31, 2020 and the
+third quarter ended September 30, 2020, respectively;
+reviewing the 2020 interim report;
+(a)
+The Audit Committee's major work during the Reporting Period includes:
+During the Reporting Period, the Audit Committee met four times. Individual attendance of each Audit Committee
+member is set out on page 93. The Audit Committee also met the external auditor four times without the presence
+of the executive Directors.
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report
+(f) reviewing the terms of engagement, independence and remuneration of the external auditor; and
+Meituan
+44
+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.
+reviewing financial information and oversight of the Company's financial reporting, financial controls, risk
+management and internal control systems.
+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;
+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:
+Audit Committee
+94
+(g)
+reviewing the Company's ESG work.
+The Audit Committee annually reviews the relationship of the Company with the Auditor and recognises 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.
+assessing the independence of independent non-executive Directors;
+(c)
+developing the criteria for identifying candidates for nomination and appointment of Directors;
+(b)
+reviewing the Board composition;
+(a)
+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)
+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;
+(a)
+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 93.
+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.
+(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.
+(c) 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
+96
+96
+95
+2020 Annual Report Meituan
+(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
+(e)
+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;
+98
+(i)
+Neil Nanpeng Shen
+6/6
+Lau Chi Ping Martin
+Non-executive Directors
+2/2
+1/2
+1/2
+སྔསྡུསྶ
+1/1
+6/6
+Wang Huiwen
+1/1
+6/6
+Mu Rongjun
+6/6
+6/6
+Executive Directors
+General
+Corporate
+Governance Meeting of
+Committee Shareholders
+Audit Remuneration Nomination
+Committee Committee Committee
+Board
+Name of Director
+Attendance/No. of Meetings Held during the Reporting Period
+The Board met six times during the Reporting Period. The attendance of each Director at Board, committee and
+shareholders 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
+Meituan
+Wang Xing
+92
+0/2
+Independent Non-executive Directors
+97
+BOARD COMMITTEES
+On September 29, 2020, the Company held an extraordinary general meeting to approve the change of the English
+name of the Company from "Meituan Dianping" to "Meituan" and the adoption of the Chinese name of "" as
+the dual foreign name of the Company in place of its old Chinese name of “i”.
+On May 20, 2020, 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 May 20, 2020. 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
+33
+93
+2020 Annual Report Meituan
+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.
+0/2
+2/2
+1/1
+1/1
+0/2
+2/2
+1/1
+1/1
+==
+4/4
+6/6
+Shum Heung Yeung Harry
+4/4
+6/6
+Leng Xuesong
+2/2
+2/2
+4/4
+6/6
+Orr Gordon Robert Halyburton
+2/2
+92
+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.
+Wang Xing
+Executive Directors
+Participated
+in continuous
+professional
+development(¹)
+Name of Director
+The Directors pursued continuous professional development and relevant details are summarized as follows:
+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 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.
+CORPORATE GOVERNANCE REPORT
+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 2020. 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 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)
+Mu Rongjun
+developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+(c)
+(d)
+(e)
+(f)
+(g)
+reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory
+requirements;
+developing, reviewing and monitoring the code of conduct and compliance manual applicable to employees
+and Directors;
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+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;
+Meituan
+2020 Annual Report
+CORPORATE GOVERNANCE REPORT
+(h)
+(b) reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+Wang Huiwen
+Non-executive Directors
+Lau Chi Ping Martin
+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.
+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.
+Appointments and Re-election of Directors
+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.
+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.
+CORPORATE GOVERNANCE REPORT
+91
+2020 Annual Report Meituan
+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 utilize their expertise to scrutinize the
+Company's performance in achieving agreed corporate goals, and monitor performance reporting.
+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.
+A list of Directors and their respective biographies are set out in the section headed "Directors and Senior
+Management" of this annual report.
+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.
+Composition
+Pursuant to 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.
+CORPORATE GOVERNANCE REPORT
+Chairman and Chief Executive Officer
+√
+√
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+Leng Xuesong
+Shum Heung Yeung Harry
+Note: (1) Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+(i)
+90
+Meituan
+2020 Annual Report
+√
+√
+√
+V
+06
+2020 Annual Report
+CORPORATE GOVERNANCE REPORT
+Continuous Professional Development of Directors
+Reporting on the work of the Corporate Governance Committee covering all areas of its terms of reference.
+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 optimize 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 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.
+Crisis Management and Reputation Risk
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report
+Meituan
+106
+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
+cyber-attacks, enabling the Company to strengthen customer trust and enhance its user experience. During
+the year, the Audit Committee reviewed cybersecurity updates during the first quarter and third quarter Audit
+Committee meeting.
+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 minimize the risk of user data loss. For its site reliability, Engineering 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.
+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.
+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 with their prior consent, and
+implement company-wide policies on data collection, usage, disclosure, transfer and storage. The Company
+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.
+CORPORATE GOVERNANCE REPORT
+105
+2020 Annual Report Meituan
+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.
+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 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 faces competition in every aspect of its business, and particularly from other companies in the
+on-demand delivery businesses, in-store services businesses, hotel & travel services and new initiatives. 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.
+Market Competition and Innovation Risk
+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.
+of business operators' concentration. The Company may, in the future, receive more Anti-monopoly enquires
+or investigations and may be imposed of fines, penalties or rectification orders as a result of such enquires or
+investigations. Regulatory environment tends to change, which has profound effect on the healthy and sustainable
+development of the internet and technology industry, while also requires the Company to actively strengthen and
+improve its compliance work. We may, from time to time, face regulatory investigation and penalty or be involved
+in corresponding legal proceedings, which in turn could have a negative impact on the business, financial condition
+and operating results.
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report
+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 consistently adheres to its fundamental value of integrity, combats fraud and has zero tolerance
+for it. The Company has established effective internal control systems and continuously optimizes 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 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 behaviors and to build a healthy, orderly and civilized
+internet ecosystem through technological cooperation and information sharing.
+2020 Annual Report Meituan
+107
+the Company's various policies and practices on corporate governance, including but not limited to the
+Company's shareholders' communication policy; and
+109
+2020 Annual Report Meituan
+The business transaction security team of the Company mitigates internet fraud 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 rules as well as
+resolving the risk events.
+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 business compliance teams of the Company consist of various professional functions, among which (i)
+the content compliance team 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 team
+is responsible for the food safety risk management, conducts study on and judges the regulations and industry
+trend, optimizes 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 mitigate food safety risks; and (iii) the compliance team 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 internal control policy as well as recruitment of
+talents to strengthen the compliance team, in order to mitigate financial compliance risks.
+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.
+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 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 its business operation complies
+with the relevant rules and regulations. Its internal control team works closely with its business units to (i) perform
+risk assessments and provide advice on risk management strategies; (ii) improve business process efficiency and
+monitor internal control effectiveness; 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:
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report
+Meituan
+108
+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 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 committee in a timely manner. The Audit
+Committee then 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 Organization
+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; (ii) increasing investment
+in building the "Internet Plus University" and developing the "panoramic learning map" in order to establish a
+training system that encapsulates the promotion of culture, general competency, professional expertise and
+leadership and to provide targeted trainings for employees; and (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
+(e) 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)
+(g)
+(h)
+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 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;
+Human Resources Risk
+CORPORATE GOVERNANCE REPORT
+Meituan
+104
+Information System Risk
+Compliance Risk
+Business Team
+Internal Audit and
+Fraud Investigation
+Independent assurance services
+Takes actions (including managing risk) to achieve organizational objectives
+Management
+3
+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
+Ensures that the Company has
+established and maintained effective
+risk management and internal control
+systems
+Assesses and determines the nature
+and level of the risks that are acceptable
+to the Company in achieving its
+strategic objectives
+The Board of Directors
+The internet and technology industry is evolving, thus 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 licenses, approvals and permits relevant
+to applicable business. The Company, when conducting its business, is required to comply with new applicable
+laws and regulations in different jurisdictions, such as regulations relating to anti-monopoly, data protection,
+internet information security, 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 7 February 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. At
+the end of 2020, the company received enquiries from the State Administration for Market Regulation regarding
+the declaration of business operators' concentration. The Company recently received a notice from the State
+Administration for Market Regulation regarding a fine of RMB500,000 imposed as a result of an unreported case
+Each of the business teams
+undertakes daily business
+operation management and
+internal control functions
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report Meituan
+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 organizational structure for risk management across all divisions, details of which are set
+out below.
+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 optimizing the organizational 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.
+Organizational Structure for Risk Management
+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.
+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 each quarter, 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.
+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.
+CORPORATE GOVERNANCE REPORT
+RISK MANAGEMENT AND INTERNAL CONTROL
+2020 Annual Report
+Meituan
+100
+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.
+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.
+101
+Risk Management Team
+Organization Governing Body
+Internal Audit and Fraud
+Investigation Team
+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.
+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
+In 2020, 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 2019 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.
+Major Risks
+The Company recognises 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 team 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.
+With regard to daily operations, each business group and functional department 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.
+CORPORATE GOVERNANCE REPORT
+103
+2020 Annual Report Meituan
+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 optimized such process constantly.
+During the Reporting Period, in order to further improve the coverage and depth of risk assessment, the Company's
+internal control department established a risk assessment project team, which 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.
+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 misstatements or losses.
+The Third Line mainly consists of the functions 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 function
+is responsible for receiving whistleblower reports through various channels and for following up and carrying out
+independent investigations on alleged fraudulent activities.
+Internal Audit and Fraud Investigation - Independent Assurance
+In conducting risk assessments, the Company comprehensively utilized 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 Organization Governing Body mainly comprises of the Board of Directors, Corporate Governance Committee
+and Audit Committee of the Company. It is responsible for ensuring appropriate structures and processes are in
+place for effective governance and ensuring that the organizational objectives and activities are aligned with the
+prioritized interests of the stakeholders.
+Second Line - Risk Management
+CORPORATE GOVERNANCE REPORT
+2020 Annual Report
+Meituan
+102
+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
+The First Line is mainly formed by the business groups 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
+Organization Governing Body - Oversight
+Third Line
+Second Line
+The second line mainly consists of, among others, the internal control department, finance department, legal
+department, information security department, business transaction security team, safety affairs department and
+business compliance team of the Company. It is responsible for formulating policies related to the risk management
+and internal control of the Company's operations, finance, compliance and litigation, information security and fraud
+risks 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.
+First Line
+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.
+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, 2020 are set out below:
+2020 Annual Report Meituan
+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
+111
+Please refer to Note 8 to the consolidated financial statements for details of remuneration of Directors for the year
+ended December 31, 2020.
+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, a senior manager 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.
+For the year ended December 31, 2020, 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
+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.
+CORPORATE GOVERNANCE REPORT
+Enquiries to the Board
+Effectiveness of Risk Management and Internal Control
+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.
+Remuneration band (RMB)
+CORPORATE GOVERNANCE REPORT
+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 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 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.
+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 recognises 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.
+As regards proposing a person for election as a Director, the procedures are available on the website of the
+Company.
+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.
+110
+Meituan 2020 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.
+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
+During the Reporting Period, the Company held an annual general meeting on May 20, 2020. Notice of the meeting
+was sent to the Shareholders on April 17, 2020, 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.
+0
+5.
+2
+Community interaction, public welfare
+activities, social media and poverty
+alleviation projects
+Social media, official website, press
+conferences, exchange meetings and
+dedicated customer service
+Online platform customer service hotline,
+meetings and merchant assessment
+Supplier assessment and supplier
+conferences
+Online platform, customer service hotline,
+social media and information disclosure
+HR assistance desk, communication
+meetings, social media and face-to-face
+communication
+Shareholders' meetings, regular
+announcements, official website,
+teleconferences and emails
+reporting, visitor reception, information
+disclosure and participation in governmental
+meetings
+116
+Policy consultation, incident
+Supply Chain Management, Product
+Responsibility and Anti-corruption
+Use of Resources, Emissions, Environment
+and Natural Resources, Employment,
+Supply Chain Management and Product
+Responsibility
+Product Responsibility, Anti-Corruption and
+Community Investment
+and Natural Resources, and Community
+Investment
+Product Responsibility, Environment
+Standards, Anti-corruption and Community
+Investment
+Product Responsibility, Supply Chain
+Management, Use of Resources, Emissions,
+Employment, Anti-corruption, Health and
+Safety, Labor Standards and Environment
+and Natural Resources
+Employment, Health and Safety,
+Development and Training, Labour
+Employment, Supply Chain Management,
+Product Responsibility, Use of Resources,
+Emissions, Anti-corruption, and Community
+Investment
+Environment and Natural Resources, and
+Community Investment
+Meituan
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+- such as fluorescent tubes, batteries, toner cartridges and ink cartridges - is collected separately and disposed of
+by certified agencies.
+-
+In terms of waste treatment, we strictly follow local authorities' rules on waste treatment in our areas of operation.
+At our Beijing and Shanghai offices, dustbins are classified to collect different waste. Hazardous waste from offices
+In terms of resources saving, we have introduced multiple measures to save water and paper. In some office areas,
+inductive water-saving tap have been installed and awareness-raising water-saving and paper-saving tips have
+been posted to enhance employees' saving awareness. We have set a default to double-sided printing in all printers
+to encourage employees to double-print documents. There are recycling boxes beside printers to collect waste
+paper.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+117
+2020 Annual Report Meituan
+In terms of energy saving, we have promoted multiple measures in offices to conserve electricity, including: (i) we
+have expanded the application of energy-saving LEDs, replaced manually-controlled lights with sound-activated
+ones, and shortened the duration of lighting. Personnel regularly inspect offices to ensure that lights are turned
+off in unmanned areas; (ii) we have saved 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; and (iii) we shut down nonessential equipment in offices and washrooms
+during nonworking hours. Additionally, we posted awareness-raising notices in relevant places, such as the
+air-conditioning temperature control panel.
+Electricity and water are the main resources consumed in our offices and operations. A unified, refined online
+system manages data of both 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 (EHS) working group manages our environmental affairs and authorises directors of relevant departments to
+supervise environmental matters. It promotes environmental management in daily operations, and controls risks, so
+as to reduce our impact.
+Practising green operations
+We have realized that our business will have environmental impacts. To improve the environmental performance of
+our operations, we identified the major environmental challenges facing us. We have reviewed our major business
+procedures to reduce our negative impacts to the environment, enhanced environmental protection capability
+across the industry, and improved our overall performance of environmental protection.
+ENVIRONMENT
+The material aspects we identified included product responsibility, anti-corruption, community investment,
+employment and supply chain management. Relevant aspects included use of resources, emissions, the
+environment and natural resources, health and safety, labour standards, and development and training. We will
+discuss these aspects in this report.
+In 2020, we conducted a materiality assessment on 11 aspects listed in the ESG Reporting Guide as a reference
+for our actions and reports, based on continual communication with key stakeholders and our operational
+characteristics.
+Materiality assessment
+Community
+Media and non-
+governmental
+organizations
+Suppliers
+Platform merchants
+•
+-
+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, management
+and execution governance structure, with documented rules guide the work and responsibilities of each tier to
+promote our ESG work.
+ESG management
+Encourage the public to take part in public welfare activities
+Promote the development of new categories of social enterprises
+•
+Create greater social value
+•
+Assist in providing solutions to more social problems
+.
+Community:
+• Promote talent development
+Protect employees' rights and interests
+Promote integrity
+•
+.
+Tier 1: Governance
+Environment management of data center
+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 authorises the Audit Committee to supervise
+ESG management and is briefed by that committee on major ESG-related matters.
+Tier 2: Management
+Users
+Employees
+Shareholders and
+investors
+Government and
+regulators
+Main communication channels
+Main ESG concerns
+Main stakeholders
+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. We identify key stakeholders and understand
+their main concerns through various communication channels based on the characteristics of actual businesses,
+management and operations.
+Stakeholder engagement
+Comprised of representatives from relevant functions, the ESG Execution Team promotes the execution of
+management strategies and realization 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.
+Tier 3: Execution
+.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+115
+2020 Annual Report Meituan
+The Committee on Safety and Risk Management (Safety and Risk Committee) is the management body
+of ESG matters in the Company. It discusses important ESG matters, guides practice, and reviews ESG
+prospects, strategies, framework, principles, policies and achievements of ESG goals.
+The Audit Committee is responsible for confirming 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.
+4. Operation:
+We do not have our own data center. When renting such facilities, we take their resource consumption and impact
+on the environment into consideration.
+Ningxia Zhongwei Data Center is a large scale, natural cooling data center currently in use. It uses 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 its sophisticated machine room structure, server
+layout, temperature control and heat recovery, Ningxia Zhongwei Data Center has a significant advantage in energy
+preservation over traditional large-scale data centers' cooling solutions.
+Note:
+(1) The non-audit services conducted by the Auditor mainly include tax retainer services, and enterprise risk management
+assessment services.
+CHANGES IN CONSTITUTIONAL DOCUMENTS
+No changes to the Memorandum and Articles of Association of the Company during the Reporting Period.
+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.
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+50,787
+2020 Annual Report Meituan
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+REPORT OVERVIEW
+Meituan (hereinafter referred to as "the Company", "Company" or "We") prepared this report in accordance with
+the Environmental, Social and Governance ("ESG") Reporting Guide set out in Appendix 27 to the Rules Governing
+the Listing of Securities on The Stock Exchange of Hong Kong Limited ("HKEx"), and upholds the principle of
+materiality, quantitative, balance and consistency required by the ESG Reporting Guide.
+This report aims to reflect our ESG performance in 2020 on an objective and fair basis. It is recommended to read
+the part on governance in conjunction with the Corporate Governance Report contained in this annual report.
+ESG CONCEPT AND MANAGEMENT
+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".
+Focusing on the Company's mission and values, we have enhanced the ESG concept integration, and formulated
+our ESG strategies from the following aspects:
+113
+1,898
+48,889
+Amount
+(RMB'000)
+1-5,000,000
+>5,000,000
+3
+6
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+The Directors acknowledge their responsibility for preparing the financial statement of the Company for the year
+ended December 31, 2020, and are not 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".
+112
+Meituan
+2020 Annual Report
+AUDITOR'S REMUNERATION
+CORPORATE GOVERNANCE REPORT
+The remuneration for the audit and non-audit services provided by the Auditor to the Group during the year ended
+December 31, 2020 was approximately as follows:
+Type of Services
+Audit and audit-related services
+Non-audit services (1)
+Total
+1.
+Environment:
+2.
+•
+119
+2020 Annual Report Meituan
+Advocating Environmental protection concept: online courses and offline communication raise merchants'
+awareness of environmental protection and urge them to take actions. The last day of each month is Meituan Food
+Delivery Environmental Protection Day and we conduct advocacy and undertake activities for merchants and the
+public on festivals related to the environment, such as Arbor Day, World Earth Day, World Environment Day and
+the week for national promotion of energy conservation. We cooperate with the China Environmental Protection
+Foundation, the National Center of Ecological Education for Teenagers, the All-China Environment Federation and
+other organisations to hold creative competitions about environmentally-friendly packaging. And we set up the NGO
+Fund of Environmental-Protection Facilities Open to the Public, alongside other participating projects, to enhance
+public awareness of environmental protection.
+To reach the 2025 targets, the Lush Mountain Plan advocates environmental protection, researches environmentally
+friendly behaviour, explores closed-loop food delivery, and promotes public welfare activities:
+In 2020, responding to Opinions on Further Enhancing the Governance and Treatment of Plastics Pollution, we
+unleashed the platform's potential to drive sustainable development. The "Lush Mountain Plan" proposed three
+environmental targets for 2025: (i) for all merchants, building a supply chain of green packaging and providing
+solutions of packages that can be recycled or reused, or that is biodegradable; (ii) promoting a market-based
+mechanism for recycling, and connecting upstream and downstream elements of the industry to normalise the
+recycling of containers in more than 20 provinces; and (iii) enhancing guidance and incentives for consumers,
+and optimising our products and operations, to support 100 million users as they take actions of sustainable
+consumption - including not using tableware.
+In August 2017, Meituan Food Delivery launched the "Lush Mountain Plan": the food delivery industry's first action
+plan to focus on environmental protection. It promoted environmental protection process throughout the food
+delivery value chain and among consumers.
+Measures taken by Meituan Food Delivery to promote environmental protection in the industry
+With a focus on the environmental impact of the industries of our major businesses, we analyse the environmental
+risks of these industries, implement protection measures and seek solutions to the challenges that arise from those
+businesses.
+Promoting environmental protection in the industry
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2020 Annual Report
+Meituan
+118
+According to National Data Center Application Development Guidelines (2019) issued by The Information and Communication
+Development Department of the Ministry of Industry and Information Technology of the People's Republic of China in September
+2020, as of the end of 2018, the average PUE of hyperscale data centers was 1.40, and the average PUE of large-scale data
+centers was 1.54. The average design PUES of hyperscale and large-scale data centers were 1.32 and 1.40, respectively.
+1
+We work with industry peers to develop technology related to green data centers, and participated in the drafting of
+the Open Data Center Committee ("ODCC")'s Cold Plate Liquid Cooling. This set of standards respond to the green
+development trend and policy requirements concerning the data center, helps the industry explore the application
+of cold plate liquid cooling in data centers: higher cooling efficiency for the data room than air-cooled cooling.
+technology, optimizing overall data center energy efficiency.
+Ningxia Zhongwei Data Center's energy-saving and emissions-reducing measures include: (i) utilising variable
+frequency pumps and wind turbines of Electrical Commutation (EC) and other equipment to reduce the energy
+consumption; (ii) using software to regulate the cooling system's airflow, optimise its heat exchange efficiency and
+reduce its consumption; (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 reduce energy consumption by fully tapping into natural resources; and (iv) refining
+motor capacity to use power and resources more efficiently.
+Meituan
+In 2020, we continued to rent the data center in Zhongwei City, in the Ningxia Hui Autonomous Region (hereinafter
+referred to as "Ningxia Zhongwei”). This center aims to supply electricity by utilizing clean energy - hydropower,
+wind power, photovoltaic power, etc - whose power usage effectiveness (PUE) reaches 1.1, which is at the forefront
+of the industry¹.
+114
+•
+Advocate green consumption
+•
+Promote the harmonious coexistence of corporate development and environmental sustainability
+•
+Promote environmental protection in the industry
+Customers:
+•
+Be customer-centric
+3.
+•
+Strive for excellence, continuously optimize, and build a good reputation among customers
+Create greater value for people's life
+Partnership:
+•
+Cooperate and pursue a win-win situation with our eco-system partners
+•
+Guarantee interests of different parties in the cooperation
+Promote sustainable development in the industry
+Number of individuals
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Total greenhouse gas (GHG) emissions (tonnes)
+Compensation and benefits
+We offer competitive salaries and performance-based cash bonuses and other incentives to our employees.
+Share-based incentives motivate employees to contribute to our corporate growth and development have been
+granted and are planned to continue to be granted to our employees. For more details, please read Report of the
+Board of Directors - Post-IPO Share Award Scheme in this annual report.
+We contribute to social security provident funds for employees in line with the law and provide supplementary
+medical insurance and subsidies. Our Love Fund and Love Fund Management Measures help employees in need
+and their families.
+124
+Meituan
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We strictly abide by relevant laws and regulations when it comes to dismissal. Our Policies on Dismissal
+Management standardise the procedure, protecting employee rights during this period.
+Promotion and development
+We objectively and fairly evaluate our employees' performances and help them improve their ability and develop
+through performance management. Based on values, performance contribution, leadership and professional
+competence, promotions are reviewed by the Internal Review Committee. Employees who make outstanding
+contributions enjoy fast promotion. Prior to the review, employees can participate in training to understand the
+promotion criteria and processes. After the review, employees can provide feedback through an open appeal
+channel.
+Work-life balance
+Our Attendance Management Policy, Holiday Management Policy and other policies manage the working hours of
+employees with certain flexibility and provide employees with holidays such as legal 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 and World Teachers' Day. We have created over 40 culture and sports clubs,
+where employees are free to join various clubs and participate in employee activities. These relieve stress and make
+full use of employees' spare time.
+Communication
+Internal channels, such as social platforms, human resource helpdesk and communication sessions, enable
+employees' suggestions and opinions to be heard and attended to in a timely manner and help management
+understand employees' requests. 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 institutional
+policies that are directly relevant to employee interests, we conduct research and interviews with staff, so as to
+protect their rights.
+2020 Annual Report Meituan
+Based on the concept of flat ranking and broadband compensation, we established a position ranking and incentive
+system, and policies such as the Management of Performance, the Rules on Position Ranking Management and the
+Plans to Review Position Ranking. These improve performance management, standardise the system of position
+ranking, and build channels for promotion. The "flat" ranking helps employees to sharpen capacities according to
+the requirements of their positions, while "broadband" compensation broadens the incentive range within ranks.
+They are convenient and flexible means of motivating and recognising employees.
+During the interview process, we check candidates' education, qualifications and experience. Our Policies on
+Background Checks and Management in Meituan help to engage the candidates our business requires and to avoid
+child labour. Since our inception, there has been no illegal employment such as child labour.
+We recruit the candidates who have the most suitable qualifications for the job, treat different races, ethnicities,
+genders, ages and religious beliefs equally, and ensure that admission and development opportunities are
+accessible to all. In 2020, we enhanced our equal employment policy, and revised our Policies on Release of Posts
+in Meituan, to standardise 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. We continue to optimise the recruitment
+process, ensure that our policies instill both equality and diversity, and guarantee compliance by training employees
+involved in recruitment and conducting regular reviews.
+Recruitment and dismissal
+5,462.38
+0.24
+0.03
+69,889.11
+8.52
+2020
+34,655.04
+203,561.50
+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.
+125
+8 The water resources used by the Company come from municipal water supply and there were no issue in sourcing water.
+Water fees of some of the offices, warehouses and service stations are included in property fees, and water consumption cannot
+be counted separately, and is not included in running water consumption.
+Due to limited statistics capabilities, the packaging data is not included this year.
+2020 Annual Report Meituan
+123
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+WORKPLACE
+Employees are our most important assets. We strive to create a comfortable and harmonious workplace, ensure
+equal opportunities, protect employees' rights, provide competitive compensation and benefits that reflect
+employees' capabilities, and ensure there are sufficient resources and opportunities for learning. For more detail,
+please read Management Discussion and Analysis - Employees in this annual report.
+Employment and labour standards
+To protect employees' legitimate rights and prevent child 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 Rights and the Interests of Women, the Labour Protection Regulations for Women
+Workers and the Labour Protection Regulations for Juvenile Workers. We have established internal policies and
+standardised management regarding recruitment, resignation, compensation, benefits, performance and promotion,
+in accordance with the measures described below.
+9
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Occupational health and safety
+_
+We pay attention to environmental and social risks during the process of supplier admission and cooperation.
+We require suppliers to provide qualification and certification for relevant products or services, and proof that they
+have a disciplinary code and have broken no laws during the admission process of suppliers. We conduct on-site
+inspections and reviews for key suppliers. We require suppliers of specific categories to meet the qualification
+requirements of environmental management or occupational health and safety management system, and verify the
+authenticity and accuracy of information about suppliers. To further minimise environmental and social risks, we
+have 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 audit. If a supplier terminates its operation owing to environmental and social
+risks or problems, a back-up will be activated to ensure that products or services are delivered on time.
+Management and protection of delivery riders
+Our food delivery services require a large number of delivery personnel (referred to as “riders”) to assist in the
+services. Delivery riders are full-time employees or contract workers of delivery partners. As we have not entered
+into an employment agreement with delivery riders, they are not our employees. The safety and rights of riders 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 set strict recruitment standards for riders, and supervise riders according to our criteria. We
+conduct irregular facial recognition tests to confirm riders' identities and ensure the safety of our service.
+From two perspectives - supervision over delivery partners and care for riders we have taken measures to
+ensure the safety of riders. 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 riders may only work when they have passed an exam and equipped
+with knowledge and skills related to traffic and cycling safety. We have established a center 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.
+Depending on the types of riders, we required partners to purchase employer's liability insurance for riders, or
+worked together with partners to launch personal accident insurance products for riders. The corresponding
+insurance products has been covered to all riders during their service and provided more protection for riders'
+personal safety and property security.
+128
+Meituan
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In 2020, we implemented measures to address and reduce safety risks for riders, including: (i) creating proper
+orders and riding routes based on a smart scheduling system, and sparing some flexible time to improve delivery
+safety; (ii) upgrading software and hardware for riders, including smart earphones, smart helmets, back-lights on
+helmets, voice control system, reinforcement gears and advanced reflective strips, etc. to reduce safety risks during
+operation and riding; (iii) rolling out a charging and battery replacement network, providing a densed network of
+charging and replacement devices, and mitigating fire risks when riders charge bikes themselves; (iv) encouraging
+partners to strengthen education and guidance of safety for riders and briefing riders on traffic safety, fire safety
+and emergency countermeasures; (v) incorporating safety into riders' bonuses, ensuring that they factor it into their
+work at the same time of focusing on delivery workload; and (vi) establishing a process to handle traffic accidents
+and safety incidents, and assigning full-time safety personnel to deal with such occurrences.
+During the pandemic, we adopted timely measures to reduce health and safety risks for riders: (i) disinfecting and
+monitoring delivery sites across the country, with delivery boxes sterilised 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 riders;
+(iii) bolstering protection for riders 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 riders concerned would stop work immediately and be referred to hospital for treatment; (iv) issuing
+health cards to all riders, requesting merchants and users record health and safety information on them, and
+requiring them to be available for checking; (v) educating riders about disease prevention and control, to improve
+riders' knowledge of disease prevention, distributing the Manual on Psychological Protection of Riders Amidst the
+Pandemic and, from the middle stage of 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 riders' family members infected by
+Covid-19.
+On top of measures ensuring riders' safety, we have also paid attention to their voices through earnest talks or
+other channels, in an attempt to improve our products and services. In 2020, we held more than 50 talks with riders
+to gauge their expectations and concerns. The Tongzhou Project was created and initiated in response to their
+feedback in order to improve riders' experience from four perspectives, namely, the guarantee of work, experience
+improvement, career development and life care. Specific measures included: (i) enabling a function via which riders
+can rate merchants and make complaints, and helping them with the psychological pressure of overdue deliveries,
+customer complaints and other difficulties; (ii) providing material and spiritual care during important festivals and
+certain periods, including distributing information about preventing heatstroke in summer and keeping warm in
+winter; (iii) providing self-learning classes and Meituan University courses, including English for Food Delivery - an
+industry first - to improve their efficiency when processing orders placed by people from overseas; (iv) carrying out
+717 Riders' Day and National Riders' Basketball League activities to foster a sense of identity; (v) opening a free,
+dedicated psychological consulting hotline in partnership with professional institutions for riders; (vi) launching the
+Rider Protection Plan and Rider Care Plan, with a RMB50,000 Rider Care Fund to cover 100 serious diseases; and
+(vii) launching the Meituan Public Welfare Foundation's Kangaroo Baby Public Welfare Program, to assist riders'
+children suffering from serious illnesses or accidental injuries. As of 31 December 2020, this had helped the children
+of 77 riders for the industry.
+2020 Annual Report Meituan
+129
+Regional offices
+Management of supply chain environmental and social risks
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+127
+2020 Annual Report Meituan
+We provide a safe working environment for our employees. We abide by the Labour Law of the People's Republic
+of China, the Production Safety Law of the People's Republic of China, the Fire Prevention Law of the People's
+Republic of China and other laws and regulations concerning occupational health and safety and fire prevention.
+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 bolster our safety management. An EHS
+working group, and appointed safety specialists, enhance our safety management and reduce risks. Measures
+safeguarding workplace safety include: (i) building an emergency-response team and training and forming a team
+of certified emergency lecturers; (ii) installing automated external defibrillators to ensure that they are available in
+emergencies; (iii) setting up an office security system to manage the entry and exit of employees in working areas;
+(iv) conducting regular fire safety inspections in offices and rectifying identified hazards; and (v) conducting safety
+training and drills covering all employees to enhance employees' awareness of working and fire 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 test air quality, drinking water and lighting to provide
+a comfortable working environment. 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 Program 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 took countermeasures in a timely
+manner to reduce the risk of infection. We installed devices to measure body temperature at all workplaces, and
+issued temperature-measuring stickers, masks and other disease prevention equipment. A daily reporting system
+collected information on employees' physical conditions. Nucleic acid testing was arranged for employees, and
+abnormalities were treated in a timely manner. All workplaces complied with local government requirements
+regarding the resumption of work and production. We strictly limited the number of employees on duty, took body
+temperatures, organised disinfection training and formulated emergency-response plans and drills for office working
+staff before resuming working and strengthen management to normalise disease prevention.
+Employee training and development
+We have established the "Internet Plus University" platform for all employees and continuously polished the training
+management mechanism. With the introduction of our Policies on Internal Curriculum Management and Policies on
+Internal Lecturers, we have standardised the planning, implementation and management of training.
+We are committed to providing employees with training anytime, anywhere and as they want. And we have
+developed a "panoramic learning map", building a training system that focuses on four aspects: culture, general
+ability, professionalism and leadership. Courses have been enriched and the curriculum quality has been enhanced,
+thanks to the establishment of a Management School, schools for different majors, courses for different topics and
+the integration of learning and development projects.
+126
+2020
+2020 Annual Report
+Face-to-face classes, online courses and practical activities cover different roles, ranks and development stages.
+Training helps new recruits adapt to their positions; for example, the three-year Better U Plan covers skills
+development, business knowledge and corporate culture for campus-recruited employees to help them complete
+the roles conversion. Existing employees are equipped with technical training for cross-channel and multi-sector
+development based on requirements of working scenarios so as to raise employees' professional quality and
+competence. Step-by-step Leadership Echelon training is available to managers at all levels, and is tailored to their
+abilities and characteristics.
+Alongside online and offline training courses and projects, flexible options such as community learning and live
+contests of knowledge and other innovative forms ignite employees' enthusiasm to learn. In this way, employees'
+demands for diversified learning and development are satisfied.
+As of the end of 2020, we had held 1,335 internal courses and 3,178 internal lectures. In 2020, average training per
+employee - including online and face-to-face learning – was 23.04 hours.
+SUPPLY CHAIN MANAGEMENT
+Our main suppliers are delivery partners and providers of materials and services. Supply chain compliance and
+stable business partnerships are important for our sustainable operations, 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.
+We have also controlled key links 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. These form a standardised
+management system that covers the whole procurement process and restrains procurement of all categories.
+Prior to official engagement, we require suppliers to complete real-name authentication, and sign and abide by
+terms concerning anti-corruption, confidentiality and clean behaviour in our Anti-Commercial Bribery Agreement,
+Confidentiality Agreement and Commitment of Self-discipline. Suppliers can report any corruption-related issues
+regarding business cooperation to us via a questionnaire in the procurement system. We regularly review suppliers
+and set up a mechanism of supplier blacklist for centralized procurement. If a violation committed by a supplier is
+confirmed, cooperation will be suspended and the supplier's credentials will be cancelled.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+5.79
+Meituan
+0.07
+Total greenhouse gas (GHG) emissions (tonnes)
+HQ offices
+Emissions 3, 4, 5, 6
+"Warehouses and service stations" refer to main warehouses and stations of service used by Kuailv Jinhuo and
+Meituan Grocery.
+are distributed in 22
+-
+provinces, five autonomous regions and four municipalities in Mainland China;
+"Regional offices" - mainly offices used by sales personnel and other supporting personnel
+Total GHG emissions per employee in office (tonnes per employee)
+"Headquarters (HQ) offices" include headquarters-level offices in Beijing and Shanghai with integrated resources,
+and customer service and R&D center offices, mainly used by customer service and R&D personnel. Among them,
+the headquarters-level workplaces are mainly Beijing Hengdian, R&D park and surrounding workplaces, and the
+Shenya office in Shanghai. Customer service and R&D centers mainly include offices in Shijiazhuang, Yangzhou,
+Chengdu and Xiamen;
+121
+2020 Annual Report Meituan
+With the improvement of the Company's capabilities concerning environmental statistics, data of Meituan Grocery has been
+disclosed since 2020.
+2
+Environmental performance indicators in the Company include offices, warehouses for Kuaily Jinhuo and
+warehouses and service stations for Meituan Grocery².
+Below are the key environmental performance indicators of the Company. The Company do not have our own data
+center. Third-party operators are in charge of the emissions, resources and energy consumption of the rented data
+center, and such data is not included in the scope of the Company's disclosure for the time being.
+Environmental performance indicators
+We cooperate with suppliers and government departments to collect and recycle Meituan Bike tyres for
+nonhazardous disposal and produce compliant recycling and reusable materials. In 2020, we initiated a public
+welfare project of Transforming Shared Bikes to Sports Ground by utilizing recycling materials of tyres in Meituan
+Bikes to construct plastic fields, improving facilities on campuses. As of December 31, 2020, we had recycled
+24,000 tyres and donated to eight playgrounds - covering a total 5,500 m² – in areas including Guangdong,
+Guizhou, Tianjin, Sichuan, Hubei and Fujian.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan Bike practices 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 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 environment-friendly suppliers in the procurement phase,
+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 bikes. The launching stage is based on science and
+underpinned by smart scheduling. In the stage of maintenance and recycling, sets of wheels, smart locks and other
+components are renovated for reuse. Based on their condition, components or bikes are separated in storage for
+recycling and reuse under cooperation with the recycling industry, forming a closed-loop supply chain.
+Total GHG emissions per square metre floor area of the office (tonnes per square metre)
+Hazardous waste per capita 5 (tonnes per employee)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+172,647.09
+2020 Annual Report
+Meituan
+122
+6 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 equipments are recycled and
+disposed of by recyclable waste collectors.
+The Company's hazardous wastes mainly contain waste fluorescent tubes, toner cartridges and ink cartridges from various
+types of offices, which are disposed of by qualified institutions. In 2020, the actual hazardous waste per capita in the HQ offices
+was 0.00002 tonnes, and the actual hazardous waste per capita in regional offices was 0.00028 tonnes. The data listed in the
+table above is rounded to two decimal places.
+5
+Total hazardous waste (tonnes)
+4 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.
+2,533.51
+0.08
+0.00
+0.62
+0.05
+0.35
+10,789.23
+2020
+Total nonhazardous waste (tonnes)
+3 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.
+Meituan Bike's full-cycle green concept
+Nonhazardous waste per capita (tonnes per employee)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Total energy consumption per capita (MWh per employee)
+Total energy consumption per square metre floor area (MWh per square metre)
+Running water consumption (tonnes)
+Running water consumption (tonnes)
+Warehouses and service stations
+Total energy consumption (MWh)
+Running water consumption (tonnes)
+2020
+3,245.90
+0.14
+Total energy consumption (MWh)
+6.21
+1,943.10
+0.08
+2020
+20,805.87
+2020
+As of the end of 2020, environmental protection concepts popularised by the Lush Mountain Plan had been
+accessed more than 1 billion times online. One million people have participated in offline activities. Across the
+country, 20 million biodegradable packaging bags, 1 million paper food containers and 10,000 sets of recyclable
+tableware have been distributed to merchants. The first batch of nearly 350,000 pieces of biodegradable packaging
+bags, of 20 types. has been received for trial by merchants free of charge, as part of our Incubation Project of
+Innovative Products for Food Delivery Packaging. Over 350,000 Lush Mountain Public Welfare Merchants have
+been gathered together and approximately RMB14 million has been earmarked for environmental protection.
+0.53
+16,289.81
+0.00
+Regional offices
+0.02
+Running water consumption (tonnes)
+Promoting public welfare activities with a focus on environmental protection: we have partnered with the China
+Environmental Protection Foundation to establish the Lush Mountain Plan Dedicated Fund. This supports public
+welfare projects with a focus on environmental protection, hand in hand with merchants on the platform through the
+Lush Mountain Public Welfare Action. We have assisted environmental and social organisations to plant and protect
+economic forests for ecological benefits in places such as Qinghai, Guizhou and Yunnan. For the progress of the
+Lush Mountain Public Welfare Action, please refer to the section “Community Investment - Poverty Alleviation" in
+this report.
+Running water consumption (tonnes)
+Exploring a scientific closed-loop: we endeavour to reduce waste generation throughout the whole life cycle of
+food delivery: (i) we continue to reduce the volume of tableware at source and to offer "tableware-free" solution
+for the reduction in disposable tableware usage; (ii) we cooperated with the China Packaging Federation, the
+Degradable Plastics Committee of the China Plastics Processing Industry Association and the China National Pulp
+and Paper Research Institute Co., Ltd. to issue the First Green Packaging Directory of the Lush Mountain Plan. A
+green packaging zone on our merchant-terminal platform provides an expanded range of environmentally-friendly
+products selection and packaging materials supply; (iii) we have set up the Incubation Project of Innovative Products
+for Food Delivery Packaging - a joint effort with package producers to conduct R&D and produce innovative, green
+packaging; (iv) we have united with foods and beverage brands to form a food delivery containers recycle union
+and collect and recycle food containers. More than 350 pilot stations have been built to recycle plastic containers
+in offices, communities, campuses and food and beverage outlets; and (v) we have joined a joint task force for the
+supply chain of green and recyclable plastics initiated by China Petroleum and Chemical Industry Federation and
+the China National Resources Recycling Association, establishing an evaluation system for plastic products that are
+easy to recycle and reuse. This will help to promote the application of green and recyclable plastics and to develop
+a supply chain for green plastics.
+Research on environment-friendly ways: we cooperated with universities, research institutes, trade associations
+and consultancies to explore industry-wide environment protection solutions and participate in the formulation
+of industry standards. Our Report on Food Delivery Industry Insights of Environmental Protection and Three-year
+Progress of the Lush Mountain Plan provided specific interpretations of environmental protection in the food
+delivery industry, in terms of basic understanding, industry trends and innovative plans. We have joined hands with
+the China Hospitality Association to publish the first Guideline on Sustainable Catering Merchants, to encourage
+the uptake of concepts such as sustainable food materials, delivery packages, energy efficiency management and
+back-end processing. In a think-tank capacity, we continue to play the role of "Advisory Panel of Environmental
+Protection for the Lush Mountain Plan Dedicated Fund" by conducting research and discussions for the
+industry. And to share expert views and drive the industry's recycling development, we cooperate with the China
+Environmental Protection Foundation and the China Association of Circular Economy to create the Expert Opinions
+Column.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+120
+Total GHG emissions per square metre floor area of the office (tonnes per square meter)
+Total hazardous waste (tonnes)
+Hazardous waste per capita5 (tonnes per employee)
+Total nonhazardous waste (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+Meituan 2020 Annual Report
+Warehouses and service stations
+Total greenhouse gas (GHG) emissions (tonnes)
+Energy and resources consumption 7,8,9
+HQ offices
+Total energy consumption (MWh)
+Nonhazardous waste per capita (tonnes per employee)
+Total energy consumption per square metre floor area (MWh per square metre)
+Total energy consumption per capita (MWh per employee)
+In 2020, for the third consecutive year, we won the CCM World Group's Golden Headset championship, which rates
+China's best customer service centers.
+By soliciting feedback through questionnaires, we identify and analyse reasons for consumer dissatisfaction and
+areas that require work.
+We allow customer service personnel flexibility, so that they can adapt to different situations and hence provide
+better service and a better experience for customers. For example, if we receive complaints about a merchant
+refusing to serve a customer, once these complaints are confirmed, personnel can suspend the merchant from the
+platform until the rectification is completed.
+We timely check and respond to customers' feedback and demands through different ways, including online
+customer service, telephone, Weixin, email and public opinion monitoring. Our ongoing enhancement and
+standardisation of the customer-complaint and problem-solving process includes specifying responsible parties at
+every key junction, from problem initiation to handling to solving, which facilitates the supervision on the problem
+solving and feedback of main responsible parties.
+Meituan 2020 Annual Report
+Customer service
+We guide merchants to provide safe and healthy products and services to consumers. In 2020, we undertook
+multiple projects to standardise the quality of merchants to enhance consumers' experience. For instance, our
+Standards for Online Information Disclosure of Catering Merchants' Health Services guide merchants to strengthen
+self-discipline in information disclosure. Meanwhile, our Safe Restaurant project encouraged merchants to
+upload their pandemic prevention measures and the nucleic acid testing results of their staff to help users decide
+where to eat. Similarly, for hotel merchants, we worked with the China Hotel Association to implement the Safe
+Accommodation project. The China Hotel Industry Pandemic Prevention and Self-discipline Convention set out our
+standards for hotel hygiene and cleaning, again enabling users to make informed choices. We also collaborated
+with the China Tourist Attractions Association to create the Convention on Self-discipline of Pandemic Prevention
+in Chinese Tourism Attractions. This provided disclosure guidelines for our Safe Entertainment project, assisting
+tourist attractions to disclose epidemic prevention information, bolstering the safety of tourists. Merchants'
+awareness and service have been strengthened by these online training systems, regular group-based courses and
+lectures by experts.
+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, the Policy on Merchant Integrity Management,
+Regulations for the Release of Merchant Information, Convention on Merchant Integrity and its Management
+Measures, Specifications on Meituan Food Delivery Provider's Service, Regulations for Non-reception of In-store
+Dining 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
+We constantly strive to improve customer satisfaction by providing high-quality customer service. We set up
+operation centers in Beijing, Shanghai, Shijiazhuang and Yangzhou with professional service teams. We practise
+smart customer service, equipping teams with intelligent assistant that quickly answer high-frequency and repetitive
+questions, automatically handle standardised tasks, deal with sudden peaks, and enhance our handling of customer
+issues.
+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. Strict management and controls 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.
+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 front to back to co-governance, including: (i) front-end: building a brand protection database
+to intercept the source of infringing stores; (ii) back-end: launching and iterating our IPR protection platform (ipr.
+meituan.com) to meet the demands of brand rights protection and improve processing efficiency and transparency;
+and (iii) co-governance: governing jointly with regulatory and judicial institutions, including offering public welfare
+courses to merchants and issuing expert opinions on problematic complaints, to enhance merchants' legal
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Intellectual property rights
+We emphasis 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 in which we operate.
+We have established effective mechanisms to control intellectual property risks, such as: (i) systematically
+identifying and evaluating intellectual property risks, making response plans, and improving prevention mechanisms;
+(ii) establishing evaluation procedures in key business links, including pre-examination rules for IPR in procurement,
+trademark reviews during new brand design, and the determining of IPR for major projects; (iii) monitoring and
+cracking down on external infringements by cleaning up fake trademarks and applications, to enhance the integrity
+of the market and protect the interests of users; (iv) enhancing our resilience to risk through external communication
+and cooperation. For example, we have joined LOT Network (License on Transfer Network) and OIN (Open Invention
+Network). Both help to create a safer domestic and international environment for business development; and (v)
+undertaking ongoing training and publicity to raise business departments' awareness of IPR risks.
+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 and spurring
+innovation through spiritual and material incentives. In 2020, applications for trademarks, patents and software
+copyrights increased steadily, and Meituan itself was recognised as a Nationally Well-known Trademark.
+awareness.
+We participate in communication and research targeted at the protection and use of internet IPRs. 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 2020, we won the National Intellectual Property
+Administration's 22nd China Patent Excellence Award.
+134
+2020 Annual Report
+Merchants management
+Meituan
+2020 Annual Report Meituan
+We also attach great importance to the safety management of the bike and electric bike sharing service. We
+manage the operation of shared bikes and electric bikes in line with relevant regulations issued by different cities for
+Internet bike and electric bike renting service. We increase bike and electric bike operation and maintenance and
+maintain rapid response. In order to ensure the safety of riding, we have established and implemented strict quality
+inspection standards for bikes and electric bikes and their parts, which apply to production and maintenance
+processes. In 2020, no major accident was caused by quality flaws of shared bikes and electric bikes.
+130
+To regulate car-hailing and ensure passenger safety, vehicles and drivers are registered and reviewed in
+accordance with supervising regulations. Vehicles participating in the car-hailing 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.
+Platform responsibility
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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 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. In accordance with the relevant requirements of the Electronic Commerce Law of the People's
+Republic of China and the Measures for the Supervision and the 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 Implementation Rules 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 Treatment of Illegal Acts in Online
+Food Safety and other laws and rules, we are responsible for the supervision and review of the merchants on the
+food delivery platform, as well as our self-operated businesses.
+Our Food Safety Committee formulates strategies, interprets laws and regulations with further implementations,
+and coordinates departments to ensure food safety. We establish food safety management system and food
+safety office at the company level, as well as quality control team in food line of business, comprehensively
+improved organizational personnel structure. 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 management 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.
+Regulations 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 undertake regular, scientific evaluation of our
+takeout food, to identify risks and propose improvements. To objectively evaluate the safety performance of online
+merchants, and the cleaning and disinfection of delivery boxes, we engaged third parties to carry out sampling
+tests and verification. Together with the China Cuisine Association and industry-leading catering partners, we
+formulated the Code for Sealing of Delivery Food and Beverage, based on the characteristics of Chinese food. We
+urge merchants to use it as a guide, to strengthen the standardisation of deliveries.
+Meituan
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We manage and monitor service quality and safety during car-hailing operation hours. In 2020, the measures we
+have taken included: (i) conducting psychological health assessments, identifying drivers with high psychological
+risk, and taking timely countermeasures; (ii) providing online and offline pre-job training, daily training and error
+correction training for drivers, plus daily safety publicity for passengers and partners; (iii) conducting facial
+recognition for drivers before daily operation; (iv) developing functions such as trip recording and one-click alarms,
+setting up 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) carrying out safe product strategy
+scenarios and sand table exercises to optimise the response and disposal process of risk order monitoring; and
+(vi) establishing classifications for crisis events, strengthening cooperation with public security organisations, and
+enhancing guidelines for emergency disposal procedures.
+Our Guidelines for Food Safety Management and Control of Self-operated Brand Commodities and Food clarify
+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 of fruits, vegetables, aquatic products, meat and
+poultry. This enhances safety and improves the management of suppliers.
+Training for employees, riders, suppliers and merchants nurtures our food safety culture. At regular training of Food
+Safety Lecture, industry experts share instructive practices, regulations and policies. Riders are regularly reminded
+of food safety and pandemic prevention requirements in the delivery process. Our weekly Safe Catering Column, for
+suppliers and merchants, shares popular science articles and practical suggestions. And, in 2020, we hosted our
+industry's first food safety quiz, to enhance the awareness of merchants with delivery businesses.
+-
+We actively participate in the social co-governance of food safety, strengthen cooperation with regulators and
+other parties, and maintain online and offline collaborative governance. By integrating government and business
+data, we improve the management of prior business qualification examination, accurate supervision of big data,
+and the severing of relationships with merchants who present problems. In collaboration with market supervision
+departments, we launched the Government-Enterprise Communication Online Licensing service to help
+merchants apply for food licenses and qualifications more conveniently. This supports the evolution of the online
+smart governance model. We engage and cooperate with associations, universities, scientific research institutions,
+the China Cuisine Association, the China Chain Store and Franchise Association and other industry organisations.
+We also work with Renmin University's Center for Collaboration and Innovation of Food Safety Governance on the
+research of governance of small restaurants.
+Ride safety
+We continually improve the safety management mechanism to enhance users' safety.
+We conduct daily management and monitoring of service quality and safety during the operation of online
+car-hailing. Abiding by the Interim Measures for the Management of Online Taxi Booking Service, we conduct pilot
+online car-hailing and information-matching. We and our service providers hold online car-hailing licenses in our
+areas of operation.
+In 2020, we upgraded the Safety Committee to the Safety and Risk Management Committee. This enhanced the
+pre-control capacity of safety risks on the basis of rapid response and handling of incidents. Our traffic accident
+and safety incident response process, staffed by dedicated personnel, handles issues and accidents.
+2020 Annual Report Meituan
+131
+132
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Confronted with the pandemic, while meeting the fundamental catering service demands of users, we innovate food
+safety products and services considering key segments such as food safety and epidemic prevention, food delivery
+and cold chain food management. Meanwhile, we joined market supervision bodies to livestream food safety and
+pandemic prevention information that supported the safe resumption of work. Our Guidelines for Disinfection of
+Imported Cold Chain Foods and Emergency Response Plan for Imported Cold Chain Foods reduced risks in all
+links and protected the safety of employees, merchants, riders and users.
+Data security and user privacy
+Meituan
+Our Data Security and Governance Committee prevents data risks through organizational guarantee, mechanism
+construction and targeted promotion. Our sound management is embodied in the 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.
+137
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Development of integrity culture
+Anti-corruption is one of our organizational capabilities and a core element of our competitiveness. We have
+cultivated our integrity culture via training, assessments, and publicity.
+Integrity training and system publicity for employees at different levels including the board of directors and senior
+management are conducted followed by exams about our Sunny Workplace Code of Conduct. In 2020, we
+conducted 291 integrity training or publicity sessions. The participants totaled 30,848. Board members undertook
+one training session and we held 14 anticorruption sessions for senior management. Overall participation in our
+annual integrity exam reached 99.4%, of whom 99.8%, passed.
+We emphasise training and assessment for positions with a high risk of corruption. For example, employees
+involved with procurement are trained in antibribery and clean procurement. Irregular tests for all staff in the
+procurement department raise their awareness of bribery and fraud risks.
+Our culture of integrity is bolstered by a series of publicity activities including the oath to uphold the Seven Integrity
+Declarations of Meituan, the initiative of Five Knows of Integrity Cooperation of Meituan issued to all partners and
+the second Cultural Values Day. And we have undertaken integrity index survey for four consecutive years since
+2017, soliciting employees' perceptions of and attitude to integrity, behaviour and policies. We share the results
+with the whole company.
+Whistle-blowing and inspection mechanism
+Our Sunny Platform encourages employees to proactively report the 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 accepting of reports, investigation and inquiry, qualitative
+judgment, appeals and penalties. Standardized clue operation is characterised by full coverage, no omissions,
+high efficiency and mandatory feedback. We protect whistleblowers and their rights and interests. Our Department
+of Supervision accepts reports on fraud and forms investigative teams. An appeal and clarification mechanism
+ensures the fairness and accuracy of the investigation. Employees found guilty of fraud are dismissed. Cases that
+violate national laws are referred to judicial authorities. In 2020, we disclosed cases four times: on the eve of the
+Spring Festival, Cultural Values Day on 28 April, the Dragon Boat Festival and the Mid-autumn Festival, notifying the
+integrity violations in a timely manner.
+We co-founded the Sunshine Integrity Alliance in 2017 and continue to participate in its anticorruption actions via
+an inter-enterprise information sharing mechanism. Our annual anticorruption announcements also help to foster a
+clean community with our partners.
+138
+2020 Annual Report Meituan
+2020 Annual Report
+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 Provisions on Anti-money Laundering through Financial Institutions, the Measures for the Administration
+of Financial Institutions' Reporting of Large-sum Transactions and Suspicious Transactions, the Measures
+for Administration of Client Identity Identification and Preservation of Client Identity Information and Trading
+Records of Financial Institutions, the Measures for the Administration of the Reporting by Financial Institutions of
+Suspicious Transactions Involving Terrorist Financing, the Administrative Measures for Anti-money Laundering and
+Counterterrorism Financing of Payment Institutions and the Administrative Measures for Anti-money Laundering
+and Counterterrorism Financing of Internet Financial Institutions (Trial).
+In 2020, in accordance with the latest regulatory documents and requirements, we revised our Administrative
+Measures for Anti-money Laundering and Counter-terrorism Financing, Administrative Measures for the Reporting
+of Large-sum Transactions and Suspicious Transactions, and Administrative Measures for Money Laundering Risk
+Assessment. To enhance our anti-money-laundering efforts, we formulated three other documents including the
+Administrative Measures for Branches' Reporting of Money Laundering and Terrorism Financing Activities.
+Our anti-money-laundering center is complemented by dedicated departments with specific responsibilities.
+Staff members focus on compliance, suspicious transactions, anti-money-laundering product designs and
+anti-money-laundering system support. Each branch has an anti-money-laundering team and department.
+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 throughout the business development process.
+In accordance with our "Know Your Customer” and “risk-based" principles, we verify qualifications and licenses
+submitted by merchants, and verify merchant identities via third parties. Through system screening and manual
+analysis, we identify and monitor money-laundering and terrorism-financing risks related to our business, and report
+confirmed suspicious transactions to relevant authorities in a timely manner. We regularly enhance the accuracy
+and effectiveness of our monitoring system via evaluation and optimisation.
+We attach great importance to employees understanding money laundering, and being vigilant for it. In 2020,
+we offered or participated in 18 training programmes that covered anti-money-laundering laws and regulations,
+the case study of suspicious transactions, and valuable experience shared by industry partners. We also raised
+awareness via the internal knowledge base, workgroups and our Weixin account. Offline campaigns at our
+branches, in business districts and among communities, involved a wide range of participants and achieved
+considerable results.
+We communicate and interact with anti-money-laundering authorities, regulators and self-regulating industry
+organisations, and assist them to raise public awareness. In 2020, we cooperated with the People's Bank of China's
+Harbin Central sub-branch to publish the Survey on the Pros and Cons of the Digital Identification Systems and
+Solutions for Risk Prevention on Anti-Money-Laundering Practice in China.
+2020 Annual Report Meituan
+139
+PRODUCT RESPONSIBILITY
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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, 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 Protection of Children's Personal Information Network, and other relevant laws and regulations, we have
+implemented procedures and controls to protect user data and reduce the risk of leakage.
+Additionally, taking 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 Risk Management and Internal Control -
+Organizational Structure for Risk Management section in the Corporate Governance Report included in this annual
+report.
+-
+Our information security management covers authorisation, security assessment, encryption, data backup and
+vulnerability prevention and control. Our self-established user account with systematic and universal authorisation
+and management has enabled us to regularly check the status of user accounts and related authorisation
+information and to manage access via network devices. We periodically evaluate the security of our databases
+and servers. There is user data encryption at 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.
+Through confidentiality agreements, monitoring and auditing, we enhance our prevention of personal data being
+accessed without authorisation, disclosed in public, used, modified, damaged or lost. 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. We 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 of 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 Protection Level 3
+Certification.
+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 beginning work. In everyday work, we educate all employees about information
+security and regulations via online and offline training. Our Sunny 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 are strongly punished.
+2020 Annual Report Meituan
+135
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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 Standardisation Technical Committee, we actively
+participated in the formulation of national standards for data security and user privacy. In 2020, we participated
+in the formulation of standards by the China Academy of Information and Communications Technology for the
+App User Rights Protection Evaluation Specification and the Minimum Necessity Evaluation Specification for App
+Collection and Use of Personal Information, and put forward suggestions on the development of industry standards.
+Compliance of information
+Compliance in 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 review advertising review standards and processes.
+We strengthen the construction of the advertising review team, and organise learning and training to publicise
+compliance knowledge and cases of violations in order to increase the awareness of advertising risks and
+compliance capabilities. At the same time, we developed a sensitive thesaurus filtering system 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, so as to ensure
+that the published content conforms to relevant laws and regulations, and that risks of violations of the law are
+properly controlled. Additionally, in order to protect the rights and interests of consumers, we set up relevant
+special advertising review regulations and focus on review of advertisements in special industries such as medical
+treatment, medicine and health food.
+Our Sunshine Committee implements the trinity model prevention, investigation and publicity - to combat
+fraud. Adhering to our Integrity Framework System - Sunshine Committee Operation Mechanism, 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 continually 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) coordinating the
+establishment of the Reporting Platform, Investigation and Handling Platform, Adjudication Platform, Grievance
+Platform, Enforcement Platform, and Document and File Management Platform, which were integrated into the
+Case Investigation Platform.
+Compliance of UGC
+136
+Meituan
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Compliance of POI
+We attach great importance to the quality and accuracy of POIs (points of interest, i.e., the places considered
+interesting or helpful by the users). We have implemented control for POI information review, and seek to enhance
+the quality of POI. Specifically: (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 improper and illegal POIs; (iii) adopting quality review and sampling inspection manually;
+and (iv) setting up communication channels with regulatory institutions and continuously optimize management
+according to regulatory requirements. In 2020, we iterated and optimized the POI review as well as anti-cheating
+strategies and expanded partial POI publishing qualification review requirements and information verification
+channels, which jointly improved the POI quality management.
+ANTI-CORRUPTION
+Anti-fraud
+We strictly adhere to the Criminal Law of the People's Republic of China, the Law on Repression of Unfair
+Competition of the People's Republic of China and other relevant laws and regulations. We strengthen our
+anti-fraud management and internal systems and foster a culture of integrity.
+Anti-fraud system and system construction
+Internal systems - including the Sunny Workplace Code of Conduct, Conflicts of Interest Avoidance and Sunny
+Declaration System, Prohibition of Private Agreements, Prohibition of Confidential Information Disclosure and
+Management System of Receiving Gifts - prevent corruption risks and standardise the behaviour of employees.
+These rules apply to all employee and provide basic guidelines for the development of integrity.
+For the quality 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. On our
+platform, the Integrity Convention of Meituan Dianping Users clarifies responsibilities and obligations. Our review
+mechanism has improved UGC quality via automated and manual inspection. Our five-layer manual review
+mechanism assigns reviewers according to the content, with special personnel for high-risk material. 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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+133
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+Meituan 2020 Annual Report
+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.
+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
+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.
+How our audit addressed the Key Audit Matter
+As at December 31, 2020, the net carrying amount of
+goodwill amounted to RMB27.6 billion.
+Impairment assessments of goodwill
+Key Audit Matter
+INDEPENDENT AUDITOR'S REPORT
+148
+147
+2020 Annual Report Meituan
+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
+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. Revenue
+of RMB114.8 billion was recognised for the current year.
+Our procedures in relation to the revenue recognition
+included:
+Refer to Notes 2.9, 2.11, 4.4 and 16 to the consolidated
+financial statements.
+We independently tested, on a sample basis, the
+accuracy of mathematical calculation applied in the
+valuation models and the calculation of impairment
+charges.
+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 assessed the adequacy of the disclosures related
+to goodwill impairment in the context of the applicable
+financial reporting framework.
+2020 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Encouraging users to participate
+We promote public welfare projects via ever-expanding channels, to attract volunteers and help them better
+understand the concept and value of public welfare:
+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 A Special Dish for Veterans on our payment page, Hope Kitchen
+and Nutrition Meals for Children in Rural Areas on our map page, and Helping and Protecting Struggling Kids
+on our wallet page. These aimed to prompt participation in public welfare by creating emotional resonance.
+Integrating user behavior: We combine public welfare with user behaviors and guide users to participate
+in public welfare in various forms when enjoying life services. We focus users' attention on environmental
+protection via takeaway food orders. Those who choose the "no tableware" option when ordering can get
+corresponding energy credits for public welfare funds, and donate those credits to environmental public
+welfare projects.
+Engaging with public welfare festivals: We organise events with different themes during important public
+welfare festivals. For example: (i) we cooperated with the United Nations World Food Programme to launch
+the Zero Waste for Takeaway Food initiative. This encouraged merchants to offer zero-waste packages,
+small-portion dishes and standard food descriptions, and encouraged users to order less and hence cut
+food waste by offering them small-portion dishes and making standard food descriptions; (ii) we cohosted
+a science quiz with China Science Communication. Designed to encourage the public to eat a balanced
+diet, the quiz attracted nearly 800,000 users, of whom more than 250,000 answered questions; and (iii) we
+participated in the ninth National Traffic Safety Day: a joint initiative by businesses and the police that uses
+video calls and interactive games to popularise the idea of safe driving.
+Encouraging employee participation
+Our employees are important participants in public welfare activities, through which they enhance their
+understanding of social values. Their contributions include donations, visits, a Public Welfare Day and public welfare
+salons:
+Monthly Donation Program: We encourage our employees to donate RMB1 per day to support the children of
+riders in the industry. In 2020, more than 10,000 employees joined the programme and donated RMB835,843,
+helping 22 children who suffer from serious diseases.
+Family Day: We set up a public welfare program on Family Day included a public welfare element. Family
+members of employees created paintings for welfare projects and donated proceeds from auctions to public
+welfare projects.
+2020 Annual Report Meituan
+141
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Clothes donation: We collect donations of clothes from employees, and put boxes in offices to collect other
+donated items.
+Blood donation: We regularly organise employee blood donations in selected areas to support local medical
+We also considered whether the judgements made in
+selecting the models, significant assumptions and data
+would give rise to indicators of possible management
+bias.
+OTHER INFORMATION
+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.
+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.
+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.
+How our audit addressed the Key Audit Matter
+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.
+149
+Sunny Bazaar: All kinds of gifts declared through our Sunny Workplace initiative are sold at charity bazaars
+and all proceeds are donated to public welfare projects.
+Party member public welfare: We organize employees who are members of the Party to help schools for
+migrant workers' children in Picun, Beijing through various means.
+.
+•
+care.
+2020 Annual Report Meituan
+Meituan
+Refer to notes 2.27, 4.5, 4.7 and 6 to the consolidated
+financial statements.
+Key Audit Matter
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2020 Annual Report
+In 2020, we established our Digital Talent Development System. Its four elements - capability standards, a learning
+map, curricula and certification - nurture digital talents 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. After completing the Meituan University courses, trainees can take exams and
+obtain certificates jointly issued by the national associations and the university. With excellent performance in hotel
+management training, we have been honoured as one of the fourth group of vocational education and training
+evaluation organisations by the Ministry of Education ("MOE"). We have also been chosen to pilot the 1+X certificate
+programme: with the MOE's endorsement, we can issue Hotel Revenue Management Skills certificates to students
+in vocational colleges and practitioners in the industry.
+We endeavour to promote our industry's overall development by enhancing the quality of life for 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
+- by establishing the digital talent development platform Meituan University in 2019. We also formulated the
+Meituan University Charter and set up training schools for different segments of the service industry. Training
+covered catering, takeaways, hotel management, delivery, beauty care, wedding services, parent-child services and
+household retail.
+Building capacity for the life service industry
+We introduced the beautiful scenery of poverty-stricken areas to the outside world and attracted tourists by
+showcasing local characteristics. Meanwhile, we worked with local authorities to develop smart tourism in
+impoverished areas. We also assisted in the scientific management of scenic spots by digitalising ticket service and
+marketing statistics and designing staggered visiting times. We provided online services for 76,900 hotels in 807
+impoverished counties across the country in 2020.
+Tourism poverty alleviation
+Using the internet, we connected merchants, users and people in poverty-stricken areas to accomplish poverty
+alleviation through technology-driven development, joint efforts and continual measures and investment. We
+initiated the Lush Mountain Public Welfare Action program and were promptly joined by a number of merchants on
+our platform. They donated money from each food delivery order for environmental protection and public welfare.
+As of the end of 2020, more than 350,000 merchants had donated a total RMB4.9 million to impoverished villages in
+areas such as Yunan, Gansu, Inner Mongolia and Qinghai. The funds have supported 15 economic crop plantations,
+including Sichuan pepper and Orah mandarin, benefitting 1,800 poor households. We launched the Transforming
+Shared Bikes to Sports Ground project in areas such as Guizhou, Sichuan, Hubei and Fujian, to help disadvantaged
+children. We also solicited funds for poverty alleviation projects through meituan.gongyi.com and had raised a total
+of RMB82 million from 7.6 million donations by the end of 2020.
+Public welfare poverty alleviation
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+144
+143
+2020 Annual Report Meituan
+See the Meituan Poverty Alleviation Report 2020 for more information.
+Meituan University worked with China Entrepreneur and the China International Engineering Consulting Corporation
+to found the Economic Talent Development Committee. And to promote the development of talents in the life
+service industry, we formulated a Partners Sharing Plan with industrial associations and representative enterprises.
+10
+Consumption poverty alleviation
+We began to offer training in employment and entrepreneurship in impoverished counties through the New Young
+Dreamers Plan, and launched the Life Service Digitalization Talent Pool with Meituan University in 2019. For life
+service entrepreneurs and employees in poverty-stricken areas, we provided training and on-site teaching in food
+delivery, hotel management, alternative accommodation services, rural tourism and internet marketing. These
+programmes have transformed poverty alleviation work from financial support to industry-based assistance. As of
+the end of 2020, we had held 31 practical training sessions for over 5,000 trainees in nine provinces and cities.
+Training poverty alleviation
+We promoted the development of an industry value chain in urban areas, indirectly creating a large number
+of employment opportunities and effectively helping workers earn money. To mitigate poverty caused by the
+pandemic, we launched the Return Plan in Spring program with our partners. The plan established a green
+channel for left-behind populations listed in the national poverty register, creating more than 700,000 long-term
+and flexible employment opportunities across the country. We helped left-behind people by launching rider
+recruitment programs in poverty-stricken counties, implementing the New Employment for Counties program in 52
+impoverished counties and communicating with provincial capitals and neighbouring areas. By the end of 2020, a
+total of 9.5 million delivery riders had earned income on our platform. Among them, around 2.3 million came from
+impoverished counties.
+Employment poverty alleviation
+In 2020 - a rewarding year for the national poverty alleviation initiative - we launched the New Beginnings in
+Counties program, focusing on employment, training, digitalisation, tourism and public welfare. Through the
+program, a dual circulation of county-level economic development driven by employment and consumption,
+achieving both poverty alleviation and rural vitalization. Applying our own development philosophy to the challenge,
+we established a model of business driving poverty relief and poverty relief rewarding business, stimulating the
+self-development ability of the poor and consolidating the outcomes.
+Poverty Alleviation10
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2020 Annual Report
+Meituan
+142
+Responding to Floods: We launched programs - including the Red Cross Society of China's 2020 Actions for
+Floods and the One Foundation's Aid to Floods in Southern China - to raise funds and provide necessities for
+people affected by floods.
+Facilitating post-pandemic economic recovery: When the pandemic was contained, we launched the Spring
+Wind Project: Recovery Assistance to help life service providers resume work and production. Its measures
+included: (i) lowering commission rates and expanding the coverage of preferential loans to ease merchants'
+cashflow problems; (ii) strengthening supply chain management to ensure adequate inventory and normal
+prices; (iii) providing merchants with digital solutions such as "full-scenario attraction of customers", "new
+consumer experience” and “intelligent management" to enhance their digital operation capabilities; and (iv)
+working closely with government bodies in various cities to boost consumption by launching campaigns
+including the Safe Consumption Festival and offering consumers vouchers, coupons and discounts.
+-
+To enhance the online merchant rate and the digital infrastructure in impoverished counties and towns, we
+implemented the idea of boosting consumption by sending migrant workers out, attracting tourists and offering
+online services for merchants. We also assisted small, medium and micro businesses in poverty-stricken areas
+with supply-side reform, and helped merchants offer online services on various platforms, expand their takeaway
+business, enhance brand awareness and increase their income. In 2020, we offered online services for nearly
+480,000 merchants in catering, tourism and hotel services in 814 impoverished counties. We achieved an online
+trade volume of approximately RMB3.479 billion, through 696 million orders.
+We launched the Spring Wind Project: Recovery Assistance in February 2020 and offered more than 1,500 free
+courses to help life service practitioners shed the problems of the pandemic and resume work and production.
+We introduced food security, work resumption measures and contactless operations to small, medium and micro
+businesses via live broadcasts for Spring Wind Lecture and courses such as Guard a Small Store.
+As of the end of 2020, we had over 2,611 lecturers in the life service industry. We have developed more than 4,000
+courses in practical operations, business operations, management and industry dynamics, with a cumulative output
+of approximately 1,000 training sessions for 3.88 million merchants and 23.76 million trainees. Offline courses have
+been utilised in 455 cities nationwide.
+2020 Annual Report Meituan
+Impairment assessments of goodwill
+Revenue recognition
+Key audit matters identified in our audit are summarised as follows:
+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.
+INDEPENDENT AUDITOR'S REPORT
+KEY AUDIT MATTERS
+Meituan 2020 Annual Report
+146
+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 Code.
+Independence
+Responding to unexpected disasters
+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.
+BASIS FOR 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, 2020, 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.
+Our opinion
+the notes to the consolidated financial statements, which include a summary of significant accounting
+policies.
+the consolidated statement of cash flows for the year then ended; and
+145
+INDEPENDENT AUDITOR'S REPORT
+To the Shareholders of Meituan
+(incorporated in the Cayman Islands with limited liability)
+OPINION
+What we have audited
+Revenue recognition
+The consolidated financial statements of Meituan (the "Company") and its subsidiaries (the “Group") set out on
+pages 152 to 272, which comprise:
+•
+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 financial position as at December 31, 2020;
+140
+We encouraged the integration of our Public Welfare Merchant Program into the daily business of merchants. As of
+the end of 2020, the plan had encompassed catering, hotel, food delivery, tickets, and other businesses, with more
+than 390,000 participating merchants. With the One Foundation and our public welfare merchants, we launched
+our Build Sports Fields for Kids in Mountainous Areas program. Its aim was to build multifunctional playgrounds
+for public kindergartens in remote mountainous areas and villages, to help their children grow up happily and
+healthily benefiting from sports education and outdoor facilities. As of December 2020, the programme had been
+implemented in Hezhang County, Weining County, Nayong County, Zhijin County and other counties of Guizhou
+province. A total of 13,000 public welfare merchants donated to, and constructed 12 such playgrounds. Merchants
+also participated in our Hidden Food Program, part of our Lush Mountain Public Welfare Action initiative, alerted
+users to tasty local food, so that small and micro businesses could make money despite the serious influence of
+the pandemic. In response to the Clean Plate campaign, we worked with catering brands to advocate reducing
+food waste by offering half-portion or small-portion dishes. We also endeavoured to popularise the idea of healthy
+and eco-friendly living with our public welfare merchants through initiatives such as Sustainable Lifestyle and Stop
+Eating Wildlife.
+Joining forces with platform merchants
+Fighting against Covid-19: We set up a special fund upon the outbreak of Covid-19 in January 2020. At the
+very beginning, we cooperated with the Chinese Red Cross Foundation and other charities to launch 12 public
+welfare activities, covering pandemic prevention and control, medical assistance, psychological assistance,
+medical care and post-pandemic support. Measures included: (i) offering free rides to medical staff and
+frontline workers; (ii) offering catering for medical staff and delivering food to hospitals and medical teams sent
+to Hubei to aid coronavirus control; (iii) providing psychological assistance to medical staff, patients and the
+public; (iv) providing frontline workers and policemen with special assistance funds; (v) launching the Salute
+to Heroes in Harm's Way program that linked more than 2,000 scenic spots across the country to provide free
+access to medical staff; and (vi) making appointments for nucleic acid tests in 39 cities - including Wuhan,
+Beijing, Guangzhou and Shanghai – available on meituan.com and dianping.com.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We joined the Combating Money Laundering Forever campaign by the People's Bank of China's Changchun Central
+sub-branch, which raised public awareness and showcased relevant achievements. We also cooperated with the
+Dalian branches of the People's Bank of China and local Party and government offices to undertake a campaign
+titled Proper Use of Payment Codes and No Sharing of Credentials and Account. These activities benefited a
+number of merchants and community residents with wide coverage.
+In 2020, we actively responded to events of public health emergencies and natural disasters, and fulfilled our
+corporate social responsibility to guarantee people's livelihoods, stabilise employment and promote economic
+recovery.
+While advancing our own development, we actively communicate with communities to understand their needs, and
+carry out public welfare and charity activities with the idea of "Internet +”. We train life service practitioners through
+various channels, to boost the impact of our community investment.
+We officially launched gongyi.meituan.com, a fundraising information platform of charitable organizations
+designated by the Ministry of Civil Affairs. It aimed to provide charities with equal and accurate information and
+fundraising services, and create a secure, effective and convenient donation channel for the public.
+COMMUNITY INVESTMENT
+Public welfare platform and projects
+386
+Income tax credits/(expenses)
+Profit before income tax
+107,353
+264,105
+12
+Share of gains of investments accounted for
+using equity method
+(191,042)
+(370,016)
+166,217
+213,684
+110
+Finance costs
+Finance income
+2,679,860
+4,330,102
+Operating profit
+2,531,143
+3,160,835
+9
+Other gains, net
+77,699
+4,955,909
+19
+through profit or loss
+Fair value changes on other financial investments at fair value
+(645,685)
+(467,690)
+13
+4,437,875
+269,737
+2,762,388
+Net provision for impairment losses on financial assets
+10,617
+10,617
+Total transaction with owners in their capacity
+Transaction with non-controlling interests
+Disposal of a subsidiary
+460,290
+460,290
+The notes on pages 160 to 272 are an integral part of these consolidated financial statements.
+0.38
+0.78
+14
+Diluted earnings per share (RMB)
+0.39
+0.81
+14
+Basic earnings per share (RMB)
+attributable to the equity holders of the Company
+Earnings per share for profit for the year
+2,236,165
+4,707,612
+(2,604)
+2,238,769
+4,708,313
+(701)
+Non-controlling interests
+Equity holders of the Company
+Profit/(loss) for the year attributable to:
+Profit for the year
+2,236,165
+4,707,612
+11,003
+(526,223)
+(5,593,895)
+7
+151
+2020 Annual Report Meituan
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, March 26, 2021
+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, 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
+2020 Annual Report
+Meituan
+150
+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.
+•
+•
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+scepticism throughout the audit. We also:
+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
+(1,614,957)
+CONSOLIDATED INCOME STATEMENT
+(4,338,954)
+Year ended December 31,
+2020
+RMB'000
+General and administrative expenses
+(10,892,514)
+7
+Research and development expenses
+(18,819,067)
+(20,882,685)
+7
+32,320,388
+34,050,142
+Selling and marketing expenses
+Gross profit
+(80,744,368) (65,208,143)
+7
+Cost of revenues
+97,528,531
+114,794,510
+15,376,424
+786,032
+884,897
+20,788,216
+65,525,997
+15,840,078
+74,213,352
+18,908,045
+6666
+Other services and sales
+Interest revenue
+Online marketing services
+Commission
+Revenues
+RMB'000
+2019
+Note
+(8,445,664)
+444,915
+2,075,242
+scheme
+Shares held for shares award
+3,272,930
+3,272,930
+3,272,930
+27.33
+expenses
+26
+Share-based compensation
+Transaction with owners in their
+1,728,980
+(701)
+1,729,681
+(2,978,632) 4,708,313
+Total comprehensive income
+(60)
+(2,920,302)
+capacity as owners
+1
+(1)
+Exercise of option and RSU vesting
+- 44,862
+44,862
+44,862
+payments
+Tax benefit from share-based
+21,671
+21,671
+21,671
+12,27
+an associate
+Share of equity movement in
+511,438
+511,438
+(2,283,840)
+1
+5 2,795,272
+26.27
+(2,920,302)
+Appropriations to general reserves
+(2,920,302)
+Currency translation differences
+(701) 4,707,612
+4,708,313 4,708,313
+92,054,394
+(58,051)
+(4,447,252) (163,800,621) 92,112,445
+389 260,359,929
+RMB'000
+Share of other comprehensive
+RMB'000
+interests
+Non-controlling
+Other Accumulated
+reserves
+losses Sub-total
+RMB'000 RMB'000 RMB'000
+Shares held
+Share for shares
+premium award scheme
+RMB'000 RMB'000
+RMB'000
+capital
+Note
+Total
+loss of investments accounted
+for using the equity method
+Changes in the fair value of other
+12,27
+(60)
+(60)
+27
+comprehensive income
+at fair value through other
+short-term treasury investments
+Changes in the fair value of
+84,387
+84,387
+84,387
+20,27
+income
+through other comprehensive
+financial investments at fair value
+(142,657)
+(142,657)
+(142,657)
+27
+34,047
+108,195
+Total transaction with owners
+3,905
+3,905
+27 - 3,905
+12,27
+Total comprehensive income
+Currency translation differences
+accounted for using the equity method
+22
+Share of other comprehensive income of investments
+2,236,165
+(2,604)
+2,238,769
+2,238,769
+86,509,772
+5,438
+86,504,334
+Other comprehensive income
+27
+679,047
+679,047
+5
+26,27
+Exercise of option and RSU vesting
+2,181,436
+2,181,436
+2,181,436
+27,33
+Share-based compensation expenses
+Transaction with owners in their capacity as owners
+Attributable to equity holders of the Company
+2,919,043
+(2,678)
+2,921,721
+2,238,769
+682,952
+678,973
+(74)
+(5,741,347) (166,039,390)
+(108,195)
+384 258,284,687
+RMB'000
+Comprehensive income
+As of January 1, 2019
+2020 Annual Report
+Meituan
+156
+97,634,275
+(58,752)
+Profit for the year
+(6,262,066) (159,200,503) 97,693,027
+As of December 31, 2020
+3,850,901
+(108,195) 3,850,901
+1,163,818
+2,795,272
+6
+in their capacity as owners
+395 263,155,201
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Attributable to equity holders of the Company
+Share
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+interests
+Sub-total
+losses
+reserves
+premium
+capital
+Note
+Non-controlling
+Accumulated
+Other
+Share
+RMB'000
+499,088
+Share
+2,919,043
+18(a)
+Deferred tax assets
+32,699,575
+31,676,381
+16
+5,376,217
+13,917,165
+15
+Intangible assets
+Property, plant and equipment
+Non-current assets
+ASSETS
+2019
+RMB'000
+2020
+RMB'000
+Note
+As of December 31,
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+154
+153
+448,670
+2020 Annual Report Meituan
+590,054
+21
+78,268,647
+1,562,037
+605,918
+7,569,817
+22
+20
+220
+Prepayments, deposits and other assets
+other comprehensive income
+Other financial investments at fair value through
+2,283,590
+13,180,943
+12
+Investments accounted for using the equity method
+7,166,122
+10,256,786
+19
+Other financial investments at fair value through profit or loss
+200,275
+612,967
+Long-term treasury investments
+49,877,870
+The notes on pages 160 to 272 are an integral part of these consolidated financial statements.
+1,728,980
+27
+fair value through other comprehensive income
+Changes in the fair value of short-term treasury investments at
+3,905
+(300)
+12,27
+accounted for using the equity method
+Share of other comprehensive (loss)/income of investments
+Items that may be reclassified to profit or loss
+Other comprehensive (loss)/income:
+2019
+RMB'000
+RMB'000
+Note
+2020
+Year ended December 31,
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+2020 Annual Report
+Meituan
+152
+(60)
+2,919,043
+Items that may not be reclassified to profit or loss
+27
+2,921,721
+(2,678)
+(701)
+Non-controlling interests
+1,729,681
+Total comprehensive income/(loss) for the year attributable to:
+Equity holders of the Company
+Deposits from transacting users
+1,728,980
+Total comprehensive income for the year
+682,878
+(2,978,632)
+Other comprehensive (loss)/income for the year, net of tax
+84,387
+20,27
+Changes in the fair value of other financial investments at fair value
+through other comprehensive income
+(142,357)
+12,27
+Share of other comprehensive loss of investments accounted for
+using the equity method
+678,973
+(2,920,302)
+Currency translation differences
+Proceeds from exercise of option and RSU vesting
+Current assets
+23
+1,388,469
+755,694
+18(b)
+Deferred tax liabilities
+Non-current liabilities
+LIABILITIES
+2019
+RMB'000
+2020
+RMB'000
+Note
+As of December 31,
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+92,054,394
+97,634,275
+(58,051)
+(58,752)
+92,112,445
+97,693,027
+(163,800,621)
+(4,447,252)
+Financial liabilities at fair value through profit or loss
+(6,262,066)
+(159,200,503)
+114,600
+Borrowings
+Trade payables
+Current liabilities
+129,552
+184,073
+Other non-current liabilities
+992,233
+1,648,008
+15
+12,966,341
+32
+466,676
+1,957,470
+389,028
+166,700
+28
+2210
+Lease liabilities
+Notes payable
+31
+Deferred revenues
+Inventories
+27
+260,359,929
+Cash and cash equivalents
+8,760,115
+12,775,667
+25(b)
+Restricted cash
+49,435,599
+43,999,364
+21
+Short-term treasury investments
+9,591,157
+12,940,125
+22
+Prepayments, deposits and other assets
+676,762
+1,030,948
+24
+Trade receivables
+275,227
+466,492
+25(a)
+26
+17,093,559
+88,306,155
+263,155,201
+26
+389
+395
+26
+Meituan 2020 Annual Report
+Total equity
+Non-controlling interests
+Equity attributable to equity holders of the Company
+Accumulated losses
+Other reserves
+Shares held for shares award scheme
+Share premium
+Share capital
+EQUITY
+132,012,915
+166,574,802
+Total assets
+82,135,045
+13,396,185
+(218,692)
+(218,611)
+Finance costs paid
+11,967,026
+6,766,253
+9,414,936
+7,495,262
+4,307,861
+3,855,559
+2,222,211
+2,491,947
+30
+10,557,218
+7,237,412
+31
+6,395,002
+3,552,587
+28
+15
+GN
+5,052,830
+4,567,171
+29
+1,089,847
+140,710
+3,365,958
+Total equity and liabilities
+(58,051)
+(4,447,252) (163,800,621) 92,112,445
+389 260,359,929
+(60,811) 2,625,579
+2,686,390
+611,143
+2,075,242
+5
+As of December 31, 2019
+as owners
+(27,150)
+(61,197)
+34,047
+Other payables and accruals
+Borrowings
+Deferred revenues
+Lease liabilities
+Income tax liabilities
+Total liabilities
+17,792,886
+92,054,394
+534,566
+51,147,641
+Cash and cash equivalents at the end of the year
+11,466
+(173,442)
+(963,716)
+17,043,692
+13,396,185
+(3,485,531)
+4,661,090
+Net increase/(decrease) in cash and cash equivalents
+Cash and cash equivalents at the beginning of the year
+Exchange loss on cash and cash equivalents
+Cash and cash equivalents reclassified from the assets
+classified as held for sale
+1,114,267
+17,418,081
+Net cash flows generated from financing activities
+114,600
+Increase in financial liabilities
+(785,825)
+(936,380)
+Lease payments
+(75,162)
+Payment for acquisitions of non-controlling interests
+25(a)
+91,806
+17,093,559
+2020 Annual Report Meituan
+36,592,563
+68,940,527
+39,958,521
+166,574,802
+132,012,915
+The notes on pages 160 to 272 are an integral part of these consolidated financial statements.
+The consolidated financial statements on pages 152 to 272 were approved by the Board of Directors on March 26,
+2021 and were signed on its behalf:
+Wang Xing
+Director
+Mu Rongjun
+Director
+2020 Annual Report Meituan
+155
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+As of January 1, 2020
+Comprehensive income
+Profit for the year
+Other comprehensive income
+159
+13,396,185
+ཆ།
+2020 Annual Report Meituan
+157
+(10,174,018)
+(21,232,004)
+(20,954)
+(19,181)
+(35,365)
+(875,919)
+13,761
+1,315,886
+1,629,777
+18,912
+Net cash flows used in investing activities
+Increase in prepayment for investments
+Loan to related parties
+Dividends received
+Gains received from treasury investments
+35,808
+disposed
+Cash inflow arising from disposal of subsidiaries, net of cash
+(455,987)
+(7,326,690)
+158
+Acquisition of other financial investments at fair value
+Meituan
+Cash flows generated from financing activities
+13,337,825
+Issuance of notes payable
+(107,969)
+(830,031)
+Repayments of ABS
+467,000
+Proceeds from ABS, net
+(2,250,000)
+(5,448,702)
+Repayments of borrowings, excluding ABS
+3,640,000
+10,900,292
+securities ("ABS")
+Proceeds from borrowings, excluding asset-backed
+2019
+RMB'000
+2020
+RMB'000
+Note
+Year ended December 31,
+CONSOLIDATED STATEMENT OF CASH FLOWS
+2020 Annual Report
+323,377
+601,370
+prepayment for investments
+(11,222,560)
+Purchase of property, plant and equipment
+Cash flows used in investing activities
+5,574,220
+8,475,013
+(463,304)
+6,037,524
+8,561,324
+(86,311)
+36(a)
+Net cash flows generated from operating activities
+Income tax paid
+Cash generated from operations
+RMB'000
+2019
+2020
+RMB'000
+Note
+Year ended December 31,
+Cash flows from operating activities
+CONSOLIDATED STATEMENT OF CASH FLOWS
+(2,984,976)
+Proceeds from disposals of property, plant and equipment
+279,764
+62,334
+Proceeds from disposal of equity investments and refunds of
+(141,025)
+(2,367,376)
+170,248,473
+199,496,075
+Acquisition of investments accounted for using the equity method
+Proceeds from disposals of treasury investments
+(177,154,553)
+(196,817,451)
+Payables to merchants
+Purchase of treasury investments
+(26,849)
+Payments for business combinations, net of cash acquired
+1,938
+Proceeds from disposals of intangible assets
+(4,578,910)
+Purchase of land use rights
+(16,760)
+(22,966)
+Purchase of intangible assets
+(1,365,975)
+Advances from transacting users
+Definition of Accounting Estimates
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+January 1, 2021
+To be
+determined
+on or after
+Effective for
+accounting
+year beginning
+Property, plant and equipment:
+Sale or contribution of assets
+between an investor and its
+associate or joint venture
+Interest Rate Benchmark
+Reform-phase 2
+Amendments to IFRS 9, IAS 39,
+IFRS 7, IFRS 4 and IFRS 16
+IAS 16 (Amendments)
+Amendments to IAS 28
+and IFRS 10
+The following new and amended standards have been issued, but are not effective for the
+Group's financial year beginning on January 1, 2020 and have not been early adopted by the
+Group's management.
+(b) New standards and amendments not yet adopted by the management of the Group
+2.1.1 Changes in accounting policies (Continued)
+Basis of preparation (Continued)
+2.1
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+January 1, 2022
+IAS 37 (Amendments)
+proceeds before intended use
+Onerous contract - cost of fulfilling
+January 1, 2022
+The Group is in the process of assessing potential impact of the above new standards and
+amendments to standards 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 to
+existing standards. The management of the Group plans to adopt these new standards and
+amendments to existing standards when they become effective.
+Amendments to IAS 1 and
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+January 1, 2023
+January 1, 2023
+For the year ended December 31, 2020
+Disclosure of Accounting Policies
+Insurance contracts
+IFRS 17
+and non-current
+January 1, 2023
+Classification of liabilities as current
+IAS 1 (Amendments)
+a contract
+January 1, 2023
+IFRS Practice Statement 2
+Amendments to IAS 8
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2020 Annual Report Meituan
+Meituan 2020 Annual Report
+160
+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.
+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 and
+financial assets at fair value through other comprehensive income, which are carried at fair value.
+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.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+2
+The financial information is presented in Renminbi ("RMB"), unless otherwise stated.
+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, hotel
+and travel booking and other services and sales.
+Meituan (formerly known as Meituan Dianping) ("the Company”) was incorporated in the Cayman Islands
+("Cayman") on September 25, 2015 as an exempted company with limited liability. The registered office
+is at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
+1.1 General information
+1 GENERAL INFORMATION AND BASIS OF PRESENTATION
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.1
+Basis of preparation (Continued)
+The adoption of the above new and amended standards did not have any significant financial
+impact on these consolidated financial statements.
+Annual Improvements to IFRS Standards 2018-2020 Cycle
+Interest Rate Benchmark Reform
+Revised Conceptual Framework for Financial Reporting
+COVID-19 related rent concessions
+Definition of a Business
+Definition of Material
+Amendments to IFRS
+161
+IAS 39 and IFRS 7
+Amendments to IFRS 3
+and IAS 8
+Amendments to IAS 1
+The Group has applied the following standards and amendments for the first time
+commencing January 1, 2020:
+New and amended standards adopted by the Group
+(a)
+2.1.1 Changes in accounting policies
+Conceptual Framework
+IFRS 16 (Amendments)
+Amendments to IFRS 9,
+162
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+2.8 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 recognised 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)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+168
+167
+2020 Annual Report Meituan
+all resulting exchange differences are recognised in other comprehensive income.
+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.
+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
+•
+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:
+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 investments at fair value
+through profit or loss are recognised in consolidated income statement as part of the "Fair value
+changes on other financial investments 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 recognised in consolidated income
+statement on a net basis within "Other gains, net".
+2.7.2 Transactions and balances
+Items included in the consolidated financial statements 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 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.
+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, 2020
+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
+Meituan 2020 Annual Report
+Subsequent costs are included in the asset's carrying amount or recognised 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 derecognised when replaced. All other repairs and maintenance are
+charged to profit or loss during the reporting period in which they are incurred.
+•
+169
+2020 Annual Report Meituan
+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
+identifiable net 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
+Gains and losses on disposals are determined by comparing proceeds with carrying amount, and are
+recognised 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.
+2.8 Property, plant and equipment (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Depreciation is calculated using the straight-line method to allocate their cost, net of their residual
+values, over their estimated useful lives, as follows:
+Meituan 2020 Annual Report
+the shorter of the term of the lease or
+the estimated useful lives of the assets
+2-3 years
+others
+•
+3 years
+5 years
+2-3 years
+leasehold improvements
+.
+bikes and electric mopeds
+•
+furniture and appliances
+•
+computer equipment (including servers)
+Property, plant and equipment arising from business acquisition is depreciated over the remaining useful
+life.
+166
+2.2 Subsidiaries
+2.6 Segment reporting
+2.2.2 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 recognised 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 recognised
+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.
+2.2.1 Business combinations (Continued)
+2.2 Subsidiaries (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+163
+2020 Annual Report Meituan
+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 recognised in a separate
+reserve within equity attributable to owners of the Company.
+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 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 identifiable
+net assets.
+•
+fair value of any asset or liability resulting from a contingent consideration arrangement, and
+•
+equity interests issued by the Group
+.
+liabilities incurred to the former owners of the acquired business
+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:
+2.2.1 Business combinations
+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.
+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.
+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, mainly includes the
+executive Directors.
+fair value of any pre-existing equity interest in the subsidiary.
+2.2.3 Disposal of subsidiaries
+• fair values of the assets transferred
+164
+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
+recognised 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 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.
+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
+Where 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 recognise further losses, unless it has
+incurred obligations or made payments on behalf of the joint ventures.
+Interests in joint ventures are accounted for using the equity method. Under the equity method of
+accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise
+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.
+2.4 Joint arrangements (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+165
+2020 Annual Report Meituan
+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 financial statements under the appropriate headings.
+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.
+2.4 Joint arrangements
+Meituan
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.3 Associates
+2020 Annual Report
+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 recognised at cost and adjusted thereafter to recognise 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 recognised 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 recognise 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.
+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 recognises the amount in "Other gains, net" in the consolidated income statement.
+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 recognised in other
+comprehensive income are reclassified to profit or loss where appropriate.
+prepayment, deposits and other assets
+While cash and cash equivalents, restricted cash, short-term treasury investments at amortized
+cost, short-term treasury investments at fair value through other comprehensive income and
+long-term treasury investments at amortized cost are also subject to the impairment requirements
+of IFRS 9, the identified impairment loss was immaterial.
+2020 Annual Report Meituan
+175
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.14 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 recognised 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.
+2.15 Deposits from transacting users
+Deposits 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.
+2.16 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.
+2.17 Trade and other receivables
+Trade and other receivables are generally due for settlement within 1 year and therefore are all classified
+as current.
+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. They are
+subsequently measured at amortised cost using the effective interest method, less loss allowance.
+Other receivables are recognised initially at fair value and subsequently measured at amortized cost
+using the effective interest method, less allowance for impairment.
+176
+•
+Meituan
+trade receivables
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+loan receivables
+2020 Annual Report
+(iv) Measurement (Continued)
+Debt instruments
+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:
+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 recognised directly
+in profit or loss and presented in "Other gains, net” together with foreign exchange gains and
+losses. Impairment losses are presented as separate line item in the statement of profit or
+loss.
+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 recognised in profit or loss. When the financial asset
+is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified
+from equity to profit or loss and recognised in "Other gains, net”. 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, net" and impairment expenses are
+presented as separate line item in the statement of 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
+recognised in profit or loss and presented net within "Other gains, net” in the period in which
+it arises.
+174
+Meituan 2020 Annual Report
+2.13 Financial assets (Continued)
+(iv) Measurement (Continued)
+Equity instruments
+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 recognised in
+profit or loss when the Group's right to receive payments is established.
+Changes in the fair value of financial assets at FVPL are recognised in “Other gains, net" in profit
+or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments
+at FVOCI are not reported separately from other changes in fair value.
+(v) Impairment
+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.
+The Group has three types of financial assets that are subject to IFRS 9's new ECL model (Note 3.1
+(b)):
+•
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+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.
+2.18 Cash and cash equivalents and restricted cash
+2.13 Financial assets (Continued)
+2.23.1 Current 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
+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.
+178
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.23 Current and deferred income tax (Continued)
+2.23.2 Deferred income tax
+(a)
+(b)
+Inside basis differences
+Deferred income tax is recognised, 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 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 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.
+Deferred income tax assets are recognised only to the extent that it is probable that future
+taxable profit will be available against which the temporary differences can be utilized.
+Outside basis differences
+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 recognised.
+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 utilized.
+2020 Annual Report Meituan
+179
+2.23 Current and deferred income tax
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 ("Board") and
+chief executive officer.
+(b)
+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 statements of financial position, and is not included in the total cash and cash equivalents
+in the consolidated statements of cash flows.
+2.19 Share capital
+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
+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 recognised initially at
+their fair value and subsequently measured at amortized cost using the effective interest 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 amortized 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 method.
+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.
+Notes payable are classified as non-current liabilities unless the Group has an unconditional obligation
+to settle the liability within 12 months after the end of the reporting period.
+Borrowing costs are expensed in the period in which they are incurred.
+Borrowings and notes payable are removed from the balance sheet when the obligation specified in the
+contract is discharged, cancelled or expired.
+2020 Annual Report Meituan
+177
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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)
+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 recognizing the gains and losses on them on different bases; or
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Trade receivables are amounts due from customers for goods and services provided in the ordinary
+course of business.
+173
+2-25 years
+5 years
+1-10 years
+15 years
+2-5 years
+5 years
+2-8 years
+When determining the length of useful life of an intangible asset, management take into account
+the (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.
+2.9.3 Research and development
+Research expenditures are recognised 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, 2020 and 2019.
+170
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.10 Shares held for shares award scheme
+The amount 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 par value of the awarded shares vested are credited to "Shares held for shares award scheme",
+with a corresponding adjustment made to "Share premium".
+2.11 Impairment of non-financial assets
+supplier relationship
+Goodwill is not subject to amortization and is tested annually for impairment, or more frequently if events
+or changes in circumstances indicate that it 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 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 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.
+•
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.9 Intangible assets (Continued)
+2.9.2 Other intangible assets
+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 recognised 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.
+The Group amortizes intangible assets with a limited useful life using the straight-line method over
+the following periods:
+•
+trade name
+•
+user generated content
+•
+software and others
+online payment license
+•
+technology and licenses
+user list
+2.12 Financial guarantee contracts
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+•
+(iii) 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 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.
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.13 Financial assets (Continued)
+(iii) Derecognition (Continued)
+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 gain or loss that
+has been recognised directly in equity.
+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.
+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 derecognised in
+their entirety and a new financial asset or liabilities is recognised 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 derecognised, 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 recognised between the derecognised portion and the retained portion based on their
+respective relative 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.
+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 ("FVPL”), 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.
+Financial assets with embedded derivatives are considered in their entirety when determining
+whether their cash flows are solely payment of principal and interest.
+Financial guarantee contracts are recognised 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:
+2020 Annual Report Meituan
+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.
+Recognition
+(iv) Measurement
+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 investments at fair value through other
+comprehensive income ("FVOCI").
+The Group reclassifies debt investments when and only when its business model for managing
+those assets changes.
+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 determined in accordance with the expected credit loss model under IFRS 9 Financial
+Instruments; and
+171
+172
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.13 Financial assets
+2020 Annual Report Meituan
+the amount initially recognised less, where appropriate, the cumulative amount of income
+recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
+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
+•
+those to be measured at amortized cost.
+The classification depends on the entity's business model for managing the financial assets and
+the contractual terms of the cash flows.
+(i) Classification
+(ii)
+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.
+Revenue arrangements with multiple performance obligations are not significant to the Group's total
+2.27 Revenue recognition (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+2.26 Provisions
+182
+Revenue is principally comprised of commission, online marketing services, interest revenue and other
+services and sales. The Group recognises revenue when or as the control of the promised goods or
+services is transferred to a customer, netting of value-added taxes ("VAT"). Depending on the terms
+of the contract and the laws that apply to the contract, if control of the goods and services transfers
+over time, revenue is recognised over the period of the contract by reference to the progress towards
+complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time
+when the customer obtains control of the goods or services.
+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
+recognised 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 recognised
+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 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 losses.
+revenue.
+Meituan
+2.27 Revenue recognition
+183
+2.27.1 The accounting policy for the Group's principal revenue sources
+In-store, hotel & travel services
+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.
+(b)
+Commission (Continued)
+(a)
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+2.27 Revenue recognition (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report Meituan
+The on-demand delivery services facilitate food and non-food ordering and offer delivery
+service to transacting users through the Group's platform. Meanwhile, the Group provides
+platform service to merchants and certain business partners in certain regions within
+the PRC, displaying the food or other goods information to transacting users. Upon
+the completion of a transaction, both the delivery service and the platform service are
+rendered. The Group recognises the delivery service fees collected from transaction
+users and the commission as revenue at the same time. The amounts to be remitted to
+third-party merchants, after netting the commission revenue from the cash payments by
+transacting users, are recorded as payables to merchants. In instances where the Group is
+not responsible for delivery, only commission revenue is recognised once a transaction is
+completed.
+On-demand delivery services (including food and non-food delivery)
+Under certain circumstances, the Group provides delivery service mainly to transacting users
+as a principal, and earns the delivery service fee collecting from transacting users as revenue
+on a gross basis.
+The Group provides an e-commerce platform that enables merchants to sell their services or
+products to transacting users through the platform. Acting as an agent, the Group generates
+revenue from commission fees, which are generally charged as a percentage of the value of
+transactions placed by transacting users on the Group's platform.
+(a) Commission
+In accordance with the principal versus agent considerations prescribed by IFRS 15, the Group
+evaluates whether it acts as the principal or agent in each of its revenue streams to determine whether
+revenue should be recorded on a gross or net basis. The Group is acting as the principal if, individually
+or in combination, it controls the specified good or service before being transferred to the customer,
+is primarily responsible for fulfilling the contract, is subject to inventory risk, and has discretion in
+establishing prices. An agent arranges for goods or services to be provided by the principal to its end
+customer, which normally receives a commission or fee for these activities.
+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 recognised for the services received over
+the remainder of the vesting period.
+2.25 Share-based payments
+2.25 Share-based payments (Continued)
+Meituan 2020 Annual Report
+180
+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 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.
+2.24.3 Bonus plan
+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.
+2.24.2 Pension obligations and other social welfare benefits
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+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 Employee benefits
+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.
+(c) Offsetting
+2.23.2 Deferred income tax (Continued)
+2.23 Current and deferred income tax (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.24.1 Employee leave entitlement
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The Group's in-store, hotel & travel services provides merchants platform to display their
+own services or goods. Transacting users can purchase the vouchers or make reservations
+offered by merchants via the Group's platform. When the vouchers are redeemed at
+merchants site, upon room check-in for hotel reservations, or on the departure date of the
+packaged tours, commission revenues are recognised.
+The Group has operated share incentive plans 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 adopted by the Company on August 30, 2018 ("Post-IPO Share
+Option Scheme") and the post-IPO share award scheme adopted by the Company on August 30, 2018
+("Post-IPO Share Award Scheme"). Share-based compensation benefits are provided to employees via
+the Pre-IPO ESOP, 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 recognised as an expense in the consolidated
+income statement.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+181
+2020 Annual Report Meituan
+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 date 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 recognised 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 Group revises its
+estimates of the number of options that are expected to vest based on the non-market 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.
+including the impact of any non-vesting conditions.
+excluding the impact of any service and non-market performance vesting conditions; and
+•
+including any market performance conditions;
+.
+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 Black-Scholes models:
+2.25.1 Share options
+2.25.3 Modifications and Cancellations
+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 recognised at the point in time as determined above,
+the amounts to be remitted to third-party merchants are recorded as payables to merchants.
+186
+The Group provides online marketing services to merchants or marketers. Some of the
+merchants or marketers pay the Group for performance-based marketing 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. The Group recognises
+revenue each time a user clicks on the marketer's link or when its information is viewed by
+pre-determined number of users.
+(d) Incentives on behalf of third parties
+In circumstance where the Group is responsible for the delivery service, the incentive to
+delivery riders is recognised as cost of revenue as it is part of the Group's fulfilment costs for
+completion of the delivery performance obligation. In connection with car-hailing services,
+the incentives to drivers are recorded as cost of revenue.
+(c) Incentives to vendors
+2.27.3 Incentives (Continued)
+2.27 Revenue recognition (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For certain business partners in certain regions within the PRC in food delivery business,
+they setup the incentive plans via the Group's system to maintain local market and manage
+the daily operation. The Group receives and pays the incentives on behalf of such business
+partners to transacting users, which is not treated as the Group's incentives.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report Meituan
+If substantial services to transacting users are provided by the third parties, the incentives at
+the Group's discretion in order to stimulate the transaction volume on the online platform are
+recorded as selling and marketing expenses. The incentives to transacting users where the
+Group is not responsible for delivery and substantially all of the incentives for in-store, hotel
+& travel services are classified as such.
+Incentives to transacting users
+(b)
+The Group records such incentives as deduction of revenue, to the extent of the revenue
+collected from the customers. The exceeded amount is recorded as selling and marketing
+expenses. The incentives on delivery service or local transporting service to transacting
+users, the incentives to crowdsourced delivery riders on behalf of merchants or individual
+users, the interest favorable offered to borrowers, and discounts on online marketing services
+or supply chain solution service to merchants are classified as such.
+The Group provides various types of incentives to transacting users, delivery riders, borrowers,
+drivers and merchants under online marketing services or supply chain solution service, including
+discounted coupons (with a minimum value to use), direct payment deduction, red packet, interest
+reduction/exemption coupons and discounts on goods or services. The major accounting policy
+for incentives is described as follows.
+187
+2.27.3 Incentives
+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.
+2.27.4 Practical Expedients and Exemptions
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.28 Interest income
+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).
+Interest income is presented as finance income where it is earned from financial assets that are held
+for cash management purposes. Interest income is presented as interest revenue where it is calculated
+using the effective interest rate method and earned from financial assets that are held for micro-credit
+business. Any other gains from short-term and long-term treasury investments is included in "Other
+gains, net".
+The total incentives recorded as selling and marketing expenses have been included in Note 7-
+Transacting User incentives.
+2.29 Dividend income
+2.30 Leases
+The Group leases various offices and others. Rental contracts are typically made for fixed periods of 1
+month to 10 years but may have extension options, which are used to maximise operational flexibility in
+terms of managing the assets used in the Group's operations.
+Lease terms are negotiated on an individual basis and contain a wide range of different terms and
+conditions. The lease agreements do not impose any covenants other than the security interests in the
+leased assets that are held by the lessor. Leased assets may not be used as security for borrowing
+purposes.
+Meituan 2020 Annual Report
+188
+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 revenues (Note 28).
+Dividends are recognised when the right to receive payment is established.
+Online marketing services
+The Group generally expenses contract acquisition cost when incurred because the amortization
+period would have been 1 year or less.
+2.27.2 Contract Balances (Continued)
+The Group's local transportation services mainly provide ride-sharing services and car-hailing
+services to its transacting users. Currently, for ride-sharing services and car-hailing services
+other than aggregated model, the Group recognises revenues substantially for the fees
+collected from transacting users. Revenues from car-hailing services of aggregated model
+are immaterial to the Group. 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 recognises no revenue.
+Other services and sales comprise primarily revenue generated from business to business
+food distribution services ("B2B food distribution services"), loan facilitation and relative
+post-origination services, ride-sharing services, car-hailing services and other products or
+services. The Group recognises revenues when the respective services are rendered, or
+when the control of the products are transferred to the customers.
+Other services and sales
+(d)
+The Group directly offers loans, including joint loans together with other institutions, through
+its online platform to merchants or individual users via qualified subsidiary. The loan principal
+is funded entirely or partially by the Group, and loan receivables due from such loan
+facilitation are recorded on the statement of financial position. Interest revenue is calculated
+by applying the effective interest rate to the gross carrying amount of a loan receivable
+except for loan receivables that subsequently become credit-impaired. For credit-impaired
+loan receivables, the effective interest rate is applied to the net carrying amount of the
+financial asset (after deduction of the loss allowance).
+(c) Interest revenue
+The Group's B2B food distribution services provide supply chain solution to merchants in the
+catering industry mainly through sales of food ingredients. The Group recognises goods sold
+revenue on a gross basis when the control of inventories is transferred.
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+184
+For certain merchants, the Group provides value-added marketing services under an annual
+plan, and charges an annual fee for such plan. The Group recognises revenue ratably as the
+value-added marketing services are provided over the plan period.
+The Group also offers display-based marketing services in the form of key words search,
+banners, and textual or graphical marketer's link. The marketers pay the Group based
+on the period their advertisements are displayed on the Group's websites and/or mobile
+applications. The revenue is recognised on a pro-rata basis over the contractual service
+period, which is normally less than 1 year, starting on the date when the advertisement is first
+displayed on the Group's websites and/or mobile applications.
+2.27 Revenue recognition (Continued)
+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.
+2020 Annual Report Meituan
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2.27 Revenue recognition (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+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. The Group's contract assets are
+mainly trade receivables due from online marketing services and loan facilitation services.
+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.
+185
+2.27.2 Contract Balances
+In certain cases, the Group also provides loan facilitation services to borrowers and lenders,
+and provides post-origination services (e.g. cash process, collection and short message
+services) to lenders and regard facilitation services and post origination services as two
+distinctive performance obligations. The borrowers are commonly merchants or individual
+users who utilize the Group's online platform. For loan facilitation services, the Group
+determines that it is not the legal lender or borrower in the loan origination and repayment
+process, but acting as an intermediary to bring both parties together. Therefore, the Group
+does not record the loans receivable or payable arising from the loan facilitation activities.
+Loan facilitation services revenue are recognised at point of time when the loan contract
+established between borrowers and lenders and post-origination services revenue are
+recognised over the loan contract period.
+Other services and sales (Continued)
+(d)
+2.27.1 The accounting policy for the Group's principal revenue sources (Continued)
+2.27 Revenue recognition (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The Group also generates other revenues from a long-term business cooperation agreement
+with Maoyan, which provides that Maoyan shall be the Group's exclusive business partner
+for the movie ticketing business. Through this cooperation agreement, the Group provides
+Maoyan with user traffic and other sources services over the cooperation period and
+recognizes revenue in a straight line basis. Please refer to Note 28 for further details.
+(a) Incentives to customers
+189
+2020 Annual Report Meituan
+Food delivery became an increasingly essential service throughout the COVID-19 pandemic in 2020. Meanwhile,
+our strength in consumer base, merchant base and delivery network remained strong and continued to generate
+powerful network effects during 2020, enabling us to achieve solid growth. In 2020, GTV of our food delivery
+business increased by 24.5% year over year to RMB488.9 billion. The growth rate for the number of food delivery
+transactions continued to surge year over year, with the daily average number of food delivery transactions
+increasing by 16.0% year over year to 27.7 million. The average value per order of our food delivery business
+increased by 7.0% year over year to RMB48.2. Monetization Rate of our food delivery business decreased to
+13.6% from 14.0% in 2019. As a result, revenue increased by 20.8% year over year to RMB66.3 billion. Operating
+profit from food delivery business increased to RMB2.8 billion in 2020 from RMB1.4 billion in 2019, while operating
+margin increased to 4.3% from 2.6%. Our solid business performance in 2020 was a testament to our resilient
+business model and strong execution capabilities.
+In-store, hotel New initiatives
+Food delivery
+& travel
+and others
+(RMB in thousands)
+Total
+Revenues
+Commission
+Online marketing services
+13,963,448
+1,732,259
+3,203,847
+3,131,896
+1,190,442
+73,614
+18,357,737
+4,937,769
+Other services and sales
+(including interest revenue)
+20,003
+21,202
+4,821,542
+4,862,747
+Total
+15,715,710
+6,356,945
+6,085,598
+28,158,253
+2020 Annual Report Meituan
+Three Months Ended December 31, 2019
+37,917,504
+9,244,159
+Unaudited
+Commission
+Online marketing services
+Other services and sales
+(including interest revenue)
+Total
+Unaudited
+Three Months Ended December 31, 2020
+In-store, hotel New initiatives
+Food delivery
+& travel
+and others
+(RMB in thousands)
+17
+Total
+2,441,964
+3,581,958
+3,538,844
+1,733,424
+24,373,609
+79,875
+6,060,683
+37,794
+14,558
+7,430,860
+7,483,212
+21,537,985
+7,135,360
+19,058,227
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues from the food delivery segment increased by 37.0% to RMB21.5 billion for the fourth quarter of 2020
+from RMB15.7 billion for the same period of 2019. Commission revenue increased by 36.5% to RMB19.1 billion as
+a result of the increase in Gross Transaction Volume mainly driven by the increase in order volume by 33.0% under
+the combined effect of the increase in Transacting User base and their purchase frequency, as we continuously
+improved our food delivery membership program to enlarge the member scale and carried out more marketing
+campaigns in different channels to stimulate consumption. Online marketing services revenue increased by 41.0%
+to RMB2.4 billion as a result of the increase in Active Merchants using our online marketing services due to their
+growing willingness to acquire online traffic.
+Our revenues from the in-store, hotel & travel segment increased by 12.2% to RMB7.1 billion for the fourth quarter
+of 2020 from RMB6.4 billion for the same period of 2019. Commission revenue increased by 11.8% to RMB3.6
+billion due to the increase in Gross Transaction Volume driven by increased Active Merchants and consumers'
+growing in-store consumption demands. Online marketing services revenue increased by 13.0% to RMB3.5 billion
+due to the increase in the number of online marketing Active Merchants.
+1,950,943
+5.1%
+1,232,474
+4.4%
+58.3%
+on financial assets
+Food delivery
+0.1%
+332,004
+1.2%
+(83.7%)
+18
+General and administrative expenses
+Net provision for impairment losses
+Meituan
+Cost of Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our cost of revenues increased by 54.3% to RMB28.5 billion for the fourth quarter of 2020 from RMB18.4 billion
+in the same period of 2019, and increased by 9.6 percentage points to 75.1% from 65.5% as a percentage of
+revenues on a year-over-year basis. The increase in amount primarily attributable to the increased food delivery
+rider costs in line with the increase of the order volume, and more expenditures for our new initiatives such as
+cost of goods sold. At the same time, more investments in new initiatives with lower gross margin resulted in the
+increase as a percentage of revenues on a year-over-year basis.
+Selling and Marketing Expenses
+Our selling and marketing expenses was RMB7.7 billion for the fourth quarter of 2020 and RMB5.3 billion for the
+same period of 2019, and increased by 1.2 percentage points to 20.2% from 19.0% as a percentage of revenues
+on a year-over-year basis. The increase was primarily attributable to the increase in Transacting User incentives
+because of the enlarged food delivery membership subscribers base and the rapid growth of some of our new
+initiatives, and the increase in promotion and advertising expenses mainly driven by our enlarged branding and
+promotional campaigns to enhance our brand recognition and stimulate user growth and consumption.
+Research and Development Expenses
+Our research and development expenses increased to RMB3.2 billion for the fourth quarter of 2020 from RMB2.2
+billion in the same period of 2019, and increased by 0.6 percentage points to 8.6% from 8.0% as a percentage of
+revenues on a year-over-year basis. The increase in both amount and as a percentage of revenues were mainly
+driven by the increased number of employees due to our businesses expansion, higher average salary and the
+increase in share-based compensation.
+General and Administrative Expenses
+Our general and administrative expenses increased to RMB2.0 billion for the fourth quarter of 2020 from RMB1.2
+billion in the same period of 2019, and increased by 0.7 percentage points to 5.1% from 4.4% as a percentage of
+revenues on a year-over-year basis. The increase in both amount and as a percentage of revenues was primarily
+attributable to the increase in employee benefits expenses due to the increased number of employees, higher
+average salary, and the increase in share-based compensation.
+2020 Annual Report Meituan
+19
+CHAIRMAN'S STATEMENT
+2020 Annual Report
+Revenues
+45.1%
+2,239,885
+Our revenues from the new initiatives and others segment increased by 51.9% to RMB9.2 billion for the fourth
+quarter of 2020 from RMB6.1 billion for the same period of 2019, mainly due to the increase in revenues from the
+retail businesses, B2B food distribution services and ride-sharing services 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 periods indicated:
+Costs and Expenses:
+Unaudited
+December 31, 2020
+Three Months Ended
+December 31, 2019
+As a
+percentage
+As a
+percentage
+Year-over-
+Amount
+8.0%
+of revenues
+(RMB in thousands, except for percentages)
+of revenues year change
+Cost of revenues
+28,461,795
+Selling and marketing expenses
+Research and development expenses
+7,675,340
+75.1% 18,440,124
+20.2% 5,349,095
+65.5%
+54.3%
+19.0%
+43.5%
+3,249,199
+8.6%
+Amount
+The following table sets forth our revenues by segment and type in absolute amount for the fourth quarter of 2020
+and 2019:
+54,187
+MANAGEMENT DISCUSSION AND ANALYSIS
+Company Outlook for 2021
+Overall, our food delivery and in-store, hotel & travel businesses continued to deliver solid results, demonstrated
+their unique values and have increasingly become a new infrastructure for peoples' daily life in this challenging
+year of 2020. We reaffirm our belief that our food delivery and in-store, hotel & travel businesses have a significant
+runway for future growth and operation optimization over the long term. While our significant investments in
+new initiatives hampered our overall profitability in 2020, these new initiatives are also creating increasing value
+for consumers, merchants, our business partners, and the broader society. We remain committed to making
+investments in big opportunities that are capable of delivering long-term growth and providing consumers and
+all participants with more value. We believe community e-commerce is one of such big opportunities, and we
+will allocate sufficient resources to accelerate its development in 2021 while continuously improve its operating
+efficiency. Increasing investments in new initiatives may continue to cause significant negative impacts on our
+overall financial results, and the Company may continue to record operating losses in the next few quarters as we
+ramp up our community e-commerce business. However, we have always focused on long-term growth rather
+than short-term profits, adhering to a long-term oriented investment philosophy. More importantly, we remain
+optimistic about the prospects of China's economic development. We believe that our determination to accelerate
+the digitization and online operation of the boarder industry over the long term will allow us to benefit from the
+digitization trend and industry growth. As such, we will continue to help merchants enhance operational efficiency
+across industries through innovations and better services, provide more convenience, as well as quality products
+and services at affordable cost for consumers, and create more value for the society with the help of technology,
+fulfilling our mission that "We help people eat better, live better."
+APPRECIATION
+On behalf of the Board, I would like to express my sincere gratitude to our consumers, merchants, business
+partners and investors for their continuous trust and support. I would also like to thank our delivery riders and
+the entire staff for their commitment and determination. In 2021, we will continue to serve our consumers and
+merchants, and create more value for the society.
+Wang Xing
+Chairman
+Hong Kong, March 26, 2021
+2020 Annual Report Meituan
+15
+MANAGEMENT DISCUSSION AND ANALYSIS
+Fourth Quarter of 2020 Compared to Fourth Quarter of 2019
+The following table sets forth the comparative figures for the fourth quarter of 2020 and 2019:
+CHAIRMAN'S STATEMENT
+Revenues
+December 31,
+2020
+(RMB in thousands)
+December 31,
+2019
+Commission
+24,373,609
+18,357,737
+Online marketing services
+6,060,683
+4,937,769
+Interest revenue
+Unaudited
+Three Months Ended
+2020 Annual Report
+Meituan
+14
+For the fourth quarter of 2020, GTV of our food delivery business increased by 39.4% year over year to RMB156.3
+billion. The daily average number of food delivery transactions increased by 33.0% year over year to 36.2
+million. The average value per order of our food delivery business increased by 4.8% year over year to RMB46.9.
+Monetization Rate of our food delivery business decreased to 13.8% from 14.0% in the same period of 2019. As
+a result, revenue increased by 37.0% year-over-year to RMB21.5 billion. Operating profit from our food delivery
+business increased to RMB882.4 million for the fourth quarter of 2020 from RMB482.8 million for the fourth quarter
+of 2019, while operating margin increased to 4.1% from 3.1%.
+10
+Our revenues increased by 34.7% to RMB37.9 billion for the fourth quarter of 2020 from RMB28.2 billion in the
+same period of 2019. The increase was mainly driven by the solid revenue growth of our food delivery business, the
+steady recovery of our in-store, hotel & travel businesses, and robust revenue growth of our new initiatives.
+Meituan
+2020 Annual Report
+CHAIRMAN'S STATEMENT
+BUSINESS REVIEW AND OUTLOOK
+On the merchant side, the COVID-19 pandemic accelerated business digitization for more restaurants and made
+online operation improvement more important to them. Consequently, in 2020, the overall quality of restaurants
+on our platform improved, while the number of high-quality restaurants on our platform also grew meaningfully.
+Driven by the upgraded supply, the average value per order of our food delivery business increased by 7% year
+over year in 2020. Helping merchants accelerate digitization and improve operations are critically important to us as
+we strive to better cater to consumers' ever increasing demands and diversified consumption needs. In the fourth
+quarter, we launched the “New Restaurant Manager" program. Through this program, over the next three years, we
+plan to discover and train over one million restaurant owners or managers and to help them embrace the trend of
+digitization while increasing their profitability. By recognizing and solving merchant pain points, we have launched
+systems for merchant services, merchant growth, and talent training, respectively.
+In terms of our delivery network, we faced an unexpected and challenging situation from the outset of the COVID-19
+pandemic. Nevertheless, we remained committed to providing delivery riders, consumers, and merchants with the
+appropriate solutions. During the COVID-19 pandemic, for example, we quickly organized various teams to ensure
+that our delivery network maintained sufficient capacity. Meanwhile, we rolled out our pioneered “contactless
+delivery" method and organized nucleic testing for our delivery riders to provide our delivery riders and consumers
+with better protection. These measures reflect our quick emergency response capabilities as well as the ability
+of our delivery network to handle unexpected situations. By the end of 2020, a total of 9.5 million delivery riders
+had earned income on the Meituan platform. Among them, around 2.3 million came from impoverished counties
+and had therefore been effectively lifted out of poverty through their work with Meituan. Moreover, we launched
+"Tongzhou Project” in the fourth quarter, which is a project focusing on delivery riders that aims to improve their
+job security, work experiences, career paths, and social well-being. We also organized numerous discussion panels
+with our delivery riders to listen to their feedback and better understand their needs and challenges. As we advance
+into 2021, we will continue to develop this project as our delivery riders' work and personal well-being remains a
+top priority.
+2020 Annual Report Meituan
+11
+CHAIRMAN'S STATEMENT
+In-store, hotel & travel
+Benefitting from the effective containment of the COVID-19 pandemic, local consumption in China experienced a
+steady recovery, and our in-store, hotel & travel businesses, which were the most impacted businesses in 2020,
+gradually ramp back up, but has yet to fully recover to normal levels. Revenues from our in-store, hotel & travel
+businesses decreased by 4.6% year over year to RMB21.3 billion in 2020. Operating profit from our in-store, hotel
+& travel businesses decreased to RMB8.2 billion in 2020 from RMB8.4 billion in 2019, while operating margin
+increased to 38.5% from 37.7%.
+For the fourth quarter of 2020, revenues from our in-store, hotel & travel businesses increased by 12.2% year over
+year to RMB7.1 billion, despite the reoccurrence of the COVID-19 pandemic in several cities. Operating profit from
+our in-store, hotel & travel businesses increased to RMB2.8 billion from RMB2.3 billion for the fourth quarter of
+2019, while operating margin increased to 39.5% from 36.7%.
+For our in-store dining business, we introduced more options for quality light meal restaurants to our platform
+during 2020, which helped to further expand our merchant base and increase both orders and revenues. For top
+national and local chain restaurants, we have designed innovative transaction-based products and supported
+their unique advertising needs. The number of these types of restaurants significantly increased throughout
+our ecosystem, with their sales also growing considerably as a result of our tailored services. By optimizing the
+operation system, we further leverage the merchant base of our food delivery business to expand our in-store dining
+merchant base. As a result, more high potential restaurants have adopted our in-store marketing products and our
+platform captured more cross-selling opportunities. For other in-store services, we effectively managed multiple
+service categories and improved our multi-dimensional operational capabilities in 2020 by correctly identifying
+the changes in consumer habits and future consumption trends. After the most severe periods of the COVID-19
+pandemic, some new categories have proven to be quite popular, such as auto-related services and escape rooms,
+with both of these categories achieving relatively high year-over-year growth rates in GTV in the period to outpace
+their pre-pandemic growth. Other critical categories also maintained their high-growth trajectories, including
+medical aesthetics, healthcare, petcare, and more. For example, our medical aesthetics sales grew by more than
+70% year over year in the fourth quarter. Meanwhile, we advanced our operational capabilities and better organized
+theme-based consumption festivals around holiday seasons, helping to better satisfy consumer demands and
+encourage local spending during 2020. For example, during the fourth quarter of 2020, we launched a series of
+promotional campaigns during Mid-Autumn Festival, National Day, Christmas and other festivals, such as "Double
+11 Carnival," "Double 12 Carnival," "Wedding Festival," "Mid-Autumn and National Day Food Festival" and more, all
+of these theme-based promotional campaigns were exceptionally well received by the market.
+12
+Meituan
+2020 Annual Report
+CHAIRMAN'S STATEMENT
+With respect to our hotel booking business, domestic room nights consumed on our platform declined by 9.7%
+year over year in 2020 due to the impact from the COVID-19 pandemic. Nonetheless, we took this opportunity to
+further solidify our advantages in consumer base, domestic supply and execution capabilities. During the year, the
+pent-up demand for overseas and long-distance domestic travel continued to spill over into domestic travel and
+weekend trip activity. In the fourth quarter, despite the reoccurrence of the COVID-19 pandemic in several cities
+hampered the recovery of consumption in these regions, consumer demand for hotel booking services in other
+cities continued to unleash, with domestic room nights consumed on our platform increasing by 8.8% year over
+year. We also effectively brought more offline users onto our platform and channeled them into online hotel booking
+during the quarter. Meanwhile, our platform's high-star hotel supply and bookings both expanded, with high-star
+hotels accounting for an increasing share of our total hotel supply and our number of high-star hotel room nights
+accounting for more than 15% of our total room nights in the fourth quarter. Our expansion of five-star hotels was
+particularly successful as we became an increasingly attractive channel for these hotels to grow their customer
+bases and sales. Notably, among total domestic room nights consumed on our platform, the number of room nights
+from five-star hotels increased by more than 110% year over year in the fourth quarter.
+New initiatives and others
+During 2020, we continued to ramp up our investments in new initiatives, especially in areas that we believe to
+have promising long-term growth potential and fit well into our "Food + Platform" strategy. Revenues from the
+new initiatives and others segment increased by 33.6% year over year to RMB27.3 billion in 2020. Operating loss
+from new initiatives and others segment expanded to RMB10.9 billion in 2020 from RMB6.7 billion in 2019, while
+operating margin decreased 6.7 percentage points year over year. For the fourth quarter of 2020, revenues from
+the new initiatives and others segment increased by 51.9% year over year to RMB9.2 billion. Operating loss for the
+segment increased both year over year and quarter over quarter to negative RMB6 billion in the fourth quarter of
+2020, while the operating margin decreased to negative 64.9%.
+2020 Annual Report Meituan
+13
+CHAIRMAN'S STATEMENT
+The digitization of the broader local retail industry accelerated during 2020. Retail business has important strategic
+value to us and was the key investment area. During the fourth quarter, we quickly expanded our community
+e-commerce model "Meituan Select" in around 2,000 cities and counties. As a result, Meituan Select now covers
+more than 90% of the cities and counties in China. While this business is still at an early stage, we believe that it
+can create tremendous value for consumers and up-stream suppliers, including farmers. Through our efforts to
+build out our supply chain and "next-day" delivery capabilities, this business model provides users with broader
+SKU selections, much more convenient shopping experience and lower prices, and in turn allows us to acquire
+vast new user base in less accessible and rural areas. During the fourth quarter, through cooperation with many
+local governments across the country, we launched the "Agricultural Produce Direct Sourcing" program in some
+pilot areas such as Yunnan, Jilin, and Guangxi, to source produce directly from farmers to reduce intermediary
+costs, improve our supply chain efficiency, help farmers generate additional revenues, and lower product prices
+for consumers. Meanwhile, we also made upfront planning and investment in infrastructure including warehousing
+and fulfillment during the quarter, to ensure that we can handle large volumes of agricultural products smoothly and
+deliver them in optimal condition timely even to lower-tier markets. Our marketplace model "Meituan Instashopping"
+achieved stellar growth as we continued to broaden and diversify merchant base, build out our marketplace
+capabilities, and convert more food delivery consumers into non-food categories consumers. High-potential
+verticals, such as flowers, medicine and more, continued to achieve rapid growth as we continued to bring more
+quality suppliers and merchants online and encourage user consumption through effective marketing. As a result,
+Meituan Instashopping's daily peak orders reached around 4.5 million in the fourth quarter. For our self-operated
+model, "Meituan Grocery," as we continued to increase coverage density across Beijing, Shanghai, Guangzhou and
+Shenzhen, both the quarterly transacting users and transaction volume grew rapidly during the fourth quarter.
+252,335
+197,759
+Thanks to our continuous effort to implement our effective food delivery membership program, refine the efficiency
+of our consumer marketing and operations, and augment the variety and quality of food delivery supplies on our
+platform, both the demand and supply sides continued to evolve into their next phases of growth during 2020.
+Lower-tier cities continued to be the main driver of our user growth in 2020, with a majority of new users still from
+third-tier cities and below. In the fourth quarter, quarterly transacting users and their purchase frequency both
+achieved healthy growth year over year. Meanwhile, monthly transacting users and their average transaction
+frequency also reached new highs during the quarter. Our food delivery membership program continued to ramp
+up the transaction frequency of high-potential consumers, while our monthly average membership subscribers
+more than doubled year over year. Certain consumption scenarios, such as breakfast, afternoon tea, and night-time
+snacks, continued to grow at a faster pace than other consumption scenarios such as lunch and dinner in the fourth
+quarter. Long-distance orders from more than 3 kilometers away also accounted for an ever larger share of our
+total delivery orders. Our consumer base and transaction frequency growth not only reflects consumers' increasing
+preferences for food delivery and more consumption scenarios, but also demonstrates consumers' ongoing trust in
+and recognition of our food delivery services.
+7,230,877
+Finance income
+Finance costs
+69,724
+(149,735)
+53,519
+(45,095)
+Share of gains of investments accounted for using equity method
+117,398
+57,646
+(Loss)/profit before income tax
+(2,815,309)
+1,489,930
+Income tax credits/(expenses)
+571,017
+(29,645)
+(Loss)/profit for the period
+Non-IFRS measures:
+Adjusted EBITDA
+Adjusted net (loss)/profit
+16
+Meituan
+2020 Annual Report
+1,460,285
+(589,128)
+2,178,650
+Revenues
+Other services and sales
+(1,436,520)
+2,270,219
+1,423,860
+(2,852,696)
+(2,244,292)
+786,746
+28,158,253
+Operating (loss)/profit
+Cost of revenues
+4,664,988
+37,917,504
+(18,440,124)
+Gross profit
+9,455,709
+9,718,129
+Selling and marketing expenses
+(7,675,340)
+(5,349,095)
+Research and development expenses
+(28,461,795)
+(2,239,885)
+(3,249,199)
+72,443
+(661,883)
+1,283,147
+at fair value through profit or loss
+Fair value changes on other financial investments
+Other gains, net
+(54,187)
+Net provision for impairment losses on financial assets
+(1,232,474)
+(1,950,943)
+General and administrative expenses
+(332,004)
+Write-off
+196
+1>Repayments are 3 years past 1>Repayments are 3 years past Asset is written off
+due
+2> and there is no reasonable
+expectation of recovery
+2> and there is no reasonable
+expectation of recovery
+due
+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 monitors 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, 2020 was nil (2019:
+RMB15 million).
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+(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.
+•
+•
+Meituan 2020 Annual Report
+Lifetime expected losses
+The Group terminates its
+cooperation with merchants
+due
+•
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+Category
+Group definition of category
+Other receivables excluding loan Prepayments to merchants
+receivables and prepayments to
+merchants
+Performing
+The Group terminates its
+cooperation with merchants for
+more than 60 days
+Customers have a low risk of default and a strong capacity to meet
+contractual cash flows
+of expected credit loss
+provision
+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
+Underperforming
+Non-performing
+A significant increase in credit
+risk is presumed if repayments
+are 30 days past due
+Repayments are 90 days past
+Basis for recognition
+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.
+Meituan 2020 Annual Report
+is then moved to 'Stage 3'. The expected credit loss is measured on lifetime basis.
+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)
+(ii)
+(4)
+Forward-looking information incorporated in the ECL models
+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 expected credit
+losses.
+(5)
+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.
+Grouping of instruments for losses measured on a collective basis
+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.
+Loss allowance
+The loss allowance recognised 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 recognised, as well as releases for
+loan receivables derecognised in the period;
+Loan receivables derecognised and write-offs of allowances related to assets that were
+written off during the period.
+2020 Annual Report Meituan
+199
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+For the year ended December 31, 2020
+198
+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.
+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.
+2020 Annual Report Meituan
+197
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+(i)
+If the financial instrument is credit-impaired (as defined below), the financial instrument
+ECL model for loan receivables, as summarized below: (Continued)
+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 are considered to have experienced a significant increase in credit risk if
+the borrower is past due more than 1 day on its contractual payments.
+(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 impairment of loan receivables was provided based on the 'three-stages' model by
+referring to the changes in credit quality since initial recognition.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+FINANCIAL RISK MANAGEMENT (Continued)
+2020 Annual Report Meituan
+2.31 Dividends distribution
+Right-of-use assets are presented in "Property, plant and equipment” on face of the Group's
+consolidated statement of financial position.
+The Group considers the lease as a single transaction in which the asset and liabilities are integrally
+linked. There is no net temporary difference at inception. Subsequently, the differences arisen on
+settlement of the liability and the amortisation of leased assets, there will be a net temporary difference
+on which deferred tax is recognised.
+The payments associated with leases of the low-value assets are recognised on a straight-line basis as
+an expense in profit or loss. The low-value assets comprise small items of facilities.
+Right-of-use assets are generally depreciated over the shorter of the asset's 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 asset is depreciated over the underlying asset's useful life.
+2.30 Leases (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+Meituan
+190
+restoration costs.
+any initial direct costs; and
+any lease payments made at or before the commencement date;
+.
+the amount of the initial measurement of lease liability;
+Right-of-use assets are measured at cost comprising the following:
+The lease payments are allocated between the liability and finance cost. The finance cost is 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 liability 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
+Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial
+statements in the period in which the dividends are approved by the Company's Shareholders or
+Directors, where appropriate.
+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;
+2.32 Government subsidies
+2020 Annual Report Meituan
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+192
+As of December 31, 2020, the Group's notes payable were carried at fixed rates, which did
+not expose the Group to cash flow interest rate risk.
+The Group's exposure to changes in interest rates is also attributable to its borrowings and
+notes payable, details of which has 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.
+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 treasury investments at amortized
+cost, and details of which have been disclosed in Note 25 and Note 21, respectively.
+Cash flow and fair value interest rate risk
+(ii)
+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.
+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 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.
+Foreign exchange risk
+(i)
+(a) Market risk
+3.1 Financial risk factors
+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 FINANCIAL RISK MANAGEMENT
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+191
+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.
+195
+To determine the incremental borrowing rate, the Group:
+The lease payments to be made under reasonably certain extension options are also included in the
+measurement of the liability.
+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.
+For prepayments, deposits and other assets, 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 prepayments, deposits and other assets is measured
+as either 12-month expected credit losses or lifetime expected credit loss, depending on whether
+there has been a significant increase in credit risk since initial recognition. If a significant increase
+in credit risk of a receivable has occurred since initial recognition, then impairment is measured as
+lifetime expected credit losses.
+194
+Meituan
+2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+(b) Credit risk (Continued)
+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
+• 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 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, and
+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.
+Macroeconomic information (such as market interest rates or growth rates) is incorporated as part
+of the internal rating model.
+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.
+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.
+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 which continue operation for less than 3 years
+before December 31, 2020 or January 1, 2020 respectively and the corresponding historical credit
+losses experienced within this period. The historical loss rates are adjusted to reflect current and
+forward-looking information on macroeconomic factors affecting the ability of the customers to
+settle the receivables. The Group has identified the urban per capita disposable income and the
+total retail sales of consumer goods of the countries in which it sells its goods and services to be
+the most relevant factors, and accordingly adjusts the historical loss rates based on expected
+changes in these factors.
+(b) Credit risk (Continued)
+payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
+option.
+•
+Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
+include the net present value of the following lease payments:
+2.30 Leases (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+(a) Market risk (Continued)
+(iii)
+Price risk
+The Group is exposed to price risk in respect of other financial investments at fair value
+through profit or loss, other financial investments at fair value through other comprehensive
+income, short-term and long-term treasury investments at fair value through profit or loss
+and short-term treasury investments at fair value through other comprehensive income 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
+The Group is exposed to credit risk in relation to its cash and cash equivalents, restricted cash,
+treasury investments at amortized cost, short-term treasury investments at fair value through
+other comprehensive income, trade receivables and prepayments, deposits and other assets.
+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.
+To manage risk arising from cash and cash equivalents, restricted cash, treasury investments at
+amortized cost and short-term treasury investments at fair value through other comprehensive
+income, 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.
+To manage 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 and the credit quality of these customers is
+assessed, which takes into account their financial position, past experience and other factors.
+The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a
+lifetime expected loss allowance for all trade receivables and contract assets.
+2020 Annual Report Meituan
+193
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+3
+3.1 Financial risk factors (Continued)
+To measure the expected credit losses, trade receivables and contract assets have been grouped
+based on shared credit risk characteristics and the days past due. 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.
+•
+fixed payments (including in-substance fixed payments), and
+For the year ended December 31, 2020
+Meituan
+206
+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 during the year ended December 31, 2020.
+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 recognise transfers into and transfers out of fair value hierarchy levels as
+at the end of the reporting period.
+2020 Annual Report
+This presents investments in listed entities with observable quoted price.
+7,166,122
+5,089,127
+23,988,182
+23,988,182
+2,076,995*
+2,076,995*
+(Note 19)
+value through profit or loss
+Other financial investments at fair
+(Note 21)
+Total
+RMB'000
+Level 3
+RMB'000
+Level 2
+RMB'000
+29,077,309 31,154,304
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3
+6,849,861
+694,106
+900,000
+176,723,212
+Acquisitions
+5,089,127
+23,988,182
+As of January 1, 2020
+RMB'000
+RMB'000
+RMB'000
+unlisted companies
+profit or loss
+income
+fair value through
+profit or loss
+RMB'000
+at fair value through
+Financial liabilities
+profit or loss
+Investments in
+fair value through
+Other financial
+investments at
+Long-term treasury
+investments at
+investments
+at fair value
+through other
+comprehensive
+Short-term treasury
+investments at
+fair value through
+profit or loss
+RMB'000
+Short-term treasury
+The following table presents the changes in level 3 items including short-term treasury investments
+at fair value through profit or loss, short-term treasury investments at fair value through other
+comprehensive income, long-term treasury investments at fair value through profit or loss,
+investments in unlisted companies, and financial liabilities at fair value through profit or loss for the
+years ended December 31, 2020 and 2019.
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+Fair value estimation (Continued)
+Level 1
+RMB'000
+fair value through profit or loss
+Short-term treasury investments at
+Financial assets
+at fair value through other
+comprehensive income (Note 21)
+Long-term treasury investments at
+fair value through profit or loss
+(Note 21)
+Short-term treasury investments
+fair value through profit or loss
+(Note 21)
+Short-term treasury investments at
+Financial assets
+As of December 31, 2020
+The following table presents the Group's assets and liabilities that are measured at fair value as of
+December 31, 2020.
+3.3.1 Fair value hierarchy (Continued)
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+204
+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 analyzes the Group's financial instruments carried at fair value as of December
+31, 2020 and 2019 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 recognised 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, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+203
+2020 Annual Report Meituan
+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.
+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.
+Other financial investments at fair
+114,600
+Level 1
+RMB'000
+Level 3
+RMB'000
+As of December 31, 2019
+The following table presents the Group's assets and liabilities that are measured at fair value as of
+December 31, 2019.
+3.3.1 Fair value hierarchy (Continued)
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+205
+2020 Annual Report Meituan
+_— _—_—_— _114,600 _ 114,600
+through profit or loss
+Financial liabilities at fair value
+Financial liabilities
+65,442 41,729,324 44,525,203
+2,730,437
+605,918
+605,918*
+fair value through other
+comprehensive income (Note 20)
+Other financial investments at
+8,132,267 10,256,786
+2,124,519*
+value through profit or loss
+(Note 19)
+612,967
+-- 612,967
+965,553
+900,111
+65,442
+32,083,979 32,083,979
+Total
+RMB'000
+Level 2
+RMB'000
+Disposals/settlements
+(168,059,503)
+(41,237)
+at fair value through other
+NA
+Expected rate of return 2.80%-3.20%
+900,111
+Short-term treasury investments
+profit or loss
+return, the higher the fair value
+at fair value through
+The higher the expected rate of
+1.7%-7%
+the fair value
+The higher the DLOM, the lower
+15%-25%
+20%-25%
+Discount for lack of
+marketability ("DLOM")
+Expected rate of return (0.11%)-6.70%
+Short-term treasury investments 32,083,979 23,988,182
+the lower the fair value
+The higher the expected volatility,
+40%-55%
+40%-49.3%
+8,132,267 5,089,127 Expected volatility
+Investments in unlisted
+companies
+to fair value
+Relationship of
+unobservable inputs
+2019
+2020
+Unobservable inputs
+2019
+RMB'000
+2020
+RMB'000
+The higher the expected rate of
+return, the higher the fair value
+Description
+comprehensive income
+612,967
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+209
+2020 Annual Report Meituan
+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 entities
+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 deal services
+in the form of ordinary shares or preferred shares and measured these investments at fair value
+through profit and 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.
+Note a: Financial liabilities at fair value through profit or loss
+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 treasury
+investments at amortized cost and the Group's financial liabilities, including borrowings, notes
+payable, trade payables, payables to merchants, deposits from transacting users, advances from
+transacting users, other payables and accruals, lease liabilities and other non-current liabilities, are
+approximate their fair values.
+There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the
+years ended December 31, 2020 and 2019.
+If the unobservable inputs of financial assets at fair value through other comprehensive income
+held by the Group had been 10% higher/lower, the other comprehensive income, net of tax for
+the years ended December 31, 2020 and 2019 would have been approximately RMB31 thousand
+higher/lower and nil, respectively.
+If the unobservable inputs of financial assets at fair value through profit or loss held by the Group
+had been 10% higher/lower, the profit before income tax for the years ended December 31, 2020
+and 2019 would have been approximately RMB166 million lower or RMB124 million higher and
+RMB67 million lower or RMB68 million higher, respectively.
+3.3.4 Valuation process, inputs and relationships to fair value (Continued)
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+208
+through profit or loss
+Note a
+Note a
+Note a
+Note a
+114,600
+Financial liabilities at fair value
+profit or loss
+The higher the expected rate of
+return, the higher the fair value
+at fair value through
+ΝΑ
+0%-2.4%
+Expected rate of return
+Long-term treasury investments
+Maintain an optimal capital structure to reduce the cost of capital.
+Range of inputs
+at December 31,
+The following table summarizes the quantitative information about the significant unobservable
+inputs used in recurring level 3 fair value measurements.
+Currency translation differences
+Change in fair value
+Transfer
+Disposals/settlements
+As of January 1, 2019
+Acquisitions
+46,842
+4,450
+111
+148,811
+for the year
+Net unrealized gains
+114,600
+8,132,267
+612,967
+900,111
+32,083,979
+As of December 31, 2020
+(328,650)
+(44,501)
+(1,380,201)
+Currency translation differences
+4,908,385
+4,599
+111
+812,289
+Change in fair value
+(8,071,981)
+Transfer
+(314,475)
+As of December 31, 2019
+Fair value
+at December 31,
+Net unrealized gains/(losses) for the year
+investments at
+fair value through
+The valuation of the level 3 instruments mainly included short-term treasury investments at
+fair value through profit or loss, short-term treasury investments at fair value through other
+comprehensive income, long-term treasury investments at fair value through profit or loss,
+investments in unlisted companies, and financial liabilities at fair value through profit or loss.
+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.
+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)
+3
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+207
+2020 Annual Report Meituan
+(661,790)
+147,157
+5,089,127
+23,988,182
+51,394
+100,063
+(661,571)
+637,410
+319,373
+(219)
+475,903
+(134,898,095)
+143,080,844
+4,904,247
+RMB'000
+profit or loss
+Investments in
+unlisted companies
+Other financial
+investments at
+15,067,960
+profit or loss
+RMB'000
+Short-term treasury
+•
+fair value through
+•
+Transfer from Stage 1
+(77,949)
+(81,245)
+3,296
+to Stage 2
+Transfer from Stage 1
+Transfers:
+(335,498)
+(59,377)
+(103,491)
+(172,630)
+January 1, 2020
+Loss allowance as of
+to Stage 3
+RMB'000
+Stage 3
+Lifetime ECL
+RMB'000
+RMB'000
+RMB'000
+12-month ECL Lifetime ECL
+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)
+(ii)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Total
+9,524
+(303,815)
+(294,291)
+Accrual and reversal
+(45,272)
+(45,272)
+Recovered after written off
+384,107
+384,107
+Write-off
+(1,281,624)
+(1,281,624)
+originated
+New loan receivables
+1,310,369
+52,774
+38,035
+1,219,560
+than write-off
+during the period other
+Loan receivables derecognised
+to Stage 2
+Transfer from Stage 3
+to Stage 1
+Transfer from Stage 3
+(17,802)
+(78,333)
+60,531
+to Stage 3
+Transfer from Stage 2
+to Stage 1
+Transfer from Stage 2
+2020 Annual Report
+Meituan
+200
+7,262,016
+Transfer from Stage 1
+105,138
+(105,138)
+to Stage 2
+Transfer from Stage 1
+Transfers:
+5,723,050
+59,377
+129,915
+5,533,758
+of January 1, 2020
+Gross carrying amount as
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Stage 3
+Lifetime ECL
+12-month ECL Lifetime ECL
+Stage 2
+Stage 1
+The gross carrying amount of the loan receivables explains their significance to the changes
+in the loss allowance as discussed above:
+Loss allowance (Continued)
+(ii)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+Safeguard their ability to continue as a going concern, so that they can continue to provide returns
+for shareholders and benefits for other stakeholders; and
+to Stage 3
+(1,925)
+(303,815)
+Transfer from Stage 2
+49,916
+107,499
+7,104,601
+of December 31, 2020
+Gross carrying amount as
+45,272
+45,272
+(384,107)
+(384,107)
+40,883,459
+40,883,459
+(52,774) (39,005,658)
+(49,221)
+(38,903,663)
+Recovered after written off
+originated
+New loan receivables
+than write-off
+during the period other
+Loan receivables derecognised
+to Stage 2
+Transfer from Stage 3
+to Stage 1
+Transfer from Stage 3
+78,333
+(78,333)
+to Stage 3
+Transfer from Stage 2
+to Stage 1
+303,815
+5,666
+Write-off
+Loss allowance as of
+7,495,262
+7,495,262
+Payables to merchants
+6,766,253
+6,766,253
+Trade payables
+As of December 31, 2019
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Over
+5 years
+Between 2
+and 5 years
+and 2 years
+1 year
+Between 1
+Less than
+(c) Liquidity risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2020 Annual Report
+202
+60,660,779
+8,947,930 9,410,158
+1,267,331
+Advances from transacting users
+41,035,360
+3,855,559
+Deposits from transacting users
+The Group's objectives when managing capital are to:
+3,741
+3.2 Capital management
+30,054,298
+9,361
+713,233
+961,209
+28,370,495
+14,977
+14,977
+Financial guarantee contracts (Note 2.12)
+129,647
+126,311
+3,336
+Other non-current liabilities
+1,692,713
+9,361
+586,922
+491,197
+605,233
+Lease liabilities
+4,133,271
+466,676
+3,666,595
+Borrowings
+3,474,669
+Other payables and accruals
+2,491,947
+2,491,947
+3,855,559
+119,512
+3,474,669
+5,951,932 9,399,935
+10,223 2,997,509
+Over
+Between 2
+and 5 years
+Between 1
+and 2 years
+RMB'000
+RMB'000
+1 year
+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.
+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.
+Modification
+The Group may write-off loan receivables that are still subject to enforcement activity.
+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.
+(iv)
+RMB'000
+Write-off policy
+(c)
+(b) Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+201
+2020 Annual Report Meituan
+(354,219)
+(49,916)
+16,057,371
+(80,504)
+(223,799)
+December 31, 2020
+5
+years
+RMB'000
+(iii)
+As of December 31, 2020
+Other non-current liabilities
+882,633
+Total
+RMB'000
+1,211,544
+Lease liabilities
+352,752
+352,752
+8,529,740
+1,983,377
+31,946
+6,514,417
+Borrowings
+5,044,613
+5,044,613
+Other payables and accruals
+Notes payable
+2,222,211
+Trade payables
+11,967,026
+11,967,026
+Payables to merchants
+9,414,936
+893,109
+119,512
+Advances from transacting users
+4,307,861
+4,307,861
+2,222,211
+Deposits from transacting users
+9,414,936
+2,833,369
+8,180,933 (10,854,996)
+4,170,796
+4,330,102
+Year ended December 31, 2019
+In-store, New initiatives
+Food delivery
+hotel & travel
+Unallocated
+items (Note i)
+RMB'000
+4,200,064
+RMB'000
+49,646,589
+RMB'000
+Total
+RMB'000
+Commission
+11,679,344
+and others
+RMB'000
+Revenues in total
+(110,464,408)
+324,597
+18,908,045
+11,018,337
+Other services and sales
+(including interest revenue)
+108,172
+40,899
+21,524,042
+21,673,113
+66,265,319
+21,252,398
+27,276,793
+114,794,510
+Cost of revenues, operating
+expenses and
+unallocated items
+(63,431,950) (13,071,465) (38,131,789)
+4,170,796
+Operating profit/(loss)
+Online marketing services
+2,679,860
+10,516,428
+1,415,880
+8,403,293
+(6,749,149)
+(390,164)
+(i)
+Unallocated items are cost of revenues and operating expenses which could not be categorized into a
+segment. These items include (i) share-based compensation expenses, (ii) amortization of intangible assets
+resulting from acquisitions, (iii) fair value changes on other financial investments at fair value through profit or
+loss, (iv) other gains, net, (v) impairment of goodwill, (vi) impairment and expense provision/(reversal) for Mobike
+restructuring plan, and (vii) net provision for impairment losses on financial assets.
+2020 Annual Report Meituan
+215
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+5 SEGMENT REPORTING (Continued)
+5.1 Segment reporting (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, 2020 and 2019.
+The reconciliation of operating profit to profit before income tax of respective period for the years ended
+December 31, 2020 and 2019 is shown in the consolidated income statement.
+7,565,111
+As of December 31, 2020 and 2019, substantially all of the non-current assets of the Group were located
+in the PRC.
+5.2 Segment assets
+Operating profit/(loss)
+(94,848,671)
+(390,164)
+(13,872,179) (27,159,003)
+219,856
+65,525,997
+15,840,078
+Other services and sales
+(including interest revenue)
+92,822
+79,700
+15,989,934
+5,103,794
+16,162,456
+54,843,205
+22,275,472
+20,409,854
+97,528,531
+Cost of revenues, operating
+expenses and
+unallocated items
+(53,427,325)
+Revenues in total
+Online marketing services
+2020 Annual Report Meituan
+5,428,154
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.5 Incentives
+As disclosed in Note 2.27, the Group provides incentives to its Transacting Users in various forms
+including discounted coupons (with a minimum value to use), direct payment deduction, red packet,
+interest reduction/exemption coupons and discounts on goods or services. 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 payment 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.
+4.6 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 the future periods.
+4.7 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.
+212
+Meituan 2020 Annual Report
+4
+5
+LO
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.8 Current and deferred income tax
+211
+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.
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+The Group tests whether goodwill has suffered any impairment, in accordance with the accounting
+policy stated in Note 2.11. Management judgment 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 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.
+For the year ended December 31, 2020
+6
+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 Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award
+Scheme and granted restricted share units and options to employees and other qualifying participants.
+The fair value of the 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 restricted share units
+is determined by reference to the grant-date market price of the ordinary shares.
+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
+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.
+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 and financial liabilities (Note 3.3).
+210
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.3 Impairment provision for trade receivables and prepayments, deposits and other assets
+The loss allowances for trade receivables and prepayments, deposits and other assets are based on
+assumptions about risk of defaults 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).
+4.4 Recoverability of non-financial assets
+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.
+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 utilized. As of December 31, 2020, the Group did not
+recognise deferred income tax asset of RMB9.3 billion in respect of cumulative tax losses including
+the amount arising from the excess deduction of share-based payments. The outcome of their actual
+utilization may be different from management's estimation.
+4.9 Presentation and measurement of investments in associates
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+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, 2020 and 2019 is as follows:
+Year ended December 31, 2020
+In-store, New initiatives
+Food delivery
+hotel & travel
+and others
+Unallocated
+items (Note i)
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+Commission
+58,592,036
+10,193,162
+2020 Annual Report
+Meituan
+214
+The Group's revenue is mainly generated in China.
+SEGMENT REPORTING
+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, 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.
+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, 2020 and 2019.
+2020 Annual Report Meituan
+213
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+74,213,352
+5 SEGMENT REPORTING (Continued)
+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.
+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) food delivery service; (c) online marketing
+services in various advertising formats provided to merchants. The cost of revenues and operating
+expenses for the food delivery segment primarily consists of (a) food delivery rider costs; (b) employee
+benefits expenses; (c) transacting user incentives; (d) promotion and advertising; and (e) payment
+processing costs.
+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) commission from merchants for vouchers, coupons, tickets and reservations sold on the
+Group's platform; and (b) online marketing services to merchants, including performance-based and
+display-based marketing services, as well as marketing services provided under annual plans. The
+cost of revenues and operating expenses for the in-store, hotel & travel segment primarily consists
+of (a) employee benefits expenses; (b) transacting user incentives; (c) promotion and advertising; (d)
+depreciation of property, plant and equipment; and (e) other outsourcing labor costs.
+New initiatives and others
+Revenues from the new initiatives and other segment are primarily derived from (a) B2B food distribution
+services; (b) micro-credit business; (c) Meituan Instashopping; (d) Ride-sharing services. The cost of
+revenues and operating expenses for the new initiatives and others segment primarily consists of (a)
+cost of goods sold; (b) employee benefits expenses; (c) other outsourcing labor costs; (d) depreciation
+of property, plant and equipment, and (e) transacting 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 evaluate the performance of the
+operating segments.
+5.1 Segment reporting (Continued)
+REVENUES BY TYPE
+Research and development expenses
+2020
+RMB'000
+Year ended December 31,
+Emolument bands (in HK dollar)
+HK$76,000,001 – HK$76,500,000
+HK$118,500,001 – HK$119,000,000
+HK$124,000,001 – HK$124,500,000
+HK$136,000,001 – HK$136,500,000
+HK$145,000,001 - HK$145,500,000
+HK$145,500,001 – HK$146,000,000
+HK$147,500,001 – HK$148,000,000
+-
+The emoluments fell within the following bands:
+Pension costs and other employee benefits
+Share-based compensation expenses
+Bonuses
+Basic salaries
+The five individuals whose emoluments were the highest in the Group include one Director whose
+emolument is reflected in the analysis shown in Note 8(c) for the year ended December 31, 2020 (2019:
+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, 2020 and
+2019. The emoluments payable to the remaining individuals for the years ended December 31, 2020 and
+2019 are as follows:
+(b) Five highest paid individuals
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+218
+2,190,871
+3,277,476
+1,027,089
+1,329,122
+2020
+RMB'000
+General and administrative expenses
+2019
+RMB'000
+8,274
+4
+1
+1
+-
+|- -
+1
+2 - | - |
+1
+2019
+Number of individuals
+Year ended December 31,
+2020
+382,322
+476,720
+623
+363,067
+459,876
+521
+10,358
+8,049
+8,274
+838,746
+1,446,846
+264,538
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+8 EMPLOYEE BENEFITS EXPENSES
+Year ended December 31,
+2020
+RMB'000
+2019
+RMB'000
+Wages, salaries and bonuses
+Share-based compensation expenses (Note 33)
+Other employee benefits
+15,398,542
+12,416,342
+3,277,476
+2,190,871
+2,133,801
+1,950,296
+Pension costs - defined contribution plans (Note i)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+217
+2020 Annual Report Meituan
+Others mainly comprise travelling and entertainment expenses, message and verification fees, transportation and
+logistics fees, and bike maintenance and relocation fees.
+(i)
+420,873
+Selling and marketing expenses
+60,498
+80,635
+Cost of revenues
+2019
+RMB'000
+2020
+RMB'000
+Year ended December 31,
+4
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+Pension costs - defined contribution plans
+(i)
+17,754,642
+21,541,521
+Total cost of revenues, selling and marketing expenses, research and
+development expenses and general and administrative expenses
+118,113,462
+96,811,828
+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.
+2020 Annual Report Meituan
+219
+88,612
+4,992,573
+2019
+RMB'000
+Food delivery rider costs
+Cost of goods sold
+48,692,295
+41,041,513
+Employee benefits expenses (Note 8)
+21,541,521
+17,754,642
+10,726,592
+7,492,322
+Transacting User incentives
+8,072,985
+8,149,976
+Other outsourcing labor costs
+5,585,367
+2,991,197
+Depreciation of property, plant and equipment
+2020
+RMB'000
+Year ended December 31,
+For the year ended December 31, 2020
+EXPENSES BY NATURE
+2019
+RMB'000
+Commission
+74,213,352
+65,525,997
+Online marketing services
+18,908,045
+15,840,078
+Other services and sales (including interest revenue)
+4,202,623
+21,673,113
+114,794,510
+97,528,531
+Further disaggregation of revenues are included in Note 5.
+216
+Meituan
+2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+7
+16,162,456
+Year ended December 31,
+3,654,793
+2,956,884
+868,964
+726,443
+457,334
+509,581
+421,787
+218,732
+170,175
+247,989
+87,857
+48,889
+41,281
+1,898
+4,108
+Mobike restructuring plan
+(5,272)
+Others (Note i)
+8,106,753
+271,012
+907,287
+1,191,007
+991,486
+2,126,910
+Payment processing costs
+2,386,671
+2,189,646
+Car-hailing driver related costs
+1,891,366
+3,119,491
+Amortization of intangible assets
+Promotion and advertising
+Rental, facility and utilities
+Online traffic costs
+Professional fees
+Tax surcharge expenses
+Impairment provision for non-financial assets
+Auditor's remuneration
+- Audit and audit-related services
+- Non-audit services
+Impairment provision and restructuring expense for
+Bandwidth and server custody fees
+731,702
+1,197,133
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+13,952
+13,050
+2,269,638
+13,167,893
+2019
+RMB'000
+2020
+RMB'000
+As of December 31,
+Associates (a)
+Joint ventures
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
+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.
+Administering and holding the Company's shares issued for shares award scheme
+which are set up for the benefits of eligible persons of the Share Award Scheme
+Principal activities
+Share Scheme Trust
+Structured entity
+13,180,943
+Note (c) Consolidation of structured entities (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+224
+As mentioned in Note (a) above and Note 2.22, the Company has consolidated the operating entities in which the
+Group does not have legal ownership in equity and one investment fund. In addition, due to the implementation of
+the shares award scheme of the Group mentioned in Note 2.10, the Company has set up a structured entity ("Share
+Scheme Trust"), and its particulars are as follows:
+Note (c) Consolidation of structured entities
+Note (b) The Effective interest held has no change after December 31, 2020 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
+Merchant information advisory
+100%
+100%
+September 23, 2003 RMB10,000,000
+technology services in the PRC
+Multimedia information
+11 SUBSIDIARIES (Continued)
+2,283,590
+(a) Investments in associates using the equity method
+As of December 31,
+91,360
+853,618
+Dilution gain (Note iii)
+(142,493)
+8,071,981
+141,025
+2,367,376
+2,089,677
+2,269,638
+Transfer (Note ii)
+Additions (Note i)
+At the beginning of the year
+2019
+RMB'000
+2020
+RMB'000
+Year ended December 31,
+(a) Investments in associates using the equity method (Continued)
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+2020
+RMB'000
+2019
+RMB'000
+Investments in associates
+- listed entities
+- unlisted entities
+11,361,160
+1,806,733
+100%
+1,106,578
+13,167,893
+2,269,638
+The quoted fair value of the investments in listed entities was RMB25,224 million and RMB1,144 million
+as of December 31, 2020 and 2019, respectively.
+2020 Annual Report Meituan
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+1,163,060
+100%
+RMB52,000,000
+Beijing, the PRC, limited March 29, 2006
+liability company
+Shanghai, the PRC,
+limited liability company
+100% Micro-credit business in the PRC
+100%
+November 28, 2016 USD460,000,000
+Chongqing, the PRC,
+limited liability company
+100% Supply chain service in the PRC
+100%
+USD500,000,000
+limited liability company
+Tianjin, the PRC, limited February 13, 2018
+liability company
+Delivery services in the PRC
+100%
+100%
+USD320,000,000
+November 27, 2018
+Shanghai, the PRC,
+liability company
+100% Ride-sharing services in the PRC
+100%
+100%
+E-commerce service platform
+liability company
+in the PRC
+Shanghai, the PRC,
+January 11, 2016
+2020 Annual Report Meituan
+USD200,000,000
+100%
+Multimedia information
+limited liability company
+technology services in the PRC
+Beijing, the PRC, limited January 12, 2016
+USD199,000,000
+100%
+Dividends from an associate
+223
+For the year ended December 31, 2020
+Beijing Kuxun Interaction Technology
+Co., Ltd.
+Shanghai Hantao Information Consulting
+Co., Ltd.
+cloud computing in the PRC
+System("RMS") system and
+Restaurant Management
+100%
+100%
+RMB870,000,000
+100% Online retail platform in the PRC
+100%
+September 19, 2012 RMB5,000,000
+E-commerce service platform
+in the PRC
+100%
+100%
+RMB5,480,000,000
+Beijing, the PRC, limited April 10, 2007
+liability company
+Shanghai, the PRC,
+limited liability company
+Beijing, the PRC, limited June 17, 2015
+liability company
+Beijing Sankuai Cloud Computing
+Technology Co., Ltd.
+Shanghai SanKuai Technology Co., Ltd.
+11 SUBSIDIARIES (Continued)
+Name
+Structured entities(a):
+Place of incorporation/ Date of
+establishment and
+kind of legal entity
+Effective interest held (b)
+incorporation/
+establishment
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Particulars of
+Principal
+activities and
+issued capital
+2020
+2019
+place of operation
+Beijing SanKuai Technology Co., Ltd.
+As of December 31,
+(5,369)
+(4,953)
+Disposals
+(a) Value Added Tax
+13 TAXATION
+RMB11.3 billion of investments accounted for using the equity method is denominated in USD (2019:
+RMB1.1 billion), other balances are denominated in RMB.
+111,258
+310,978
+3,905
+107,353
+311,278
+(300)
+Total comprehensive income
+- Other comprehensive (loss)/income
+- Profit from operations
+Aggregate amounts of the Group's share of:
+2,269,638
+2,797,677
+Aggregate carrying amount of individually immaterial associates
+2019
+RMB'000
+2020
+RMB'000
+4,252,973
+6,117,243
+10,370,216
+2020 Annual Report Meituan
+227
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The Group is mainly subject to 6% VAT, and surcharges on VAT payments according to PRC tax law.
+For the year ended December 31, 2020
+(a) Investments in associates using the equity method (Continued)
+As of December 31, 2020, the carrying amount of the investment in Li Auto Inc. relative to the Group's
+total assets is 6.23%, and the fair value of this investment was RMB24,283 million.
+There were no dividends received from Li Auto Inc. during the year ended December 31, 2020 and the
+unrealised loss mainly represents the Group's share of results of Li Auto Inc.
+There were no material contingent liabilities relating to the Group's interests in the associates.
+The Group has interests in a number of individually immaterial associates that are accounted for using
+the equity method.
+As of December 31,
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+Carrying amount
+(b) Income tax
+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 gains. Additionally, the Cayman Islands does
+not impose a withholding tax on payments of dividends to shareholders.
+For the year ended December 31, 2020
+229
+2020 Annual Report Meituan
+(526,223)
+269,737
+Total income tax credits/(expenses)
+(44,069)
+416,909
+Deferred income tax credits/(expenses) (Note 18)
+(482,154)
+(147,172)
+Current income tax expenses
+2019
+RMB'000
+RMB'000
+2020
+Year ended December 31,
+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.
+228
+Meituan
+2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+13 TAXATION (Continued)
+(b) Income tax (Continued)
+Cayman Islands
+British Virgin Islands
+Hong Kong
+Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profit
+for the year ended December 31, 2020. No Hong Kong profits tax was provided for as there was no
+estimated assessable profit for the year ended December 31, 2019.
+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% during the years
+ended December 31, 2020 and 2019.
+Certain subsidiaries of the Group in the PRC are subject to "high and new technology enterprises" and,
+accordingly, were eligible for a preferential income tax rate of 15% for the years ended December 31,
+2020 and 2019. In addition, certain PRC subsidiaries of the Group are subject to "small and thin-profit
+enterprises" under the EIT Law, and accordingly, were eligible for a preferential income tax rate of 20%
+for the years ended December 31, 2020 and 2019.
+Withholding tax on undistributed dividends
+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.
+100%
+Goodwill and others
+14.27%
+Li Auto Inc.
+Principal activities/place
+of operation
+Interest held
+indirectly
+Number of
+shares held
+Place of
+incorporation
+Name of entity
+Particulars of a material associate of the Group, as determined by the Directors, are set out below:
+(a) Investments in associates using the equity method (Continued)
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+Meituan 2020 Annual Report
+226
+The interest of the Group in Li Auto Inc. was diluted from 15.18% to 14.27% due to the public offering of
+additional issuance in December 2020, and the Group realized dilution gain of RMB853 million.
+In 2020, the Group transferred the investment in Li Auto Inc. from other financial investments at fair value
+through profit or loss to investments accounted for using the equity method due to the conversion of preferred
+shares into ordinary shares upon its successful listing on Nasdaq (Note 19).
+The Group entered into a share subscription agreement to make an additional investment of USD300 million
+(equivalent to approximately RMB2,080 million) on Li Auto Inc. in the concurrent private placement of its global
+offering.
+(iii)
+(ii)
+(33,116)
+Share of gains of investments accounted for using equity method
+264,105
+107,353
+Other reserves
+(120,986)
+PRC
+3,905
+(532,470)
+16,880
+At the end of the year
+13,167,893
+2,269,638
+(i)
+Currency translation differences
+Group's share in RMB
+258,171,601
+new energy vehicles
+manufacturer/PRC
+Group's share in %
+29,803,597
+Net assets
+Reconciliation to carrying amounts:
+29,803,597
+Total equity
+2,260,458
+Non-current liabilities
+4,309,221
+Current liabilities
+4,982,167
+Non-current assets
+31,391,109
+Current assets
+Summarised consolidated balance sheet
+Currency translation differences
+(1,020,728)
+Except for Li Auto Inc., the Directors of the Company considered that there is no other individual
+investment which was determined as a material associate.
+Set out below are the summarised financial information of Li Auto Inc. extracted from its financial
+statements prepared under US Generally Accepted Accounting Principles ("US GAAP"). They have been
+amended to reflect adjustments made by the Group when using the equity method, including fair value
+adjustments and modifications for differences in accounting policy.
+Summarised consolidated financial statements
+Revenues
+Cost of sales
+Loss from operations
+14.27%
+Net loss
+December 31,
+2020
+RMB'000
+9,456,609
+(7,907,270)
+(669,337)
+(151,657)
+As of
+USD549,049,120
+225
+Multimedia information
+2020 Annual Report
+Meituan
+220
+Total
+500
+Leng Xuesong
+500
+Shum Heung Yeung Harry
+500
+Orr Gordon Robert Halyburton
+Shen, Nanpeng Neil
+Lau, Chi Ping Martin
+149,114
+144,923
+156
+1,995
+2,040
+expenses
+RMB'000
+RMB'000
+Total
+RMB'000
+| | | │
+2,520
+1,264
+2,772
+5,461
+2,041
+1,796
+155
+37,371
+41,363
+169
+benefits
+1,764
+1,764
+222
+221
+2020 Annual Report Meituan
+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 years ended December 31, 2020 and 2019.
+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,
+2020. None of the other Director waived or has agreed to waive any emoluments during the years
+ended December 31, 2020 and 2019.
+Waiver of Director's emoluments
+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 year or at any time during the years
+ended December 31, 2020 and 2019.
+Directors' material interests in transactions, arrangements or contracts
+v)
+iv)
+There were no 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 years
+ended December 31, 2020 and 2019.
+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 years ended December 31, 2020 and
+2019.
+Consideration provided to third parties for making available Directors' services
+ii)
+1,264
+1,764
+1,500
+6,601
+6,563
+480
+1,264
+186,086
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments (Continued)
+i) Directors' termination benefits
+No Director's termination benefit subsisted at the end of the year or at any time during the years
+ended December 31, 2020 and 2019.
+201,230
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Bonuses
+RMB'000
+Basic
+salaries
+RMB'000
+23,655
+19,442
+132
+2,040
+2,041
+5,190
+150
+2,520
+2,520
+RMB'000
+RMB'000
+technology services in the PRC
+expenses
+benefits
+RMB'000
+Bonuses
+RMB'000
+RMB'000
+salaries
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments
+The remuneration of every Director and the chief executive is set out below:
+For the year ended December 31, 2020:
+Name
+2,040
+Wang Xing
+Wang Huiwen
+Pension costs
+and other Share-based
+Basic
+employee compensation
+Fees
+RMB'000
+Mu Rongjun
+employee compensation
+1,968
+71,722
+Fees
+RMB'000
+Share-based
+and other
+Pension costs
+Wang Huiwen
+Mu Rongjun
+Wang Xing
+Name
+For the year ended December 31, 2019:
+108,044
+93,039
+376
+6,528
+6,601
+1,500
+1,125
+625
+75,824
+Lau, Chi Ping Martin
+Shen, Nanpeng Neil
+Orr Gordon Robert Halyburton
+500
+Shum Heung Yeung Harry
+94
+500
+500
+Total
+625
+1,125
+625
+1,125
+Leng Xuesong
+For the year ended December 31, 2020
+Total
+OTHER GAINS, NET
+100%
+100%
+USD50,000
+Cayman, limited liability April 2, 2015
+mobike Ltd. ("Mobike")
+Investment holding in Cayman
+100%
+100%
+USD50,000
+Cayman, limited liability April 1, 2016
+company
+Kangaroo Technology Corporation
+Hong Kong
+Investment holding in
+100%
+100%
+HKD1
+November 27, 2015
+place of operation
+Meituan Corporation
+Cayman, limited liability July 29, 2010
+company
+USD50,000
+100%
+100%
+Investment holding in Cayman
+Investment holding in Cayman
+Internet Plus (Hong Kong) Limited
+Cayman, limited liability December 20, 2005
+company
+Hong Kong, limited
+liability company
+USD50,000
+100%
+100%
+Investment holding in Cayman
+DianPing Holdings Limited ("DianPing")
+2019
+company
+The British Virgin
+100%
+9
+100%
+USD495,000,000
+March 16, 2006
+in the PRC
+Online hotel and travel services
+100%
+100%
+USD54,665,694
+Chongqing Meituan Sankuai Micro-credit
+Co., Ltd.
+Tianjin Xiaoyi Technology Co., Ltd.
+Shanghai Sankuai Zhisong Technology
+Co., Ltd.
+Mobike (Beijing) Information Technology
+Co., Ltd.
+Hucheng Information Technology
+(Shanghai) Co., Ltd.
+Xiamen Sankuai Online Technology
+Co., Ltd.
+Hanhai Information Technology (Shanghai)
+Co., Ltd.
+March 19, 2014
+USD50,000
+100%
+100%
+Investment holding in
+Islands, limited liability
+company
+Inspired Elite Investments Limited
+The British Virgin Islands
+Beijing SanKuai Online Technology
+Co., Ltd.
+Beijing, the PRC, limited May 6, 2011
+liability company
+USD2,676,260,000 100%
+100%
+E-commerce service platform
+in the PRC
+Beijing Kuxun Technology Co., Ltd.
+Indirectly held:
+2020
+Beijing, the PRC, limited April 27, 2006
+liability company
+Shanghai, the PRC,
+limited liability company
+Xiamen, the PRC, limited March 25, 2014
+Principal
+activities and
+2,531,143
+3,160,835
+39,925
+(114,467)
+Others
+(81,872)
+(170,340)
+40,177
+Gains from the disposal of subsidiaries
+Foreign exchange loss, net
+160,884
+Gains from the disposal of investments
+176,880
+Gains from remeasurement of investments
+876,467
+(i)
+386,771
+637,410
+816,888
+profit or loss (Note 3.3)
+Fair value changes of treasury investments at fair value through
+91,360
+853,618
+Dilution gain (Note 12)
+1,388,365
+Subsidies and tax preference (Note i)
+2019
+RMB'000
+RMB'000
+issued capital
+Year ended December 31,
+2020
+Interest income from treasury investments at amortized cost
+Since April 1, 2019, taxpayers in the manufacturing and consumer services industry are allowed to enjoy additional
+10% of input VAT amount to deduct from tax payable. Since October 1, 2019, taxpayers in consumer services
+industry are allowed to enjoy additional 15% of input VAT amount to deduct from tax payable. As a result, for the
+year ended December 31, 2020, the Group recognised a gain of RMB805.7 million (2019: RMB299.9 million).
+589,912
+Finance income
+Particulars of
+10 FINANCE INCOME/(COSTS)
+Effective interest held (b)
+As of December 31,
+kind of legal entity
+establishment and
+Subsidiaries
+Directly held:
+Name
+The Company's major subsidiaries (including controlled and structured entities) during the year ended
+December 31, 2020 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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+11 SUBSIDIARIES
+Meituan 2020 Annual Report
+(191,042)
+(370,016)
+Total
+(14,815)
+Place of incorporation/ Date of
+Bank charges and others
+Interest income from bank deposits
+Year ended December 31,
+(24,534)
+2020
+RMB'000
+2019
+RMB'000
+213,684
+166,217
+Finance costs
+incorporation/
+establishment
+(253,216)
+Interest expense on bank borrowings and notes payable
+(91,199)
+(85,028)
+Interest in respect of lease liabilities
+(92,266)
+differences
+(27,949)
+(1,278,647)
+Depreciation
+(7,613,657)
+(15,805) (4,497,479) (206,251)
+(1,783,990) (105,140)
+(2,288,342)
+At January 1, 2020
+Accumulated depreciation
+(605,780)
+(921,846)
+(4,202,623)
+(85,051)
+Disposal
+46,088
+18,200
+2,496,832
+495,703
+3,332
+3,062,506
+Currency translation
+11
+22,694,869
+11
+2,351
+Transfers
+3,756,829
+180,074
+6,951,124
+At December 31, 2020
+2,540,360
+2,180,516
+13,044,253
+Disposal
+(53,631)
+(38,709)
+(2,629,859)
+(10,456)
+(8,493)
+(590,460)
+(18,070)
+(3,344,678)
+1,734,740
+108,278
+(2,431,532)
+588,514
+Currency translation
+differences
+(21)
+At December 31, 2020
+5,644,530
+228,071 11,837,828
+420,464
+241,703
+570,444
+(3,520,901)
+At December 31, 2020
+(3,784,637)
+8,053,191
+111,424
+241,157 2,724,917
+460,330
+13,917,165
+232
+Meituan
+2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+For the year ended December 31, 2020
+Bikes and
+202,517
+Computer Furniture and
+appliances
+RMB'000
+RMB'000
+electric Leasehold
+mopeds improvements
+RMB'000
+Assets under
+construction
+Right-of-use
+assets
+Total
+RMB'000
+RMB'000
+RMB'000
+1,192,179
+RMB'000
+equipment
+2,123,629
+5,376,217
+133,423 1,561,014
+(309,040)
+Impairment
+At January 1, 2020
+(7,497)
+Additions
+Disposal
+At December 31, 2020
+(1,031,912)
+(81,719)
+(8,753,763)
+(7,945)
+(15,442)
+(29,691)
+(29,691)
+7,497
+7,399
+1,296
+16,192
+(546)
+(28,395)
+(28,941)
+Net carrying amount
+At January 1, 2020
+2,217,641
+70,901
+1,276,847
+116,391
+(25,554)
+Additions
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2,166,794
+1,239,239
+432,959
+- Tax losses for which no deferred income tax assets were
+recognised
+(2,136,100)
+(1,768,349)
+- Utilization of previously unrecognised temporary differences
+537,509
+1,006,456
+- Withholding tax (Note i)
+(568,384)
+- Adjustments for current tax of prior year
+- Utilization of previously unrecognised tax losses
+61,576
+Total income tax credits/(expenses)
+269,737
+(526,223)
+(i)
+The Group's subsidiaries outside of PRC recognised withholding tax for their investments in the PRC entities.
+230
+Meituan
+2020 Annual Report
+14 EARNINGS PER SHARE
+(a) Basic earnings per share for the years ended December 31, 2020 and 2019 were calculated by dividing
+the profit attributable to the Company's equity holders by the weighted average number of ordinary
+shares in issue during the year.
+(b)
+Year ended December 31,
+2020
+(9,460)
+2019
+498,142
+- Super deduction for research and development expenses
+Cost
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+13 TAXATION (Continued)
+(b) Income tax (Continued)
+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, 2020 and 2019, being the tax rate of the
+major subsidiaries of the Group.
+The difference is analyzed as follows:
+Year ended December 31,
+2020
+RMB'000
+2019
+RMB'000
+Profit before income tax
+4,437,875
+1,261,674
+2,762,388
+(1,109,469)
+(690,597)
+Tax effects of:
+- Different tax rates available to different jurisdictions
+1,509,383
+(460,243)
+- Preferential income tax rates applicable to subsidiaries
+(298,412)
+502,450
+- Expenses not deductible for income tax purposes
+(227,279)
+(37,581)
+Tax calculated at statutory income tax rate of 25% in
+the PRC
+13,005,316
+Profit attributable to equity holders of
+4,708,313
+15 PROPERTY, PLANT AND EQUIPMENT
+Bikes and
+Computer Furniture and
+electric Leasehold
+Assets under
+Right-of-use
+equipment
+appliances
+RMB'000
+RMB'000
+mopeds improvements
+RMB'000 RMB'000
+construction
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+assets
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Cost
+At January 1, 2020
+4,505,983
+86,706
+5,781,823
+322,642
+141,368
+Others
+the Company (RMB'000)
+231
+0.38
+Weighted average number of ordinary shares in issue (thousand)
+5,845,354
+2,238,769
+5,767,906
+Basic earnings per share (RMB)
+0.81
+0.39
+Diluted 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 two
+categories of dilutive potential ordinary shares: share options and RSUs.
+Year ended December 31,
+2020
+2019
+Profit attributable to equity holders of
+the Company (RMB' 000)
+2020 Annual Report Meituan
+4,708,313
+Weighted average number of ordinary shares in issue (thousand)
+5,845,354
+5,767,906
+Adjustments for share options and RSUs (thousand)
+158,251
+155,004
+Weighted average number of ordinary shares used as the
+denominator in calculating diluted earnings
+per share (thousand)
+6,003,605
+Diluted earnings per share (RMB)
+0.78
+2,238,769
+At December 31, 2018
+5,922,910
+100,342 5,152,325
+(10,801)
+(12,001)
+(22,802)
+At December 31, 2019
+5,006,300
+490,000
+1,877,633
+390,000
+849,830
+907,000
+28,700
+27,849,022
+37,398,485
+Accumulated amortization
+At January 1, 2019
+Disposal
+22,746
+22,746
+Additions
+RMB'000
+Supplier
+relationship
+RMB'000
+Goodwill
+Total
+RMB'000 RMB'000
+Cost
+At January 1, 2019
+(565,565)
+5,006,300
+1,865,688
+390,000
+849,830
+907,000
+28,700
+27,861,023
+37,398,541
+490,000
+RMB'000
+(318,500)
+(62,833)
+(389,525)
+(351,016)
+(11,473)
+(3,204,653)
+Impairment
+At January 1, 2019
+(1,347,510)
+Disposal
+At December 31, 2019
+(1,347,510)
+(3,238)
+(3,238)
+8
+(155,422) (1,506,258)
+12,001
+(88.833)
+(1,178,322)
+(416,500)
+(768,984)
+(240,174)
+(169,616)
+(7,453)
+(2,016,279)
+Amortization
+(203,419)
+(98,000)
+(652,138)
+(528,817)
+(181,400)
+(4,020)
+(1,191,007)
+Disposal
+2,633
+2,633
+At December 31, 2019
+(26,000) (149,351)
+RMB'000
+RMB'000
+RMB'000
+(490,000)
+(1,542,848) (114,833) (538,875)
+(529,066)
+(15,493)
+(4,184,757)
+Impairment
+At January 1, 2020
+(1,347,510)
+Additions
+At December 31, 2020
+(1,347,510)
+(3,238)
+(3,238)
+(143,421) (1,494,257)
+(58,166)
+(953,642)
+At December 31, 2020
+11,382
+11,382
+(416,500)
+(1,178,322)
+(88,833)
+3,198,019
+(351,016)
+(11,473)
+(3,204,653)
+(58,166)
+Amortization
+(73,500)
+(375,908)
+(26,000) (149,350)
+(178,050)
+(4,020)
+(991,486)
+Disposal
+(184,658)
+(201,587)
+(1,552,423)
+Net carrying amount
+For the year ended December 31, 2020
+16 INTANGIBLE ASSETS (Continued)
+User
+Online
+Trade
+generated
+Software
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+payment
+name
+content
+and others
+license
+and licenses
+User list
+RMB'000
+Technology
+12,001
+235
+13,119 27,647,435 31,676,381
+At January 1, 2020
+2,889,806
+73,500
+699,311
+301,167
+457,067
+555,984
+2020 Annual Report Meituan
+17,139
+32,699,575
+At December 31, 2020
+2,705,148
+349,861
+275,167
+307,717
+377,934
+27,705,601
+(143,421)
+(1,494,257)
+Net carrying amount
+Impairment of goodwill (Continued)
+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.
+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.
+Impairment review on the goodwill of the Group has been conducted by the management as of December 31,
+2020 and 2019, according to IAS 36 "Impairment of assets".
+The key assumptions used in the value-in-use calculations for significant group of CGUs allocated with
+goodwill are as follows:
+As of December 31, 2020
+Annual revenue growth rate
+Food delivery
+In-store,
+hotel & travel
+Ride-sharing
+services
+for the 5-year period (%)
+5%-50%
+5%-55%
+Gross profit rate
+21%-25%
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+237
+Food delivery
+In-store, hotel & travel
+Ride-sharing services
+4,845,229
+4,845,229
+18,950,647
+18,950,647
+90%
+3,707,427
+New initiatives and others (excluding
+ride-sharing services)
+202,298
+27,705,601
+202,298
+27,705,601
+2020 Annual Report Meituan
+3,707,427
+6%-67%
+23%-36%
+Terminal revenue growth rate (%)
+3%
+In-store,
+hotel & travel
+Ride-sharing
+services
+5%-31%
+20%-27%
+13%-32%
+88%-90%
+11%-166%
+29%-49%
+3%
+3%
+Food delivery
+3%
+27%
+31%
+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.
+New initiatives and others includes different CGUs. Those CGUS cover the business of RMS, B2B food
+distribution services and micro-credit business. The discount rate used in the impairment testing for the CGUS
+in new initiatives and others segments is from 24% to 28%, while the terminal revenue growth rate is 3% for
+the years ended December 31, 2020 and 2019.
+Impairment losses of RMB58 million related to the CGU of supply chain has been charged in “General and
+administrative expenses" for the year ended December 31, 2020, resulting from revisions of financial/business
+outlook and changes in the market environment of the underlying business.
+2020 Annual Report Meituan
+239
+28%
+RMB'000
+Pre-tax discount rate (%)
+Gross profit rate
+3%
+3%
+Pre-tax discount rate (%)
+25%
+25%
+28%
+238
+Terminal revenue growth rate (%)
+Meituan
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+16 INTANGIBLE ASSETS (Continued)
+Impairment of goodwill (Continued)
+As of December 31, 2019
+Annual revenue growth rate
+for the 5-year period (%)
+2020 Annual Report
+(768,984)
+RMB'000
+Disposal
+2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+16 INTANGIBLE ASSETS (Continued)
+Amortization expenses have been charged to the consolidated income statement as follows:
+Selling and marketing expenses
+General and administrative expenses
+Cost of revenues
+Research and development expenses
+Impairment of goodwill
+Year ended December 31,
+2020
+2019
+RMB'000
+RMB'000
+592,367
+Meituan
+236
+27,705,601 32,699,575
+17,139
+At January 1, 2019
+3,093,225
+171,500
+1,213,550
+327,167
+606.418
+737,384
+768,079
+21,159
+At December 31, 2019
+2,889,806
+73,500
+699,311
+301,167
+457,067
+555,984
+27,705,601 33,876,004
+215,993
+242,504
+176,978
+ride-sharing services)
+202,298
+27,705,601
+4,845,229
+18,950,647
+3,707,427
+(58,166) -
+New initiatives and others (excluding
+144,132
+27,647,435
+Year ended December 31, 2019
+Opening
+RMB'000
+RMB'000
+Addition Reallocation
+RMB'000
+Impairment
+RMB'000
+(58,166)
+Closing
+3,707,427
+18,950,647
+176,636
+6,148
+3,788
+991,486
+1,191,007
+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:
+Year ended December 31, 2020
+Ride-sharing services
+Opening
+Addition Reallocation
+RMB'000 RMB'000
+Impairment Disposal
+RMB'000 RMB'000
+Closing
+RMB'000
+Food delivery
+4,845,229
+In-store, hotel & travel
+RMB'000
+At January 1, 2020
+(389,525)
+1,164,141
+907,000
+28,700
+27,849,022
+37,398,485
+Additions
+29,568
+29,568
+Disposal
+(14,492)
+(14,492)
+At December 31, 2020
+5,006,300
+490,000
+1,892,709
+390,000
+849,830
+907,000
+28,700
+27,849,022
+37,413,561
+Accumulated amortization
+481,399
+74,010
+49,063
+Disposal
+849,830
+390,000
+1,877,633
+490,000
+Trade
+generated
+and
+payment
+Technology
+Supplier
+name
+content
+others
+license
+and licenses
+User list relationship
+(3,654,793)
+Goodwill
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Cost
+At January 1, 2020
+5,006,300
+Total
+(820,908)
+(131,069)
+(1,554,568)
+(20,061)
+(650,009)
+(118,105)
+(69,419)
+Disposal
+3,520,302
+594,696
+516,624
+6,604
+920,527
+104,468
+1,377,383
+(6,023)
+Additions
+2,021,192
+194,512
+182,058
+5,152,325
+100,342
+3,198,019
+At January 1, 2019
+2,021,192
+2,021,192
+Adjustment on adoption of IFRS 16
+8,827,256
+194,512
+10,848,448
+Online
+(449,094)
+Transfers
+(42,485)
+(1,105,763)
+Depreciation
+(4,777,927)
+(77,979)
+(3,420,977)
+(47,329)
+(1,231,642)
+At January 1, 2019
+Accumulated depreciation
+13,005,316
+2,166,794
+(1,312,711)
+141,368
+5,781,823
+86,706
+4,505,983
+At December 31, 2019
+4,096
+4,095
+1
+Currency translation differences
+(54,819)
+(563,745)
+154,041
+354,885
+322,642
+182,058
+Software
+For the year ended December 31, 2020
+1,966,377
+53,013
+1,660,834
+104,079
+194,512
+2,021,192
+6,000,007
+At December 31, 2019
+2,217,641
+70,901
+1,276,847
+116,391
+133,423
+1,561,014 5,376,217
+2020 Annual Report Meituan
+233
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+Depreciation 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
+(a)
+IFRS 16
+At January 1, 2019 on adoption of
+Net carrying amount
+(15,442)
+Currency translation differences
+(3,333)
+(3,334)
+At December 31, 2019
+(2,288,342)
+(15,805) (4,497,479)
+(206,251)
+(605,780)
+(7,613,657)
+Impairment
+At January 1, 2019
+(70,514)
+Leases
+(70,514)
+(30)
+(8,181)
+(13,968)
+(22,179)
+Disposal
+30
+71,198
+6,023
+77,251
+At December 31, 2019
+(7,497)
+(7,945)
+Additions
+Year ended December 31,
+2020
+RMB'000
+2019
+RMB'000
+2020
+RMB'000
+2019
+RMB'000
+1,089,847
+534,566
+1,648,008
+992,233
+2,737,855
+1,526,799
+The additions to the right-of-use assets during the year ended December 31, 2020 were RMB2,181
+million, which mainly represented some lease-hold of office buildings.
+(ii)
+Amounts recognised in the consolidated income statement
+As of December 31,
+The consolidated income statement shows the following amounts relating to leases:
+2020
+RMB'000
+2019
+RMB'000
+Depreciation charge of right-of-use assets
+Interest expense (included in finance income/(costs))
+921,846
+92,266
+820,908
+85,028
+234
+Meituan
+2020 Annual Report
+16 INTANGIBLE ASSETS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Year ended December 31,
+User
+1,561,014
+396,873
+3,216,094
+2,717,465
+513,443
+516,988
+302,013
+233,764
+171,073
+186,576
+4,202,623
+3,654,793
+(i) Amounts recognised in the consolidated statement of financial position
+The consolidated statement of financial position shows the following amounts relating to leases:
+2,724,917
+Right-of-use assets
+Others
+Total
+Lease liabilities
+Current
+Non-current
+As of December 31,
+2020
+RMB'000
+2019
+RMB'000
+1,923,104
+2,797
+801,813
+Offices
+822,397
+215,128
+176,250
+(750,046)
+As of December 31, 2019
+(3,518)
+(3,518)
+income
+Charged to other comprehensive
+587,391
+75,939
+393,115
+(18,015)
+136,352
+income statement
+(438,363)
+Credited/(charged) to consolidated
+(100,955)
+(862,290)
+(416,830)
+(886,398)
+As of January 1, 2019
+(155,943) (1,630,975)
+(50,029)
+(804,356)
+(620,647)
+As of December 31, 2020
+31,368
+31,368
+(2,266,473)
+income
+(469,175)
+The Group only recognises 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, 2020 and
+2019, the Group did not recognise deferred income tax assets of RMB9.3 billion and RMB6.6 billion in
+respect of cumulative tax losses amounting to RMB43.6 billion and RMB28.7 billion including the tax
+losses arising from the excess deduction of share-based payments. These tax losses will expire from
+2021 to 2025, and certain subsidiaries of the Group may extend to 2030.
+Tax losses
+10,256,786
+19
+22
+- Other financial investments 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
+Assets as per consolidated statements of financial position
+Financial assets at fair value through profit or loss:
+2019
+RMB'000
+2020
+RMB'000
+Note
+As of December 31,
+The Group holds the following financial instruments:
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+(25,016) (1,682,600)
+For the year ended December 31, 2020
+10,256,786
+Other financial investments at fair value through profit or loss (Note a)
+2019
+RMB'000
+2020
+RMB'000
+As of December 31,
+Non-current
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+243
+2020 Annual Report Meituan
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Credited to other comprehensive
+20,257
+(130,927)
+848,365
+As of December 31,2019
+(631,460)
+1,515,645
+142,294
+(106,474)
+(524,986)
+Credited to consolidated income statement
+1,373,351
+As of January 1, 2019
+1,323,951
+314,032
+1,009,919
+35,820
+As of December 31,2020
+43,114
+Charged to other comprehensive income
+396,652
+278,212
+118,440
+Charged to consolidated income statement
+884,185
+35,820
+848,365
+As of January 1, 2020
+Total
+RMB'000
+Others
+RMB'000
+43,114
+884,185
+242
+Meituan
+419,146
+(397,361)
+129,399
+income statement
+Credited/(charged) to consolidated
+(25,016) (1,682,600)
+(469,175)
+(438,363)
+(750,046)
+As of January 1, 2020
+Total
+RMB'000
+Others
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+revenues
+fair value
+Assets
+Deferred
+method or at
+Intangible
+using the
+equity
+Investments
+The movement on the gross deferred tax liabilities is as follows:
+18 DEFERRED INCOME TAXES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+21
+32,083,979
+7,166,122
+23,988,182
+21
+18 DEFERRED INCOME TAXES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+29,759,304
+57,194,559
+1,526,799
+2,737,855
+12,966,341
+32
+4,019,263
+8,352,472
+31
+129,552
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statements of
+financial position:
+119,512
+5,106,345
+30
+30
+2,491,947
+2,222,211
+3,855,559
+4,307,861
+7,495,262
+9,414,936
+6,766,253
+11,967,026
+29
+3,474,669
+(a) Deferred tax assets
+As of December 31,
+2020
+RMB'000
+272,420
+435,799
+448,670
+2020
+As of December 31,
+- to be recovered within 12 months
+- to be recovered after 12 months
+Deferred tax assets:
+590,054
+448,670
+Net deferred tax assets
+(294,131)
+(875,281)
+Set-off of deferred tax assets pursuant to set-off provisions
+884,185
+1,323,951
+Total gross deferred tax assets
+35,820
+314,032
+- Others
+848,365
+1,009,919
+- Tax losses
+The balance comprises temporary differences attributable to:
+2019
+RMB'000
+RMB'000
+29
+2019
+RMB'000
+114,600
+Meituan
+21
+- Long-term treasury investments at amortized cost
+8,646,803
+10,560,882
+22
+- Prepayments, deposits and other assets
+676,762
+1,030,948
+24
+- Trade receivables
+1,571,471
+605,918
+200,275
+20
+965,553
+21
+21
+Financial assets at amortized cost:
+Other financial investments at fair value through other
+comprehensive income
+comprehensive income
+-
+- Short-term treasury investments at fair value through other
+Financial assets at fair value through other comprehensive income:
+31,154,304
+42,953,732
+612,967
+20
+- Short-term treasury investments at amortized cost
+21
+10,949,832
+240
+- Lease liabilities
+- Notes payable
+- Borrowings
+- Other non-current liabilities
+-
+· Other payables and accruals
+-
+- Deposits from transacting users
+- Advances from transacting users
+- Payables to merchants
+- Trade payables
+Financial liabilities at amortized cost:
+- Financial liabilities at fair value through profit or loss
+Financial liabilities at fair value through profit or loss:
+Liabilities as per consolidated statement of financial position
+57,127,557
+52,410,888
+13,396,185
+17,093,559
+25(a)
+- Cash and cash equivalents
+8,760,115
+12,775,667
+25(b)
+- Restricted cash
+25,447,417
+2020 Annual Report
+154,255
+(ii)
+7,166,122
+Treasury investments 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 recognised in "Other
+gains, net" in the consolidated income statement.
+2020 Annual Report Meituan
+247
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+21 TREASURY INVESTMENTS (Continued)
+(c) Treasury investments at fair value through other comprehensive income
+Treasury investments at fair value through other comprehensive income are large-denomination
+negotiable certificates of term deposits and other financial products, in which the contractual cash flows
+represent solely payments of principal and interest and the objective of the Group's business model is
+achieved both by collecting contractual cash flows and selling these financial assets. The fair values are
+within level 2 and 3 of the fair value hierarchy (Note 3.3).
+(d) Treasury investments are denominated in the following currencies:
+As of December 31,
+USD
+RMB
+2020
+RMB'000
+2019
+RMB'000
+31,828,437
+(b) Treasury investments at fair value through profit or loss
+32,630,495
+There is also no exposure to price risk as the investments will be held to maturity.
+Treasury investments at amortized cost are fixed rate certificate of deposit and term deposits.
+As of December 31,
+2020
+RMB'000
+2019
+RMB'000
+200,275
+612,967
+612,967
+200,275
+10,949,832
+25,447,417
+32,083,979
+23,988,182
+965,553
+43,999,364
+49,435,599
+Note 3.1 (b) sets out information about the impairment of financial assets and the Group's exposure to
+credit risk.
+12,783,894
+17,005,379
+44,612,331
+RMB'000
+4,578,910
+1,356,167
+159,703
+466,232
+334,509
+972,099
+297,044
+282,044
+268,658
+135,813
+268,297
+12,378
+7,569,817
+1,562,037
+2019
+RMB'000
+2020
+As of December 31,
+49,635,874
+The majority of treasury investments denominated in USD currency are held by the entities with the
+same functional currency. Therefore, there is no exposure to foreign currency risk.
+248
+Meituan 2020 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+Non-current
+For the year ended December 31, 2020
+Prepayment for land use rights
+Loan receivables (Note i)
+Recoverable value-added tax
+Prepayment for investments
+Rental deposits
+Others
+Current
+For the year ended December 31, 2020
+Prepayment for fixed assets
+(a) Treasury investments at amortized cost
+- Fair value through other comprehensive income (c)
+- Fair value through profit or loss (b)
+(218,848)
+47,656
+7,566,686
+5,789,747
+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.
+RMB4.0 billion of other financial investments at fair value through profit or loss is denominated in
+USD (2019: RMB3.4 billion), other balances are denominated in RMB.
+2020 Annual Report Meituan
+245
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+Other financial investments at fair value through other comprehensive income comprise the following:
+Non-current assets
+Equity investments in listed securities
+As of December 31,
+319,373
+(218,538)
+(219)
+(88,794)
+Other investments at fair value through profit or loss
+Year ended December 31,
+2020
+RMB'000
+2019
+RMB'000
+Additions
+At the beginning of the year
+Change in fair value
+5,789,747
+2020
+RMB'000
+4,226,015
+449,903
+170,820
+747,019
+Disposals
+Transfer
+Currency translation differences
+At the end of the year
+2,132,299
+Loan receivables (Note i)
+2019
+605,918
+2019
+RMB'000
+Gain recognised in other comprehensive income
+Related to equity investments (Note 27)
+84,387
+246
+Meituan
+2020 Annual Report
+84,387
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+21
+TREASURY INVESTMENTS
+Long-term treasury investments at
+- Amortized cost (a)
+- Fair value through profit or loss (b)
+Short-term treasury investments at
+- Amortized cost (a)
+Year ended December 31,
+2020
+RMB'000
+Amounts recognised in other comprehensive income:
+During the year ended December 31, 2020, the Group made a new investment with the amount of approximately
+RMB549 million that are not held for trading. And the Group made an irrevocable election to measure the investment
+as other financial investments at fair value through other comprehensive income.
+(i)
+605,918
+Movement of other financial investments at fair value through other comprehensive income is analysed as
+follows:
+At the beginning of the year
+Additions (Note i)
+Change in fair value
+Currency translation differences
+Year ended December 31,
+RMB'000
+2020
+RMB'000
+RMB'000
+548,668
+84,387
+(27,137)
+605,918
+At the end of the year
+2019
+For the years ended December 31, 2020 and 2019, the Group made investments 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.
+6,441,565
+Tax prepayments
+RMB'000
+2020
+Year ended December 31,
+Investments in associates at fair value through profit or loss
+(i)
+7,166,122
+10,256,786
+5,789,747
+7,566,686
+1,376,375
+2,690,100
+Investments in associates at fair value through profit or loss (Note i)
+Other investments at fair value through profit or loss (Note ii)
+RMB'000
+RMB'000
+2019
+2019
+RMB'000
+2020
+At the beginning of the year
+2,015,957
+3,738
+(109,802)
+(7,853,443)
+(225,681)
+(669,320)
+(1,388,469)
+4,785,089
+26,000
+4,717,562
+At the end of the year
+Currency translation differences
+Transfer
+Disposals
+Change in fair value
+Additions
+1,376,375
+As of December 31,
+(a) Other financial investments at fair value through profit or loss (Continued)
+OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+7,166,122
+2019
+RMB'000
+RMB'000
+2020
+Year ended of December 31,
+(ii)
+At the end of the year
+Currency translation differences
+Transfer (Note 12)
+Disposals (Note ii)
+Change in fair value
+Additions (Note i)
+At the beginning of the year
+Other financial investments at fair value through profit or loss
+(a)
+6,241,972
+6,849,861
+475,903
+4,955,909
+19
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+Meituan
+244
+During the year ended December 31, 2020, the Group disposed several investments at fair value through profit
+or loss with the aggregate amount of RMB314 million.
+During the year ended December 31, 2020, the Group's additions to other financial investments at fair value
+through profit or loss mainly comprised the investment in Li Auto Inc. amounting to USD500 million (equivalent
+to approximately RMB3,504 million).
+2,690,100
+7,166,122
+51,394
+(328,650)
+319,373
+(8,071,981)
+(219)
+(314,475)
+77,699
+10,256,786
+1,376,375
+(755,694)
+(528,895)
+156,044
+147,940
+123,602
+102,593
+287,577
+954,886
+634,464
+12,940,125
+9,591,157
+2020 Annual Report Meituan
+249
+590,054
+2020 Annual Report Meituan
+241
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Others
+Prepayments for channel marketing fee
+Receivables from investment disposal
+Deposits
+408,248
+2,275,045
+1,534,292
+Amounts due from related parties (Note 37)
+1,425,059
+324,741
+Contract assets
+591,646
+For the year ended December 31, 2020
+373,609
+369,744
+303,868
+Receivables related to share options and RSUs
+303,176
+86,273
+Prepayments to merchants (Note ii)
+299,358
+Receivables from third-party payment service providers
+5,387,552
+18 DEFERRED INCOME TAXES (Continued)
+As of December 31,
+(469,175)
+(155,943)
+(25,016)
+(1,630,975)
+(1,682,600)
+875,281
+294,131
+(755,694)
+(1,388,469)
+As of December 31,
+2020
+RMB'000
+2019
+RMB'000
+(751,223)
+(859,574)
+(4,471)
+(50,029)
+(438,363)
+(804,356)
+(750,046)
+2019
+RMB'000
+The balance comprises temporary differences attributable to:
+2020
+RMB'000
+- Intangible assets arising from business combinations
+- Investments using the equity method or at fair value
+- Deferred revenues
+(b) Deferred tax liabilities
+- Others
+Set-off of deferred tax liabilities pursuant to set-off provisions
+Net deferred tax liabilities
+Deferred tax liabilities:
+- to be recovered after 12 months
+- to be recovered within 12 months
+The movement on the gross deferred tax assets is as follows:
+(620,647)
+Total gross deferred tax liabilities
+RMB'000
+Deposits
+As of January 1, 2019
+Share-based
+27 OTHER RESERVES (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+255
+2020 Annual Report Meituan
+(6,262,066)
+(137,448)
+84,387
+(10,359,316)
+4,150,291
+20
+20
+108,195
+108,195
+44,862
+44,862
+(60)
+(60)
+84,387
+84,387
+(120,986)
+(2,920,302)
+(2,283,840)
+(2,920,302)
+| |
+---- (120,986)
+(2,283,840)
+Capital compensation
+reserve
+RMB'000
+Currency
+translation
+reserve
+RMB'000
+reserve
+RMB'000
+Non-Current
+28 DEFERRED REVENUES
+As of December 31, 2019
+Currency translation differences
+equity method
+investments accounted for using the
+Share of other comprehensive income of
+Disposal of a subsidiary
+10,617
+10,617
+34,047
+34,047
+Transaction with non-controlling interests
+As of December 31, 2020
+(1,614,957)
+Exercise of option and RSU vesting
+2,181,436
+2,181,436
+Share-based compensation expenses
+(5,741,347)
+(218,028)
+(8,118,061)
+2,594,722
+20
+RMB'000
+RMB'000
+Total
+Others
+(1,614,957)
+reserves
+Appropriations to general
+payments
+through other
+Currency
+Share-based
+compensation
+Capital
+at fair value
+investments
+financial
+of other
+the fair value
+Changes in
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+27 OTHER RESERVES
+translation comprehensive
+2020 Annual Report
+254
+260,360,318
+260,359,929
+389
+58
+5,808,666
+As of December 31, 2019
+2,075,247
+2,075,242
+5
+1
+81,219
+258,285,071
+Meituan
+20
+reserve
+reserve
+Tax benefit from share-based
+through other comprehensive
+income
+of short-term treasury
+investments at fair value
+at fair value through other
+comprehensive income
+Changes in the fair value
+other financial investments
+Currency translation differences
+Changes in the fair value of
+in associates
+Share of equity movement
+RSU vesting
+Exercise of option and
+3,272,930
+3,272,930
+expenses
+reserve
+Share-based compensation
+(169,459)
+(7,439,014)
+3,161,201
+20
+As of January 1, 2020
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Others
+income
+(4,447,252)
+384 258,284,687
+20
+3,905
+257
+2020 Annual Report Meituan
+6,766,253
+11,967,026
+56,104
+63,803
+119,630
+45,876
+237,151
+46,688
+6,353,368
+11,810,659
+2019
+RMB'000
+As of December 31,
+2020
+RMB'000
+The majority of the Group's trade payables were 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, 2020 and 2019, the aging analysis of the trade payables based on invoice date were as
+follows:
+6,766,253
+11,967,026
+RMB'000
+2019
+2020
+RMB'000
+As of December 31,
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+30 OTHER PAYABLES AND ACCRUALS
+As of December 31,
+61,732
+Undue interests accrued for notes payable (Note 32)
+55,718
+82,316
+Payables for acquisition
+205,715
+312,481
+Accrued expenses
+328,690
+367,960
+Advance from customers and others
+351,249
+395,785
+Trade payables
+Amounts due to related parties (Note 37)
+601,193
+Amounts collected for third parties
+881,567
+1,150,193
+1,803,783
+2,680,966
+2,947,738
+4,124,807
+Other tax payable
+Salaries and benefits payable
+RMB'000
+2019
+2020
+RMB'000
+312,191
+29 TRADE PAYABLES
+2,482,061
+3,931,679
+363
+Others
+44,010
+65,873
+Ride-sharing monthly pass
+222,267
+222,267
+Business cooperation agreement with Maoyan (Note i)
+4,299,191
+4,764,327
+Online marketing services
+389,028
+166,700
+1,703
+Current
+388,967
+166,700
+Business cooperation agreement with Maoyan (Note i)
+Others
+2019
+RMB'000
+RMB'000
+2020
+As of December 31,
+(4,447,252)
+(169,459)
+(7,439,014)
+3,161,201
+679,047
+679,047
+61
+3,905
+5,052,830
+5,219,530
+2,236
+1,279
+Others
+21,741
+44,010
+Ride-sharing monthly pass
+222,267
+222,267
+Business cooperation agreement with Maoyan
+2,235,817
+3,664,123
+Online marketing services
+at the beginning of the year
+4,567,171
+Revenue recognised that was included in the deferred revenues balance
+RMB'000
+2019
+2020
+Year ended December 31,
+The following table shows how much of the revenue recognised in the current reporting period relates to
+carried-forward deferred revenues:
+28 DEFERRED REVENUES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+Meituan
+256
+In July 2016, as part of the Group's disposal of Maoyan, the Group entered into a business cooperation agreement
+with Maoyan for a 5-year period. Subsequently in September 2017, the agreement was extended for another 14
+months to September 30, 2022. The Group recognises the revenue over the contract period.
+(i)
+4,956,199
+RMB'000
+40
+57
+5,727,447
+Trade receivables
+TRADE RECEIVABLES
+24
+275,227
+466,492
+(88,795)
+(13,747)
+Less: provision for impairment
+364,022
+480,239
+265,975
+439,130
+98,047
+41,109
+Finished goods
+Raw materials
+RMB'000
+RMB'000
+2019
+2020
+As of December 31,
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+23 INVENTORIES
+Meituan 2020 Annual Report
+250
+(65,113)
+Less: allowance for impairment
+As of December 31,
+2020
+RMB'000
+26,478
+54,016
+(7,030)
+Assets transferred from derecognition of held for sale as held for sale
+Reversal
+(86,664)
+(89,964)
+Provision
+(124,069)
+(155,854)
+At the beginning of the year
+2019
+RMB'000
+RMB'000
+2020
+(59,581)
+Year ended December 31,
+24 TRADE RECEIVABLES (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+251
+2020 Annual Report Meituan
+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 the contract assets and trade receivables with similar credit
+risk characteristics and is adjusted for forward-looking estimates. At each reporting date the historical
+observed default rates are updated and changes in the forward-looking estimates are analyzed.
+676,762
+1,030,948
+(155,854)
+(166,570)
+832,616
+1,197,518
+2019
+RMB'000
+Movements on the Group's allowance for impairment of trade receivables are as follows:
+At the end of the year
+24,063
+5,475
+(335,498)
+2019
+RMB'000
+RMB'000
+2020
+Year ended December 31,
+At the end of the year
+Receivables written off during the year as uncollectable
+Recovered after written off
+Provision
+At the beginning of the year
+Movements on the Group's allowance for impairment of loan receivables are as follows:
+5,387,552
+6,907,797
+(335,498)
+(150,990)
+(354,219)
+7,262,016
+2019
+RMB'000
+RMB'000
+2020
+As of December 31,
+Less: allowance for impairment
+Unsecured loan receivables
+(ii)
+Loan receivables are derived from micro-credit 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 are generally within 12 months. Breakdown for
+loan receivables included both current and non-current portion as follows:
+(i)
+PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+22
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+5,723,050
+Receivables written off during the year as uncollectable
+(357,556)
+384,107
+Receivables written off during the year as uncollectable
+(11,502)
+57
+Reversal/(provision)
+(77,674)
+(65,113)
+At the beginning of the year
+2019
+RMB'000
+Year ended December 31,
+Movements on the Group's allowance for impairment of prepayments to merchants are as follows:
+Majority of loss allowance are related to the non-performing balances for which 100% provision have been
+provided.
+408,248
+299,358
+(435,122)
+(65,113)
+473,361
+358,939
+2019
+RMB'000
+2020
+RMB'000
+As of December 31,
+(a)
+Less: allowance for impairment(a)
+Prepayments to merchants
+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
+recognises 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
+advances from transacting users.
+(335,498)
+(354,219)
+(45,272)
+250,614
+(59,581)
+25,232
+35,431
+At the end of the year
+shares
+shares
+Share
+ordinary
+ordinary
+Shares held
+for shares
+value of
+Number of
+Nominal
+Issued:
+As of December 31, 2020 and 2019, the authorized share capital of the Company comprises 10,000,000,000
+ordinary shares with par value of USD0.00001 per share.
+As of December 31, 2019, RMB231 million and USD6 million (equivalent to approximately RMB42million)
+restricted deposits were held by bank as letter of guarantee. Other restricted cash balances are those
+held in bank account which are subject to certain restriction according to agreement with certain parties.
+26 SHARE CAPITAL, SHARE PREMIUM AND SHARES HELD FOR SHARES AWARD SCHEME
+As of December 31, 2020, RMB190 million, USD4 million and HKD1 million (equivalent to approximately
+RMB27 million) restricted deposits were held by bank as letter of guarantee. Other restricted cash
+balances are those held in bank account which are subject to certain restriction according to agreement
+with certain parties.
+'000
+8,760,115
+55,810
+42,427
+3,148
+8,704,305
+12,730,092
+RMB
+USD
+Others
+2019
+RMB'000
+2020
+RMB'000
+As of December 31,
+Restricted cash are dominated in the following currencies:
+(b) Restricted cash
+CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS (Continued)
+25
+For the year ended December 31, 2020
+12,775,667
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+USD'000
+Share
+premium
+RMB'000
+As of January 1, 2019
+Exercise of option and
+RSU vesting
+263,155,596
+263,155,201
+395
+59
+5,885,649
+As of December 31, 2020
+(1)
+1
+11,207
+award scheme
+Shares held for shares
+2,795,278
+capital
+RMB'000
+1
+5
+1
+65,776
+RSU vesting
+Exercise of option and
+260,360,318
+260,359,929
+389
+58
+5,808,666
+As of January 1, 2020
+Total
+RMB'000
+award
+scheme
+RMB'000
+2,795,272
+Others
+253
+13,396,185
+25 CASH AND BALANCES WITH BANK AND FINANCIAL INSTITUTIONS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+Meituan
+252
+The maximum exposure to credit risk as of December 31, 2020 and 2019 was the carrying value of the trade
+receivables. The Group did not hold any collateral as security.
+676,762
+1,030,948
+10,290
+7,583
+34,574
+39,416
+87,114
+(a) Cash and cash equivalents
+94,088
+889,861
+2019
+RMB'000
+As of December 31,
+2020
+RMB'000
+The majority of the Group's trade receivables were denominated in RMB.
+Over 1 year
+6 months to 1 year
+3 to 6 months
+Up to 3 months
+Trade receivables
+The Group allows a credit period of 30 to 180 days to its customers. Aging analysis of trade receivables (net
+off allowance for impairment of trade receivables) based on invoice date is as follows:
+The Group considered that the carrying amounts of the trade receivables balances approximated their fair
+value as of December 31, 2020 and 2019.
+(155,854)
+(166,570)
+544,784
+2020 Annual Report Meituan
+As of December 31,
+2019
+17,093,559
+156,576
+643,769
+5,660,813
+7,866,891
+7,578,796
+8,582,899
+RMB'000
+2019
+2020
+RMB'000
+As of December 31,
+Others
+RMB
+USD
+2020
+Cash and cash equivalents are denominated in the following currencies:
+(i)
+13,396,185
+17,093,559
+353,587
+860,998
+6,294,862
+1,305,480
+Term deposit with initial terms within three months
+Cash held in other financial institutions (Note i)
+6,747,736
+14,927,081
+Cash in hand and cash in bank
+RMB'000
+RMB'000
+Cash and cash equivalents of the Group primarily represent bank deposits and fixed deposits with maturities
+less than three months. As of December 31, 2020 and 2019, 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 RMB861 million and RMB354 million, respectively, which have
+been classified as cash and cash equivalents on the consolidated statements of financial position.
+779,785
+2020
+RMB'000
+10,557,218
+Meituan
+2020 Annual Report
+31
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+BORROWINGS (Continued)
+(a)
+(b)
+(c)
+As of December 31, 2020, the effective interest rates for bank loans were 1.54%-3.85% (2019: 3.68%-
+6.50%), and the effective interest rates for asset-backed securities were nil (2019: 4.59%-6.20%).
+For the year ended December 31, 2020, the weighted average effective interest rate was 3.21% (2019:
+5.242%). The floating rates of USD bank loans which were subject to London interbank offered rate
+would be repriced quarterly or yearly according to the contract terms.
+There were no consolidated ABS issued in the year of 2020. ABS issued in the year of 2019 have been
+fully repaid in 2020.
+258
+32 NOTES PAYABLE
+As of December 31,
+2020
+RMB'000
+Non-current portion of long-term USD notes payable
+12,966,341
+Included in current liabilities:
+Undue interests accrued for notes payable (Note 30)
+61,732
+The aggregate principal amounts of notes payable were USD2,000 million (2019: nil). Applicable interest rates
+are at 2.125% ~ 3.05% per annum, and the interests will be payable semi-annually.
+2020 Annual Report Meituan
+259
+350,761
+Included in non-current liabilities:
+3,552,587
+2019
+RMB'000
+362,587
+7,237,412
+6,395,002
+31 BORROWINGS
+Included in non-current liabilities:
+-
+unsecured
+As of December 31, 2020
+Original
+amount
+'000
+As of December 31, 2019
+Amount
+RMB' 000
+Original
+amount
+'000
+Amount
+RMB'000
+USD bank loans
+RMB asset-backed securities
+1,957,470
+USD300,000
+3,190,000
+3,250,000 RMB3,190,000
+3,145,002
+RMB asset-backed securities
+RMB3,250,000
+USD482,000
+Included in current liabilities:
+RMB bank loans - unsecured
+USD bank loans - unsecured
+466,676
+RMB466,676
+-
+RMB362,587
+(4,955,909)
+19
+through profit or loss
+Change in fair value from investments at fair value
+(107,353)
+(264,105)
+Impairment provision for other long-term assets
+Share of gains of investments accounted for using
+equity method
+29,691
+7,15
+58,166
+7,16
+(77,699)
+Impairment provision for goodwill
+12
+Dividend income and interest classified as investing
+Increase in restricted cash
+(1,218,122)
+88,612
+(272,974)
+(381,667)
+Increase in trade receivables
+(4,504,029)
+(4,016,150)
+Change in working capital
+cash flows
+(38,217)
+111,045
+151,198
+Net exchange loss
+220,362
+384,791
+Finance costs
+(1,527,405)
+Net gain on sale of non-current assets
+(5,272)
+2019
+RMB'000
+Impairment provision and restructuring expense for
+2,762,388
+4,437,875
+Profit before income tax
+Increase in prepayments, deposits and other assets
+2020
+RMB'000
+Note
+Year ended December 31,
+(a) Cash generated from operations
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+265
+2020 Annual Report Meituan
+23,749
+5,242,423
+Adjustments for
+Depreciation and amortization
+15,16
+5,194,109
+(176,880)
+(292,421)
+(853,618)
+66
+Gains from the remeasurement of investments
+investments disposals
+Dilution gain and gains from business and
+Mobike restructuring plan
+2,190,871
+8
+payments
+Non-cash employee benefits expense - share-based
+645,685
+467,690
+Net provision for impairment losses on financial assets
+4,845,800
+3,277,476
+(3,261,037)
+Decrease in liabilities directly associated with assets
+(Increase)/decrease in inventories
+Cash flow
+1,526,799
+4,019,263
+as of January 1, 2020
+Liabilities from financing activities
+RMB'000
+Total
+Lease
+liabilities
+RMB'000
+RMB'000
+through
+profit or loss
+payable
+RMB'000
+RMB'000
+Borrowings
+Notes
+fair value
+4,621,559
+13,337,825
+114,600
+Acquisitions
+(370,006)
+(289,118)
+Currency translation differences
+156,640
+92,266
+63,606
+768
+Financial
+liabilities at
+Finance cost
+(3,352)
+Recognization of issuance cost
+(125,346)
+(125,346)
+Disposals
+2,180,516
+5,546,062
+(936,380) 17,137,604
+2,180,516
+(3,352)
+Liabilities from financing activities
+(c) Reconciliation of liabilities 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, 2020.
+3,383,910
+Increase in other payables and accruals
+1,228,319
+263,331
+Increase in deferred revenues
+640,892
+452,277
+1,508,703
+Increase in advances from transacting users
+1,919,674
+Increase/(decrease) in payables to merchants
+1,291,272
+3,991,118
+Increase in trade payables
+94,966
+(191,265)
+(101,126)
+(1,703,120)
+Increase in other non-current liabilities
+Decrease in deposits from transacting users
+(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, 2020
+2020 Annual Report
+Meituan
+266
+6,037,524
+5,106
+8,561,324
+(209,241)
+classified as held for sale
+733,447
+211,905
+Decrease in assets classified as held for sale
+34,955
+(866,003)
+(269,726)
+Cash generated from operations
+1,962,390
+170,017
+3,102,913
+23,749
+2020 Annual Report
+Meituan
+262
+The weighted average remaining contractual life of outstanding share options was 6 years and 7 years as
+of December 31, 2020 and 2019. The weighted average price of the shares at the time these options were
+exercised was HKD175.76 per share (equivalent to approximately RMB156.13 per share) during the year
+ended December 31, 2020.
+21.23
+32,713,923
+27.81
+73,710,007
+13.18
+(35,867,197)
+25.45
+(7,484,459)
+69.10
+740,000
+22.69
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+33 SHARE-BASED PAYMENTS (Continued)
+Fair value of share options
+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:
+69.10
+28.41
+43.20-72.99
+100.15-195.98
+40%
+40%-45%
+6.3
+6.3-6.5
+116,321,663
+1.5%
+2019
+2020
+Year ended December 31,
+Fair value of share options (HKD)
+Expected volatility
+Expected term - years
+Risk-free interest rates
+0.5%
+Exercise price (HKD)
+Vested and exercisable as of December 31, 2019
+Exercised during the year
+Number of
+Weighted
+average
+exercise price
+Outstanding as of December 31, 2020
+Exercised during the year
+Forfeited during the year
+Granted during the year
+Outstanding as of January 1, 2020
+Movements in the number of share options granted and their related weighted average exercise prices are as
+follows:
+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.
+Options granted typically expire in 10 years from the respective grant dates. The 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
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+261
+per share
+share options
+option
+(HKD)
+Forfeited during the year
+Granted during the year
+Outstanding as of January 1, 2019
+21.60
+24,147,385
+Vested and exercisable as of December 31, 2020
+33.95
+Outstanding as of December 31, 2019
+50,893,174
+(21,567,100)
+33.76
+(3,861,049)
+146.22
+2,611,316
+27.81
+73,710,007
+26.59
+Purchase of land use rights
+Purchase of Investments
+The weighted average fair value of granted options was HKD57.52 and HKD28.41 per share, for the years
+ended December 31, 2020 and 2019, respectively.
+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.
+9,435
+4,546
+1,879,868
+301,568
+(659,124)
+2019
+RMB'000
+2020
+RMB'000
+Year ended December 31,
+Meituan 2020 Annual Report
+264
+Others
+Share options
+RSUs
+The total share-based compensation expenses recognised in the consolidated income statement are RMB3.3
+billion and RMB2.2 billion for the years ended December 31, 2020 and 2019, respectively. The following table
+sets forth a breakdown of the share-based compensation expenses by nature:
+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.
+47.26
+3,277,476
+2,190,871
+34 DIVIDENDS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2,546,586
+Purchase of property, plant and equipment
+2019
+RMB'000
+RMB'000
+2020
+As of December 31,
+23,749
+142,875,991
+5,242,423
+5,242,423
+2019
+RMB'000
+2020
+RMB'000
+As of December 31,
+Within 1 year
+1-2 years
+35 CAPITAL COMMITMENTS
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2020 and 2019.
+23,658
+91
+RSUs
+43.41
+31.23
+Granted during the year
+47.26
+142,875,991
+Outstanding as of January 1, 2020
+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:
+RSUS (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+263
+2020 Annual Report Meituan
+44,797,063
+167.84
+Vested during the year
+(49,436,884)
+(45,351,471)
+69.43
+47,430,198
+35.87
+164,133,960
+Outstanding as of December 31, 2019
+Forfeited during the year
+(23,336,696)
+Vested during the year
+Outstanding as of January 1, 2019
+90.18
+126,541,129
+Outstanding as of December 31, 2020
+(11,695,041)
+Forfeited during the year
+43.67
+Granted during the year
+Liabilities from financing activities
+60.02
+8,352,472
+(ii)
+Purchase of goods and service
+One of the Company's shareholders
+1,885,502
+1,849,435
+Associate of the Group
+1,082,554
+927,744
+2,813,246
+2,388,353
+2020 Annual Report Meituan
+269
+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 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 authorized and reserved 683,038,063 ordinary shares under the
+Pre-IPO ESOP for awards of 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
+will not grant further share options and RSUs under the Pre-IPO ESOP after the listing of the Class B shares
+on the Main Board of the Stock Exchange of Hong Kong Limited.
+538,918
+In addition, according to the merger agreement with Mobike, RSUs of the Company with a total valuation
+of USD60 million shall be granted to current Mobike officers, Directors, and employees, and subject to the
+Company's Pre-IPO ESOP. The Company recorded share-based compensation expenses over the service
+period based on its best estimate of the grant date fair value of related RSUs.
+682,828
+3,695
+Associate of the Group
+Tianjin Maoyan and its subsidiaries
+Associate of the Group
+(b) Significant transactions with related parties
+Year ended December 31,
+2020
+12,656
+2019
+RMB'000
+(i) Sales of service
+Associate of the Group
+679,133
+1,069,898
+One of the Company's shareholders
+RMB'000
+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 recognised for
+the services received over the remainder of the vesting period, and is recognised in the Group's consolidated
+income statement as share-based compensation expenses.
+A total of 21,290,122 share options were assumed by the Group in the acquisition of Mobike. The Mobike
+option replacement has been analyzed 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
+recognised as compensation expenses attributable to post-combination services.
+33 SHARE-BASED PAYMENTS (Continued)
+All of these notes payable issued by the Group were unsecured.
+13,028,073
+8,103,167
+4,863,174
+61,732
+2019
+RMB'000
+On October 29, 2020, the Company issued senior notes with an aggregate principal amount of USD2,000
+million on the Stock Exchange of Hong Kong Limited as set out below.
+More than 5 years
+2020
+RMB'000
+As of December 31,
+The notes payable and undue interests were repayable as follows:
+32 NOTES PAYABLE (Continued)
+For the year ended December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Within 1 year (Note 30)
+Between 2 and 5 years
+2025 senior notes
+2030 senior notes
+Amount
+(USD million)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+as of December 31, 2020
+Meituan
+260
+On April 4, 2018, the Company and Mobike entered into a strategic transaction, 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 Pre-IPO ESOP. After the replacement
+awards were issued, Mobike's original incentive plan ceased to operate.
+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 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
+Pre-IPO ESOP, and permits the awards of options and RSUs of the Company's ordinary shares.
+33 SHARE-BASED PAYMENTS
+As of December 31, 2020, the fair value of the notes payable amounted to RMB13,515 million. The respective
+fair values are assessed based on the quoted market price of these notes on the reporting date.
+2,000
+2.125% October 28, 2025
+3.05% October 28, 2030
+1,250
+750
+Due Date
+Interest Rate
+(per annum)
+Shenzhen Meizhu Enterprise Management Co., Ltd.
+Associate of the Group
+2020 Annual Report Meituan
+Ningbo Meishan Bonded Port Area Meixing Investment
+Liabilities from financing activities as of
+January 1, 2019
+2,270,056
+1,846,656
+4,116,712
+Cash flow
+Acquisitions
+Recognization of issuance cost
+1,749,031
+(785,825)
+963,206
+465,968
+465,968
+176
+176
+Liabilities from financing activities as of
+December 31, 2019
+4,019,263
+As of December 31, 2020, the Group has authorised and reserved a total of 652,738,577 ordinary shares
+under the Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award Scheme for awards of
+options and RSUs of the Company's ordinary shares.
+1,846,656
+1,526,799
+2,270,056
+1,846,656
+13,028,073
+114,600
+2,737,855
+24,233,000
+2020 Annual Report Meituan
+267
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
+(c) Reconciliation of liabilities generated from financing activities (Continued)
+Liabilities from financing activities
+Borrowings
+Lease
+Liabilities
+RMB'000
+RMB'000
+Management Co., Ltd.
+Liabilities from financing activities as of
+December 31, 2018
+2,270,056
+Recognised on adoption of IFRS 16
+-
+5,546,062
+Total
+RMB'000
+The following significant transactions were carried out between the Group and its related parties during the
+periods presented. In the opinion of the Directors of the Company, 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.
+Dalian Tongda Enterprise Management Co., Ltd.
+Beijing RTMAP Technology Co., Ltd.
+AsiaSea Co., Ltd.
+One of the Company's shareholders
+Associate of the Group
+Relationship
+Tencent Group
+Hefei Haizhitun Technology Co., Ltd.
+Name of related parties
+(a) Names and relationships with related parties
+37 RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+2020 Annual Report
+Meituan
+37 RELATED PARTY TRANSACTIONS
+The following companies are significant related parties of the Group that had transactions and/or
+balances with the Group during the year.
+Associate of the Group
+Associate of the Group
+Fujian Piaofeutong Information Technology Co., Ltd
+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.
+Associate of the Group
+Jilin Yillion Bank Co., Ltd.
+268
+Associate of the Group
+Associate of the Group
+treasury
+investments
+20
+3,161,201
+at FVOCI
+RMB'000
+"Crown Holdings"
+"Director(s)"
+"Group", "our Group" or "the Group",
+"we", "us", or "our"
+"Hong Kong dollars" or "HK dollars"
+or "HK$"
+"Hong Kong Securities and Futures
+Ordinance" or "SFO"
+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
+(6,256,238)
+"Hong Kong" or "HK"
+short-term
+3,253,296
+849,336
+18,177,107
+849,336
+149,136,743
+131,593,676
+The statement of financial position of the Company was approved by the Board of Directors on March
+26, 2021 and was signed on its behalf.
+Wang Xing
+Director
+Mu Rongjun
+Director
+2020 Annual Report Meituan
+271
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+39
+FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(b) Reserve movement of the Company
+reserve
+RMB'000
+Currency
+translation
+reserve
+RMB'000
+reserve
+RMB'000
+Capital compensation
+Share-based
+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
+fair value of
+Total other comprehensive loss
+treasury investments at FVOCI
+Changes in the fair value of short-term
+Currency translation differences
+Other Comprehensive loss
+As of January 1, 2020
+Changes in the
+the director(s) of the Company
+“Listing Rules"
+Hong Kong dollars, the lawful currency of Hong Kong
+"Contractual Arrangement(s)❞
+"Consolidated Affiliated Entities"
+"connected transaction(s)"
+"connected person(s)"
+"Company", "our Company",
+"the Company"
+"Companies Ordinance"
+holder(s) of the Share(s)
+"Class B Shares"
+"Class A Shares"
+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
+"Chengdu Meigengmei”
+the corporate governance code as set out in Appendix 14 to the Listing
+Rules
+the British Virgin Islands
+"CG Code"
+"United States", "U.S." or "US"
+"BVI❞
+DEFINITIONS
+273
+2020 Annual Report Meituan
+the board of Directors
+"Charmway Enterprises"
+the Company and its subsidiaries and Consolidated Affiliated Entities from
+time to time
+Chengdu Meigengmei Information Technology Co., Ltd. (¾¤¤¤à♣
+#), a limited liability company incorporated under the laws of
+the PRC on July 18, 2014 and our Consolidated Affiliated Entity
+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
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
+Kong), as amended, supplemented or otherwise modified from time to
+time
+"Hong Kong Share Registrar"
+the series of contractual arrangements entered into between WFOES,
+Onshore Holdcos and Registered Shareholders (as applicable)
+"IFRS"
+"Independent Third Party(ies)"
+"IPO"
+"Kevin Sunny"
+"Listing"
+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
+"Listing Date"
+Computershare Hong Kong Investor Services 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=REA
+]), a limited liability company incorporated under the laws of the PRC on
+November 18, 2015 and our indirect wholly-owned subsidiary
+the entities we control through the Contractual Arrangements, namely, the
+Onshore Holdcos and their respective subsidiaries (each a "Consolidated
+Affiliated Entity")
+has the meaning ascribed to it under the Listing Rules
+has the meaning ascribed to it under the Listing Rules
+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
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+849,336
+3,253,296
+14,923,811
+1,957,470
+12,966,341
+(d) Key management compensation
+Year ended December 31,
+2020
+RMB'000
+2019
+RMB'000
+Fees
+Basic salaries
+1,500
+1,500
+12,721
+12,721
+Bonuses
+351,249
+12,648
+Pension costs and other employee benefits
+Share-based compensation expenses
+764
+948
+425,834
+488,139
+38 CONTINGENCIES
+453,467
+516,455
+The Group did not have any material contingent liabilities as of December 31, 2020 and 2019.
+270
+Meituan
+2020 Annual Report
+13,147
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+395,785
+33,077
+DEFINITIONS
+"Controlling Shareholder(s)"
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2020
+37 RELATED PARTY TRANSACTIONS (Continued)
+(c) Balances with related parties
+As of December 31,
+2020
+RMB'000
+2019
+RMB'000
+(i)
+Due from related parties
+79,547
+Associate of the Group
+290,917
+One of the Company's shareholders
+288,626
+33,824
+1,425,059
+324,741
+(ii)
+Due to related parties
+Associate of the Group
+362,708
+271,702
+One of the Company's shareholders
+1,136,433
+39 FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+(a) Financial position of the Company
+ASSETS
+Share premium
+Shares held for shares award scheme
+Other reserves
+Accumulated losses
+Equity attributable to equity holders of the Company
+LIABILITIES
+Non-current liabilities
+Borrowings
+Notes payable
+Current liabilities
+Other payables and accruals
+Total liabilities
+Share capital
+Total equity and liabilities
+26
+395
+389
+26
+263,155,201
+260,359,929
+26
+39(b)
+(6,405,555)
+(125,790,405)
+(3,095,017)
+(126,520,961)
+130,959,636
+130,744,340
+20
+EQUITY
+131,593,676
+149,136,743
+Non-current assets
+Note
+As of December 31,
+2020
+RMB'000
+2019
+RMB'000
+Investments in subsidiaries
+Intangible assets
+68,519,333
+287
+65,246,403
+Long-term treasury investments
+612,967
+Prepayments, deposits and other assets
+41,208,960
+32,426,176
+110,341,547
+97,672,579
+Current assets
+Short-term treasury investments
+31,572,008
+27,676,401
+Prepayments, deposits and other assets
+Cash and cash equivalents
+302,553
+6,920,635
+93,317
+6,151,379
+38,795,196
+33,921,097
+Total assets
+"Board"
+Meituan 2020 Annual Report
+274
+2020 Annual Report
+"Main Board"
+"Meituan Finance"
+"Memorandum" or "Memorandum
+of Association"
+"Mobike"
+"Mobike Beijing"
+"Model Code"
+"Onshore Holdcos," each an
+"Onshore Holdco"
+"Post-IPO Share Award Scheme"
+"Post-IPO Share Option Scheme"
+"PRC"
+"PRC Legal Advisor"
+"Pre-IPO ESOP"
+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
+Beijing Meituan Finance Technology Co., Ltd. (¤ŒÂ¶¶¸ÁRA
+]), a limited liability company incorporated under the laws of the PRC on
+August 9, 2017 and our Consolidated Affiliated Entity
+the memorandum of association of the Company adopted on August 30,
+2018 with effect from the Listing Date, as amended from time to time
+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
+Mobike (Beijing) Information Technology Co., Ltd. ((±À) Ħa
+A), 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
+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 post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+the post-IPO share option scheme adopted by the Company on August
+30, 2018
+DEFINITIONS
+275
+2020 Annual Report Meituan
+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
+"Tianjin Xiaoyi Technology"
+"Tianjin Wanlong"
+"Tianjin Hanbo"
+"Tianjin Antechu Technology"
+"Tencent"
+"substantial shareholder"
+"subsidiary(ies)"
+1,051,177
+Meituan
+272
+the People's Republic of China
+There were no material subsequent events during the period from December 31, 2020 to the approval date of
+these consolidated financial statements by the Board on March 26, 2021.
+(6,256,238)
+3,161,201
+(1,614,957)
+the Hong Kong Special Administrative Region of the PRC
+International Financial Reporting Standards, as issued from time to time
+by the International Accounting Standards Board
+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
+September 20, 2018
+(3,095,017)
+The Stock Exchange of Hong Kong Limited
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+prospectus of the Company dated September 7, 2018
+), a limited liability company incorporated under the laws of the
+PRC on March 16, 2006 and our indirect wholly-owned subsidiary
+Shanghai Hantao Information Consultancy Co., Ltd. (AX
+), a limited liability company incorporated under the laws of the
+PRC on September 23, 2003 and our Consolidated Affiliated Entity
+Shanghai Juzuo Technology Co., Ltd. ), a limited
+liability company incorporated under the laws of the PRC on April 12,
+2018 and our indirect wholly-owned subsidiary
+Shanghai Lutuan Technology Co., Ltd. (±), a limited
+liability company incorporated under the laws of the PRC on January 12,
+2017 and our Consolidated Affiliated Entity
+Shanghai Sankuai Technology Co., Ltd. (2), a limited
+liability company incorporated under the laws of the PRC on September
+19, 2012 and our Consolidated Affiliated Entity
+the Class A Shares and Class B Shares in the share capital of the
+Company, as the context so requires
+Shared Patience Inc., a limited liability company incorporated under the
+laws of the BVI, which is wholly owned by Wang Xing
+Shared Vision Investment Limited, a limited liability company incorporated
+under the laws of the BVI, which is wholly owned by Mu Rongjun
+2020 Annual Report Meituan
+277
+DEFINITIONS
+"Shareholder(s)"
+"Shenzhen Sankuai Online"
+"Shenzhen Tencent Computer"
+"Stock Exchange"
+20
+566,479
+566,479
+2,181,436
+(1,614,957)
+1,051,177
+1,051,177
+(E)
+"Shared Vision"
+"Shared Patience"
+"Share(s)"
+"Prospectus"
+"Registered Shareholders"
+"Reporting Period"
+276
+Meituan 2020 Annual Report
+the registered shareholders of the Onshore Holdcos
+the year ended December 31, 2020
+DEFINITIONS
+"Reserved Matters"
+"RMB" or "Renminbi❞
+the pre-IPO employee stock incentive scheme adopted by the Company
+dated October 6, 2015, as amended from time to time
+"RSU(s)"
+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
+Renminbi, the lawful currency of China
+restricted share unit(s)
+Sankuai Cloud Online Technology Co., Ltd. (EEEK (UÀ)ĦĦĦRA
+]), a limited liability company incorporated under the laws of the PRC on
+November 3, 2015 and our indirect wholly-owned subsidiary
+"Shanghai Hanhai"
+Hanhai Information Technology (Shanghai) Co., Ltd.
+"Shanghai Hantao❞
+"Shanghai Juzuo"
+"Shanghai Lutuan"
+"Shanghai Sankuai Technology"
+"Sankuai Cloud Online"
+has the meaning ascribed to it in section 15 of the Companies Ordinance
+1,051,177
+Tencent Holdings Limited (HKEx Stock Code: 700), or Tencent Holdings
+Limited and/or its subsidiaries, as the case may be
+3,272,930
+(2,283,840)
+989,090
+989,090
+20
+4,150,291 (10,555,695)
+(171)
+(6,405,555)
+20
+20
+2,594,722
+(7,307,415)
+(4,712,673)
+(4,299,628)
+2,181,436
+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 Online Technology Co., Ltd. (ESARORA),
+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. (À), 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. (ÀÆSONA
+]), 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
+"Beijing Xinmeida"
+"Beijing Sankuai Technology"
+"Beijing Sankuai Online"
+"Beijing Sankuai Cloud Computing"
+"Beijing Mobike"
+Beijing Xinmeida Technology Co., Ltd. (±À¾¾¾), a limited
+liability company incorporated under the laws of the PRC on March 17,
+2016 and our Consolidated Affiliated Entity
+"Beijing Kuxun Technology"
+(171)
+(171)
+Total
+RMB'000
+(3,095,017)
+Transaction with owners in their
+capacity as owners
+Share-based compensation expenses
+3,272,930
+Exercise of option and RSU vesting
+(2,283,840)
+Total transaction with owners in their
+capacity as owners
+As of December 31, 2020
+As of January 1, 2019
+(4,299,457)
+Other Comprehensive income
+Total other comprehensive income
+Transaction with owners in their
+capacity as owners
+Share-based compensation expenses
+Exercise of option and RSU vesting
+Total transaction with owners in their
+capacity as owners
+As of December 31, 2019
+40 SUBSEQUENT EVENTS
+(4,299,457)
+(4,299,457)
+(171)
+Currency translation differences
+has the meaning ascribed to it in the Listing Rules
+"Beijing Kuxun Interaction"
+the audit committee of the Company
+"WVR Structure"
+"WVR Beneficiaries"
+Tianjin Antechu Technology Co., Ltd. (ZZ), a limited
+liability company incorporated under the laws of the PRC on January 17,
+2018 and our Consolidated Affiliated Entity
+Tianjin Hanbo Information Technology Co., Ltd. (¥¤
+"WFOES", each a "WFOE"
+]), a limited liability company incorporated under the laws of the PRC on
+September 19, 2014 and our indirect wholly-owned subsidiary
+Tianjin Wanlong Technology Co., Ltd. (NARA), a limited
+liability company incorporated under the laws of the PRC on August 18,
+2015 and our indirect wholly-owned subsidiary
+"Auditor"
+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
+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
+"US dollars", "U.S. dollars" or "US$"
+"VIE(s)"
+278
+Meituan
+2020 Annual Report
+variable interest entity(ies)
+DEFINITIONS
+"weighted voting right"
+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
+"Audit Committee"
+"associate(s)"
+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
+"Articles" or "Articles of Association"
+the forthcoming annual general meeting of the Company to be held in
+June 2021
+DEFINITIONS
+"AGM"
+279
+2020 Annual Report Meituan
+them.
+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
+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
+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
+the number of transactions is generally recognised based on the number of
+payments made. (i) With respect to our in-store business, one transaction is
+recognised if a user purchases multiple vouchers with a single payment; (ii)
+with respect to our hotel-booking business, one transaction is recognised 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
+recognised 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 recognised only when the user purchases or claims the monthly
+pass, and subsequent rides are not recognised as transactions; if a user does
+not use a monthly pass, then one transaction is recognised for every ride
+"monetization rate"
+Meituan
+GLOSSARY
+"Active Merchant"
+"Gross Transaction
+Volume" or "GTV"
+"SKU"
+"Transacting User"
+2020 Annual Report
+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
+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
+"transaction"
+280
+daily active user
+"DAU"
+(RMB in thousands)
+MANAGEMENT DISCUSSION AND ANALYSIS
+24,373,609
+2,441,964
+3,538,844
+79,875
+6,060,683
+37,794
+14,558
+18,251,171
+7,483,212
+21,537,985
+7,135,360
+Unaudited
+9,244,159
+37,917,504
+Three Months Ended September 30, 2020
+In-store, hotel New initiatives
+Food delivery
+& travel
+and others
+1,733,424
+Total
+3,581,958
+Total
+23
+23
+2020 Annual Report Meituan
+35,401,282
+8,230,388
+6,478,078
+20,692,816
+6,613,062
+6,569,932
+9,373
+33,757
+5,659,942
+23,128,278
+1,555,759
+104,697
+3,321,348
+3,147,357
+2,407,888
+& travel
+and others
+(RMB in thousands)
+19,058,227
+7,430,860
+As a result of the foregoing, our operating loss and margin for the fourth quarter of 2020 was negative RMB2.9
+billion and negative 7.5% respectively, compared to operating profit of RMB1.4 billion and 5.1% in the same period
+of 2019.
+Food delivery
+Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss
+Our loss in fair value changes on other financial investments at fair value through profit or loss was negative
+RMB661.9 million for the fourth quarter of 2020, compared with a gain of RMB72.4 million in the same period of
+2019. This was primarily due to the fair value changes in our investments in listed entities.
+Other Gains, Net
+Our other gains, net for the fourth quarter of 2020 increased by RMB496.4 million to RMB1.3 billion compared to
+the same period of 2019, which was primarily due to an RMB852.9 million increase in dilution gain, partially offset
+by increased foreign exchange losses, the decreased tax return and preference and the decrease in gains from
+treasury investments.
+21
+2020 Annual Report Meituan
+As a result of the foregoing, we had a loss of negative RMB2.2 billion for the fourth quarter of 2020, compared to a
+profit of RMB1.5 billion for the same period of 2019.
+Our net provision for impairment losses on financial assets decreased to RMB54.2 million for the fourth quarter of
+2020 from RMB332.0 million in the same period of 2019, and decreased by 1.1 percentage points to 0.1% from 1.2%
+as a percentage of revenues, primarily due to decreased impairment provision for financial assets, such as loan
+receivables, prepayments, and other receivables.
+(Loss)/Profit for the Period
+Income Tax Credits/(Expenses)
+Primarily as a result of the foregoing, our loss before income tax for the fourth quarter of 2020 was negative RMB2.8
+billion, compared to a profit before income tax of RMB1.5 billion in the same period of 2019.
+(Loss)/Profit before Income Tax
+Our operating loss from the new initiatives and others segment expanded to negative RMB6.0 billion for the fourth
+quarter of 2020 from negative RMB1.3 billion for the same period of 2019, which was primarily attributable to (i)
+the rapid expansion in operating loss of our retail businesses, (ii) the increase in operating loss of our bike-sharing
+services resulted from the heavy depreciation costs due to the launch of new bikes and electric mopeds, (iii) the
+increase in some expenditures in research and development of advanced technologies, and (iv) partially offset by
+the decrease in operating loss from our restaurant management systems. As a result of foregoing, our operating
+margin for this segment decreased by 43.2 percentage points to negative 64.9% from negative 21.7% on a
+year-over-year basis.
+Our operating profit from the in-store, hotel & travel segment increased by 21.0% to RMB2.8 billion for the fourth
+quarter of 2020 from RMB2.3 billion for the same period of 2019. The increase was mainly due to the increase in
+revenue, partially offset by the increase in employee benefits expenses and other outsourcing labor costs. Our
+operating margin for this segment increased by 2.8 percentage points to 39.5% from 36.7% on a year-over-year
+basis, mainly due to the improved marketing and online traffic acquisition efficiency, partially offset by the increased
+offline promotion expenses.
+Our operating profit from the food delivery segment increased to RMB882.4 million for the fourth quarter of 2020
+from RMB482.8 million for the same period of 2019, mainly driven by the growth in gross profit due to increased
+food delivery business scale and average value per order, partially offset by the increase in operating expenses
+resulted from the revenues growth and higher user subsidies. Our operating margin for this segment increased by
+1.0 percentage points to 4.1% from 3.1% on a year-over-year basis due to the increase in average value per order
+offset by lower Monetization Rate and higher user subsidy ratio.
+MANAGEMENT DISCUSSION AND ANALYSIS
+We had income tax credits of RMB571.0 million for the fourth quarter of 2020, compared to income tax expenses of
+RMB29.6 million in the same period of 2019, primarily due to the taxable income position turned to tax loss position
+as a result of business expansion.
+2020 Annual Report
+Net Provision for Impairment Losses on Financial Assets
+21
+5,659,942
+6,060,683
+Online marketing services
+23,128,278
+24,373,609
+Commission
+(RMB in thousands)
+MANAGEMENT DISCUSSION AND ANALYSIS
+2020
+September 30,
+Revenues
+Three Months Ended
+December 31,
+Unaudited
+The following table sets forth the comparative figures for the fourth quarter of 2020 and the third quarter of 2020:
+Fourth Quarter of 2020 Compared to Third Quarter of 2020
+MANAGEMENT DISCUSSION AND ANALYSIS
+2020
+Interest revenue
+Meituan
+20
+In-store, hotel & travel
+882,352
+Food delivery
+of revenues year change
+Amount
+of revenues
+(RMB in thousands, except for percentages)
+Amount
+2,821,935
+Year-over-
+As a
+As a
+percentage
+December 31, 2019
+December 31, 2020
+Three Months Ended
+Unaudited
+Operating (loss)/profit and margin by segment are set forth in the table below.
+percentage
+20
+New initiatives and others
+Unallocated items
+(300.3%)
+5.1%
+(7.5%) 1,423,860
+(2,852,696)
+Total operating (loss)/profit
+NA
+ΝΑ
+(6,002,831)
+355.3%
+(1,318,445)
+(71,801)
+82.7%
+21.0%
+36.7%
+3.1%
+482,829
+2,331,277
+4.1%
+39.5%
+(64.9%)
+ΝΑ
+(554,152)
+(21.7%)
+252,335
+218,687
+Other services and sales
+(1,436,520)
+(589,128)
+6,321,001
+(2,244,292)
+2020 Annual Report
+Meituan
+22
+2,054,996
+Adjusted net (loss)/profit
+Non-IFRS measures:
+(Loss)/profit for the period
+(429,552)
+571,017
+Income tax credits/(expenses)
+6,750,553
+(2,815,309)
+Adjusted EBITDA
+(Loss)/profit before income tax
+Revenues
+Our revenues increased by 7.1% to RMB37.9 billion for the fourth quarter of 2020 from RMB35.4 billion for the third
+quarter of 2020. All business segments achieved growth on a quarter-over-quarter basis as we strengthened our
+food delivery and in-store, hotel & travel businesses while continuously developing new initiatives.
+In-store, hotel New initiatives
+Three Months Ended December 31, 2020
+Unaudited
+Total
+(including interest revenue)
+Other services and sales
+Online marketing services
+MANAGEMENT DISCUSSION AND ANALYSIS
+Commission
+Total
+(including interest revenue)
+Other services and sales
+Online marketing services
+Commission
+Revenues
+The following table sets forth our revenues by segment and type in absolute amount for the fourth quarter of 2020
+and the third quarter of 2020:
+Revenues
+92,698
+117,398
+Share of gains of investments accounted for using equity method
+(2,970,120)
+(3,249,199)
+Research and development expenses
+(5,835,574)
+(7,675,340)
+Selling and marketing expenses
+10,823,009
+General and administrative expenses
+9,455,709
+(24,578,273)
+(28,461,795)
+Cost of revenues
+35,401,282
+37,917,504
+6,394,375
+7,230,877
+Gross profit
+(1,950,943)
+(1,415,119)
+Net provision for impairment losses on financial assets
+45,678
+(111,506)
+(149,735)
+Finance costs
+69,724
+Finance income
+6,723,683
+(2,852,696)
+Operating (loss)/profit
+472,408
+1,283,147
+Other gains, net
+5,779,364
+(661,883)
+at fair value through profit or loss
+Fair value changes on other financial investments
+(130,285)
+(54,187)
+Operating (Loss)/Profit
+2,675,399
+54,187
+December 31,
+108,172
+40,899
+21,524,042
+21,673,113
+Total
+Revenues
+Commission
+Online marketing services
+Other services and sales
+(including interest revenue)
+Total
+66,265,319
+Food delivery
+21,252,398
+27,276,793
+114,794,510
+Year Ended December 31, 2019
+In-store, hotel New initiatives
+& travel
+and others
+(RMB in thousands)
+Total
+49,646,589
+(including interest revenue)
+5,103,794
+18,908,045
+5,428,154
+324,597
+(370,016)
+Finance costs
+166,217
+213,684
+Finance income
+2,679,860
+4,330,102
+Operating profit
+2,531,143
+3,160,835
+Other gains, net
+77,699
+4,955,909
+at fair value through profit or loss
+Fair value changes on other financial investments
+(645,685)
+Online marketing services
+Other services and sales
+58,592,036
+7,565,111
+10,193,162
+11,018,337
+74,213,352
+11,679,344
+10,516,428
+4,200,064
+65,525,997
+Selling and marketing expenses
+32,320,388
+34,050,142
+Gross profit
+(65,208,143)
+(80,744,368)
+97,528,531
+114,794,510
+Cost of revenues
+15,376,424
+20,788,216
+Other services and sales
+786,032
+884,897
+Interest revenue
+65,525,997
+15,840,078
+18,908,045
+Online marketing services
+74,213,352
+(20,882,685)
+(18,819,067)
+Research and development expenses
+(10,892,514)
+219,856
+15,840,078
+92,822
+79,700
+15,989,934
+16,162,456
+54,843,205
+22,275,472
+20,409,854
+(191,042)
+97,528,531
+29
+29
+Total operating (loss)/profit
+(467,690)
+Net provision for impairment losses on financial assets
+(4,338,954)
+(5,593,895)
+General and administrative expenses
+(8,445,664)
+2020 Annual Report Meituan
+Share of gains of investments accounted for using equity method
+264,105
+107,353
+September 30, 2020
+December 31, 2020
+Three Months Ended
+Unaudited
+Operating (loss)/profit and operating margin by segment are set forth in the table below.
+As a result of the foregoing, our operating loss for the fourth quarter of 2020 was negative RMB2.9 billion,
+compared to an operating profit of RMB6.7 billion for the third quarter of 2020.
+Operating (Loss)/Profit
+Our other gains, net for the fourth quarter of 2020 increased by RMB810.7 million to RMB1.3 billion compared to
+the third quarter of 2020, which was mainly attributable to an RMB852.9 million of dilution gain.
+Other Gains, Net
+Our loss in fair value changes on other financial investments at fair value through profit or loss was negative
+RMB661.9 million for the fourth quarter of 2020, compared to a gain of RMB5.8 billion for the third quarter of 2020.
+This was primarily due to the fair value changes in our investments in listed entities.
+Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss
+MANAGEMENT DISCUSSION AND ANALYSIS
+(7.5%)
+6,723,683
+19.0%
+(142.4%)
+26
+Meituan
+2020 Annual Report
+As a
+percentage
+As a
+percentage
+Amount
+of revenues
+(RMB in thousands, except for percentages)
+(110.7%)
+ΝΑ
+1.2%
+195.9%
+14.8%
+3.7%
+43.0%
+(24.7%)
+(2,028,909)
+5,196,859
+ΝΑ
+(554,152)
+Unallocated items
+MANAGEMENT DISCUSSION AND ANALYSIS
+768,477
+2,787,256
+(6,002,831)
+New initiatives and others
+2,821,935
+In-store, hotel & travel
+882,352
+Food delivery
+Quarter-
+over-quarter
+change
+of revenues
+Amount
+4.1%
+39.5%
+(64.9%)
+Commission
+Our operating profit from the food delivery segment increased to RMB882.4 million for the fourth quarter of 2020
+from RMB768.5 million for the third quarter of 2020, which was mainly attributable to the growth in gross profit due
+to the increase in food delivery business scale, partially offset by the increased expenditures of user subsidies and
+marketing campaigns to drive the revenues growth. The operating margin for this segment increased to 4.1% from
+3.7% on a quarter-over-quarter basis due to improved Monetization Rate as a result of the order mix change.
+Our operating loss from the new initiatives and others segment expanded to negative RMB6.0 billion for the
+fourth quarter of 2020 from negative RMB2.0 billion for the third quarter of 2020, and the operating margin for this
+segment decreased by 40.2 percentage points to negative 64.9% from negative 24.7% on a quarter-over-quarter
+basis. The significant negative impact on both amount and as a percentage of revenues was primarily attributable
+to (i) the increase in operating loss from the retail businesses driven by our rapid business expansion, and (ii) the
+increase in operating loss from our ride-sharing services affected by both lower turnover rate due to bad weather
+conditions and heavier depreciation costs due to massive assets purchase in the second half of 2020.
+4,656,685
+3,120,605
+7,253,634
+4,737,837
+2,236,165
+4,707,612
+(526,223)
+269,737
+2,762,388
+4,437,875
+2020 Annual Report
+Meituan
+28
+Adjusted net profit
+Adjusted EBITDA
+Non-IFRS measures:
+Profit for the year
+Income tax credits/(expenses)
+Profit before income tax
+Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues increased by 17.7% to RMB114.8 billion in 2020 from RMB97.5 billion in 2019. The increase was
+primarily due to solid revenue growth of our food delivery business and business expansion in our new initiatives,
+especially retail businesses to meet various demands of both consumers and merchants.
+The following table sets forth our revenues by segment and type in absolute amount in 2020 and 2019:
+(Loss)/Profit before Income Tax
+Primarily as a result of the foregoing, our loss before income tax for the fourth quarter of 2020 was negative RMB2.8
+billion, compared to a profit before income tax of RMB6.8 billion for the third quarter of 2020.
+Income Tax Credits/(Expenses)
+We had income tax credits of RMB571.0 million for the fourth quarter of 2020, compared to income tax expenses
+of RMB429.6 million for the third quarter of 2020, primarily due to the taxable income position turned to tax loss
+position as a result of business expansion.
+(Loss)/Profit for the Period
+As a result of the foregoing, we had a loss of negative RMB2.2 billion for the fourth quarter of 2020, compared to a
+profit of RMB6.3 billion for the third quarter of 2020.
+2020 Annual Report Meituan
+27
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our operating profit from the in-store, hotel & travel segment remained stable of RMB2.8 billion for the fourth
+quarter of 2020. The operating margin for this segment decreased by 3.5 percentage points to 39.5% on a
+quarter-over-quarter basis mainly due to the increased expenditure on promotion and advertising, partially offset by
+the improved operation efficiency.
+Year ended December 31, 2020 Compared to Year ended December 31, 2019
+Year Ended
+December 31,
+Commission
+Revenues
+& travel
+(RMB in thousands)
+Total
+and others
+Year Ended December 31, 2020
+In-store, hotel New initiatives
+Food delivery
+The following table sets forth the comparative figures for the years ended December 31, 2020 and 2019:
+Revenues
+(2,852,696)
+Net Provision for Impairment Losses on Financial Assets
+75.1% 24,578,273
+20.2% 5,835,574
+8.6% 2,970,120
+5.1% 1,415,119
+69.4%
+15.8%
+16.5%
+31.5%
+8.4%
+9.4%
+4.0%
+37.9%
+(RMB in thousands)
+0.1%
+130,285
+0.4%
+(58.4%)
+24
+Our general and administrative expenses increased to RMB2.0 billion for the fourth quarter of 2020 from RMB1.4
+billion for the third quarter of 2020, and increased by 1.1 percentage points to 5.1% from 4.0% as a percentage of
+revenues. The increase in both amount and as a percentage of revenues was primarily attributable to increase in
+employee benefits expenses due to the increased number of employees, higher average salary, and the increase in
+share-based compensation.
+Meituan
+2020 Annual Report
+Cost of Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our cost of revenues increased by 15.8% to RMB28.5 billion for the fourth quarter of 2020 from RMB24.6 billion
+for the third quarter of 2020, and increased by 5.7 percentage points to 75.1% from 69.4% as a percentage of
+revenues. The increase in amount was mainly attributable to our continuously investments in our new initiatives and
+the increased food delivery rider costs due to the increase of order volume and seasonal incentives to food delivery
+riders. The increase as a percentage of revenues on a quarter-over-quarter basis mainly resulted from the rapid
+expansion of our retail businesses in their early stage.
+Selling and Marketing Expenses
+Our selling and marketing expenses increased to RMB7.7 billion for the fourth quarter of 2020 from RMB5.8
+billion for the third quarter of 2020, and increased by 3.7 percentage points to 20.2% from 16.5% as a percentage
+of revenues on a quarter-over-quarter basis. The increase was primarily attributable to increase in Transacting
+User incentives due to seasonal marketing campaigns for all business segments, and increased promotion and
+advertising expenses due to our enlarged branding and promotional campaigns to enhance our brand recognition
+and stimulate user growth and consumption.
+Research and Development Expenses
+25
+25
+2020 Annual Report Meituan
+Our net provision for impairment losses on financial assets decreased to RMB54.2 million for the fourth quarter
+of 2020 from RMB130.3 million for the third quarter of 2020, and decreased by 0.3 percentage points to 0.1%
+from 0.4% as a percentage of revenues, which was primarily due to the decreased impairment provision for loan
+receivables.
+Our research and development expenses increased to RMB3.2 billion for the fourth quarter of 2020 from RMB3.0
+billion for the third quarter of 2020, and increased by 0.2 percentage points to 8.6% from 8.4% as a percentage of
+revenues. The increase in both amount and as a percentage of revenues was primarily attributable to the increased
+number of employees due to our new businesses expansion, higher average salary and the increase in share-based
+compensation.
+1,950,943
+3,249,199
+24
+Selling and marketing expenses
+Research and development expenses
+General and administrative expenses
+Net provision for impairment losses
+on financial assets
+2020
+2019
+Our revenues from the food delivery segment increased by 4.1% to RMB21.5 billion for the fourth quarter of 2020
+from RMB20.7 billion for the third quarter of 2020, as a result of the increase in the order volume by 3.7%.
+Our revenues from the in-store, hotel & travel segment increased by 10.1% to RMB7.1 billion for the fourth quarter
+of 2020 from RMB6.5 billion for the third quarter of 2020. Commission revenue increased by 7.8% to RMB3.6
+billion, which was primarily attributable to the recovery of consumption in hotel and in-store businesses affected
+by both effective control of the COVID-19 pandemic domestically and year-end holiday season. Online marketing
+service revenue increased by 12.4% to RMB3.5 billion due to the increase in the number of online marketing Active
+Merchants and the average revenue per online marketing Active Merchants, as a result of their growing willingness
+to acquire online traffic during the holidays and the innovative products and services we offered to certain
+merchants.
+28,461,795
+7,675,340
+Our revenues from the new initiatives and others segment increased by 12.3% to RMB9.2 billion for the fourth
+quarter of 2020 from RMB8.2 billion for the third quarter of 2020, which was primarily due to the increase in the
+revenues from the B2B food distribution services and retail businesses as a result of business expansion.
+Costs and Expenses
+The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:
+Costs and Expenses:
+December 31, 2020
+Unaudited
+Three Months Ended
+September 30, 2020
+Quarter-
+General and Administrative Expenses
+As a
+As a
+of revenues
+(RMB in thousands, except for percentages)
+Amount
+quarter
+change
+Cost of revenues
+of revenues
+over-
+Amount
+percentage
+percentage
+Our operating profit from the in-store, hotel & travel segment decreased by 2.6% to RMB8.2 billion in 2020 from
+RMB8.4 billion in 2019 mainly due to the decrease in segment revenue and the increase in employee benefits
+expenses, partially offset by the decrease in Transacting User incentives. Our operating margin for this segment
+increased by 0.8 percentage points to 38.5% from 37.7% on a year-over-year basis mainly due to the improved
+online traffic acquisition efficiency.
+Pledge of Assets
+As of December 31, 2020, we did not pledge any assets for fund raising.
+Future Plans for Material Investments and Capital Assets
+As of December 31, 2020, we did not have other plans for material investments and capital assets.
+Employees
+As of December 31, 2020, we had a total of approximately 69,205 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 and 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.
+2020 Annual Report Meituan
+39
+Profit before Income Tax
+MANAGEMENT DISCUSSION AND ANALYSIS
+32
+Meituan
+2020 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our operating loss from the new initiatives and others segment expanded to negative RMB10.9 billion in 2020 from
+negative RMB6.7 billion in 2019, which was primarily attributable to (i) the increase in operating loss of our retail
+businesses, driven by rapid business expansion, and (ii) the increase in loss from some new initiatives, partially
+offset by the decrease in operating loss from our restaurant management systems. Our operating margin for this
+segment decreased by 6.7 percentage points to negative 39.8% from negative 33.1% on a year-over-year basis,
+which was primarily attributable to the rapid expansion of our retail businesses.
+2020 Annual Report
+For the year ended December 31, 2020, we did not have any material acquisitions or disposals of subsidiaries and
+affiliated companies.
+Foreign Exchange Risk
+32
+Gearing ratio
+As of December 31, 2020, our gearing ratio, calculated as total borrowings and notes payable divided by total
+equity attributable to equity holders of the Company, was approximately 22%.
+Contingent Liabilities
+The Group did not have any material contingent liabilities as of December 31, 2020.
+Investments Held
+As of December 31, 2020, our investment portfolio amounted to approximately RMB24,044 million (December 31,
+2019: RMB9,450 million) as recorded in the consolidated statement of financial position under various categories
+including:
+investments in associates and joint ventures which are accounted for using equity method;
+other financial investments at fair value through profit or loss;
+other financial investments at fair value through other comprehensive income.
+2020 Annual Report Meituan
+37
+32
+38
+88
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+We manage our investment portfolio with the primary objective to continue to implement the "Food + Platform"
+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 and
+robotics, to help us strengthen our business and improve efficiency.
+The fair value of our stakes in listed investee entities amounted to RMB27,954 million as of December 31, 2020
+(December 31, 2019: RMB3,221 million). Other than Li Auto Inc. as disclosed in Note 12 and Note 19 to the
+consolidated financial statements, none of the carrying amount of any of our investments constitutes 5% or more of
+our total assets as of December 31, 2020.
+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
+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.
+Meituan
+1,460,285
+MANAGEMENT DISCUSSION AND ANALYSIS
+Amount
+As a
+percentage
+December 31, 2019
+Year Ended
+Amount
+percentage
+As a
+December 31, 2020
+Operating profit/(loss) and margin by segment are set forth in the table below.
+of revenues
+As a result of the foregoing, our operating profit and margin in 2020 was RMB4.3 billion and 3.8%, respectively,
+compared to RMB2.7 billion and 2.7% in 2019.
+Our other gains, net in 2020 increased by RMB629.7 million to RMB3.2 billion compared to the year of 2019. The
+increase was primarily due to the increase in tax return and preference and dilution gain, partially offset by the
+decrease in gains from treasury investments and disposal and remeasurement of equity investments.
+Other Gains, Net
+Our gain in fair value changes on other financial investments at fair value through profit or loss was RMB5.0 billion
+in 2020, compared with a gain of RMB77.7 million in 2019. This was primarily due to the fair value changes in our
+investments in listed entities.
+Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss
+MANAGEMENT DISCUSSION AND ANALYSIS
+31
+2020 Annual Report Meituan
+Our net provision for impairment losses on financial assets decreased to RMB467.7 million in 2020 from RMB645.7
+million in 2019, and decreased by 0.3 percentage points to 0.4% from 0.7% as a percentage of revenues primarily
+due to the decreased impairment provision for financial assets.
+Net Provision for Impairment Losses on Financial Assets
+Operating Profit
+Our general and administrative expenses increased to RMB5.6 billion in 2020 from RMB4.3 billion in 2019, and
+increased by 0.5 percentage points to 4.9% from 4.4% as a percentage of revenues. The increase in both amount
+and as a percentage of revenues was primarily attributable to the increase in employee benefits expenses due to
+the increased number of employees, higher average salary, and the increase in share-based compensation.
+Year-over-
+year change
+Food delivery
+2.7%
+2,679,860
+3.8%
+4,330,102
+Total operating profit
+NA
+ΝΑ
+60.8%
+(2.6%)
+of revenues
+(RMB in thousands, except for percentages)
+100.1%
+1,415,880
+8,403,293
+(6,749,149)
+(390,164)
+4.3%
+38.5%
+(39.8%)
+ΝΑ
+4,170,796
+Unallocated items
+(10,854,996)
+New initiatives and others
+8,180,933
+In-store, hotel & travel
+2,833,369
+2.6%
+37.7%
+(33.1%)
+General and Administrative Expenses
+Our research and development expenses increased to RMB10.9 billion in 2020 from RMB8.4 billion in 2019, and
+increased by 0.8 percentage points to 9.5% from 8.7% as a percentage of revenues. The increase in both amount
+and as a percentage of revenues was mainly driven by the increased number of employees due to our businesses
+expansion, higher average salary and the increase in share-based compensation.
+Research and Development Expenses
+Selling and marketing expenses
+Research and development expenses
+General and administrative expenses
+Net provision for impairment losses
+on financial assets
+80,744,368
+Cost of revenues
+Costs and Expenses:
+of revenues
+(RMB in thousands, except for percentages)
+of revenues year change
+Amount
+Year-over-
+As a
+percentage
+20,882,685
+10,892,514
+December 31, 2019
+Amount
+percentage
+As a
+December 31, 2020
+The following table sets forth a breakdown of our costs and expenses by function for the years indicated:
+Costs and Expenses
+Our revenues from the new initiatives and others segment increased by 33.6% to RMB27.3 billion in 2020 from
+RMB20.4 billion in 2019 mainly due to the increase in revenues from the retail businesses, B2B food distribution
+services and ride-sharing services as we expanded these businesses to satisfy consumers' growing needs.
+Our revenues from the in-store, hotel & travel segment decreased by 4.6% to RMB21.3 billion in 2020 from
+RMB22.3 billion in 2019. Commission revenue decreased by 12.7% to RMB10.2 billion mainly due to the decreased
+consumption in hotel & travel businesses due to the COVID-19 pandemic. Online marketing service revenue
+increased by 4.8% to RMB11.0 billion driven by the increase in the number of online marketing Active Merchants of
+our in-store business.
+Our revenues from the food delivery segment increased by 20.8% to RMB66.3 billion in 2020 from RMB54.8
+billion in 2019. Commission revenue increased by 18.0% to RMB58.6 billion on a year-over-year basis as a result
+of the increase in GTV by 24.5%, which was primarily attributable to (i) the increase in order volume by 16.3%
+due to the acquisition of new users, promotion of food delivery membership program and development of various
+consumption scenarios, and (ii) the increase in average value per order by 7.0% because of higher portion of orders
+from branded merchants on our platform. Online marketing services revenue increased by 48.2% to RMB7.6 billion
+primarily due to the increase in the number of Active Merchants and their average marketing expenditure due to
+their growing willingness to acquire more online traffic.
+Year Ended
+5,593,895
+70.3% 65,208,143
+18.2% 18,819,067
+9.5% 8,445,664
+4.9% 4,338,954
+66.9%
+Our selling and marketing expenses increased by RMB2.1 billion to RMB20.9 billion in 2020 from RMB18.8
+billion in 2019, and decreased by 1.1 percentage points to 18.2% from 19.3% as a percentage of revenues on a
+year-over-year basis. The increase in amount was primarily attributable to the increase in promotion and advertising
+expenses mainly driven by our enlarged branding and promotional campaigns to enhance our brand recognition
+and stimulate user growth and consumption, and the increase in employee benefits expenses mainly due to
+increased number of employees as a result of our new business expansion and higher average salary. The total
+Transacting User incentives kept stable on a year-over-year basis, which resulted in the decrease of selling and
+marketing expenses as a percentage of revenues in 2020.
+Selling and Marketing Expenses
+Our cost of revenues increased by 23.8% to RMB80.7 billion in 2020 from RMB65.2 billion in 2019 and increased
+by 3.4 percentage points to 70.3% from 66.9% as a percentage of revenues on a year-over-year basis. The
+increase in amount was primarily attributable to the increase in food delivery rider costs in line with the increase of
+order volume, and more expenditures for our new initiatives such as cost of goods sold. As the same time, more
+investments in new initiatives with lower gross margin resulted in the increase as a percentage of revenues on a
+year-over-year basis.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Cost of Revenues
+2020 Annual Report
+Meituan
+30
+(27.6%)
+0.7%
+645,685
+0.4%
+467,690
+28.9%
+(2,244,292)
+4.4%
+29.0%
+8.7%
+11.0%
+19.3%
+23.8%
+Primarily as a result of the foregoing, our profit before income tax in 2020 was RMB4.4 billion, compared to a profit
+before income tax of RMB2.8 billion in 2019.
+61.6%
+Income Tax Credits/(Expenses)
+Profit for the Year
+Year Ended
+MANAGEMENT DISCUSSION AND ANALYSIS
+2020 Annual Report
+Meituan
+34
+Represents gains from fair value changes on investments, including (i) fair value changes on other financial investments at
+fair value through profit or loss, and (ii) dilution gain.
+(1)
+2,675,399
+2,178,650
+(589,128)
+Adjusted EBITDA
+1,073,515
+75,060
+135,776
+547,213
+75,597
+1,633,819
+Depreciation on property, plant and equipment
+Amortization of software and others
+(472,408)
+(742,857)
+(430,233)
+investments and subsidiaries
+December 31,
+fair value change, disposal and remeasurement of
+December 31,
+2020
+Impairment and expense (reversal)/provision for
+662,190
+615,578
+Amortization of intangible assets resulting from acquisitions
+58,166
+Impairment of goodwill
+(176,880)
+Gains from the remeasurement of investments
+(201,061)
+(169,059)
+(5,809,527)
+2,190,871
+3,277,476
+2,236,165
+4,707,612
+Gains on disposal of investments and subsidiaries
+Fair value gains on investments (1)
+Share-based compensation expenses
+Adjusted for:
+Profit for the year
+(RMB in thousands)
+2019
+Mobike restructuring plan
+Other gains except for (gains)/losses related to
+45,095
+Net provision for impairment losses on financial assets
+(2,819)
+7,977
+738
+Mobike restructuring plan
+Impairment and expense provision/(reversal) for
+160,857
+165,547
+133,007
+from acquisitions
+Amortization of intangible assets resulting
+Impairment of goodwill
+58,166
+(43,889)
+(5,779,364)
+(72,443)
+(191,031)
+838,709
+700,133
+1,041,671
+6,321,001
+57,333
+111,506
+Tax effects on non-IFRS adjustments
+(4,724)
+149,735
+Finance costs
+(45,678)
+(53,519)
+(69,724)
+Finance income
+(92,698)
+(57,646)
+(117,398)
+Share of gains of investments accounted for
+using equity method
+(28,894)
+34,369
+(394,404)
+tax effects on non-IFRS adjustments
+Income tax (credits)/expenses, except for
+Adjusted for:
+2,054,996
+2,270,219
+(1,436,520)
+Adjusted net (loss)/profit
+458,446
+(176,613)
+We had income tax credits of RMB269.7 million in 2020, compared to income tax expenses of RMB526.2 million in
+2019, primarily due to the increased tax losses in 2020.
+(5,272)
+Net provision for impairment losses on financial assets
+2020 Annual Report
+Meituan
+36
+For the year ended December 31, 2020, net cash generated from operating activities was RMB8.5 billion, which
+was primarily attributable to our profit before income tax, as adjusted by (i) depreciation and amortization and
+share-based payments, partially offset by fair value changes on other financial investments at fair value through
+profit or loss and dividend income and interest classified as investing cash flows, and (ii) changes in working capital,
+which primarily comprised an increase in trade payables, other payables and accruals and payables to merchants,
+partially offset by an increase in restricted cash and prepayments, deposits and other assets.
+Net cash generated from operating activities represents the cash generated from our operations minus the income
+tax paid. Cash generated from our operations primarily consisted of our profit for the year, as adjusted by non-cash
+items and changes in working capital.
+13,396,185
+17,093,559
+Net Cash Generated from Operating Activities
+Cash and cash equivalents at the end of the year
+11,466
+Cash and cash equivalents reclassified from the assets
+classified as held for sale
+(173,442)
+(963,716)
+17,043,692
+13,396,185
+Cash and cash equivalents at the beginning of the year
+Exchange loss on cash and cash equivalents
+(3,485,531)
+4,661,090
+Net increase/(decrease) in cash and cash equivalents
+1,114,267
+17,418,081
+MANAGEMENT DISCUSSION AND ANALYSIS
+5,574,220
+(10,174,018)
+Net Cash Used in Investing Activities
+Net Cash Generated from Financing Activities
+As a result of the foregoing, we had a profit of RMB4.7 billion in 2020, compared to a profit of RMB2.2 billion in
+2019.
+Reconciliation of Non-IFRS Measures to the Nearest IFRS Measures
+To supplement our consolidated results which are prepared and presented in accordance with IFRS, we also use
+adjusted EBITDA and adjusted net (loss)/profit 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 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 or
+financial conditions as reported under IFRS. In addition, these non-IFRS measures may be defined differently from
+similar terms used by other companies.
+2020 Annual Report Meituan
+33
+33
+MANAGEMENT DISCUSSION AND ANALYSIS
+The following tables set forth the reconciliations of our non-IFRS measures for the fourth quarter of 2020 and 2019,
+the third quarter of 2020 and the years ended December 31, 2020 and 2019, to the nearest measures prepared in
+accordance with IFRS.
+(Loss)/profit for the period
+Adjusted for:
+Share-based compensation expenses
+Fair value gains on investments (1)
+Gains on disposal of investments and subsidiaries
+Unaudited
+December 31,
+2020
+Three Months Ended
+December 31,
+September 30,
+2019
+2020
+(RMB in thousands)
+For the year ended December 31, 2020, net cash generated from financing activities was RMB17.4 billion, which
+was mainly attributable to issuance of notes payable and proceeds from borrowings, partially offset by repayments
+of borrowings and lease payments.
+For the year ended December 31, 2020, net cash used in investing activities was RMB21.2 billion, which was
+mainly attributable to purchase of property, plant and equipment, land use rights, and investments in some listed or
+unlisted entities, partially offset by net cash generated from treasury investments.
+88,612
+(21,232,004)
+(RMB in thousands)
+191,042
+370,016
+Finance costs
+(166,217)
+(213,684)
+Finance income
+(107,353)
+(264,105)
+Share of gains of investments accounted for using equity method
+557,709
+(546,309)
+non-IFRS adjustments
+Income tax (credits)/expenses, except for tax effects on
+4,656,685
+3,120,605
+Adjusted for:
+Adjusted net profit
+(31,486)
+276,572
+Tax effects on non-IFRS adjustments
+57,333
+Other gains except for (gains)/losses related to fair value change,
+8,475,013
+disposal and remeasurement of investments and subsidiaries
+Amortization of software and others
+Depreciation on property, plant and equipment
+2019
+2020
+December 31,
+December 31,
+Year Ended
+Net cash generated from financing activities
+Net cash used in investing activities
+Net cash generated from operating activities
+The following table sets forth our cash flows for the years indicated:
+We had historically funded our cash requirements principally from capital contribution from shareholders and
+financing through issuance and sale of equity securities or senior notes. We had cash and cash equivalents of
+RMB17.1 billion and short-term treasury investments of RMB44.0 billion as of December 31, 2020, compared to the
+balance of RMB13.4 billion and RMB49.4 billion as of December 31, 2019.
+Liquidity and Capital Resources
+MANAGEMENT DISCUSSION AND ANALYSIS
+35
+2020 Annual Report Meituan
+Represents gains from fair value changes on investments, including (i) fair value changes on other financial investments at
+fair value through profit or loss, and (ii) dilution gain.
+(1)
+7,253,634
+4,737,837
+Adjusted EBITDA
+(2,061,842)
+528,817
+3,654,793
+4,202,623
+(2,307,217)
+375,908
+Our operating profit from the food delivery segment increased to RMB2.8 billion in 2020 from RMB1.4 billion in
+2019, mainly driven by the expansion of business scale, higher average value per order and improved operating
+efficiency, partially offset by the increase in food delivery rider costs and employee benefits expenses. Our
+operating margin for this segment increased by 1.7 percentage points to 4.3% from 2.6% on a year-over-year basis
+mainly due to higher average value per order and improved operating efficiency, offset by higher delivery cost and
+other cost per order.
+DIRECTORS AND SENIOR MANAGEMENT
+The biographical details of the Directors and senior management of the Company are set out as follows:
+48
+48
+REPORT OF DIRECTORS
+For the year ended December 31, 2020, the Group applied the IPO Proceeds in the following manner:
+35% to upgrade our technology and enhance our
+research and development capabilities
+Use of
+proceeds as
+stated in
+the Prospectus
+(in RMB'000)
+(approximate)
+Actual use of
+proceeds in
+2020
+Net proceeds
+unutilized as of
+31 December
+2020
+(in RMB'000)
+(approximate)
+(in RMB'000)
+(approximate)
+Expected time
+of use
+9,980,661
+47
+2020 Annual Report Meituan
+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, 2020, we have utilized an amount of RMB3,934.3 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, 2020, the
+unutilized net proceeds was in the amount of approximately RMB24,581.9 million. The Company intends to apply
+them in the same manner and proportion as stated in the Prospectus.
+USE OF NET PROCEEDS FROM LISTING
+The Chinese stock short name for trading in the shares of the Company on the Stock Exchange has been changed
+from “W” to “-W” from October 29, 2020. The English short name for trading in the shares of the
+Company on the Stock Ex-change remains unchanged as "MEITUAN-W” and the stock code of the Company
+remains unchanged as "3690".
+PRINCIPAL ACTIVITIES
+46
+46
+The Company is China's leading e-commerce platform for services. It provides a platform using technology to
+connect consumers and merchants and offers diversified daily services, 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, 2020 are set out in the consolidated statement of
+comprehensive income contained in this annual report.
+9,980,661
+Meituan
+DIVIDEND POLICY AND FINAL DIVIDENDS
+REPORT OF DIRECTORS
+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 recognised 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.
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2020.
+BUSINESS REVIEW
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+2020 Annual Report
+" to "Meituan ” in Hong Kong under Part 16 of the Companies Ordinance (Chapter 622 of the Laws of Hong
+Kong).
+1,964,198
+1,970,090
+by end of 2022
+For the year ended December 31, 2020, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+Major Suppliers
+For the year ended December 31, 2020, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+PROPERTY, PLANT AND EQUIPMENT
+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.
+SHARE CAPITAL
+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.
+RESERVES
+Details of movements in the reserves of the Group during the Reporting Period are set out on page 156 in the
+consolidated statement of changes in equity.
+DISTRIBUTABLE RESERVES
+As of December 31, 2020, the Company's reserves available for distribution, amounted to approximately RMB263.2
+billion.
+BANK LOANS AND OTHER BORROWINGS
+Particulars of bank loans and other borrowings of the Group as of December 31, 2020 are set out in Note 31 to the
+consolidated financial statements.
+2020 Annual Report Meituan
+49
+Major Customers
+MAJOR CUSTOMERS AND SUPPLIERS
+REPORT OF DIRECTORS
+2020 Annual Report
+by end of 2022
+35% to develop new services and products
+20% to selectively pursue acquisitions or
+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
+8,016,463
+8,010,571
+28,516,174
+5,703,235
+by end of 2022
+2,851,617
+by end of 2022
+24,581,886
+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
+3,934,288
+Subsequent to the passing of a special resolution regarding the simplification of company name at the extraordinary
+general meeting held on September 29, 2020, the name of the Company was changed from "Meituan Dianping" to
+"Meituan" and the Chinese name of “” has been adopted as the dual foreign name of the Company in place
+of its old Chinese name of “with effect from September 30, 2020. The Certification of Incorporation on
+Change of Name was issued by the Registrar of Companies in the Cayman Islands on September 30,2020 certifying
+the change of English name and the dual foreign name of the Company. The Certificate of Registration of Alteration
+of Registered Non-Hong Kong Company was issued by the Registrar of Companies in Hong Kong on October 22,
+2020 confirming the registration of the name of the Company has been changed from “Meituan Dianping
+investments in assets and businesses which
+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.
+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.
+Leng Xuesong (AA), aged 52, 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.
+DIRECTORS AND SENIOR MANAGEMENT
+2020 Annual Report
+Meituan
+44
+42
+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 the China-Britain Business Council.
+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 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 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, aged 58, 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.
+Independent Non-executive 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.
+Neil Nanpeng Shen has been an independent non-executive director of Trip.com Group Ltd. (NASDAQ Ticker:
+TCOM), 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.
+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 has also served as non-executive director of China Index Holdings Limited (NASDAQ Ticker:
+CIH) since July 2019.
+SIMPLICATION OF COMPANY NAME AND STOCK SHORT NAME
+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).
+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.
+Chen Shaohui (), aged 40, 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.
+Wang Huiwen (EX), aged 42, 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.
+Mu Rongjun (), aged 41, 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 Xing (E), aged 42, 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.
+DIRECTORS AND SENIOR MANAGEMENT
+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
+43
+43
+2020 Annual Report Meituan
+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 been an independent non-executive director of Youdao, Inc. (NYSE
+Ticker: DAO) since October 2019.
+Shum Heung Yeung Harry (), aged 54, 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 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.
+41
+42
+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.
+Executive Directors
+DIRECTORS
+Meituan
+2020 Annual Report
+Chen Liang (), aged 41, 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. (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.
+Wang Xing (E), aged 42, 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.
+Zhang Chuan (II), aged 45, is a Senior Vice President and is responsible for overseeing the Company's in-store
+services business.
+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.
+2020 Annual Report Meituan
+45
+45
+REPORT OF DIRECTORS
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+GLOBAL OFFERING
+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.
+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 (), 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 (¼) 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.
+2020 Annual Report Meituan
+Mu Rongjun (), aged 41, 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.
+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), 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.
+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 (), aged 53, 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.
+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) (HKEX
+Stock: 9618). From March 2014 to August 2020, Lau Chi Ping Martin served 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.
+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 (), aged 48, 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.
+DIRECTORS AND SENIOR MANAGEMENT
+Non-executive Directors
+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.
+Meituan
+40
+Wang Huiwen received his bachelor's degree in electronic engineering from Tsinghua University in July 2001.
+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 (¼), 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 (EX), aged 42, 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, organizational growth and talent development of the Company.
+2020 Annual Report
+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.
+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.
+489,600,000 Class A Shares
+Interest in controlled corporation
+Songtao Limited (1)
+11.36%
+Share Patience (1)
+Beneficial interest
+66.56%
+489,600,000 Class A Shares
+66.56%
+Beneficial interest
+83,588,783 Class A Shares
+TMF (Cayman) Ltd.
+Wang Xing
+489,600,000 Class A Shares
+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%
+Interest in controlled corporation (1)
+83,588,783 Class A Shares
+11.36%
+Class A Shares-Mu Rongjun
+Charmway Enterprises(2)
+Shared Vision (2)
+Crown Holdings (1)
+Trustee
+Class A Shares-Wang Xing
+SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND
+UNDERLYING SHARES
+class of Shares (5)
+0.25%
+Class B Shares
+SHEN Nanpeng Neil (5)
+Interest in controlled corporations (L) Sequoia Capital China Funds,
+387,668,586
+7.53%
+Sequoia Capital Global
+Growth Funds and Other
+Controlled Entities
+Class B Shares
+12,822,605
+Beneficial interest (L)
+0.18%
+ORR Gordon Robert
+Halyburton (6)
+Beneficial interest (L)
+60,000
+0.00%
+Class B Shares
+LENG Xuesong (6)
+Beneficial interest (L)
+9,520,506
+Class B Shares
+0.00%
+Beneficial interest (L)
+0.10%
+Aim Mars Investment Limited
+36,400,000
+4.95%
+Class A Shares
+2,134,660
+0.04%
+Class B Shares
+Interest in controlled corporation (L)
+Class B Shares
+Kevin Sunny
+4.95%
+Class A Shares
+2,134,660
+0.04%
+Class B Shares
+Interest in controlled corporation (L)
+Galileo Space Limited
+5,321,335
+36,400,000
+Name of Substantial Shareholder
+Class B Shares
+Beneficial interest (L)
+(7)
+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 9,520,506 Class B Shares. Other Controlled Entities refers to URM Management Limited and
+N&J Investment Holdings Limited (which hold approximately 0.0013% and 0.10%, respectively, of the outstanding Shares)
+and are controlled by Neil Nanpeng Shen.
+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 6.75% interest in the share capital of the Company (or 7.71% 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.
+As at December 31, 2020, the Company had 5,885,419,585 issued Shares in total, comprising of 735,568,783 Class A
+Shares and 5,149,850,802 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, 2020.
+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, 2020.
+Save as disclosed above, as of December 31, 2020, 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.
+(6)
+56
+2020 Annual Report
+REPORT OF DIRECTORS
+As of December 31, 2020, 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:
+Approximate
+percentage of
+Capacity/Nature of interest
+Number and class of
+Shares held
+interest in each
+Meituan
+SHUM Heung
+Yeung Harry (6)
+REPORT OF DIRECTORS
+2020 Annual Report Meituan
+60,000
+0.00%
+Class B Shares
+54
+Meituan
+2020 Annual Report
+Notes:
+(1)
+55
+The letter "L" denotes the person's Long Position in such Shares.
+REPORT OF DIRECTORS
+(3)
+(4)
+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.
+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, 2020, 500,001 Class B Shares were issued to Shared Vision with respect to the vesting of 500,001 RSUs granted to Mu
+Rongjun 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. 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, 2020, (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.
+(5)
+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. and Sequoia Capital China Growth Fund IV, L.P. (which hold approximately 0.79%,
+0.09%, 0.12%, 2.40%, 0.06%, 0.40%, 0.61%, 0.01%, 0.03%, 0.01%, 0.88%, 0.07%, 0.02% and 0.12%, 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 0.36%, 0.01%
+and 0.50%, 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.
+(2)
+60,000
+2020 Annual Report Meituan
+Class B Shares
+Interest in controlled corporation (L)
+TMF (Cayman) Ltd
+Trustee
+118,650,000 Class A Shares
+16.13%
+Mu Rongjun
+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%
+Interest in controlled corporation (2)
+7,330,000 Class A Shares
+1.00%
+Class B Shares - Tencent
+Huai River Investment Limited (3)
+Beneficial interest
+623,420,905 Class B Shares
+12.11%
+Tencent Mobility Limited (3)
+Beneficial interest
+383,955,705 Class B Shares
+7.46%
+16.13%
+Morespark Limited (3)
+118,650,000 Class A Shares
+Day One Holdings Limited (2)
+50
+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.
+In accordance with Article 17.18 of the Articles of Association, Mr. Wang Huiwen, Mr. Lau Chi Ping Martin and Mr.
+Neil Nanpeng Shen shall retire by rotation, and being eligible, have offered themselves for re-election at the AGM.
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Leng Xuesong (3)
+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 (E) (Chairman of the Board)
+Executive Directors
+The Directors during the Reporting Period and up to date of this annual report are:
+DIRECTORS
+REPORT OF DIRECTORS
+Beneficial interest
+118,650,000 Class A Shares
+16.13%
+Beneficial interest
+7,330,000 Class A Shares
+1.00%
+Interest in controlled corporation
+50
+Beneficial interest
+0.17%
+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. and Sequoia Capital China Growth Fund IV, L.P. (which hold approximately 0.79%,
+0.09%, 0.12%, 2.40%, 0.06%, 0.40%, 0.61%, 0.01%, 0.03%, 0.01%, 0.88%, 0.07%, 0.02% and 0.12%, 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 0.36%, 0.01%
+and 0.50%, 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.
+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, Great Summer Limited, a company incorporated under the laws of the British Virgin Islands, Distribution
+Pool Limited, a company incorporated under the laws of the British Virgin Islands, THL A Limited and THL A25 Limited and
+companies incorporated under the laws of the British Virgin Islands, are wholly owned subsidiaries of 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.
+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.
+(4)
+(3)
+(1)
+Notes:
+0.18%
+7.53%
+387,668,586 Class B Shares
+9,520,506 Class B Shares
+Beneficial interest
+Other
+Sequoia Capital Global Growth
+Funds and Other Controlled
+Entities(4)
+Class B Shares-Sequoia
+Sequoia Capital China Funds,
+class of Shares (5)
+interest in each
+Number and class of
+Shares held
+Capacity/Nature of interest
+Name of Substantial Shareholder
+Approximate
+percentage of
+57
+REPORT OF DIRECTORS
+40
+58
+8,850,245 Class B Shares
+Meituan
+REPORT OF DIRECTORS
+Great Summer Limited (3)
+Beneficial interest
+25,000,000 Class B Shares
+0.49%
+THL A Limited (3)
+Beneficial interest
+496,661 Class B Shares
+0.01%
+THL A25 Limited (3)
+Beneficial interest
+12,912 Class B Shares
+0.00%
+Distribution Pool Limited (3)
+Beneficial interest
+1,018,420 Class B Shares
+0.02%
+59
+2020 Annual Report Meituan
+As at December 31, 2020, the Company had 5,885,419,585 issued Shares in total, comprising of 735,568,783 Class A
+Shares and 5,149,850,802 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, 2020.
+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 0.50% interest in the share capital of the Company (or 0.58% 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 0.37% interest in the share capital of the Company (or 0.42% 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. ("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 9,520,506 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 0.0013% and 0.10%, 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 6.75% interest in the share capital of the
+Company (or 7.71%% of the total issued Class B Shares).
+(5)
+2020 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS
+83,588,783
+Class A Shares
+11.36%
+739
+0.00%
+Class B Shares
+MU Rongjun (3)
+Beneficiary and founder of a Trust (L) Trust
+118,650,000
+16.13%
+Class A Shares
+Interest in controlled corporation (L)
+Day One Holdings Limited
+118,650,000
+16.13%
+Class A Shares
+Interest in controlled corporation (L) Charmway Enterprises
+118,650,000
+16.13%
+Class A Shares
+2020 Annual Report Meituan
+53
+REPORT OF DIRECTORS
+Name of Director or
+Interest in controlled corporation (L)
+chief executive
+66.56%
+Crown Holdings
+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.
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+As of December 31, 2020, 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:
+Interests of Directors and Chief Executives in the Company
+Approximate
+percentage
+of interest
+Name of Director or
+Number and class
+in each class
+chief executive
+Nature of interest(1)
+Relevant company
+of securities
+of Shares (7)
+WANG Xing(2)
+Beneficiary and founder of a Trust (L) Trust
+Interest in controlled corporation (L) Songtao Limited
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+66.56%
+66.56%
+Interest in controlled corporation (L)
+489,600,000
+Class A Shares
+Nature of interest(¹)
+Shared Patience
+Interest in controlled corporation (L)
+2020 Annual Report
+Meituan
+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.
+52
+62
+EMOLUMENT POLICY
+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.
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+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.
+MANAGEMENT CONTRACTS
+REPORT OF DIRECTORS
+51
+2020 Annual Report Meituan
+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' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+Details of the emoluments of the Directors during the Reporting Period are set out in Note 8 to the consolidated
+financial statements.
+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 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.
+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, 2020.
+DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
+REPORT OF DIRECTORS
+Relevant company
+Meituan 2020 Annual Report
+0.04%
+2,134,660
+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.
+4.95%
+Shared Vision
+Number and class
+of securities
+Class A Shares
+percentage
+of interest
+in each class
+of Shares (7)
+7,330,000
+Class A Shares
+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.
+1.00%
+500,001
+Approximate
+0.01%
+36,400,000
+Beneficiary and founder of a Trust (L) Trust
+WANG Huiwen (4)
+Class B Shares
+5,499,999
+Beneficial interest (L)
+0.11%
+Class B Shares
+5,055,940
+US$5.18
+Other Employees
+February 1, 2015 4-6 years
+to July 1, 2018
+May 31, 2006 to
+0.5 to 6 years
+August 1, 2018
+0
+0
+0
+0
+US$0.000017-
+US$5.18
+5,055,940
+US$1.005-
+Wang Huiwen
+0
+0
+0
+62,912,454
+0
+5,000,000
+6 years
+US$3.86-
+US$5.18
+of exercise
+Period
+Period
+2020
+Directors
+Mu Rongjun
+July 1, 2017 to
+July 1, 2018
+5,000,000
+21,276,793 HK$174.9024
+US$0.000017-
+underlying
+3,849,333
+The table below shows the details of RSUs granted to the Directors and other employees under the Pre-IPO ESOP.
+Number of
+Shares
+Number of
+Shares
+underlying
+price
+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.
+RSUS
+RSUs
+outstanding
+RSUs vested
+cancelled
+outstanding
+as of
+RSUS
+4,654
+Outstanding RSUs Granted under the Pre-IPO ESOP
+(1)
+37,781,674
+US$5.18
+Total
+62
+62
+Meituan
+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.
+2020 Annual Report
+21,276,793 HK$174.9024
+US$0.000017-
+4,654
+3,849,333 47,837,614
+US$5.18
+Note:
+REPORT OF DIRECTORS
+72,968,394
+2020
+i.
+December 31,
+during the
+Exercise price
+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.
+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.
+Options
+iii.
+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.
+2020 Annual Report Meituan
+61
+REPORT OF DIRECTORS
+RSUs
+i. Performance objectives and other terms
+Payment
+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.
+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.
+REPORT OF DIRECTORS
+REPORT OF DIRECTORS
+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
+Grant of Awards
+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.
+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.
+Administration
+60
+60
+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.
+Meituan 2020 Annual Report
+Maximum Number of Shares
+Price
+ii.
+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.
+options
+cancelled
+Shares
+underlying
+options
+outstanding
+during the
+during
+as of
+Name
+Shares options lapsed
+immediately
+Date of Grant
+Exercise
+of January 1,
+the exercise
+before the date
+Reporting
+the Reporting
+Vesting
+Period (¹)
+Form and timing of payment of RSUs
+Period and
+options
+outstanding as
+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
+Reporting
+Shares
+Weighted
+Average price
+Number of
+underlying
+during the
+of Class B
+Number of
+exercised
+during the
+July 1, 2017
+as of
+price
+exercise)
+Period
+Period
+2020
+Other Employees
+July 5, 2019
+HK$70.0
+4 years(1) HK$69.1
+740,000
+0
+30,000 HK$259.0000
+0
+0
+710,000
+HK$69.1
+Other Employees
+April 24,2020
+HK$100
+5.2 years(2) HK$100.15
+0 1,356,000
+226,000 HK$266.7327
+HK$100.15
+0
+Period
+0
+2020
+Reporting
+options
+date on
+outstanding
+granted
+Period immediately
+lapsed
+cancelled outstanding
+which the
+as of
+during the
+and the
+before the
+during the
+during the as of
+Date of options were
+Name
+Grant
+granted
+Vesting Exercise
+Period Price
+January 1,
+Reporting
+exercise
+date of
+Reporting December 31,
+1,130,000
+Other Employees
+July 20,2020
+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.
+Awards
+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.
+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.
+68
+Meituan
+2020 Annual Report
+Grant of Award
+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 4.62% 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, 2020, 105,774,045 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 180,521,265 Shares (including Award Shares which have been cancelled or forfeited in accordance with the
+Post-IPO Share Award Scheme), representing 3.07% 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.
+2020 Annual Report Meituan
+69
+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 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.
+POST-IPO SHARE AWARD SCHEME
+HK$191.1
+4 years (3) HK$195.98
+0 1,255,316
+0
+0
+0
+0
+1,255,316
+Total
+Notes:
+740,000
+options
+2,611,316
+0
+0
+3,095,316
+(1)
+(3)
+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.
+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 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.
+2020 Annual Report Meituan
+67
+REPORT OF DIRECTORS
+256,000 HK$265.8266
+options
+Shares
+Reporting
+33,170,683
+6,707,035
+0
+41,764,788
+Total
+Note:
+(1)
+92,434,171
+35,695,684
+6,707,035
+0
+50,031,452
+Including RSUs which have been vested prior to the Reporting Period but which Shares were issued to the grantees during
+the Reporting Period.
+2020 Annual Report Meituan
+63
+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.
+Qualifying Participants
+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.
+Maximum Number of Class B Shares
+81,642,506
+0 to 6 years
+Other Employees
+7,766,665
+January 1,
+Reporting
+Reporting during the
+December 31,
+Name
+Date of Grant
+Vesting Period
+2020
+Period (¹)
+Period Reporting Period
+2020
+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 8.08% 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.
+Directors
+6 years
+January 1, 2016 to
+July 1, 2018
+4 to 6 years
+666,666
+10,124,999
+166,667
+0
+0
+499,999
+2,358,334
+0
+0
+Mu Rongjun
+Wang Huiwen
+RSUS lapsed
+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
+The table below shows the details of options granted under the Post-IPO Share Option Scheme:
+Number of
+Weighted
+Closing price
+of the Shares
+immediately
+before the
+Number of
+Shares
+Number of
+options
+Average
+Number of
+Shares
+exercised
+price of
+Shares
+underlying underlying
+during the
+Class B
+Number of
+Number of
+underlying
+options options
+Outstanding Options Granted under the Post-IPO Share Option Scheme
+REPORT OF DIRECTORS
+Meituan 2020 Annual Report
+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.
+2020 Annual Report
+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, 2020, 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 closing price of a Class B Share as stated in the daily quotations sheet issued by the Stock Exchange on
+the date of grant;
+64
+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
+2020 Annual Report Meituan
+65
+55
+66
+99
+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
+(iii) the nominal value of a Class B Share on the date of grant.
+(ii)
+December 29, 2010 to
+August 2, 2018
+during the
+underlying
+RSUs
+underlying
+underlying
+RSUS
+RSUs
+RSUs
+RSUS
+outstanding
+granted
+RSUS vested
+cancelled
+lapsed
+outstanding
+as of
+during the
+during the
+50,708,516
+during the
+as of
+January 1,
+Reporting
+Reporting
+Reporting
+Number of
+Shares
+Shares
+Number of
+Number of
+Shares
+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
+71
+2020 Annual Report Meituan
+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.
+Neil Nanpeng Shen, our non-executive Director, is a non-executive director of Trip.com Group Ltd. (NASDAQ
+Ticker: TCOM), 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.
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+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.
+Reporting December 31,
+PRE-EMPTIVE RIGHTS
+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, 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 2020.
+REPORT OF DIRECTORS
+EQUITY-LINKED AGREEMENTS
+76,696,376
+0
+4,984,456
+44,797,063 13,824,747
+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:
+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.
+Name
+Date of Grant
+Vesting Period
+commencing from December 20,
+2018 until September 20, 2022
+Shum Heung
+Yeung Harry
+November 23,
+2018
+6.25% to vest in each quarter
+commencing from December 20,
+2018 until September 20, 2022
+41,250
+0
+15,000
+0
+0
+26,250
+2018
+Other Employees
+4 to 5.2 years
+50,584,766
+44,797,063
+13,779,747
+4,984,456
+0
+76,617,626
+to October 21, 2020
+Total
+70
+70
+October 4, 2018
+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.
+26,250
+0
+2020
+Period
+Period
+Period
+Period
+2020
+Directors
+Orr Gordon Robert
+November 23,
+Halyburton
+2018
+0
+6.25% to vest in each quarter
+commencing from December 20,
+2018 until September 20, 2022
+0
+15,000
+0
+0
+26.250
+Leng Xuesong
+November 23,
+6.25% to vest in each quarter
+41,250
+0
+15,000
+41,250
+Meituan
+2020 Annual Report
+100%
+74
+74
+Meituan
+2020 Annual Report
+REPORT OF DIRECTORS
+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 by the Group in 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.
+Certain related party transactions as disclosed in Note 37 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.
+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.
+2020 Annual Report Meituan
+75
+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.
+15
+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:
+Our Company
+Notes:
+100%
+WFOES
+Management and
+consulting services
+Service
+Fees
+Registered Shareholders (1)
+REPORT OF DIRECTORS
+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.
+(၁)
+in the ordinary and usual course of business of the Group;
+72
+Meituan
+2020 Annual Report
+REPORT OF DIRECTORS
+Cloud Services and Technical Services Framework Agreement
+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
+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.
+The annual cap for the year ended December 31, 2020 is RMB500 million, while the actual transaction amount for
+the year ended December 31, 2020 is approximately RMB159 million.
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+The Group has entered into the following non-exempt continuing connected transactions during the Reporting
+Period.
+(b) on normal commercial terms or better; and
+Payment Services Framework Agreement
+2020 Annual Report Meituan
+73
+REPORT OF DIRECTORS
+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.
+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.
+The annual cap for the year ended December 31, 2020 is RMB2.5 billion, while the actual transaction amount for
+the year ended December 31, 2020 is approximately RMB1,490 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.
+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)
+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.
+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.
+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.
+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.
+2020 Annual Report Meituan
+77
+REPORT OF DIRECTORS
+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
+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) (2020 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.
+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
+2020 Annual Report
+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
+Pursuant to the loan agreements entered into between the relevant WFOES (other than in the case of Mobike
+Beijing, Shanghai Hanhai, Sankuai Cloud Online, Tianjin Hanbo and Tianjin Wanlong) 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.
+2020 Annual Report Meituan
+79
+12
+78
+The annual cap for the year ended December 31, 2020 is RMB560 million, while the actual transaction amount for
+the year ended December 31, 2020 is approximately RMB340 million.
+“----” 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.
+denotes a direct legal and beneficial ownership in the equity interest.
+(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)
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(iv) 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%;
+(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;
+denotes a contractual relationship.
+76
+2020 Annual Report
+(ix) Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+REPORT OF DIRECTORS
+(x)
+Beijing Sankuai Technology is owned by Wang Xing as to 50.97% and Mu Rongjun as to 49.03%; and
+(xi)
+Shanghai Hantao is owned by Wang Xing as to 95% and Mu Rongjun as to 5%.
+(2)
+(3)
+(4)
+Meituan
+Shenzhen Tencent Computer is a subsidiary of Tencent, which is a substantial shareholder of the Company, and
+therefore a connected person of the Company.
+REPORT OF DIRECTORS
+no change without independent non-executive Directors' approval;
+83
+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.
+89
+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
+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
+There were no important events affecting the Company and its subsidiaries which occurred after December 31,
+2020 and up to the date of this annual report.
+AUDIT COMMITTEE
+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.
+CORPORATE GOVERNANCE
+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.
+86
+Meituan
+2020 Annual Report
+PROFESSIONAL TAX ADVICE RECOMMENDED
+REPORT OF DIRECTORS
+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.
+On behalf of the Board
+Wang Xing
+Chairman
+REPORT OF DIRECTORS
+85
+2020 Annual Report Meituan
+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.
+(b)
+no change without independent Shareholders' approval;
+(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.
+84
+Meituan
+2020 Annual Report
+Hong Kong, March 26, 2021
+REPORT OF DIRECTORS
+The independent non-executive Directors have reviewed the Contractual Arrangements outlined above, and
+confirmed that:
+(a) the transactions carried out during the Reporting Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+(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
+(c)
+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.
+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, 2020 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
+RMB204.5 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.
+Annual Review by the Independent Non-executive Directors and the Auditor
+(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:
+CORPORATE GOVERNANCE REPORT
+•
+REPORT OF DIRECTORS
+2020 Annual Report
+Meituan
+82
+32
+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.
+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.
+These are the certain risks that are associated with the Contractual Arrangements, including:
+Risks Relating to the Contractual Arrangements
+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) (2020 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.
+CORPORATE GOVERNANCE REPORT
+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, 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.
+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.
+2020 Annual Report Meituan
+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.
+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.
+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.
+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 described in the paragraph headed “Board of Directors
+Chief Executive Officer".
+_
+Chairman and
+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.
+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.
+87
+88
+2020 Annual Report
+BOARD OF DIRECTORS
+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)
+(ii)
+(i)
+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 Company exercises the option to acquire equity ownership of its VIES, the ownership transfer may
+subject us to certain limitations and substantial costs.
+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.
+Meituan
+2020 Annual Report Meituan
+(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.
+2020 Annual Report Meituan
+The revenue of the Onshore Holdcos and their respective subsidiaries amounted to RMB3.8 billion for the year
+ended December 31, 2020, representing approximately 3.3% of the total revenue for the year of the Group. The
+total assets of the Onshore Holdcos and their respective subsidiaries amounted to RMB20.9 billion as of December
+31, 2020, representing approximately 12.5% of the total assets of the Group.
+REPORT OF DIRECTORS
+Reasons for Adopting the Contractual Arrangements
+2020 Annual Report Meituan
+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,
+2020, 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.
+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.
+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 recognised 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.
+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.
+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, replace 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 Foreign Investment Law
+81
+2020 Annual Report
+REPORT OF DIRECTORS
+88
+Meituan
+REPORT OF DIRECTORS
+80
+Beijing Sankuai Online was the original corresponding WFOE under the Contractual Arrangements with respect to
+Beijing Sankuai Technology. For the purpose of separating the businesses of Beijing Sankuai Online and Beijing
+Sankuai Technology (including its subsidiaries) such that each of them has clearly defined separate roles and
+responsibilities within the Group, which is expected to reduce operational overlap, allowing the Company to allocate
+resources more efficiently and streamline the operations of the Group as a whole, the corresponding WFOE entity
+relating to Beijing Sankuai Technology has been changed from Beijing Shankuai Online to another wholly-owned
+subsidiary of the Company, Tianjin Hanbo, by execution of a new set of Contractual Arrangements in lieu of the
+original Contractual Arrangements relating to Beijing Sankuai Technology.
+Concurrently with the change of the corresponding WFOE above, on November 30, 2020, Tianjin Hanbo, being the
+new WFOE, and Wang Xing and Mu Rongjun, being the Registered Shareholders of Beijing Sankuai Technology,
+entered into new loan agreements for the amount of approximately RMB2,793 million and RMB2,687 million,
+respectively (the "New Loan Agreements"). Pursuant to the New Loan Agreements, Tianjin Hanbo agreed to
+provide loans to Wang Xing and Mu Rongjun to be used exclusively for the following purpose: (i) with respect to
+loans provided to Wang Xing, all of which are used for repayment of the loans to Beijing Sankuai Online under the
+original Contractual Arrangements, and (ii) with respect to loans provided to Mu Rongjun, of which RMB147 million
+are used for repayment of the loans to Beijing Sankuai Online under the original Contractual Arrangements, and
+remaining RMB2,540 million are used for injecting to Beijing Sankuai Technology as share capital. The terms of
+the New Loan Agreements are identical to the terms of the original Loan Agreements save for the lender, the loan
+amount and the use of such loans.
+Upon completion of the change of the corresponding WFOE and the capital injection under the New Loan
+Agreements, the relevant parties, including the Tianjin Hanbo, Beijing Sankuai Technology and its Registered
+Shareholders, entered into a new set of Contractual Arrangements, including the powers of attorney, the exclusive
+business cooperation agreement, the exclusive option agreement, the equity pledge agreement, the New Loan
+Agreements, the confirmations from such Registered Shareholders and the spouse undertakings on November
+30, 2020 (collectively known as the “Beijing Sankuai Technology VIE Agreements”) to terminate and replace
+the original Contractual Arrangements relating to Beijing Sankuai Technology. The terms of the Beijing Sankuai
+Technology VIE Agreements are identical to the terms of the original Contractual Arrangements of Beijing Sankuai
+Technology.
+Change of the corresponding WFOE and Capital Injection to Beijing Sankuai Technology
+Mr. Wang Huiwen (X)
+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. Mu Rongjun ()
+CORPORATE INFORMATION
+Executive Directors
+JOINT COMPANY SECRETARIES
+BOARD OF DIRECTORS
+2 Meituan 2021 Annual Report
+H
+Glossary
+300
+Mr. Wang Xing (E) (Chairman of the Board)
+Dr. Shum Heung Yeung Harry (Á¥)
+22/F, Prince's Building
+Central
+Ms. Xu Sijia ()
+Grand Cayman, KY1-1104
+PO Box 309, Ugland House
+REMUNERATION COMMITTEE
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Leng Xuesong (A)
+Mr. Orr Gordon Robert Halyburton (Chairman)
+REGISTERED OFFICE
+AUDIT COMMITTEE
+Hong Kong
+Certified Public Accountants and
+Registered PIE Auditor
+PricewaterhouseCoopers
+AUDITOR
+Mr. Wang Huiwen (X)
+Mr. Wang Xing (1)
+AUTHORIZED REPRESENTATIVES
+Ms. Lau Yee Wa ()
+Definitions
+293
+18 Harbour Road, Wanchai
+Hong Kong
+Notes to the Consolidated Financial Statements
+Directors and Senior Management
+Management Discussion and Analysis
+11
+6
+2
+Chairman's Statement
+Financial Summary and Operation Highlights
+17
+Corporate Information
+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
+3,897,016 (10,205,238)
+CONTENTS
+177
+41
+47
+175
+Consolidated Statement of Cash Flows
+173
+Consolidated Statement of Changes in Equity
+171
+Consolidated Statement of Financial Position
+170
+Report of Directors
+Consolidated Statement of Comprehensive Income
+169
+Independent Auditor's Report
+163
+116
+Environmental, Social and Governance Report
+Corporate Governance Report
+89
+Cayman Islands
+Consolidated Income Statement
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+NOMINATION COMMITTEE
+COMPLIANCE ADVISOR
+Level 54, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+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)
+Computershare Hong Kong Investor Services Limited
+Shops 1712-1716, 17th Floor
+Hopewell Centre
+183 Queen's Road East
+Wanchai
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+Cricket Square
+Maples Fund Services (Cayman) Limited
+PO Box 1093, Boundary Hall
+Grand Cayman KY1-1102
+Cayman Islands
+PRINCIPAL BANKER
+China Merchants Bank, Beijing Branch,
+LEGAL ADVISORS
+Shouti Sub-branch
+Meituan 2021 Annual Report 3
+HONG KONG SHARE REGISTRAR
+26th Floor, Central Plaza
+Maples and Calder (Hong Kong) LLP
+As to Cayman Islands law:
+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):
+CORPORATE INFORMATION
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Mu Rongjun ()
+1/F, Tengda Building
+Haidian District
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+6 Meituan 2021 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+2017
+Year ended December 31,
+2018
+2019
+2020
+2021
+(RMB in thousands)
+Revenues
+Gross profit
+Profit/(loss) before income tax
+Profit/(loss) for the year
+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
+114,794,510 179,127,997
+34,050,142 42,474,128
+Beijing 100102
+China
+Chaoyang District
+No. 4 Wang Jing East Road
+Block B&C, Hengjiweiye Building
+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;
+No. 168 Xizhimenwai Street
+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;
+(ii)
+Beijing
+China
+STOCK CODE
+Guotai Junan Capital Limited
+27/F, Low Block
+181 Queen's Road Central
+Hong Kong
+3690
+COMPANY'S WEBSITE
+about.meituan.com
+4 Meituan 2021 Annual Report
+CORPORATE INFORMATION
+WEIGHTED VOTING RIGHTS
+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.
+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.
+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.
+Meituan 2021 Annual Report 5
+CORPORATE INFORMATION
+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:
+(i)
+(iii)
+(433,211)
+Grand Millennium Plaza
+4,707,612 (23,536,198)
+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
+14,558 7,430,860
+12,664,562
+Total
+items¹
+(RMB in thousands)
+and others
+travel
+hotel &
+In-store,
+Food delivery services
+Total revenues
+21,537,985
+7,135,360 9,244,159
+Food delivery services
+Revenues:
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+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.
+1
+(554,152) (2,852,696)
+882,352 2,821,935 (6,002,831)
+(554,152) (40,770,200)
+(16,252,764)
+(20,655,633) (4,313,425) (15,246,990)
+(16,252,764)
+Operating (loss)/profit
+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
+-
+initiatives Unallocated
+Commission
+New
+Food
+Online marketing services
+Total revenues
+Meituan 2021 Annual Report 9
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+Operating (loss)/profit
+Year Ended December 31, 2020
+Food delivery services
+Commission
+Food
+delivery
+New
+initiatives
+Unallocated
+travel
+and others
+items¹
+Total
+(RMB in thousands)
+In-store,
+hotel &
+Revenues:
+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
+Unaudited Three Months Ended December 31, 2020
+(5,005,856)
+29,085,170
+2,125,931
+63,968
+40,744,531
+42,934,430
+Total revenues
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+Operating (loss)/profit
+96,311,778 32,530,325 50,285,894
+(90,137,137) (18,437,212) (88,679,789)
+(68,183,267)
+6,174,641 14,093,113 (38,393,895)
+179,127,997
+-
+(5,001,058) (202,255,196)
+(68,183,267)
+(5,001,058) (23,127,199)
+delivery
+39,116,411
+In-store,
+hotel &
+(21.8)
+4,437,875 (23,566,477)
+70.0
+38.1
+96.7
+Operating (loss)/profit
+12.6
+75.5
+ΝΑ
+NA
+12.6
+Including: Food delivery related costs
+33.7
+(21.8)
+63.2
+11.9
+ΝΑ
+Food
+delivery
+Year Ended December 31, 2021
+In-store,
+hotel &
+New
+initiatives
+-
+982,816
+54,203,640
+52,904,757
+-
+28,547,274 15,798,936 8,558,547
+11,434,933 16,667,421
+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
+travel
+Unallocated
+18.1
+Food
+Cost of revenues, operating expenses
+and unallocated items
+NA
+32.0
+34.2
+13.5
+28.8
+NA
+NA
+12.6
+31.0
+(Percentages %)
+items¹
+and others
+travel
+delivery
+Unallocated
+New
+initiatives
+Year-over-year change
+Total
+304.4
+\ \/ //
+ΝΑ
+58.7
+22.2
+21.3
+Total revenues
+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
+30.6
+39,116,411
+Other services and sales
+(including interest revenue)
+5,428,154
+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)
+Total
+items¹
+and others
+travel
+Unallocated
+New
+initiatives
+12,025,596
+Total revenues
+26,126,641
+8,722,427 14,674,065
+72.3
+253.7
+ΝΑ
+NA
+18,502,868 10,193,162
+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.
+1,735,577
+(18,306,347)
+-
+In-store,
+hotel &
+(433,211) (54,528,989)
+49,523,133
+12,925,660
+8,182,629
+14,160,298
+14,254,546
+-
+Revenues:
+Operating (loss)/profit
+Cost of revenues, operating expenses
+and unallocated items
+Including: Food delivery related costs
+(24,391,064) (4,825,411) (24,879,303)
+(18,306,347)
+117.9
+Food
+delivery
+FINANCIAL INFORMATION BY SEGMENT
+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)
+(15,487,131) (123,281,091) 2,921,721
+1,728,980 (25,036,620)
+4,708,313 (23,538,379)
+2,238,769
+2,919,043
+(18,916,617) (115,477,171)
+(15,558,395) (123,296,397)
+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
+Current liabilities
+2017
+2018
+As of December 31,
+2019
+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
+Unaudited Three Months Ended December 31, 2021
+(40,501,382) 86,509,772 92,054,394
+97,693,027
+(58,752)
+92,112,445
+(58,051)
+86,504,334
+5,438
+(40,559,116)
+57,734
+83,634,163 120,661,511 132,012,915 166,574,802 240,653,269
+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
+(RMB in thousands)
+2021
+2020
+125,613,442
+(56,680)
+Operating (loss)/profit
+1
+ΝΑ
+54.3
+55.0
+57.7
+4,170,796 (110,464,408)
+(49,291,318)
+(63,431,950) (13,071,465) (38,131,789)
+(49,291,318)
+38.3
+114,794,510
+66,265,319 21,252,398 27,276,793
+22,645,870
+40,899 21,524,042
+1,080,929
+18,908,045
+324,597
+11,018,337
+7,565,111
+38.6
+34,124,184
+ΝΑ
+NA
+In-store,
+2,833,369
+New
+Food
+delivery
+hotel &
+travel
+initiatives Unallocated
+and others
+items¹
+Total
+(Percentages %)
+Revenues:
+Food delivery services
+Commission
+Online marketing services
+38.6
+ΝΑ
+Year-over-year change
+8,180,933 (10,854,996) 4,170,796 4,330,102
+89.3
+ΝΑ
+84.4
+53.1
+45.3
+Total revenues
+89.6
+ΝΑ
+and unallocated items
+Including: Food delivery related costs
+56.4
+96.7
+(including interest revenue)
+Other services and sales
+53.8
+ΝΑ
+202.8
+51.3
+51.2
+55.0
+42.1
+ΝΑ
+41.0
+132.6
+ΝΑ
+83.1
+38.3
+ΝΑ
+NA
+56.0
+Cost of revenues, operating expenses
+Shum Heung Yeung Harry
+Composition
+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.
+Chairman and Chief Executive Officer
+CORPORATE GOVERNANCE REPORT
+92 Meituan 2021 Annual Report
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+V
+V
+Note: (1) Attended training/seminar/conference arranged by the Company or other external parties or read relevant materials.
+Leng Xuesong
+Wang Xing
+Wang Huiwen
+Non-executive Directors
+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, 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.
+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.
+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.
+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.
+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
+Mu Rongjun
+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.
+A list of Directors and their respective biographies are set out in the section headed "Directors and Senior
+Management" of this annual report.
+ངངང
+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.
+(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;
+Meituan 2021 Annual Report 97
+CORPORATE GOVERNANCE REPORT
+(c)
+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
+(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 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) making recommendations to the Board on the remuneration packages and the Company's policy and
+structure for remuneration for all Directors and senior management;
+During the Reporting Period, the Remuneration Committee met once. Individual attendance of each Remuneration
+Committee member is set out on page 94.
+(a) review compensation and benefits framework and structure; and
+(b)
+review of director and management compensation scheme;
+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.
+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;
+The Remuneration Committee's major work during the Reporting Period includes:
+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.
+CORPORATE GOVERNANCE REPORT
+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.
+The Audit Committee's major work during the Reporting Period includes:
+(a)
+reviewing the 2021 interim report;
+(b)
+reviewing the Company's quarterly result announcements for the first quarter ended March 31, 2021 and the
+third quarter ended September 30, 2021, respectively;
+(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;
+(e)
+reviewing the Company's continuing connected transactions;
+(f)
+reviewing the terms of engagement, independence and remuneration of the external auditor; and
+(g)
+reviewing the Company's ESG work.
+(b) developing the criteria for identifying candidates for nomination and appointment of Directors;
+96 Meituan 2021 Annual Report
+(c) assessing the independence of independent non-executive Directors;
+(e)
+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)
+developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+(b) reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+(၁)
+Corporate Governance Committee
+reviewing and monitoring the Company's policies and practices on compliance with legal and regulatory
+requirements;
+(e)
+(f)
+(g)
+reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+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;
+Lau Chi Ping Martin
+(d) developing, reviewing and monitoring the code of conduct and compliance manual applicable to employees
+and Directors;
+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
+making recommendations to the Board on the appointment or re-appointment of Directors and succession
+planning for Directors; and
+developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+98 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+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 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.
+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.
+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.
+During the Reporting Period, the Nomination Committee met once. Individual attendance of each Nomination
+Committee member is set out on page 94.
+The Nomination Committee's major work during the Reporting Period includes:
+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.
+(a) reviewing and monitoring the implementation of the board diversity policy;
+(b) reviewing and assessing the structure, size, composition and diversity of the Board;
+(c)
+reviewing the re-election of Directors and its schedule; and
+(d) reviewing and assessing the independence of the independent non-executive Directors.
+(d)
+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.
+Neil Nanpeng Shen
+monitoring the integrity of the Company's financial statements, annual reports, accounts and half-yearly
+reports; and
+Appointments and Re-election of Directors
+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.
+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.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 93
+Wang Xing
+7/7
+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.
+Mu Rongjun
+1/1
+Wang Huiwen
+7/7
+1/1
+1/1
+1/1
+1/1
+7/7
+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.
+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.
+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).
+General
+reviewing financial information and oversight of the Company's financial reporting, financial controls, risk
+management and internal control systems.
+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.
+94 Meituan 2021 Annual Report
+Executive Directors
+Non-executive Directors
+Lau Chi Ping Martin
+CORPORATE GOVERNANCE REPORT
+7/7
+2/2
+1/1
+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.
+During the Reporting Period, the Chairman met once with the independent non-executive Directors without the
+presence of executive Directors.
+Meituan 2021 Annual Report 95
+CORPORATE GOVERNANCE REPORT
+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.
+1/1
+BOARD COMMITTEES
+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) reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the
+audit process in accordance with applicable standards;
+(c)
+developing and implementing policies on engaging an external auditor to supply non-audit services;
+Neil Nanpeng Shen
+(e)
+Audit Committee
+1/1
+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.
+7/7
+7/7
+0/1
+4/4
+0/1
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+7/7
+4/4
+2/2
+(d)
+Leng Xuesong
+7/7
+4/4
+1/1
+1/1
+Shum Heung Yeung Harry
+1/1
+2/2
+1/1
+Information Security Risk
+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 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 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.
+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.
+Market Competition and Innovation Risk
+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.
+Meituan 2021 Annual Report 107
+CORPORATE GOVERNANCE REPORT
+time.
+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.
+Compliance Risk
+CORPORATE GOVERNANCE REPORT
+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
+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.
+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.
+Major Risks
+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.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 105
+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.
+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 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.
+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.
+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.
+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 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.
+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 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.
+Crisis Management and Reputation Risk
+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.
+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.
+Risk Management Process
+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
+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.
+CORPORATE GOVERNANCE REPORT
+(e)
+(f)
+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;
+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;
+(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;
+(h)
+(i)
+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.
+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.
+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.
+102 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+RISK MANAGEMENT AND INTERNAL CONTROL
+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;
+100 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+(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;
+(i)
+(i)
+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;
+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;
+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.
+(k)
+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;
+(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
+(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.
+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.
+The Corporate Governance Committee's major work during the Reporting Period includes:
+(a)
+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);
+(1)
+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 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.
+Organisational Structure for Risk Management
+Internal Audit and Fraud
+Investigation Team
+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
+First Line
+Second Line
+Third Line
+Organisation Governing Body - Oversight
+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.
+Management
+First Line-Operation and Management
+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.
+104 Meituan 2021 Annual Report
+CORPORATE GOVERNANCE REPORT
+Second Line - Risk Management
+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.
+Third Line - Internal audit and fraud investigation - Independent Assurance
+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
+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
+Assesses and determines the nature
+and level of the risks that are acceptable
+to the Company in achieving its
+strategic objectives
+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.
+Ensures that the Company has
+established and maintained effective
+risk management and internal control
+systems
+on the design, implementation and
+supervision of the risk management and
+internal control systems on an ongoing basis
+Audit Committee
+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
+Management
+Takes actions (including managing risk) to achieve organisational objectives
+Internal Audit and
+Oversight
+Independent assurance services
+Monitors the management of the Company
+making a recommendation to the Board as to the appointment or removal of the compliance adviser;
+106 Meituan 2021 Annual Report
+Meituan 2021 Annual Report 117
+Promote environmental protection in the industry
+Promote the harmonious coexistence of corporate development and environmental sustainability
+Advocate green consumption
+•
+Environment:
+1.
+Focusing on the Company's mission and values, we have enhanced the ESG concepts integration, and formulated
+our ESG strategies from the following aspects:
+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".
+ESG CONCEPT AND MANAGEMENT
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+The Company conducted a materiality assessment of ESG issues stakeholders concerned. The Board participated
+in the evaluation, prioritization, and management of important ESG issues.
+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.
+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.
+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.
+REPORT OVERVIEW
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+116 Meituan 2021 Annual Report
+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.
+-
+-
+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.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 115
+2. Customers:
+Be customer-oriented
+Pursue excellence, continuously improve, and achieve a good reputation among customers
+Create greater value for people's lives
+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
+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.
+ESG Management
+Encourage the public to jointly take part in public services
+•
+Accomplish as new socially-responsible enterprises
+•
+Create greater social value
+•
+Assist in providing solutions to more social issues
+.
+Community:
+5.
+DIVERSITY
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Promote talent development
+•
+Protect employees' rights and interests
+•
+. Promote integrity
+Operation:
+Promote sustainable development in the industry
+•
+Guarantee interests of different partners
+Maintain win-win collabouration with our eco-system partners
+•
+4.
+Partners:
+3.
+118 Meituan 2021 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
+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.
+JOINT COMPANY SECRETARIES
+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.
+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.
+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.
+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.
+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.
+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 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
+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.
+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.
+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 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.
+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.
+The Company has arranged appropriate directors and officers' liability insurance in respect of legal action against
+the Directors and officers.
+No changes to the Memorandum and Articles of Association of the Company during the Reporting Period.
+CHANGES IN CONSTITUTIONAL DOCUMENTS
+(1) The non-audit services conducted by the Auditor mainly include certain consulting services and tax related services.
+55,932
+8,053
+47,879
+Amount
+(RMB'000)
+Note:
+Total
+Non-audit services (1)
+Audit and audit-related services
+Type of Services
+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:
+AUDITOR'S REMUNERATION
+DIRECTORS AND OFFICERS LIABILITY INSURANCE
+CORPORATE GOVERNANCE REPORT
+The statement of the Auditors about their reporting responsibilities on the financial statements is set out in the
+section headed "Independent Auditor's Report".
+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.
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+>5,000,000
+5
+4
+2
+Number of individuals
+1 - 5,000,000
+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, and for the year ended
+December 31, 2021 are set out below:
+Please refer to Note 8 to the consolidated financial statements for details of remuneration of Directors for the year
+ended December 31, 2021.
+REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
+114 Meituan 2021 Annual Report
+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.
+Management
+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.
+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
+Policy consultation, incident reporting,
+visitor reception, information disclosure,
+and participation in governmental meetings
+Main communication channels
+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
+Convening of Extraordinary General Meeting and Putting Forward Proposals
+Media and
+non-governmental
+organisations
+Delivery couriers
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Stakeholder Engagement
+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.
+In 2021, the main stakeholders, their main concerns, and the main communication channels are as follows:
+Meituan 2021 Annual Report 119
+Government and
+regulatory bodies
+Shareholders and
+investors
+Employees
+Users
+Platform merchants
+Main stakeholders
+Suppliers
+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
+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.
+122 Meituan 2021 Annual Report
+Environment Management of Data Centre
+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.
+Meituan 2021 Annual Report 123
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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.
+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.
+Practicing Green Operations
+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.
+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.
+124 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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
+issues
+Meituan 2021 Annual Report 121
+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
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+120 Meituan 2021 Annual Report
+Supply Chain Management
+Social issues
+Employee Training and Development
+Energy Conservation
+Social Welfare Participation
+Diversity and Equal
+Opportunities
+Promoting Environmental Protection in the Industry
+Water Conservation
+Climate Change Intellectual Property Protection
+Response
+Materiality to Meituan's business
+ENVIRONMENT
+☐ Driving Environmental Protection ●
+Practice in the Industry
+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.
+Meituan 2021 Annual Report 125
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+Meituan 2021 Annual Report 129
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Environmental Targets
+Legal Employment
+Platform Information
+Management
+We set environmental targets based on our previous environmental performance considering characteristics of our
+own operations. The targets we set include:
+Starting from 2022, all the headquarter offices will sort wastes by categories.
+Starting from 2022, electronic wastes generated in all headquarter offices will be 100% treated for harmless
+disposal.
+Starting from 2022, all newly renovated or replaced lighting system in our headquarter offices will stop using
+fluorescent tubes.
+128 Meituan 2021 Annual Report
+•
+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.
+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.
+Environmental Performance Indicators
+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 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
+"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;
+"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;
+"Warehouses and service stations" refers to warehouses and stations used for Meituan Select business, Kuailv
+Jinhuo, Meituan Grocery, and Meituan Bikes and Electric Mopeds.
+2
+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.
+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.
+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.
+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.
+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.
+Green packaging
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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.
+Low-carbon eco-system
+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.
+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.
+Lush Mountain science & technology
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Lush Mountain public welfare
+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.
+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.
+Meituan Bikes and Meituan Electric Mopeds' Full-Cycle Green Concept
+-
+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.
+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.
+Meituan 2021 Annual Report 127
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Climate Change Response
+Measures Taken by Meituan Food Delivery to Promote Environmental Protection in the Industry
+126 Meituan 2021 Annual Report
+Materiality to stakeholders
+Above age 50
+2021
+Total greenhouse gas (GHG) emissions (tonnes)
+Warehouses and service stations
+Nonhazardous waste per employee (tonnes per employee)
+Total nonhazardous waste (tonnes)
+Hazardous waste per employee (tonnes per employee)
+Total GHG emissions per square metre floor area of the office (tonnes per square metre)
+Total hazardous waste (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+Total greenhouse gas (GHG) emissions (tonnes)
+Regional sales offices
+Nonhazardous waste per employee (tonnes per employee)
+Total nonhazardous waste (tonnes)
+Hazardous waste per employee (tonnes per employee)
+Total GHG emissions per square metre floor area of the office (tonnes per square metre)
+Total hazardous waste (tonnes)
+Total GHG emissions per employee in office (tonnes per employee)
+Total greenhouse gas (GHG) emissions (tonnes)
+HQ offices
+Employee Training
+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.
+The number of working days lost due to work injuries in 2021 was 7,958 days.
+0
+20,097.91
+0
+0.43
+0.15
+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.
+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.
+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.
+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.
+6
+5
+4
+3
+102,155.43
+2021
+0.08
+3,302.94
+0.00
+2.59
+0.02
+0.15
+5,721.03
+2021
+0.09
+4,120.94
+0.00
+0.05
+Meituan 2021 Annual Report 131
+0
+0
+Number of work-related fatalities
+Indicators
+Health and Safety
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+138 Meituan 2021 Annual Report
+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.
+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).
+0.00%
+16.67%
+Other countries and regions
+Hong Kong, Macao and Taiwan
+24.03%
+20.00%
+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
+Rate of work-related fatality (%)
+0
+2021
+2019
+Emissions 3, 4, 5, 6
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+130 Meituan 2021 Annual Report
+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.
+136 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Employee Training and Development
+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.
+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
+0
+2020
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Energy and Resources Consumption7, 8, 9
+HQ offices
+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.
+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.
+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
+Non-management
+We pay attention to environmental and social risks in supplier onboarding and cooperation.
+100.0%
+by management level
+Work-Life Balance
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+134 Meituan 2021 Annual Report
+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.
+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 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.
+Promotion and Development
+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.
+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.
+Compensation and Benefits
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 133
+=
+Indicators
+2021
+Percentage of employees trained by gender
+Male
+99.9%
+Female
+99.8%
+Percentage of employees trained
+Management
+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.
+53,644.29
+Running water consumption (tonnes)
+0.04
+Total energy consumption per square metre floor area (MWh per square metre)
+0.26
+Total energy consumption per employee (MWh per employee)
+9,751.47
+Total energy consumption (MWh)
+2021
+Regional sales offices
+7.17
+Running water consumption per employee (tonnes/per employee)
+331,942.00
+Running water consumption (tonnes)
+0.08
+Total energy consumption per square metre floor area (MWh per square metre)
+0.64
+Total energy consumption per employee (MWh per employee)
+30,047.24
+2021
+Total energy consumption (MWh)
+Running water consumption per employee (tonnes per employee)
+3.54
+Warehouses and service stations
+Total energy consumption (MWh)
+Green Procurement
+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.
+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.
+Labour Standards
+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.
+During the interview process, we check candidates' working experience and skills, which enables us to employ
+qualified candidates who meet job requirements.
+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.
+Recruitment and Separation
+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.
+Employment and Labour Standards
+100,525
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+132 Meituan 2021 Annual Report
+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.
+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.
+9
+8
+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.
+172,000.15
+1,003,522.59
+2021
+Running water consumption (tonnes)
+WORKPLACE
+The Mainland of China
+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.
+Above age 50
+521
+3
+8
+The Mainland of China
+Hong Kong, Macao and Taiwan
+Other countries and regions
+Management
+Number of employees by employment type
+Number of employees by management level
+Number of employees by geographical region
+Non-management
+17
+60,440
+37,543
+62,982
+Age 31 to 50
+Age 30 and under
+Female
+Male
+40,068
+100,004
+100,514
+100,033
+Employee turnover rate by geographical region
+18.92%
+28.04%
+22.29%
+Full-time
+Age 31 to 50
+Age 30 and under
+Female
+25.07%
+24.03%
+Employee turnover rate by age group
+Employee turnover rate by gender
+Total turnover rate
+492
+Contractors and other types
+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.
+Male
+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.
+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.
+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
+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.
+Ride Safety
+We continually improve the safety management mechanism to enhance users' safety.
+Meituan 2021 Annual Report 145
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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
+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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+144 Meituan 2021 Annual Report
+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.
+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.
+Food Safety
+Safety Guarantees
+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.
+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.
+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 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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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.
+Intellectual Property Rights
+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.
+Platform Responsibility
+By soliciting feedback through questionnaires, we identify and analyse reasons for consumer dissatisfaction and
+areas that require improvements.
+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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 149
+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.
+Customer Service
+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.
+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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+148 Meituan 2021 Annual Report
+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.
+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.
+Merchants Management
+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.
+Meituan 2021 Annual Report 147
+PRODUCT RESPONSIBILITY
+8
+Meituan 2021 Annual Report 143
+140 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Number of Suppliers
+Number of suppliers by region
+The Mainland of China
+Hong Kong, Macau, and Taiwan
+Other Countries and Regions
+2021
+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
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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.
+142 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.
+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
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+-
+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.
+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.
+Meituan 2021 Annual Report 141
+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.
+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
+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.
+152 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE 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
+Information Content.
+Compliance of POI
+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.
+Anti-fraud
+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.
+154 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+ANTI-CORRUPTION
+Anti-fraud System and System Development
+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.
+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.
+Disaster Relief and Pandemic Prevention
+Meituan 2021 Annual Report 155
+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.
+COMMUNITY INVESTMENT
+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.
+Public Welfare Platform and Projects
+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.
+158 Meituan 2021 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Public Welfare Cooperation
+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.
+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.
+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.
+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.
+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.
+Encouraging Employee Participation
+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.
+•
+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.
+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;
+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.
+Meituan 2021 Annual Report 159
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+Encouraging User Participate
+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, 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.
+Anti-Money Laundering and Counter-Terrorism Financing
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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.
+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.
+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.
+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.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2021 Annual Report 151
+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.
+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.
+Data Security and User Privacy
+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".
+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.
+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 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.
+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.
+Development of Integrity Culture
+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.
+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 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.
+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 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.
+Violation Reporting and Inspection Mechanism
+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.
+156 Meituan 2021 Annual Report
+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.
+150 Meituan 2021 Annual Report
+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.
+(8,612,626)
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Including: Interest revenue
+Cost of revenues
+Gross profit
+Selling and marketing expenses
+5,6
+179,127,997
+1,000,004
+114,794,510
+884,897
+7
+(136,653,869)
+Revenues
+(80,744,368)
+34,050,142
+7
+(40,683,166) (20,882,685)
+Research and development expenses
+7
+(16,675,595)
+(10,892,514)
+General and administrative expenses
+7
+(5,593,895)
+42,474,128
+Net provisions for impairment losses on financial and contract assets
+2020
+RMB'000
+Note
+The Audit Committee is 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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+168 Meituan 2021 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+160 Meituan 2021 Annual Report
+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.
+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.
+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.
+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.
+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
+Meituan 2021 Annual Report 169
+CONSOLIDATED INCOME STATEMENT
+Year ended December 31,
+2021
+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.
+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.
+(259,953)
+Fair value changes of other financial investments at
+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
+to the equity holders of the Company
+(23,566,477)
+30,279
+Basic (loss)/earnings per share (RMB)
+(23,538,379)
+2,181
+4,708,313
+(701)
+(23,536,198)
+4,707,612
+14
+(3.90)
+0.81
+(3.90)
+0.78
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+Diluted (loss)/earnings per share (RMB)
+(467,690)
+13
+(Loss)/profit before income tax
+fair value through profit or loss
+19
+815,747
+4,955,909
+Other (losses)/gains, net
+9
+(185,734)
+3,160,835
+Operating (loss)/profit
+Finance income
+Income tax credits
+Finance costs
+5002
+(23,127,199)
+4,330,102
+10
+10
+12
+546,037
+(1,130,935)
+145,620
+213,684
+(370,016)
+264,105
+Share of gains of investments accounted for using the equity method
+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.
+RMB'000
+RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE CONSOLIDATED
+Meituan 2021 Annual Report 163
+INDEPENDENT AUDITOR'S REPORT
+The consolidated financial statements of Meituan (the "Company") and its subsidiaries (the "Group"), which are set
+out on pages 169 to 292, comprise:
+•
+the consolidated statement of financial position as at December 31, 2021;
+•
+•
+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;
+What we have audited
+the consolidated statement of cash flows for the year then ended; and
+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.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Independence
+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
+Code.
+164 Meituan 2021 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+the notes to the consolidated financial statements, which include significant accounting policies and other
+explanatory information.
+FINANCIAL STATEMENTS
+(incorporated in the Cayman Islands with limited liability)
+To the Shareholders of Meituan
+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,
+Rural Revitalisation
+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.
+Industry Upgrade
+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.
+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
+Supporting the Life Service Industry Practitioners
+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.
+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 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.
+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.
+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.
+OPINION
+•
+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 evaluated and tested the key controls over the
+impairment of goodwill.
+We assessed the appropriateness of the valuation models
+and significant assumptions with the involvement of our
+internal valuation experts.
+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 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.
+166 Meituan 2021 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+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.
+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 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 also considered whether the judgements made in
+selecting the models, significant assumptions and data
+would give rise to indicators of possible management
+bias.
+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.
+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.
+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.
+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.
+Meituan 2021 Annual Report 167
+INDEPENDENT AUDITOR'S REPORT
+Key audit matters identified in our audit are summarised as follows:
+We assessed the adequacy of the disclosures related
+to goodwill impairment in the context of the applicable
+financial reporting framework.
+Our procedures in relation to the impairment assessments
+of goodwill included:
+How our audit addressed the Key Audit Matter
+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.
+How our audit addressed the Key Audit Matter
+Revenue recognition
+Impairment assessments of goodwill
+Key Audit Matter
+Revenue recognition
+Refer to notes 2.27, 4.5, 4.6 and 6 to the consolidated
+financial statements.
+How our audit addressed the Key Audit Matter
+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.
+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.
+We understood and tested management's process and
+controls in respect of revenue recognition and calculation
+derived from different services.
+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:
+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.
+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.
+Meituan 2021 Annual Report 165
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+Impairment assessments of goodwill
+Refer to Notes 2.9, 4.4 and 16 to the consolidated
+financial statements.
+As at December 31, 2021, the net carrying amount of
+goodwill amounted to RMB27.7 billion.
+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.
+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.
+Total comprehensive (loss)/income for the year
+(2,978,632)
+(1,500,422)
+Other comprehensive loss for the year, net of tax
+(43,633)
+(86,821)
+20,27
+(142,357)
+(25,036,620)
+84,387
+1,728,980
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Equity holders of the Company
+(25,038,801)
+1,729,681
+Non-controlling interests
+2,181
+(701)
+(25,036,620)
+1,728,980
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+Meituan 2021 Annual Report 171
+12,27
+Total comprehensive (loss)/income for the year attributable to:
+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
+170 Meituan 2021 Annual Report
+(1,540,203)
+As of December 31,
+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
+(60)
+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
+27
+27
+163,604
+27
+(2,920,302)
+2021
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+RMB'000
+CONSOLIDATED STATEMENT OF CASH FLOWS
+176 Meituan 2021 Annual Report
+(21,232,004)
+(58,491,834)
+(19,181)
+(42,000)
+Year ended December 31,
+37,081
+18,912
+(913,000)
+(1,205,221)
+Net cash flows used in investing activities
+Prepayments for investments
+Loans repayments from investees and others
+Loans payments to investees and others
+1,234,179
+Note
+2021
+RMB'000
+2020
+RMB'000
+Payments of lease liabilities
+Net proceeds from issuance of ordinary shares
+Proceeds from exercise of share options
+Finance costs paid
+Net proceeds from issuance of notes payable
+(830,031)
+Repayments of ABS
+(5,448,702)
+(9,578,283)
+Repayments of borrowings, excluding ABS
+10,900,292
+25,346,479
+Proceeds from borrowings, excluding asset-backed securities ("ABS")
+36(c)
+Cash flows from financing activities
+1,629,777
+996,319
+24,325
+(867,327)
+Dividends received
+Distributions from a non
+wholly-owned subsidiary
+Gains received from treasury investments and other
+(109)
+(109)
+Total transaction with owners in
+their capacity as owners
+16
+48,066,036
+4,736,891
+(2,649) 52,800,294
+(109)
+52,800,185
+As of December 31, 2021
+411 311,221,237
+(2,866,675) (182,741,531) 125,613,442
+(2,649)
+Increase in financial liabilities
+2,649
+535,289
+financial instruments
+- 45,285,900
+Issuance of convertible bonds
+(equity component)
+27,32
+- 1,513,938
+1,513,938
+- 1,513,938
+Tax benefit from share-based
+payments
+Appropriations to general reserves
+22
+27
+--- 535,289
+535,289
+27
+(56,680) 125,556,762
+19,288,691
+(620,127)
+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.
+2.1.2 New standards and amendments not yet adopted by the Group
+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.
+2.1.1 New amendments adopted by the Group (Continued)
+Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1
+Amendments to IAS 28 and IFRS 10
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+178 Meituan 2021 Annual Report
+Interest Rate Benchmark Reform - phase 2
+Amendments to IFRS 9, IAS 39,
+IFRS 7, IFRS 4 and IFRS 16
+The Group has applied the following amendments for the first time commencing January 1, 2021:
+2.1.1 New amendments adopted by the Group
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+IAS 16 (Amendments)
+Sale or contribution of assets
+between an investor and its
+associate or joint venture
+Property, plant and equipment:
+Effective for
+January 1, 2023
+Classification of liabilities as current
+a contract
+January 1, 2022
+Onerous contract - cost of fulfilling
+IAS 1 (Amendments)
+IAS 37 (Amendments)
+January 1, 2022
+proceeds before intended use
+Reference to the conceptual
+framework
+Amendments to IFRS 3
+January 1, 2022
+To be
+determined
+or after
+beginning on
+financial year
+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.
+Basis of preparation and changes in accounting policies and disclosures
+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.
+17,418,081
+78,598,331
+Cash and cash equivalents at the end of the year
+Cash and cash equivalents at the beginning of the year
+Exchange losses on cash and cash equivalents
+Net increase in cash and cash equivalents
+Net cash flows generated from financing activities
+114,600
+791,400
+(936,380)
+(2,191,299)
+45,286,099
+499,088
+275,371
+Note
+(218,611)
+16,095,040
+13,337,825
+4,661,090
+13,396,185
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
+2
+The consolidated financial statements are presented in Renminbi ("RMB"), unless otherwise stated.
+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.
+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.
+For the year ended December 31, 2021
+GENERAL INFORMATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 177
+1
+17,093,559
+32,513,428
+25(a)
+(963,716)
+(675,171)
+17,093,559
+35,887 - - 45,285,000
+45,285,887
+174 Meituan 2021 Annual Report
+Attributable to equity holders of the Company
+44,862
+27
+_ _ - 108,195 (108,195)
+their capacity as owners
+6 2,795,272
+1,142,147 (108,195) 3,829,230
+44,862
+3,829,230
+395 263,155,201
+(6,262,066) (159,200,503) 97,693,027
+(58,752)
+97,634,275
+Meituan 2021 Annual Report 175
+CONSOLIDATED STATEMENT OF CASH FLOWS
+As of December 31, 2020
+44,862
+---
+27
+Total transaction with owners in
+21,671
+21,671
+21,671
+3,272,930
+3.272,930
+3,272,930
+(1)
+26.27
+5 2,795,272
+1
+(2,283,840)
+511,438
+511,438
+22
+Year ended December 31,
+2021
+Note
+RMB'000
+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
+601,370
+(5,040,733)
+(7,326,690)
+106,219
+Appropriations to general reserves
+and intangible assets
+(15,824,436)
+2020
+RMB'000
+Cash flows from operating activities
+Cash (used in)/generated from operations
+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)
+8,475,013
+Cash flows from investing activities
+Purchases and prepayments of property, plant and equipment
+and intangible assets
+(9,010,455)
+Proceeds from disposals of property, plant and equipment
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+payments
+vesting
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2020
+RMB'000
+389
+(4,447,252) (163,800,621)
+92,112,445
+(58,051)
+92,054,394
+Comprehensive income
+Profit for the year
+260,359,929
+RMB'000
+RMB'000
+Note
+Shares held for
+Non-
+Share
+Share shares award
+Other
+Accumulated
+controlling
+capital
+premium
+scheme
+reserves
+losses
+Sub-total
+interests
+Total
+Other comprehensive income
+Share of other comprehensive loss of
+investments accounted for using
+the equity method
+4,708,313
+(60)
+(2,920,302)
+(2,978,632) 4,708,313
+1,729,681
+(701)
+1,728,980
+(60)
+(2,920,302)
+Share of other changes in net assets
+of associates
+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
+(60)
+(2,920,302)
+Tax benefit from share-based
+Total comprehensive income
+2
+4,708,313
+(701) 4,707,612
+12,27
+,27 ---
+(142,657)
+(142,657)
+(142,657)
+Fair value changes of other financial
+investments at fair value through
+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
+27 ---
+27
+13
+26
+placement and subscription
+LIABILITIES
+Non-current liabilities
+Deferred tax liabilities
+As of December 31,
+Note
+2021
+RMB'000
+172 Meituan 2021 Annual Report
+2020
+RMB'000
+895,691
+755,694
+Financial liabilities at fair value through profit or loss
+114,600
+Deferred revenues
+28
+18(b)
+97,634,275
+125,556,762
+(58,752)
+Total equity
+26
+411
+395
+26
+311,221,237
+263,155,201
+26
+27
+(2,866,675)
+(182,741,531)
+(6,262,066)
+(159,200,503)
+125,613,442
+97,693,027
+(56,680)
+166,700
+Borrowings
+31
+12,219,667
+11,967,026
+Payables to merchants
+10,950,920
+9,414,936
+Advances from transacting users
+5,171,054
+4,307,861
+Other payables and accruals
+30
+18,400,738
+12,779,429
+Borrowings
+31
+11,565,200
+6,395,002
+15,165,619
+Non-controlling interests
+29
+Trade payables
+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
+Current liabilities
+29
+Deferred revenues
+Equity attributable to equity holders of the Company
+Other reserves
+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
+612,967
+13,868,788
+Other financial investments at fair value through
+other comprehensive income
+Prepayments, deposits and other assets
+220
+2,022,705
+605,918
+13,180,943
+4,010,442
+21
+Long-term treasury investments
+2020
+RMB'000
+ASSETS
+Non-current assets
+Property, plant and equipment
+Intangible assets
+15
+22,814,246
+13,917,165
+16
+31,048,814
+31,676,381
+Deferred tax assets
+18(a)
+1,378,468
+448,670
+3,381,272
+7,569,817
+92,824,592
+78,268,647
+13,276,919
+12,775,667
+Cash and cash equivalents
+25(a)
+32,513,428
+17,093,559
+147,828,677
+88,306,155
+Total assets
+240,653,269
+166,574,802
+EQUITY
+Share capital
+Share premium
+Shares held for shares award scheme
+25(b)
+Accumulated losses
+Restricted cash
+84,282,016
+Current assets
+Inventories
+23
+681,693
+466,492
+Trade receivables
+24
+1,793,035
+1,030,948
+Prepayments, deposits and other assets
+22
+15,281,586
+12,940,125
+Short-term treasury investments
+21
+43,999,364
+28
+5,478,480
+5,052,830
+(86,821)
+(86,821)
+Fair value changes of debt
+instruments at fair value through
+other comprehensive income
+27
+(86,821)
+4,795
+- 4,795
+Net provisions for impairment losses
+on debt instruments at fair value
+through other comprehensive
+income
+Currency translation differences
+4,795
+20.27
+other comprehensive income
+investments at fair value through
+(6,262,066) (159,200,503) 97,693,027
+(58,752) 97,634,275
+Comprehensive income
+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
+12,27
+(41,797)
+(41,797)
+(41,797)
+Fair value changes of other financial
+22
+27
+163,604
+27
+1
+5,193,445
+5,193,445
+5,193,445
+(1)
+Exercise of share options and
+RSUS vesting
+26,27
+2
+2,780,149
+1
+(2,508,430)
+271,722
+271,722
+Issuance of shares upon
+26
+395 263,155,201
+Shares held for shares award scheme
+capacity as owners
+(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
+Transaction with owners in their
+Equity-settled share-based payments 27,33
+As of January 1, 2021
+RMB'000
+RMB'000
+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.
+2.2 Subsidiaries
+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.
+2.1.2 New standards and amendments not yet adopted by the Group (Continued)
+Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1
+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.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Meituan 2021 Annual Report 179
+2
+a single transaction
+and liabilities arising from
+January 1, 2023
+Deferred tax related to assets
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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 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:
+The notes on pages 177 to 292 are an integral part of these consolidated financial statements.
+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
+Net cash outflow arising from disposals or deemed
+January 1, 2023
+Amendments to IAS 12
+Amendments to IAS 8
+Other Accumulated
+controlling
+capital
+premium
+scheme
+Note
+RMB'000
+RMB'000
+RMB'000
+reserves
+RMB'000
+losses
+RMB'000
+Sub-total
+interests
+Total
+RMB'000
+Share shares award
+Share
+disposals of subsidiaries
+Wang Xing
+Amendments to IAS 1 and IFRS Practice Disclosure of Accounting Policies
+January 1, 2023
+Insurance contracts
+IFRS 17
+and non-current
+Definition of Accounting Estimates
+January 1, 2023
+Director
+Director
+Meituan 2021 Annual Report 173
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Attributable to equity holders of the Company
+Shares held for
+Non-
+Mu Rongjun
+Statement 2
+2.2 Subsidiaries (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+the carrying amount of the financial asset transferred; and
+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.
+2.7.1 Functional and presentation currency
+2.7 Foreign currency exchange and translation
+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.
+2.6 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.
+2.7.2 Transactions and balances
+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.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 183
+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.
+2.5 Separate financial statements
+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.
+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".
+184 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 185
+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.
+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".
+all resulting translation differences are recognised in other comprehensive income.
+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
+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.
+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
+•
+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:
+2.7.3 Group companies
+2.7 Foreign currency exchange and translation (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+•
+For the year ended December 31, 2021
+2.4 Joint arrangements
+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.
+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.
+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.
+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.
+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 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.
+fair value of any pre-existing equity interests in the subsidiary.
+Meituan 2021 Annual Report 181
+•
+equity interests issued by the Group
+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:
+2.2.1 Business combinations
+fair value of any asset or liability resulting from a contingent consideration arrangement, and
+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
+2.2 Subsidiaries (Continued)
+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.
+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.
+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.
+2.3 Associates (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+182 Meituan 2021 Annual Report
+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.
+2.3 Associates
+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.
+2.2.3 Changes in ownership interests in subsidiaries with 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.
+2.2.2 Changes in ownership interests in subsidiaries without change of control
+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.
+180 Meituan 2021 Annual Report
+2
+2.8 Property, plant and equipment
+The Group classifies its financial assets in the following measurement categories:
+2.13.1 Classification
+2.13 Financial assets
+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.
+2.12 Land use rights
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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.
+2.11 Impairment of non-financial assets
+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".
+The nominal value of the shares transferred by the Company to the Share Scheme Trust, is presented as
+"Shares held for shares award scheme".
+2.10 Shares held for shares award scheme
+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.
+188 Meituan 2021 Annual Report
+2.9.3 Research and development
+those to be measured subsequently at fair value (either through other comprehensive income
+or through profit or loss), and
+those to be measured at amortised cost.
+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 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.
+2.13.3 Derecognition
+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.
+2.13.2 Recognition
+2.13 Financial assets (Continued)
+•
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 189
+The Group reclassifies debt instruments when and only when its business model for managing
+those assets changes.
+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").
+The classification depends on the entity's business model for managing the financial assets and
+the contractual terms of the cash flows.
+2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.9 Intangible assets (Continued)
+2
+2-3 years
+3 years
+3-5 years
+Others
+.
+Leasehold improvements
+•
+the shorter of the lease term and
+the estimated useful lives
+2-5 years
+Bikes and electric mopeds
+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 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.
+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.
+•
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
+reporting period.
+186 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 187
+1-10 years
+2-25 years
+Other intangible assets arising from business combinations
+Software and others
+•
+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.
+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.
+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.
+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.
+2.9.1 Goodwill
+2.9 Intangible assets
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2.9.2 Other intangible assets
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+the sum of the consideration received from the transfer and any cumulative gains or losses
+that has been recognised directly in equity.
+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.
+9,244,159
+Three Months Ended December 31, 2021
+Unaudited
+Food delivery services
+Commission
+Revenues
+The following table sets forth our revenues by segment and type in absolute amount for the fourth quarter of 2021
+and 2020:
+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)
+In-store, New initiatives
+(5,339,151)
+Food delivery
+and others
+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
+3,223,472
+14,254,546
+14,160,298
+2,325,479
+4,066,205
+7,768,614
+14,254,546
+Total
+(RMB in thousands)
+hotel & travel
+Loss for the period
+571,017
+5,058
+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)
+(4,581,961)
+Research and development expenses
+(7,675,340)
+(11,239,904)
+9,455,709
+Selling and marketing expenses
+Gross profit
+726,955
+(661,883)
+Other gains, net
+594,023
+Income tax credits
+(2,815,309)
+(5,344,209)
+Loss before income tax
+117,398
+(163,855)
+for using the equity method
+Share of (losses)/gains of investments accounted
+12,925,660
+(149,735)
+Finance costs
+69,724
+157,174
+Finance income
+(2,852,696)
+(5,005,856)
+Operating loss
+1,283,147
+(331,672)
+Total
+Revenues
+26,126,641
+22.7%
+11,239,904
+Selling and marketing expenses
+31.9%
+75.1%
+28,461,795
+75.8%
+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
+7,675,340
+As a
+percentage
+20.2%
+Research and development expenses
+(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
+General and administrative expenses
+Net provisions for impairment losses
+41.0%
+8.6%
+3,249,199
+9.3%
+4,581,961
+46.4%
+December 31, 2020
+December 31, 2021
+Unaudited
+Three Months Ended
+Online marketing services
+12,664,562
+11,344,881
+1,733,424
+3,581,958
+6,029,499
+12,664,562
+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
+2,441,964
+3,538,844
+79,875
+6,060,683
+Costs and Expenses:
+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
+(28,461,795)
+37,917,504
+21,537,985
+Total
+7,847,378
+7,430,860
+14,558
+401,960
+(including interest revenue)
+Other services and sales
+7,135,360
+(37,540,530)
+11,982,603
+37,917,504
+188,620.8
+3,910.6
+115.3
+156,287.3
+3,331.3
+119.7
+20.7%
+17.4%
+(3.7%)
+Year Ended
+December 31,
+2021
+December 31,
+2020
+Year-over-year
+change
+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
+43.6%
+41.6%
+34.5%
+2
+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.
+(in millions, except for percentages)
+On behalf of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2021.
+Gross Transaction Volume of food delivery
+Number of food delivery transactions²
+Number of domestic hotel room nights
+2020
+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
+Twelve Months Ended
+December 31,
+2020
+Year-over-year
+change
+(in millions, except for percentages)
+690.5
+8.8
+510.6
+35.2%
+6.8
+29.2%
+252,335
+35.8
+28.1
+27.2%
+Three Months Ended
+December 31, December 31,
+Year-over-year
+2021
+change
+FINANCIAL PERFORMANCE HIGHLIGHTS
+(units, except for percentages)
+BUSINESS REVIEW AND OUTLOOK
+Company Outlook and Strategy for 2022
+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.
+APPRECIATION
+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.
+Wang Xing
+Chairman
+Hong Kong, March 25, 2022
+Meituan 2021 Annual Report 17
+MANAGEMENT DISCUSSION AND ANALYSIS
+The Fourth Quarter of 2021 Compared to the Fourth Quarter of 2020
+The following table sets forth the comparative figures for the fourth quarter of 2021 and 2020:
+Revenues
+Including: Interest revenue
+Cost of revenues
+Unaudited
+December 31,
+December 31,
+2021
+2020
+(RMB in thousands)
+49,523,133
+238,175
+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.
+CHAIRMAN'S STATEMENT
+16 Meituan 2021 Annual Report
+Three Months Ended
+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.
+Food delivery
+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.
+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.
+12 Meituan 2021 Annual Report
+CHAIRMAN'S STATEMENT
+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.
+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.
+Meituan 2021 Annual Report 13
+CHAIRMAN'S STATEMENT
+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.
+In-store, hotel & travel
+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.
+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%.
+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.
+Meituan 2021 Annual Report 15
+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.
+CHAIRMAN'S STATEMENT
+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.
+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
+New initiatives and others
+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:
+•
+2.25.1 Share options
+including any market performance conditions
+•
+excluding the impact of any service and non-market performance vesting conditions, and
+including the impact of any non-vesting conditions.
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Meituan 2021 Annual Report 199
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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.
+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.
+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.
+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.
+2.25 Share-based payments
+Meituan 2021 Annual Report 195
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2.25.3 Modifications and Cancellations
+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
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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
+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.
+198 Meituan 2021 Annual Report
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 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.
+2.26 Provisions
+196 Meituan 2021 Annual Report
+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.
+2.23 Current and deferred income tax
+2
+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
+(b)
+(a)
+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:
+2.22 Financial liabilities at fair value through profit or loss
+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.
+Borrowing costs are expensed in the period in which they are incurred.
+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.
+2.21 Borrowings, notes payable and borrowing costs (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.19 Share capital
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.23.1 Current income tax
+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.
+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.
+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.
+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.
+2.23.2 Deferred income tax (Continued)
+2.23 Current and deferred income tax (Continued)
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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.
+2.23.2 Deferred 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
+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 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.
+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".
+2.24 Employee benefits
+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.
+2.16 Inventories
+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.
+2.15 Deposits from transacting users
+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
+•
+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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+192 Meituan 2021 Annual Report
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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:
+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.
+2.18 Cash and cash equivalents and restricted cash
+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.
+190 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.13 Financial assets (Continued)
+2.13.3 Derecognition (Continued)
+2.17 Trade and other receivables
+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.
+Debt instruments
+2.24.1 Employee leave entitlement
+(a)
+2.13.4 Measurement (Continued)
+2.13 Financial assets (Continued)
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2
+•
+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
+For the year ended December 31, 2021
+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
+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.
+3
+FINANCIAL RISK MANAGEMENT
+Financial risk factors
+3.1
+3.1.1 Market risk
+(a) Foreign exchange risk
+2.31 Dividends distribution
+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.
+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.
+•
+2
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 207
+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.
+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.
+Right-of-use assets are presented in "Property, plant and equipment" in the Group's consolidated
+statement of financial position.
+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.
+restoration costs.
+•
+any initial direct costs; and
+any lease payments made at or before the commencement date;
+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.
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+208 Meituan 2021 Annual Report
+Meituan 2021 Annual Report 209
+For the year ended December 31, 2021
+the amount of the initial measurement of lease liabilities;
+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.
+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.
+Trade receivables and contract assets
+(b)
+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.
+Cash and cash equivalents, restricted cash and treasury investments
+(a)
+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.
+3.1.2 Credit risk
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+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).
+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.
+(c)
+21.
+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
+Cash flow and fair value interest rate risk
+(b)
+3.1.1 Market risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+•
+.
+2.30 Leases other than land use rights (Continued)
+2.27 Revenue recognition (Continued)
+2.27.1 The accounting policy for the Group's principal revenue types (Continued)
+(c)
+Online marketing services
+(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.
+Right-of-use assets are measured at cost comprising the following:
+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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+202 Meituan 2021 Annual Report
+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".
+200 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition
+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.
+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.
+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.
+Meituan 2021 Annual Report 201
+2.27 Revenue recognition (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.1 The accounting policy for the Group's principal revenue types
+(a) Food delivery services
+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.
+(b)
+Commission
+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.
+2
+2.27.2 Contract Balances
+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.
+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.
+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
+.
+payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
+option.
+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.
+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.
+To determine the incremental borrowing rate, the Group:
+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;
+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
+makes adjustments specific to the lease, e.g. term, country, currency and security.
+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.
+206 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
+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.
+Meituan 2021 Annual Report 205
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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).
+204 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
+2.27 Revenue recognition (Continued)
+2.27.4 Practical Expedients and Exemptions
+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.
+2.28 Interest income
+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.
+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.
+2.30 Leases other than land use rights
+Dividend income is recognised when it is received or when the right to collection is unconditionally
+established.
+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.
+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".
+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.
+2.29 Dividend income
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+Loss allowance (Continued)
+(ii)
+Loan receivables (Continued)
+(d)
+3.1.2 Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+Loss allowance
+Increases of loss allowance for new financial instruments recognised, as well as
+decreases due to loan receivables derecognition in the reporting period;
+Grouping of instruments for losses measured on a collective basis
+•
+Loan receivables derecognised and write-offs of loss allowance related to assets
+that were written off during the reporting period, and the subsequent recovery;
+and
+Changes in the inputs, assumptions and estimation techniques of ECL calculation
+during the reporting period.
+Meituan 2021 Annual Report 217
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+• 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;
+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.
+The loss allowance recognised in the reporting period is impacted by a variety of
+factors, as described below:
+ECL model for loan receivables:
+(i)
+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
+212 Meituan 2021 Annual Report
+Customers have a low risk of default and a strong capacity to meet
+The Group terminates its
+cooperation with merchants
+12-month ECL, where
+the expected lifetime of
+an asset is less than 12
+months, expected losses are
+measured at its expected
+lifetime
+Lifetime ECL
+Underperforming
+An SICR is presumed if
+repayments are 30 days past
+due
+Non-performing
+Write-off
+Repayments are 90 days past
+due
+(i) Repayments are 3 years past
+due
+contractual cash flows
+significant changes in the expected performance and behaviour of the counterparty,
+including changes in the payment status and operating results of the counterparty.
+significant changes in the value of the collateral supporting the obligation or in the
+quality of third-party guarantees or credit enhancements, and
+SICR on other financial instruments of the same counterparty
+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 Financial risk factors (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:
+Meituan 2021 Annual Report 211
+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)
+•
+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
+(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
+The key judgements and assumptions adopted by the Group in addressing the
+requirements of the standard are discussed below:
+Significant increase in credit risk (SICR)
+The Group considers loan receivables to have experienced an SICR if the
+borrower is past due more than 1 day on its contractual payments.
+Definition of default and credit-impaired assets
+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.
+Meituan 2021 Annual Report 215
+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)
+(i)
+ECL model for loan receivables: (Continued)
+Measuring ECL - Explanation of inputs, assumptions and estimation techniques
+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.
+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.
+Forward-looking information incorporated in the ECL models
+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.
+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.
+216 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)
+amount.
+ECL model for loan receivables: (Continued)
+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
+•
+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)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(d)
+Loan receivables
+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)
+The gross carrying amount of the loan receivables explains their significance to the
+changes in the loss allowance as discussed above:
+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 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.
+214 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)
+(i)
+ECL model for loan receivables: (Continued)
+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.
+If the loan receivables are credit-impaired (as defined below), then they are moved
+to "Stage 3". The ECL is measured on lifetime basis.
+Stage 1
+3.1.3 Liquidity risk
+12-month ECL
+26,027
+Net decreases
+(15,240)
+(70,414)
+55,174
+Transfer from Stage 2 to Stage 3
+72
+74
+Transfer from Stage 2 to Stage 1
+(197,668)
+(203,665)
+5,997
+Transfer from Stage 1 to Stage 3
+(85,162)
+22,496
+(88,487)
+Transfer from Stage 1 to Stage 2
+(354,219)
+(49,916)
+(80,504)
+(223,799)
+Loss allowance as of January 1, 2021
+Transfers:
+RMB'000
+RMB'000
+RMB'000
+Total
+Stage 3
+Lifetime ECL
+Lifetime ECL
+12-month ECL
+Stage 2
+3,325
+35,518
+84,041
+Write-offs
+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.
+Modification
+The Group may write-off loan receivables that are still subject to enforcement activity.
+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.
+For the year ended December 31, 2021
+(iv)
+Write-off policy
+(iii)
+Loan receivables (Continued)
+(d)
+3.1.2 Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 219
+(283,573)
+(46,806)
+285,007
+285,007
+Recovered after written off
+(36,992)
+(36,992)
+Changes in ECL measurement
+Stage 1
+43,124
+(6,344)
+36,588
+Loss allowance as
+of December 31, 2021
+(145,328)
+(91,439)
+(192)
+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:
+RMB'000
+Loan receivables (Continued)
+99
+Transfer from Stage 2 to Stage 1
+212,858
+(212,858)
+Lifetime ECL
+118,026
+(118,026)
+Transfer from Stage 1 to Stage 2
+Transfers:
+7,262,016
+49,916
+107,499
+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.
+Loss allowance (Continued)
+Stage 2
+7,104,601
+of January 1, 2021
+Gross carrying amount as
+RMB'000
+Total
+Stage 3
+Lifetime ECL
+RMB'000
+RMB'000
+RMB'000
+(99)
+Transfer from Stage 2 to Stage 3
+Transfer from Stage 1 to Stage 3
+73,592
+218 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+(73,592)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+5,965,763
+(d)
+37,389
+5,849,931
+78,443
+Gross carrying amount as
+36,992
+(285,007)
+(285,007)
+36,992
+Recovered after written off
+Write-offs
+(50,962) (1,048,238)
+(73,391)
+(923,885)
+Net decreases
+of December 31, 2021
+For the year ended December 31, 2021, fair value changes of loan receivables existed
+in the net decreases of stage 2 and stage 3.
+4.2
+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.
+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.
+Meituan 2021 Annual Report 229
+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:
+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.
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+4
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The carrying amounts of the Group's financial assets and financial liabilities measured at amortised
+cost are approximate their fair values.
+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.
+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.
+4.1 Recognition of share-based compensation expenses
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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).
+Financial liabilities at fair value through profit or loss.
+220 Meituan 2021 Annual Report
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.3 Liquidity risk (Continued)
+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.
+Less than
+1 year
+RMB'000
+Between 1
+and 2 years
+RMB'000
+77,412
+375,797
+for the year
+Net unrealised gains/(losses)
+Estimation of the fair values of financial assets and financial liabilities
+Note b:
+3.3 Fair value estimation (Continued)
+Loan receivables at fair value through other comprehensive income
+(8,071,981)
+Transfers
+(314,475)
+(41,237)
+(168,059,503)
+Deductions
+Changes in fair values
+114,600
+694,106
+900,000
+176,723,212
+Additions
+5,089,127
+23,988,182
+6,849,861
+812,289
+111
+4,599
+4,450
+111
+148,811
+Net unrealised gains for the year
+114,600
+8,132,267
+612,967
+900,111
+32,083,979
+As of December 31, 2020
+(328,650)
+(44,501)
+(1,380,201)
+Currency translation differences
+4,908,385
+As of January 1, 2020
+46,842
+RMB'000
+RMB'000
+treasury
+investments
+at fair value
+treasury
+investments
+Short-term
+investments
+Short-term
+at fair value
+Other financial
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+226 Meituan 2021 Annual Report
+358,423
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+Long-term
+treasury
+investments
+at fair value
+through profit
+RMB'000
+RMB'000
+profit or loss
+value through
+liabilities at fair
+Financial
+or loss
+Investments
+in unlisted
+companies
+or loss
+income
+or loss
+through profit
+comprehensive
+through profit
+at fair value
+through other
+RMB'000
+3
+Meituan 2021 Annual Report 227
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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
+Note a
+0.00%-2.43% 0.00% -2.40%
+612,967
+3,295,284
+Long-term treasury
+income
+through other comprehensive
+The higher the expected rate of
+return, the higher the fair value
+Expected rate of return
+NA
+comprehensive income
+Financial liabilities at fair
+Note a:
+3.3.4 Valuation process, inputs and relationships to fair value (Continued)
+1,490,250
+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
+value through profit or loss
+Note b
+114,600
+investments at fair value
+1.45%-2.80% 2.80%-3.20%
+Expected rate of return
+900,111
+Relationships of
+unobservable inputs
+2020
+Range of inputs
+as of December 31,
+2021
+Unobservable inputs
+2020
+RMB'000
+RMB'000
+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)
+to fair value
+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.
+Investments in unlisted
+companies
+40%-78%
+5,414,982
+Short-term treasury
+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%
+13,528,295 8,132,267 Expected volatility
+12,038,045
+(91,667)
+3,295,284
+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
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+•
+3.3 Fair value estimation (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
+3.3.1 Fair value hierarchy (Continued)
+•
+Level 1: unadjusted quoted prices in active markets for identical assets or liabilities
+•
+5,171,054
+Advances from transacting users
+10,950,920
+10,950,920
+Payables to merchants
+15,165,619
+15,165,619
+Trade payables
+As of December 31, 2021
+Total
+RMB'000
+RMB'000
+RMB'000
+Over
+5 years
+Between 2
+and 5 years
+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:
+Financial assets
+5,171,054
+Short-term treasury investments
+loss (Note 21)
+532,455*
+1,490,250
+2,022,705
+2,794,267
+4,128,024
+82,866,893 89,789,184
+12,038,045 14,299,857
+Meituan 2021 Annual Report 223
+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)
+As of December 31, 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+-
+2,261,812*
+4,210,835
+Short-term treasury investments
+at fair value through other
+comprehensive income (Note 21)
+Long-term treasury investments
+at fair value through profit or
+loss (Note 21)
+Loan receivables at fair value
+through other comprehensive
+income (Note 22(a))
+Other financial investments
+at fair value through profit or
+loss (Note 19)
+Other financial investments at
+fair value through other
+comprehensive income (Note 20)
+- 56,417,497
+56,417,497
+4,128,024
+5,414,982
+9,543,006
+|- - 3,295,284 3,295,284
+-- 4,210,835
+at fair value through profit or
+Financial assets
+Other payables and accruals
+8,787,640
+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
+41,022,250
+352,752
+1,211,544
+Notes payable
+8,529,740
+31,946 1,983,377
+6,514,417
+Borrowings
+7,253,714
+Lease liabilities
+1,267,331 8,947,930
+9,410,158
+60,647,669
+(57,228)
+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.
+3.3.1 Fair value hierarchy
+Fair value estimation
+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.
+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.
+Maintain an optimal capital structure to reduce the cost of capital.
+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
+.
+The Group's objectives when managing capital are to:
+3.2 Capital management
+3 FINANCIAL RISK MANAGEMENT (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 221
+7,253,714
+8,787,640
+Other payables and accruals
+4,307,861
+4,426,687
+54,171,389
+5,233,721
+34,525,462
+8,941,919
+86,701
+344,686 24,894,171
+1,522,958 1,650,762
+36,405,942 9,028,620 104,032,638
+344,686
+1,973,300
+Notes payable
+24,198,222
+9,861,009
+2,559,043
+11,778,170
+Borrowings
+Lease liabilities
+Less than
+1 year
+Between 1
+and 2 years
+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
+4,307,861
+Short-term treasury investments
+at fair value through profit or
+loss (Note 21)
+income
+in unlisted
+companies
+in unlisted
+companies
+through profit
+or loss
+RMB'000
+or loss
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2021
+32,083,979
+RMB'000
+income
+or loss
+comprehensive
+through profit
+at fair value
+through other
+comprehensive
+other assets
+or loss
+income
+treasury Loan receivables
+investments
+at fair value
+through other
+Financial
+liabilities at
+Investments
+Investments
+fair value
+comprehensive
+through profit
+900,111
+deposits and
+612,967
+114,600
+1,112,454
+78,237
+39,833
+(57,228)
+678,454
+256,500
+Changes in fair values
+Currency translation
+(1,033,952)
+(7,071)
+(36,067)
+As of December 31, 2021
+56,417,497
+5,414,982
+differences
+783,750
+(1,068,094)
+Transfers
+Additions
+374,408,482
+4,769,314
+3,284,298
+23,118,704
+5,160,883
+450,000
+791,400
+Deductions
+(350,153,466)
+(325,609)
+(605,747)
+(18,850,641)
+(773,798)
+(906,000)
+8,132,267
+fair value
+Prepayments,
+investments at
+8,132,267
+10,256,786
+Other financial investments at
+fair value through other
+comprehensive income (Note 20)
+605,918*
+2,124,519*
+605,918
+65,442 41,729,324
+44,525,203
+Financial liabilities
+Financial liabilities at fair value
+through profit or loss
+*
+2,730,437
+loss (Note 19)
+fair value through profit or
+612,967
+Short-term treasury investments
+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
+965,553
+612,967
+This presents investments in listed entities with observable quoted price.
+114,600
+114,600
+224 Meituan 2021 Annual Report
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+treasury
+investments
+Short-term
+Short-term
+treasury
+investments
+Long-term
+at fair value
+through profit
+at fair value
+through other
+at fair value
+Other financial
+Other financial
+investments
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+4,210,835
+Meituan 2021 Annual Report 225
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.2 Valuation techniques used to determine fair values
+Specific valuation techniques used to measure financial instruments include:
+•
+The use of quoted market prices or dealer quotes for similar instruments;
+•
+•
+The discounted cash flows model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate;
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+There was no change to valuation techniques in use during the year ended December 31, 2021.
+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.
+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.
+28,299
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+4,202,623
+8,110,975
+Depreciation of property, plant and equipment
+8,128,968
+22,538,561
+Other outsourcing costs
+Amortisation of intangible assets
+11,029,869
+Promotion, advertising and user incentives
+15,859,348
+26,352,193
+Transaction costs (Note i)
+21,541,521
+34,767,852
+23,200,707
+817,044
+991,486
+Auditor's remuneration
+15,398,542
+23,802,907
+Other employee benefits
+Share-based compensation expenses (Note 33)
+Wages, salaries and bonuses
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+EMPLOYEE BENEFITS EXPENSES
+8
+(i) Transaction costs consist of cost of goods sold and certain costs from various businesses.
+- Non-audit services
+- Audit and audit-related services
+48,889
+1,898
+47,879
+8,053
+Employee benefits expenses (Note 8)
+49,291,318
+68,183,267
+Food delivery related costs
+Year ended December 31,
+2021
+RMB'000
+Further disaggregation of revenues are included in Note 5.
+Other services and sales (including interest revenue)
+Online marketing services
+Commission
+Food delivery services
+REVENUES BY TYPE
+6
+As of December 31, 2021 and 2020, substantially all of the non-current assets of the Group were located
+in the PRC.
+5.2 Segment assets
+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.
+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.
+5.1 Description of segments and principal activities (Continued)
+5 SEGMENT REPORTING (Continued)
+For the year ended December 31, 2021
+2020
+RMB'000
+5,193,860
+54,203,640
+52,904,757
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+For the year ended December 31, 2021
+EXPENSES BY NATURE
+7
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 237
+114,794,510
+179,127,997
+22,645,870
+42,934,430
+18,908,045
+29,085,170
+34,124,184
+39,116,411
+3,277,476
+3,600,279
+2,133,801
+EMPLOYEE BENEFITS EXPENSES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 239
+8
+230 Meituan 2021 Annual Report
+476,720
+542,487
+459,876
+523,211
+Share-based compensation expenses
+521
+652
+Pension costs and other employee benefits
+8,049
+864
+(b) Five highest paid individuals (Continued)
+Bonuses
+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
+4
+5
+1
+1
+1
+| - - | |--
+1
+1
+1
+1
+2020
+Year ended December 31,
+2021
+Number of individuals
+For the year ended December 31, 2021
+HK$183,000,001 - HK$183,500,000
+-
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+8,274
+Basic salaries
+Research and development expenses
+Selling and marketing expenses
+Cost of revenues
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+238 Meituan 2021 Annual Report
+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.
+Pension costs - defined contribution plans
+(i)
+21,541,521
+34,767,852
+731,702
+2,170,806
+Pension costs - defined contribution plans (Note i)
+General and administrative expenses
+17,760
+Year ended December 31,
+2020
+RMB'000
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+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:
+(b) Five highest paid individuals
+3,277,476
+5,193,860
+1,329,122
+1,759,472
+1,446,846
+2,617,015
+420,873
+692,262
+80,635
+125,111
+2021
+RMB'000
+236 Meituan 2021 Annual Report
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+(i)
+Food delivery
+Year ended December 31, 2021
+In-store, New initiatives
+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:
+5.1 Description of segments and principal activities (Continued)
+5 SEGMENT REPORTING (Continued)
+For the year ended December 31, 2021
+hotel & travel
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The Group's revenue is mainly generated in China.
+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 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.
+New initiatives and others
+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.
+In-store, hotel & travel
+234 Meituan 2021 Annual Report
+RMB'000
+RMB'000
+Food delivery services
+Commission
+Other services and sales
+29,085,170
+52,904,757
+54,203,640
+Total
+RMB'000
+RMB'000
+Unallocated
+items (Note i)
+and others
+RMB'000
+982,816
+8,558,547
+15,798,936
+16,667,421
+11,434,933
+Online marketing services
+28,547,274
+54,203,640
+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.
+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.
+5.1 Description of segments and principal activities (Continued)
+SEGMENT REPORTING (Continued)
+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.
+4.6 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 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.
+4.7 Current and deferred income tax
+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.
+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
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4.8 Presentation and measurement of investments in associates
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+(including interest revenue)
+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.
+4.4 Recoverability of goodwill
+5
+LO
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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.
+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.
+5.1 Description of segments and principal activities
+SEGMENT REPORTING
+5
+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.
+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
+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.
+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.
+2,125,931
+Food delivery
+40,744,531
+(49,291,318)
+(49,291,318)
+2,833,369
+8,180,933 (10,854,996)
+34,124,184
+324,597
+related costs
+11,018,337
+7,565,111
+Online marketing services
+5,428,154
+10,193,162
+18,502,868
+Commission
+4,170,796
+Including: Food delivery
+4,170,796 (110,464,408)
+(63,431,950) (13,071,465) (38,131,789)
+Other services and sales
+18,908,045
+63,968
+(including interest revenue)
+1,080,929
+40,899
+21,524,042
+22,645,870
+Revenues in total
+66,265,319
+21,252,398
+27,276,793
+114,794,510
+Cost of revenues, operating
+expenses and unallocated
+items
+39,116,411
+4,330,102
+39,116,411
+Total
+RMB'000
+(68,183,267)
+(68,183,267)
+(5,001,058) (202,255,196)
+Operating (loss)/profit
+(88,679,789)
+(90,137,137) (18,437,212)
+and unallocated items
+Including: Food delivery
+related costs
+operating expenses
+Cost of revenues,
+Food delivery services
+50,285,894
+32,530,325
+96,311,778
+Revenues in total
+42,934,430
+Operating (loss)/profit
+6,174,641
+179,127,997
+(5,001,058) (23,127,199)
+Unallocated
+items (Note i)
+14,093,113 (38,393,895)
+and others
+RMB'000
+RMB'000
+RMB'000
+hotel & travel
+Food delivery
+In-store, New initiatives
+RMB'000
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 235
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Year ended December 31, 2020
+SEGMENT REPORTING (Continued)
+5
+5.1 Description of segments and principal activities (Continued)
+Structured entities (ii):
+Name
+Micro-credit business in the PRC
+11 SUBSIDIARIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Place of incorporation/
+establishment and
+244 Meituan 2021 Annual Report
+limited liability company
+Effective interests held (i)
+100%
+100%
+RMB5,000,000,000
+November 28, 2016
+liability company
+Chongqing, the PRC,
+Chongqing Meituan Sankuai
+Micro-credit Co., Ltd.
+Supply chain services in the PRC
+100%
+0.78
+USD500,000,000
+February 13, 2018
+liability company
+Tianjin, the PRC, limited
+Tianjin Xiaoyi Technology Co., Ltd.
+Date of
+100%
+incorporation/
+June 17, 2015
+As of December 31,
+cloud computing in the PRC
+Shanghai Hantao Information
+Consulting Co., Ltd.
+Shanghai, the PRC, limited September 23, 2003
+RMB10,000,000
+100%
+100%
+Merchant information
+liability company
+advisory services in the PRC
+Note (i)
+System ("RMS") and
+Note (ii)
+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,
+Delivery services in the PRC
+2021
+RMB'000
+The Effective interests held by the Group have no changes since January 1, 2022 until the reporting date.
+Particulars of
+Restaurant Management
+100%
+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
+100%
+RMB5,480,000,000
+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
+RMB870,000,000
+100%
+100%
+Finance costs
+USD320,000,000
+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
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+546,037
+213,684
+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)
+(185,734)
+90,067
+(72,941)
+Others
+2020
+RMB'000
+2020
+RMB'000
+Subsidies and tax preference (Note i)
+1,502,905
+1,388,365
+Fair value changes of treasury investments at fair value
+through profit or loss (Note 3.3)
+1,152,287
+816,888
+Dilution gains (Note 12)
+(24,534)
+716,427
+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)
+853,618
+100%
+Total
+(370,016)
+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
+Beijing, the PRC, limited
+Beijing Sankuai Online Technology Co., Ltd.
+Indirectly held:
+Investment holding in
+The British Virgin Islands
+11 SUBSIDIARIES
+Meituan 2021 Annual Report 243
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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
+(1,130,935)
+establishment
+2021
+2020
+Principal activities
+and place of operation
+Name
+Directly held:
+Inspired Elite Investments Limited
+The British Virgin Islands, March 19, 2014
+limited liability company
+USD50,000
+100%
+100%
+Particulars of
+issued capital
+13,856,036
+PRC corporate income tax ("CIT")
+12,752
+Current income tax expenses
+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.
+Withholding tax on undistributed dividends
+(b) Income tax (Continued)
+13 TAXATION (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+248 Meituan 2021 Annual Report
+Deferred income tax credits (Note 18)
+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.
+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.
+Hong Kong
+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.
+British Virgin 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.
+Cayman Islands
+(b) Income tax
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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.
+Total income tax credits
+Year ended December 31,
+2021
+RMB'000
+- Different tax rates available to different jurisdictions
+(1,109,469)
+5,891,619
+Tax calculated at statutory income tax rate of 25% in mainland China
+Tax effects of:
+4,437,875
+(23,566,477)
+(Loss)/profit before income tax
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+The difference is analysed as follows:
+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.
+269,737
+30,279
+416,909
+447,541
+(147,172)
+(417,262)
+2020
+RMB'000
+Meituan 2021 Annual Report 247
+13 TAXATION (Continued)
+The Group is mainly subject to VAT rate of 6%, and relevant surcharges on VAT payments according to
+PRC tax law.
+(a) Value Added Tax
+13,167,893
+13,856,036
+At the end of the year
+(532,470)
+(267,004)
+Currency translation differences
+(120,986)
+117,125
+Other reserves (Note 27)
+264,105
+145,620
+Share of gains of investments accounted for using the equity method
+(8,888)
+Disposals
+(5,369)
+(15,137)
+Dividends from associates
+853,618
+2021
+RMB'000
+246 Meituan 2021 Annual Report
+(615,429)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+310,978
+103,823
+(300)
+(41,797)
+311,278
+145,620
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+TAXATION
+13
+Total comprehensive income
+- Other comprehensive loss
+- Profit from operations
+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:
+There were no material contingent liabilities relating to the Group's interests in the associates.
+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.
+(i)
+(a) Investments in associates accounted for using the equity method (Continued)
+For the year ended December 31, 2021
+13,167,893
+1,509,383
+(2,316,035)
+2,269,638
+Additions
+Transfer (Note 19)
+2,367,376
+8,071,981
+Dilution gains (Note i)
+716,427
+(3.90)
+13,167,893
+6,003,605
+158,251
+5,845,354
+6,037,677
+4,708,313
+(23,538,379)
+2020
+Year ended December 31,
+2021
+Diluted (loss)/earnings per share (RMB)
+6,037,677
+At the beginning of the year
+2020
+RMB'000
+2021
+RMB'000
+13,050
+13,868,788
+13,180,943
+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.
+(a) Investments in associates accounted for using the equity method
+As of December 31,
+2021
+RMB'000
+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,
+share (thousands)
+denominator in calculating diluted (loss)/earnings per
+Weighted average number of ordinary shares used as the
+Weighted average number of ordinary shares in issue (thousands)
+Adjustments for share options and RSUs (thousands)
+(568,384)
+(40,982)
+537,509
+62,252
+(896,861)
+(3,993,860)
+Total income tax credits
+- Others
+- Withholding tax (Note i)
+Other temporary differences
+Tax losses
+- Changes in deferred tax assets and liabilities mismatched
+with (loss)/profit before income tax
+1,261,674
+1,190,896
+- Super deduction for research and development expenses
+(227,279)
+(132,578)
+- Expenses not deductible for income tax purposes
+(298,412)
+(15,604)
+- Preferential income tax rates applicable to subsidiaries
+61,576
+269,737
+(Loss)/profit attributable to equity holders of the Company (RMB'000)
+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.
+0.81
+(3.90)
+Basic (loss)/earnings per share (RMB)
+(23,538,379)
+6,037,677
+(Loss)/profit attributable to equity holders of the Company (RMB'000)
+Weighted average number of ordinary shares in issue (thousands)
+5,845,354
+4,708,313
+2020
+Year ended December 31,
+2021
+(b)
+(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.
+14 (LOSS)/EARNINGS PER SHARE
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 249
+The Group's subsidiaries outside of PRC recognised withholding tax for their investments in the PRC entities.
+(i)
+30,279
+Year ended December 31,
+10,614
+RMB'000
+Orr Gordon Robert Halyburton
+Neil Nanpeng Shen
+Lau Chi Ping Martin
+Mu Rongjun
+Wang Huiwen
+Wang Xing
+Name
+For the year ended December 31, 2021:
+The emoluments of Directors and the chief executive is set out below:
+(c) Directors' and chief executive's emoluments
+8 EMPLOYEE BENEFITS EXPENSES (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+275
+སྐྱེསྐྱེསྒྱེ།
+Shum Heung Yeung Harry
+775
+9
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+242 Meituan 2021 Annual Report
+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.
+Waiver of Directors' 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 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.
+Directors' material interests in transactions, arrangements or contracts
+(iv)
+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.
+(iii) Information about loans, quasi-loans and other dealings in favour of Directors, controlled bodies
+corporate by and connected entities with such Directors.
+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.
+Consideration provided to or receivable by third parties for making available Directors' services
+OTHER (LOSSES)/GAINS, NET
+Leng Xuesong
+Total
+Pension costs
+275
+500
+៩៩ |
+500
+500
+1,647
+153
+1,494
+16,189
+11,957
+5,192
+៩៩
+152
+4,080
+152
+5,040
+RMB'000
+and other
+Share-based
+employee compensation
+Fees
+Basic salaries
+Bonuses
+(ii)
+benefits
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+expenses
+No Directors' termination benefits subsisted at the end of the years or at any time during the years
+ended December 31, 2021 and 2020.
+275
+(i)
+Share-based
+employee
+compensation
+Fees
+RMB'000
+Basic salaries
+Bonuses
+benefits
+expenses
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+2,520
+2,520
+150
+5,190
+2,041
+Directors' termination benefits
+625
+88
+500
+500
+500
+and other
+75,824
+94
+1,968
+23,655
+19,442
+132
+2,040
+71,722
+Pension costs
+2,040
+Shum Heung Yeung Harry
+Leng Xuesong
+Total
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(c) Directors' and chief executive's emoluments (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+Meituan 2021 Annual Report 241
+8
+93,039
+376
+6,528
+6,601
+1,500
+1,125
+625
+1,125
+625
+108,044
+240 Meituan 2021 Annual Report
+Orr Gordon Robert Halyburton
+Neil Nanpeng Shen
+Lau Chi Ping Martin
+1,125
+Mu Rongjun
+Wang Huiwen
+Name
+For the year ended December 31, 2020:
+Wang Xing
+12,782
+775
+457
+775
+1,500
+57
+25,353
+Pre-tax discount rate
+Food delivery
+In-store,
+hotel & travel
+3%-31%
+19%-20%
+3%-33%
+89%-91%
+11%-45%
+Terminal revenue growth rate
+services
+Bike-sharing
+and moped
+Gross margin
+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.
+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 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)
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2021
+15%-38%
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Annual revenue growth rate for 5-year period
+3%
+Annual revenue growth rate for 5-year period
+3%
+256 Meituan 2021 Annual Report
+3%
+Terminal revenue growth rate
+23%-36%
+90%
+6%-67%
+5%-55%
+5%-50%
+21%-25%
+Gross margin
+services
+3%
+Bike-sharing
+and moped
+Food delivery
+As of December 31, 2020
+Impairment of goodwill (Continued)
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 257
+27%
+26%
+26%
+In-store,
+hotel & travel
+27,647,435
+Bike-sharing and moped services
+27,705,601
+Meituan 2021 Annual Report 255
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2021
+Amortisation expenses have been charged to the consolidated income statement as follows:
+Selling and marketing expenses
+General and administrative expenses
+Cost of revenues
+Research and development expenses
+Impairment of goodwill
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+443,794
+592,367
+177,565
+215,993
+176,000
+176,978
+19,685
+6,148
+31,676,381
+817,044
+349,861
+27,647,435
+(991,486)
+Impairment charges
+(58,166)
+(58,166)
+Ending net book amount
+27,647,435
+3,679,085
+349,861
+31,676,381
+As of December 31, 2020
+Cost
+27,849,022
+7,671,830
+1,892,709
+37,413,561
+Accumulated amortisation
+and impairment
+(3,992,745)
+(1,542,848)
+(5,737,180)
+Net book amount
+3,679,085
+(58,166)
+991,486
+Opening
+RMB'000
+RMB'000
+Addition Reallocation Impairment
+RMB'000
+Disposal
+Ending
+RMB'000
+RMB'000
+RMB'000
+Food delivery
+4,845,229
+4,845,229
+In-store, hotel & travel
+18,950,647
+18,950,647
+3,707,427
+3,707,427
+New initiatives and others (excluding bike-
+sharing and moped services)
+202,298
+(58,166)
+144,132
+Year ended December 31, 2020
+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:
+Opening
+227,200
+Year ended December 31, 2021
+RMB'000
+Addition Reallocation Impairment
+RMB'000 RMB'000 RMB'000
+Disposal
+Ending
+RMB'000
+Food delivery
+4,845,229
+4,845,229
+In-store, hotel & travel
+18,950,647
+18,950,647
+Bike-sharing and moped services
+3,707,427
+3,707,427
+New initiatives and others (excluding bike-
+sharing and moped services)
+144,132
+83,068
+27,647,435
+83,068
+27,730,503
+RMB'000
+21
+3%
+30
+8,865,695
+7,328,556
+119,512
+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
+Meituan 2021 Annual Report 259
+4,307,861
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+5,171,054
+10,950,920
+- 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
+9,414,936
+Financial liabilities at fair value through profit or loss:
+18 DEFERRED INCOME TAXES
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
+financial position:
+1,378,468
+448,670
+Deferred tax assets:
+As of December 31,
+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
+448,670
+Net deferred tax assets
+For the year ended December 31, 2021
+(875,281)
+Set-off of deferred tax assets pursuant to set-off provisions
+(a) Deferred tax assets
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+The balance comprises temporary differences attributable to:
+- Tax losses
+1,695,764
+1,009,919
+- Others
+511,208
+314,032
+Total gross deferred tax assets
+2,206,972
+1,323,951
+(828,504)
+3%
+Liabilities as per consolidated statement of financial position
+74,720,672
+- Other financial investments at fair value through profit or loss
+19
+3,295,284
+14,299,857
+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
+Financial assets at fair value through other comprehensive income:
+- Short-term treasury investments at fair value through
+other comprehensive income
+21
+21
+32,083,979
+(375,908)
+Pre-tax discount rate
+25%
+25%
+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.
+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%.
+17 FINANCIAL INSTRUMENTS BY CATEGORY
+The Group holds the following financial instruments:
+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
+56,417,497
+52,410,888
+9,543,006
+- Loan receivables at fair value through other comprehensive income
+- Other financial investments at fair value through other
+comprehensive income
+10,560,882
+21
+715,158
+21
+18,321,513
+10,949,832
+- Restricted cash
+25(b)
+13,276,919
+12,775,667
+-
+- Cash and cash equivalents
+25(a)
+32,513,428
+17,093,559
+8,100,619
+965,553
+22
+- Short-term treasury investments at amortised cost
+22(a)
+4,210,835
+20
+20
+2,022,705
+605,918
+15,776,546
+1,571,471
+Financial assets at amortised cost:
+- Trade receivables
+- Prepayments, deposits and other assets
+- Long-term treasury investments at amortised cost
+24
+1,793,035
+1,030,948
+~~~
+(615,578)
+(201,587)
+(3,110)
+942,476
+5,432,542
+3,892,988
+Net book amount
+(15,094,836)
+(890,334)
+(58,563)
+(2,109,953)
+(524)
+4,721,003
+(6,952,738)
+and impairment
+Accumulated depreciation
+37,909,082
+2,036,595
+6,737,539
+6,830,956
+943,000
+12,385,280
+8,975,712
+(5,082,724)
+Cost
+6,678,976
+22,814,246
+5,781,823
+4,505,983
+Cost
+As of January 1, 2020
+Total
+RMB'000
+Others
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+1,146,261
+RMB'000
+Right-of-use
+Assets under
+construction
+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
+assets
+141,368
+As of December 31, 2021
+1,146,261
+(19,111)
+Disposals
+704,673
+(1,920,913)
+1,216,240
+Transfers
+17,540,029
+346,055
+6,737,539
+(136,405)
+4,219,704
+117,425
+3,430,860
+Additions
+13,917,165
+774,271
+2,724,917
+241,157
+8,053,191
+2,123,629
+2,688,446
+22,814,246
+(66,008)
+(78,184)
+6,678,976
+Amortisation charges
+942,476
+5,432,542
+3,892,988
+Ending net book amount
+(26)
+Currency translation differences
+(51,649)
+(180,590)
+(51,443)
+Impairment charges
+(8,110,975)
+(549,111)
+(58,563)
+(2,043,002)
+(3,817,909)
+(1,642,390)
+Depreciation charges
+(480,298)
+(206)
+2,166,794
+409,348
+13,005,316
+1,218,979
+3,756,829
+241,703
+11,837,828
+5,644,530
+Cost
+As of December 31, 2020
+13,917,165
+774,271
+22,699,869
+2,724,917
+8,053,191
+2,123,629
+Ending net book amount
+(11)
+(10)
+Currency translation differences
+(29,691)
+(29,691)
+Impairment charges
+241,157
+(4,202,623)
+Accumulated depreciation
+(3,520,901)
+General and administrative expenses
+Selling and marketing expenses
+Cost of revenues
+Depreciation expenses have been charged to the consolidated income statement as follows:
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+252 Meituan 2021 Annual Report
+13,917,165
+and impairment
+774,271
+241,157
+8,053,191
+2,123,629
+Net book amount
+(8,782,704)
+(444,708)
+(1,031,912)
+(546)
+(3,784,637)
+2,724,917
+(218,140)
+(921,846)
+(1,783,990)
+2,217,641
+Opening net book amount
+December 31, 2020
+or the year ended
+For
+5,376,217
+187,292
+1,561,014
+133,423
+1,276,847
+1,276,847
+Net book amount
+(7,629,099)
+(222,056)
+(605,780)
+(7,945)
+(4,504,976)
+(2,288,342)
+and impairment
+Accumulated depreciation
+2,217,641
+133,423
+1,561,014
+187,292
+(1,278,647)
+Depreciation charges
+(270,980)
+(42,056)
+(94,757)
+(1,094)
+(125,530)
+(7,543)
+Disposals
+696,792
+(2,431,532)
+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
+Opening net book amount
+December 31, 2021
+4,721,003
+13,917,165
+27,705,601
+Net book amount
+(4,698,910)
+(1,178,322)
+(3,377,167)
+(143,421)
+and impairment
+For the year ended
+Accumulated amortisation
+4,294,663
+37,398,485
+7,671,830
+27,849,022
+Cost
+As of January 1, 2020
+Total
+RMB'000
+and others
+RMB'000
+Software
+RMB'000
+RMB'000
+1,877,633
+combinations
+699,311
+For the year ended
+7,671,830
+1,892,709
+37,413,561
+Accumulated amortisation
+Ending net book amount
+(201,587)
+(3,992,745)
+(1,542,848)
+(5,737,180)
+32,699,575
+Net book amount
+Disposals
+29,568
+32,699,575
+699,311
+29,568
+Additions
+4,294,663
+27,705,601
+Opening net book amount
+December 31, 2020
+(3,110)
+27,849,022
+Goodwill
+Other intangible
+27,932,090
+Cost
+27,647,435
+3,679,085
+349,861
+31,676,381
+For the year ended
+December 31, 2021
+Opening net book amount
+7,714,630
+27,647,435
+349,861
+31,676,381
+Additions
+83,068
+42,800
+Disposals
+63,689
+(80)
+27,730,503
+Amortisation charges
+3,679,085
+assets arising
+from business
+1,956,232
+Accumulated amortisation
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+254 Meituan 2021 Annual Report
+31,048,814
+92,379
+3,225,932
+189,557
+(80)
+(817,044)
+(321,091)
+37,602,952
+(495,953)
+92,379
+3,225,932
+27,730,503
+Net book amount
+(6,554,138)
+(1,863,853)
+(4,488,698)
+(201,587)
+and impairment
+31,048,814
+Cost
+and impairment
+Total
+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
+Research and development expenses
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+6,389,656
+3,216,094
+846,153
+513,443
+458,030
+RMB'000
+171,073
+RMB'000
+RMB'000
+774,271
+2,724,917
+241,157
+8,053,191
+2,123,629
+Net book amount
+(8,782,704)
+(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
+241,703
+11,837,828
+5,644,530
+Cost
+As of January 1, 2021
+RMB'000
+RMB'000
+417,136
+302,013
+8,110,975
+2,043,002
+921,846
+193,420
+As of January 1, 2021
+16 INTANGIBLE ASSETS
+Meituan 2021 Annual Report 253
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Other intangible
+2020
+RMB'000
+For the year ended December 31, 2021
+from business
+Software
+Goodwill
+combinations
+and others
+RMB'000
+RMB'000
+RMB'000
+assets arising
+2021
+RMB'000
+92,266
+Depreciation charge of right-of-use assets
+Interest expenses (included in finance costs)
+4,202,623
+(a) Leases (excluding land use rights)
+Except for recognition of lease liabilities, the carrying amounts of right-of-use assets (excluding land use
+rights) by category are as follows:
+Offices
+Others
+Total
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+Year ended December 31,
+As of December 31, 2021
+2,937,030
+The consolidated income statement shows the following amounts relating to leases (excluding the
+depreciation of land use rights):
+2,724,917
+4,721,003
+801,813
+1,783,973
+1,923,104
+43,114
+assets or at fair value
+314,032
+43,114
+Deferred
+using the
+equity method
+Intangible
+accounted for
+As of December 31, 2020
+The movement on the gross deferred tax liabilities is as follows:
+1,323,951
+1,009,919
+Investments
+RMB'000
+396,652
+(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
+875,281
+Net deferred tax liabilities
+(895,691)
+(755,694)
+As of December 31,
+2021
+2020
+RMB'000
+Deferred tax liabilities:
+- Others
+(50,029)
+(24,897)
+(804,356)
+260 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+18 DEFERRED INCOME TAXES (Continued)
+(b) Deferred tax liabilities
+The balance comprises temporary differences attributable to:
+As of December 31,
+- to be recovered after 12 months
+2021
+2020
+RMB'000
+- Intangible assets arising from business combinations
+(489,022)
+(620,647)
+- Investments accounted for using the equity method or at fair value
+- Deferred revenues
+(1,051,129)
+RMB'000
+Credited to consolidated statement of changes in equity
+(893,459)
+- to be recovered within 12 months
+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
+848,365
+35,820
+884,185
+Credited to consolidated income statement
+118,440
+278,212
+197,176
+349,255
+Credited to consolidated income statement
+1,323,951
+(2,232)
+(4,471)
+(895,691)
+(755,694)
+Meituan 2021 Annual Report 261
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+18 DEFERRED INCOME TAXES (Continued)
+(751,223)
+The movement on the gross deferred tax assets is as follows:
+Tax losses
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+As of January 1, 2021
+1,009,919
+314,032
+For the year ended December 31, 2021
+revenues
+Equity investments in listed entities
+RMB'000
+(10,700)
+Business combination
+16,370
+16,370
+Credited to other comprehensive income
+(98,890)
+(3,204)
+25,132
+(10,700)
+(263,143)
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+532,455
+605,918
+1,490,250
+2,022,705
+605,918
+142,325
+As of December 31, 2021
+(489,022)
+(1,051,129)
+(620,647)
+As of December 31, 2020
+20,257
+31,368
+31,368
+Credited to other comprehensive income
+(130,927)
+419,146
+(397,361)
+129,399
+income statement
+Credited/(charged) to consolidated
+(25,016) (1,682,600)
+(469,175)
+(438,363)
+(750,046)
+As of January 1, 2020
+(1,724,195)
+(159,147)
+(24,897)
+Meituan 2021 Annual Report 265
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME (Continued)
+Movement of other financial investments at fair value through other comprehensive income is analysed as
+follows:
+- 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
+612,967
+Short-term treasury investments at
+- Amortised cost
+18,321,513
+10,949,832
+- Fair value through profit or loss
+56,417,497
+32,083,979
+- Fair value through other comprehensive income
+Long-term treasury investments at
+(804,356)
+21 TREASURY INVESTMENTS
+(i)
+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
+Year ended December 31,
+2021
+RMB'000
+2020
+RMB'000
+605,918
+450,000
+548,668
+(86,821)
+84,387
+1,068,094
+(14,486)
+(27,137)
+2,022,705
+605,918
+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.
+(50,029)
+(155,943)
+(1,630,975)
+170,820
+596,526
+Changes in fair values
+2,132,299
+2,767,859
+Additions (Note i)
+5,789,747
+7,566,686
+At the beginning of the year
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+(b) Other investees
+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.
+(i)
+Others
+2,690,100
+4,453,450
+At the end of the year
+Disposals
+(109,802)
+(713,798)
+Transfers (Note ii) (Note 12, 20)
+Other financial investments at fair value through other comprehensive income comprise the following:
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+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.
+During the year ended December 31, 2021, the Group's additions to other investments mainly comprised the
+investments in some unlisted entities.
+(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)
+For the year ended December 31, 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+264 Meituan 2021 Annual Report
+7,566,686
+9,846,407
+At the end of the year
+(218,848)
+(86,522)
+Currency translation differences
+(218,538)
+(284,344)
+(88,794)
+9,543,006
+(5,145)
+(7,853,443)
+10,256,786
+14,299,857
+7,566,686
+9,846,407
+2,690,100
+4,453,450
+2020
+RMB'000
+2021
+RMB'000
+As of December 31,
+Other investees (b)
+Associates (a)
+OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+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
+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.
+Currency translation differences
+Meituan 2021 Annual Report 263
+For the year ended December 31, 2021
+(783,750)
+Transfers (Note 12, 20)
+(225,681)
+(60,000)
+Disposals
+4,785,089
+219,221
+Changes in fair values
+4,717,562
+2,393,024
+Additions (Note i)
+1,376,375
+2,690,100
+At the beginning of the year
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+(a) Associates
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+965,553
+Deductible value-added tax
+43,999,364
+598,542
+439,130
+738,415
+480,239
+Less: provisions for impairment
+(56,722)
+(13,747)
+681,693
+466,492
+24
+24
+Meituan 2021 Annual Report 269
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+TRADE RECEIVABLES
+Trade receivables
+Less: allowance for impairment
+41,109
+As of December 31,
+139,873
+2020
+RMB'000
+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)
+4,210,835
+Allowances for impairment losses on loan receivables at fair
+value through other comprehensive income (Note 3.1.2)
+23 INVENTORIES
+(158,839)
+As of December 31,
+2021
+RMB'000
+Raw materials
+Finished goods
+2021
+RMB'000
+2020
+RMB'000
+2,019,029
+Credited/(charged) to consolidated
+income statement
+Equity investments in unlisted entities
+The Group considered that the carrying amount of the trade receivables approximated their fair values as of
+December 31, 2021 and 2020.
+(166,570)
+(225,994)
+25,232
+33,955
+54,016
+14,852
+(89,964)
+(108,231)
+(155,854)
+(166,570)
+2020
+RMB'000
+2021
+RMB'000
+84,282,016
+(1,630,975)
+(155,943)
+(50,029)
+(804,356)
+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.
+Movements on the Group's allowance for impairment of trade receivables are as follows:
+At the beginning of the year
+As of December 31,
+Provision
+At the end of the year
+Year ended December 31,
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+As of January 1, 2021
+(620,647)
+Reversal
+Less: allowance for impairment (Note 3.1.2)
+Write-off
+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:
+2021
+RMB'000
+2020
+RMB'000
+Non-current
+Loan receivables (a)
+Prepayments for PP&E
+Rental deposits
+1,021,951
+466,232
+903,474
+5,935,077
+409,322
+268,658
+Prepayments for investments
+339,044
+297,044
+Deductible value-added tax
+As of December 31,
+For the year ended December 31, 2021
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+266 Meituan 2021 Annual Report
+Loan receivables at amortised cost
+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.
+Treasury investments were denominated in the following currencies:
+As of December 31,
+2021
+RMB'000
+247,226
+USD
+2020
+RMB'000
+54,654,850
+31,828,437
+33,637,608
+12,783,894
+44,612,331
+Meituan 2021 Annual Report 267
+RMB
+334,509
+88,292,458
+460,255
+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
+402,626
+299,358
+379,799
+1,377,881
+252,614
+15,281,586
+12,940,125
+268 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+(a) Loan receivables
+Others
+568,026
+Others
+369,744
+Prepayments to merchants
+7,569,817
+Current
+Loan receivables (a)
+4,819,078
+6,441,565
+3,056,071
+2,275,045
+Receivables upon share-based payments vesting or exercise
+303,176
+Contract assets
+930,984
+3,381,272
+2,258,425
+591,646
+268,297
+882,395
+Deposits in third-party payment processors
+11,207
+1
+(1)
+As of December 31, 2020
+5,885,649
+59
+395
+263,155,201
+263,155,596
+Share-based
+27 OTHER RESERVES
+Capital
+option
+Currency
+Conversion
+For the year ended December 31, 2021
+(i)
+Shares held for shares award
+scheme
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2021 Annual Report 273
+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.
+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.
+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.
+2,795,278
+389
+2,795,272
+translation
+Issuance of shares upon
+placement and
+subscription (i)
+198,353
+2
+13
+45,285,887
+45,285,900
+As of December 31, 2021
+6,136,145
+61
+411
+311,221,237
+(1)
+311,221,648
+As of January 1, 2020
+5,808,666
+58
+260,359,929
+260,360,318
+Exercise of share options
+and RSUs vesting
+65,776
+1
+5
+1
+of convertible
+As of December 31, 2021
+payments
+Currency translation differences
+Fair value changes of and net
+provisions for impairment losses
+on financial assets
+Issuance of convertible bonds
+(equity component) (Note 32)
+Tax benefit from share-based
+payments
+Appropriations to general reserves
+As of January 1, 2020
+Equity-settled share-based payments
+Exercise of share options and RSUs vesting
+Share of changes in net assets of associates
+Currency translation differences
+Fair value changes of and net provisions for
+impairment losses on financial assets
+Tax benefit from share-based payments
+Appropriations to general reserves
+As of December 31, 2020
+81,578
+81,578
+- 1,513,938
+1,513,938
+535,289
+2,649
+535,289
+2,649
+20
+6,835,306
+(11,899,519)
+1
+(1,540,203)
+reserve
+117,125
+(1.540203) 117,125
+differences
+bonds
+Others
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2021
+20
+4,150,291
+(10,359,316)
+(53,061)
+(6,262,066)
+Equity-settled share-based
+payments
+5,193,445
+5,193,445
+Exercise of share options and RSUs
+vesting
+(2,508,430)
+Share of changes in net assets of
+associates
+(2,508,430)
+9,809
+2020
+RMB'000
+Shares held for shares
+1,513,938
+Cash on hand and cash in bank
+20,084,162
+14,927,081
+Term deposits with initial terms within three months
+Cash held in other financial institutions (Note i)
+11,871,616
+1,305,480
+557,650
+860,998
+32,513,428
+17,093,559
+2021
+RMB'000
+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.
+Meituan 2021 Annual Report 271
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS (Continued)
+(a) Cash and cash equivalents (Continued)
+Cash and cash equivalents are denominated in the following currencies:
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+RMB
+USD
+25
+As of December 31,
+(a) Cash and cash equivalents
+25 CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS
+270 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+24 TRADE RECEIVABLES (Continued)
+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:
+Trade receivables
+Up to 3 months
+3 to 6 months
+6 months to 1 year
+Over 1 year
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+1,669,739
+889,861
+101,529
+94,088
+17,861
+39,416
+3,906
+7,583
+1,793,035
+1,030,948
+The majority of the Group's trade receivables was denominated in RMB.
+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.
+Others
+award scheme
+15,934,705
+16,507,095
+Share
+shares
+shares
+capital
+'000
+USD'000
+RMB'000
+Share
+premium
+RMB'000
+award
+scheme
+RMB'000
+Total
+RMB'000
+ordinary
+As of January 1, 2021
+59
+395
+263,155,201
+263,155,596
+Exercise of share options
+and RSUS vesting
+42,334
+- 2
+2,780,149
+1
+2,780,152
+5,885,649
+for shares
+value of
+Number of
+ordinary
+7,866,891
+71,628
+643,769
+32,513,428
+17,093,559
+(b) Restricted cash
+Restricted cash are denominated in the following currencies:
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+RMB
+USD
+Others
+13,243,107
+22,166
+11,646
+12,730,092
+42,427
+3,148
+13,276,919
+12,775,667
+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.
+272 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+26 SHARE CAPITAL, SHARE PREMIUM AND SHARES HELD FOR SHARES AWARD SCHEME
+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.
+Issued and fully paid:
+Nominal
+Shares held
+8,582,899
+683,580
+3,665,402
+Currency
+11,565,200
+(a)
+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%).
+(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.
+32 NOTES PAYABLE
+Included in non-current liabilities:
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+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:
+Undue interests accrued for senior notes (Note 30)
+60,320
+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:
+3,145,002
+USD482,000
+3,250,000
+2,140,000 RMB3,250,000
+9,425,200
+395,785
+Undue interests accrued for senior notes (Note 32)
+60,320
+61,732
+Others
+765,503
+777,375
+18,400,738
+12,779,429
+276 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+31 BORROWINGS
+As of December 31, 2021
+Original
+amount
+'000
+As of December 31,
+Amount
+RMB'000
+'000
+Amount
+RMB'000
+Included in non-current liabilities:
+USD bank borrowings - unsecured (b) USD1,916,600
+12,219,667
+USD300,000
+1,957,470
+12,219,667
+1,957,470
+Included in current liabilities:
+RMB bank borrowings - unsecured
+RMB2,140,000
+USD bank borrowings - unsecured (b) USD1,478,300
+As of December 31, 2020
+Original
+amount
+280,620
+2021
+RMB'000
+More than 5 years
+Meituan 2021 Annual Report 279
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+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
+(184,635)
+19,292,043
+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.
+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.
+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.
+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.
+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.
+2020
+RMB'000
+60,320
+61,732
+22,459,694
+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
+Within 1 year (Note 30)
+Between 2 and 5 years
+2030 senior notes
+Interest Rate
+(per annum)
+Due Date
+750
+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").
+Amount
+(USD million)
+Amounts due to related parties (Note 37)
+858,974
+631,276
+(10,359,316)
+(53,061)
+(6,262,066)
+274 Meituan 2021 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+28 DEFERRED REVENUES
+Non-Current
+Business cooperation agreement with Maoyan
+Current
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+166,700
+166,700
+Online marketing services and others
+5,263,620
+4,764,690
+Business cooperation agreement with Maoyan
+157,264
+222,267
+Various packages for bike-sharing and moped services
+57,596
+65,873
+5,478,480
+5,052,830
+5,478,480
+4,150,291
+20
+20
+108,195
+Share-based
+translation
+Capital reserve
+RMB'000
+payments
+differences
+Others
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+20
+3,161,201
+(7,439,014)
+5,219,530
+(169,459)
+3,272,930
+3,272,930
+(2,283,840)
+(2,283,840)
+-- (120,986)
+(120,986)
+(2,920,302)
+(2,920,302)
+84,327
+84,327
+44,862
+44,862
+108,195
+(4,447,252)
+The following table shows how much of the revenues recognised in the current reporting period relates to
+carried-forward deferred revenues:
+Year ended December 31,
+2021
+46,688
+88,042
+45,876
+23,979
+63,803
+15,165,619
+11,967,026
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+Employee payroll and benefits payables
+5,862,949
+3,995,916
+146,690
+Deposits from merchants and transacting users
+4,903,176
+Unpaid fine imposed pursuant to China's Anti-Monopoly Law
+2,422,440
+Amounts collected on behalf of third parties
+1,835,104
+1,106,030
+Customer advances
+682,029
+367,960
+Accrued expenses
+671,597
+312,481
+Taxes and surcharges payables
+5,188,900
+(2,866,675)
+11,810,659
+2020
+RMB'000
+RMB'000
+2020
+RMB'000
+Revenues recognised that was included in the deferred revenues
+balance at the beginning of the year
+Online marketing services and others
+4,092,837
+Business cooperation agreement with Maoyan
+Various packages for bike-sharing and moped services
+209,685
+65,873
+222,267
+44,010
+4,368,395
+3,931,679
+14,906,908
+29
+Meituan 2021 Annual Report 275
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+As of December 31, 2021 and 2020, the aging analysis of the trade payables based on invoice date is 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 was denominated in RMB.
+30 OTHER PAYABLES AND ACCRUALS
+As of December 31,
+2021
+RMB'000
+TRADE PAYABLES
+6,395,002
+280 Meituan 2021 Annual Report
+Additions
+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
+(3,352)
+Recognition of issuance costs
+(125,346)
+Deductions
+2,180,516
+(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)
+Finance costs
+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
+1,500
+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
+768
+63,606
+92,266
+2021
+As of December 31,
+For the year ended December 31, 2021
+Basic salaries
+22,854
+12,721
+Bonuses
+12,648
+Pension costs and other employee benefits
+864
+764
+Share-based compensation expenses
+349,173
+425,834
+374,391
+453,467
+38 CONTINGENCIES
+The Group did not have any material contingent liabilities as of December 31, 2021 and 2020.
+(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.
+RMB'000
+(iii) In 2021, the Company issued 198,352,600 ordinary shares to Tencent of which 187,000,000
+2020
+RMB'000
+Due from related parties
+Fees
+2020
+RMB'000
+2021
+RMB'000
+Year ended December 31,
+(d) Key management compensation
+395,785
+280,620
+33,077
+47,994
+One of the Company's shareholders
+362,708
+232,626
+Associates of the Group
+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
+(i)
+2,813,246
+4,175,151
+927,744
+One of the Company's shareholders
+Associate of the Group
+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
+Associate of the Group
+Fujian Piaofutong Information Technology Co., Ltd
+Associate of the Group
+Associate of the Group
+1,885,502
+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
+(501,723)
+679,133
+Associates of the Group
+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
+944,715
+Increase in restricted cash
+liabilities
+(38,217)
+Meituan 2021 Annual Report 283
+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:
+Changes of working capital:
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2021
+21.60
+33 SHARE-BASED PAYMENTS (Continued)
+Movement in the number of RSUs granted and the respective weighted average grant date fair value are as
+follows:
+Forfeited during the year
+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
+RSUS (Continued)
+24,147,385
+33.95
+50,893,174
+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
+-
+Forfeited during the year
+(811,629)
+26.59
+(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
+Outstanding as of December 31, 2020
+Forfeited 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
+Granted during the year
+142,875,991
+Fair value of share options
+44,797,063
+(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:
+47.26
+4,437,875
+(23,566,477)
+(Loss)/profit before income tax
+2020
+RMB'000
+2021
+RMB'000
+(853,618)
+Net provisions for impairment of non-financial assets
+Share of gains of investments accounted for using
+15,16
+51,649
+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)
+Note
+(1,332,183)
+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
+87,857
+treasury investments and others
+Year ended December 31,
+1,500
+For the year ended December 31, 2021
+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
+Within 1 year
+1-2 years
+As of December 31,
+2021
+RMB'000
+2020
+RMB'000
+5,242,423
+235,352
+4,299,871
+5,242,423
+As of December 31,
+2021
+733,447
+RMB'000
+2020
+RMB'000
+Purchase of property, plant and equipment
+3,062,527
+4,508,976
+Investments
+1,237,344
+(a) Cash (used in)/generated from operations
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+284 Meituan 2021 Annual Report
+4,064,519
+5,193,860
+36 NOTE TO CONSOLIDATED STATEMENTS OF CASH FLOWS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3,277,476
+5,242,423
+4,299,871
+167.84
+(49,436,884)
+43.67
+(11,695,041)
+60.02
+126,541,129
+90.18
+Meituan 2021 Annual Report 285
+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.
+170,017
+3,102,913
+2020
+RMB'000
+107,105
+5,086,340
+2021
+RMB'000
+415
+RSUs
+Others
+Share options
+4,546
+Year ended December 31,
+Three Months Ended December 31, 2021
+(5,526,910)
+Unaudited
+Revenues
+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:
+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.
+Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+24 Meituan 2021 Annual Report
+(3,935,732)
+Non-IFRS measures:
+(4,061,659)
+(2,009,748)
+Adjusted EBITDA
+(9,994,410)
+(5,339,151)
+(10,000,446)
+6,036
+5,058
+(5,344,209)
+In-store, New initiatives
+26,484,643
+Adjusted net loss
+Food delivery
+Total
+and others
+12,925,660
+Total
+Revenues
+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
+(RMB in thousands)
+Total
+Food delivery services
+14,674,501
+Commission
+Total
+11,713,800
+11,226,424
+15,991
+471,385
+(including interest revenue)
+20,055
+Other services and sales
+14,674,501
+14,419,359
+2,211,138
+285,837
+4,124,543
+4,480,794
+3,255,079
+Online marketing services
+8,083,678
+8,021,710
+hotel & travel
+880,009
+Other services and sales
+(RMB in thousands)
+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
+Operating (loss)/profit and margin by segment are set forth in the table below.
+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
+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.
+Other Gains, Net
+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.
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+8,182,629
+20 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+(including interest revenue)
+Research and Development Expenses
+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.
+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.
+Cost of Revenues
+(10.1%) (2,852,696)
+Income tax credits
+(6,002,831)
+(64.9%)
+70.0%
+Unallocated items
+(433,211)
+ΝΑ
+(554,152)
+ΝΑ
+(21.8%)
+Total operating loss
+(5,005,856)
+(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
+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.
+Meituan 2021 Annual Report 23
+(69.5%)
+(10,205,238)
+New initiatives and others
+38.1%
+8,621,328
+Unaudited
+Three Months Ended
+December 31, 2021
+December 31, 2020
+As a
+percentage
+As a
+percentage
+Year-over-
+Amount
+of revenues
+Amount
+MANAGEMENT DISCUSSION AND ANALYSIS
+of revenues
+(RMB in thousands, except for percentages)
+Food delivery
+1,735,577
+6.6%
+In-store, hotel & travel
+3,897,016
+44.7%
+882,352
+2,821,935
+4.1%
+96.7%
+39.5%
+year change
+Loss for the period
+The Fourth Quarter of 2021 Compared to the Third Quarter of 2021
+Unaudited
+(52,489)
+(136,884)
+Fair value changes of other financial investments
+at fair value through profit or loss
+726,955
+(117,990)
+Other gains/(losses), net
+594,023
+(2,134,851)
+Operating loss
+(5,005,856)
+(10,102,631)
+Finance income
+157,174
+198,890
+Finance costs
+(331,672)
+(369,942)
+Share of (losses)/gains of investments accounted
+for using the equity method
+(163,855)
+273,237
+Loss before income tax
+and contract assets
+Net provisions for impairment losses on financial
+(2,387,116)
+(2,435,083)
+Three Months Ended
+December 31,
+September 30,
+2021
+2021
+(RMB in thousands)
+Revenues
+49,523,133
+Including: Interest revenue
+238,175
+Cost of revenues
+The following table sets forth the comparative figures for the fourth quarter of 2021 and the third quarter of 2021:
+48,829,370
+245,039
+(38,051,383)
+Gross profit
+Selling and marketing expenses
+11,982,603
+10,777,987
+(11,239,904)
+(11,388,227)
+Research and development expenses
+(4,581,961)
+(4,715,550)
+General and administrative expenses
+(37,540,530)
+13,723,399
+12,025,596
+Meituan 2021 Annual Report 25
+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)
+876,103
+(20.7%)
+28 Meituan 2021 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+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 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.
+Income Tax Credits
+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:
+(50.4%)
+Revenues
+6.6%
+44.7%
+(69.5%)
+NA
+Unallocated items
+Net Provisions for Impairment Losses on Financial and Contract Assets
+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.
+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 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
+Three Months Ended
+December 31, 2021
+September 30, 2021
+(433,211)
+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
+3,897,016
+New initiatives and others
+(10,205,238)
+As a
+percentage
+MANAGEMENT DISCUSSION AND ANALYSIS
+Including: Interest revenue
+Year Ended
+Other (losses)/gains, net
+Operating (loss)/profit
+Finance income
+(23,127,199)
+4,330,102
+546,037
+213,684
+Finance costs
+(1,130,935)
+(370,016)
+Share of gains of investments accounted for
+using the equity method
+145,620
+3,160,835
+264,105
+Income tax credits
+(23,566,477)
+30,279
+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
+(15,571,500)
+3,120,605
+(Loss)/profit before income tax
+Cost of revenues
+(185,734)
+815,747
+December 31,
+December 31,
+2021
+2020
+(RMB in thousands)
+179,127,997
+1,000,004
+114,794,510
+884,897
+(136,653,869)
+48,829,370
+Gross profit
+Selling and marketing expenses
+42,474,128
+4,955,909
+34,050,142
+(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
+(40,683,166)
+Meituan 2021 Annual Report 27
+(80,744,368)
+Amount
+Research and development expenses
+(1.3%)
+23.3%
+11,388,227
+22.7%
+11,239,904
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+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
+As a
+percentage
+Quarter-
+over-quarter
+Selling and marketing expenses
+of revenues
+Amount
+of revenues
+change
+(RMB in thousands, except for percentages)
+Cost of revenues
+37,540,530
+75.8%
+38,051,383
+4,581,961
+77.9%
+(1.3%)
+4,715,550
+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.
+Research and Development Expenses
+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
+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.
+Cost of Revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+26 Meituan 2021 Annual Report
+9.3%
+0.3%
+136,884
+(61.7%)
+52,489
+9.7%
+(2.8%)
+0.1%
+General and administrative expenses
+Net provisions for impairment losses
+2,435,083
+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.
+2,387,116
+4.9%
+2.0%
+on financial and contract assets
+4.9%
+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
+RECLASSIFICATION OF COMPARATIVE FIGURES
+Share-based
+Certain comparative figures have been reclassified to conform to the current year presentation.
+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
+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 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 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 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 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 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
+"Board"
+the board of Directors
+294 Meituan 2021 Annual Report
+DEFINITIONS
+"BVI❞
+"CG Code"
+"Charmway Enterprises"
+"Chengdu Meigengmei"
+"Class A Shares"
+"Class B Shares"
+the external auditor of the Company
+292 Meituan 2021 Annual Report
+the audit committee of the Company
+the articles of association of the Company adopted on August 30, 2018 with
+effect from the Listing Date, as amended from time to time
+"AGM"
+Meituan 2021 Annual Report 293
+DEFINITIONS
+the forthcoming annual general meeting of the Company to be held on May
+18, 2022
+"Articles" or
+"Articles of Association"
+"associate(s)"
+"Audit Committee"
+"Auditor"
+"Beijing Kuxun Interaction"
+"Beijing Kuxun Technology"
+"Beijing Mobike"
+"Beijing Sankuai
+Cloud Computing"
+"Beijing Sankuai Online"
+"Beijing Sankuai Technology"
+"Beijing Xinmeida"
+has the meaning ascribed to it under the Listing Rules
+(6,405,555)
+(4,299,628)
+(10,555,695)
+As of January 1, 2020
+(3,095,017)
+3,161,201 (6,256,238)
+20
+20
+(4,425,554)
+7,039
+1,513,938
+6,835,306 (12,781,857)
+20
+4,198,953
+1,513,938
+2,685,015
+1,513,938
+1,513,938
+(2,508,430)
+(2,508,430)
+As of December 31, 2021
+their capacity as owners
+Total transaction with owners in
+(equity component)
+Other comprehensive loss
+Currency translation differences
+Fair value changes of and net
+provisions for impairment
+losses on financial assets
+Total other comprehensive loss
+Transaction with owners in their
+4,150,291
+20
+989,090
+989,090
+(2,283,840)
+3,272,930
+"Companies Ordinance" or
+“Hong Kong
+(171)
+(4,299,457)
+(171)
+(171)
+(171)
+(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
+(4,299,457)
+Companies Ordinance"
+"Company", "our Company",
+"the Company"
+"connected person(s)"
+Hanhai Information Technology (Shanghai) Co., Ltd.
+(E)
+A), a limited liability company incorporated under the laws of the PRC
+on March 16, 2006 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
+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 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 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
+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
+298 Meituan 2021 Annual Report
+"Share(s)"
+the Class A Shares and Class B Shares in the share capital of the Company,
+as the context so requires
+"Shareholder(s)"
+"Shared Patience"
+"Shared Vision"
+"Shenzhen Sankuai Online"
+"Shenzhen Tencent Computer"
+DEFINITIONS
+"Stock Exchange"
+restricted share unit(s)
+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
+DEFINITIONS
+"Prospectus"
+"Registered Shareholders"
+"Reporting Period"
+"Reserved Matters"
+"RMB" or "Renminbi❞
+"RSU(s)"
+Renminbi, the lawful currency of China
+"Sankuai Cloud Online"
+"Shanghai Hantao❞
+"Shanghai Juzuo"
+"Shanghai Lutuan"
+"Shanghai Sankuai Technology"
+prospectus of the Company dated September 7, 2018
+the registered shareholders of the Onshore Holdcos
+the year ended December 31, 2021
+"Shanghai Hanhai"
+Meituan 2021 Annual Report 297
+"subsidiary(ies)"
+"Tencent"
+"United States", "U.S." or "US"
+"US dollars", "U.S. dollars" or
+"US$"
+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
+"VIE(S)"
+"weighted voting right"
+"WFOES", each a "WFOE"
+DEFINITIONS
+"WVR Beneficiaries"
+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, Mobike Beijing and Tianjin Hanbo
+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
+has the meaning ascribed to it in the Listing Rules
+"%"
+per cent
+"WVR Structure"
+"substantial shareholder"
+Meituan 2021 Annual Report 299
+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
+"Tianjin Antechu Technology"
+"Tianjin Hanbo❞
+"Tianjin Wanlong"
+"Tianjin Xiaoyi Technology"
+holder(s) of the Share(s)
+Shared Patience Inc., a limited liability company incorporated under the laws
+of the BVI, which is wholly owned by Wang Xing
+Shared Vision Investment Limited, a limited liability company incorporated
+under the laws of the BVI, which is wholly owned by Mu Rongjun
+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
+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
+A), a company established in the PRC on November 11, 1998 and a
+wholly owned subsidiary of Tencent
+The Stock Exchange of Hong Kong Limited
+has the meaning ascribed to it in section 15 of the Companies Ordinance
+has the meaning ascribed to it in the Listing Rules
+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. (XZBGN), a limited
+liability company incorporated under the laws of the PRC on January 17,
+2018 and our Consolidated Affiliated Entity
+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
+Shenzhen Tencent Computer Systems Co., Ltd.
+Issuance of convertible bonds
+the pre-IPO employee stock incentive scheme adopted by the Company
+dated October 6, 2015, as amended from time to time
+the People's Republic of China
+"Group", "our Group" or
+"the Group", "we", "us", or "our"
+"Hong Kong dollars" or
+"HK dollars" or "HK$"
+"Hong Kong Securities and
+Futures Ordinance" or "SFO"
+"Hong Kong Share Registrar"
+"Director(s)"
+"Hong Kong" or "HK"
+"Independent Third Party(ies)"
+"IPO"
+"Kevin Sunny"
+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
+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
+the director(s) of the Company
+the Company and its subsidiaries and Consolidated Affiliated Entities from
+time to time
+"IFRS"
+Hong Kong dollars, the lawful currency of Hong Kong
+"Crown Holdings"
+DEFINITIONS
+"connected transaction(s)"
+"Consolidated Affiliated Entities"
+"Contractual Arrangement(s)❞
+the British Virgin Islands
+The version of corporate governance code as set out in Appendix 14 to the
+Listing Rules valid until December 31, 2021
+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
+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
+"Controlling Shareholder(s)"
+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
+the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as
+amended, supplemented or otherwise modified from time to time
+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
+has the meaning ascribed to it under the Listing Rules
+has the meaning ascribed to it under the Listing Rules
+the entities we control through the Contractual Arrangements, namely, the
+Onshore Holdcos and their respective subsidiaries (each a "Consolidated
+Affiliated Entity")
+the series of contractual arrangements entered into between WFOES,
+Onshore Holdcos and Registered Shareholders (as applicable)
+Meituan 2021 Annual Report 295
+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
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
+Kong), as amended, supplemented or otherwise modified from time to time
+the Hong Kong Special Administrative Region of the PRC
+"Onshore Holdcos," each an
+"Onshore Holdco❞
+"Post-IPO Share Award Scheme"
+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
+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
+the memorandum of association of the Company adopted on August 30,
+2018 with effect from the Listing Date, as amended from time to time
+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
+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
+"New CG Code"
+the Model Code for Securities Transactions by Directors of Listed Issuers as
+set out in Appendix 10 to the Listing Rules
+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 post-IPO scheme award scheme adopted by the Company on August
+30, 2018
+"Post-IPO Share Option Scheme"
+the post-IPO share option scheme adopted by the Company on August 30,
+2018
+"PRC"
+"PRC Legal Advisor"
+"Pre-IPO ESOP"
+the version of the corporate governance code set out in Appendix 14 to the
+Listing Rules valid from January 1, 2022
+Computershare Hong Kong Investor Services Limited
+"Model Code"
+"Mobike"
+International Financial Reporting Standards, as issued from time to time by
+the International Accounting Standards Board
+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
+"Listing"
+"Listing Date"
+"Listing Rules"
+"Mobike Beijing”
+the listing of the Class B Shares on the Main Board of the Stock Exchange
+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
+296 Meituan 2021 Annual Report
+DEFINITIONS
+"Main Board"
+"Meituan Finance"
+"Memorandum" or
+"Memorandum of Association"
+September 20, 2018
+RSUS vesting
+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.
+5,193,445
+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
+39(b)
+26
+Shares held for shares award scheme
+Other reserves
+263,155,201
+395
+411
+311,221,237
+26
+Borrowings
+Notes payable
+Current liabilities
+Borrowings
+18,177,107
+55,189,152
+Exercise of share options and
+14,657,254
+3,253,296
+8,308,970
+6,348,284
+Share premium
+14,923,811
+12,966,341
+30,383,378
+1,957,470
+10,148,520
+Total equity and liabilities
+Total liabilities
+Other payables and accruals
+40,531,898
+26
+Share capital
+EQUITY
+281
+Intangible assets
+68,519,333
+73,669,047
+2020
+RMB'000
+2021
+RMB'000
+Note
+Long-term treasury investments
+As of December 31,
+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
+Investments in subsidiaries
+232,991,956
+Prepayments, deposits and other assets
+287
+612,967
+41,208,960
+Total assets
+149,136,743
+232,991,956
+38,795,196
+68,738,108
+6,920,635
+302,553
+2,579,982
+88,004,538
+963,662
+15,699,578
+Prepayments, deposits and other assets
+31,572,008
+52,074,868
+Short-term treasury investments
+Current assets
+110,341,547
+164,253,848
+Cash and cash equivalents
+149,136,743
+3,253,296
+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.
+Transaction with owners in
+Unless otherwise expressly stated or the context otherwise requires, all data in this document is as of the date of
+this document.
+- - (2,226,162) - - 12,
+(2,226,162)
+—— ——— — — —_____ 7,210
+7,210
+(2,226,162) - 7,210 (2
+(2,218,952)
+their capacity as owners
+Equity-settled share-based payments
+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.
+(b) Other reserves movement of the Company
+Conversion
+Currency
+(171)
+(10,555,695)
+4,150,291
+20
+As of January 1, 2021
+RMB'000
+Total
+Others
+RMB'000
+bonds
+RMB'000
+RMB'000
+RMB'000
+differences
+payments
+option of
+convertible
+translation
+Total other comprehensive loss
+Capital
+reserve
+RMB'000
+- 5,193,445 - - - 5,
+(6,405,555)
+Other comprehensive loss
+Currency translation differences
+Fair value changes of and net
+provisions for impairment losses
+on financial assets
+"SKU"
+"transaction"
+"Transacting 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
+"monetization rate"
+"Gross Transaction Volume" or
+"GTV"
+"DAU"
+"Active Merchant"
+GLOSSARY
+300 Meituan 2021 Annual Report
+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
+daily active user
+133,007
+Tax effects on non-IFRS adjustments
+121,138
+(176,613)
+123,155
+1,795
+Adjusted net loss
+(7,831)
+121,525
+resulting from acquisitions
+Amortisation of intangible assets
+(434)
+738
+(1,477)
+Impairment and expense reversal/(provision)
+(580,615)
+(191,031)
+(471,908)
+(3,935,732)
+(1,436,520)
+(5,526,910)
+Adjusted for:
+369,942
+149,735
+331,672
+Finance costs
+(198,890)
+(69,724)
+(126,196)
+(157,174)
+(273,237)
+(117,398)
+(107,445)
+adjusted for adjusted net loss
+accounted for using the equity method not
+Share of (losses)/gains of investments
+Finance income
+adjusted net loss
+(577,770)
+(430,233)
+Income tax credits, except for tax effects
+on non-IFRS adjustments
+(2,009,748)
+(4,061,659)
+(589,128)
+Adjusted EBITDA
+2,105,868
+1,633,819
+2,473,008
+Depreciation on property, plant and equipment
+78,383
+75,597
+89,889
+Amortisation of software and others
+(608,984)
+(394,404)
+Other gains/(losses), net not adjusted for
+MANAGEMENT DISCUSSION AND ANALYSIS
+34 Meituan 2021 Annual Report
+ΝΑ
+1,041,671
+1,634,141
+Share-based compensation expenses
+Anti-Monopoly Law
+Fine imposed pursuant to China's
+(9,994,410)
+(2,244,292)
+(5,339,151)
+(RMB in thousands)
+2021
+September 30,
+December 31,
+2020
+2021
+3.8%
+December 31,
+Adjusted for:
+Loss for the period
+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.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2021 Annual Report 35
+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.
+Reconciliation of Non-IFRS Measures to the Nearest IFRS Measures
+As a result of the foregoing, we had loss of RMB23.5 billion in 2021, compared to profit of RMB4.7 billion in 2020.
+(Loss)/profit for the Year
+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.
+Income Tax Credits
+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.
+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 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.
+Unaudited
+Three Months Ended
+3,442,440
+1,481,159
+4,330,102
+(23,127,199)
+December 31, 2020
+As a
+percentage
+As a
+percentage
+Year-over-
+Amount
+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
+(12.9%)
+6.4%
+43.3%
+(38,393,895)
+(76.4%)
+Unallocated items
+(5,001,058)
+ΝΑ
+2,833,369
+8,180,933
+(10,854,996)
+4,170,796
+4.3%
+38.5%
+117.9%
+72.3%
+(39.8%)
+253.7%
+ΝΑ
+ΝΑ
+Total operating (loss)/profit
+New initiatives and others
+Net gains from investments (1)
+17,093,559
+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.
+Net Cash Flows Used in Operating Activities
+Cash and cash equivalents at the end of the year
+(963,716)
+(675,171)
+13,396,185
+December 31, 2021
+Cash and cash equivalents at the beginning of the year
+Exchange losses on cash and cash equivalents
+4,661,090
+16,095,040
+Net increase in cash and cash equivalents
+17,418,081
+78,598,331
+8,475,013
+(21,232,004)
+(58,491,834)
+(4,011,457)
+(RMB in thousands)
+2020
+2021
+December 31,
+December 31,
+Year Ended
+Net cash flows generated from financing activities
+Net cash flows used in investing activities
+Net cash flows (used in)/generated from operating activities
+The following table sets forth our cash flows for the years indicated:
+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.
+Liquidity and Capital Resources
+32,513,428
+17,093,559
+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.
+As of December 31, 2021, we did not have other plans for material investments and capital assets.
+Future Plans for Material Investments and Capital 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.
+Pledge of Assets
+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.
+Foreign Exchange Risk
+For the year ended December 31, 2021, we did not have any material acquisitions or disposals of subsidiaries and
+affiliated companies.
+Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies
+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.
+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.
+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.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2021 Annual Report 39
+MANAGEMENT DISCUSSION AND ANALYSIS
+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.
+investments accounted for using the equity method;
+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:
+Investments Held
+The Group did not have any material contingent liabilities as of December 31, 2021.
+Contingent Liabilities
+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%.
+Gearing ratio
+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.
+Net Cash Flows Generated from Financing 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.
+Net Cash Flows Used in Investing Activities
+MANAGEMENT DISCUSSION AND ANALYSIS
+38 Meituan 2021 Annual Report
+other financial investments at fair value through other comprehensive income.
+Meituan 2021 Annual Report 37
+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.
+4,737,837
+138,442
+Tax effects on non-IFRS adjustments
+615,578
+495,954
+Amortisation of intangible assets resulting from acquisitions
+52,894
+(58,743)
+Impairment and expense reversal/(provision)
+(5,809,527)
+(1,247,255)
+Net gains from investments(1)
+3,277,476
+5,193,860
+276,572
+Share-based compensation expenses
+Fine imposed pursuant to China's Anti-Monopoly Law
+Adjusted for:
+4,707,612
+(23,536,198)
+(Loss)/Profit for the year
+(RMB in thousands)
+2020
+2021
+December 31,
+December 31,
+Year Ended
+MANAGEMENT DISCUSSION AND ANALYSIS
+36 Meituan 2021 Annual Report
+3,442,440
+(1)
+Adjusted net (loss)/profit
+3,120,605
+(9,694,076)
+(1)
+Adjusted EBITDA
+Depreciation on property, plant and equipment
+4,202,623
+8,110,975
+375,908
+321,090
+Amortisation of software and others
+(2,307,217)
+(2,553,898)
+net (loss)/profit
+Other (losses)/gains, net not adjusted for adjusted
+(15,571,500)
+370,016
+Finance costs
+(213,684)
+(546,037)
+Finance income
+(264,105)
+(416,920)
+the equity method not adjusted for adjusted net (loss)/profit
+Share of gains of investments accounted for using
+(546,309)
+(168,721)
+non-IFRS adjustments
+Income tax credits, except for tax effects on
+Adjusted for:
+1,130,935
+Year Ended
+other financial investments at fair value through profit or loss; and
+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.
+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
+Online marketing services
+7,565,111
+10,193,162
+11,018,337
+5,428,154
+324,597
+50,285,894
+39,116,411
+34,124,184
+Other services and sales
+(including interest revenue)
+1,080,929
+40,899
+21,524,042
+22,645,870
+Total
+66,265,319
+21,252,398
+27,276,793
+114,794,510
+Meituan 2021 Annual Report 31
+MANAGEMENT DISCUSSION AND ANALYSIS
+18,908,045
+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.
+32,530,325
+Revenues
+Operating (loss)/profit and margin by segment are set forth in the table below.
+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
+Food delivery services
+Commission
+96,311,778
+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
+40,744,531
+Total
+54,203,640
+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.
+42,934,430
+Costs and Expenses
+4.8%
+5,593,895
+4.9%
+54.0%
+259,953
+0.1%
+467,690
+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.
+8,612,626
+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.
+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.
+Net Provisions for Impairment Losses on Financial and Contract Assets
+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.
+Meituan 2021 Annual Report 33
+MANAGEMENT DISCUSSION AND ANALYSIS
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+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.
+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
+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.
+Research and Development Expenses
+53.1%
+Selling and Marketing Expenses
+10,892,514
+The following table sets forth a breakdown of our costs and expenses by function for the years indicated:
+Costs and Expenses:
+9.5%
+Year Ended
+December 31, 2021
+December 31, 2020
+As a
+percentage
+As a
+percentage
+Year-over-
+of revenues
+Amount
+of revenues
+year change
+(RMB in thousands, except for percentages)
+Cost of revenues
+Amount
+136,653,869
+9.3%
+16,675,595
+Research and development expenses
+General and administrative expenses
+Net provisions for impairment losses on
+financial and contract assets
+94.8%
+20,882,685
+22.7%
+18.2%
+Selling and marketing expenses
+69.2%
+70.3%
+80,744,368
+76.3%
+40,683,166
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+Meituan 2021 Annual Report 45
+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.
+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.
+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.
+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.
+44 Meituan 2021 Annual Report
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+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.
+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.
+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.
+Zhang Chuan (II), aged 46, is a Senior Vice President and is responsible for overseeing the Company's in-store
+services business.
+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.
+Meituan 2021 Annual Report 47
+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.
+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.
+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.
+Chen Liang received his bachelor's degree in mechatronic engineering from South China University of Technology
+in July 2002.
+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 (), aged 42, is a Senior Vice President and is responsible for overseeing the Company's grocery
+retail business.
+DIRECTORS AND SENIOR MANAGEMENT
+46 Meituan 2021 Annual Report
+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.
+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).
+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.
+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.
+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.
+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.
+SENIOR MANAGEMENT
+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.
+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.
+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.
+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.
+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 (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.
+Executive Directors
+DIRECTORS
+The biographical details of the Directors and senior management of the Company are set out as follows:
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+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.
+Employees
+MANAGEMENT DISCUSSION AND ANALYSIS
+40 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 41
+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 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.
+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.
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+Meituan 2021 Annual Report 43
+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.
+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 (), 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.
+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.
+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.
+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 (), 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.
+Non-executive Directors
+DIRECTORS AND SENIOR MANAGEMENT
+42 Meituan 2021 Annual Report
+Wang Huiwen received his bachelor's degree in electronic engineering from Tsinghua University in July 2001.
+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.
+Independent Non-executive Directors
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+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.
+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.
+5,392,801
+3,934,288
+28,516,174
+2,851,617
+corporate purpose
+10% for working capital and general
+310,434
+5,703,235
+to our business and are in line
+businesses which are complementary
+or investments in assets and
+20% to selectively pursue acquisitions
+by end of 2022
+323,623
+with our strategies
+by end of 2022
+1,808,786
+1,042,831
+GLOBAL OFFERING
+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.
+Use of Net Proceeds from Issuance of the Tencent Subscription
+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.
+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.
+4.
+3.
+Use of Net Proceeds from Issuance of the 2027 Bonds and 2028 Bonds
+2.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 49
+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.
+5,563,923
+22,952,251
+by end of 2022
+9,657,038
+1,970,090
+Use of Net Proceeds from Issuance of the 2021 Placing and Subscription
+and products
+Use of Net Proceeds from Listing
+1.
+USE OF NET PROCEEDS
+REPORT OF DIRECTORS
+48 Meituan 2021 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.
+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.
+BUSINESS REVIEW
+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.
+DIVIDEND POLICY AND FINAL DIVIDENDS
+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.
+PRINCIPAL ACTIVITIES
+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.
+9,980,661
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2021.
+For the year ended December 31, 2021, the Company applied the IPO Proceeds for the following purposes:
+RESULTS
+Utilisation as of
+31 December
+Use of proceeds
+as stated in
+the Prospectus
+(in RMB'000)
+(approximate)
+3,887,035
+6,093,626
+1,964,198
+9,980,661
+and enhance our research and
+development capabilities
+35% to upgrade our technology
+by end of 2022
+31 December
+2021
+(in RMB'000)
+(approximate)
+2020
+Expected time
+of use
+(in RMB'000)
+(approximate)
+35% to develop new services
+2021
+(in RMB'000)
+(approximate)
+Net proceeds
+unutilised as of
+Utilisation as of
+31 December
+0.10%
+Class B Shares
+Interest in controlled corporation (L)
+Kevin Sunny
+36,400,000
+5.37%
+Class A Shares
+0.04%
+Interest in controlled corporation (L)
+Galileo Space Limited
+5,321,335
+0.04%
+2,134,660
+Class B Shares
+Class B Shares
+Class A Shares
+5.37%
+36,400,000
+Aim Mars Investment Limited
+Interest in controlled corporation (L)
+0.04%
+2,134,660
+Class A Shares
+5.37%
+36,400,000
+class of Shares (7)
+interest in each
+percentage of
+2,134,660
+Class B Shares
+Class B Shares
+12,822,605
+Approximate
+0.00%
+60,000
+Beneficial interest (L)
+SHUM Heung
+Class B Shares
+0.00%
+60,000
+Beneficial interest (L)
+LENG Xuesong (6)
+Class B Shares
+0.00%
+60,000
+Beneficial interest (L)
+ORR Gordon Robert
+Halyburton (6)
+0.29%
+15,664,215
+Class B Shares
+0.01%
+674,700
+Beneficial interest (L)
+Class B Shares
+4.99%
+Sequoia Capital China Funds,
+Sequoia Capital Global
+Growth Funds and Other
+Controlled Entities
+SCEP Master Fund
+Interest in controlled corporations (L)
+Interest in controlled corporations (L)
+SHEN Nanpeng Neil (5)
+Class B Shares
+0.23%
+Beneficial interest (L)
+securities
+118,650,000
+Number and
+Trust
+Beneficiary and founder of a Trust (L)
+MU Rongjun (3)
+0.88%
+47,952,542
+Class B Shares
+WangXing Foundation
+Interest in controlled corporation (L)
+Class B Shares
+0.00%
+1,121
+WAFO Global Inc.
+Interest in controlled corporation (L)
+Class B Shares
+0.00%
+318
+3.87%
+26,269,783
+Class A Shares
+Shared Patience
+Interest in controlled corporation (L)
+72.19%
+489,600,000
+Class A Shares
+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
+Interest in controlled corporation (L)
+Yeung Harry(6)
+17.49%
+Class A Shares
+Interest in controlled corporation (L)
+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
+Name of Director or
+Class B Shares
+0.10%
+5,333,332
+Beneficial interest (L)
+Class B Shares
+class of
+0.01%
+Class A Shares
+1.08%
+7,330,000
+Shared Vision
+Interest in controlled corporation (L)
+Class A Shares
+17.49%
+118,650,000
+Charmway Enterprises
+Interest in controlled corporation (L)
+Class A Shares
+17.49%
+118,650,000
+Day One Holdings Limited
+666,668
+Class B Shares
+Name of Substantial Shareholder
+REPORT OF DIRECTORS
+0.46%
+25,000,000 Class B Shares
+Beneficial interest (L)
+Great Summer Limited (4)
+0.16%
+8,850,245 Class B Shares
+Beneficial interest (L)
+7.24%
+395,308,305 Class B Shares
+Beneficial interest (L)
+11.42%
+623,420,905 Class B Shares
+Beneficial interest (L)
+Class B Shares - Tencent
+Huai River Investment Limited (4)
+Tencent Mobility Limited (4)
+Morespark Limited (4)
+1.08%
+7,330,000 Class A Shares
+Interest in controlled corporation (2) (L)
+17.49%
+118,650,000 Class A Shares
+Founder of a trust(2) (L)
+17.49%
+118,650,000 Class A Shares
+Beneficiary of a trust(2) (L)
+17.49%
+118,650,000 Class A Shares
+Trustee (L)
+TMF (Cayman) Ltd.
+Mu Rongjun
+17.49%
+118,650,000 Class A Shares
+THL A Limited (4)
+THL A25 Limited (4)
+Interest in controlled corporation (L)
+Beneficial interest (L)
+Beneficial interest (L)
+0.01%
+Trust
+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.
+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.
+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.
+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.
+(5)
+(4)
+(2)
+The letter "L" denotes the person's Long Position in such Shares.
+(1)
+0.29%
+5.00%
+272,776,369 Class B Shares
+15,664,215 Class B Shares
+Beneficial interest (L)
+Other (L)
+Notes:
+Class B Shares - Sequoia
+Sequoia Capital China Funds,
+Sequoia Capital Global Growth
+Funds and Other Controlled
+Entities (5)
+percentage of
+interest in each
+class of Shares (6)
+Number and class of
+Shares held
+Capacity/Nature of interest(¹)
+Name of Substantial Shareholder
+Approximate
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 59
+0.019%
+1,018,420 Class B Shares
+Beneficial interest (L)
+Distribution Pool Limited (4)
+0.00%
+12,912 Class B Shares
+559,594 Class B Shares
+Day One Holdings Limited (3)
+1.08%
+7,330,000 Class A 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.
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+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.
+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
+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.
+(5)
+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.
+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.
+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:
+Capacity/Nature of interest (¹)
+Number and class of
+Shares held
+interest in each
+class of Shares (6)
+Beneficial interest (L)
+17.49%
+118,650,000 Class A Shares
+Beneficial interest (L)
+Class A Shares-Mu Rongjun
+Charmway Enterprises (3)
+Shared Vision (3)
+3.87%
+26,269,783 Class A Shares
+72.19%
+489,600,000 Class A Shares
+Interest in controlled corporation (1) (L)
+Founder of a trust (¹) (L)
+72.19%
+489,600,000 Class A Shares
+Beneficiary of a trust (¹) (L)
+56 Meituan 2021 Annual Report
+72.19%
+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)
+489,600,000 Class A Shares
+Beneficiary and founder of a Trust (L)
+272,101,669
+class of
+securities
+Meituan 2021 Annual Report 51
+REPORT OF 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.
+DIRECTORS
+The Directors during the Reporting Period and up to date of this annual report are:
+Executive Directors
+Mr. Wang Xing (E) (Chairman of the Board)
+Mr. Mu Rongjun (1)
+Mr. Wang Huiwen (X)
+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)
+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.
+As of December 31, 2021, the Company's reserves available for distribution, amounted to approximately RMB311.2
+billion.
+DISTRIBUTABLE RESERVES
+WANG Xing (2)
+50 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+MAJOR CUSTOMERS AND SUPPLIERS
+Major Customers
+For the year ended December 31, 2021, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+Major Suppliers
+Dr. Shum Heung Yeung Harry (¥)
+For the year ended December 31, 2021, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+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.
+SHARE CAPITAL
+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.
+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.
+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.
+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.
+PROPERTY, PLANT AND EQUIPMENT
+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.
+BANK LOANS AND OTHER BORROWINGS
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+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.
+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.
+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.
+RETIREMENT AND EMPLOYEE BENEFITS SCHEME
+Details of the retirement and employee benefits scheme of the Company are set out in Note 8 to the consolidated
+financial statements.
+REPORT OF DIRECTORS
+EMOLUMENT POLICY
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+Interests of Directors and Chief Executives in the Company
+Number and
+Name of Director or
+chief executive
+Nature of interest(1)
+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.
+Relevant company
+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:
+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.
+54 Meituan 2021 Annual Report
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+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.
+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.
+52 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+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 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.
+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.
+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.
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS
+Details of the emoluments of the Directors during the Reporting Period are set out in Note 8 to the consolidated
+financial statements.
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+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.
+MANAGEMENT CONTRACTS
+Meituan 2021 Annual Report 53
+REPORT OF DIRECTORS
+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.
+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).
+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.
+Administration
+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.
+Grant of Awards
+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.
+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.
+i.
+Exercise price
+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.
+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.
+Payment
+Options
+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.
+79.23%
+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.
+64 Meituan 2021 Annual Report
+4,904,273,202
+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.
+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.
+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.
+62 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+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
+Eligible Participants
+REPORT OF DIRECTORS
+underlying
+i. Performance objectives and other terms
+options
+options
+options
+Shares
+during the
+options
+options
+before the
+date on
+underlying
+Number of
+Class B
+exercised
+79.58%
+underlying
+immediately
+Shares
+price of
+Number of
+RSUs
+outstanding
+Reporting
+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.
+during the
+during the
+before the
+during the Period and
+as of
+Exercise January 1,
+Price
+2021
+Period
+granted
+granted
+Grant
+Vesting
+options were
+Date of
+which the
+outstanding
+cancelled
+lapsed
+immediately
+Name
+0.44%
+1.93%
+0.44%
+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
+REPORT OF DIRECTORS
+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.
+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:
+Assuming the 2028 Bonds are fully
+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%
+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).
+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).
+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)
+0
+710,000
+HK$69.1
+4 years (1)
+HK$70.0
+Other Employees July 5, 2019
+2021
+Period
+489,600,000
+Period
+price
+Reporting December 31,
+Reporting
+date of
+Reporting the exercise
+Period
+as of
+60 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+exercise
+27,030,158
+7.94%
+7.94%
+0.00%
+26,734,628
+0.43%
+0
+0.00%
+26,734,628
+0.43%
+2028 CB Bondholders
+0
+0.00%
+0
+Other Shareholders
+4,904,273,202
+79.93%
+4,904,273,202
+0.00%
+79.58%
+27,030,158
+4,904,273,202
+0
+2027 CB Bondholders
+10.07%
+623,420,905
+489,600,000
+7.91%
+Charmway Enterprises
+118,650,000
+options
+118,650,000
+1.93%
+118,650,000
+489,600,000
+1.93%
+1.92%
+Huai River Investment Limited
+623,420,905
+10.16%
+623,420,905
+10.12%
+623,420,905
+10.11%
+118,650,000
+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.
+of the Shares
+Other Employees
+US$5.18
+5,055,940
+0
+0
+0
+5,055,940
+US$1.005-
+February 1, 2015 to 4-6 years
+July 1, 2018
+Wang Huiwen
+5,000,000
+0
+0
+0
+0
+5,000,000
+US$3.86-
+US$5.18
+May 31, 2006 to
+August 1, 2018
+0.5 to
+6 years
+US$0.000017-
+US$5.18
+37,781,674
+Outstanding RSUs Granted under the Pre-IPO ESOP
+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)
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 65
+Note:
+US$5.18
+35,144,745
+6 years
+818,515
+11,874,178 HKD280.7018
+US$0.000017-
+47,837,614
+Total
+US$5.18
+25,088,805
+818,515
+176
+11,874,178 HKD280.7018
+US$0.000017-
+176
+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.
+July 1, 2017 to
+July 1, 2018
+2021
+Shares
+exercised
+Weighted
+Average price
+Number of
+underlying
+during the
+of Class B
+Number of
+options
+Reporting
+outstanding as
+Period and
+Shares options lapsed
+immediately
+options
+cancelled
+Shares
+underlying
+options
+outstanding
+during the
+during
+Number of
+Number of
+options
+Number of
+The table below shows the details of share options granted to the Directors and other employees under the Pre-IPO
+ESOP.
+Period
+Period
+of exercise
+price
+December 31,
+the Reporting
+Reporting
+the exercise before the date
+Directors
+Mu Rongjun
+of January 1,
+2021
+Exercise
+Vesting
+Period (¹)
+Date of Grant
+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.
+Price
+Shares
+The table below shows the details of RSUs granted to the Directors and other employees under the Pre-IPO ESOP.
+Name
+(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, 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.
+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.
+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.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 67
+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 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.
+Maximum Number of Class B Shares
+0
+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
+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)
+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.
+Number of
+Average
+Number of
+Number of Number of
+Closing price
+Weighted
+The table below shows the details of options granted under the Post-IPO Share Option Scheme:
+Outstanding Options Granted under the 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:
+REPORT OF DIRECTORS
+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
+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.
+Grant Offer Letter and Notification of Grant of Options
+REPORT OF DIRECTORS
+68 Meituan 2021 Annual Report
+Meituan 2021 Annual Report 69
+Number of Shares
+POST-IPO SHARE OPTION SCHEME
+66 Meituan 2021 Annual Report
+0
+0
+166,667
+499,999
+7,766,665
+4 to 6 years
+January 1, 2016 to
+July 1, 2018
+6 years
+July 1, 2017
+Directors
+Mu Rongjun
+Wang Huiwen
+during the
+outstanding as of
+Reporting Period December 31, 2021
+underlying RSUs
+RSUS lapsed
+RSUS cancelled
+during the
+Reporting Period
+RSUs vested
+during the
+Reporting Period (1)
+Number of Shares
+underlying RSUs
+outstanding as of
+January 1, 2021
+Vesting Period
+Date of Grant
+333,332
+0
+0
+0
+Including RSUs which have been vested before the Reporting Period but which Shares were issued to the grantees during
+the Reporting Period.
+24,642,339
+0
+1,324,330
+24,064,783
+50,031,452
+(1)
+Note:
+REPORT OF DIRECTORS
+Total
+0
+1,324,330
+23,898,116
+41,764,788
+0 to 6 years
+December 29, 2010 to
+August 2, 2018
+Other Employees
+7,766,665
+16,542,342
+0
+(1)
+0
+0
+1,251,602
+Total
+3,095,316
+0
+229,714 HKD251.1930
+0
+0
+0
+Notes:
+as of
+(2)
+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.
+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 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.
+0
+2,865,602
+3,714 HKD323.7872
+Name
+Other Employees April 24, 2020
+Other Employees July 20, 2020
+710,000
+HK$100
+5.2 years(2)
+HK$100.15
+1,130,000
+0
+226,000 HKD250.0000
+0
+0
+904,000
+4 years
+HK$195.98
+HK$191.1
+0
+1,255,316
+8,176,876
+0
+51,236,349 19,024,135
+76,696,376
+Total
+0 100,697,964
+0
+11,250
+commencing from December 20,
+October 4, 2018 to
+October 22, 2021
+2018 until September 20, 2022
+2 to 6 years
+76,617,626
+51,236,349
+18,979,135
+0 100,731,714
+8,176,876
+Other Employees
+EQUITY-LINKED AGREEMENTS
+Number of
+Shares
+REPORT OF DIRECTORS
+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.
+Meituan 2021 Annual Report 73
+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.
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+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.
+15,000
+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.
+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.
+0
+15,000
+November 23, 2018 6.25% to vest in each quarter
+2021
+Period
+Period
+Period (¹)
+Period
+2021
+Vesting Period
+Directors
+Date of Grant
+Reporting December 31,
+Reporting
+Reporting
+Reporting
+January 1,
+as of
+during the
+Name
+26,250
+Orr Gordon Robert
+Halyburton
+26,250
+Shum Heung
+Yeung Harry
+2018 until September 20, 2022
+commencing from December 20,
+11,250
+0
+0
+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.
+November 23, 2018 6.25% to vest in each quarter
+commencing from December 20,
+0
+2018 until September 20, 2022
+November 23, 2018 6.25% to vest in each quarter
+Leng Xuesong
+11,250
+0
+0
+15,000
+0
+26,250
+Shenzhen Tencent Computer is a subsidiary of Tencent, which is a substantial shareholder of the Company, and
+therefore a connected person of the Company.
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+Meituan 2021 Annual Report 75
+Beijing Sankuai Cloud Computing is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vi)
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(v)
+(iv) Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(iii)
+(vii) Beijing Xinmeida 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%;
+(i)
+(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.
+Onshore Holdcos and their subsidiaries
+100%
+Registered Shareholders (1)
+Service
+Fees
+Management and
+consulting services
+Tianjin Antechu Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+WFOES
+(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;
+(x)
+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.
+Exclusive Business Cooperation Agreements
+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:
+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.
+“----” 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.
+denotes a contractual relationship.
+denotes a direct legal and beneficial ownership in the equity interest.
+(ix)
+(4)
+(2)
+Shanghai Hantao is owned by Wang Xing as to 95% and Mu Rongjun as to 5%.
+(xi)
+Beijing Sankuai Technology is owned by Wang Xing as to 50.97% and Mu Rongjun as to 49.03%; and
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 79
+Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(3)
+100%
+Notes:
+Our Company
+NON-EXEMPT CONNECTED TRANSACTIONS
+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.
+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.
+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.
+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.
+REPORT OF DIRECTORS
+76 Meituan 2021 Annual Report
+Issue of Class B Shares to Connected Person
+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.
+The Group has entered into the following non-exempt continuing connected transactions during the Reporting
+Period.
+during the
+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.
+Cloud Services and Technical Services Framework Agreement
+REPORT OF DIRECTORS
+Payment Services Framework Agreement
+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
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the 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.
+CONTRACTUAL ARRANGEMENTS
+REPORT OF DIRECTORS
+78 Meituan 2021 Annual Report
+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.
+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.
+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.
+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.
+(၁)
+on normal commercial terms or better; and
+(b)
+(a) in the ordinary and usual course of business of the Group;
+The independent non-executive Directors have reviewed the continuing connected transactions outlined above, and
+confirmed that such continuing connected transactions had been entered into:
+Annual Review by the Independent Non-executive Directors and the Auditor
+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.
+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 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.
+during the
+outstanding
+as of
+Termination
+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.
+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.
+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.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 71
+Grant of Award
+Shares
+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.
+Awards
+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 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.
+REPORT OF DIRECTORS
+70 Meituan 2021 Annual Report
+during the
+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.
+Number of
+POST-IPO SHARE AWARD SCHEME
+(i)
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+outstanding
+lapsed
+RSUs vested
+granted
+Number of
+RSUS
+RSUs
+RSUs
+RSUS
+cancelled
+underlying
+underlying
+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
+(ii)
+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:
+Shares
+underlying
+RSUs
+REPORT OF DIRECTORS
+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.
+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.
+REPORT OF DIRECTORS
+88 Meituan 2021 Annual Report
+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.
+SUFFICIENCY OF PUBLIC FLOAT
+CLOSURE OF THE REGISTER OF MEMBERS
+IMPORTANT EVENTS AFTER THE REPORTING PERIOD
+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.
+AUDIT COMMITTEE
+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.
+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.
+REPORT OF DIRECTORS
+Meituan 2021 Annual Report 87
+PROFESSIONAL TAX ADVICE RECOMMENDED
+PERMITTED INDEMNITY PROVISION
+CORPORATE GOVERNANCE
+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.
+The Board is pleased to present the corporate governance report of the Company for 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.
+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.
+Meituan 2021 Annual Report 81
+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).
+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.
+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.
+MODEL CODE FOR SECURITIES TRANSACTIONS
+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".
+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.
+AUDITOR
+The Board is committed to ensuring the Company adhere to a high standard of corporate governance.
+CORPORATE GOVERNANCE REPORT
+Meituan 2021 Annual Report 89
+CORPORATE GOVERNANCE REPORT
+Hong Kong, March 25, 2022
+Chairman
+Wang Xing
+On behalf of the Board
+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 PRACTICES
+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.
+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
+LEGAL PROCEEDINGS AND COMPLIANCE
+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.
+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.
+84 Meituan 2021 Annual Report
+.
+•
+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.
+REPORT OF DIRECTORS
+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 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.
+Reasons for Adopting the Contractual Arrangements
+REPORT OF DIRECTORS
+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
+REPORT OF DIRECTORS
+The Foreign Investment Law
+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
+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.
+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 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:
+(ii)
+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
+(e)
+The independent non-executive Directors have reviewed the Contractual Arrangements outlined above, and
+confirmed that:
+(b)
+(c)
+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.
+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.
+(a) the transactions carried out during the Reporting Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+(d)
+(c)
+no change without independent Shareholders' approval;
+(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:
+(a)
+no change without independent non-executive Directors' approval;
+(b)
+(i)
+Powers of Attorney
+Equity Pledge 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.
+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.
+Exclusive Option Agreements
+80 Meituan 2021 Annual Report
+REPORT OF DIRECTORS
+15 Queen's Road Central
+Hong Kong
+As to the PRC law:
+Han Kun Law Offices
+Beijing office
+9/F, Office Tower C1
+Oriental Plaza
+No. 1 East Chang An Ave
+Beijing 100738, the PRC
+As to Cayman Islands law:
+Maples and Calder (Hong Kong) LLP
+Maples Fund Services (Cayman) Limited
+PO Box 1093, Boundary Hall
+Cricket Square
+Grand Cayman KY1-1102
+Cayman Islands
+Mr. Leng Xuesong (A) (Chairman)
+China Merchants Bank, Beijing Branch
+Shouti Sub-branch
+1/F, Tengda Building
+No. 168 Xizhimenwai Street
+Haidian District
+Beijing
+China
+STOCK CODES
+3690 (HKD counter)
+26th Floor, Central Plaza
+18 Harbour Road, Wanchai
+Hong Kong
+COMPLIANCE ADVISOR
+83690 (RMB counter)
+STOCK SHORT NAMES
+The Landmark
+PRINCIPAL BANKER
+42/F, Edinburgh Tower
+Guotai Junan Capital Limited
+Dr. Shum Heung Yeung Harry (¥)
+Block B&C, Hengjiweiye Building
+No. 4 Wang Jing East Road
+Chaoyang District
+Beijing 100102
+China
+PRINCIPAL PLACE OF BUSINESS IN HONG
+KONG
+5/F, Manulife Place
+348 Kwun Tong Road
+Kowloon
+Hong Kong
+LEGAL ADVISORS
+Meituan 2023 Annual Report 3
+CORPORATE INFORMATION
+HONG KONG SHARE REGISTRAR
+Computershare Hong Kong Investor Services Limited
+Shops 1712-1716, 17th Floor
+Hopewell Centre
+183 Queen's Road East
+Wanchai
+Hong Kong
+PRINCIPAL SHARE REGISTRAR AND TRANSFER
+OFFICE
+As to Hong Kong law:
+Davis Polk & Wardwell
+10/F, The Hong Kong Club Building
+3A Chater Road
+Central
+Skadden, Arps, Slate, Meagher & Flom
+Hong Kong
+Grand Millennium Plaza
+181 Queen's Road Central
+Hong Kong
+Profit/(loss) before income tax
+Profit/(loss) for the year
+97,528,531
+32,320,388
+2,762,388
+2,236,165
+114,794,510 179,127,997 219,954,948 276,744,954
+34,050,142 42,474,128 61,752,979 97,191,161
+4,437,875 (23,566,477) (6,755,517) 14,021,868
+4,707,612 (23,536,198) (6,685,323) 13,857,331
+Profit/(loss) for the year attributable to
+equity holders of the Company
+2,238,769
+4,708,313
+(23,538,379)
+(6,686,110) 13,855,828
+Total comprehensive income/(loss) for
+the year
+2,919,043
+Gross profit
+1,728,980 (25,036,620)
+Total comprehensive income/(loss) for
+the year attributable to equity holders of
+the Company
+2,921,721
+1,729,681
+(25,038,801)
+(6,130,149) 14,223,183
+CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As of December 31,
+2019
+2020
+2021
+2022
+(6,129,362) 14,224,686
+Revenues
+(RMB in thousands)
+2023
+-W (HKD counter)
+MEITUAN-W (HKD counter)
+*-WR (RMB counter)
+MEITUAN-WR (RMB counter)
+COMPANY'S WEBSITE
+about.meituan.com
+EAT BETTER, LIVE BETTE
+4 Meituan 2023 Annual Report
+CORPORATE INFORMATION
+WEIGHTED VOTING RIGHTS
+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.
+As at the date of this annual report (i.e. March 22, 2024), the WVR Beneficiaries are Wang Xing and Mu Rongjun.
+Wang Xing beneficially owned 515,869,783 Class A Shares, representing approximately 44.33% 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 84,401,229 Class A Shares,
+representing approximately 7.25% 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 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.
+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
+600,271,012 Class B Shares, representing approximately 10.65% of the total number of issued Class B Shares as
+at the date of this annual report.
+Meituan 2023 Annual Report 5
+CORPORATE INFORMATION
+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:
+(i)
+(ii)
+(iii)
+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;
+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;
+where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer complies with Listing Rule
+8A.18(2); or
+(iv) when all of the Class A Shares have been converted to Class B Shares.
+EAT BETTER, LIVE BETTE
+6 Meituan 2023 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+2019
+Year ended December 31,
+2020
+2021
+2022
+27/F, Low Block
+HEAD OFFICE AND PRINCIPAL PLACE OF
+BUSINESS IN CHINA
+PO Box 309, Ugland House
+NOMINATION COMMITTEE
+commerce
+New
+initiatives
+Unallocated
+items¹
+(RMB in thousands)
+Total
+Revenues:
+Delivery services
+21,927,023
+21,927,023
+Commission
+19,426,729
+569,576
+19,996,305
+Core local
+Online marketing services
+76,905
+10,984,001
+Other services and sales (including interest revenue)
+2,869,794
+17,918,828
+20,788,622
+Total revenues
+55,130,642
+18,565,309
+73,695,951
+Cost of revenues, operating expenses and
+unallocated items
+(47,111,217) (23,398,001) (1,428,599)
+(71,937,817)
+10,907,096
+Operating profit/(loss)
+Unaudited Three Months Ended December 31, 2023
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Non-current assets
+Current assets
+49,877,870 78,268,647 92,824,592 101,335,725 109,913,453
+82,135,045 88,306,155 147,828,677 143,145,467 183,116,179
+Total assets
+EQUITY
+Equity attributable to equity holders of
+the Company
+Non-controlling interests
+Total Equity
+LIABILITIES
+132,012,915 166,574,802 240,653,269 244,481,192 293,029,632
+92,112,445
+97,693,027
+FINANCIAL INFORMATION BY SEGMENT
+(58,051)
+125,613,442
+(56,680)
+128,761,610
+(55,893)
+152,013,207
+(56,840)
+92,054,394
+97,634,275 125,556,762 128,705,717 151,956,367
+Non-current liabilities
+Current liabilities
+3,365,958 17,792,886 46,503,550 39,345,378 40,199,170
+36,592,563 51,147,641 68,592,957 76,430,097 100,874,095
+Total liabilities
+Total equity and liabilities
+39,958,521 68,940,527 115,096,507 115,775,475 141,073,265
+132,012,915 166,574,802 240,653,269 244,481,192 293,029,632
+Meituan 2023 Annual Report 7
+(58,752)
+Grand Cayman, KY1-1104
+Cayman Islands
+8,019,425
+1,758,134
+(1,581,812)
+(731,590)
+1
+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, (iv) other gains, net
+and (v) certain corporate administrative expenses and other items. They are not allocated to individual segments.
+EAT BETTER, LIVE BETTE
+8
+Meituan 2023 Annual Report
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Core local
+commerce
+Year-over-year change
+New
+initiatives
+Unallocated
+items
+(6,365,020)
+Total
+Revenues:
+Delivery services
+(appointed on March 22, 2024)
+REMUNERATION COMMITTEE
+PricewaterhouseCoopers
+Certified Public Accountants and
+Registered PIE Auditor
+22/F, Prince's Building
+Central
+Hong Kong
+REGISTERED OFFICE
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Mu Rongjun ()
+(Percentages %)
+(4,832,692) (1,428,599)
+7,215,242
+(1,581,812) (60,860,529)
+Revenues:
+Unaudited Three Months Ended December 31, 2022
+Core local
+commerce
+New
+Unallocated
+initiatives
+items
+(RMB in thousands)
+Total
+Delivery services
+19,772,732
+Commission
+Operating (loss)/profit
+14,636,518
+19,772,732
+14,933,859
+Online marketing services
+7,744,751
+Other services and sales (including interest revenue)
+1,318,663
+24,841
+16,334,093
+- 7,769,592
+17,652,756
+Total revenues
+43,472,664
+16,656,275
+60,128,939
+Cost of revenues, operating expenses and
+unallocated items
+(36,257,422) (23,021,295)
+297,341
+2023
+10.9
+ASSETS
+16.6
+Operating profit/(loss)
+31.2
+(28.9)
+(26.3)
+ΝΑ
+EAT BETTER, LIVE BETTE
+[美 美团
+Meituan
+(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
+Stock Code: 3690
+雪美雞
+EAT BETTER, LIVE BETTER
+2023
+Annual Report
+CONTENTS
+2
+Corporate Information
+Financial Summary and Operation Highlights
+Chairman's Statement
+Management Discussion and Analysis
+Directors and Senior Management
+Report of Directors
+6
+(26.3)
+2.8
+28.2
+unallocated items
+ΝΑ
+ΝΑ
+17.3
+Commission
+35.3
+50.6
+ΝΑ
+35.7
+Online marketing services
+31.2
+188.1
+19
+ΝΑ
+Other services and sales (including interest revenue)
+101.6
+(RMB in thousands)
+ΝΑ
+23.5
+Total revenues
+28.7
+18.0
+ΝΑ
+25.8
+Cost of revenues, operating expenses and
+31.7
+11
+16
+40
+Executive Directors
+Mr. Wang Xing()
+(Chairman and Chief Executive Officer)
+Mr. Mu Rongjun ()
+Non-executive Director
+Mr. Leng Xuesong (A) (Chairman)
+Dr. Shum Heung Yeung Harry (¥)
+Mr. Orr Gordon Robert Halyburton
+JOINT COMPANY SECRETARIES
+Mr. Neil Nanpeng Shen ()
+Independent Non-executive Directors
+Mr. Orr Gordon Robert Halyburton
+Mr. Leng Xuesong (A)
+CORPORATE GOVERNANCE COMMITTEE
+Dr. Shum Heung Yeung Harry (¥)
+Ms. Yang Marjorie Mun Tak (1)
+(appointed on June 30, 2023)
+Ms. Xu Sijia ()
+Ms. Lau Yee Wa ()
+AUTHORIZED REPRESENTATIVES
+Mr. Wang Xing (1)
+Mr. Mu Rongjun ()
+(appointed on June 26, 2023)
+AUDITOR
+Mr. Orr Gordon Robert Halyburton (Chairman)
+Mr. Leng Xuesong (A)
+Dr. Shum Heung Yeung Harry (¥)
+Ms. Yang Marjorie Mun Tak (
+AUDIT COMMITTEE
+17.3
+BOARD OF DIRECTORS
+2 Meituan 2023 Annual Report
+47
+96
+Corporate Governance Report
+131
+Environmental, Social and Governance Report
+200
+Independent Auditor's Report
+206
+Consolidated Income Statement
+207
+Consolidated Statement of Comprehensive Income
+CORPORATE INFORMATION
+208
+210
+Consolidated Statement of Changes in Equity
+212
+Consolidated Statement of Cash Flows
+214
+Notes to the Consolidated Financial Statements
+336
+Definitions
+344
+Glossary
+EAT BETTER, LIVE BETTER
+Consolidated Statement of Financial Position
+Delivery services
+17.0
+Total
+Online marketing services
+76,688,543
+2,057,806
+74,630,737
+Commission
+82,190,980
+40,266,890
+82,190,980
+(RMB in thousands)
+Total
+items
+Unallocated
+New
+initiatives
+Year Ended December 31, 2023
+Delivery services
+commerce
+246,326
+Other services and sales (including interest revenue)
+Core local
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+Meituan 2023 Annual Report 9
+38,698,847 (20,166,484) (5,116,976) 13,415,387
+(168,208,085) (90,004,506) (5,116,976) (263,329,567)
+276,744,954
+40,513,216
+69,838,022
+Operating profit/(loss)
+Cost of revenues, operating expenses and
+unallocated items
+Total revenues
+77,352,215
+67,533,890
+9,818,325
+206,906,932
+Core local
+Revenues:
+ΝΑ
+Other services and sales (including interest revenue)
+41.4
+ΝΑ
+209.6
+40.8
+Online marketing services
+117.6
+33.9
+91.6
+32.7
+Commission
+10.9
+ΝΑ
+ΝΑ
+ΝΑ
+9.7
+ΝΑ
+17.8
+(9.7)
+(24.1)
+11.1
+Operating profit/(loss)
+18.2
+(9.7)
+1.6
+29.9
+unallocated items
+Cost of revenues, operating expenses and
+22.6
+ΝΑ
+11.5
+26.8
+Total revenues
+commerce
+(Percentages %)
+Year Ended December 31, 2022
+Unallocated
+Total revenues
+85,511
+57,743,724
+4,869,027
+Other services and sales (including interest revenue)
+30,683,079
+Online marketing services
+Cost of revenues, operating expenses and
+unallocated items
+1,366,691
+70,063,908
+Commission
+Delivery services
+Revenues:
+(RMB in thousands)
+Total
+55,143,008
+Operating (loss)/profit
+Revenues:
+70,063,908
+items
+initiatives
+commerce
+Core local
+New Unallocated
+Year-over-year change
+29,502,669 (28,379,210) (6,943,907) (5,820,448)
+(131,256,353) (87,575,136) (6,943,907) (225,775,396)
+219,954,948
+-
+59,195,926
+160,759,022
+- 62,612,751
+30,768,590
+56,509,699
+items
+New
+initiatives
+EAT BETTER, LIVE BETTE
+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.
+(1)
+Type of continuous professional development
+Participated
+in continuous
+professional
+development(1)
+A: Attending training sessions, including but not limited to briefings, seminars, conferences and workshops;
+B: Reading relevant news alerts, newspapers, journals, magazines and relevant publications.
+Note:
+A, B
+A, B
+A, B
+A, B
+A, B
+A, B
+A, B
+A, B
+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.
+Yang Marjorie Mun Tak (appointed on June 30, 2023)
+Leng Xuesong
+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.
+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.
+Meituan 2023 Annual Report 99
+CORPORATE GOVERNANCE REPORT
+Shum Heung Yeung Harry
+The Directors pursued continuous professional development for the Reporting Period and relevant details are
+summarized as follows:
+Wang Xing
+Mu Rongjun
+Non-executive Directors
+Wang Huiwen (redesignated from an executive Director to a non-executive Director with
+effect from March 25, 2023, and resigned with effect from June 26, 2023)
+Neil Nanpeng Shen
+Independent Non-executive Directors
+Orr Gordon Robert Halyburton
+Name of Director
+Executive Directors
+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.
+Risks Relating to the Contractual Arrangements
+CORPORATE GOVERNANCE REPORT
+CORPORATE GOVERNANCE REPORT
+96 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Hong Kong, March 22, 2024
+Chairman
+Wang Xing
+On behalf of the Board
+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.
+PricewaterhouseCoopers was appointed as the Auditor during the Reporting Period. The accompanying
+financial statements prepared in accordance with IFRS Accounting Standards have been audited by
+PricewaterhouseCoopers. There has been no change in Auditors in preceding three years.
+AUDITOR
+The Board is pleased to present the corporate governance report of the Company for the Reporting Period.
+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.
+The Company will hold the AGM on June 21, 2024. The register of members of the Company will be closed from
+Tuesday, June 18, 2024 to Friday, June 21, 2024, 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 Monday,
+June 17, 2024.
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 95
+CLOSURE OF THE REGISTER OF MEMBERS
+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.
+SUFFICIENCY OF PUBLIC FLOAT
+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.
+CORPORATE GOVERNANCE
+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.
+AUDIT COMMITTEE
+Save for the Shares Repurchased following the end of the reporting period as disclosed on page 76, there were no
+other important events affecting the Company and its subsidiaries which occurred after December 31, 2023 and up
+to the date of this annual report.
+PROFESSIONAL TAX ADVICE RECOMMENDED
+CORPORATE GOVERNANCE CULTURE AND PURPOSE
+The Company is committed to ensuring that its affairs are conducted in accordance with high ethical standards.
+This reflects its belief that, to achieve its long-term objectives, it is imperative to act with probity, transparency and
+accountability. By so acting, the Company believes that Shareholder wealth will be maximised in the long term and
+that its employees, its business partners and the communities it operates in will all benefit.
+Corporate governance is the process by which the Board instructs management of the Group to conduct its affairs
+with a view to ensuring that its objectives are met. The Board is committed to maintaining and developing robust
+corporate governance practices that are intended to ensure:
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report
+98
+EAT BETTER, LIVE BETTE
+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. The independent non-executive Directors are responsible for ensuring a high standard of
+regulatory reporting of the Company and providing a balance in the Board for bringing effective independent
+judgement on corporate actions and operations.
+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.
+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.
+Responsibilities
+The Board has a balance of skills, experience and diversity of perspectives appropriate to the requirements of the
+Company's business and regularly reviews the contribution required from a Director to perform his responsibilities
+to the Company and whether the Director is spending sufficient time performing them that are commensurate with
+their role and the Board responsibilities. The Board includes a balance composition of Executive Directors and Non-
+executive Directors (including Independent Non-executive Directors) so that there is a strong independent element
+on the Board, which can effectively exercise independent judgement.
+The Company is headed by an effective Board which assumes responsibility for its leadership and control and be
+collectively responsibility for promoting the Company's success by directing and supervising the Company's affairs.
+Directors take decisions objectively in the best interests of the Company.
+BOARD 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.
+The Company has adopted the Model Code as set out in Appendix C3 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.
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report 97
+MODEL CODE FOR SECURITIES TRANSACTIONS
+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 C.2.1 described in the paragraph headed “Board of Directors - Chairman and
+Chief Executive Officer".
+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 Board is committed to ensuring the Company adhere to a high standard of corporate governance.
+CORPORATE GOVERNANCE PRACTICES
+that high standards of ethics are maintained.
+the delivery of high-quality products and services meeting the satisfaction of customers; and
+that overall business risk is understood and managed appropriately;
+that the interests of those who deal with the Company are safeguarded;
+satisfactory and sustainable returns to Shareholders;
+IMPORTANT EVENTS AFTER THE REPORTING PERIOD
+Under the Articles of Association, during the Reporting Period and up to the date of this annual report 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.
+PERMITTED INDEMNITY PROVISION
+REPORT OF DIRECTORS
+REPORT OF DIRECTORS
+92 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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.
+Listing Rules Implications and Waivers from the Stock Exchange
+(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)
+(ii)
+(i)
+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 Company exercises the option to acquire equity ownership of its VIES, the ownership transfer may
+subject us to certain limitations and substantial costs.
+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.
+The equity holders, directors and executive officers of the VIES may have potential conflicts of interest with
+the Company.
+•
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 91
+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 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 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.
+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.
+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.
+These are the certain risks that are associated with the Contractual Arrangements, including:
+The transactions contemplated under the Contractual Arrangements constitute continuing connected transactions
+of the Company.
+REPORT OF DIRECTORS
+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:
+no change without independent non-executive Directors' approval;
+94 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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.
+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.
+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.
+LEGAL PROCEEDINGS AND COMPLIANCE
+During the Reporting Period, the charitable and other donations made by the Group amounted to approximately
+RMB44 million.
+DONATIONS
+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, 2023 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 their equity interests which were not otherwise
+subsequently assigned or transferred to the Group.
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 93
+(c)
+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
+(b)
+(a) the transactions carried out during the Reporting Period had been entered into in accordance with the relevant
+provisions of the Contractual Arrangements;
+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
+the Group will disclose details relating to the Contractual Arrangements on an ongoing basis.
+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 Contractual Arrangements shall continue to enable the Group to receive the economic benefits derived by
+the Consolidated Affiliated Entities;
+(e)
+(d)
+(c)
+no change without independent Shareholders' approval;
+(b)
+(a)
+90 Meituan 2023 Annual Report
+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 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.
+Remuneration Committee
+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 C1 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;
+(c)
+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
+(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.
+106 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+During the Reporting Period, the Remuneration Committee met once. Individual attendance of each Remuneration
+Committee member is set out on page 103.
+The Remuneration Committee's major work during the Reporting Period includes:
+(a)
+review compensation and benefits framework and structure; and
+(b) review of director and management compensation scheme;
+During the Reporting Period, the Remuneration Committee approved the grant of 25,721 RSUs to Ms. Yang
+Marjorie Mun Tak, and noted that (a) such grant which involves certain RSUs having a vesting period shorter than
+12 months, is (i) consistent with previous customary practice of the Company in terms of equity-based remuneration
+to independent non-executive Directors, and (ii) in line with the purpose of attracting, motivating and retaining core
+talents of the Group; and (b) such grant without any performance-related elements attached is consistent with the
+previous customary practice of the Company in terms of equity-based remuneration to independent non-executive
+Directors.
+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.
+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 C1 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;
+(g) reviewing the Company's ESG work.
+reviewing the terms of engagement, independence and remuneration of the external auditor; and
+(f)
+reviewing the Company's continuing connected transactions;
+Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+BOARD COMMITTEES
+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 C1 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;
+(c) assessing the independence of independent non-executive Directors;
+(d) monitoring the integrity of the Company's financial statements, annual reports, accounts and half-yearly
+reports; and
+During the Reporting Period, the Audit Committee consisted of three independent non-executive Directors, namely
+Orr Gordon Robert Halyburton, Leng Xuesong, Shum Heung Yeung Harry. On March 22, 2024, Yang Marjorie
+Mun Tak was appointed as a member of the Audit Committee, and the Audit Committee currently consists of four
+independent non-executive Directors. 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 Reporting Period, the Audit Committee met four times. Individual attendance of each Audit Committee
+member is set out on page 103. The Audit Committee also met the external auditor four times without the presence
+of the executive Directors.
+Meituan 2023 Annual Report 105
+CORPORATE GOVERNANCE REPORT
+(a)
+reviewing the 2023 interim report;
+(b) reviewing the Company's quarterly result announcements for the first quarter ended March 31, 2023 and the
+third quarter ended September 30, 2023, respectively;
+(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;
+(e)
+(e) reviewing financial information and oversight of the Company's financial reporting, financial controls, risk
+management and internal control systems.
+104
+LEAT BETTER, LIVE BETTE
+Meituan 2023 Annual Report 107
+In order to provide information of the candidates nominated by the Board to stand for election at a general
+meeting, and to invite nominations from shareholders, a circular will be sent to shareholders. The circular will
+set out the lodgment period for shareholders to make the nominations. The names, brief biographies (including
+qualifications and relevant experience), independence, proposed remuneration and any other information, as
+required pursuant to the applicable laws, rules and regulations, of the proposed candidates will be included in
+the circular to shareholders.
+(iv) A shareholder can serve a notice to the company secretary within the lodgement period of its intention to
+propose a resolution to elect a certain person as a Director, without the Board's recommendation or the
+nomination committee's nomination, other than those candidates set out in the shareholder circular. The
+particulars of the candidates so proposed will be sent to all shareholders for information by a supplementary
+circular.
+(v)
+The Board shall have the final decision on all matters relating to its recommendation of candidates to stand
+for election at any general meeting.
+Meituan 2023 Annual Report
+109
+CORPORATE GOVERNANCE REPORT
+Pursuant to the Director Nomination Committee, for assessing the suitability and the potential contribution to the
+Board of a proposed candidate, the Nomination Committee will consider, including but not limited to (i) reputation
+for integrity, (ii) accomplishment and experience in the internet industry, (iii) commitment in respect of available time
+and relevant interest, and (iv) diversity in all its aspects, including but not limited to gender, age (18 years or above),
+cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service.
+The Nomination Committee will review the Director Nomination Policy, as appropriate, to ensure its effectiveness.
+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 C1 of
+the Listing Rules, the duties of the Corporate Governance Committee as set out in its terms of reference include:
+(a) developing and reviewing the Company's policies and practices on corporate governance and make
+recommendations to the Board;
+(b) reviewing and monitoring the training and continuous professional development of Directors and senior
+management;
+(c)
+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 applicable to employees
+and Directors;
+(e) reviewing the Company's compliance with the CG Code and disclosure in the Corporate Governance Report;
+(f) reviewing and monitoring whether the Company is operated and managed for the benefit of all of its
+shareholders;
+(g)
+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;
+LEAT BETTER, LIVE BETTE
+(iii)
+For filling a casual vacancy, the Nomination Committee shall make recommendations for the Board's
+consideration and approval. For proposing candidates to stand for election at a general meeting, the
+Nomination Committee shall make nominations to the Board for its consideration and recommendation.
+The company secretary shall call a meeting of the Nomination Committee, and invite nominations of
+candidates from Board members if any, for consideration by the Nomination Committee prior to its meeting.
+The Nomination Committee may also put forward candidates who are not nominated by Board members.
+(ii)
+CORPORATE GOVERNANCE REPORT
+After the resignation of Wang Huiwen on June 26, 2023, the Nomination Committee consists of two members,
+namely Leng Xuesong and Shum Heung Yeung Harry, the independent non-executive Directors. Leng Xuesong has
+been appointed as the chairman of the Nomination Committee.
+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 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 has appointed one
+female director in June 2023. 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.
+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.
+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.
+During the Reporting Period, the Nomination Committee met once. Individual attendance of each Nomination
+Committee member is set out on page 103.
+The Nomination Committee's major work during the Reporting Period includes:
+(a)
+reviewing and monitoring the implementation of the board diversity policy;
+(b) reviewing and assessing the structure, size, composition and diversity of the Board;
+(e) developing a policy concerning diversity of Board members, and disclosing the policy or a summary of the
+policy in the corporate governance report.
+(c)
+(d) reviewing the proposed election of Ms. Yang Marjorie Mun Tak as an independent non-executive Director,
+and providing suggestions to the Board; and
+(e) reviewing and assessing the independence of the independent non-executive Directors.
+LEAT BETTER, LIVE BETTE
+108 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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 non-executive Director, Wang Huiwen and independent non-executive
+Directors, Orr Gordon Robert Halyburton and Leng Xuesong in the annual general meeting of the Company held
+on June 30, 2023. After due consideration of the aforesaid mentioned factors and the previous contributions of
+the independent non-executive Director, the Nomination Committee was satisfied that Wang Huiwen, Orr Gordon
+Robert Halyburton and Leng Xuesong would continue to bring valuable business experience, knowledge and
+professionalism to the Board for its efficient and effective functioning and diversity.
+Director Nomination Policy
+The Board has delegated its responsibilities and authority for selection and appointment of Directors to the
+Nomination Committee of the Company.
+The Company has adopted a Director Nomination Policy which sets out the selection criteria and nomination
+process and the Board succession planning considerations in relation to nomination and appointment of Directors
+of the Company and aims to ensure that the Board has a balance of skills, experience and diversity of perspectives
+appropriate to the Company and the continuity of the Board and appropriate leadership at Board level.
+The nomination process set out in the Director Nomination Policy:
+(i)
+reviewing the re-election of Directors and its schedule;
+(d) making recommendations to the Board on the appointment or re-appointment of Directors and succession
+planning for Directors; and
+The Audit Committee's major work during the Reporting Period includes:
+the poll results were set out in the Company's announcement dated June 30, 2023. The Chairman as well as other ET BETTER, LIVE BETTE
+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.
+LEAT BETTER, LIVE BETTE
+102
+Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+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.
+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 with automatic renewal 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, Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong, and Dr. Shum
+Heung Yeung Harry entered into an appointment letter, respectively, with the Company for three years. On June 30,
+2023, Ms. Yang Marjorie Mun Tak entered into an appointment letter with the Company on similar terms for three
+years.
+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.
+Meituan 2023 Annual Report 103
+CORPORATE GOVERNANCE REPORT
+Board Activity
+The Board has met four 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:
+Attendance/No. of Meetings Held during the Reporting Period
+Corporate
+General
+Name of Director
+Board
+Audit
+Committee
+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 or her 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.
+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.
+The Board's composition is in compliance with the requirement under Rules 3.10(1) and (2) and 3.10A of the Listing
+Rules relating to the appointment of at least three independent non-executive directors representing at least one-
+third of the Board and at least one of them have appropriate professional qualifications or accounting or related
+financial management expertise. 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.
+Independent Non-executive Directors
+100 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+Chairman and Chief Executive Officer
+Pursuant to provision C.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 Mr. 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 segregating the roles of chairman of the Board and the chief executive
+officer of the Company at an appropriate time 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 seven Directors, with three executive Directors, a
+non-executive Director and three independent non-executive Directors.
+During the year ended December 31, 2023 and up to the date of this annual report, the composition of the Board
+comprised the following Directors:
+Executive Directors
+Mr. WANG, Xing (Chairman of the Board and Chief Executive Officer)
+Mr. MU, Rongjun
+Non-executive Directors
+Remuneration Nomination
+Committee Committee
+Mr. WANG, Huiwen (redesignated from an executive Director to a non-executive
+Independent non-executive Directors
+Mr. ORR, Gordon Robert Halyburton
+Mr. LENG, Xuesong
+Dr. SHUM, Heung Yeung Harry
+Ms. YANG, Marjorie Mun Tak (appointed on June 30, 2023)
+During the Reporting Period and up to the date of this annual report, (i) Mr. WANG, Huiwen was redesignated from
+an executive Director to a non-executive Director with effect from March 25, 2023, and resigned as a non-executive
+Director with effect from June 26, 2023 and (ii) Ms. YANG, Marjorie Mun Tak was appointed as an independent
+non-executive Director with effect from June 30, 2023, and save as aforesaid, there has been no other 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.
+Meituan 2023 Annual Report 101
+CORPORATE GOVERNANCE REPORT
+Board Independence Evaluation
+The Board has established mechanisms to ensure independent views and input are available to the Board. The
+Board ensures the appointment of at least three independent non-executive directors and at least one-third of
+its members being independent non-executive directors. Further, independent non-executive directors will be
+appointed to Board Committees as required under the Listing Rules and as far as practicable to ensure independent
+views and input are available. The Nomination Committee strictly adheres to the independence assessment criteria
+as set out in the Listing Rules with regard to the nomination and appointment of independent non-executive
+directors, and is mandated to assess annually the independence of independent non-executive directors to ensure
+that they can continually exercise independent judgement.
+Director with effect from March 25, 2023, and resigned with effect from June 26, 2023)
+Mr. SHEN, Nanpeng Neil
+Governance
+Each of the non-executive Directors has entered into an appointment letter with the Company. Their appointment
+as a Director shall continue for a term of three years 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 9, 2021, Neil Shen Nanpeng entered into an appointment letter with the Company on similar terms for three
+years, and on March 25, 2023, Wang Huiwen entered into an appointment letter on similar terms, and he has been
+redesignated from an executive director to a non-executive director and subsequently resigned as a non-executive
+Director with effect from June 26, 2023, due to personal health reasons.
+Committee
+4/4
+ཟུཟུ€
+4/4
+2/2
+4/4
+4/4
+ངང
+1/1
+1/1
+2/2
+1/1
+1/1
+2/2
+ཙཱངང
+Meeting of
+1/1
+1/1
+Yang Marjorie Mun Tak (appointed on
+June 30, 2023)
+2/2
+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.
+During the Reporting Period, the Chairman met once with the independent non-executive Directors without the
+presence of executive Directors.
+On June 30, 2023, the Company held its annual general meeting to consider and approve (i) the proposed election
+of an independent non-executive Director; (ii) the proposed re-election of Directors; (iii) the proposed granting of
+general mandate to issue and repurchase Shares; (iv) the proposed re-appointment of auditor; (v) the proposed
+amendments to the Post-IPO Share Option Scheme; (vi) the proposed amendments to the Post-IPO Share Award
+Scheme; (vii) the proposed amendments to the Articles of Association and the adoption of the Seventh Amended
+and Restated Memorandum and Articles of Association; and (viii) the proposed issue of Class B Shares to the
+connected grantees of RSUs. All the proposed resolutions to the annual general meeting were taken by poll and
+Shum Heung Yeung Harry
+4/4
+1/1
+4/4
+Leng Xuesong
+Shareholders
+Executive Directors
+Wang Xing
+4/4
+4/4
+1/1
+Non-executive Directors
+Wang Huiwen (redesignated from
+1/1
+ངང
+1/1
+Mu Rongjun
+non-executive Director with effect
+an executive Director to a
+Independent Non-executive Directors
+1/1
+Orr Gordon Robert Halyburton
+Neil Nanpeng Shen
+4/4
+2/2
+with effect from June 26, 2023)
+from March 25, 2023, and resigned
+1/1
+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
+Audit Committee
+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
+on the design, implementation and
+supervision of the risk management and
+internal control systems on an ongoing basis
+Monitors the management of the Company
+Ensures that the Company has
+established and maintained effective
+risk management and internal control
+systems
+Assesses and determines the nature
+and level of the risks that are acceptable
+to the Company in achieving its
+strategic objectives
+The Board of Directors
+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.
+CORPORATE GOVERNANCE REPORT
+Third Line - Internal audit and fraud investigation - Independent Assurance
+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.
+Organisational Structure for Risk Management
+44
+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 (including
+ESG risks) 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.
+Organisation Governing Body
+43
+Third Line
+Takes actions (including managing risk) to achieve organisational objectives
+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 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
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report
+114
+EAT BETTER, LIVE BETTE
+Management
+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
+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
+Internal Audit and
+Fraud Investigation
+Independent assurance services
+First Line
+RISK MANAGEMENT AND INTERNAL CONTROL
+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.
+112 Meituan 2023 Annual Report
+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 103.
+(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)
+(a)
+(k)
+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
+110 Meituan 2023 Annual Report
+Management
+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;
+CORPORATE GOVERNANCE REPORT
+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);
+(c)
+EAT BETTER, LIVE BETTE
+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.
+During the Reporting Period, the Corporate Governance Committee has sought to ensure effective and on-going
+communication between the Company and the Shareholders, 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.
+Reporting on the work of the Corporate Governance Committee covering all areas of its terms of reference.
+the Company's various policies and practices on corporate governance, including but not limited to the
+Company's shareholders' communication policy; and
+(i)
+(h)
+(b) reviewing the code of conduct applicable to employees and Directors;
+(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;
+(f)
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report 111
+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;
+(e)
+(d) reviewing the disclosure in the Corporate Governance Report and the Company's compliance with the CG
+Code;
+assessing, reviewing and making recommendation to the Board for the re-appointment of the Company's
+compliance advisor;
+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;
+First Line-Operation and Management
+Meituan 2023 Annual Report 113
+Meituan 2023 Annual Report 119
+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.
+User data is handled strictly in accordance with the Company's defined policies. It has obtained the ISO 27001,
+ISO 27018 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.
+EAT BETTER, LIVE BETTE
+118 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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 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.
+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 emergency drill system is recognised by Ministry of Industry and
+Information Technology and awarded the outstanding project award.
+The Company's Audit Committee also reviews the cybersecurity updates regularly to provide suggestions and
+recommendations on the compliance with information security compliance requirements and 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 meetings in the first and
+fourth quarter and reviewed the latest regulatory requirements of cyber security and compliance process of the
+Company.
+Crisis Management and Reputation Risk
+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.
+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.
+CORPORATE GOVERNANCE REPORT
+Fraud Risk
+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.
+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 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.
+Human Resources Risk
+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.
+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;
+and (iii) supporting and facilitating the leadership role of its management, stimulating its employees' full potential
+and promoting personal development among its employees.
+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.
+EAT BETTER, LIVE BETTE
+Second Line - Risk Management
+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.
+The Board and the management of the Company place emphasis on information security risk management, and
+continue to improve the Company's data security and privacy protection management system. We have established
+a Data Compliance and Privacy Protection Committee to coordinate the Company's internal data compliance
+and privacy protection governance, including formulating management strategies, promoting and supervising the
+effective implementation of the strategies.
+Protection of user data and other related information is critical to the Company's business. The Standing Committee
+of the National People's Congress promulgated the Data Security Law and the Personal Information Protection Law
+in 2021. The above-mentioned laws have strengthened the security protection of data and personal information,
+and further refined and improved the basic principles and compliance requirements for data security management
+and personal information protection. The Company is strongly aware that 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. Therefore, the Company actively deploys compliance strategies
+to continuously improve its data security and personal information protection capabilities. Cyberspace regulatory
+authorities of China has issued the Provisions on the Administration of Algorithm-generated Recommendations
+for Internet Information Services, which established explicit requirements for the provision of Internet information
+services by applying recommendation algorithm technology. In accordance with the requirements, the Company
+proactively improved the lifecycle process of algorithms, enhanced the governance capacity of algorithm
+security, and finished the filing of 7 algorithm systems in total, such as scheduling decision-making, personalised
+recommendation and generation and integration.
+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.
+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, ensuring the healthy and
+compliant development of the business thereof.
+Information Security Risk
+Meituan 2023 Annual Report 115
+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.
+CORPORATE GOVERNANCE REPORT
+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.
+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 2023, 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 2022 still persist, albeit with an adjusted risk level. In particular, there is a certain increase in market competition
+and innovation risk and a slight decrease in compliance risk, while the other risk levels are mostly unchanged.
+EAT BETTER, LIVE BETTE
+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.
+Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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.
+Market Competition and Innovation Risk
+The internet and technology industry faces with keen competition from rapid market changes, the emergence
+of new business models and the entry of well-funded competitors, which may pose certain challenges to the
+achievement of the Company's business goals and maintaining sustainable and healthy business growth. In the
+meantime, the industry may undergo new changes and the Company's business model may be challenged as users
+increase their demand for innovation in services and products, and the innovation of Al related technologies and
+competition are becoming intensified.
+The Company closely monitors the landscape of industry and market competition, and also attaches significant
+importance to the changing trends of user demand. The Company supports its establishment of strategies to
+address market competition risks through continuous in-depth analysis and research in the industry. The Company
+strives to consolidate its core competitiveness by continuously enhancing the diversity and quality of the platform's
+offerings, improving the operation efficiency and enhancing and improving the responsiveness, functionality and
+features of its mobile apps, websites and systems, and brings new value and experience to its users and partners
+by exploring emerging technology application scenarios. 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.
+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 laws, regulations
+and policies 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 or
+revised laws, regulations and policies by different regulatory authorities, such as regulations and policy documents
+relating to anti-monopoly, data protection, cybersecurity, IP, financial compliance, etc.
+In the past year, the policy focus has been adjusted in line with the improvement of the compliance of the
+platform economy. The competition order in the platform economy has been improving steadily, and the business
+environment of the platform economy has been continuously optimized, benefiting from more emphasis on
+"enhancing the healthy development of the platform economy". On one hand, the compliance of platform
+enterprises has been continuously enhanced; on the other hand, the relevant laws and policies in the field of
+platform economy have been gradually refined, and more reliant on clear regulatory rules to guide and maintain
+a fair and orderly competitive market environment, making compliance requirements and regulatory expectations
+clearer and more stable. It is expected that the internet industry will maintain a normalized regulatory posture in the
+long run. The Company will maintain its strict compliance standard and regulate its operation in accordance with
+relevant laws and regulations.
+116
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report 117
+Shareholders' Meetings
+(d)
+Any information or documents of the Company posted on the Stock Exchange's website will also be
+published on the Company's website (about.meituan.com).
+(c) Corporate Website
+"Corporate Communication" as defined under the Listing Rules refers to any document issued or to be issued
+by the Company for the information or action of holders of any of its securities, including but not limited to
+the following documents of the Company: (a) the Directors' report, annual accounts together with a copy
+of the auditor's report and, where applicable, its summary financial report; (b) the interim report and, where
+applicable, its summary interim report; (c) a notice of meeting; (d) a listing document; (e) a circular; and (f)
+a proxy form. The Corporate Communication of the Company will be published on the Stock Exchange's
+website (www.hkex.com.hk) in a timely manner as required by the Listing Rules. Corporate Communication
+will be provided to Shareholders and non-registered holders of the Company's securities in both English and
+Chinese versions or where permitted, in a single language, in a timely manner as required by the Listing Rules.
+(b) Announcements and Other Documents pursuant to the Listing Rules
+CORPORATE GOVERNANCE REPORT
+Meituan 2023 Annual Report 125
+(a) Corporate Communication
+The annual general meeting and other general meetings of the Company are the primary forum for
+communication between the Company and its Shareholders. The Company shall provide Shareholders with
+relevant information on the resolutions(s) proposed at a general meeting in a timely manner in accordance
+with the Listing Rules. The information provided shall be reasonably necessary to enable Shareholders to
+make an informed decision on the proposed resolution(s). Shareholders are encouraged to participate in
+general meetings or to appoint proxies to attend and vote at the meetings for and on their behalf if they are
+unable to attend the meetings. Where appropriate or required, the Chairman of the Board and other Board
+members, the chairmen of board committees or their delegates, and the external auditors should attend
+general meetings of the Company to answer Shareholders' questions (if any).
+The Company shall publish announcements (on inside information, corporate actions and transactions etc.)
+and other documents (e.g. Memorandum and Articles of Association) on the Stock Exchange's website in a
+timely manner in accordance with the Listing Rules.
+(e) Shareholders' Enquiries
+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.
+Shareholders should direct their enquiries about their shareholdings to the Company's Hong Kong
+Share Registrar, Computershare Hong Kong Investor Services Limited, by Online Feedback at
+https://www.computershare.com/hk/en/online_feedback or calling its hotline at 2862 8555, or going in person
+to its public counter at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai,
+Hong Kong.
+Enquiries about Corporate Governance or Other Matters to be put to the Board and the Company
+The Company will not normally deal with verbal or anonymous enquiries. Shareholders may send written
+enquiries to the Company, for the attention of the Board by mail to Block B&C, Hengjiweiye Building, No. 4
+Wang Jing East Road, Chaoyang District, Beijing 100102, China.
+EAT BETTER, LIVE BETTE
+126 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+AMENDMENTS TO CONSTITUTIONAL DOCUMENTS
+Upon the Shareholders' approval on June 30, 2023 at the AGM, the Company has adopted the Seventh Amended
+and Restated Memorandum of Association and Articles of Association for the purpose of, among others, bringing
+the then-existing Articles of Association in line with the Core Shareholder Protection Standards set out in Appendix
+3 to the Listing Rules and the applicable laws of the Cayman Islands, and providing flexibility to the Company
+in relation to the conduct of general meetings (to hold virtual meetings) and other house-keeping amendments
+that are consistent with such amendments and the applicable laws and the Listing Rules; and to incorporate and
+consolidate other amendments to the Memorandum of Association passed at previous annual general meeting(s)
+of the Company. A summary of the major changes made to the Seventh Amended and Restated Memorandum
+and Articles of Association are set out below. For further details, please refer to the announcement of the Company
+dated March 24, 2023 and the circular of the Company dated June 8, 2023.
+•
+The Company has established a number of channels for maintaining an on-going dialogue with its Shareholders as
+follows:
+•
+•
+Enquiries about shareholdings
+The Company has in place a Shareholders' Communication Policy. The policy aims at promoting effective
+communication with Shareholders and other stakeholders, encouraging Shareholders to engage actively with the
+Company and enabling Shareholders to exercise their rights as Shareholders effectively. The Board reviewed the
+implementation and effectiveness of the Shareholders' Communication Policy and the results were satisfactory.
+EAT BETTER, LIVE BETTE
+For the avoidance of doubt, Shareholders must deposit and send the original duly signed written requisition,
+notice or statement, or enquiry (as the case may be) to the above address, apart from the registered office of the
+Company, and provide their full name, contact details and identification in order to give effect thereto. Shareholders'
+information may be disclosed as required by law.
+EAT BETTER, LIVE BETTE
+122 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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 30, 2023. Notice of the meeting
+was sent to the Shareholders on June 8, 2023, at least 21 calendar 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.
+Meituan 2023 Annual Report 123
+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 2023. Having compared the implementation and outcome of the shareholder
+communication channels of the Group with that of the other listed issuers who principally engage in comparable
+industry, and their effectiveness was confirmed.
+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.
+•
+124 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+Contact Details
+Shareholders may send their enquiries or requests as mentioned above to the following:
+Address:
+Email:
+Block B&C, Hengjiweiye Building, No. 4 Wang Jing East Road, Chaoyang District, Beijing,
+People's Republic of China
+(For the attention of the Investor Relations Department)
+ir@meituan.com
+SHAREHOLDERS' COMMUNICATION POLICY
+To provide that an annual general meeting of the Company shall be held in each financial year and to be held
+within six (6) months after the end of its financial year, and removing any exception no longer applicable to the
+Company;
+CORPORATE GOVERNANCE REPORT
+to codify the rights of a Shareholder holding any Class A Share(s) to convert into any Class B Share(s) on a
+voluntary basis;
+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, 2023 was approximately as follows:
+Type of Services
+Audit and audit-related services
+Non-audit services (1)
+Total
+Note:
+(1) The non-audit services conducted by the Auditor mainly include certain consulting services.
+Amount
+(RMB'000)
+32,197
+2,434
+34,631
+The statement of the Independent Auditors about their reporting responsibilities on the financial statements is set
+out in the section headed "Independent Auditor's Report”.
+Meituan 2023 Annual Report
+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.
+Control procedures have been implemented to ensure that unauthorized access and use of inside information are
+strictly prohibited.
+DIVIDEND POLICY
+The Company has adopted a Dividend Policy on payment of dividends. The Company do not have any pre-
+determined dividend payout ratio. Depending on the financial conditions of the Company and the Group and the
+conditions and factors as set out in the Dividend Policy, dividends may be proposed and/or declared by the Board
+during a financial year and any final dividend for a financial year will be subject to the Shareholders' approval.
+DIVERSITY
+The Company is committed to promoting 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.
+The Company aims to maintain an appropriate balance of diversity perspectives that are relevant to the Company's
+business growth and is also committed to ensuring that recruitment and selection practices at all levels (from the
+Board downwards) are appropriately structured so that a diverse range of candidates are considered.
+The Board will consider setting measurable objectives to implement the Board Diversity Policy and review
+such objectives from time to time to ensure their appropriateness and ascertain the progress made towards
+achieving those objectives.
+The Nomination Committee will review the Board Diversity Policy, as appropriate, to ensure its effectiveness.
+129
+EAT BETTER, LIVE BETTE
+CORPORATE GOVERNANCE REPORT
+The Directors acknowledge their responsibility for preparing the financial statement of the Company for the year
+ended December 31, 2023, and are not 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.
+DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENT
+The Company's compensation policy is to ensure that the remuneration offered to employees, including Directors
+and senior management, is based on skill, knowledge, responsibilities and involvement in the Company's
+affairs. The remuneration packages of executive Directors are also determined with reference to the Company's
+performance and profitability, the prevailing market conditions and the performance or contribution of each
+executive Director. The remuneration for the executive Directors comprises basic salary, pensions and discretionary
+bonus. The remuneration policy for non-executive Directors and independent non-executive Directors is to ensure
+that non-executive Directors and independent non-executive Directors are adequately compensated for their efforts
+and time dedicated to the Company's affairs, including their participation in Board committees. The remuneration
+for the non-executive Directors and independent non-executive Directors mainly comprises Director's fee which
+is determined with reference to their duties and responsibilities by the Board. Individual Directors and senior
+management have not been involved in deciding their own remuneration.
+to allow the participants of general meetings to virtually attend, participate and vote by means of specified
+conferencing application and/or communication facilities and to make corresponding amendments on the
+related proceedings and procedures as regards the general meetings of the Company;
+to remove the requirement that the board of Directors consist of less than one-half of independent non-
+executive Directors;
+to provide that the Company may by special resolution resolve that the Company be wound up voluntarily;
+to codify the requirement that, unless the Directors otherwise prescribe, the financial year of the Company
+shall end on December 31 in each year;
+to clarify that all Shareholders have the right to speak at general meetings of the Company except where the
+Shareholder is required by the Listing Rules to abstain from voting; and
+to make other house-keeping amendments to update or clarify provisions considered by the Board to be
+necessary or desirable to comply with or better align with the wording and requirements of the applicable laws
+of the Cayman Islands and the Listing Rules.
+ADDITION OF THE RMB COUNTER
+Meituan 2023 Annual Report
+127
+The launch of the RMB counter for trading in the Class B Shares on the Stock Exchange has taken effect from 9:00 a.m.
+on June 19, 2023. The Chinese stock short name for trading in the Class B Shares under the RMB counter is "-WR".
+The English stock short name for trading in the Class B Shares under the RMB counter is "MEITUAN-WR". The stock
+code of the Company on the RMB counter is "83690" and the board lot size for trading in the Class B Shares under the
+RMB counter remains the same as that for the HKD counter, being 100 Class B Shares. For further details, please refer
+to the announcements of the Company dated April 28, 2023 and June 6, 2023, respectively.
+JOINT COMPANY SECRETARIES
+Ms. 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. Ms. Xu Sijia has been appointed to succeed Mr. 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.
+In order to uphold good corporate governance and ensure compliance with the Listing Rules and applicable Hong
+Kong laws, the Company also engages Ms. Lau Yee Wa, a director of corporate services division of Tricor Services
+Limited, as the other joint company secretary to assist Ms. Xu Sijia to discharge her duties as a company secretary
+of the Company. Ms. Lau Yee Wa's primary contact person at the Company is Ms. Xu Sijia.
+For the year ended December 31, 2023, Ms. Xu Sijia and Ms. 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, 2023.
+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, 2023 are set out below:
+Remuneration band (RMB)
+Number of individuals
+1 - 5,000,000
+>5,000,000
+155
+EAT BETTER, LIVE BETTE
+128 Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+to provide that the minimum stake required for members to requisition an extraordinary general meeting and
+to add resolutions to a meeting agenda, being not less than one-tenth of the voting rights of the Company, is
+on a "one vote per share" basis;
+0
+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.
+•
+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
+promote risk management level and (iii) promote risk awareness throughout the Company. Apart from its internal
+control department, the Company has also established different functional divisions 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 fundamental 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.
+Meituan 2023 Annual Report 121
+CORPORATE GOVERNANCE REPORT
+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 management, conducts study on regulations, policies
+and industry trend, optimizes 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 is responsible for the compliance risk management of the internet finance
+business; by analyzing rules and regulations and the regulatory environment, it provides guidance and support to
+each finance business line to implement rules, regulations and financial regulatory requirements, in order to mitigate
+financial compliance risks.
+The business transaction security team of the Company mitigates internet fraud, internet cheats in relation to
+illegal industry, and operational risks to ensure assets safeguard and the effectiveness of operation by providing
+continuous training, improving the business transaction security management system, and upgrading the risk
+control models as well as resolving risk events.
+Effectiveness of Risk Management and Internal Control
+The Audit Committee, on behalf of the Board, continuously reviews the risk management (including ESG risks)
+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.
+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.
+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 user privacy, and it periodically reports to the Audit Committee.
+Based on the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring
+Organisations ("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
+CORPORATE GOVERNANCE REPORT
+120 Meituan 2023 Annual Report
+Optimise location selection: In response to the national strategy of "East-to-West Computing Resources
+Transfer" project, we keep working to optimise our geographical deployment of data centres. Four regional
+computational clusters have been formed based on the latency feature of our businesses. We expand
+the capacity of our existing data centres in Beijing, Shanghai, Zhongwei, and other areas, while the
+recent-deployed large-scale data centre in Huailai, Hebei is largely customised to meet our business demands
+for efficient data storage and data call in different business scenarios. Moreover, according to the national
+standard Maximum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Data Centres,
+we gradually decommission data centres with low energy efficiency. In 2023, we stopped using three data
+centres of this kind.
+To enhance the environmental management of our leased data centres, we take actions to optimise location
+selection, define onboarding standards, implement the management requirements for the full-life cycle, and explore
+the use of renewable energy.
+The Company does not yet have its own data centre. We actively responding to the policy guidance such as
+the Guiding Opinions on Strengthening the Construction of Green Data Centres, and attach importance to
+environmental protection and low-carbon operations of the leased data centres.
+Environmental Management of Data Centres
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 139
+Define onboarding standards: We prioritise the leasing of eco-friendly data centres and consider various
+factors related to the inner spatial arrangement and operation of leased data centre, including environmental
+impacts, resource consumption, renewable energy utilisation, and regional climate conditions. In addition,
+we require data centre suppliers to obtain certification such as ISO 9001 quality management system
+certification, ISO 20000 IT service management system certification. We also review and assess data centres'
+environmental impact assessment reports and energy-saving assessment reports.
+RoHS Directive refers to EU's Directive 2011/65/EU on the Restriction of the Use of Certain Hazardous Substances in
+Electrical and Electronic Equipment (Restriction of Hazardous Substances), which aims to standardise the materials and
+manufacturing processes of electronic and electrical products, and eliminate the use of lead, mercury, cadmium, and
+hexavalent chromium in such devices.
+Production phase: In terms of product manufacturing, we have established detailed environmental and quality
+management requirements, and fully examined the qualifications of our production suppliers, including
+ISO 9001 quality management system certification and ISO 14001 environmental management system
+certification. Also, we have established a mechanism for our production supplier onboarding audit and daily
+and annual audits to control the environmental impact and quality risks. In terms of raw material selection, we
+strictly control the use of hazardous substances, such as lead and mercury. By the end of 2023, our power
+bank products are all in compliance with the European Union's RoHS Directive¹.
+Design phase: We focus on product service life and energy conversion efficiency. We adopt product design
+schemes with high-energy conversion efficiency and select high-performance electronic components to
+reduce energy loss during charging and discharging processes.
+While providing consumers with convenient charging services, we also strive to minimise the environmental impact
+of our power banks throughout their entire lifecycle by considering factors like product service life, resource
+utilization efficiency, and the use of environmentally friendly materials.
+Environmental Management of Power Banks
+Warehouse network planning: We continuously optimise warehouse layout, improve inventory level, and
+enhance resource utilisation efficiency to reduce carbon emissions and energy consumption. In particular,
+we take several measures, including (i) optimisation of warehouse site selection: assessing product
+demand of merchants and consumers and conducting research on location and layout of warehouses to
+shorten the transportation distance from warehouse to merchants and consumers, and further reduce the
+carbon emissions arising from transportation; (ii) in-warehouse handling efficiency improvement: applying
+double-sided loading and unloading stations and multi-layer storage racks to improve the efficiency of
+in-warehouse operations and reduce the frequency of goods delivery; (iii) inventory turnover improvement:
+identifying category differences and optimisation opportunities. Continuously optimising inventory turnover
+and reducing energy consumption of commodity circulation through improving forecast accuracy,
+strengthening supplier performance management, promoting standardisation of ordering and inventory
+management; and (iv) turnover equipment utilisation improvement: using PP plastic turnover boxes and other
+recyclable turnover equipment to reduce the use of single-use materials, such as plastic bags and cartons.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+138 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Logistics management: We adopt several measures to promote energy saving and emissions reduction
+through precision operations and the use of new energy vehicles (NEVs): (i) precision operations: monitoring
+vehicle loading rate and quantity during routine operations to reduce vehicle operations. Performing regular
+maintenance to ensure optimal performance of vehicles. Optimising the efficient use of fuel consumption
+based on different vehicle models; (ii) use of NEVs: actively cooperating with companies offering new energy
+vehicle leasing services to increase the proportion of new energy vehicle usage; and (iii) use of environmentally
+friendly materials: applying degradable plastic bags or non-woven bags in multiple cities across the country.
+Operation and maintenance phase: We continue optimising the distribution and management of charging
+station through analysing the utilisation of power banks in deployment areas to avoid resource wastage due
+to redundant placement. We recycle worn-out power banks and hand them over to qualified recycling and
+processing companies to ensure proper end treatments.
+Implement the management requirements for the full-life cycle: We propose appropriate management
+requirements for data centre suppliers in construction, operation, and decommissioning. During the
+construction phase, we require data centre suppliers to select eco-friendly materials and fill in the
+Standardised Manual on Safe and Courteous On-Site Construction and the Manual on Hazardous Waste
+Management. These measures aim to refine the management tasks related to waste sorting, collection,
+storage, and recycling at the construction site. During the operation phase, we conduct quarterly inspections
+of the on-site environment of data centres. We regularly inspect the water quality of the circulating
+water system in data centres, publicise the requirements for the final treatment of pollutants, and ensure
+routine management and compliant disposal of hazardous waste such as waste batteries. During the
+decommissioning phase, suppliers are required to scrap and recycle servers in accordance with the
+regulations.
+Policy consultation, incident reporting,
+visitor reception, information disclosure,
+and participation in government meeting
+Main communication channels
+Shareholder meeting, earnings release,
+annual report, interim report, official
+website, communication meeting, and
+email communication
+HR helpdesk, employee engagement
+meeting, social media and in-person
+meeting, and communication hotline
+Online platform, customer service hotline,
+social media, and information disclosure
+Online platform, customer service hotline,
+merchant meeting, and merchant inspection
+Meituan 2023 Annual Report
+135
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Main stakeholders
+Suppliers
+Media and
+non-governmental
+organisations
+Customer Service, Services Retail Industry
+Empowerment and Development, and
+Product and Service Quality Management
+Product and Service Quality Management,
+Information Security and Privacy Protection,
+and Customer Service
+Employment Practices, Employee Rights
+and Benefits, Employee Training and
+Development, Occupational Health and
+Safety, Diversity and Equal Opportunities,
+Product and Service Quality Management,
+and Social Welfare Participation
+Courier Health and Safety, Information
+Security and Privacy Protection, Employee
+Training and Development, Product and
+Service Quality Management, and Anti-
+Corruption
+Cold chain management: We took various measures to continuously promote environmental-friendly
+transformations in our cold chain operations, including (i) resource circularity and reuse: replacing single-use
+dry ice with reusable ice packs. Recycling turnover materials to reduce the use of disposable materials; (ii)
+reduction by design: optimising the design of disposable packaging materials such as containers for fruits and
+vegetables and single-use plastic bags, as well as circulating baskets and transportation trays, while ensuring
+performance or functionality requirements; (iii) energy conservation and emissions reduction: implementing
+refined onsite management of electric appliance and optimise lighting strategies. Employing intelligent
+equipment with early warning functions to monitor temperature, humidity, and door curtain closure status to
+conduct real-time monitor of cold storage status and improve operation efficiency; and (iv) introduction of
+refrigerant freezing racks: replacing plastic baskets and cage trolleys with refrigerant freezing racks to improve
+freezing efficiency.
+Product and Service Quality Management,
+Anti-Corruption, Compliance of Content,
+Employment Practices, Courier Health
+and Safety, Information Security and
+Privacy Protection, Climate Change Action,
+Services Retail Industry Empowerment and
+Development, and Intellectual Property
+Rights
+Main ESG concerns
+EAT BETTER, LIVE BETTE
+We integrate energy-saving technologies into our cold chain management, logistics management, and warehouse
+network planning to promote precision operations, reduce resource consumption, and improve resource efficiency
+in our retail business.
+In terms of waste treatment, we strictly follow local authorities' requirements in our areas of operation. In all
+headquarter offices, dustbins are categorised to collect different types of waste. Hazardous waste from our offices,
+such as fluorescent tubes, batteries, toner cartridges, and ink cartridges, is collected separately and handed over
+to qualified agencies for further treatment. 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,
+such as obsolete computers, monitors, telephones, and projectors, we have formulated an internal processing
+procedure for centralized management and hand the waste over to professional institutions for harmless disposal
+and recycling. We classify the garbage generated in the cafeteria as kitchen waste, recyclable waste, and other
+waste. Kitchen waste is collected by a designated waste removal company and transported to a waste treatment
+centre for composting, biogas fermentation, and other methods of conversion into fertilizer or energy. Recyclable
+waste and other types of waste are handed over to property management companies of the leased park for further
+treatments.
+Platform merchants
+Employment Practices
+Compliance of Content
+Safety
+Employee Rights and Benefits
+Occupational Health and
+Customer Service
+Services Retail Industry
+Empowerment and Development
+Promoting Green Development of
+the Industry Chain
+Anti-Corruption
+Product and Service
+Quality Management
+Information Security and
+Privacy Protection
+Courier Health and Safety
+Climate Change Action
+Materiality to stakeholders
+Materiality Assessment
+Courier feedback session and grievance,
+and complaint hotline
+Social media, official website, press
+conference, information-sharing meeting,
+and dedicated customer service
+Supplier inspection and supplier meeting
+Main communication channels
+Courier Health and Safety, Customer
+Service, and Product and Service Quality
+Management
+Courier Health and Safety, Product and
+Service Quality Management, Customer
+Service, Promoting Green Development of
+the Industry Chain, Energy Conservation,
+Services Retail Industry Empowerment and
+Development, and Water Conservation
+Supply Chain Management, Product
+and Service Quality Management, Anti-
+Corruption, and Information Security and
+Privacy Protection
+Main ESG concerns
+Couriers
+In 2023, through engaging in ongoing communication with key stakeholders and taking the business impact
+analysis of ESG issues into account, we conducted a materiality assessment as a reference for our action planning
+and report preparation. The result of our materiality assessment is presented in the following figure, and each issue
+identified will be discussed in detail in this report.
+Water Conservation
+Supply Chain
+Management
+Energy Conservation
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 137
+To reduce paper use and water consumption, we install sensor taps for selected office areas and set up related
+signs to promote water and paper conservation throughout our workplaces. Double-sided printing mode is set as
+default for all printers in our offices to realise the efficient use of paper.
+Raise awareness of energy conservation: We set up energy-saving reminders and labels next to thermostats
+and switch panels to raise employees' awareness of energy conservation in workplaces.
+Explore new energy-saving technologies: We expand the use of energy-saving LEDs and replace manual
+switches with sound-activated ones to shorten the duration of illumination. We also install centralised control
+systems for air conditioning in selected meeting rooms and cafeterias.
+Improve electrical equipment management: We conduct regular inspections of office workplaces to avoid
+leaving lights on in unoccupied areas, and we shut down non-essential equipment in offices and washrooms
+during off-hours. We have implemented a monitoring mechanism to track monthly and quarterly workplace
+electricity consumption. We collect real-time energy consumption data of selected office areas through the
+online energy management system to detect abnormal conditions and conduct timely evaluation and control.
+We continue enhancing our energy conservation performance by improving electrical equipment management,
+exploring new energy-saving technologies, and raising awareness of energy conservation:
+The main resources consumed in our workplaces are electricity, water, and paper. Major types of waste we
+generated include domestic waste, electronic waste, fluorescent tubes, batteries, toner cartridges, and ink
+cartridges. We have established a workplace environmental management team, led by the management. With the
+participation of relevant departments, the team is responsible for promoting energy and resource conservation
+measures and ensuring compliant disposal of all types of waste.
+Green Workplace
+We strictly abide by environmental laws and regulation, such as Environmental Protection Law of the People's
+Republic of China and Law of the People's Republic of China on Energy Conservation. Authorised directors from
+relevant departments are designated to supervise the Company's environmental management. They constantly
+drive the implementation of specific initiatives related to environmental management and green operation in our
+daily office and business operations.
+Practising Green Operations
+We remain committed to actively practicing environmental protection and the concept of green operation by
+proactively identifying and managing major environmental risks and striving to minimise the impact of our operation
+on the environment. We also aim to promote the green development of the industry value chain and enhance the
+overall capacity and performance of environmental management in the industry.
+ENVIRONMENT
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+136 Meituan 2023 Annual Report
+Materiality to Meituan's business
+. Environmental
+issues
+• Social issues
+Diversity and Equal
+Opportunities
+Employee Training and
+Development
+Rights
+Intellectual Property
+Social Welfare
+Participation
+Environmental Management in Retail Businesses
+132
+EAT BETTER, LIVE BETTE
+Operation:
+•
+Support solving more social issues
+•
+Community:
+• Facilitate talent development
+• Protect employee's rights and benefits
+• Maintain integrity
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 133
+5.
+4.
+Promote the sustainable development of the industry
+•
+Safeguard the interests of partners
+•
+• Achieve win-win cooperation with ecosystem partners
+3.
+Strive for excellence, continuously improve, and build a positive reputation among customers
+Create more value in people's life
+•
+Create greater social value
+•
+Advocate for community participation in public service activities
+ESG Governance
+Customers
+Employees
+Shareholders and
+investors
+Government and
+regulatory bodies
+Main stakeholders
+The main stakeholders identified, ESG concerns collected, and communication channels used are listed as follows.
+We actively listen and respond to the demands of stakeholders. In line with the Environmental, Social and
+Governance Reporting Guide, we identified the key stakeholders and collected their main concerns through various
+communication channels.
+Stakeholder Engagement
+Comprised of representatives from major businesses and functional departments, the ESG Execution Team
+facilitates the execution of management strategies and realisation of ESG goals. It is tasked with conducting
+ESG materiality assessment, incorporating ESG risk management into daily risk control processes, organising
+ESG-focused trainings to raise awareness among employees at different levels and in different roles, conducting
+specialised research on critical ESG issues such as the impact of climate-related risks and opportunities, and
+regularly reporting to the Company's management and governance bodies.
+•
+Execution
+Meituan 2023 Annual Report
+134
+EAT BETTER, LIVE BETTE
+Consisted of key members from major business and functional departments, the ESG Governance Team is
+established to manage ESG matters. It is responsible for reviewing ESG strategies, frameworks, principles, and
+policies of the Company, providing guidance on ESG practices, regularly assessing progress towards ESG goals,
+and participating in specialised trainings on ESG topics.
+Management
+The Audit Committee is responsible for supervising ESG matters. It evaluates the Company's ESG related
+strategies, frameworks, principles, and policies, and assesses and supervises the Company's relevant practices. It
+also monitors the establishment and progress of the Company's ESG goals and provides updates to the Board on
+these matters.
+The Board of Directors serves as the highest decision-making body in ESG management. It participates in
+assessing and prioritising key ESG issues and holds overall responsibility for ESG strategies and reporting. It
+authorises the Audit Committee to supervise ESG management and receives regular updates from the committee
+regarding significant ESG-related matters.
+Governance
+To enhance the implementation of our ESG management strategies and strengthen our competence in sustainable
+development, we have established a three-tier ESG governance structure of "Governance-Management-Execution"
+and documented rules that outline the responsibilities and duties of each tier when facilitating our ESG work. The
+purpose of this governance structure is to support the long-term administration of ESG within the Company and
+facilitate collaboration with stakeholders.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Be customer-centric
+Partners:
+2.
+Senior Management
+Customers:
+Other employees
+Overall workforce
+14.29% (1)
+85.71% (6)
+0% (0)
+37.12% (42,635)
+37.12% (42,635)
+100% (5)
+62.88% (72,220)
+62.88% (72,225)
+Board
+Details on the gender ratio of the Group together with relevant data can be found in the Environmental, Social and
+Governance Report on pages 131 to 199 of this annual report.
+Meituan 2023 Annual Report 131
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan (hereinafter referred to as "the Company", "Company" or "We") prepared this report in accordance with
+Appendix C2 Environmental, Social and Governance Reporting Guide in Listing Rules of the Stock Exchange of
+Hong Kong Limited, and upholds the principles of materiality, quantitative, balance, and consistency.
+We proactively engaged with key stakeholders and gathered insights into their concerns regarding environmental,
+social and governance (ESG) issues. These ESG issues were prioritised and addressed in the report according to
+their materiality, as discussed in chapters “Stakeholder Engagement" and "Materiality Assessment”. Quantitative
+information was used to reflect environmental and social key performance indicators (KPIs) for reliable evaluation
+and validation. The criteria for quantification, methodologies, assumptions, and/or calculation tools for KPIs, as
+well as the sources of conversion factors, were indicated and explained when necessary. The statistical approach
+for disclosing information in this report remains consistent with previous years. Any specific changes made in the
+report were justified and accompanied by explanations for their inclusion.
+This report aims to present our ESG performance in 2023 on an objective, fair, and balanced basis. It is
+recommended to read the governance section in conjunction with the "Corporate Governance Report" included in
+this annual report.
+Unless otherwise specified, the scope of this report is the ESG performance of businesses directly operated and
+managed by the Company. The reporting period for this report is from January 1, 2023 to December 31, 2023.
+BOARD STATEMENT
+The Board takes full responsibility for the Company's ESG strategy and reporting. The Board's Audit Committee
+assists in overseeing ESG issues. The ESG Governance Team is responsible for routine management of ESG issues
+and provides guidance on ESG practices. The ESG Execution Team, which consists of key members from major
+business and functional departments, coordinates and implements ESG initiatives, and periodically reports the
+progress to the management and governance teams. The Board, the responsible management, and the execution
+team participate in ESG training programs annually, including climate change action, information security and
+privacy protection, anti-corruption, etc., to enhance their expertise in ESG and keep up with the latest trends in the
+field.
+The Company conducts materiality assessments to understand key ESG issues of stakeholders' interest
+and develops and integrates ESG management strategies into daily operations and management. The Board
+participates in assessing and prioritising key ESG issues and reviews ESG management strategies on a regular
+basis to evaluate their potential impact on the Company's overall strategy. In 2023, the Company made continuous
+efforts and achieved progress on key ESG issues such as climate change action, management and protection of
+couriers, Meituan Food Delivery environmental protection action in the industry, environmental management of data
+centres, and information security and privacy protection.
+REPORT OVERVIEW
+Male
+(as listed in this Annual Report)
+The Company values gender diversity across all levels of the Group. The following table sets out the gender ratio in
+the workforce of the Group, including the Board and senior management as at the date of this Annual Report:
+Promote the industry's capacity for environmental protection
+•
+Promote the harmonious coexistence of corporate development and environmental sustainability
+•
+Advocate green consumption
+Female
+1. Environment:
+Based on the Company's mission and values, we enhance the integration of bellowing ESG visions and our
+business practices and strategic planning:
+As our mission is "we help people eat better, live better", we adhere to the values including "customer-centric",
+"integrity", "win-win cooperation", and "striving for excellence".
+•
+GENDER DIVERSITY
+The Company has set ESG goals associated with business operations, including environmental targets, such
+as energy conservation, water conservation, and waste management within the workplace. The Board regularly
+reviews the progress of these targets.
+The Company recognises the significant impact that ESG-related risks and opportunities could potentially have
+and thus incorporates them into our risk management system. The Board oversees the assessment of ESG-related
+risks and opportunities and ensures the establishment of an appropriate and effective ESG risk management
+and internal supervision system. This year, the Company established an internal process to identify, assess, and
+manage climate-related risks and opportunities. We carried out risk identification, assessment, and management
+for ESG issues, such as business compliance, information security, and human resource management. For detailed
+information, please refer to the "Climate Change Action" section in this report and the "Corporate Governance
+Report-Risk Management and Internal Control" section in the annual report.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+130
+Meituan 2023 Annual Report
+CORPORATE GOVERNANCE REPORT
+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. The Company had appointed Ms. Yang
+Marjorie Mun Tak to the Board on June 30, 2023. For more details, please refer to the section headed "Corporate
+Governance Report - Board Committees - Nomination Committee” in this annual report. In 2023, we hired 114,860
+employees, of which 72,225 were male and 42,635 were female. The gender ratio in the workforce (including senior
+management) was approximately 17 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.
+OUR VALUES AND ESG MANAGEMENT
+We actively cooperate with industry associations, manufacturers, catering merchants, and research institutions to
+carry out food delivery green packaging innovations. We also explore innovative and practical green packaging
+solutions that meet the needs of catering merchants. In 2023, the "Working Group on Green Packaging Application
+in Food Delivery"2, which we established in collaboration with China Packaging Federation and other industry
+associations completed the first phase of "Green Packaging Solution", covering 6 categories of dishes. By the end
+of 2023, we had facilitated the development and launched 41 green packaging products on the market, with a total
+of over 2.91 million pieces. In addition, we jointly issued the Guidelines on Packaging Reduction in Food Delivery
+with the China Packaging Federation and other industry associations to provide practical operational guidelines for
+catering merchants and avoid over-packaging.
+We participate in the establishment of green packaging standards for food delivery services. We are continuously
+working to improve the relevant standard system under the three major categories of green packaging that have
+been defined. We guide the supply chain of the food delivery industry to produce standardly, thereby promote
+the wider adoption of green packaging. By the end of 2023, we had initiated or participated in the formulation of
+113 national standards and association standards, including Implementation Rules for the Design and Evaluation
+of Recyclable and Renewable Plastic Products - Evaluation Criteria for Disposable Food and Beverage Plastic
+Packaging Containers in Food Delivery (Takeaways), General Requirements for Green Paper Takeaway Package,
+Recycled Polypropylene Nonwoven Tote Bag, Closure Labels for Takeaway Food Package, and Green Management
+Specifications for Takeaways.
+EAT BETTER, LIVE BETTE
+Apply the green building concepts
+of safety, durability, and liveability
+throughout the site selection,
+design, and construction
+processes. Benchmark against
+green building standards in terms
+of water conservation, energy
+efficiency, and renewable energy
+utilisation
+Meituan Food Delivery cooperates
+with merchants to optimise the
+supply of "Small-Portion Dishes"
+and other dish categories and
+remind consumers to "order
+proper portion" and "reduce the
+use of disposable cutlery"
+Meituan Bikes and Meituan
+E-mopeds continue exploring
+Construct office buildings that
+meet national and international
+leading green building
+standards, and plan for ongoing
+management of energy efficiency
+and other green aspects in office
+and operating spaces to increase
+climate resilience
+Resilience
+Green Packaging
+measures to reduce the carbon
+footprint from bike production and
+operation, and have been certified
+by China Communications
+(Beijing) Transportation Product
+Certification Center as lifecycle
+"carbon-negative"
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2
+Meituan Food Delivery has launched the “Lush Mountain Project" since 2017 as the food delivery industry's first
+action plan to focus on environmental protection. “Lush Mountain Project” aims to promote the low-carbon society
+transformation through building a green and low-carbon consumption ecosystem in cooperation with the entire
+food delivery industry and consumers. We formulate short, medium, and long-term goals and plans around green
+environmental protection, and carry out environmental protection work through four modules, including Green
+Packaging, Low-Carbon Ecology, Green Tech, and Green Charity. In 2023, on the basis of our vision of "Better Life,
+Better Nature”, we focused on developing low-carbon alternatives for our business on all platforms, collaborating
+with our ecosystem partners for sustainable development, and exploring the way of harmonious coexistence
+between human and nature, and continued strengthening our investment in the four modules.
+We actively implement various environmental protection actions in response to the laws and regulations and
+the 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, the Action Plan for Plastic Pollution Control of the 14th Five-Year
+Plan, the Anti-Food Waste Law of the People's Republic of China, the Implementation Plan on Promoting Green
+Consumption, and the Administrative Measures for the Use and Reporting of Disposable Plastic Products by
+Business Operators.
+Meituan Food Delivery Environmental Protection Action in the Industry
+We pay attention to the environmental impacts of the value chain of our business and proactively seek solutions to
+promote green development of the value chain.
+Promoting Green Development of the Industry Chain
+In 2023, by implementing the aforementioned environmental protection measures, we successfully reduced the
+overall average PUE of our data centres in Beijing, Shanghai, and Zhongwei to 1.25, with that of some areas even
+lowered to 1.1, which is superior to the industry average.
+Explore the use of renewable energy: Our leased data centre in Zhongwei is now completely powered by
+renewable energy. Through advanced structural design, temperature control, heat recovery, and other
+technical means, it has achieved a continuous control and reduction of power usage effectiveness (PUE).
+Furthermore, we actively discussed the possibility of utilising Distributed Photovoltaics (DPV) with data centre
+suppliers. In 2023, we installed rooftop photovoltaic panels in our data centres in Beijing and Shanghai to
+power the lighting in the server rooms and the auxiliary power areas.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+140
+Actions to seize opportunity
+Meituan 2023 Annual Report 141
+We continuously explore and promote large-scale recycling of plastic take-out boxes and investigate the challenges
+and suitable recycling methods under different scenarios. In 2023, we launched joint projects with local recycling
+enterprises, environmental protection organisations, and regulatory authorities to explore innovative solutions for the
+large-scale recycling of plastic take-out boxes, including (i) “Dandelion – Boxes Transformers into New Fashion",
+a regional pilot programme of large-scale regular recycling of take-out boxes in Shenzhen; (ii) in collaboration with
+the China Environmental Protection Foundation, we carried out the recruitment of implementing units for the "Boxes
+Transformers" programme, a city-level large-scale recycling initiative of plastic take-out boxes. In 2023, 9 recycling
+enterprises in 7 provinces joined the programme as partners; (iii) jointed alongside with 3 recycling enterprises, we
+established a full-chain recycling system of take-out boxes, namely "Recycling Site - Community Transfer Station -
+Recyclable Resources Sorting Centre", in different areas of Beijing. We continuously exploring the effective method
+of integrating take-out boxes into urban waste recycling system while promoting our achievements in the industry.
+By the end of 2023, we had facilitated large-scale waste sorting and plastic box recycling projects in 15 cities of 14
+provinces across the country and recycled approximately 17.6 thousand tonnes of take-out boxes, which achieved
+an increase of over 11,000 tonnes compared to 2022. Furthermore, we collaborated with M&G Stationery to launch
+the first carbon-neutral stationery series. Each one of the gel pens' body in this series are made from reprocessed
+plastic from recycled plastic take-out boxes, which can reduce the carbon emissions generated from the production
+of approximately 2.3g of plastic.
+As the government continuously
+advocates the concept of green
+consumption, more Chinese
+consumers are willing to purchase
+green and low-carbon goods and
+services
+consumption
+Production phase: During the preliminary design process, bike components are designed to be universally
+adaptable and easy to maintain and the frames are designed in a light-weighted way. When choosing raw
+materials, we give preference to environmentally friendly components, such as recyclable PP plastic and
+composite materials with low carbon emissions per unit. For E-mopeds, we also opt for lithium batteries
+that are more environmentally friendly. In the manufacturing stage, we require bike components suppliers to
+produce durable products to extend the product life and reduce waste.
+Operation phase: During the deployment stage, we use intelligent dispatch systems to collect and analyse
+information, such as the placement number and the transport mileage, for smart scheduling to ensure the
+scientific and standardised placement. During the operation and maintenance stage, we promptly dealing with
+faulty and damaged bikes to prevent accidents while consumers are riding. Maintenance personnel will collect
+bikes in a timely manner, carry out bike inspection after replacing damaged parts, and redeploy qualified
+bikes.
+Meituan 2023 Annual Report 145
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Disposal phase: Hazardous waste, such as batteries in locks and batteries powering E-mopeds, are handed
+over to bike lock and battery suppliers for unified recycling and disposal. As for non-hazardous waste, such as
+frames and tyres, we cooperate with resource recycling companies to recycle and reuse them, thus forming a
+closed-loop supply chain and achieving 100% recycling and reuse of scrapped bikes.
+In 2023, Meituan Bikes and Meituan E-mopeds were certified as “carbon-negative" products, and consumers
+reduced 485,800 tonnes of carbon emissions through green and low-carbon cycling.
+Climate Change Action
+Against the backdrop of global efforts to address climate change and enhance climate governance, we have
+prioritised "continuously strengthening the assessment and responses to risks related to climate change" as one
+of our key tasks. Following the recommendations made by Task Force on Climate-Related Financial Disclosures
+(TCFD), we have implemented a systematic approach to identify different types of climate-related risks and assess
+their potential impacts on our key business operations. We have integrated climate risk management into our daily
+risk management system, evaluated specific "physical risks" and "transition risks", and optimised our management
+measures accordingly. Furthermore, in line with the characteristics of our key businesses, we have leveraged our
+service strengths to fully explore the opportunities brought by climate change.
+To enhance our capacity for climate change governance, we integrated climate-related supervision and
+management into our three-tier ESG structure of "Governance-Management-Execution". The governance body
+regularly oversees the Company's strategies and progress in responding to climate change, including strategy
+development, work plans, risk, and opportunity management. The management level guides the identification and
+management of climate-related risks and opportunities and promote specific actions by relevant departments
+within the execution level to implement approved strategies and goals related to climate change. We attach great
+importance to enhancing the professional understanding of personnel at all levels on climate-related issues and
+provide them with specialized training covering the identification of climate-related risks and opportunities, climate
+risk management, and other topics.
+This year, under the supervision of the governance body and the guidance of the management level, we improved
+the process of identifying and assessing climate-related risks and opportunities. We identified key climate risks
+and opportunities by means of industry analysis, internal discussions, and expert consultations. By referring to the
+climate risk and opportunity analysis framework recommended by TCFD and industry practices, we compiled a list
+of risks and opportunities that can be considered. We organised special seminars with key business and functional
+departments to collect and discuss management's suggestions on climate-related risks and opportunities
+assessment and the current management status. We also sought external opinions from industry experts and
+scholars to obtain external perspectives. The following eight key climate risks and opportunities were prioritised,
+and their potential impacts were assessed. We have also optimised the corresponding response measures for these
+identified climate risks and opportunities.
+4
+Data calculated according to the Report on Bike-sharing Contribution to Pollution and Carbon Reduction issued by
+the Environmental Development Centre of the Ministry of Ecology and Environment and China Environmental United ET BETTER, LIVE BETTE
+Certification Centre.
+146
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Climate-related risks
+Physical risks
+Category
+Increasingly frequent
+Acute physical
+extreme weather
+risks
+events, such as
+-
+•
+Green concepts are integrated into the lifecycles of Meituan Bikes and Meituan E-mopeds. The principle of “3 Rs” -
+reduce, reuse, recycle – is strictly followed in the production, operation, and disposal of these bikes and E-mopeds.
+Meituan Bikes and Meituan E-mopeds' Lifecycle Environmental Management
+3
+"Working Group on Green Packaging Application in Food Delivery" aims to promote the research and development and
+design of green packaging, as well as its application in the food delivery industry through innovation and collaboration, and
+to complete the "Green Packaging Solution" of 16 categories of dishes in three phases by 2025.
+For more information about our participation in formulating green packaging standards and standard content, please see
+Meituan Lush Mountain 5-year Progress Report (2017-2022).
+EAT BETTER, LIVE BETTE
+142
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Low-Carbon Ecology
+We promote the digital transformation of goods and services retail on both the demand side and the supply side to
+build a sustainable ecosystem involving "Merchants-Platform-Consumers". We encourage merchants to practise
+sustainable operations through constraint and incentive mechanisms. We guide consumers to achieve sustainable
+consumption through product design and campaigns. We collaborate with industry partners to develop tools and
+guidelines that promote the sustainable development of the food delivery industry.
+On the merchant side, we launched a feature called "Merchant's Lush Mountain Profile" to encourage
+merchants to share their environmental protection practices. Merchants can showcase their commitment to
+sustainable operations by creating visible environmental profiles, in which they could tag themselves with 7
+merchant sustainable categories, such as "food saving action" and "low-carbon consumption improvement”.
+Also, the merchants are enabled to improve their own environmental protection profiles by uploading
+environmental protection actions, making environmental protection commitments and so on. By the end
+of 2023, 2.63 million merchants had acquired their own "Merchant's Lush Mountain Profile", an increase
+of 630,000 merchants from 2022. In addition, we pay attention and respond to new consumption trends to
+promote food saving. We incentivize catering merchants in a variety of ways to provide “Small-portion Dishes"
+and "One-person Meal" packages to consumers. We also jointly released the Insight Report on Small-Portion
+Dishes with the China Hospitality Association. There had been more than 7.4 million types of "Small-portion
+Dishes" provided by over 1.1 million merchants by the end of 2023, an increase of 1.5 million types compared
+to 2022.
+On the consumer side, we advocate sustainable consumption. In the entire process of food ordering,
+consumers receive reminders such as “portion size" and "order proper portion" in the ordering interface.
+In addition, since September 2017, we have utilized both online and offline resources and cooperated with
+public welfare organisations, industry associations, merchants, and other relevant parties, to establish the
+"Meituan Food Delivery Environmental Protection Day". The initiative includes a series of environmental
+protection advocacy activities, such as cutlery saving, waste sorting, food waste reduction, and wild animal
+protection. By the end of 2023, more than 400 million consumers had used the "no need for cutlery" option
+while ordering and the cumulative carbon reduction exceeded 226,000 tonnes.
+On the industry side, we actively promote sustainable operations in the Chinese catering industry. In 2023,
+jointly with the School of Environment, Tsinghua University, and China Chain Store & Franchise Association,
+we published the official result of the “Quantitative Evaluation of Food Consumption Reduction Paths".
+This research provides a comprehensive analysis of policies, systems, and measures as well as the best
+practices of related entities towards food waste reduction in the domestic and international catering industry.
+It also proposes feasible paths and development directions of food waste reduction for the Chinese catering
+industry. We collaborated with the China Hospitality Association and other organisations to develop the
+Guidelines for the Description of Food Portion to Save Food in order to provide catering merchants with more
+universal, practical, and operational guidance on meal portion information.
+hurricanes and floods
+Green Tech
+143
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In 2021, we launched the "Meituan Green Tech Fund", the first public welfare fund focusing on "carbon neutrality
+and circular economy". The Fund mainly supports two areas: the "Meituan Green Tech Award" and the "Innovation
+China Meituan Green Tech Demonstration Project Grant”. The “Meituan Green Tech Award" is set up to encourage
+more young scientists to engage in scientific exploration and technological transformation in the green and
+low-carbon field. The "Innovation China Meituan Green Tech Demonstration Project Grant" focuses on three major
+areas of technology, including green innovative packaging, green recycling, and green supply chain systems, to
+promote the applications of environmental protection related technological achievements in the industry, as well as
+to contribute to the vision of realising a beautiful China.
+In 2023, we continued the selection process for the "Meituan Green Tech Award", with a focus on the four
+major topics: green and low-carbon materials, carbon capture and resource utilisation, new energy and
+energy storage, and synchronous control of pollution reduction and carbon emissions. The award covered
+research in key areas, including material science, chemistry, chemical engineering, environmental science,
+and energy science. We rewarded each scientist with RMB1 million to encourage and support their research.
+By the end of 2023, a total of 19 winners had been awarded.
+The first batch of 9 demonstration projects selected for the "Innovation China Meituan Green Tech
+Demonstration Project Grant” have obtained a total of 24 granted and pending patents. By the end of 2023,
+all plastic take-out box recycling pilots of the demonstration projects had been put into operation, and a
+total of over 4,400 tonnes of plastic take-out boxes had been recycled. In 2023, the Meituan Green Tech
+Fund provided support to Donghua University to develop "the First Low-Carbon Polypropylene Fabric Made
+from Recycled Take-out Boxes". Through innovative processing and modification, waste take-out boxes are
+upcycled and transformed into polypropylene fibres, which are used as raw materials for fabrics and T-shirt
+products with quick-drying function. Besides, we are currently collecting, evaluating, and selecting the second
+round of demonstration projects.
+EAT BETTER, LIVE BETTE
+144
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Green Charity
+We partnered with the China Environmental Protection Foundation to establish the "Lush Mountain Nature Guard
+Campaign". This foundation provides financial support to social organisations and scientific research institutions
+and implements nature-based solutions to carry out public welfare projects in conservation areas to improve the
+ecological quality, as well as to enhance the human adaptability to climate change and build a harmonious and
+coexisting relationship between human and nature. In 2023, we reviewed the second batch of the "Lush Mountain
+Public Welfare Nature Guard Campaign" projects and supported 20 initiatives that continue emphasising on
+developing "ecological protection and restoration" and "livelihood substitution”. On August 15, 2023, the first
+National Ecology Day, we jointly launched the "Lush Mountain Public Welfare Clean Nature Campaign" with the
+Beijing Society of Entrepreneurs and Ecology Foundation. The Campaign funded the first batch of 12 public welfare
+projects, aiming to cooperate with environmental protection public welfare organisations to eliminate plastic and
+other wastes in the natural environment, as well as to contribute to the construction of a beautiful China where
+human beings and nature coexist in harmony.
+We leveraged the platform's philanthropic influence and encouraged platform merchants to participate in public
+welfare projects to become Lush Mountain Charitable Merchants, thereby building an environmental protection
+public welfare ecosystem. Since the launch of the "Lush Mountain Public Welfare Action", the number of the Lush
+Mountain Charitable Merchants has grown rapidly. By the end of 2023, more than 1.23 million merchants had joined
+the "Lush Mountain Public Welfare Action", completing over 10 billion donations and implementing more than 110
+public welfare projects.
+Meituan 2023 Annual Report
+Potential opportunities
+Rising average
+temperature
+Major risk mitigation measures
+Opportunities
+Category
+Potential opportunities
+Recycling of packaging Resource
+and other materials
+efficiency
+Active exploration of
+innovative voluntary
+emissions reduction
+mechanisms
+Exploration
+of innovative
+voluntary
+emissions
+reduction
+mechanisms
+Increase the use of reusable
+packaging materials and support
+green packaging R&D projects
+and industrialisation to improve
+resource efficiency
+Actively explore the diversified
+application of scenarios under the
+"Carbon Inclusion" programme,
+an incentive mechanism to
+motivate consumers to choose
+low-carbon and green travel
+modes, which will in return
+increase consumer loyalty
+Actions to seize opportunity
+Continuously increasing the
+proportion of reusable packaging
+materials such as containers used
+in storage and transportation in
+retail and other key businesses
+Launch the "Lush Mountain
+Project" and collaborate with
+universities and research
+institutions to promote the use of
+green packaging materials across
+the entire food delivery industry
+Promote the concept of green
+travel and environmental
+protection, and encourage
+consumers to use the carbon
+credits they earn from cycling
+to participate in activities such
+as the "Contribute to Carbon
+Reduction - Playground
+Environmental Protection Corner
+Programme", organised by
+Meituan Charity, to create the
+connection between green and
+low-carbon lifestyle and public
+welfare activities
+Actively participate in piloting
+carbon inclusion platforms
+in provincial and municipal
+governments, counting the
+personal emissions reductions
+achieved by local cycling
+consumers into the respective
+carbon platforms, to help expand
+the number of participants in
+green travel
+Scientifically quantify the carbon
+emissions reductions of Meituan
+Bikes consumers, actively
+participate in the development
+of carbon reduction accounting
+methods for cycling, and assist
+the development of innovative
+voluntary emissions reduction
+mechanisms based on low-
+carbon consumer behaviour
+Opportunities
+Meituan 2023 Annual Report 149
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Category
+Shifts in consumer
+preference
+Goods and
+services
+Office buildings
+with lower energy
+Climate-related opportunities
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+148 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Extreme climate hazards like
+severe precipitation, flooding, and
+typhoons can reduce or impede
+the efficiency of supply chain,
+operation, and service fulfilment
+of our businesses
+Establish standardised
+emergency management systems
+and optimise corresponding
+management measures in a timely
+manner to address identified
+extreme climate hazards.
+-
+Stock up emergency supplies
+and reinforce protective facilities
+in advance for workplaces or
+premises in regions susceptible
+to extreme climate hazards.
+Purchase commercial insurance
+for assets that are vulnerable to
+extreme climate hazards
+Chronic physical
+risks
+Regular heat waves have posed
+challenges to control the quality
+of fresh food and other perishable
+goods throughout stages
+such as storage, cold chain
+transportation, and delivery
+Optimise supply chain
+infrastructure and reduce
+product loss by strengthening
+the construction of cold chain
+storage, flexibly deploying
+mobile cold chain storage,
+and enhancing temperature
+management during storage and
+transportation
+Establish comprehensive
+standards for the entire workflow
+of cold chain operations, covering
+operational procedures, control
+mechanisms, and product quality
+management to ensure consistent
+quality management throughout
+the logistics and transportation
+process for fresh groceries
+Meituan 2023 Annual Report 147
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Transition risks
+Potential risks
+Category
+Policy and legal
+risks
+requirements
+Potential risks
+The tightening of climate-
+related policies has led to
+increasingly stringent compliance
+requirements for related data
+management and information
+disclosure, which require
+enterprises to enhance data
+and statistics management
+capabilities, hire additional
+industry experts, etc., resulting
+in potential management costs.
+Failure to build capabilities in
+climate risks management,
+information disclosure,
+and related data statistics
+management in a timely manner
+can also lead to compliance and
+disclosure risks
+Major risk mitigation measures
+Actively build a professional
+team, learn from industry
+experts, establish and improve
+the data management system,
+and continuously track and
+understand the latest updates
+in climate-related disclosure
+standards to steadily improve
+climate-related disclosure
+performance and enhance the
+Company's ability to manage and
+control climate risks and identify
+opportunities
+Mandatory regulation Market risks
+on existing goods
+and services
+Due to national or regional
+regulatory policies, such as plastic
+restriction, waste sorting, and
+gasoline & diesel truck restriction,
+key retail businesses are required
+to use green plastic materials
+in their goods and services,
+establish fine management
+measures for solid waste, and
+increase the proportion of new-
+energy vehicles, etc., which will
+result in potential compliance
+or operating costs. Failure to
+adjust goods and services in a
+timely manner in accordance with
+regulatory requirements can also
+result in market compliance risks
+Timely identify and interpret major
+national, provincial and municipal
+policies related to climate change,
+including plastic restriction, waste
+sorting, gasoline & diesel truck
+restriction, etc., and analyse their
+impacts
+Evaluate substitute green plastic
+materials to ensure compliance
+with national and regional
+requirements; categorise solid
+waste and identify recyclable
+waste to reduce disposal costs;
+and expand cooperation channels
+with high-quality new-energy
+vehicle suppliers to enrich the
+supply of transport capacity
+Tightening climate-
+related disclosure
+Regularly provide special training
+for employees and couriers in
+daily operations
+2.45
+0.05
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+156 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+We standardise and improve the management of recruitment process, prohibiting the use of discriminatory words
+or statements in job descriptions that violate the principle of equal opportunities. We organise recruitment trainings
+and conduct regular reviews to continually optimise the recruitment process, ensure the implementation of our
+equality and diversity policies, and guarantee the compliance of recruitment.
+We recruit candidates who match the positions the most. We treat different races, ethnics, genders, ages, and
+religious beliefs equally to ensure that admission and development opportunities are accessible to all. We have
+formulated internal policies such as the Employee Recruitment and Selection Policy, the Job Posting Policy of
+Meituan and the Interviewer Management Specifications to clarify the code of conduct for the whole recruitment
+process and the penalties for possible violations such as discrimination.
+Recruitment and Departure Management
+Employment and Labour Standards
+Employees are one of the most vital assets of the Company. We strive to build a comfortable and harmonious
+working environment through ensuring equal opportunities, protecting employees' rights, providing competitive
+compensation and benefits that match employees' capabilities, and ensuring sufficient learning resources and
+opportunities for employees. For more information, please refer to the section of "Management Discussion and
+Analysis - Employees" in this annual report.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 155
+WORKPLACE
+The Company's core businesses do not directly produce finished products, therefore the Key Performance Indicator A2.5 -
+Total packaging material used for finished products with reference to per unit produced is not applicable to the Company.
+The water resources used by the Company come from municipal water supply and there were no concerns in sourcing
+water. Water fees of some offices, warehouses and service stations are included in property management fees, therefore,
+water consumption cannot be counted separately and is not included in running water consumption.
+11
+We continuously strengthen our talent pool by improving the interview experience, diversifying recruitment
+channels, and encouraging internal rotation to attract talents that match our development directions:
+10
+431,911.88
+1,725,919.45
+2023
+Running water consumption (tonnes)
+Total energy consumption (MWh)
+Warehouses and service stations
+2.74
+Running water consumption per employee (tonnes per employee)
+48,215.86
+Running water consumption (tonnes)
+0.05
+Energy consumption per square metre of floor area (MWh per square metre)
+0.26
+Energy consumption per employee (MWh per employee)
+11,569.58
+9 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.
+Total energy consumption (MWh)
+For improving the interview experience, we advocate a candidate-centric recruitment concept. During the
+interview process, we assess candidates' work experience and skills to ensure we recruit qualified candidates
+who meet the job requirements. We will revoke the interview authorisation of any interviewer who violates
+related policies and negatively impacts candidates' experience.
+For encouraging internal rotation, we prioritize internal talents for vacant positions, ensuring a healthy flow of
+talents within the Company. Through job rotation, we help employees to grow and encourage them to choose
+career development paths aligned with their interests, thereby unleashing their potential.
+We implement democratic management and communication within the Company and introduced the Measures
+for Releasing Institutional Policies and an internal platform for policy release. Before officially releasing significant
+policies that directly impact employee interests, we conduct survey interviews with employees to ensure their rights
+and interests are sufficiently protected.
+We value employees' feedbacks and maintain unimpeded channels for complaints and reports. If an employee
+disagrees with the performance evaluation or promotion results or identifies a suspected violation of Integrity
+Workplace Code of Conduct, they may submit formal complaints or reports through channels such as the Integrity
+Workplace Reporting e-mail address and the reporting platform. We also provide an anonymous reporting option
+to protect whistle-blowers' privacy. Our HR helpdesk is equipped with an automatic keyword-triggered response
+mechanism, and when it receives an employee complaint, it notifies the appropriate department according to the
+complaint type to handle it and inform them of the result.
+We provide a variety of communication channels for employees, such as topic-based communities, HR helpdesk,
+official WeChat account, and employee engagement meetings, to provide a better communication experience,
+encourage employees to communicate with others, and create an open and equal working environment. We value
+continuous communication between employees and management, and help management listen to employees'
+suggestions and feedback and answer their questions through luncheon and group meetings. We also clarify
+matters of general concern to employees through online and offline channels, such as messages on the official
+WeChat account and face-to-face communication.
+Communication and Democratic Management
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 159
+Net Promoter Score (NPS): A measure of the extent to which employees would recommend the Company to others for a
+job.
+12
+We make great efforts to improve the employee experience by collecting and analysing employees' annual
+satisfaction survey through questionnaires and face-to-face communication. In 2023, we conducted the
+"Heart-Warming Group" satisfaction survey for all employees to understand their sense of identity with the
+Company and their expectations. In addition, we collect and assess employee experience on topics such as
+"Onboarding Experience” and “Working Environment", by conducting annual employee experience index survey
+with reference to the calculation method of Net Promoter Score (NPS) 12.
+We support all employees to enjoy their holidays and lead healthy lives. We provide statutory annual leave, various
+welfare leaves, and fully paid sick and childcare leave, and extend marriage leave, maternity leave, and paternity
+leave. We try to work out a flexible operation and management model for some business scenarios and offer a
+work-from-home solution. Moreover, we encourage employees to take part in recreation and sports activities by
+organising more than 50 social clubs across the country to relieve their work pressure and enrich their spare time.
+To continuously enhance employees' sense of well-being, we offer facilities including gyms, libraries, and nursing
+rooms and hold employee-culture activities like "Family Day" and "Xiaomei Day". During festivals, such as Spring
+Festival, Mid-autumn Festival, International Women's Day, and Children's Day, we distribute gifts to all employees.
+We also give blessing gifts to employees on important occasions, such as marriages and births. In addition, we
+have established "Heart-Warming Classes" on the themes of “mental health”, “physical health", and "mindfulness &
+meditation" to safeguard the physical and mental health of our employees.
+We have formulated the Attendance Management Policy, Holiday Management Policy, and other policies to manage
+working hours with certain flexibility.
+Work-Life Balance
+We review the employees' promotion based on their performance contribution, leadership, and professional
+competence. Employees with outstanding contributions are offered fast-track promotions. Prior to the review,
+employees can participate in trainings to understand the criteria and processes. During the review process, we
+have an internal supervision mechanism for the promotion process. Employees can make suggestions or report any
+violations related to the promotion process.
+In terms of diversifying recruitment channels, we strive to establish new talent recruitment channels to attract
+more proficient candidates. Since 2017, we have consistently implemented the "Beidou Program" to recruit
+technology talents from universities around the world to meet our demand for talents specialised in emerging
+technologies, such as autonomous delivery vehicles and drones. In addition, we have been cooperating
+with Tsinghua University on several research projects to align real-world industry scenarios with academic
+research results. In this way, we can ensure adequate resources of excellent talents while facilitating the
+practical application of innovative methods in the technology field.
+We evaluate employees' performances objectively, fairly, and comprehensively based on their job performance,
+the achievement of personal and team goals, and the feedback from managers, subordinates, and partners.
+Besides, we set different evaluation cycles for different positions. For sales and customer service personnel, who
+are expected to achieve short-term goals, we evaluate their performance on a monthly or quarterly basis to align
+with the performance output cycle. For R&D and functional personnel, we evaluate their overall performance on an
+annual basis and guide them to focus on long-term development. We also value timely and effective performance
+feedback. For example, we require managers to communicate with employees on evaluation results and follow up
+on their feedback in a timely manner.
+158 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+We attach importance to developing goal management skills for our employees and teams. Through daily
+management of individual goals, we support the continuous growth of our employees. Employees communicate
+with their managers in a "1 on 1" manner about the progress towards self-goals, resolution of difficulties
+encountered, and necessary changes to the self-goals. Meanwhile, to ensure effective team goals, all teams timely
+conduct monthly or quarterly reviews based on business development.
+We have established a performance and position ranking management system, and formulated policies, such as
+the Performance Management Policy and the Position Ranking Management Policy, to standardise the performance
+management process, the evaluation cycle, and the promotion and position ranking system.
+Performance and Promotion
+We provide social insurance and housing fund for employees in accordance with the related laws and regulations.
+We also offer commercial insurance in different categories, including accident, life, and supplementary medical
+insurance, as well as various subsidies. We have established a Kind Fund, including Kind Loans, Critical Illness
+Care, Death Grants, Special Occasions Solatium, and Emergency Fund. We have also established the Kind Fund
+Management Policy to help employees and their families in need.
+We offer competitive salaries to all employees. Through annual benchmarking with industry peers, we make sure
+that our compensation can fully attract, motivate, and retain top-tier talents. We develop a high-performance culture
+and offer employees with performance-based incentives to encourage them to consistently strive for excellence
+and realise their full potential. Moreover, we grant shares to employees in core positions and those who have
+contributed to our company's long-term development, motivating them to continue creating value for the Company
+and our clients.
+Compensation and Benefits
+We have formulated the Attendance Management Policy and Integrity Workplace Code of Conduct to safeguard
+our employees' legitimate rights and interests. We verify the identification documents of candidates during the
+recruitment process to prevent the employment of child labour. Since the establishment of the Company, no illegal
+employment incidents such as child labour have occurred. We respect the willingness of employees at all stages of
+employment to ensure their voluntary participation in work and avoid forced labour. We have formulated an internal
+management policy following the requirements of relevant laws and regulations, specifying the remedial measures
+that should be implemented under instances of child labour and forced labour.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+157
+Meituan 2023 Annual Report
+Labour Standards
+We strictly comply with relevant laws and regulations and communicate with employees adequately in case
+of employee departure. We have formulated the Employee Departure Policy, a standard procedure to protect
+employees' rights and interests on departure.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+2023
+Regional sales offices
+6.36
+CA
+EAT BETTER, LIVE BETTE
+The Company's non-hazardous waste mainly includes domestic waste and waste electronic equipment from various types
+of offices. Domestic waste mainly includes office waste, which is handled by the property management companies, and
+we calculate such waste 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 electronic equipment is
+handed to professional institutions for harmless disposal and recycling.
+The Company's hazardous waste mainly contain waste lead-acid batteries, waste fluorescent tubes, toner cartridges and
+ink cartridges from offices, which are disposed by qualified institutions. In 2023, the actual hazardous waste per employee
+in the HQ offices was 0.00004 tonnes, and the actual hazardous waste per employee in regional sales offices was 0.00005
+tonnes. The data listed in the table above is rounded to two decimal places.
+GHG emissions include carbon dioxide, methane, and nitrous oxide. GHG emissions data is presented in carbon dioxide
+equivalent and calculated based on the 2021 Baseline Emission Factors for Regional Power Grids in China for Emission
+Reduction Projects issued by the Ministry of Ecology and Environment.
+Due to the Company's business nature, the primary emissions of the Company are GHG emissions, arising from the use of
+electricity generated from fossil fuels.
+8
+7
+6
+5
+Non-hazardous waste per employee (tonnes per employee)
+Total non-hazardous waste (tonnes)
+0.09
+5,010.37
+154
+0.00
+27,346.66
+2023
+Hazardous waste per employee (tonnes per employee)
+Total hazardous waste (tonnes)
+GHG emissions per square metre of floor area (tonnes per square metre)
+GHG emissions per employee (tonnes per employee)
+Total GHG emissions (tonnes)
+HQ offices
+Emissions 5,6,7,8
+"Warehouses and service stations" refers to the main warehouses and stations used for the business units of
+Meituan Select, Kuailv Jinhuo, Xiaoxiang Supermarket, and Meituan Bikes and E-mopeds.
+"Regional sales offices" refers to offices used by sales personnel and other supporting personnel. They are mainly
+distributed in 22 provinces, 5 autonomous regions, and 4 municipalities in Mainland China.
+"HQ offices" are headquarter-level offices located in Beijing and Shanghai with integrated functions and centre
+offices for customer service and R&D, mainly used by customer service and R&D personnel. The headquarter-level
+workplaces mainly include our Beijing Hengdian office, R&D park and surrounding workplaces and the Hulianbaodi
+office in Shanghai. Centre customer service and R&D offices are mainly our offices in Shijiazhuang, Yangzhou,
+Nantong, Wuhan, and Luoyang.
+Below are the key environmental performance indicators of the Company. The scope of these includes
+headquarters offices, regional sales offices, warehouses, and service stations. Currently, the Company does not
+have a self-owned data centre, and the values of the emissions and the resource and energy consumption of the
+leased data centres are not included in the scope.
+Environmental Performance Indicators
+0.48
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Regional sales offices
+Running water consumption per employee (tonnes per employee)
+365,777.62
+Running water consumption (tonnes)
+0.08
+Energy consumption per square metre of floor area (MWh per square metre)
+0.74
+Energy consumption per employee (MWh per employee)
+42,779.82
+2023
+Total energy consumption (MWh)
+HQ offices
+236,809.93
+2023
+0.08
+3,785.48
+0.00
+2.09
+Total GHG emissions (tonnes)
+GHG emissions per employee (tonnes per employee)
+GHG emissions per square metre of floor area (tonnes per square metre)
+Total hazardous waste (tonnes)
+Hazardous waste per employee (tonnes per employee)
+Total non-hazardous waste (tonnes)
+Occupational Health and Safety
+Non-hazardous waste per employee (tonnes per employee)
+Total GHG emissions (tonnes)
+Energy and Resources Consumption⁹,10,11
+2023
+6,479.37
+0.15
+0.03
+Warehouses and service stations
+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.
+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 Special Rules on
+the Labour Protection of Female Employees, and the Special Provisions on the Protection of Juvenile Workers to
+safeguard employees' legitimate rights and prevent child labour and forced labour. We have established internal
+policies and conducted standardised management on recruitment, departure, compensation, benefits, performance
+review, and promotion by following the specific measures described below.
+EAT BETTER, LIVE BETTE
+Electronic waste generated in all headquarter offices
+has been 100% treated for harmless disposal by 2023.
+All headquarter offices have implemented waste sorting
+by categories by 2023.
+Using total energy consumption per employee in 2021
+as a benchmark, by the end of 2026, total energy
+consumption per employee in headquarter offices will
+be reduced by 8%.
+Using running water consumption per employee in 2021
+as a benchmark, by the end of 2026, running water
+consumption per employee in headquarter offices will
+be reduced by 8%.
+Starting from 2022, all offices will stop using fluorescent
+tubes in all newly renovated or entirely replaced lighting
+systems.
+Starting from 2022, electronic waste generated in all
+headquarter offices will be 100% treated for harmless
+disposal.
+Starting from 2022, waste sorting in all headquarter
+offices will be conducted.
+Environmental targets
+In 2021, we set environmental targets based on our previous environmental performances and the characteristics of
+our own operations. The progress of our environmental targets in this year is as follows:
+Environmental Targets
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+152
+EAT BETTER, LIVE BETTE
+We explore carbon reduction opportunities across the whole industry chain that are in line with our business
+attributes, continue facilitating the transformation of green and low-carbon scientific research and technological
+achievements, and constantly guide consumers to cultivate low-carbon and environmentally friendly consumption
+habits. Following the invitation to attend the 27th United Nations Climate Change Conference in 2022 to share the
+"Chinese Story" about how Meituan Bikes and Meituan E-mopeds promote a green and low-carbon lifestyle, the
+sustainability practice of Meituan Food Delivery's Lush Mountain Project was listed in the 2023 Business Climate
+Action Cases, and was presented at China's Pavilion Side Event - "Corporate Net Zero Drive: China's Practice and
+Global Perspective" during the 28th United Nations Climate Change Conference. For more information, please
+refer to the chapters of "Green Packaging", "Low-Carbon Ecology", and "Green Tech" in this report, or log on to
+the Social Responsibility section of the official website of Meituan Food Delivery (https://waimai.meituan.com/)
+and check out the special reports of Protection of Rights and Interests of Meituan's Food Delivery Couriers, Green
+Packaging Solutions for Food Delivery, Guidelines for Reducing Packaging for Food Delivery, Recommended Green
+Packaging List of Lush Mountain Project, and Handbook on Green and Low-Carbon Actions for Food Delivery
+Consumption.
+For transition risks, we actively embrace the global trend of low-carbon transition and proactively contribute to
+China's green economy development. We pay close attention to the laws and regulations on climate change,
+energy consumption management, energy saving, and carbon reduction that may present significant impacts to
+our businesses. We adjust and deploy key control measures in line with the relevant requirements set by the latest
+laws and regulations. Through evaluating and adopting emerging low-carbon technologies, deploying data centres
+with higher energy efficiency level, and incorporating green and low-carbon initiatives into our key businesses and
+services, we continuously manage and improve our environmental performance, minimising environmental impacts
+and practicing the concept of eco-friendliness in our operations, so as to achieve sustainable development for
+mankind and nature. For more information, please refer to the chapters of "Environmental Targets", "Environmental
+Management of Data Centres", "Green Procurement", "Environmental Management in Retail Businesses", and
+"Meituan Bikes and Meituan E-mopeds' Lifecycle Environmental Management" in this report.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 151
+After the events: We conduct timely and comprehensive assessment of the damage, and orderly restore
+workplace and business operations. Through reviewing the effectiveness of the "Meteorological Disaster
+Emergency Plan”, we keep identifying areas for optimisation. We include basic knowledge of extreme weather
+responses into the training content for employees and business partners.
+During the events: We adjust the response level according to the weather conditions, implementing special
+emergency plans and adjusting business strategies in a timely manner based on the actual disruptions
+occurred, and promptly initiate various support measures to help the affected employees and business
+partners.
+Before the events: We issue weather forewarning to employees and partners across the country through the
+"Weather Forewarning System". In 2023, more than 120 thousand pushes were issued. We have formulated
+the "Meteorological Disaster Emergency Plan" and arranged employees to work from home when the
+workplace could not operate normally.
+With regard to physical risks, a mature extreme weather management mechanism is the cornerstone for ensuring
+the normal operation of workplaces, the safety of employees and couriers, and the smooth flow of business
+processes. We have set up a professional and highly qualified emergency support team for extreme weather events,
+which is responsible for implementing specific work tasks in the workplace, business operations, and other key
+scenarios before, during, and after extreme weather events under the general principle of coordinating command
+with flexible response:
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+150
+All newly renovated or entirely replaced lighting systems
+in our offices have stopped using fluorescent tubes by
+2023.
+In 2023, the running water consumption per employee
+in headquarter offices was reduced by 11% compared
+with 2021 levels, and the set target was achieved.
+2023 progress of the environmental targets
+Our greenhouse gas (GHG) emissions are mainly generated from the energy consumption of our operations. Since
+the energy use efficiency target has already been set, we do not set a separate GHG emissions reduction target this
+year.
+Meituan 2023 Annual Report 153
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+The energy consumption per employee in headquarter
+offices was increased by 15% in 2023 compared with
+2021, mainly because of the increased workplace area
+in 2023. Meanwhile, a large number of employees
+worked from home in base year, resulting in relatively
+lower electricity consumption per employee.
+We have established management policies, including the Administrative Measures for Access Control of Office
+Areas and the Fire Safety Management Policy of Meituan to constantly improve our workplace safety management.
+Some of our workplaces obtained ISO 45001 occupational health and safety management system certification
+and maintain the validity of the certification through annual follow-up audits. Based on the experience learnt from
+the certification application process, and in accordance with the requirements of the certification standards, we
+have built the workplace risk assessment mechanism and internal audit standards. In 2023, in light of the audit
+standards, we completed a series of internal audits, including the identification of occupational health and safety
+risk factors, environmental impact factors, as well as the evaluation of management effectiveness in all workplaces.
+In addition, we stepped up the fire prevention early warning system in the workplace. We identified the main
+occupational health and safety risk factors in different workplaces, assess and quantify their risk levels, and used an
+online system to periodically present the risk levels, allowing us to focus on high-risk areas and implement effective
+control measures.
+99.77%
+Non-management
+Daily Management and Performance Evaluation
+We manage and track suppliers' qualification, performances, and compliance with Supplier Code of Conduct to
+continuously evaluate their professional services capabilities throughout the contract execution.
+We value common development with suppliers and guide them to constantly improve their performance. After the
+supplier audit, we communicate with suppliers in a timely manner. For suppliers with unsatisfactory performance,
+the procurement personnel will formulate a performance improvement plan together with suppliers and urge them
+to implement the rectification advice. Two weeks after the implementation of the performance improvement plan,
+the Supplier Management Team will assess the supplier rectification result and conduct a second audit for suppliers
+when necessary. For suppliers in breach of the procurement red line, we will adopt the blacklisting management
+system, imposing penalties and permanently excluding them from our platform. For suppliers who fail to meet the
+standards after rectification or violate the baseline ESG standards such as integrity, information security, and other
+critical areas, we will terminate cooperation and promptly use alternative suppliers to ensure that goods or services
+are delivered on time.
+We promote competence building of employees. We enhance the professional capabilities of our employees in
+procurement and supplier management positions through internal sharing and special training, promoting the
+implementation of supplier management policies and processes.
+Supply Chain Anti-Corruption
+We have implemented supplier feedback and review mechanisms. Suppliers can report any corruption-related
+issues during business cooperation to us on Meituan official websites or via a questionnaire on the procurement
+supplier portal. If a violation committed by a supplier is confirmed, cooperation would be terminated and the
+supplier would be disqualified from providing services.
+We actively promote a corporate culture of integrity cooperation and engage in ongoing activities to build a culture
+of integrity among our suppliers. We regularly conduct supplier integrity training and send integrity reminder emails
+to suppliers on certain holidays. In 2023, we launched and enabled the online function of integrity cooperation
+promotion on the supplier portal, achieving full coverage of integrity cooperation promotion for centralised
+procurement suppliers.
+We pay attention to environmental protection when procuring goods and services. In 2023, the Company
+invested more than RMB200 million in packaging bags made of environmentally friendly materials, including fully
+biodegradable bags, non-woven bags, and environmentally friendly paper bags for all lines of business. When
+choosing kitchen equipment, we select energy-saving gas stoves and automatic spray dishwashers and add UV
+lights to the exhaust hood to reduce particulate matter emissions. We also regularly maintain the oil and smoke
+cleansing equipment to ensure its effective operation.
+Meituan 2023 Annual Report 167
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Number of Suppliers 15
+Number of suppliers by geographical region
+Mainland China
+Hong Kong, Macao and Taiwan
+Other countries and regions
+Management and Protection of Couriers
+Employee turnover rate by age group
+Green Procurement
+Male
+Female
+Management
+Non-management
+23.94
+25.75
+166 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Key suppliers: Through our supplier selection process, the suppliers that are identified as consistently applicable with
+unique standards, and suppliers that have relatively high ESG risks, regional risks, or product quality risks (e.g., meat,
+poultry, and vegetable products).
+14
+We maintain a database of qualified suppliers, and all suppliers listed in the database have undergone supplier
+onboarding audits. Before official engagement, we require all suppliers to complete real-name authentication,
+sign our Anti-Commercial Bribery Agreement, Confidentiality Agreement, and Commitment of Self-Discipline, and
+abide by the regulations of anti-corruption, confidentiality, and behaviour with integrity. In 2023, a total of 5,079
+newly added centralised procurement suppliers completed the signing of the Anti-Commercial Bribery Agreement,
+Confidentiality Agreement, and Commitment of Self-Discipline.
+Audit mechanism: We evaluate suppliers' ESG risk level on an ongoing basis and implement multiple audit
+methods for suppliers at different risk levels, including remote audit, on-site audit, and supervisory audit
+conducted by us or third parties. We will initiate on-site audit and information verification procedures for
+key suppliers 14 and suppliers of specific product categories, in order to assess their ESG risks and relevant
+managerial skills.
+18.80%
+Qualification review: We require suppliers to provide qualifications for relevant goods or services and proof
+of no violations of law and discipline, and we review the corporate reputation of suppliers by checking the
+corporate credit information disclosure system (National Enterprise Credit Information Publicity System) and
+other means. We call on suppliers to meet the ESG management requirements specified in the Supplier Code
+of Conduct, require them to provide system certificates, including ISO 14001 environmental management
+systems certification and ISO 45001 occupational health and safety management system certification as
+necessary based on product categories, and verify the authenticity and accuracy of qualification information
+of suppliers.
+In the supplier onboarding process, we conduct qualification review and audit mechanism to ensure that suppliers'
+ESG risks are effectively managed in advance:
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Onboarding Management
+We constantly improve the supply chain management mechanism. We have established 10 procurement
+management systems, with the Procurement Management Policy as the general guideline, and formed the
+management mechanism covering different links, including supplier onboarding management, daily management,
+and performance evaluation to effectively manage suppliers' ESG risks.
+Whole Process Management of the Supply Chain
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 165
+The number of working days lost due to work injuries are mainly from the longer recovery periods we offered to injured
+employees for the fracture injury from traffic accidents.
+13
+Our main suppliers are delivery partners and suppliers of goods and services. Supply chain compliance
+management and stable business partnerships are important for our sustainable operation, and we encourage
+partners to improve their ESG risk management.
+24.32
+24.55
+Male
+6.30%
+2023
+EAT BETTER, LIVE BETTE
+168 Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We require our delivery partners to provide adequate safety training for couriers, including (i) conducting safety
+training before couriers receive orders and further advancing the training once they have received a certain number
+of orders; (ii) conducting regular monthly safety training as well as special training for couriers who have traffic
+violations or accidents; and (iii) setting training assessment standards to evaluate couriers' knowledge of the
+content involved in safety training, such as traffic rules, safe riding, emergency response, and dress codes, ensuring
+that the couriers pass the assessment before they start working. In addition, we restrict the development of the
+delivery partners who fail to meet the standards in couriers' safety training assessment or have safety accidents
+with major responsibility.
+Depending on the types of couriers, we require partners to purchase "employer's liability insurance" for couriers or
+work together with partners to launch “personal accident insurance" products for couriers. In 2023, we required the
+insurance enrolment rate to reach 100% during the couriers' service time, providing more protection for couriers'
+personal safety during delivery. We continue improving the commercial insurance and its claim process. We have
+launched the "Couriers' Direct Compensation Project" so the couriers can self-claim their settlement through one
+click on their Apps. This has improved claim settlement efficiency and enhanced the couriers' experience.
+EAT BETTER, LIVE BETTE
+Listening to couriers' voice: We actively expand the communication channels for couriers and listen to
+couriers' feedback and opinions through "Couriers Feedback Sessions" and "Courier Rights Protection
+Hotline". By the end of 2023, we had held a total of 310 "Couriers Feedback Sessions" and developed
+support programs based on the collected feedback, which significantly improved couriers' work experience.
+In addition, we continue promoting the development of couriers' union. Through courier negotiation and
+coordination mechanisms, we collect couriers' concerns and explore targeted solutions.
+Enhancing incentive mechanisms: We have optimised the management for "Bulk Orders", where we
+have refined the delivery rules for the orders of large, heavy, and expensive items in terms of dispatching
+mechanism, delivery time, and subsidy to improve couriers' delivery experience.
+Providing work support: We build courier stations across the country, where basic amenities are available,
+such as drinking water, rest areas, and mobile phone charging. In 2023, we constructed more than 38,000
+courier stations. Our support for couriers varies depending on the season and weather. For example, in
+snowstorm days, we provide free lunch, ginger tea, hot porridge, and other food and beverages at some
+stations and free portable chargers in designated areas.
+Number of suppliers: refers to the number of suppliers in collaboration and maintained in the supplier management system
+as of December 31, 2023. "Region" refers to the place where the suppliers are registered.
+Optimising delivery rules: Constantly optimising the delivery algorithm by collecting opinions and suggestions
+from couriers, external experts, and other stakeholders and conducting consumer surveys in different cities.
+By the end of 2023, we had disclosed the algorithm rules seven times in total.
+Improving Couriers' Work Experience
+Raising awareness: We have launched safety training courses on Couriers' App to educate couriers on traffic
+safety, fire safety, and emergency response and incorporated safety into couriers' bonuses, strengthening
+their awareness of safe riding. In 2023, our online safety training courses were viewed more than 50 million
+times. Moreover, we held more than 3,000 sessions of offline safety training in collaboration with local traffic
+police in more than 60 cities. During the training, couriers learned about traffic laws and participated in law
+enforcement activities with the police. By doing so, couriers have obtained a better understanding in terms of
+safety.
+Risk management and control: We continue optimising the security centre in the couriers' order receiving
+App. Apart from common safety protection functions, such as severe weather warning, courier insurance,
+emergency contact person, and case reporting, we have also added features to display data on traffic
+violations and accidents to inform couriers of riding safety status. We organise blood pressure checks for all
+couriers across the country, rescheduling work shifts and arranging sick leave or medical services for couriers
+with abnormal blood pressure to minimise accidents. In addition, we have expanded the coverage of the
+"Couriers' Accident Warning" function to identify couriers in need through technical means and provide online
+and offline emergency support.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 169
+Technological upgrade: In terms of software, we optimise the dispatch system to improve the efficiency of
+order delivery by setting reasonable delivery time limits and routes, while also allowing flexibility in the delivery
+time for couriers. In order to improve delivery safety, we offer complaint channels for couriers to extend the
+delivery time limit in special scenarios, such as severe weather and delayed preparation of meals. In terms of
+hardware, we continue extending the use of smart helmets to enable couriers to receive orders through voice
+commands. The helmets also remind vehicles behind through self-sensing taillights to lower the risk of traffic
+accidents. By the end of 2023, we had put smart helmets into trial operation in 28 cities across the country,
+covering over 120 thousand couriers. We also strictly standardise the use of batteries and charging equipment
+for E-mopeds and promote a charging and battery replacement network development. We provide a dense
+network of safe charging and replacement devices, thereby mitigating fire risks when charging batteries.
+•
+Through technological upgrade, risk management, and control and awareness enhancement, we continuously
+improve the safety capabilities of couriers and help them handle and reduce the safety risk during delivery services:
+Protecting Courier Safety
+We take multiple measures to improve couriers' work experience, including:
+Female
+15
+We permit our delivery partners to use our logo and require them to comply with the relevant laws and regulations
+to protect couriers' safety and labour rights. We also require our business partners to comply with operation and
+delivery standards as contracted, formulate scientific labour management rules, and set recruitment standards
+for couriers. Furthermore, we have established explicit requirements for fair employment for couriers and strictly
+prohibit delivery partners from engaging in any form of discrimination during courier recruitment. Delivery partners
+must not discriminate against women or people with disabilities nor threaten the fair employment rights of workers
+in any form. Meanwhile, we enhance the delivery partners' management of the couriers' compensation, assuring
+couriers are properly paid on time. We optimise order structures to ensure a stable income for couriers.
+41,744
+Age 30 and under
+Age 31 to 50
+18.44%
+13
+19.37%
+24.18%
+13.49%
+Employee turnover rate by geographical region
+We require our delivery partners to have a complete safety management system for couriers and consider courier
+riding safety management performance in the delivery partner assessment. We supervise and assess delivery
+partners' safety management through multiple means, including (i) building evaluation mechanisms to assess
+delivery partners' compliance with regard to safety policies; for delivery partners with poor safety management
+performance, we take actions such as restricting their expansion, dismissing some or all their sites, and charging
+penalties; (ii) setting up dynamic assessment indicators, considering couriers' helmet wearing rates and delivery
+vehicle compliance to urge delivery partners to fulfil their safety management responsibilities; and (iii) continually
+operating the delivery partners' remote monitor centres, encouraging them to update their safety equipment and
+persistently monitoring the safety equipment operation status.
+Above age 50
+Hong Kong, Macao and Taiwan
+46.81%
+18.81%
+99.80%
+Other countries and regions
+0.00%
+20
+Our platform requires a substantial number of couriers to provide delivery service. The safety and rights of couriers
+are essential to our supply chain's social risk management and socially responsible commitments.
+Standardisation of Management Mechanism for Partners
+Mainland China
+Management
+114,372
+Female
+We ensure couriers' rights and interests protection by protecting their safety, improving their work experience, and
+providing practical support to them.
+160 Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We implemented a number of workplace safeguarding measures, including (i) launching an office security system
+and a Security Operations Centre to respond to emergencies at all times and protect the safety of personnel in
+the workplace; (ii) improving the first aid system, formulating first aid response procedures, and establishing a
+three-level response strategy composed of security personnel, health cabins, and employee volunteers; achieving
+full coverage of AED (Automatic External Defibrillator) for all headquarters and regional workplaces with more
+than 300 employees to ensure the provision for first aid equipment in emergency situations; (iii) organising safety
+training and emergency drills on a regular basis and formulating specific publicity plans about safety according to
+major events and seasonal safety characteristics to improve employees' safety awareness; and (iv) establishing an
+emergency handling process to respond to employee safety accidents promptly and properly.
+We continually strengthen the safety protection capabilities of frontline employees in positions such as sales and
+warehouse management. We reduce the probability of safety accidents in high-risk work scenarios and the harm
+from occupational diseases through multi-level protection practices, including (i) formulating clear safety rules and
+regulations for field operations and discovering safety hazards through morning meetings, routine inspections,
+etc., actively responding to them; (ii) specifying the standards for safe operation in warehouses, standardising
+the use of warehouse equipment, identifying and rectifying potential safety hazards timely; (iii) strengthening the
+safety awareness of sales employees while adding reflective strips to the employees' electric vehicles to reduce the
+probability of traffic accidents; and (iv) hiring professional physical and mental health service agencies to evaluate
+employees mental health and improve their mental stability through professional training.
+In addition to ensuring employees' safety at work, their physical and mental health is also crucial to us. In 2023,
+we provided various services and organised activities to improve employees' physical and mental health, including
+(i) monitoring air quality, drinking water, and lighting conditions in our workplace to provide a comfortable working
+environment for our employees and setting up health stations in some offices to provide consulting services and
+essential medicines for them; (ii) providing online consultation, annual physical examinations, and supplementary
+medical reports interpretations and starting to offer services such as the "Workplace Health Day" and vaccinations;
+(iii) regularly organising a series of "Healthy Lecture" seminars focused on topics, including health and psychology,
+which attracted nearly 60,000 times of participation of employees from 118 cities across the country; (iv) organising
+special health training programmes, such as the "Healthy Weight Loss Camp" and the "Cloud Sleeping Camp"
+to guide employees in enhancing physical conditions and relieving work stress; and (v) launching an Employee
+Assistance Programme and partnering with external organisations to offer mental health hotline and regular mental
+health training sessions.
+Meituan 2023 Annual Report 161
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Employee Training and Development
+We set up a talent development department covering all employees, particularly emphasising the concept of
+"truth-seeking and being practical", with a focus on "talent development", "cultural heritage", and "knowledge
+management", to create a talent development system that aligns with industry trends and represents our
+characteristics. We continue improving the training management mechanism and standardise the planning,
+implementation, and management of training contents. We appoint the Company's internal senior employees
+from different professional fields as training experts and meanwhile cooperate with external agencies to introduce
+learning resources to help employees enrich their knowledge about the industry and broaden horizons.
+We highly value the growth and development of all employees and business partners. We conduct face-to-face
+classes, online courses, and practical activities to provide systematic training resources matching different grades,
+career stages, and positions of employees.
+Professional Competence and Leadership Development
+Depending on the working scenarios and demand from business departments, we develop customised learning
+programmes, standardised learning products and personalised learning programmes for all employees to promote
+the Company's talent cultivation.
+. We pay attention to cultivating the professional skills of newly recruited employees, and are committed to
+guiding them to better integrate into the workplace and seek their career development directions, particularly
+through: (i) for campus recruitment, we provide "Sprout Campus Recruitment” training programme covering
+company culture, management policies, and business capabilities. In 2023, 2,616 employees attended the
+program; (ii) for social recruitment, we provide a dedicated training program - "Sprout Social Recruitment”
+program, and offer appropriate professional competence trainings based on their experience levels; and (iii)
+for management personnel from social recruitment, we offer a customised program, "Tree Planting Plan",
+which incorporates three learning modules of “Constructing New Thought”, “"Embracing New Positioning",
+and "Taking New Actions". We also offer various support, such as one-on-one learning peers and seminars
+for the newly recruited.
+We continuously enhance the professional quality and ability of all employees, focusing on general workplace
+skill training and professional skill training based on workplace scenarios: (i) for technical staff, providing
+professional skill training relevant to their positions through programmes such as the "General Skill Training
+Ground" and "Online General Knowledge Courses"; meanwhile, launching the Big Model Learning Zone,
+organising the "AIGC Hackathon Contest”, and carrying out a series of "AIGC Hack Show" empowering
+activities. In 2023, the number of project participants reached 7,100 employees; and (ii) for sales employees,
+using various teaching methods, such as "online learning", "centralised training", "apprenticeship" and
+"benchmarking sharing" to help front-line sales employees better understand the industry and the customers
+they are serving, master professional knowledge and skills, and get familiar with sales service process.
+EAT BETTER, LIVE BETTE
+162
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+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).
+The number of employees leaving the Company includes the number of employees who resigned voluntarily. The
+number does not include employees leaving during their probation period.
+EAT BETTER, LIVE BETTE
+164
+Indicators
+=
+Employee Training
+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.
+The number of working days lost due to work injuries in 2023 was 9,529.5 days 13.
+0
+0
+2021
+0.0022%
+Through online and offline customised management training lessons, we actively assist different levels of
+management in deeply understanding and improving management basic skills, including target management,
+employee coaching, and talent review: (i) for junior management, providing the "New Tree Plan" to help
+them have a clear development direction and meet the key challenges of their current role; (ii) for middle
+management, providing the "Shade Tree Plan" to help them obtain systematic knowledge about the core
+concepts, tools, methods, and practice guidance in terms of role recognition, manager selection, manager
+coaching, and high-performance team building through case study and activity experience, so that they can
+better cope with different management challenges; and (iii) for senior leadership, providing the "Prosperity
+Plan" to help them strengthen their comprehensive understanding of business and business thinking and
+improve their ability for strategy development, team building, and collaboration through offline training,
+pre-training online learning, and post-training feedback follow-up.
+2
+0.0026%
+3
+2023
+Rate of work-related fatality
+Number of work-related fatalities
+Indicators
+Health and Safety
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+2022
+99.79%
+School-Enterprise Joint Training Programmes
+Meituan 2023 Annual Report 163
+159
+9
+Management
+488
+Non-management
+Full-time
+114,731
+Contractors and other types
+129
+Total turnover rate
+Employee turnover rate by gender
+Percentage of employees trained by gender
+Percentage of employees trained by management level
+Average training hours of employees by gender
+Average training hours of employees by management level
+SUPPLY CHAIN MANAGEMENT
+2023
+Male
+99.76%
+114,692
+28
+52,071
+Mainland China
+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
+2023
+114,860
+Male
+We continuously deepen school-enterprise cooperation and promote close collaboration with universities and
+research institutions. We fully tap into the resources of colleges and universities in education, science and
+technology, and talent cultivation to achieve mutual promotion and development between academic and the
+industry: (i) developing big data technology and practical application courses combining basic theories with real
+business cases as optional courses for postgraduates and undergraduates; (ii) organising the "Business Analysis
+Elite Contest". In 2023, we sought business analysis case reports from over 2,000 students from around 400
+colleges and universities from China and abroad, to help them improve their comprehensive abilities in business
+theory, business analysis skills, and practical operations under real business scenarios; and (iii) supporting
+the summer professional practice programmes of undergraduates for three consecutive years and coaching
+undergraduates in completing research projects independently by providing professional subjects related to real
+business scenarios and corresponding senior employees as professional mentors.
+Female
+72,225
+42,635
+62,761
+Number of employees by geographical region
+Number of employees by management level
+Number of employees by employment type
+Hong Kong, Macao and Taiwan
+Other countries and regions
+Age 31 to 50
+Above age 50
+Age 30 and under
+Optimise Couriers' Rights and Interests Protection Measures
+176
+Caring for Couriers
+Integration of industry, education, and research: We promote the integrated development of industry,
+education, and research, and help merchants develop the brand marketing throughout the industry chain. We,
+in cooperation with various universities and colleges of culture and tourism, conduct training for merchants
+nationwide, informing merchants of policy and regulatory updates, business experience of merchant
+champions, safety compliance concepts, platform rules and norms, etc.
+Industry experience learning platform: We provide a platform for merchants to share cutting-edge industry
+information and opinions in the form of live streaming and other activities, thereby fostering the collective
+development of the industry.
+Live Q&A: We organise live Q&As for merchants to answer their questions regarding business operations,
+which act as new communication channels for merchants and the platform.
+170
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We keep improving the courier welfare policy to better care for and support couriers in their work and life. To this
+end, we take multiple measures in caring for couriers' health, looking after couriers' families, protecting female
+couriers, and helping couriers in need, as follows:
+Caring for couriers' health: We regard couriers' physical and mental health as a priority. We provide
+twenty-four seven online health counselling and medicine-delivery services for couriers and their families.
+Couriers can acquire free consultation from doctors or pharmacists through the Couriers' App and receive
+monthly allowances for medicine purchase. We continue enhancing the "Tongzhou 1 m² Protection"
+self-service health area, which integrates functions, such as couriers' health promotion, service guidelines,
+service applications, feedback, medical equipment, and medical supplies display to help couriers acquire
+proper health support. In addition, we have set up courier's mental health counselling hotline and mental
+health mini-classes, helping them relieve pressure and negative emotion in their daily work and life, and
+maintaining a positive and optimistic mindset in a scientific and comprehensive manner.
+Looking after couriers' families: We continue delivering the "Baby Kangaroo Charity Project” initiated in
+2019, striving to provide education and support for serious illness for couriers' children across the industry.
+To help couriers balance work and childcare, we have established the "Baby Kangaroo Charity Home" with
+charity organisations, where extracurricular activities, after-school care, early childhood education, and other
+childcare services are available. By the end of 2023, the "Baby Kangaroo Charity Project" had provided
+assistance totalling RMB29 million for 749 couriers' children with serious illness, whilst 5 "Baby Kangaroo
+Charity Homes" were established.
+Protecting female couriers: We acknowledge the importance of and promote female couriers' health by
+providing free cervical cancer and breast cancer screening services across the country. Female couriers can
+make an appointment on the Couriers' App for cervical cancer and breast cancer screening at our partner
+medical institutions. In 2023, we opened a free appointment channel for female couriers in more than 300
+cities across the country. In addition, we also offer a "Health Kit” designed for female couriers' health at
+distribution sites, Party-masses service centres, courier stations, and other locations across the country, and
+regularly hold the "Health Salon" on women's health.
+Helping couriers in need: We have established a funding for serious diseases to help couriers and their
+families suffering from serious illnesses. By the end of 2023, the fund had provided a total of RMB170
+million to 5,433 couriers and courier families, providing effective help for the courier's family to overcome the
+difficulties.
+Meituan 2023 Annual Report 171
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Empowering Couriers' Development
+Skill: We provide newly onboarded couriers with new courier orders and liability exemption cards to help them
+familiarise themselves with the working mechanism rapidly. In addition, we release an instructional video of
+order receiving skills through the "Order Receiving VR Simulation” function on Couriers' App and carry out the
+"Experienced Couriers Help the New Ones" project to help new couriers master basic career skills.
+Career: We continue improving the courier training and development system. Through holding the "Station
+Manager Training Plan" and other projects, we keep discovering management talents among couriers. By the
+end of 2023, there had been more than 440,000 participations in the "Station Manager Training Plan".
+Education: We have launched the "Couriers Go to Universities" project in collaboration with The Open
+University of China to provide couriers with opportunities for academic advancement, alleviating financial
+pressure and expanding their career prospects, aiming to send high-quality talents to the industry. By the end
+of 2023, a total of 320 couriers had been admitted to study logistics management at The Open University of
+China.
+Job transfer: We also provide job transfer opportunities for couriers through the "Courier Job Transfer
+Program", enabling couriers to gain experience in different roles within our business operations, such as
+customer service and training instructor.
+Career transition: We encourage couriers to explore diverse career paths and get themselves armed with skills
+and resources for starting new journeys in other industries.
+Customer Service
+We strive to improve customer satisfaction by providing high-quality customer service. We have established
+operation centres across Shijiazhuang, Yangzhou, Nantong, Wuhan, and Luoyang with professional service teams,
+allowing us to respond faster to customers.
+We promote smart customer service by equipping service teams with intelligent assistance that can quickly answer
+highly frequent and repetitive inquiries and handle standardised tasks automatically. By using intelligent assistance,
+the service teams can manage unexpected business peaks and improve efficiency in handling customer issues. In
+addition, we quickly identify possible service issues by using the intelligent quality inspection system to improve
+customer service management capability and efficiency.
+We use the issue-tickets system to record consumer issues, forming a closed-loop solution process from issue
+initiation, issue handling, issue resolution to solution evaluation. We clarify the internal responsible party for
+each procedure to urge and follow up with the main responsible party for problem feedback and resolution. We
+timely check and respond to customers' feedback and requests through different channels, including consumer
+satisfaction questionnaires and public opinion monitoring, continuously improving and standardising our customer
+service procedures.
+LEAT BETTER, LIVE BETTE
+We are continuously advancing the management of data security and privacy protection. We have formulated
+the Regulations on Privacy Protection, the Data Security Management Procedure, the Employee Information
+Security and Confidentiality Behaviour Standard, and other internal management policies, and publicly released
+management policies, such as the Meituan Privacy Policy and Privacy Policy for Minors, in a bid to standardise the
+Company's management requirements for the entire lifecycle of personal information, including collection, transfer,
+storage, processing, and deletion of data.
+We continue improving our information security and privacy protection system. The Board's Audit Committee
+receives an annual report on information security and privacy protection issues, makes decisions on the risk
+identification and assessment strategy, and supervises the effective implementation of the strategy. The Data
+Compliance and Privacy Protection Committee is responsible for coordinating the internal data compliance and
+privacy protection management work of the Company, developing the Company's data compliance and privacy
+protection management strategy and promoting its implementation.
+Defining Systematic Management Requirements
+Meituan always upholds a "customer-centric" approach and is committed to information security and user privacy
+protection. We strictly abide by the Cybersecurity Law of the People's Republic of China, the Data Security Law
+of the People's Republic of China, the Personal Information Protection Law of the People's Republic of China, the
+Provisions on the Administration of Mobile Internet Applications Information Services and other relevant laws and
+regulations. We continue managing and protecting information security and user privacy by defining systematic
+management requirements, implementing internal procedures and control measures, fostering employee security
+awareness, and promoting the orderly development of the industry.
+Information Security and Privacy Protection
+We also respect the IP of other parties and safeguard IP owners' rights and interests with measures such as
+formulating user agreements and implementing platform IP protection mechanisms. Once receiving infringement
+notices, we delete or block the alleged infringing item in accordance with relevant laws and regulations and the
+evidence provided in the complaint. We protect IP owners with a comprehensive "front-end, mid-end, back-end,
+and co-governance and supervision” mechanism, including (i) front-end: optimising and upgrading the brand
+protection database to intercept the source of infringing stores; (ii) mid-end: establishing a long-term brand
+monitoring mechanism and continuously enhancing control efforts to promote compliance operations of existing
+merchants; (iii) back-end: launching and iterating our IP Protection Platform to serve brand owners on their requests
+and complaints and improve processing efficiency and transparency; and (iv) co-governance and supervision:
+collaborating with IP owners, regulatory authorities, and the public for collaborative governance, assisting the IP
+owners who submit protection requests on the "Brand Protection Service Station" and introducing a public review
+mechanism to allow public participation in the formulation of IP protection rules. In 2023, we actively carried out
+brand protection in cooperation with IP protection associations, and effectively advanced the progress by means
+of "face-to-face" communication, two-way survey, and exchanges. For example, we launched a brand protection
+livestreaming lecture for catering merchants jointly with a hot-pot brand, benefiting more than 400 thousand
+merchants.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 179
+EAT BETTER, LIVE BETTE
+We continuously strengthen IP management, foster a culture of innovation, respect and encourage originality,
+and enhance the accumulation of our own IP. Based on the standards of patent output and value evaluation, we
+have improved patent filing efficiency and output value by implementing our Guidelines for Patent Application,
+reviewing pre-patent proposals, and performing sampling inspection on the application text quality. Also, we
+incentivize innovation through both intangible and tangible rewards. In 2023, we continued promoting the IP quality
+management. Through tracking important projects and setting systematic IP operational indicators, we manage our
+important innovations and improve our overall ability of IP management in terms of quantity and quality.
+We recognise the importance of protecting intellectual property rights (IPR) and thus focus on IPR application and
+accumulation. We conduct IPR management 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 other jurisdictions where we operate. We are the vice president
+unit of the Patent Protection Association of China, the director unit of the China Trademark Association, and the
+standing director unit of the China Intellectual Property Society.
+Intellectual Property Rights
+In 2023, we received a total of 1,201,801 customer complaints, which accounted for 0.13% of the total number of
+service times, and 95.6% of the complaints were resolved within 3 working days.
+As a result of our excellent customer service, we have won the CCM World Group's Golden Headset championship
+for consecutive years and retained the trophy permanently as the annual champion of the China's Best Customer
+Centre Competition. Moreover, in 2023, our employees were awarded the titles of "Most Beautiful Customer
+Service Staff" and "Excellent Customer Service Staff" in the national customer service staff selection by the China
+Consumer Journal.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+178
+CAR
+We continuously enhance the professional capability of our customer service personnel to solve customer issues by
+sorting out major customer service procedures and increasing their knowledge on procedures in different business
+scenarios. We grant customer service personnel with flexibility and authority so that they can deal with different
+situations. For example, if we receive complaints regarding a merchant refusing to serve a customer, once these BETTER, LIVE BETTE
+complaints are confirmed, customer service personnel have right to suspend the merchant from listing goods and
+services on the platform until the rectification is completed.
+We have established effective mechanisms to manage intellectual property risks, including (i) systematically
+identifying and evaluating intellectual property risks, setting response plans, and improving prevention mechanisms;
+(ii) establishing evaluation policies in key business lines, including IPR pre-examination rules in procurement and
+R&D and trademark reviews during new brand design, to provide IPR protection for major projects; (iii) enhancing
+the integrity of the market and safeguarding the interests of consumers through monitoring and combating external
+infringements and excluding fake trademarks and applications; (iv) enhancing our resilience against intellectual
+property risks through external exchanges and cooperation; and (v) improving intellectual property operation
+guidelines across all business lines and undertaking ongoing training and publicity to raise awareness of business
+departments on IPR risks.
+172 Meituan 2023 Annual Report
+We offer career development assistance to our couriers in various aspects. In 2023, we unveiled the "Courier
+Growth Plan", focusing on couriers' needs for development at different career stages, from entry, proficiency,
+promotion to further career transition. The plan aims to create a development path that encompasses skill, career,
+education, job transfer, and career transition to broaden couriers' career horizon, enlarge talent pool, and underpin
+the long-term and robust advancement of the industry, as follows:
+PRODUCT RESPONSIBILITY
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Biking Safety
+We actively implement and abide by relevant national standards regarding the R&D and production of bikes
+and E-mopeds, such as the Safety Technical Specification for Electric Bicycle (GB 17761-2018) and the Safety
+Requirement for Bicycles (GB 3565-2005) to ensure vehicle safety.
+We take several measures to ensure the safe use of shared bikes and E-mopeds, including (i) ensuring the
+reliability of operated vehicles through several management methods, such as preventive maintenance, problem
+identification, automatic off-line of malfunctioning vehicles, and overall vehicle maintenance; (ii) optimising the
+vehicle design, equipping vehicles with loading sensors, monitoring vehicle speeds and areas of operation, and
+monitoring and managing E-mopeds multi-riding and other high-risk riding scenarios; (iii) installing the brake
+self-adjustment system, which can automatically adjust the brake tightness during riding, thus preventing and
+reducing accidents; (iv) applying consumer real-name authentication, facial recognition, and other technical means
+and managing consumer credit by taking riding location, Bluetooth matching, and accident history into account, to
+prevent account sharing and underage riding; (v) reminding consumers of the potential risks through App pop-up
+notifications before riding and voice messages triggered when unlocking; and (vi) buying riding accident insurance
+for consumers to ensure the personal safety and property security of consumers and third parties.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We continuously upgrade our vehicle models to offer consumers a comfortable experience with guaranteed vehicle
+safety. Through consistent improvement, the X1 and X2 models of shared E-mopeds won the "2022 Design
+Intelligence Award" and "2023 Design Intelligence Award" respectively, granted by the Organisation Committee of
+Design Intelligence Award (DIA).
+Merchant Management
+Abiding by relevant laws and regulations, such as the Electronic Commerce Law of the People's Republic of China
+and the Law of the People's Republic of China on the Protection of Consumer Rights and Interests, we have
+formulated rules and policies based on different business models for managing the operations and services of
+merchants on our platform. In 2023, we revised the Specification for Handling Violations of Meituan In-Store Dining
+Merchants and the Terms of Service for Meituan Group Buying Consumers to further standardise the management
+measures for the improper behaviours of merchants, such as illegal collection of consumers' private information,
+integrity violation, and fake transactions in service scenarios to continuously improve the service awareness of
+merchants and consumer experience.
+Meituan 2023 Annual Report
+Legal awareness campaign: We conduct legal awareness campaigns to enhance merchants' understanding of
+the rules of our platform and guide them to operate their business in compliance with platform guidelines and
+legal regulations.
+EAT BETTER, LIVE BETTE
+We have established a training system for merchants on our platform, enhancing merchants' service awareness
+through regular online and offline training courses. We offer diversified training courses and seminars, including:
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 177
+We supervise and assess platform merchants' quality of service and take appropriate actions against violations,
+such as service non-conformance, fake advertising, fake transactions, fake stores, and fake listing of real estate
+sources. In response to certain merchant violations, we, as a clue provider, have established a joint working
+mechanism with the public security authorities. We have established a systematic violation handling process and
+hierarchical punishment mechanism to standardise the behaviour of merchants and safeguard consumers' rights
+and interests. We impose penalties, including warnings, adjustments to search results, hidden ratings, suspension
+of businesses and stores, account bans and fines according to the severity of the merchant's violation.
+For the ticket merchants of tourism attractions, we have collaborated with a number of scenic spots to
+set up dedicated service personnel, exclusive service materials, and channels for the elderly, in order to
+comprehensively improve the booking experience of elderly consumers. We continuously promote the
+"Elderly-Friendly Ticket Project", further optimise the consumer interface, simplify the operating procedure,
+and use more intelligent methods to solve the operational difficulties of online ticket purchases for the elderly
+and provide a better service experience.
+For accommodation merchants, we ensured a hygienic and clean accommodation environment for consumers
+by establishing hygiene and sanitary standards for different hotels, including e-sports hotels and cinema
+hotels. In 2023, we expanded the coverage of the "Assured Refund" and the "Agreement for Cancellation
+before Eight P.M." to further enhance the booking experience of consumers and the performance awareness
+of merchants. For homestay merchants, we have added tiered refund and change rules to our cancellation
+policy to safeguard the rights and interests of merchants while allaying potential cancellation concerns of
+customers and constraining their refund behaviours.
+For catering and snack merchants, in conjunction with well-known catering snack chain brands and the China
+Hospitality Association, we have developed and issued the group standard Operation Requirements for Snack
+Chain Enterprises in Digital Services of Catering to guide chain enterprises of catering snacks to realise digital
+service and management. In 2023, we launched the food safety insurance "Safe Dining", which effectively
+protects consumers rights in scenarios involving foreign objects, expired meals, and spoiled meals.
+•
+We guide merchants to provide safe, healthy, and convenient goods and services to consumers. We have
+undertaken multiple projects to guarantee the product and service quality of merchants to enhance consumers'
+experience.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 175
+Collaborative governance: We continue strengthening government and business collaboration in food safety
+through actively participating in national and local "Food Safety Publicity Weeks” activities, supporting the
+co-construction of food safety demonstration stores, districts, and cities. In 2023, we actively piloted the
+online exhibition of "Bright Kitchen and Stove" to help merchants improve the food safety synergy of delivery
+food governance. We have strengthened research cooperation with research institutions and think tanks on
+innovation in food safety governance, to further guide food safety practices with scientific theories.
+In 2023, we assisted the regulatory authorities to promote and manage consumers' rider behaviours. In cooperation
+with the public security and traffic management authorities, we made the publicity video "New Riding Safety Rules"
+to promote riding safety. In addition, we supported local traffic police bureaus in various cities across the country to
+launch a customised traffic safety pop-up window for accurately pushing riding safety reminders and carried out 27
+offline activities with the theme of "Traffic Safety".
+Standard setting: We actively participate in the establishment of food safety standards. For example, we
+collaborated with the China Chain Store & Franchise Association, the China Aquatic Products Processing and
+Marketing Alliance, and other industry partners to publish the Specification of Quality Management for Live
+White leg Shrimp in Preposition Warehouse Pattern and the Specification of Quality Management for Prepared
+Meals in OEM Model to guarantee food quality and safety.
+Platform Responsibility
+Meituan is a technology-driven retail company that offers a wide range of diversified daily goods and services in the
+retail sector through the use of technology. This includes food delivery, in-store services, hotel and travel bookings,
+and other service offerings and sales. In accordance with the requirements of the Law of the People's Republic
+of China on the Protection of Consumer Rights and Interests, the E-Commerce Law of the People's Republic of
+China, the Measures for the Supervision and Administration of Food Safety in Online Catering Services, and other
+laws and regulations, we systematically manage the goods and services provided by the platform in terms of safety
+guarantees, merchant management, customer service, etc., to protect the legal rights and interests of consumers.
+Safety Guarantees
+Culture promotion: We continuously organise food safety trainings to promote food safety culture and
+enhance awareness and capability of food safety compliance. For employees, we regularly conduct "Food
+Safety Lecture" training sessions where industry experts are invited to teach compliance requirements and
+skills to improve employee knowledge about food safety regulatory requirements and practices. For couriers,
+we provide regular trainings on food safety and code of conduct during delivery process. For suppliers and
+merchants, we provide them with food safety knowledge and solutions through a variety of means, such as
+regular promotion of "Key Points on Food Safety Management”, launching of "Food Safety Training Camp",
+and continuous operation of the "Safe 365" public welfare training programme on food safety.
+We place great importance on food safety. In accordance with the requirements of 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 Interim Measures for the Supervision and Administration of Food-related Product Quality and Safety
+and other laws and regulations, we hold responsibility for the food safety supervision and administration within our
+platform, as well as our retail businesses. We regularly follow up on updates to food safety regulations and make
+timely and dynamic adjustments to compliance requirements.
+We take our role in food safety seriously, optimising our food safety management system, and continuously
+improving our organisational capacity and human resource support for food safety. At the Company level, we have
+established the Food Safety Committee and Food Safety Office to take responsibility of formulating strategies,
+building competence, interpreting laws and regulations with further implementations, and coordinating multiple
+business lines. At the business operations level, we have arranged a quality control team for different business
+types to undertake specific food safety compliance requirements in the areas of qualification examination of partner
+merchants, supplier's on-site audit, goods warehousing, in-stock management, transportation, and distribution,
+thereby achieving efficient and unified management of food safety within the Company.
+We have established an emergency response mechanism with clear procedures and measures for handling food
+safety incidents. We cooperate with market regulatory authorities and other relevant departments to ensure proper
+emergency handling. We also established a food recall management system to regulate the recall process and the
+disposal method for unsafe food products. In 2023, there were no significant food safety incidents requiring recalls
+for health and safety reasons.
+Meituan 2023 Annual Report 173
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We develop and implement targeted food safety initiatives for both our platform and retail operations, including:
+Food Safety
+On food retail: We actively respond to the regulatory requirements of food safety responsibilities for
+enterprises, improve the food safety management organisation and staffing, and implement the "Daily
+Controlling, Weekly Investigating and Monthly Scheduling" food safety risk prevention and control
+mechanism. We have formulated and refined food safety management policies in different stages, including
+supplier admission, product storage, and product selling. In the supplier admission stage, we check suppliers'
+qualifications, including business licence, food production and operation licence and filing, etc. For food
+suppliers with large volume of purchases and sales, we proceed on-site inspections, random inspections, and
+other methods to monitor the compliance of their production and operation processes. In the product storage
+stage, we conduct sensory inspections and rapid detections for fresh agricultural products with high food
+safety risks to safeguard the quality and safety of products. In the product selling stage, we have established
+a quality control system, using quality and safety data analysis models to monitor the food safety performance
+of the products, and take timely control measures for products with food safety issues. We strengthen
+cooperation with third-party testing agencies, and regularly conduct specific food safety sampling to identify
+and manage food safety risks of products on sale.
+On community e-commerce food: We continue improving a comprehensive food safety management model
+that is tailored to the actual requirements of the community e-commerce ecosystem and establishing
+a food safety and quality assurance system that covers all aspects of the workflow, including platform
+partner merchants, storage facilities, and self-pickup points. We strive to improve food safety management
+capabilities in all stages. We employ methods such as safety sampling inspections and intelligent evaluations
+to dynamically monitor the quality and safety of food sold through the platform. We partner with merchants to
+continuously improve food quality and ensure community e-commerce food safety.
+EAT BETTER, LIVE BETTE
+174
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+On private label products: We have formulated the Guidelines for Safety Management and Control of Private
+Label Products and Food and have continuously updated the life-cycle food safety management system
+covering supplier selection, product selection, R&D, production, storage, and distribution. Before cooperation,
+we perform audits on suppliers in aspects of qualifications, premises, and production process management.
+In conjunction with third-party testing agencies, we conduct regular sampling test on private label food and
+dynamic monitoring and evaluation on food quality and safety during cooperation to improve the management
+of suppliers.
+In addition, we actively support the social co-governance of food safety. We have strengthened communication and
+cooperation on food safety with food safety regulatory authorities, industry associations, research institutions, and
+think tanks in three areas: industry standard setting, culture promotion, and collaborative governance.
+On food delivery: We develop and update 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 Food Safety Issues in Meituan Delivery Processing Specifications. We optimise the
+monitoring mechanism of merchants' food safety performance. On one hand, we objectively evaluate the
+food safety performance of merchants by conducting regular food sampling tests in delivery services through
+partnering with third party testing agencies. On the other, we continue piloting and promoting the on-site
+inspection mechanism of merchants as well as urging merchants to maintain a neat environmental hygiene
+and other food safety management practices. We provide timely solutions to problems identified during
+sampling test and on-site inspection to help and guide merchants to improve their food safety management
+continuously. We continue applying daily cleaning and disinfection to delivery boxes whilst collaborating with
+market regulatory departments and industry partners to promote applications of take-out sealing methods,
+such as food safety sealing labels. Moreover, we continue exploring and promoting measures such as the
+"Food safety for food delivery" liability insurance to enhance the protection of consumer's rights and interests.
+EAT BETTER, LIVE BETTE
+In compliance with regulatory requirements, we have set up multiple positions in various departments to carry
+out precision management of anti-money laundering work, including (i) establishing an anti-money laundering
+management department and a dedicated anti-money laundering compliance position in the public affairs
+department to coordinate and implement various anti-money laundering work; (ii) assigning personnel in the risk
+control department for suspicious transaction monitoring, anti-money laundering product design, and anti-money
+laundering strategy, responsible for the implementation of anti-money laundering management such as suspicious
+transaction monitoring; and (iii) launching anti-money laundering system support positions and anti-money
+laundering data support positions in the technical department, responsible for the development, daily maintenance,
+and upgrade of the anti-money laundering system.
+Abiding by the anti-money laundering laws and regulations, such as the Anti-Money Laundering Law of the People's
+Republic of China, the Administrative Measures for the Anti-money Laundering and Anti-terrorist Financing Work of
+Payment Institutions, and the Guidelines for the Assessment of Money Laundering and Terrorism Financing Risks
+and Categorized Management of Customers of Financial Institutions, we have amended related internal policies,
+such as the Administrative Measures for Customer Due Diligence, and formulated the Guidelines for Strengthened
+Anti-Money Laundering Due Diligence, in a bid to realise a more robust anti-money laundering system and better
+fulfil the reporting obligations of large-sum and suspicious transactions. Meanwhile, we have formulated the
+Administrative Measures for the Assessment of Money Laundering Risk in Services to clarify the standards and
+processes for the assessment of money laundering risk in our services.
+Anti-Money Laundering and Countering Terrorism Financing
+In 2023, we received the investigation and litigation outcomes of 7 corruption cases. All 7 employees involved in
+the cases were transferred to the public security authorities and sentenced in accordance with the law. We have
+terminated labour relations with the above-mentioned employees by the Integrity Workplace Code of Conduct and
+established a case review mechanism to avoid the recurrence of similar cases. The cases have not had a significant
+impact on our business.
+As one of the initiators and vice-chairman of the strategic decision-making committee of the Trust and Integrity
+Enterprise Alliance, we have been continuously participating in the work of the Trust and Integrity Enterprise
+Alliance since 2017, jointly carrying out anti-corruption actions. We issue the anti-corruption announcements
+every year, which aim at punishing corruption, fraud, counterfeiting, breach of information security rules, and other
+criminal acts through Internet approaches, improving the anti-corruption governance level of alliance members and
+fostering a community of integrity with our partners.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We have conducted an integrity index survey for seven consecutive years since 2017 to examine factors, including
+integrity perception, integrity attitude, integrity behaviour, and integrity system. The results are then internally
+shared and explained with full transparency.
+We have established the Integrity Declaration Platform to encourage employees to proactively disclose any
+instances of giving or receiving gifts and conflicts of interests. We also accept employees' reports of violations
+of laws and commercial ethics through a whistleblowing mechanism. We have established an internal case
+management system that integrates the processes of complaint acceptance, investigation inquiries, qualitative
+adjudication, appeals, and disciplinary enforcement into a close-loop management system. Moreover, we have
+established a standardised operation for handling reporting clues with "full coverage, no omissions, high efficiency,
+and mandatory feedback" and protecting whistle blowers' information to safeguard their legitimate rights and
+interests. Our Department of Integrity and Supervision accepts fraud reports and forms investigative teams. We
+have established a grievance 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
+transferred to judicial authorities.
+Whistleblowing and Inspection Mechanism
+180
+We coordinate all departments to promote the co-creation of an integrity culture and instruct all employees to
+understand and abide by the Integrity Workplace Code of Conduct. We conduct integrity training and publicity at
+different levels, including the Board of Directors and senior management, and all employees are required to take
+integrity examinations. In 2023, we had 798 integrity instructors delivering 701 sessions of integrity training or
+publicity activities to 101,024 trainees, including 1 session of integrity training for Board members and 39 sessions
+for management.
+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 others.
+188 Meituan 2023 Annual Report
+Meituan 2023 Annual Report 187
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+We pay special attention to improving employees' and partner merchants' awareness and knowledge of anti-money
+laundering and we are working to build an anti-money laundering culture both internally and externally. Internally, we
+have formulated the Policy for Anti-Money Laundering Training and Publicity Management to specify the content,
+form, and frequency of anti-money laundering training. The anti-money laundering management department
+organises and conducts training on various topics, including key tasks for anti-money laundering and typical money
+laundering cases. In 2023, we launched monthly training sessions of anti-money laundering for the management,
+anti-money laundering personnel, anti-money laundering partners, and the public. We report to the management on
+anti-money laundering work and the progress of important projects and interpret the latest laws and regulations for
+anti-money laundering every two weeks. Externally, we conduct training on topics such as anti-money laundering
+knowledge and fund security to our partner merchants through social media posts. We carry out publicity at our
+branches, in business districts, and among communities, involving a wide range of participants and achieving
+favourable results.
+Fostering a Corporate Culture of Integrity
+EAT BETTER, LIVE BETTE
+Public Welfare Initiatives: Employees can support environmental protection by donating garments and
+recycling water bottles and can also contribute to public welfare through book-reading events, charity auction
+of home-made items, blood donation, and participation in charity salons.
+Charity Bazaars: Gifts declared through our "Integrity Workplace Declaration" project are sold at charity sales
+and all proceeds are donated to public welfare projects. In 2023, the funds raised from the Charity Bazaars
+were used to build 3 rural playgrounds for children.
+Employee Monthly Donation: We encourage our employees to donate RMB1 per day to support the children
+of couriers in the industry. By the end of 2023, more than 36,000 employees had joined the programme and
+collectively donated RMB22.309 million to the "Baby Kangaroo Charity Project”, helping 560 couriers' children
+who suffer from serious diseases.
+In the Company, our employees participate in public welfare initiatives through various forms, such as “Employee
+Monthly Donation", "Charity Bazaars", and "Charity Salons".
+In terms of public welfare, we jointly carry out the Meituan "Playgrounds for Rural Children" charity project with
+other charity organisations, aiming to build multifunctional playgrounds for children in less-developed areas to
+empower them to engage in joyful play and support their healthy growth. Through our self-developed donation
+tracking system, compassionate consumers and merchants can track the specific details of rubber floor they
+donated, including the names of the supported kindergartens and the exact locations of the floor inside the
+playgrounds. By the end of 2023, with the support of 638 thousand charitable merchants and 474 thousand
+warm-hearted consumers, the project had supported constructing 1,276 playgrounds in 29 provinces and
+autonomous regions, such as Guizhou, Yunnan, Xizang, and Qinghai, directly benefiting 189 thousand children in
+rural areas.
+Public Welfare Initiatives
+Meituan Public Welfare Platform is one of the online fundraising platforms designated by the Ministry of Civil Affairs
+of the People's Republic of China, positioned in the "Internet + Public Welfare" model, aiming to provide equal
+and accurate information release and fundraising services for charity organisations and to build safe, efficient, and
+convenient public welfare donation channels.
+Public Welfare Platform and Projects
+We actively communicate with communities to understand their development needs and organise public welfare
+charity and community investment activities with the concept of "Internet +”. We contribute to the development of
+the retail industry, enhance the influence of community investment, and promote the sustainable development of
+communities through various channels.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 189
+COMMUNITY INVESTMENT
+In 2023, we actively communicated with the People's Bank of China, reported on the experience and challenges
+of our anti-money laundering projects, and facilitated their research studies. We also regularly visited the digital
+currency research institute to exchange with them the industry development trends. We carried out a tripartite
+cooperation project among public security authorities, enterprises, and government, to assist regulators in
+combating illegal and criminal activities. Finally, we kept strengthening communication and cooperation with peers,
+and actively participated in various seminars organised by industry associations to exchange with peers on issues
+like telecom fraud and new money laundering tricks.
+We enhance control at all key links of money laundering risk management and continue uplifting capabilities for
+anti-money laundering monitoring and management. In terms of customer due diligence, following "Know Your
+Customer" and "Risk Priority” principles, we refine the due diligence work and increase the accuracy of monitoring
+to strengthen our ability to manage money-laundering risks. In the early stage of due diligence, we verify the
+qualifications and licences submitted by customers and verify customers' identities via officially authorised third-
+party verification channels. In the ongoing stage of due diligence, we refine the identification scenarios, optimise
+the risk rating model, and distinguish the risk level indicators between new and existing customers. In the enhanced
+stage of due diligence, we upgrade the mechanism for due diligence on high-risk customers and design more
+effective follow-up control measures. To identify and address money laundering and terrorist financing risk with
+higher effectiveness and accuracy, we have upgraded the suspicious transaction monitoring model and iterated the
+list scanning and matching logic.
+To mitigate fraud risk, we have established a whole-crew risk management system based on the Three Lines
+Model and our actual needs. For more details on the risk management system, please refer to the section of "Risk
+Management and Internal Control - Organisational Structure for Risk Management” in the annual report.
+Our culture of integrity is further promoted by a series of publicity activities. For example, in 2023, we organised
+publicity activities and commitment activities in various forms to raise employees' awareness of gifts declaration
+this year. A total of more than 6,977 employees participated in the activities and declared giving or receiving gifts.
+186 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+182
+Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Promoting the Orderly Development of the Industry
+We implement the "least-necessary" principle to ensure information security. All third parties exchanging data with
+us are managed strictly, and we have clarified the types of data shared with third parties and our policies regarding
+the use of third-party data in the Meituan Privacy Policy 16. We have a dedicated team to manage suppliers and
+partners, and conduct pre-event assessment, in-process control, and post-event tracking to ensure security and
+compliance in the process of cooperation, as follows:
+Our Integrity Workplace Code of Conduct and Integrity Management Responsibility Policy include clear stipulations
+regarding information security management, interaction security, and information release control on employee
+departure and transfer. Employees who leak data will receive severe disciplinary punishments.
+.
+In-process control: We control potential security risks in data exchanges with suppliers by assessing the
+necessity and sensitivity of data interfaces and checking data transfer logs and exceptions.
+Post-event tracking: We have established a violation accountability mechanism, and different punishments
+like fines, contract termination, and legal actions are imposed on suppliers who are engaged in improper data
+processing. Moreover, we will trigger an emergency response process when necessary to ensure effective
+protection of user data.
+We actively promote the enhancement of industry-wide data security and user personal information management
+capacity building. As a member of the National Information Security Standardisation Technical Committee, we
+actively participate in the formulation of national standards for data security and user's personal information
+management. In 2023, we assisted the China Academy of Information and Communications Technology in the
+formulation of the Processing Specification for Personal Information of Software Development Kit and the Technical
+Requirements for Differential Privacy-based User Personal Information Protection.
+16
+For more information about the data shared with third parties and related management requirements, please see the
+Meituan Privacy Policy.
+Meituan 2023 Annual Report
+Pre-event assessment: We have set up supplier onboarding requirements and a hierarchical security fund
+mechanism and verify the supporting materials submitted by suppliers. We only cooperate with the suppliers
+who have met all onboarding requirements, such as qualification and data security capabilities. Meanwhile,
+we will enter into a confidentiality agreement with the supplier to specify obligations for data security and
+violation penalty rules binding on both parties during the course of our cooperation.
+183
+Confidentiality agreements are signed with our employees, and relevant training is provided regularly. All staff,
+including full-time employees, contract personnel, and interns, are required to take courses on information security
+and pass relevant examinations before taking on duties. We provide targeted training on information leakage
+prevention and “anti-phishing" for key employees who have access to highly sensitive information or are engaged
+in the processing of such information to uplift their awareness of information security. In 2023, we conducted 2
+sessions of information security training for all employees and targeted trainings for employees in every line of
+business on a monthly basis.
+Enhancing information demand review: We ensure legal and compliant use of personal information by
+establishing a personal information protection impact assessment system to review business needs involving
+personal information.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We protect information security and user privacy in compliance with international and industry standards. We
+have obtained ISO 27001 information security management system certification, ISO 27701 privacy information
+management system certification, ISO 27018 public cloud privacy security management system certification,
+CSA Star certification, and the Certificate of Level 3 Classified Protection of Cybersecurity. Meituan App has
+received the Mobile Internet Application Security certification issued by China Cybersecurity Review Technology
+and Certification Centre (CCRC). The business systems that we use and the services we offer are managed in
+accordance with the above certification standards, and the validity of such certifications are maintained through
+independent third-party audit on an annual basis.
+Implementing Internal Procedures and Control Measures
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Permission management: We have established systematic and universal rules regarding user account
+permissions and management and implemented access controls over network access devices. We regularly
+check the status of user accounts and related permissions, automatically revoking expired accounts and
+permissions.
+Security assessment and audit: We conduct multiple security configuration assessments of databases and
+servers every year. Real-time auditing of high-risk operations is conducted through the automated security
+audit system, which aims to reduce the risk of data leakage, identify misuse and abuse of data, and prevent
+the unauthorised access.
+Fostering Employees' Security Awareness
+Encryption: We manage the storage and usage of user data through software and hardware-level data
+encryption. We protect personal information from unauthorised access, public disclosure, use, modification,
+damage, or loss through information confidentiality agreements and monitoring and auditing mechanisms.
+Vulnerability prevention: We implement tiered data management based on security vulnerabilities, undertake
+daily inspections, set up emergency response mechanisms for evaluating critical risks, develop disaster
+recovery plans, and conduct regular drills.
+Meituan 2023 Annual Report 181
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+In privacy protection, we focus on refining privacy rules, iterating services' privacy functions and enhancing
+information demand review, and implement various privacy protection measures as follows:
+Refining privacy rules: We inform users about the collection and usage of personal information, as well as their
+rights to access, modify, delete, and secure their data, through App pop-up windows for privacy policy and
+privacy rule authorization. We also provide a clear list of personal data collected and shared with third parties.
+Iterating privacy browsing function: We have developed a private browsing mode, in which users can use
+our basic services such as browsing without providing any personal information. Users can search, modify,
+delete, and make other operations on their personal information through the App privacy management page
+to protect their legal rights. In the Meituan App's personalised recommendation function, we introduce the
+mechanism and principle of recommendation to users and provide convenient options for users to control and
+optimise the recommendation content through user feedback.
+Data recovery and backup: We have developed a series of backup management procedures and a backup
+recovery process to ensure rapid recovery of damaged data. For artificial intelligence and cloud platforms,
+local or off-site backup is deployed depending on the nature of the business to minimise the risk of losing
+users' data.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+To support information security protection, we have built up a security management mode that incorporates
+functions of permission management, security assessment and audit, encryption, data recovery and backup, and
+vulnerability prevention and control:
+Compliance of Advertisement
+Anti-Fraud
+Meituan 2023 Annual Report 185
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We strictly adhere to the Anti-Unfair Competition Law of the People's Republic of China and other relevant laws
+and regulations, continuously enhance our internal policies and management systems, and build up our capabilities
+for fraud risk prevention and management. We are committed to fostering a culture of integrity and building a clean,
+transparent, and fair workplace. For external partnership, we create an open, transparent, honest, and efficient
+cooperation environment to attract high-quality partners.
+Anti-Fraud Policy and System Construction
+We have formulated the Integrity Workplace Code of Conduct and the Integrity Management Responsibility Policy
+to specify the Company's requirements on corporate integrity behaviours and clarify that managers shall assume
+management responsibility for employee's fraud-related incidents, reflecting the bottom-line requirement of
+integrity.
+ANTI-CORRUPTION
+We have established the Integrity Committee which is responsible for leading the Company's anti-corruption
+undertaking, policy system building, corruption investigation and handling, and integrity culture development.
+The Committee is chaired by the head of the Corporate Affairs Platform and the head of the relevant functional
+department serves as the Secretary-General. Adhering to our Specification for Integrity Committee and Framework
+of Integrity & Operational Mechanism of Integrity Committee, the Committee independently reports to the senior
+management team. The Committee's main responsibilities include:
+Leading the investigation and handling of disciplinary breaches, making qualitative decisions on major,
+difficult, and complex cases. Accepting and adjudicating appeals from employees regarding disciplinary
+treatment.
+Establishing internal platforms for the management of integrity issues in a coordinated manner, such as the
+Reporting Platform, Investigation and Handling Platform, and Adjudication Platform.
+•
+We assess potential corruption risks involved in internal and external communication of employees, comprehensively
+monitor fraud conduct, adopt a "zero tolerance" attitude towards fraud, and deal with violations seriously in
+accordance with rules and regulations. In 2023, the Integrity Committee focused on promoting fraud and corruption
+governance in key areas of the value chain, such as procurement of goods, services, products and spare parts, and
+major business cooperation. We assisted the public security authorities to file and investigate a total of 93 internal
+and external persons suspected of committing crimes.
+LEAT BETTER, LIVE BETTE
+Compliance of Content
+. Formulating and optimising our code of professional conduct, while implementing integrity strategy to
+comprehensively identify and prevent integrity risks.
+In 2023, we upgraded the POI information feedback portal and channel, lowering the barrier for consumers and
+merchants to provide feedback. We have designated personnel to follow up and solve POI-related issues reported
+by consumers and merchants in a timely manner. We corrected data and iterated services based on feedback to
+improve consumer experience.
+Building and continuously deepening our integrity culture.
+We attach great importance to the compliance, authenticity, and accuracy of POIs (Points of Interests, i.e., the
+places considered interesting or helpful by the consumers).
+We continuously improve the review system to enhance the quality control of POI content, including (i) integrating
+manual review with the intelligent identification system to conduct quality sampling inspection and review of POI
+content, introducing video-based verification methods to strengthen POI authenticity. We continue enhancing
+the capability and expanding the range of application of POI anti-cheating identification to screen and filter
+inappropriate and illegal POI; (ii) collecting the complained and reported content of the POI through various
+channels, and carrying out unified revision and rectification of such content; (iii) keeping adequate communication
+with regulators and continuously improving POI management according to regulatory requirements; and (iv)
+providing training on the prevention and control of fake POI, organising relevant employees to take part in the
+examination, assessing their POI management ability, and providing follow-up guide to employees underperforming
+in POI management in real work.
+In 2023, we further made improvements to our platform to better identify and handle illegal activities and content
+in advertising. We developed a sensitive word and image filtering system, which achieves full coverage of
+advertisement review, and conducted second review for frequently displayed and popular materials. We screen
+out illegal words in advertising and strictly control advertising content through automatic and manual inspection,
+ensuring that advertising content is legal and compliant. For special industries, such as medical treatment,
+medicine, and dietary supplements, we have set up relevant special advertisement reviewing rules and conduct
+focused review on these advertisements to protect the rights and interests of consumers.
+We strictly comply with the Measures for the Administration of Internet Information Services and the Provisions
+on Ecological Governance of Network Information Content and continue enhancing compliance and quality
+management of User Generated Content (UGC). We have established a Content Security Committee to coordinate
+and promote the establishment of the content security system, guarantee UGC compliance, and enhance UGC
+quality. In addition, we have set up communication channels with regulatory authorities to respond quickly and
+continue managing UGC in line with regulatory requirements.
+In terms of UGC review, our multiple-layer review mechanism helps to improve UGC quality via automatic and
+manual review.
+Manual inspection: Different level of reviewers are assigned by content, with designated personnel in charge
+of screening high-risk contents.
+Automatic inspection: Constantly enhancing the automatic identification system, improving text recognition
+capability, and optimising the image recognition and semantic analysis models to improve the screening
+accuracy of content of violation.
+EAT BETTER, LIVE BETTE
+Compliance of UGC
+Meituan 2023 Annual Report
+Compliance of POI
+184
+We are committed to strengthening employees' ability to manage UGC and developing a merchant content
+compliance culture. We provide online and offline content security courses to train and assess employees'
+awareness of UGC security. We require all UGC reviewers to take special training on UGC security, following which
+they will have to pass examinations before they can start to work.
+We abide by the Advertising Law of the People's Republic of China, the Regulations on Control of Advertisement,
+the Administrative Measures for 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 actively fulfil the relevant compliance requirements for Internet information
+service providers and set up the advertising acceptance, review, and file management systems. Moreover, we
+continue enhancing advertisement review standards and processes. We strengthen the construction of the
+advertisement reviewing team, organise learning and training sessions, and publicise compliance knowledge and
+cases of violations to increase the risks awareness in advertisement and compliance capabilities.
+In case of any illegal content, we would implement a hierarchical management policy supplemented with blocking
+and deleting measures. In 2023, we extended our risk management to further cover the content of videos and live
+streaming, and built risk prevention and control links.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+We have also established a specific emergency response system and a mechanism for prevention and control of
+sensitive information. We set up emergency response mechanisms for content management, covering regulatory
+directives and special projects and enabling recall capabilities for UGC contingency on the platform. We have
+launched 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 resolve process. We continuously maintain a sensitive-word database to
+track and update new sensitive words. For sensitive occasions such as festivals, we have established a prevention
+and control mechanism to ensure content security.
+December 31, 2022
+60,128,939
+EAT BETTER, LIVE BETTE
+18
+Meituan 2023 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues from the Core local commerce segment increased by 26.8% to RMB55.1 billion for the fourth quarter
+of 2023 from RMB43.5 billion for the same period of 2022. The revenue growth in delivery services and commission
+was mainly due to the growth in the number of transactions of the Core local commerce segment, which was driven
+by our supply enhancement, product iterations, and continued recovery in consumption, partially offset by lower
+average order value of our food delivery and Meituan Instashopping businesses. The revenue growth in online
+marketing services was mainly attributable to the increases in the number of and the average revenue from online
+marketing Active Merchants.
+Our revenues from the New initiatives segment increased by 11.5% to RMB18.6 billion for the fourth quarter of 2023
+from RMB16.7 billion for the same period of 2022. The year-over-year growth was mainly due to the development
+of our goods retail businesses, partially offset by the contraction of our self-operated ride sharing business.
+Costs and Expenses
+Unaudited
+Three Months Ended
+December 31, 2023
+16,656,275
+As a
+percentage
+The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:
+Online marketing services
+Total
+17,652,756
+16,334,093
+1,318,663
+(including interest revenue)
+Other services and sales
+7,769,592
+24,841
+7,744,751
+14,933,859
+297,341
+14,636,518
+As a
+percentage
+19,772,732
+43,472,664
+Amount
+2,700,281
+Amount
+19,772,732
+EAT BETTER, LIVE BETTE
+Our general and administrative expenses increased by 10.2% to RMB2.7 billion for the fourth quarter of 2023 from
+RMB2.5 billion for the same period of 2022. The percentage of revenues was 3.7%, remaining stable on a year-
+over-year basis.
+General and Administrative Expenses
+Our research and development expenses was RMB5.4 billion for the fourth quarter of 2023, remaining stable on
+a year-over-year basis. The percentage of revenues decreased by 1.3 percentage points to 7.4% from 8.7% on a
+year-over-year basis, primarily due to improved operating leverage.
+Research and Development Expenses
+Our selling and marketing expenses increased by 55.3% to RMB16.7 billion for the fourth quarter of 2023 from
+RMB10.8 billion for the same period of 2022, and increased by 4.8 percentage points to 22.7% from 17.9% as a
+percentage of revenues on a year-over-year basis. Both the increases in amount and as a percentage of revenues
+were primarily attributable to the increases in Transacting User incentives as well as promotion and advertising
+expenses, resulting from the consumption recovery, evolving business circumstances and business strategies. In
+addition, the increase in employee benefits expenses contributed to the increase in amount of selling and marketing
+expenses.
+Selling and Marketing Expenses
+Our cost of revenues increased by 12.7% to RMB48.7 billion for the fourth quarter of 2023 from RMB43.2 billion
+for the same period of 2022, and decreased by 5.7 percentage points to 66.1% from 71.8% as a percentage of
+revenues on a year-over-year basis. The increase in amount was primarily due to the increases in: (i) delivery related
+costs of our food delivery and Meituan Instashopping businesses, and (ii) cost of revenues of our goods retail
+businesses. The decrease in cost of revenues as a percentage of revenues on a year-over-year basis was mainly
+due to: (i) the change of revenue mix, (ii) lower delivery related costs per order of our food delivery and Meituan
+Instashopping businesses, and (iii) the improved gross margin of our goods retail businesses.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2023 Annual Report 19
+Cost of Revenues
+4.1%
+2,450,697
+of revenues
+3.7%
+5,242,928
+7.4%
+5,425,285
+17.9%
+71.8%
+43,195,543
+10,766,926
+66.1%
+22.7%
+16,725,310
+Selling and marketing expenses
+Research and development expenses
+General and administrative expenses
+48,702,612
+Cost of revenues
+Costs and Expenses:
+(RMB in thousands, except for percentages)
+of revenues
+8.7%
+Total
+73,695,951
+New
+initiatives
+Hong Kong, March 22, 2024
+Chairman
+Wang Xing
+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 2024, we will continue to execute our "Retail +
+Technology" corporate strategy and fulfill our mission that "We help people eat better, live better".
+APPRECIATION
+Facing the new macro environment and competitive landscape, we proactively responded to the changes and
+iterated our business operations in 2023. We are convinced that the domestic consumption market has immense
+potential, and we are well-positioned to seize growth opportunities. As we venture into 2024, we will continue to
+enrich our product and service matrix that caters to a broader consumer base and merchant base. We will deep-
+dive into the intricacies of the on-demand delivery industry, as we firmly believe that having everything delivered to
+the consumers' doorsteps within 30 minutes will be the next era. In addition, with the continuous emergence of new
+consumption trends, digital transformation of the local service industry is inevitable, and there is tremendous room
+for its online penetration. As an industry leader, we will leverage our know-hows, solidify our core competencies,
+and continue to enhance our capabilities, to facilitate the digital transformation process. Moreover, we will make
+our utmost effort to benefit all the participants in our ecosystem, create more job opportunities and realize greater
+social value.
+CHAIRMAN'S STATEMENT
+Meituan 2023 Annual Report 15
+EAT BETTER, LIVE BETTE
+COMPANY OUTLOOK AND STRATEGY FOR 2024
+Growth of Meituan Select ("") slowed down in 2023, as the market size of community e-commerce was
+relatively flat on year-over-year basis. Despite the year-over-year efficiency improvement, Meituan Select still
+made significant loss with high operating loss ratio during 2023 mainly due to: 1) scale growth was slower than
+expected which made it difficult to meaningfully lower fulfillment cost per item; and 2) fierce competition which
+made it difficult to improve price mark-up ratio and lower subsidies. While Meituan Select is still part of our online
+grocery strategy, we admitted this market was much tougher than we originally expected. We will make strategic
+changes and refine the business model in 2024, aiming to significantly reduce the operating loss. We will prioritize
+on building key competences and improving user experience, rather than focusing on market share. We plan to
+increase the price mark-up ratio and reduce subsidies in the future, paying more attention to the long-term growth
+of natural retention rate.
+For the fourth quarter of 2023, revenues from the New initiatives segment increased by 11.5% year over year
+to RMB18.6 billion. Operating loss for the segment decreased by 24.1% year over year to RMB4.8 billion, and
+operating margin improved sequentially to negative 26.0%.
+In 2023, revenues from the New initiatives segment increased by 18.0% year over year to RMB69.8 billion.
+Operating loss narrowed to RMB20.2 billion, while operating margin improved to negative 28.9%, primarily
+attributable to improvement in operational efficiency across all businesses in this segment.
+New Initiatives
+CHAIRMAN'S STATEMENT
+14 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+For hotel and travel businesses, we effectively captured the strong industry rebound, by leveraging our expertise
+in leisure travel and our competitive advantage in the domestic market. Our domestic hotel GTV increased by over
+100% year over year in 2023. We enhanced our platform supply and improved live streaming capabilities that
+could help consumers make informed decisions. Through a combination of live streaming and shelf-based model,
+we helped hotel merchants improve operational efficiency, acquire user traffic, and sell mega-hit products. We
+also iterated the Hotel+X products and leveraged our unique positioning in in-store dining to offer more diversified
+bundle deals. Our expanded effort in marketing and promotions led to record high reservation volume during
+holiday seasons in 2023. In addition, we further strengthened our presence in the high-star domain, and deepened
+merchant collaborations through joint marketing events and joint membership programs with high-star hotels.
+For alternative accommodations, we continued to expand supply, improve our service quality and enhance user
+experience, after achieving absolute leadership in the domestic market.
+In December 2023, we upgraded the former Meituan Grocery (“”) to a new brand - Xiaoxiang Supermarket
+(""), which marks the official transition from grocery to online supermarket. During 2023, GTV from
+Xiaoxiang Supermarket increased by around 30% year over year. We further enhanced our market position and
+led the industry growth. During the year, we diversified our product selections to provide consumers with more
+high-quality items. We also enhanced our ability in private labels. As a result, sales contribution from private labels
+continued to grow. Our user base, average order value and purchase frequency all increased steadily, indicating
+a stronger consumer mindshare. Moreover, we steadily improved our operational efficiency through supply chain
+optimization and fulfillment cost reduction.
+Amidst the changing industry landscape, we continued to optimize our shelf-based search model in order to
+strengthen our competitive advantage. During 2023, by offering merchant incentives and joint-marketing programs,
+we not only deepened collaborations with high-quality merchants, but also provided consumers with value-
+for-money deals. We also lowered the threshold for subscription-based services, thus accelerating merchant
+onboarding and significantly expanding our merchant base. We provided comprehensive solutions and marketing
+tools for the newly opened merchants to support their business growth. As a trustworthy platform in local services,
+we helped merchants accumulate valuable digital assets like user reviews and transaction data to further improve
+their operations, while helping consumers make consumption decisions more easily. We further optimized our
+theme-based marketing events and organized more diversified online and offline promotions for our trusted "Must-
+Eat List” (“”), “Must-Eat Festival” (""), and “Black Pearl List” (“\"), which helped these high-
+quality merchants further enhance brand awareness and transaction conversions. In addition, we implemented
+direct operations nationwide to replace the former agency model, so that we can seize more growth opportunities in
+the lower-tier markets. Throughout the year, we also launched a series of measures to better meet consumer needs
+and incentivize consumption, such as offering add-on selections for combo meals, and providing delivery service
+options.
+16 Meituan 2023 Annual Report
+The Fourth Quarter of 2023 Compared to the Fourth Quarter of 2022
+409,525
+438,293
+60,128,939
+73,695,951
+General and administrative expenses
+Net (provisions for)/reversals of impairment
+Selling and marketing expenses
+Research and development expenses
+Gross profit
+Cost of revenues
+MANAGEMENT DISCUSSION AND ANALYSIS
+Including: Interest revenue
+(RMB in thousands)
+2022
+2023
+December 31,
+December 31,
+Three Months Ended
+Unaudited
+The following table sets forth the comparative figures for the fourth quarter of 2023 and 2022:
+Revenues
+(48,702,612)
+In 2023, we continued to iterate business operations and drive industry transformation. During the year, we
+enhanced our ability in promoting value-for-money mega-hit products and enriched our video content offerings.
+Through the Special Deals sessions (“\”), we collaborated with high-quality merchants to offer a diverse
+selection of discounted deals and improved our traffic allocation efficiency. As a result, order volume from Special
+Deals ("") increased rapidly. We also introduced a combination of live streaming programs, which includes
+Meituan platform live streaming (“”), merchant live streaming and sales team live streaming. We can
+thereby provide vivid recommendations for consumers and satisfy their stockpiling needs. Throughout 2023,
+the transaction scale from live streaming increased rapidly. Consumers have become more willing to watch live
+streaming and place orders on our platform. Both Special Deals sessions and live streaming events helped us to
+further solidify our consumer mindshare of "Everyday Low Price".
+Meituan 2023 Annual Report 13
+Year-over-year
+December 31,
+2022
+2023
+December 31,
+Year Ended
+25.2%
+4,830.2
+6,046.0
+change
+(in millions, except for percentages)
+December 31,
+2022
+2023
+Three Months Ended
+December 31,
+Number of On-demand Delivery transactions
+OPERATING METRICS
+FINANCIAL SUMMARY AND OPERATION HIGHLIGHTS
+10 Meituan 2023 Annual Report
+(RMB in thousands)
+Year-over-year
+change
+CHAIRMAN'S STATEMENT
+(in millions, except for percentages)
+21,893.2
+As we proactively captured the offline consumption rebound, GTV of our in-store, hotel and travel businesses
+increased by over 100% year over year in 2023. The year-over-year growths of Annual Transacting Users and
+Annual Active Merchants exceeded 30% and 60%, respectively.
+2023 marks the 10-year anniversary of our food delivery business. After continuous innovation and growth over
+the past decade, our food delivery business further solidified its market leadership and core competence in 2023.
+Annual Transacting Users of food delivery continued to grow, and mid- to high-frequency users, and their purchase
+frequency increased steadily. Having food and meals delivered in 30 minutes has become a new lifestyle. It now
+covers broader consumption categories and caters to a much larger consumer base. As consumer preference
+evolved throughout 2023, we proactively iterated our business strategies and refined our operations in products,
+marketing and supply. We expanded the scale of Pin Hao Fan ("") to better satisfy consumer demand in
+value-for-money selections. Additionally, we refined our operations in high order value products, such as Shen
+Qiang Shou (""), Meal For One ("-") and Must-Order List (""). During the process, we enhanced
+two key competences. The first one is product display. We enhanced our content production capabilities across
+various formats, including graphics, texts, videos and live streaming, to nurture a vibrant content ecosystem. The
+other one is promotional schemes. We upgraded and simplified our membership program to make it easier to use
+by consumers and merchants alike. Our continuous improvement in the shelf-based model, combined with our
+enhanced marketing ability to sell mega-hit products, allows us to stimulate consumer demand more effectively.
+CHAIRMAN'S STATEMENT
+12 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+For the fourth quarter of 2023, segment revenue increased by 26.8% year over year to RMB55.1 billion. Operating
+profit increased by 11.1% year over year to RMB8.0 billion, and operating margin was 14.5% in the fourth quarter.
+For the full year of 2023, revenue for the Core local commerce segment increased by 28.7% year over year to
+RMB206.9 billion, thanks to the rapid recovery of local businesses. Operating profit increased by 31.2% year over
+year to RMB38.7 billion, and operating margin improved slightly to 18.7% from 18.4% in 2022.
+Core Local Commerce
+Number of On-demand Delivery transactions
+COMPANY BUSINESS HIGHLIGHTS
+COMPANY FINANCIAL HIGHLIGHTS
+On behalf of the Board, I am pleased to present the Group's annual results for the year ended December 31, 2023.
+As an industry leader, Meituan achieved healthy and high-quality growth during 2023. Annual Transacting Users
+and annual Active Merchants both increased to record highs, laying a solid foundation for the long-term business
+expansion in the future. We continued to cultivate consumer mindshare in the "Everything Now" lifestyle. In
+addition, we fostered a sustainable development ecosystem for our consumers, merchants, couriers, and business
+partners, and facilitated the high-quality growth of on-demand retail in China. Our in-store, hotel and travel
+businesses continued to deepen online penetration in the new consumption environment, and achieved robust
+growth in merchant base and user base. We effectively satisfied the diverse needs from consumers and invigorated
+local consumption, by offering value-for-money selections through various product formats. Going forward, we
+will continue to execute our "Retail + Technology" corporate strategy, and deliver greater value to consumers and
+merchants, as well as the society at large.
+To our Shareholders:
+CHAIRMAN'S STATEMENT
+Meituan 2023 Annual Report 11
+23.9%
+17,670.2
+For the full year of 2023, our revenues increased by 25.8% to RMB276.7 billion from RMB220.0 billion in 2022. Our
+Core local commerce segment achieved an operating profit of RMB38.7 billion in 2023, which increased by 31.2%
+from RMB29.5 billion in 2022. Meanwhile, the operating loss for our New initiatives segment narrowed to RMB20.2
+billion in 2023 from RMB28.4 billion in 2022. Our profit for the year of 2023 was RMB13.9 billion, compared to the
+loss of RMB6.7 billion for the year of 2022. Our adjusted EBITDA and adjusted net profit increased to RMB23.9
+billion and RMB23.3 billion in 2023, respectively. We also achieved an operating cash inflow of RMB40.5 billion in
+2023. We held cash and cash equivalents of RMB33.3 billion and short-term treasury investments of RMB111.8
+billion as of December 31, 2023.
+(43,195,543)
+Meituan Instashopping posted another stellar growth with order volume increasing by over 40% year over year
+in 2023. After rapid expansion over the past five years, it plays a pivotal role in the on-demand retail industry,
+and connects millions of local retailers and brands with hundreds of millions of consumers. Compared to the
+food delivery users, the user base of Meituan Instashopping has higher stickiness to our platform and stronger
+purchasing power, with a significant portion being younger users. While we continued to improve our supply, we
+noticed that purchase frequency and spending of Meituan Instashopping users grew consistently. Meanwhile,
+annual Active Merchants of Meituan Instashopping grew by almost 30% year over year in 2023. As more offline
+retailers embraced the on-demand channel, the quality and diversity of our platform supply also enhanced. We
+partnered with around 400 brands and supported their transition to online operation. We also expanded our
+new supply formats to broader regions. Meituan InstaMart ("ª¤ŒÂ”) now covers more than 200 cities. Our
+improved supply capability has led to elevated user experience and robust growth in order volume. Moreover, we
+continued to optimize our platform solutions to cope with the evolving demand. For example, we offered consumers
+one-stop online health services. Consumers could get quick home testing, diagnose online, and have their
+medicines delivered. We also extended our coverage for 24-hour pharmacies and partnered with chain pharmacies
+to provide medical insurance payment options.
+16,933,396
+21,927,023
+21,927,023
+Total
+(RMB in thousands)
+New
+initiatives
+commerce
+Core local
+Three Months Ended December 31, 2023
+Unaudited
+Delivery services
+Commission
+Revenues
+The following table sets forth our revenues by segment and type for the fourth quarter of 2023 and 2022:
+Our revenues increased by 22.6% to RMB73.7 billion for the fourth quarter of 2023 from RMB60.1 billion for the
+same period of 2022. We achieved revenue growth in both reportable segments.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2023 Annual Report 17
+Revenues
+829,145
+19,426,729
+569,576
+10,907,096
+76,905
+commerce
+24,993,339
+Core local
+Three Months Ended December 31, 2022
+Unaudited
+Commission
+Delivery services
+Revenues
+4,374,712
+18,565,309
+Total
+20,788,622
+17,918,828
+2,869,794
+(including interest revenue)
+Other services and sales
+Online marketing services
+10,984,001
+55,130,642
+Adjusted net profit
+19,996,305
+3,744,406
+1,758,134
+Operating profit/(loss)
+588,455
+2,085,740
+Other gains, net
+187,942
+at fair value through profit or loss
+Fair value changes of other financial investments
+(731,590)
+19,168
+losses on financial and contract assets
+(2,450,697)
+(2,700,281)
+(5,242,928)
+(5,425,285)
+2,960,883
+(10,766,926)
+(16,725,310)
+(408,417)
+Finance income
+(61,652)
+Income tax (expenses)/credits
+(1,083,541)
+2,216,987
+Profit/(loss) for the period
+1,699
+(96,059)
+Non-IFRS Accounting Standards measures:
+(1,085,240)
+2,313,046
+216,153
+Profit/(loss) before income tax
+(95,873)
+705,484
+for using the equity method
+Share of profits/(losses) of investments accounted
+(405,168)
+(366,725)
+Finance costs
+147,391
+Adjusted EBITDA
+GHG emissions per square metre of floor area
+(tonnes per square metre)
+GHG emissions per employee (tonnes per
+employee)
+Independent practitioner's limited assurance report
+. Total non-hazardous waste (tonnes)
+Non-hazardous waste per employee (tonnes per
+employee)
+Total GHG emissions (tonnes)
+•
+•
+Hazardous waste per employee (tonnes per
+employee)
+•
+We have undertaken a limited assurance engagement in respect of the selected Environmental, Social and
+Governance ("ESG") data of Meituan (the "Company") listed below in the Company's ESG report for the year ended
+December 31, 2023 ("the 2023 ESG report") (the "Selected ESG Data").
+.
+Emissions
+Workplace Performance Indicators
+Environmental Performance Indicators
+The Selected ESG Data for the year ended December 31, 2023 is summarised below:
+SELECTED ESG DATA
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+To the board of directors of Meituan
+Regional sales offices
+- HQ offices
+Total GHG emissions (tonnes)
+Non-management
+GHG emissions per square metre of floor area
+(tonnes per square metre)
+Contractors and other types
+Meituan 2023 Annual Report 195
+Full-time
+Number of employees by employment type
+Number of employees by management level
+Management
+Other countries and regions
+Hong Kong, Macao and Taiwan
+Number of employees by geographical region
+Mainland China
+Above age 50
+Age 31 to 50
+Age 30 and under
+Number of employees by age group
+Male
+Female
+Number of employees by gender
+Total number of employees
+Employment
+Total GHG emissions (tonnes)
+Warehouses and service stations
+• Total non-hazardous waste (tonnes)
+Non-hazardous waste per employee (tonnes per
+employee)
+Hazardous waste per employee (tonnes per
+employee)
+Total hazardous waste (tonnes)
+GHG emissions per employee (tonnes per
+employee)
+Leveraging the scale advantage of merchants and consumers on our platform, we supported the government in the
+"E-Coupons for Merchants and Consumer" project, which aims to stimulate consumers' willingness to spend by
+issuing e-coupons, thereby increasing the transaction scale of physical retailers and supporting the development
+of city economies. In addition, we also promoted the project in local live-streaming events, aiming to drive local
+consumption, facilitate e-coupon redemption, and encourage consumers to use coupons at local physical retailers.
+Stabilising prices during disasters: We take price stability as the top priority to ensure people's livelihood
+and resolutely resist illegal acts, such as price gouging and price cheating during disasters. In the event
+of a disaster, we launch an initiative calling on merchants to help maintain supplies of daily necessities
+and stabilise prices. At the same time, we strengthen the risk analysis of the supply and demand of daily
+necessities to provide a basis for alerts and decision-making for the supply of materials and price stability
+during disasters. In addition, we cooperate with merchants to ensure enough material supply.
+Operation services: We provide exclusive service packages by integrating platform resources, such as free
+Food Delivery Butler Service, brand promotion, instant retail system, and other digital upgrade services.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+192
+EAT BETTER, LIVE BETTE
+We provide elderly-friendly live service of "4+4" full scenarios and make efforts in aspects of online operation
+optimisation and offline elderly assistance services. For online operation optimisation, we have optimised the
+operation interfaces or product functions of the "Elderly Consumer Version" Meituan App, "Elderly Consumer
+Version" Dianping App, Taxi at One Click, and Voice-enabled Delivery, making these Apps more friendly to
+elderly consumers. For offline elderly assistance services, we have carried out four initiatives, including "Youth
+Volunteer Service Station for the Community", "Filial Piety Orders", "Elderly-Friendly Renovation at Scenic Spots",
+and "Shanghai Digital Experience Project", bringing "Elderly-Friendly approaches" to every aspect of the elderly
+people's life.
+In line with the Implementation Plan for Effectively Resolving the Difficulties Facing the Elderly in the Use of
+Intelligent Technologies and other policies, we have established an "Elderly-oriented Product and Service" team,
+aiming to continuously optimise new product functions based on the actual needs of the elderly and improve their
+consumer experience.
+Elderly-Oriented Upgrade
+We have set up a dedicated team on accessibility experience management, aiming to make life easier for special
+groups by taking the following measures for barrier-free management and renovation: (i) conducting targeted
+training on barrier-free optimisation, including topics on international standard interpretation, self-testing, and
+acceptance inspection methods; (ii) constantly raising employees' awareness through exploring the development
+and application of barrier-free automatic testing tools and popularising the concept of barrier-free development,
+thereby improving the R&D staff's awareness and ability to serve special groups; (iii) optimising product functions,
+actively collecting the needs of the visually impaired, conducting research on their demands and experience, and
+obtaining an in-depth understanding of their needs and expectations for product function improvement. Moreover,
+applying digital technologies to services, helping the visually impaired obtain information conveniently and operating
+our services accurately and smoothly by means of converting text and pictures to voice, reducing man-machine
+verification and identity verification, blocking advertising and marketing content, and so on, to improve their
+consumer experience. For example, we have developed the "Yingying Bracelet❞ to enable hearing-impaired baristas
+easily receive order notification; and (iv) assisting special groups in store operation, jointly launching the "See
+Digital" care action for blind merchants with the China Association of Persons with Visual Disabilities, and operating
+the "Version for Blind Merchants", which provides blind merchants with a low-threshold, zero-cost marketing
+channel and standardised training on Internet business. In 2023, we assisted nearly 7,000 blind merchants to
+digitalise their operations, attract online customers, reduce operating costs, and improve store services.
+As a life service platform, we give full play to the characteristics of our business and do our best to improve
+barrier-free access to information, striving to become an important tool facilitating the life of special groups, such
+as the disabled and disadvantaged, as well as an important channel through which they can find employment or
+self-employment opportunities.
+Barrier-Free Optimisation
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 191
+Supporting post-disaster reconstruction: We carry out several measures to support businesses affected by
+disasters in resuming their operations and participate in living guarantee work after disasters. We provide
+renovation funds and on-site repair service for merchants with seriously damaged storefronts in the affected
+areas and we also help disaster-stricken catering merchants resume a clean work environment by providing
+disinfection tools for them. Furthermore, we help people contact their relatives and rescuers in a timely
+manner through providing free portable chargers in the affected areas. In addition, we provide business
+suspension protection for merchants whose business is suspended due to disasters, so that the suspension
+will not affect their business ratings, rankings, and other performance indicators. Once their businesses
+resume, we provide network traffic support to help them win orders.
+Assisting emergency medical treatment: We have established teams of professional pharmacists across the
+country to provide 24-hour online medical consultation services for people from affected areas during public
+health emergencies. We also coordinate professional service providers, including maternity hospitals and
+confinement centres to offer necessary assistance to special groups, such as pregnant women and new-born
+babies, when emergencies occur. In 2023, in response to the earthquake that occurred in Jishishan County,
+Gansu Province, we took immediate action to guarantee medical supplies and established medical teams to
+ensure the health and safety of the people in the disaster-stricken areas. Moreover, we launched an online
+psychological clinic to help alleviate the post-disaster trauma of the people in the affected areas.
+Contributing to disaster relief: The Meituan Public Welfare Foundation donated RMB30 million for the disaster
+relief and post-disaster resettlement of the areas ravaged by rainstorm in the Beijing-Tianjin-Hebei region. We
+increased stock and delivery capacity to secure daily supplies for people in the disaster-stricken areas. We
+applied the same rigorous requirements for timeliness as in our daily operations and used our well-established
+and efficient logistics network and experience in regional operations to successfully secure the efficient
+delivery of daily supplies during the disaster.
+In 2023, we fulfilled our corporate social responsibility for responding to public health emergencies and natural
+disasters by leveraging our business advantages and gathering all parties to maintain people's livelihood, stabilise
+social employment, and boost economic recovery.
+Emergency Response
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+190
+Total turnover rate
+Rural Revitalisation
+Branding promotions: We actively participate in the themed activity "Time-Honoured Brand Carnival"
+organised by the Ministry of Commerce of the People of China, and fully tap into the sales potential of
+time-honoured brands during the festival to help them expand their sales channels.
+In 2023, to meet the new deployment and requirements of the Rural Revitalisation Strategy, we took full advantage
+of digital technology and talents, and closely integrated the revitalisation of rural industries and talent with the
+Company's business to improve the living standards of rural residents and actively fulfil our corporate social
+responsibility.
+We continue cooperating with large-scale agricultural enterprises and agricultural bases to increase direct
+procurement of high-quality agricultural products, so that these products could enter our communities directly
+from their origins, and the farmers could gain more benefits. We leverage the advantages of the digital economy
+to help and improve the production, circulation, and consumption of agricultural products through scientific and
+technological innovation. Also, we promote the digitalisation, standardisation, and branding of the agricultural
+product supply chains to help revitalise the rural area and stimulate the economic growth in the future.
+Marketing models: We unveil a variety of content marketing tools to create a multi-dimensional publicity
+matrix for time-honoured brands. We held a mid-autumn festival live-streaming event in Beijing, Shanghai,
+Shenzhen, and Xi'an to help time-honoured brands increase their revenue.
+Products and services: We continue exploring online time-honoured brands to highlight exclusive labels for
+them. By the end of 2023, we had labelled 138 time-honoured catering brands in 29 provinces across the
+country.
+•
+In 2023, we continued our efforts in building a food delivery ecosystem sharing common growth and prosperity. We
+iterated and upgraded our "Prosperity Plan" to version 2.0, highlighting the assistance in the digital transformation
+and the development of both new and existing merchants. For new merchants, we launched the "Green Pass for
+Registration", "Exposure Improvement”, and “Couriers Management Assistant" for new merchants and provided
+financial support to ensure their store growth and facilitate the success of their first store. For existing merchants,
+we implemented the special project of "China Time-Honoured Brands", through which we make tireless efforts in
+stepping up the digital innovation and development of time-honoured brands in aspects of "goods and services",
+"marketing models”, “operation management”, and “branding promotions":
+Supporting the Development of the Real Economy
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report
+194
+EAT BETTER, LIVE BETTE
+In the hotel industry, we have been honoured as the fourth batch of vocational education and training evaluation
+organisations and been registered in the vocational skill level certificate list by the Ministry of Education of the
+People's Republic of China. We can issue relevant professional skills certificates to vocational college students
+and practitioners in the industry. By the end of 2023, we had nearly 20 cooperating universities for "1+X certificate
+(academic certificate + multiple vocational skill certificates)" pilots, and the number of students applying for hotel
+revenue management majors reached almost 700.
+We support flexible employment, such as couriers. We provide digital competency training on product development,
+data analysis, business model, and consumer and platform operation for services retail industry participants.
+We continue improving the courier training system, providing diversified training courses for couriers. Please see
+section "Empowering Couriers' Development” in this report for more details. We help practitioners in the catering
+industry gain systematic knowledge of food delivery operation and enhance their digital operation capabilities. By
+the end of 2023, we had provided free courses on food delivery operation for more than 100,000 practitioners in the
+catering industry and helped about 12,000 of them obtain the certificate of "Food Delivery Operation Managers".
+We promote the overall development of the services retail industry by enhancing industry practitioners' capabilities.
+We respond to policies, including the Guiding Opinions on Promoting Standardised and Healthy Development of
+Platform Economy and the Implementation Plan for National Vocational Education Reform, to create a base camp
+of talent in the services retail industry. We have set up several training centres on catering, food delivery, hotel
+management, beauty care, and guest housing to meet the learning and certification needs of industry practitioners
+and help cultivate talents in the services retail industry.
+Services Retail Industry Empowerment and Development
+New form of business: We keep exploring new business modes to help boost and broaden employment
+channels in rural areas, in a bid to bring more opportunities and space for people in rural areas to increase
+their income. New jobs, such as couriers, have become an important employment option for workers in key
+assisted counties.
+Training for agricultural product suppliers: We creatively combine upskilling assistance with industry
+assistance to launch and upgrade the "Training for High-quality Agricultural Product Suppliers in Places of
+Origin". For each key link in the supply process, we provide training on different themes to make the flow
+of agricultural products more organised, effective, and standardised. By the end of 2023, we had provided
+training for more than 2,000 suppliers of high-quality agricultural products.
+In response to policies and guidance such as the Opinions on Accelerating the Revitalisation of Rural Talents, we
+strive to play a more positive role in training talents and increasing employment in rural areas by conducting training
+for agricultural product suppliers and bolstering the development of new business modes.
+Talent Development
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 193
+Sales side: We fully leverage the advantages of the retail platform to create more exposure opportunities
+and traffic for agricultural products. During the 2023 Farmers' Harvest Festival, we collaborated with more
+than 1.3 million merchants on our platform for online promotion of fresh produce, rice, flour, grain, and oil to
+increase farmers' income. We also actively participated in production-to-retail marketing activities organised
+by governments of multiple provinces and cities to help sell local agricultural products across the country.
+Commodity side: We promote high-quality speciality agricultural products across the country. We carry out a
+series of "Local Top-notch Product” activities in conjunction with seasonal availability of agricultural products
+to raise the brand-awareness of local quality products. We shorten the supply chain of agricultural products
+and promote local employment and agricultural brands by leveraging our digital capabilities in instant retail.
+We also strengthen collaboration with local governments to launch the "Direct Sourcing of Fresh Produce" to
+increase direct procurement of high-quality agricultural products at source.
+Industry Upgrade
+Employee turnover rate by gender
+Total hazardous waste (tonnes)
+Employee turnover rate by age group
+OUR RESPONSIBILITY
+Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement
+and operate a system of quality management including policies or procedures regarding compliance with ethical
+requirements, professional standards and applicable legal and regulatory requirements.
+We have complied with the independence and other ethical requirements of the International Code of Ethics for
+Professional Accountants (including International Independence Standards) issued by the International Ethics
+Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional
+competence and due care, confidentiality and professional behaviour.
+OUR INDEPENDENCE AND QUALITY MANAGEMENT
+The absence of a significant body of established practice on which to draw to evaluate and measure non-financial
+information allows for different, but acceptable, measures and measurement techniques and can affect
+comparability between entities.
+INHERENT LIMITATIONS
+The Company is responsible for the preparation of the Selected ESG Data in accordance with the Criteria. This
+responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of
+Selected ESG Data that is free from material misstatement, whether due to fraud or error.
+THE COMPANY'S RESPONSIBILITY FOR THE SELECTED ESG DATA
+The criteria used by the Company to prepare the Selected ESG Data is set out in the section headed "Report
+Overview" in the 2023 ESG report (the "Criteria").
+Our responsibility is to express a limited assurance conclusion on the Selected ESG Data based on the procedures
+we have performed and the evidence we have obtained. We conducted our limited assurance engagement in
+accordance with International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements
+other than Audits or Reviews of Historical Financial Information issued by the International Auditing and Assurance
+Standards Board. That standard requires that we plan and perform this engagement to obtain limited assurance
+about whether the Selected ESG Data is free from material misstatement.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+CRITERIA
+Our assurance was with respect to the year ended December 31, 2023 information only and we have not performed
+any procedures with respect to earlier periods or any other elements included in the 2023 ESG report and,
+therefore, do not express any conclusion thereon.
+Number of corruption cases the Company received
+litigation outcomes
+Total number of customer complaints received
+Anti-Fraud
+Platform Responsibility
+Other countries and regions
+Hong Kong, Macao and Taiwan
+Number of suppliers by geographical region
+Mainland China
+Number of Suppliers
+Meituan 2023 Annual Report 197
+EAT BETTER, LIVE BETTE
+198 Meituan 2023 Annual Report
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Male
+Female
+EAT BETTER, LIVE BETTE
+Hong Kong, April 29, 2024
+Certified Public Accountants
+PricewaterhouseCoopers
+Our report has been prepared solely for the board of directors of the Company and is not to be used for any other
+purpose. We do not assume responsibility towards or accept liability to any other parties for the content of this
+report.
+RESTRICTION ON USE
+Based on the procedures we have performed and the evidence we have obtained, nothing has come to our
+attention that causes us to believe that the Company's Selected ESG Data for the year ended December 31, 2023
+is not prepared, in all material respects, in accordance with the Criteria.
+LIMITED ASSURANCE CONCLUSION
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+Meituan 2023 Annual Report 199
+The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent
+than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
+engagement is substantially lower than the assurance that would have been obtained had we performed a
+reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether
+the Company's Selected ESG Data has been prepared, in all material respects, in accordance with the Criteria.
+considered the disclosure and presentation of the Selected ESG Data.
+performed limited substantive testing on a selective basis of the Selected ESG Data to check that data had
+been appropriately measured, recorded, collated and reported; and
+understood the process for collecting and reporting the Selected ESG Data;
+made inquiries of the persons involved in the preparation of the ESG report at the Company's headquarters
+regarding the preparation process and the internal control system relating to this process;
+obtained an understanding of the ESG governance structure;
+•
+•
+Given the circumstances of the engagement, in performing the procedures listed above we:
+A limited assurance engagement involves assessing the suitability in the circumstances of the Company's use of
+the Criteria as the basis for the preparation of the Selected ESG Data, assessing the risks of material misstatement
+of the Selected ESG Data whether due to fraud or error, responding to the assessed risks as necessary in the
+circumstances, and evaluating the overall presentation of the Selected ESG Data. A limited assurance engagement
+is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment
+procedures, including an understanding of internal control, and the procedures performed in response to the
+assessed risks.
+Running water consumption (tonnes)
+.
+The procedures we performed were based on our professional judgment and included inquiries, observation
+of processes performed, inspection of documents, analytical procedures, evaluating the appropriateness of
+quantification methods and reporting policies, and agreeing or reconciling with underlying records.
+Non-management
+Running water consumption per employee (tonnes
+per employee)
+• Running water consumption (tonnes)
+Energy consumption per square metre of floor
+area (MWh per square metre)
+Energy consumption per employee (MWh per
+employee)
+•
+Total energy consumption (MWh)
+•
+HQ offices
+Health and Safety
+Energy and Resources Consumption
+Meituan 2023 Annual Report
+196
+EAT BETTER, LIVE BETTE
+Other countries and regions
+Hong Kong, Macao and Taiwan
+Mainland China
+Employee turnover rate by geographical region
+Above age 50
+Age 31 to 50
+. Total energy consumption (MWh)
+Age 30 and under
+- Regional sales offices
+.
+ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
+•
+Management
+-
+Total energy consumption (MWh)
+Average training hours of employees by management
+level
+Female
+Male
+Average training hours of employees by gender
+Management
+Percentage of employees trained by management
+level
+Female
+Percentage of employees trained by gender
+Male
+Non-management
+Employee Training
+Number of working days lost due to work injuries
+Rate of work-related fatality (%)
+Number of work-related fatalities
+Energy consumption per employee (MWh per
+employee)
+Warehouses and service stations
+• Running water consumption per employee (tonnes
+per employee)
+Running water consumption (tonnes)
+•
+Energy consumption per square metre of floor
+area (MWh per square metre)
+Equity holders of the Company
+Profit/(loss) for the year attributable to:
+Profit/(loss) for the year
+Income tax (expenses)/credits
+818,986
+(1,425,157)
+1,212,652
+Profit/(loss) before income tax
+657,908
+(1,628,825)
+35,848
+13,415,387
+(5,820,448)
+Non-controlling interests
+5102
+14,021,868
+(6,685,323)
+(164,537)
+(6,755,517)
+70,194
+13,857,331
+(6,685,323)
+13,855,828
+1,503
+(6,686,110)
+787
+13,857,331
+Earnings/(loss) per share for profit/(loss) for the year attributable to
+the equity holders of the Company
+4,165,037
+Basic earnings/(loss) per share (RMB)
+13
+(1,013,057)
+(58,616,997)
+9
+Diluted earnings/(loss) per share (RMB)
+(179,553,793)
+(158,201,969)
+97,191,161
+61,752,979
+7
+(39,745,112)
+Research and development expenses
+7
+(21,201,005)
+(20,739,865)
+General and administrative expenses
+234,227
+6,315,473
+7
+(9,771,810)
+Net provisions for impairment losses on financial and contract assets
+(1,135,405)
+(468,620)
+Fair value changes of other financial investments at fair value
+through profit or loss
+19
+Other gains, net
+Operating profit/(loss)
+Finance income
+Finance costs
+Share of profits of investments accounted for using the equity method
+(9,372,067)
+14
+(6,129,362)
+(1.09)
+27
+275,055
+1,194,270
+Share of other comprehensive income of investments
+accounted for using the equity method
+Fair value changes of other financial investments at
+fair value through other comprehensive income
+12,27
+36,880
+85,260
+20,27
+(426,513)
+(481,883)
+Other comprehensive income for the year
+367,355
+27
+555,961
+14,224,686
+7
+Total comprehensive income/(loss) for the year attributable to:
+Equity holders of the Company
+14,223,183
+(6,130,149)
+Non-controlling interests
+1,503
+787
+14,224,686
+(6,129,362)
+The notes on pages 214 to 335 are an integral part of these consolidated financial statements.
+Total comprehensive income/(loss) for the year
+2.23
+51,041
+27
+2.11
+(1.09)
+The notes on pages 214 to 335 are an integral part of these consolidated financial statements.
+Profit/(loss) for the year
+Meituan 2023 Annual Report 207
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+Other comprehensive income, net of tax:
+Items that may be reclassified to profit or loss
+Year ended December 31,
+Note
+2023
+RMB'000
+2022
+RMB'000
+142,190
+13,857,331
+Share of other comprehensive income/(loss) of investments
+accounted for using the equity method
+12,27
+5,192
+(4,516)
+Fair value changes of debt instruments at fair value through
+other comprehensive income
+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
+27
+27
+27
+334,551
+(288,211)
+(6,685,323)
+Gross profit
+We considered whether the judgements made in selecting
+the models, significant assumptions and data would give
+rise to indicators of possible management bias.
+1,133,670
+Revenue recognition
+Impairment assessments of goodwill
+Key Audit Matter
+Revenue recognition
+Refer to Notes 2.1.16, 4.2, 4.3 and 6 to the consolidated
+financial statements.
+How our audit addressed the Key Audit Matter
+Our procedures in relation to the revenue recognition
+included:
+The Group provides an e-commerce platform that
+offers diversified daily goods and services in the
+broader retail by leveraging technology, including on-
+demand delivery, in-store, hotel and travel booking and
+other services and sales. The Group mainly generates
+revenue in the way of delivery services, commission,
+online marketing services and other services and sales.
+Revenue of RMB276,745 million was recognised for
+the current year.
+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.
+We understood and tested management's process and
+controls in respect of revenue recognition and calculation
+derived from different services.
+We discussed with management and evaluated their
+judgements made in determining the method and timing
+of revenue recognition and calculation.
+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.
+Key audit matters identified in our audit are summarised as follows:
+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.
+LEAT BETTER, LIVE BETTE
+202
+Meituan 2023 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+Impairment assessments of goodwill
+Refer to Notes 2.1.9, 4.1 and 16 to the consolidated
+financial statements.
+As at December 31, 2023, the net carrying amount of
+goodwill amounted to RMB27,774 million.
+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 assist the preparation of the goodwill impairment
+testing. The recoverable amounts of CGUs were
+determined based on the value-in-use calculations
+using cash flow projections. The key assumptions
+used include annual revenue growth rate for the 5-year
+period, gross margin, terminal revenue growth rate and
+pre-tax discount rate. 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.
+How our audit addressed the Key Audit Matter
+Our procedures in relation to the impairment assessments
+of goodwill included:
+Based on the procedures performed, we found that
+the Group's revenue recognition was supported by the
+evidence obtained.
+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 impairment assessment of the goodwill to
+assess the effectiveness of the management's estimation
+process.
+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.
+Meituan 2023 Annual Report 201
+EAT BETTER, LIVE BETTE
+200 Meituan 2023 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+To the Shareholders of Meituan
+(incorporated in the Cayman Islands with limited liability)
+OPINION
+What we have audited
+The consolidated financial statements of Meituan (the "Company") and its subsidiaries (the "Group"), which are set
+out on pages 206 to 335, comprise:
+•
+the consolidated statement of financial position as at December 31, 2023;
+•
+the consolidated income statement for the year then ended;
+INDEPENDENT AUDITOR'S REPORT
+•
+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, comprising material accounting policy information 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, 2023, and of its consolidated financial performance and its consolidated cash
+flows for the year then ended in accordance with IFRS Accounting Standards 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 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
+Code.
+KEY AUDIT MATTERS
+.
+Cost of revenues
+We evaluated and tested the key controls over the
+impairment assessment of goodwill.
+We evaluated the independent valuer's objectivity,
+competence and capabilities.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+Meituan 2023 Annual Report 205
+INDEPENDENT AUDITOR'S REPORT
+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 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.
+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.
+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.
+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.
+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 22, 2024
+EAT BETTER, LIVE BETTE
+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.
+206
+CONSOLIDATED INCOME STATEMENT
+Year ended December 31,
+2023
+Note
+RMB'000
+2022
+RMB'000
+Revenues
+5,6
+276,744,954
+219,954,948
+Including: Interest revenue
+1,449,743
+Meituan 2023 Annual Report
+We tested management's assessment including periodic
+impairment indications evaluation as to whether indicators
+of impairment exist by corroborating with management
+and market information.
+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.
+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.
+We assessed the appropriateness of the valuation models
+and significant assumptions with the involvement of our
+internal valuation experts.
+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 2023 Annual Report 203
+INDEPENDENT AUDITOR'S REPORT
+Key Audit Matter
+How our audit addressed the Key Audit Matter
+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.
+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 assessed the adequacy of the disclosures related
+to goodwill impairment in the context of the applicable
+financial reporting framework.
+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.
+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.
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+scepticism throughout the audit. We also:
+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.
+EAT BETTER, LIVE BETTE
+204
+Meituan 2023 Annual Report
+INDEPENDENT AUDITOR'S REPORT
+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 IFRS Accounting Standards 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.
+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 Audit Committee is responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
+STATEMENTS
+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.
+208
+Selling and marketing expenses
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+100,000
+Borrowings
+31
+610,103
+1,548,967
+Notes payable
+32
+34,610,966
+33,607,372
+Lease liabilities
+3,598,252
+3,203,163
+Other non-current liabilities
+32,899
+39,773
+40,199,170
+39,345,378
+378,720
+Financial liabilities at fair value through profit or loss
+846,103
+968,230
+1,484,187
+(189,466,336)
+152,013,207
+128,761,610
+(56,840)
+(55,893)
+151,956,367
+128,705,717
+Meituan 2023 Annual Report 209
+Current liabilities
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+2023
+Note
+RMB'000
+2022
+RMB'000
+LIABILITIES
+Non-current liabilities
+Deferred tax liabilities
+18(b)
+As of December 31,
+Trade payables
+Payables to merchants
+Advances from transacting users
+5,053,375
+2,479,785
+2,165,978
+206,025
+100,470
+100,874,095
+76,430,097
+141,073,265
+5,598,132
+115,775,475
+The notes on pages 214 to 335 are an integral part of these consolidated financial statements.
+The consolidated financial statements on pages 206 to 335 were approved by the Board of Directors on March 22,
+2024 and were signed on its behalf:
+Wang Xing
+Director
+Mu Rongjun
+Director
+EAT BETTER, LIVE BETTE
+Meituan 2023 Annual Report
+293,029,632 244,481,192
+2,051,062
+(175,616,885)
+28
+19,321,793
+Other payables and accruals
+Borrowings
+Deferred revenues
+Lease liabilities
+Income tax liabilities
+Total liabilities
+Total equity and liabilities
+29
+17,562,145
+22,980,506
+23,798,004
+12,432,342
+8,547,635
+5,081,178
+No w w
+30
+17,942,215
+16,655,307
+17,379,302
+27
+31
+316,743,344
+19
+18,481,104
+15,073,013
+Investments accounted for using the equity method
+12
+18,289,183
+16,582,381
+Other financial investments at fair value through other
+Other financial investments at fair value through profit or loss
+comprehensive income
+2220
+2,314,536
+2,321,865
+4,011,247
+4,903,068
+109,913,453
+101,335,725
+Current assets
+Prepayments, deposits and other assets
+Inventories
+8,114,058
+21
+26
+Note
+2023
+RMB'000
+2022
+RMB'000
+ASSETS
+Non-current assets
+Property, plant and equipment
+Intangible assets
+8,527,142
+15
+22,201,259
+16
+30,642,975
+Deferred tax assets
+18(a)
+1,914,449
+1,497,106
+Long-term treasury investments
+25,977,845
+23
+30,397,947
+1,162,765
+143,145,467
+Total assets
+293,029,632
+244,481,192
+EQUITY
+Share capital
+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
+418
+415
+26
+1,304,595
+325,578,612
+183,116,179
+20,158,606
+As of December 31,
+Trade receivables
+24
+33,339,754
+2,742,999
+2,052,731
+22
+14,534,923
+13,292,494
+Short-term treasury investments
+21
+Prepayments, deposits and other assets
+111,820,679
+91,873,270
+Restricted cash
+25(b)
+25(a)
+19,373,229
+14,605,601
+Cash and cash equivalents
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2023
+1,484,187 (189,466,336) 128,761,610
+316,743,344
+Profit for the year
+(55,893) 128,705,717
+Comprehensive income
+Total
+Other comprehensive income,
+415
+interests
+RMB'000
+losses
+reserves
+RMB'000
+controlling
+holders of
+Other Accumulated
+shares award
+scheme
+RMB'000
+net of tax
+RMB'000
+Note
+premium
+capital
+Share
+Share
+Non-
+the Company
+13,855,828 13,855,828
+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 IFRS Accounting Standards.
+Share of other comprehensive income
+to equity
+2.1.3 Associates
+(c) Changes in ownership interests in subsidiaries with change of control
+2.1.2 Subsidiaries (Continued)
+2.1 Summary of material accounting policies (Continued)
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 219
+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.
+(b) 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 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.
+Net provisions for impairment losses on
+comprehensive income
+at fair value through other
+Fair value changes of debt instruments
+(426,513)
+(426,513)
+(426,513)
+20,27
+other comprehensive income
+investments at fair value through
+Fair value changes of other financial
+42,072
+42,072
+42,072
+12,27
+the equity method
+of investments accounted for using
+1,503 13,857,331
+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.
+January 1, 2025
+Equity
+attributable
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 217
+The Group is in the process of assessing potential impact of the above new amendments that
+is relevant to the Group upon initial application. According to the preliminary assessment,
+the above new amendments are not expected to have any significant impact on the Group's
+financial positions and results of operations upon adopting the above new amendments.
+The management of the Group plans to adopt these new amendments when they become
+effective.
+Amendments to IAS 21
+Lack of Exchangeability
+January 1, 2024
+January 1, 2024
+Lease Liability in a Sale and Leaseback
+Supplier Finance Arrangements
+January 1, 2024
+Non-current Liabilities with Covenants
+Amendments to IAS 1
+Amendments to IFRS 16
+Amendments to IAS 7 and
+IFRS 7
+Current or Non-current
+January 1, 2024
+Associate or Joint Venture
+Classification of Liabilities as
+Amendments to IAS 1
+To be
+determined
+or after
+beginning on
+Effective for
+financial year
+Sale or Contribution of Assets
+between an Investor and its
+Amendments to IAS 28 and
+IFRS 10
+The following new amendments have been issued, but are not effective for the Group's
+financial year beginning on January 1, 2023 and have not been early adopted by the Group.
+(b) New amendments not yet adopted by the Group
+2.1.1 Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1 Summary of material accounting policies (Continued)
+2 SUMMARY OF 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 measured at fair value
+through profit or loss (Note 2.1.11). All investments in the form of ordinary shares with significant
+influence are accounted for using the equity method of accounting.
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.2 Subsidiaries
+Shares
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Meituan 2023 Annual Report
+210
+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.
+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
+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.
+Business combinations (Continued)
+(a)
+2.1.2 Subsidiaries (Continued)
+2.1 Summary of material accounting policies (Continued)
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+held for
+Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+fair value of any pre-existing equity interests in the subsidiary.
+fair value of any asset or liability resulting from a contingent consideration arrangement,
+and
+equity interests issued by the Group
+•
+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:
+(a) Business combinations
+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.
+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.
+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.
+218
+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.
+controlling
+EAT BETTER, LIVE BETTE
+411 311,221,237
+As of January 1, 2022
+RMB'000
+RMB'000
+RMB'000
+Total
+interests
+the Company
+losses
+RMB'000
+reserves
+RMB'000
+RMB'000 RMB'000
+RMB'000
+Note
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+holders of
+Accumulated
+Other
+Share shares award
+scheme
+premium
+capital
+Share
+Non-
+to equity
+Shares held for
+attributable
+Equity
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Meituan 2023 Annual Report 211
+(56,840) 151,956,367
+(2,866,675) (182,741,531)
+2,051,062 (175,616,885) 152,013,207
+125,613,442
+Comprehensive loss
+27---
+2
+27--- (288,211)
+other comprehensive income
+Currency translation differences
+debt instruments at fair value through
+Net provisions for impairment losses on
+(288,211)
+(288,211)
+comprehensive income
+at fair value through other
+Fair value changes of debt instruments
+(481,883)
+(481,883)
+(481,883)
+20,27
+other comprehensive income
+Fair value changes of other financial
+investments at fair value through
+80,744
+80,744
+80,744
+12,27
+of investments accounted for using
+the equity method
+787 (6,685,323)
+(6,686,110)
+(6,686,110)
+Share of other comprehensive income
+net of tax
+Other comprehensive income,
+Loss for the year
+(56,680) 125,556,762
+418 325,578,612
+(2,450) 8,703,814
+(6,377) 8,706,264
+Equity-settled share-based payments
+capacity as owners
+Transaction with owners in their
+322,150
+322,150
+322,150
+12,27
+assets of associates
+Share of other changes in net
+14,224,686
+1,503
+367,355 13,855,828 14,223,183
+275,055
+275,055
+275,055
+27
+142,190
+142,190
+142,190
+27
+Total comprehensive income
+22
+other comprehensive income
+Currency translation differences
+334,551
+334,551
+334,551
+27
+22
+debt instruments at fair value through
+27,33
+8,394,315
+8,394,315
+8,394,315
+(122,630)
+8,835,268
+3
+As of December 31, 2023
+(6,377)
+6,377
+27
+216,667
+216,667
+216,667
+27
+22
+(2,450)
+(2,450)
+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.
+Total transaction with owners in their
+capacity as owners
+Tax benefit from share-based payments
+subsidiary
+Distributions from a non wholly-owned
+95,282
+95,282
+(8,739,989)
+2
+8,835,268
+1
+26.27
+vesting
+2
+26
+Shares held for shares award scheme
+Exercise of share options and RSUs
+Appropriations to general reserves
+Meituan 2023 Annual Report
+For the year ended December 31, 2023
+EAT BETTER, LIVE BETTE
+1,438,076
+2,465,591
+Net cash flows used in investing activities
+Loans repayments from investees and others
+Collection of investments prepayments
+Loans payments to investees and others
+Dividends received
+financial instruments
+Gains received from treasury investments and other
+72,748
+(3,240,760)
+(3,588,016)
+1,630
+90,052
+(40,000)
+(60,000)
+Purchases of investments accounted for using the equity method
+Proceeds from disposals of investments in associates and others
+Purchases and prepayments of other financial investments at fair value
+Net cash inflow arising from disposals or deemed
+disposals of subsidiaries
+179,619,759
+(247,258)
+40,521,850
+11,411,448
+(6,879,551)
+(5,731,304)
+36
+34,101
+301,073
+365,114
+(89,237)
+Purchases of treasury investments and others
+(132,980,842)
+(187,401,376)
+Sales or maturities of treasury investments and others
+114,679,410
+407,603
+11,658,706
+69,782
+(736,914)
+170,341
+(2,619,636)
+(2,969,089)
+193,492
+(1,162,162)
+(578,058)
+(32,704,167)
+(42,146,859)
+Repayments of Assumed Liabilities
+Dividends paid to non-controlling interests
+Increase in other financial liabilities
+Payments of lease liabilities
+Proceeds from exercise of share options
+Repayments of borrowings and notes payable
+Finance costs paid
+25,844,975
+42,809,865
+Proceeds from borrowings and notes payable
+1,111,724
+874,424
+42,000
+(24,663,844)
+(14,713,569)
+Meituan 2023 Annual Report
+(202,500)
+CONSOLIDATED STATEMENT OF CASH FLOWS
+2023
+Note
+RMB'000
+2022
+RMB'000
+Cash flows from financing activities
+37(c)
+216
+40,744,699
+(222,849)
+37(a)
+Acquisitions of businesses, net of cash acquired
+Tax benefit from share-based payments
+265,981
+265,981
+(5,256,130)
+3
+1 5,522,107
+26,27
+vesting
+Exercise of share options and RSUs
+8,742,962
+8,742,962
+8,742,962
+251,916
+251,916
+251,916
+Shares held for shares award scheme 26
+27,33
+51,041
+1,194,270
+51,041
+1,194,270
+555,961 (6,686,110)
+(6,130,149)
+787
+Appropriations to general reserves
+(6,129,362)
+Share of other changes in net
+assets of associates
+12,27
+Transaction with owners in their
+capacity as owners
+Equity-settled share-based payments
+Total comprehensive loss
+Total transaction with owners in their
+capacity as owners
+22
+27
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Year ended December 31,
+Note
+2023
+RMB'000
+2022
+RMB'000
+Cash flows from operating activities
+Meituan 2023 Annual Report
+Cash generated from operations
+Net cash flows generated from operating activities
+Cash flows from investing activities
+Purchases and prepayments of property, plant and equipment
+and intangible assets
+Proceeds from disposals of property, plant and equipment and
+intangible assets
+Income tax paid
+278,720
+212
+1,484,187 (189,466,336) 128,761,610
+17,458
+17,458
+17,458
+27
+38,695
+(38,695)
+(55,893) 128,705,717
+As of December 31, 2022
+3,542,985
+(38,695)
+9,026,401
+9,026,401
+EAT BETTER, LIVE BETTE
+415 316,743,344
+4 5,522,107
+480,448
+Year ended December 31,
+213
+2
+The consolidated financial statements are presented in Renminbi ("RMB”), unless otherwise stated.
+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.
+Meituan (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 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.
+GENERAL INFORMATION
+1
+27
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+214
+EAT BETTER, LIVE BETTE
+20,158,606
+SUMMARY OF ACCOUNTING POLICIES
+33,339,754
+Cash and cash equivalents at the end of the year
+937,500
+104,445
+32,513,428
+20,158,606
+(13,292,322)
+13,076,703
+(9,990,201)
+(2,781,303)
+Net increase/(decrease) in cash and cash equivalents
+Cash and cash equivalents at the beginning of the year
+Exchange gains on cash and cash equivalents
+Net cash flows used in financing activities
+(366,924)
+25(a)
+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.
+2.1 Summary of material accounting policies
+2.1.1 Basis of preparation and changes in accounting policies and disclosures
+The adoption of the other new standard and amendments did not have any significant
+financial impact on these consolidated financial statements.
+Details of the effect of the amendments on the note of the consolidated financial
+statements were disclosed in Note 18.
+Note (i): The Group applied Amendments to IAS 12 from the effective date on January 1,
+2023. In accordance with the amendments, the Group recognised deferred tax
+related to assets and liabilities arising from a single transaction of leases that gave
+rise to equal taxable and deductible temporary differences on the initial recognition
+of leases that occurred on or after the beginning of the earliest comparative
+period presented. As a result, with the beginning of the earliest comparative
+period presented being January 1, 2022, an adjustment of RMB902 million was
+recognised to the gross amounts of deferred tax assets and deferred tax liabilities
+simultaneously, and the resulting deferred tax assets and deferred tax liabilities
+were set off and presented on a net basis on the consolidated statement of financial
+position. Applying the amendments mentioned above, there was nil impact on the
+opening balance of accumulated losses for the reporting periods presented.
+Liabilities arising from a Single Transaction
+International Tax Reform-Pillar Two
+Model Rules
+Amendments to IAS 12 (Note 13(b))
+Deferred Tax related to Assets and
+Amendments to IAS 12 (Note (i))
+Definition of Accounting Estimates
+Disclosure of Accounting Policies
+Insurance Contracts
+Amendments to IAS 8
+Statement 2
+December 2021 Amendments to IFRS 17)
+Amendments to IAS 1 and IFRS Practice
+IFRS 17 (including the June 2020 and
+The Group has applied the following new standard and amendments for the first time
+commencing January 1, 2023:
+New standard and amendments adopted by the Group
+(a)
+2.1.1 Basis of preparation and changes in accounting policies and disclosures (Continued)
+2.1 Summary of material accounting policies (Continued)
+For the year ended December 31, 2023
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+215
+Meituan 2023 Annual Report
+The preparation of the consolidated financial statements in conformity with IFRS Accounting
+Standards 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.
+The consolidated financial statements of the Group have been prepared in accordance with all
+applicable International Financial Reporting Standards as issued by the IASB ("IFRS Accounting
+Standards") 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.
+36
+(2,450)
+51,041
+1,194,270
+220
+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.
+Meituan 2023 Annual Report 223
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.7 Foreign currency exchange and translation (Continued)
+(c) Group companies (Continued)
+The Group has monetary items that are receivables from or payables to foreign operations.
+The items for which settlements are neither planned nor likely to occur in the foreseeable
+future are, in substance, part of the Group's net investment in foreign operations. Such
+monetary items include long-term receivables or loans. They do not include trade receivables
+or trade payables. 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 disposed, the related
+foreign exchange gains or losses are reclassified into the consolidated income statement,
+as part of "Other gains/(losses), net". The accumulative translation adjustments related to
+subsidiaries with same functional currency as the Company is presented as part of items of
+other comprehensive income that will not be reclassified to profit or loss.
+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.
+2.1.8 Property, plant and equipment
+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.
+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.
+EAT BETTER, LIVE BETTE
+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
+•
+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:
+(c) Group companies
+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.
+the sum of the consideration received from the transfer and any cumulative gains or
+losses that has been recognised directly in equity.
+the carrying amount of the financial asset transferred; and
+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 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.
+(c) Derecognition
+2.1.11 Financial assets (Continued)
+224
+2.1 Summary of material accounting policies (Continued)
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.7 Foreign currency exchange and translation (Continued)
+(b) Transactions and balances
+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 gains/(losses), net".
+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.
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2.1.9 Intangible assets
+(a) 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
+disposals of a subsidiary include the carrying amount of goodwill relating to the subsidiary
+sold.
+(b)
+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 below the operating segments.
+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.
+2.1 Summary of material accounting policies (Continued)
+•
+Software and others
+2-25 years
+1-10 years
+EAT BETTER, LIVE BETTE
+226
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Other intangible assets arising from business combinations
+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.
+For the year ended December 31, 2023
+2
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.8 Property, plant and equipment (Continued)
+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
+•
+•
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+Bikes and electric mopeds
+3-5 years
+2-3 years
+2-5 years
+Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful
+lives.
+The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
+each reporting period.
+Management reviewed the useful lives of equipments and changed the estimated useful lives of
+certain equipments in "Computer equipment" category from 3 years to 5 years to better reflect the
+pattern in which future economic benefits associated with the assets would flow to the Group. This
+change in accounting estimate was effective beginning January 1, 2023. Based on the carrying
+amount as of December 31, 2022, the net effect of this change was a decrease in depreciation
+expenses of RMB1,005 million for the year ended December 31, 2023.
+Gains or losses on disposals are determined by comparing proceeds with carrying amount, and
+are recognised in "Other gains/(losses), net" in the consolidated income statement.
+Meituan 2023 Annual Report 225
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+• Others
+EAT BETTER, LIVE BETTE
+229
+Meituan 2023 Annual Report
+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.
+2.1.6 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. Two or more operating segments may be aggregated into a single operating segment if
+aggregation is consistent with the core principle of IFRS 8. The segments have similar economic
+characteristics, and the segments are similar in the nature of the products and services, the nature
+of the production processes, the type or class of customer for their products and services, the
+methods used to distribute their products or provide their services; and if applicable, the nature of
+the regulatory environment.
+2.1.7 Foreign currency exchange and translation
+(a) 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
+People's Republic of China ("PRC") and these subsidiaries considered RMB as their
+functional currency. The Group's presentation currency is RMB.
+EAT BETTER, LIVE BETTE
+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.
+222
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+(c) Research and development
+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 for the
+years ended December 31, 2023 and 2022.
+2.1.10 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 are depreciated over the remaining period of the lease on a straight-line basis.
+The land use rights mainly represented prepaid lease payments in respect of land in the Mainland
+of China with lease periods of 40 to 50 years.
+Meituan 2023 Annual Report 227
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2.1.5 Separate financial statements
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.3 Associates (Continued)
+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.
+2.1 Summary of material accounting policies (Continued)
+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.
+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.
+2.1.4 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, rather than the legal structure of the joint
+arrangement. The Group has only joint ventures. Interests in joint ventures are accounted for using
+the equity method of accounting as mentioned in Note 2.1.3.
+Meituan 2023 Annual Report 221
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2
+SUMMARY OF 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 gains/(losses), net" in the
+consolidated income statement.
+2.1.9 Intangible assets (Continued)
+2
+2.1 Summary of material accounting policies (Continued)
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.11 Financial assets (Continued)
+(a) Classification (Continued)
+228
+Financial assets measured at fair value through other comprehensive income
+A debt instrument which is measured at FVOCI if both of the following conditions are met:
+(i) the asset is managed within a business model whose objective is achieved by collecting
+contractual cash flows and selling financial assets; (ii) the contractual terms of the financial
+asset give rise on specified dates to cash flows that are solely payments of principal and
+interest on the principal amount outstanding.
+The Group may make an irrevocable election at initial recognition to designate an equity
+instrument as at FVOCI if it is not held for trading purpose.
+Financial assets measured at fair value through profit or loss
+Financial assets measured at FVPL include the debt instruments that do not meet the
+criteria for amortised cost or FVOCI, and the equity investments which are not designated as
+measured at FVOCI.
+The Group reclassifies debt instruments when and only when its business model for
+managing financial assets changes.
+(b) Recognition
+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.
+Financial assets measured at FVOCI include debt instruments measured at FVOCI and equity
+instruments designated as at FVOCI.
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+EAT BETTER, LIVE BETTE
+Financial assets measured at amortised cost
+2.1.11 Financial assets
+For the year ended December 31, 2023
+(a) Classification
+The Group classifies its financial assets in the following measurement categories:
+•
+financial assets measured at amortised cost;
+financial assets measured at fair value through other comprehensive income ("FVOCI");
+A debt instrument is measured at amortised cost if both of the following conditions are met
+and is not designated as at FVPL: (i) the asset is managed within a business model whose
+objective is to hold assets in order to collect contractual cash flows; (ii) the contractual terms
+of the financial asset give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+•
+financial assets measured at fair value through profit or loss ("FVPL”).
+The classification is based on the entity's business model for managing the financial assets
+and the contractual cash flow characteristics of the financial asset.
+Business model
+The Group's business model reflects how the Group manages its financial assets in order to
+generate cash flows. The business model determines whether the cash flow will result from
+collecting contractual cash flows, selling of financial assets or both.
+The contractual cash flow characteristics
+The characteristics of the contractual cash flow of financial assets refer to the cash
+flow attributes agreed in the contract of financial instruments that reflect the economic
+characteristics of the relevant financial assets.
+or
+2
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+(c)
+Meituan 2023 Annual Report 235
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.15 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.
+The total expenses are recognised over the vesting period, over which all of the specified vesting
+conditions are to be satisfied.
+(a)
+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:
+• including the impact of any market performance conditions
+excluding the impact of any service and non-market performance conditions, and
+•
+including the impact of any non-vesting conditions
+At the end of each period, the Group revises its estimates of the number of share options
+that are expected to become vested based on the non-market performance 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.
+EAT BETTER, LIVE BETTE
+236
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+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.
+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.
+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 (Continued)
+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.
+Meituan 2023 Annual Report
+233
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+2.1 Summary of material accounting policies (Continued)
+2.1.14 Current and deferred income tax
+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.
+(a) Current income tax
+(b)
+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.
+Deferred 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 and does not give rise to equal taxable and deductible temporary differences. 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.
+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.
+EAT BETTER, LIVE BETTE
+234
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.14 Current and deferred income tax (Continued)
+(b)
+2.1.15 Share-based payments (Continued)
+(b) 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.
+(a)
+The accounting policy for the Group's principal revenue types (Continued)
+(ii)
+Commission
+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.
+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".
+(iii) Online marketing services
+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".
+Meituan 2023 Annual Report 239
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.16 Revenue recognition (Continued)
+(a)
+The accounting policy for the Group's principal revenue types (Continued)
+(iv) Other services and sales
+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. Other services
+and sales revenue primarily comprises (i) sales of goods, mainly generated from
+Xiaoxiang Supermarket (formerly "Meituan Grocery") and B2B food distribution
+services, (ii) various services rendered by various businesses such as Meituan Select,
+bike sharing and e-moped sharing, power banks and micro-credit.
+Revenues generated from micro-credit primarily consist of revenues generated
+from loan facilitation services and post-origination services, and interest revenue.
+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 gross carrying amount of loan
+receivables.
+EAT BETTER, LIVE BETTE
+2.1.16 Revenue recognition (Continued)
+Other borrowing costs are expensed in the period in which they are incurred.
+2.1 Summary of material accounting policies (Continued)
+For the year ended December 31, 2023
+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.
+2.1.16 Revenue recognition
+Revenues are principally comprised of 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.
+Meituan 2023 Annual Report
+237
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.16 Revenue recognition (Continued)
+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.
+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.
+(a) The accounting policy for the Group's principal revenue types
+(i)
+Delivery services
+The Group provides on-demand delivery services to certain merchants and transacting
+users (collectively as the "Delivery services Customers") as a principal. Delivery
+services revenue is recognised at the time when the on-demand delivery services
+are provided and is determined based on the fees charged to the 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 "Delivery related costs" in cost of revenues.
+EAT BETTER, LIVE BETTE
+238
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+Investment income earned on the temporary investment of specific borrowings, pending their
+expenditure on qualifying assets, is deducted from the borrowing costs eligible for capitalisation.
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 231
+FVPL: Gains or losses on debt instruments that is subsequently measured at
+FVPL are recognised in profit or loss and presented within "Other gains/(losses),
+net" or "Fair value changes of other financial investments at fair value through
+profit or loss".
+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 gains/(losses), 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 gains/
+(losses), net" and impairment losses are presented as a separate line item in the
+consolidated income statement.
+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
+gains/(losses), net" together with foreign exchange gains or losses. Impairment
+losses are presented as a separate line item in the consolidated income
+statement.
+Debt instruments
+(i)
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+For assets measured at fair value, gains or losses will either be recorded in profit or loss or
+other comprehensive income. Financial assets with embedded derivatives are considered in
+their entirety when determining whether their cash flows are solely payment of principal and
+interest.
+(d) Measurement
+2.1.11 Financial assets (Continued)
+2.1 Summary of material accounting policies (Continued)
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+230
+General and specific borrowing costs that are directly attributable to the acquisition, construction
+or production of a qualifying asset are capitalised during the period of time that is required to
+complete and prepare the asset for its intended use or sale. Qualifying assets are assets that
+necessarily take a substantial period of time to get ready for their intended use or sale.
+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 FVPL. Transaction costs of financial assets at FVPL are expensed in
+profit or loss.
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+2.1.11 Financial assets (Continued)
+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.
+2.1.13 Borrowings, notes payable and borrowing costs
+2.1 Summary of material accounting policies (Continued)
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2.1 Summary of material accounting policies (Continued)
+Meituan 2023 Annual Report
+232
+EAT BETTER, LIVE BETTE
+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. Inventories recognised in profit or loss during
+the year ended December 31, 2023 amounted to RMB30,422 million.
+2.1.12 Inventories
+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").
+(e) 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.
+Provisions or reversals of impairment losses on equity investments at FVOCI are not
+reported separately from other changes in fair value.
+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.
+Equity instruments
+(ii)
+(d) Measurement (Continued)
+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.
+(b)
+21.
+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
+Icash 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
+(c)
+(a) Foreign exchange risk (Continued)
+(a) Foreign exchange risk
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 249
+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.
+3.1.1 Market risk
+3.1.1 Market risk (Continued)
+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.
+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.
+Price risk
+2.2 Summary of other accounting policies (Continued)
+3.1 Financial risk factors
+2.2.4 Trade and other receivables
+For the year ended December 31, 2023
+Trade receivables are amounts due from customers for goods and services provided in the
+ordinary course of business.
+Trade and other receivables are generally due for settlement within 1 year and therefore are all
+classified as current.
+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.
+2.2.5 Cash and cash equivalents and restricted cash
+As of December 31, 2023, the Group's notes payable were carried at fixed rates, and the
+Group's borrowings were partially carried at floating rates.
+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.
+2.2.6 Share capital
+EAT BETTER, LIVE BETTE
+246
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+EAT BETTER, LIVE BETTE
+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).
+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 total cash and cash
+equivalents in the consolidated statements of cash flows.
+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)
+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
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 247
+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.
+(a) Employee leave entitlement
+2.2.9 Employee benefits
+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.
+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
+(b)
+(a)
+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:
+2.2.8 Financial liabilities at fair value through profit or loss
+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.
+2.2.7 Trade and other payables
+2.2 Summary of other accounting policies (Continued)
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.2 Summary of other accounting policies (Continued)
+2.2.9 Employee benefits (Continued)
+(b) Pension obligations and other social welfare benefits
+2.2.13 Government subsidies
+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.
+2.2.12 Dividends distribution
+Dividend income is recognised when it is received or when the right to collection is unconditionally
+established.
+2.2.11 Dividend income
+2.2 Summary of other accounting policies (Continued)
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+For the year ended December 31, 2023
+3 FINANCIAL RISK MANAGEMENT
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+248
+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 obligation. The increase in the provision due to
+the passage of time is recognised as interest expenses.
+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.
+Provisions 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.
+2.2.10 Provisions
+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.
+Bonus plan
+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.
+Meituan 2023 Annual Report
+2
+EAT BETTER, LIVE BETTE
+Meituan 2023 Annual Report 245
+(d) 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.
+2.1.17 Interest income
+Interest income is calculated by applying the effective interest rate to the gross carrying amount of
+financial assets 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 assets (after the deduction of the loss allowance).
+Interest income earned from financial assets that are held for cash management purposes is
+presented as finance income. Interest revenue earns from loan receivables that are held for micro-
+credit business (Note 2.1.16(a)(iv)). Any other gains from treasury investments is included in "Other
+gains/(losses), net”.
+EAT BETTER, LIVE BETTE
+242
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+The Group leases land use rights (Note 2.1.10), 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 other than land use rights may not be
+used as security for borrowing purposes.
+Leases other than land use rights are recognised as a right-of-use asset and a corresponding
+liability at the date at which the leased asset is available for use by the Group.
+Lease liabilities include the net present value of the following lease payments:
+•
+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 a 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).
+(c) Incentives to transacting users
+2.1.16 Revenue recognition (Continued)
+2.1 Summary of material accounting policies (Continued)
+240
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.16 Revenue recognition (Continued)
+(b)
+fixed payments (including in-substance fixed payments), and
+Contract Balances
+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 generated from
+loan facilitation 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.
+Meituan 2023 Annual Report 241
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+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.
+payments of penalties for terminating the lease, if the lease term reflects the Group exercising
+that option.
+2.1.18 Leases other than land use rights
+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.
+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 lease payments to be made under reasonably certain extension options are also included in
+the measurement of the lease liabilities.
+244
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2 SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.2 Summary of other accounting policies
+2.2.1 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".
+2.2.2 Impairment of non-financial assets
+Other than goodwill mentioned in Note 2.1.9(a), 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.
+2.2.3 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 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.
+restoration costs.
+any initial direct costs; and
+EAT BETTER, LIVE BETTE
+any lease payments made at or before the commencement date;
+To determine the incremental borrowing rate, the Group:
+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;
+.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+2
+SUMMARY OF ACCOUNTING POLICIES (Continued)
+2.1 Summary of material accounting policies (Continued)
+2.1.18 Leases other than land use rights (Continued)
+Meituan 2023 Annual Report 243
+•
+makes adjustments specific to the lease, e.g. term, country, currency and security.
+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.
+Right-of-use assets are measured at cost comprising the following:
+•
+the amount of the initial measurement of lease liabilities;
+•
+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
+(b)
+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.
+Cash and cash equivalents, restricted cash and treasury investments
+(a)
+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 for)/reversals of impairment losses on
+financial and contract assets" in the consolidated income statement.
+3.1.2 Credit risk
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+250
+Trade receivables and contract assets
+3.1 Financial risk factors (Continued)
+ECL model for loan receivables:
+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 Group applies the IFRS 9 simplified approach to measure ECL which uses lifetime
+expected loss allowance for all trade receivables and contract assets. 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 per capita disposable income of
+urban residents 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.
+Write-offs
+(306,796)
+(306,796)
+Recovered after written off
+45,694
+45,694
+Gross carrying amount as of
+181,419
+December 31, 2023
+49,109
+17,698
+8,439,374
+EAT BETTER, LIVE BETTE
+256
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+8,372,567
+(64,350)
+(74,511)
+320,280
+22,729
+8,519,057
+Transfers:
+Transfer from Stage 1 to Stage 2
+(136,982)
+136,982
+Transfer from Stage 1 to Stage 3
+(258,938)
+258,938
+Transfer from Stage 2 to Stage 1
+72
+(72)
+-
+Transfer from Stage 2 to Stage 3
+(61,483)
+61,483
+Net increases/(decreases)
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(243,135)
+243,135
+Transfer from Stage 2 to Stage 1
+185
+(185)
+Transfer from Stage 2 to Stage 3
+(90,177)
+90,177
+Net increases/(decreases)
+2,914,975
+(13,709)
+(60,061) 2,841,205
+Write-offs
+Recovered after written off
+(330,149)
+42,238
+(330,149)
+42,238
+Transfer from Stage 1 to Stage 3
+48,193
+73,821
+Transfer from Stage 1 to Stage 2
+(c) Loan receivables (Continued)
+(ii)
+Loss allowance (Continued)
+Stage 1
+12-month ECL
+RMB'000
+Stage 2
+Lifetime ECL
+RMB'000
+Stage 3
+Lifetime ECL
+RMB'000
+Total
+RMB'000
+Gross carrying amount as of
+January 1, 2022
+5,849,931
+78,443
+37,389
+5,965,763
+Transfers:
+(73,821)
+Gross carrying amount as of
+8,448,135
+Gross carrying amount as of
+Definition of default and credit-impaired assets
+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.
+Meituan 2023 Annual Report 253
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+The Group considers loan receivables to have experienced an SICR if the
+borrower is past due more than 1 day on its contractual payments.
+3.1.2 Credit risk (Continued)
+(i)
+ECL model for loan receivables: (Continued)
+Measuring ECL - Explanation of inputs, assumptions and estimation techniques
+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.
+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.
+Forward-looking information incorporated in the ECL models
+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.
+(c) Loan receivables (Continued)
+Significant increase in credit risk (SICR)
+The key judgements and assumptions adopted by the Group in addressing the
+requirements of the standard are discussed below:
+amount.
+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.
+LEAT BETTER, LIVE BETTE
+252
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c)
+Loan receivables (Continued)
+(i)
+ECL model for loan receivables: (Continued)
+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.
+•
+If the loan receivables are credit-impaired (as defined below), then they are moved
+to "Stage 3". The ECL is measured on lifetime basis.
+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
+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.
+Grouping of instruments for losses measured on a collective basis
+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.
+LEAST BETTER, LIVE BETTE
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c)
+Loan receivables (Continued)
+(ii)
+Loss allowance (Continued)
+For the year ended December 31, 2023
+The gross carrying amount of the loan receivables explains their significance to the
+changes in the loss allowance as discussed above:
+Stage 1
+12-month ECL
+RMB'000
+Stage 2
+Lifetime ECL
+RMB'000
+Stage 3
+Lifetime ECL
+RMB'000
+Total
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+January 1, 2023
+255
+Changes in the inputs, assumptions and estimation techniques of ECL calculation
+during the reporting period.
+254
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c) Loan receivables (Continued)
+(ii)
+Loss allowance
+The loss allowance recognised in the reporting period is impacted by a variety of
+factors, as described below:
+•
+•
+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;
+Increases of loss allowance for new financial instruments recognised, as well as
+decreases due to loan receivables derecognition in the reporting period;
+Loan receivables derecognised and write-offs of loss allowance related to assets
+that were written off during the reporting period, and the subsequent recovery;
+and
+Meituan 2023 Annual Report
+December 31, 2022
+8,448,135
+48,193
+Transfer from Stage 2 to Stage 1
+135
+130
+Transfer from Stage 2 to Stage 3
+65,697
+(77,357)
+(11,660)
+(202,400)
+Net (increases)/decreases
+21,125
+43,726
+(9,128)
+Write-offs
+330,149
+330,149
+Recovered after written off
+(73,979)
+(208,570)
+6,170
+Transfer from Stage 1 to Stage 3
+Stage 3
+Lifetime ECL
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Loss allowance as of
+January 1, 2022
+(145,328)
+(91,439)
+(46,806)
+(283,573)
+Transfers:
+Transfer from Stage 1 to Stage 2
+1,873
+(53,781)
+(51,908)
+(42,238)
+(42,238)
+Changes in ECL measurement
+(7,664)
+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.
+EAT BETTER, LIVE BETTE
+(i)
+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.
+Loan receivables
+(c)
+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 after exhausting all practical
+recovery efforts. Subsequent recoveries of amounts previously written off are credited
+against the same line item.
+Trade receivables and contract assets (Continued)
+(b)
+3.1.2 Credit risk (Continued)
+3.1 Financial risk factors (Continued)
+FINANCIAL RISK MANAGEMENT (Continued)
+3
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 251
+(iv) Modification
+Stage 2
+Lifetime ECL
+The Group may write off loan receivables that are still subject to enforcement activity.
+(iii) Write-off policy
+4,363
+(35,526)
+(38,827)
+Loss allowance as of
+December 31, 2022
+(218,933)
+(53,900)
+(36,622)
+(309,455)
+Meituan 2023 Annual Report 259
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2023
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c) Loan receivables (Continued)
+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.
+12-month ECL
+Stage 1
+Loss allowance (Continued)
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Loss allowance as of
+January 1, 2023
+(218,933)
+(53,900)
+(36,622)
+(309,455)
+Transfers:
+Transfer from Stage 1 to Stage 2
+4,026
+(98,022)
+(93,996)
+Transfer from Stage 1 to Stage 3
+7,610
+Total
+(210,451)
+Stage 3
+Lifetime ECL
+12-month ECL
+22,729
+8,519,057
+For the years ended December 31, 2023 and 2022, the net decreases of stage 2 and
+stage 3 include fair value changes of loan receivables measured at FVOCI (Note 22(a)).
+Meituan 2023 Annual Report 257
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c)
+Loan receivables (Continued)
+(ii)
+Loss allowance (Continued)
+For the year ended December 31, 2023
+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
+Lifetime ECL
+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.
+(202,841)
+(2)
+(110,498)
+Loss allowance as of
+December 31, 2023
+(275,143)
+(103,043)
+(54,066)
+(432,252)
+EAT BETTER, LIVE BETTE
+258
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.2 Credit risk (Continued)
+(c) Loan receivables (Continued)
+(ii)
+(50,083)
+Transfer from Stage 2 to Stage 1
+(1,983)
+Changes in ECL measurement
+51
+49
+Transfer from Stage 2 to Stage 3
+43,997
+(49,970)
+(5,973)
+Net decreases/(increases)
+(9,412)
+6,814
+31,958
+29,360
+Write-offs
+306,796
+306,796
+Recovered after written off
+(45,694)
+(45,694)
+(58,432)
+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.
+income
+Transfers, net
+Financial liabilities at fair value
+through profit or loss
+_- - 378,720 378,720
+Meituan 2023 Annual Report 263
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.1 Fair value hierarchy (Continued)
+As of December 31, 2022
+Financial assets
+Treasury investments at fair value
+through profit or loss (Note 21)
+Treasury investments at fair value
+through other comprehensive
+income (Note 21)
+Loan receivables at fair value
+through other comprehensive
+income (Note 22(a))
+Other financial investments at fair
+value through profit or loss
+(Note 19)
+Level 1
+RMB'000
+Level 3
+RMB'000
+Total
+RMB'000
+77,845,116 77,845,116
+4,819,558
+6,307,707 11,127,265
+Financial liabilities
+7,963,958 131,516,094 140,381,588
+901,536
+2,314,536
+The following tables present the Group's assets and liabilities that are measured at fair value as of
+December 31, 2023 and 2022.
+Level 1
+RMB'000
+Level 2
+RMB'000
+Level 3
+RMB'000
+Total
+RMB'000
+As of December 31, 2023
+Financial assets
+Treasury investments at fair value
+through profit or loss (Note 21)
+Treasury investments at fair value
+through other comprehensive
+income (Note 21)
+Loan receivables at fair value
+through other comprehensive
+income (Note 22(a))
+--
+Other financial investments at fair
+Other financial investments
+91,193,316
+91,193,316
+7,963,958
+12,630,261 20,594,219
+-- 7,798,413 7,798,413
+-- 18,481,104 18,481,104
+at fair value through other
+comprehensive income (Note 20)
+901,536*
+1,413,000
+value through profit or loss
+(Note 19)
+7,124,305
+7,124,305
+15,073,013 15,073,013
+The discounted cash flows model and unobservable inputs mainly including assumptions of
+expected future cash flows and discount rate;
+The latest round financing, i.e. the prior transaction price or the third-party pricing
+information; and
+•
+A combination of observable and unobservable inputs, including risk-free rate, expected
+volatility, discount rate for lack of marketability, market multiples, etc.
+There was no change to valuation techniques in use during the year ended December 31, 2023.
+3.3.3 Fair value measurements using significant unobservable inputs (level 3)
+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, 2023 and 2022. 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.
+Meituan 2023 Annual Report 265
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+•
+Treasury
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+Treasury
+investments
+Loan
+receivables
+investments
+EAT BETTER, LIVE BETTE
+Details of impairment charge, key assumptions and impact of possible changes in key assumptions are
+disclosed in Note 16.
+The Group tests whether goodwill has suffered any impairment, in accordance with the accounting
+policy stated in Note 2.1.9(a). 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 of disposal 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 gross 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.
+4.1 Recoverability of goodwill
+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:
+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 Fair value estimation (Continued)
+3.3.1 Fair value hierarchy (Continued)
+The use of quoted market prices or dealer quotes for similar instruments;
+Specific valuation techniques used to measure financial instruments of level 2 and level 3 include:
+Other financial investments at fair
+value through other
+comprehensive income (Note 20)
+908,865*
+1,413,000
+2,321,865
+908,865
+4,819,558 107,763,141 113,491,564
+Financial liabilities
+Financial liabilities at fair value
+through profit or loss
+•
+This presents investments in listed entities with observable quoted price.
+100,000
+EAT BETTER, LIVE BETTE
+264
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.2 Valuation techniques used to determine fair values
+The fair value of financial instruments that are not traded in an active market is determined by
+using valuation techniques. These valuation techniques maximise the use of observable market
+data where it is available and rely as little as possible on entity specific estimates. If all significant
+inputs required for evaluating the fair value of a financial instrument are observable, the instrument
+is included in level 2.
+If one or more of the significant inputs are not based on observable market data, the instrument is
+included in level 3.
+100,000
+3.3 Fair value estimation (Continued)
+3 FINANCIAL RISK MANAGEMENT (Continued)
+For the year ended December 31, 2023
+23,798,004
+8,547,635
+Other payables and accruals
+(excluding non-financial liabilities items)
+9,994,009
+9,994,009
+Borrowings
+19,425,020
+Notes payable
+Lease liabilities
+142,804
+382,908 16,241,706 11,570,122
+2,674,679 1,616,926 2,137,652
+22,980,506
+21,032
+9,393,431
+37,588,167
+57,082 6,486,339
+87,802,761
+17,879,664
+13,850,578 10,058,000 129,591,003
+As of December 31, 2022
+Less than
+Between 1
+1 year
+and 2 years
+607,487 20,196,343
+Between 2
+and 5 years
+8,547,635
+22,980,506
+(393,304)
+260
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.1 Financial risk factors (Continued)
+3.1.3 Liquidity risk (Continued)
+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.
+Less than
+23,798,004
+1 year
+Between 1
+and 2 years
+RMB'000
+Between 2
+and 5 years
+Over
+5 years
+RMB'000
+RMB'000
+Total
+RMB'000
+As of December 31, 2023
+Trade payables
+Payables to merchants
+Advances from transacting users
+RMB'000
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+Over
+RMB'000
+3
+FINANCIAL RISK MANAGEMENT (Continued)
+3.2 Capital management
+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.
+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.
+3.3
+Fair value estimation
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3.3.1 Fair value hierarchy
+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)
+EAT BETTER, LIVE BETTE
+262
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+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.
+5 years
+Meituan 2023 Annual Report 261
+59,477 5,881,908
+RMB'000
+RMB'000
+RMB'000
+Total
+RMB'000
+Trade payables
+17,379,302
+Payables to merchants
+12,432,342
+Advances from transacting users
+5,081,178
+Other payables and accruals
+63,948,348 2,028,212 30,329,312 9,765,502 106,071,374
+(excluding non-financial liabilities items)
+Borrowings
+17,606,781
+Notes payable
+Lease liabilities
+17,379,302
+12,432,342
+5,081,178
+48,646 1,429,772
+376,524 376,524 27,081,556
+2,401,405 1,603,042 1,817,984
+8,670,816
+203,699
+9,502,326 37,336,930
+19,288,898
+8,670,816
+4
+Level 2
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Transfers, net
+(400,261)
+Changes in fair values
+3,384,290
+383,190
+(90,017)
+234,227
+Currency translation differences
+331,670
+52,801
+91,079
+(85,065)
+As of December 31, 2023
+12,630,261
+7,798,413
+18,481,104
+1,413,000
+378,720
+Net unrealised gains/(losses) for the year
+1,780,851
+312,858
+(90,017)
+224,175
+EAT BETTER, LIVE BETTE
+91,193,316
+266
+(5,001,192) (125,627,921)
+Deductions
+income
+income
+or loss
+income
+or loss
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+(100,219,456)
+As of January 1, 2023
+6,307,707
+7,124,305
+15,073,013
+1,413,000
+100,000
+Additions
+109,851,696
+10,887,755
+126,392,046
+3,568,111
+278,720
+77,845,116
+or loss
+Meituan 2023 Annual Report
+For the year ended December 31, 2023
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+As of January 1, 2022
+59,712,781
+5,414,982
+4,210,835
+12,038,045
+or loss
+1,490,250
+170,008,154
+2,190,961
+101,415,941
+3,149,995
+706,500
+480,448
+Deductions
+(154,810,006)
+(1,528,525)
+(98,508,669)
+(848,881)
+Additions
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+or loss
+income
+3 FINANCIAL RISK MANAGEMENT (Continued)
+3.3 Fair value estimation (Continued)
+3.3.3 Fair value measurements using significant unobservable inputs (level 3) (Continued)
+Treasury
+investments
+Loan
+For the year ended December 31, 2023
+Other financial
+investments
+Other financial
+investments at
+Treasury
+investments
+Financial
+income
+at fair value
+through profit
+comprehensive
+at fair value
+through other
+comprehensive
+fair value
+liabilities
+at fair value
+through profit
+through other
+at fair value
+comprehensive
+through profit
+or loss
+at fair value
+through other
+through profit
+receivables
+at fair value
+The higher the risk-adjusted
+discount rate, the lower the
+Note (ii)
+Note (ii)
+Note (ii)
+Loan receivables at fair value 7,798,413 7,124,305
+through other comprehensive
+comprehensive income
+The higher the expected rate of
+return, the higher the fair value
+The higher the expected rate of
+return, the higher the fair value
+value through other
+0.94%-4.17% -3.75%-3.85%
+Expected rate of return
+12,630,261 6,307,707
+fair value
+Treasury investments at fair
+91,193,316 77,845,116 Expected rate of return 0.00% -9.34% -2.14%-6.30%
+Treasury investments at fair
+The higher the DLOM, the lower
+the fair value
+20%-30%
+15%-30%
+Discount for lack of
+marketability ("DLOM")
+Note (1)
+40%-65%
+31%-65%
+Other financial investments at 19,894,104 16,486,013 Expected volatility
+fair value
+RMB'000 RMB'000
+value through profit or loss
+to fair value
+income
+Note (i)
+comprehensive
+Meituan 2023 Annual Report 269
+The carrying amounts of the Group's financial assets and financial liabilities measured at amortised
+cost are approximate their fair values except for notes payable (Note 32).
+If the respective unobservable inputs of financial assets at fair value through other comprehensive
+income held by the Group had been 10% higher or lower, the aggregate other comprehensive
+income for the year ended December 31, 2023 would have been approximately RMB22 million
+higher or RMB17 million lower (for the year ended December 31, 2022: RMB8 million higher or
+RMB6 million lower).
+If the respective unobservable inputs of financial assets at fair value through profit or loss held
+by the Group had been 10% higher or lower, the aggregate profit before income tax for the year
+ended December 31, 2023 would have been approximately RMB59 million lower or RMB59 million
+higher (for the year ended December 31, 2022: RMB112 million lower or RMB116 million higher).
+In December 2022, the Group established and consolidated a limited partnership investment fund
+("the Fund") with limited life. The Fund invested in private companies in the form of ordinary shares
+or preferred shares that are measured at fair value through profit or loss. The Group designates
+the returns to other limited partners as financial liabilities at fair value through profit or loss. These
+returns are calculated based on the fair value of underlying investments and the predetermined
+distribution mechanism of returns set out in the agreement of the Fund.
+Note (iii): Financial liabilities at fair value through profit or loss
+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 and market risk.
+Loan receivables at fair value through other comprehensive income
+The unobservable inputs of expected volatility is used in the valuation of other financial investments
+at fair value. The relationship between them is uncertain.
+Other financial investments at fair value
+Financial liabilities at fair value 378,720 100,000
+Note (ii):
+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, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+268
+EAT BETTER, LIVE BETTE
+through profit or loss
+Note (iii)
+Note (iii)
+Note (i):
+2022
+Note (iii)
+Relationships of
+unobservable inputs
+As of December 31, 2022
+12,856
+429,803
+62,443
+2,028,851
+Currency translation differences
+(194,580)
+6,198
+167,846
+905,336
+Changes in fair values
+77,845,116
+498,631
+at fair value
+through other
+comprehensive
+at fair value
+through other
+comprehensive
+Other financial
+investments
+at fair value
+through profit
+Other financial
+investments at
+Financial
+fair value
+liabilities
+2023
+through other
+at fair value
+through profit
+6,307,707
+(783,750)
+15,073,013
+Unobservable
+inputs
+2022
+7,124,305
+2023
+Range of inputs
+as of December 31,
+as of December 31,
+Fair values
+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, market approach, etc.
+The Group has a team that manages the valuation of financial 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 values
+of the Group's level 2 and 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)
+Description
+FINANCIAL RISK MANAGEMENT (Continued)
+100,000
+Net unrealised gains/(losses) for the year
+316,697
+1,413,000
+6,198
+105,721
+(182,223)
+Meituan 2023 Annual Report 267
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+3
+and unallocated items
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Operating profit/(loss)
+77,352,215
+Cost of revenues, operating expenses
+9,818,325 67,533,890
+276,744,954
+-
+Meituan 2023 Annual Report 275
+(168,208,085) (90,004,506) (5,116,976) (263,329,567)
+38,698,847 (20,166,484) (5,116,976) 13,415,387
+Total revenues
+206,906,932 69,838,022
+(including interest revenue)
+Total
+RMB'000
+40,513,216
+76,688,543
+2,057,806
+246,326
+40,266,890
+74,630,737
+82,190,980
+--
+82,190,980
+items*
+RMB'000
+RMB'000
+commerce
+RMB'000
+5
+New Unallocated
+initiatives
+Other services and sales
+SEGMENT REPORTING (Continued)
+(including interest revenue)
+Delivery services
+219,954,948
+Core local
+160,759,022 59,195,926
+Total revenues
+62,612,751
+4,869,027 57,743,724
+30,768,590
+85,511
+30,683,079
+56,509,699
+1,366,691
+55,143,008
+70,063,908
+-
+70,063,908
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+items*
+initiatives
+commerce
+New Unallocated
+Core local
+Year ended December 31, 2022
+For the year ended December 31, 2023
+Other services and sales
+Online marketing services
+Commission
+5.1 Description of segments and principal activities (Continued)
+Year ended December 31, 2023
+4.4 Recognition of share-based compensation expenses
+Commission
+272
+EAT BETTER, LIVE BETTE
+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 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.
+Presentation and measurement of investments in associates
+4.8
+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.
+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.
+4.7 Current and deferred income tax
+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.
+4.6 Loss allowance for financial and contract assets arising from credit risk
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+271
+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).
+4.5 Estimation of the fair values of financial assets and financial liabilities
+As mentioned in Note 2.1.15, 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 RSUs is determined by reference to the grant-date market price of the
+ordinary shares. Forfeitures are estimated based on historical experience and are periodically reviewed.
+Where the actual forfeitures differ from the initial estimate, such difference will impact the share-based
+compensation expenses in subsequent periods.
+Determining whether the Group is acting as a principal or as an agent in the provision of certain goods or
+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.
+4.3 Principal versus agent considerations
+As disclosed in Note 2.1.16(c), all incentives provided to customers from an accounting perspective are
+recorded as a reduction of revenue if there is no exchange of a distinct good or service to the Group
+or the fair value of the good and service received cannot be reasonably estimated, 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 provided at the
+Group's discretion and the objectives, business strategy and design of the incentive programmes.
+4.2 Incentives
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+4
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+270
+Cost of revenues, operating expenses
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+4
+CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Delivery services
+The segment information provided to the Group's CODM for the reportable segments for the years
+ended December 31, 2023 and 2022 is as follows:
+5.1 Description of segments and principal activities (Continued)
+5 SEGMENT REPORTING (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+274
+EAT BETTER, LIVE BETTE
+The Group's revenues are mainly generated in the PRC.
+There were no separate segment assets and segment liabilities information provided to the CODM, as
+CODM does not use such information to allocate resources to or to evaluate the performance of the
+operating segments.
+The Group continually develops various New initiatives, including Meituan Select, Xiaoxiang
+Supermarket, B2B food distribution etc., to satisfy consumers' diverse needs in different consumption
+scenarios. Revenues from the New initiatives segment primarily consist of (a) sales of goods primarily
+from B2B food distribution and Xiaoxiang Supermarket; and (b) various services rendered by various
+businesses such as Meituan Select, bike sharing, e-moped sharing, power banks and micro-credit.
+The cost of revenues and operating expenses for the New initiatives segment primarily consist of (a)
+transaction costs; (b) other outsourcing costs; (c) employee benefits expenses; and (d) promotion,
+advertising and user incentives.
+New initiatives
+The Core local commerce segment includes food delivery, Meituan Instashopping, in-store services, and
+hotel & travel related businesses. The food delivery and Meituan Instashopping businesses primarily help
+consumers place orders of food and grocery prepared by merchants through the Group's online tools,
+mainly various of mobile apps, and offers On-demand Delivery services. The in-store, hotel & travel
+related businesses primarily help consumers purchase local consumer services provided by merchants
+in numerous in-store categories or make reservations for hotels, attraction ticketing and transportation
+ticketing. Revenues from the Core local commerce segment primarily consist of (a) delivery services from
+both merchants and consumers; (b) commission from technology service charged to merchants and
+third-party agent partners; and (c) online marketing services in various formats provided to merchants.
+The cost of revenues and operating expenses for the Core local commerce segment primarily consist
+of (a) delivery related costs; (b) promotion, advertising and user incentives; and (c) employee benefits
+expenses.
+Core local commerce
+5.1 Description of segments and principal activities (Continued)
+SEGMENT REPORTING (Continued)
+5
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 273
+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 used in the performance measurement
+and resource allocation by the CODM.
+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, 2023 and 2022.
+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.
+5.1 Description of segments and principal activities
+SEGMENT REPORTING
+5
+The Group is required to reassess whether it controls the investee if facts and circumstances indicate a
+change to one or more of the three factors of control.
+Consolidation is required only if control exists. The Group controls an investee when it has all the
+following: (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with
+the investee; and (iii) the ability to use its power over the investee to affect the amount of the Group's
+returns. Power results from rights that can be straightforward through voting rights or complicated in
+contractual arrangements. Variable returns are returns that are not fixed and have the potential to vary
+as a result of the performance of an investee. These three factors cannot be considered in isolation by
+the Group in its assessment of control over an investee. Where the factors of control are not apparent,
+significant judgement is applied in the assessment, which is based on an overall analysis of all of the
+relevant facts and circumstances.
+4.9 Scope of consolidation
+Online marketing services
+and unallocated items
+36,474,673
+(6,943,907) (225,775,396)
+258,405
+Selling and marketing expenses
+1,294,780
+Research and development expenses
+4,753,890
+4,637,634
+General and administrative expenses
+2,094,392
+2,552,143
+8,383,353
+8,742,962
+(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, 2023 (2022: None). All of these individuals have not received any
+emolument from the Group as an inducement to join or upon joining the Group or compensation for loss
+of office during the years ended December 31, 2023 and 2022. The emoluments to the five highest paid
+individuals for the years ended December 31, 2023 and 2022 are as follows:
+Year ended December 31,
+2023
+RMB'000
+2022
+RMB'000
+305,253
+Basic salaries
+Cost of revenues
+RMB'000
+2,900,646
+2,728,648
+43,094,011
+41,619,666
+Note (i):
+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.
+EAT BETTER, LIVE BETTE
+278
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+8
+EMPLOYEE BENEFITS EXPENSES (Continued)
+(a) Share-based compensation expenses have been charged to the consolidated income
+statement as follows:
+Year ended December 31,
+2023
+2022
+RMB'000
+Pension costs - defined contribution plans (Note (i))
+17,307
+EAT BETTER, LIVE BETTE
+-
+The emoluments fell within the following bands:
+(b) Five highest paid individuals (Continued)
+EMPLOYEE BENEFITS EXPENSES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 279
+8
+531,941
+521,575
+574
+512,967
+502,347
+Share-based compensation expenses
+561
+Pension costs and other employee benefits
+1,360
+(131,256,353) (87,575,136)
+Bonuses
+Emolument bands (in HK dollar)
+HK$57,500,001 – HK$58,000,000
+HK$71,000,001 – HK$71,500,000
+HK$83,500,001 – HK$84,000,000
+HK$106,000,001 – HK$106,500,000
+18,400
+HK$111,000,001 – HK$111,500,000
+Number of individuals
+Year ended December 31,
+2023
+5
+5
+1
+-1
+HK$172,000,001 - HK$172,500,000
+HK$165,500,001 – HK$166,000,000
+1
+HK$142,000,001 – HK$142,500,000
+HK$140,500,001 – HK$141,000,000
+HK$120,000,001 - HK$120,500,000
+1
+1
+1
+1
+1
+-1
+2022
+For the year ended December 31, 2023
+4,635,100
+1,229,818
+Other employee benefits
+6 REVENUES BY TYPE
+As of December 31, 2023 and 2022, substantially all of the non-current assets of the Group were located
+in the PRC.
+5.2 Segment assets
+4,645,325
+5 SEGMENT REPORTING (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+276
+EAT BETTER, LIVE BETTE
+The reconciliation from operating profit/(loss) to profit/(loss) before income tax for the years ended
+December 31, 2023 and 2022 is shown in the consolidated income statement.
+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, 2023 and 2022.
+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, (iv) other gains, net and (v) certain corporate administrative expenses and other items. They are not
+allocated to individual segments.
+(6,943,907) (5,820,448)
+Operating (loss)/profit
+29,502,669 (28,379,210)
+77,352,215
+Year ended December 31,
+2023
+RMB'000
+2022
+RMB'000
+Delivery services
+82,190,980
+62,612,751
+Further analysis of revenue disaggregation is included in Note 5.
+276,744,954
+219,954,948
+Meituan 2023 Annual Report 277
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+7
+RMB'000
+EXPENSES BY NATURE
+2023
+30,768,590
+40,513,216
+Online marketing services
+56,509,699
+76,688,543
+Commission
+70,063,908
+Year ended December 31,
+2022
+RMB'000
+Other services and sales (including interest revenue)
+90,744,081
+Other outsourcing costs
+27,863,828
+22,563,096
+Depreciation of property, plant and equipment (Note 15)
+Delivery related costs
+7,687,823
+9,194,580
+20,569,982
+Amortisation of intangible assets (Note 16)
+535,734
+Auditor's remuneration
+- Audit and audit-related services
+- Non-audit services
+Note (i):
+8 EMPLOYEE BENEFITS EXPENSES
+32,197
+308,934
+41,402
+11,264
+33,333,008
+8,742,962
+8,383,353
+25,512,956
+80,189,722
+Employee benefits expenses (Note 8)
+27,164,687
+Share-based compensation expenses (Note 33)
+Promotion, advertising and user incentives
+Wages, salaries and bonuses
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+Transaction costs consist of cost of inventories sold and certain costs for services rendered.
+41,619,666
+Transaction costs (Note (i))
+38,906,399
+43,094,011
+2,434
+Place of
+incorporation
+(185,564)
+Currency translation differences
+217,374
+1,065,769
+At the end of the year
+18,289,183
+16,568,451
+Dilution gains mainly comprised gains on dilution of the Group's equity interests in Li Auto Inc. due to its
+issuance of additional shares in 2023 and 2022.
+Note (ii): During the year ended December 31, 2023, the Group identified indications that investments in associates
+may be impaired with significant or prolonged declines in values of the associate, mainly due to the
+adverse financial and business outlook of the associate. The Group carried out impairment assessment
+and determined the respective recoverable amount with reference to the higher of value in use and fair
+value less cost of disposal. The calculation of discounted cash flow was based on cash flow projected by
+management and pre-tax discount rate applied to the estimated cash flow projection.
+Particulars of a material associate of the Group, as determined by the Directors, are set out below:
+Name of entity
+Note (i):
+2,687
+334,060
+Other additions
+Business combination
+At the beginning of the year
+The quoted fair value of the investments in listed entities was RMB36,429 million and RMB20,719 million
+as of December 31, 2023 and 2022, respectively.
+(a) Investments in associates accounted for using the equity method (Continued)
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+For the year ended December 31, 2023
+Transfers, net
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+EAT BETTER, LIVE BETTE
+16,568,451
+18,289,183
+1,916,994
+14,651,457
+16,321,321
+1,967,862
+Number of
+shares held
+286 Meituan 2023 Annual Report
+Dilution gains (Note (i))
+Dividends from associates
+Year ended December 31,
+368,098
+Share of other changes in equity
+35,848
+1,227,019
+using the equity method
+Share of profits of investments accounted for
+(47,029)
+(28,416)
+214,521
+89,123
+1,009,246
+100,000
+30,411
+13,856,036
+16,568,451
+2022
+RMB'000
+2023
+RMB'000
+Impairment provision (Note (ii))
+Interest held
+Principal activities/
+indirectly place of operation
+(a) Value Added Tax
+Cayman Islands
+Meituan 2023 Annual Report 289
+13 TAXATION (Continued)
+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.
+Cayman Islands
+(b) Income tax
+The Group is mainly subject to VAT rate of 6% for services revenues or 13% for revenues of inventories
+sales, and relevant surcharges on VAT payments according to mainland China tax law.
+- unlisted entities
+TAXATION
+13
+117,809
+109,269
+81,961
+10,807
+- Other comprehensive income
+35,848
+98,462
+- Profit from operations
+2022
+RMB'000
+RMB'000
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+(b) Income tax (Continued)
+British Virgin Islands
+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. Additionally, the British Virgin Islands does not
+impose a withholding tax on payments of dividends to shareholders.
+Mr. Lau Chi Ping Martin, who has served as a member of the board of directors of the Company
+since October 2017, has resigned as a non-executive director with effect from November 16, 2022.
+(vii) Mr. Wang Huiwen has redesignated from an executive Director to a non-executive Director with
+effect from March 25, 2023, and has resigned as a non-executive Director with effect from June
+26, 2023.
+(viii) Ms. Yang Marjorie Mun Tak was appointed as an independent non-executive Director on June 30,
+2023.
+EAT BETTER, LIVE BETTE
+282
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+9
+Year ended December 31,
+2023
+OTHER GAINS, NET
+2023
+RMB'000
+2022
+RMB'000
+EAT BETTER, LIVE BETTE
+Certain subsidiaries of the Group in mainland China are subject to "high and new technology
+enterprises", whose preferential income tax rate was 15% for the years ended December 31, 2023 and
+2022. Moreover, a subsidiary which was entitled to the preferential policy of "2-year exemption and 3-year
+half rate concession", applied a preferential income tax rate of 12.5% for the year ended December 31,
+2022. Certain mainland China subsidiaries located in western region and engaged in certain encouraged
+industries were eligible for a preferential income tax rate of 15% for the years ended December 31, 2023
+and 2022. In addition, certain mainland China 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, 2023 and 2022.
+CIT provision was made on the estimated assessable profit of entities within the Group incorporated in
+mainland China and was calculated in accordance with the relevant regulations of mainland China after
+considering the available tax benefits from refunds and allowances. The general mainland China CIT rate
+was 25% for the years ended December 31, 2023 and 2022.
+Mainland China corporate income tax ("CIT")
+Subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax of which the tax rate is
+8.25% for assessable profits on the first HK$2 million and 16.5% for any assessable profits in excess of
+HK$2 million.
+Hong Kong
+Year ended December 31,
+Aggregated amount of the Group's share of profits of individually immaterial associates accounted for
+using the equity method is as follows:
+There were no material contingent liabilities relating to the Group's interests in the associates accounted
+for using the equity method.
+There were no dividends received from Li Auto Inc. during the year ended December 31, 2023.
+Reconciliation to carrying amounts:
+Non-current liabilities
+Current liabilities
+Non-current assets
+Current assets
+Summarised consolidated balance sheet
+Total comprehensive income
+Net income
+Revenues
+Li Auto Inc. shareholders' equity
+Summarised consolidated statements of comprehensive income
+Except for Li Auto Inc., the Directors of the Company considered that there was no other individual
+investment which was determined as a material associate as of December 31, 2023. There were no
+individually material associates that were accounted for using the equity method as of December 31,
+2022.
+(a) Investments in associates accounted for using the equity method (Continued)
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 287
+manufacturer/PRC
+new energy vehicles
+13.01%
+258,171,601
+Set out below are the summarised financial information of Li Auto Inc. extracted from its financial
+statements prepared under US Generally Accepted Accounting Principles ("US GAAP"). They have been
+amended to reflect adjustments made by the Group when using the equity method, including fair value
+adjustments and modifications for differences in accounting policy.
+Li Auto Inc.
+Group's share in %
+Goodwill and others
+As of December 31, 2023, the fair value of this investment was RMB34,221 million.
+(a) Investments in associates accounted for using the equity method (Continued)
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+288
+EAT BETTER, LIVE BETTE
+13,942,283
+13.01%
+7,825,526
+6,116,757
+Group's share in RMB
+60,142,624
+72,742,709
+28,941,887
+114,525,584
+11,778,359
+11,809,125
+123,851,332
+2023
+RMB'000
+As of/Year ended
+December 31,
+Carrying amount
+10,149,540
+- listed entities
+2,032,806
+2022
+RMB'000
+Beijing Sankuai Online Technology Beijing, the PRC, limited
+USD5,045,770,000
+100%
+100%
+E-commerce service platform
+Co., Ltd.
+Hanhai Information Technology
+(Shanghai) Co., Ltd.
+Indirectly held:
+liability company
+Shanghai, the PRC, limited
+USD495,000,000
+100%
+100%
+Multimedia information
+Xiamen Sankuai Online Technology
+Co., Ltd.
+Shanghai Sankuai Zhisong
+Technology Co., Ltd.
+in the PRC
+The British Virgin Islands
+Investment holding in
+100%
+The Company's major subsidiaries (including directly held and indirectly held, collectively controlled, and
+structured entities) for the years ended December 31, 2023 and 2022 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.
+Name
+Effective interests held
+(Note (i))
+Place of incorporation/
+establishment and
+As of December 31,
+kind of legal entity
+Particulars of
+issued capital
+2023
+2022
+Principal activities
+and place of operation
+Directly held:
+Inspired Elite Investments Limited
+The British Virgin Islands,
+limited liability company
+USD50,000
+100%
+liability company
+Xiamen, the PRC, limited
+liability company
+Shanghai, the PRC, limited
+liability company
+technology services in the PRC
+USD549,049,120
+100%
+Place of incorporation/
+establishment and
+Name
+kind of legal entity
+Particulars of
+issued capital
+As of December 31,
+Principal activities
+2023
+2022
+and place of operation
+Structured entities (Note (ii)):
+Beijing Sankuai Technology
+Co., Ltd.
+Beijing, the PRC, limited
+RMB5,480,000,000
+None of the Directors waived or have agreed to waive any emoluments during the years ended
+December 31, 2023 and 2022.
+Effective interests held
+(Note (i))
+For the year ended December 31, 2023
+11 SUBSIDIARIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+100%
+E-commerce service platform
+in the PRC
+USD320,000,000
+100%
+100%
+Delivery services in the PRC
+Chongqing Meituan Sankuai Micro- Chongqing, the PRC, limited RMB7,500,000,000
+credit Co., Ltd.
+liability company
+100%
+100% Micro-credit business in the PRC
+EAT BETTER, LIVE BETTE
+284
+Meituan 2023 Annual Report
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 283
+11 SUBSIDIARIES
+Merchant information advisory
+services in the PRC
+100%
+100%
+RMB10,000,000
+liability company
+Shanghai, the PRC, limited
+liability company
+Cloud computing in the PRC
+100%
+100%
+RMB870,000,000
+Beijing Sankuai Cloud Computing Beijing, the PRC, limited
+Co., Ltd.
+Shanghai Hantao Information
+Consultancy Co., Ltd.
+liability company
+Co., Ltd.
+E-commerce service platform
+in the PRC
+Online retail platform in the PRC
+100%
+100%
+Note (i):
+RMB5,000,000
+Note (ii):
+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, the Company is
+able to control these structured entities or their subsidiaries and therefore consolidated these entities.
+As of December 31,
+2023
+RMB'000
+(a) Investments in associates accounted for using the equity method
+As of December 31, 2023, investments in associates with aggregated balance of RMB14,861 million
+were denominated in USD (as of December 31, 2022: RMB13,225 million), and remainder balances were
+denominated in RMB.
+16,582,381
+18,289,183
+16,568,451
+13,930
+18,289,183
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+Associates (a)
+Joint ventures
+12 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 285
+Due to the implementation of the shares award scheme of the Group mentioned in Note 2.2.1, a 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.
+The Effective interests held by the Group have no changes since January 1, 2024 until the reporting date.
+Investments in associates
+liability company
+Shanghai, the PRC, limited
+100%
+RMB'000
+2022
+RMB'000
+818,986
+657,908
+Finance costs
+Interest expenses on bank borrowings and notes payable
+Interest in respect of lease liabilities
+(1,163,175)
+(1,317,132)
+Others
+(260,678)
+(1,304)
+(266,053)
+(45,640)
+Total
+(1,425,157)
+(1,628,825)
+2023
+Shanghai Sankuai Technology
+Year ended December 31,
+Finance income
+100%
+Fair value changes and gains of treasury investments
+Subsidies and tax preference (Note (i))
+4,108,802
+1,442,083
+2,026,177
+Foreign exchange gains, net
+Others
+74,998
+354,271
+105,496
+335,877
+6,315,473
+4,165,037
+Note (i): Taxpayers in industries of postal services, telecommunication services and modern services are allowed to
+enjoy an additional 5% and taxpayers in industries of consumer services are allowed to enjoy an additional
+10% input VAT super-credit against their VAT payable for the year ended December 31, 2023 (2022: 10% and
+15%, respectively). Such input VAT super-credit treatment was recorded as "Other gains, net". For the years
+ended December 31, 2023 and 2022, the Group recognised a gain of RMB1,392 million and RMB1,604 million,
+respectively.
+10 FINANCE INCOME/(COSTS)
+Interest income from bank deposits
+(vi)
+1,030
+(v)
+170
+3,635
+7,885
+374
+375
+46
+795
+Wang Huiwen
+Neil Nanpeng Shen
+Orr Gordon Robert Halyburton
+500
+Shum Heung Yeung Harry
+500
+Leng Xuesong
+500
+Yang Marjorie Mun Tak
+127
+1,030
+1,530
+1,030
+1,530
+1,530
+1,277
+1,404
+2,001
+9,495
+386
+4,080
+5,210
+170
+5,040
+Waiver of Directors' emoluments
+280
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+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, 2023:
+Name
+Wang Xing
+Mu Rongjun
+Pension costs
+8,002
+and other
+employee compensation
+Fees
+Basic salaries
+Bonuses
+benefits
+expenses
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Share-based
+19,884
+1,508
+Name
+500
+776
+1,276
+776
+1,276
+776
+1,276
+1,500
+10,628
+471
+9,707
+22,306
+8
+Leng Xuesong
+Meituan 2023 Annual Report 281
+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, 2023 and 2022.
+(ii)
+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, 2023 and
+2022.
+(iii) Information about loans, quasi-loans and other dealings in favour of Directors, controlled bodies
+corporate by and connected entities with such Directors
+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, 2023 and 2022.
+(iv)
+Directors' material interests in transactions, arrangements or contracts
+For the year ended December 31, 2022:
+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, 2023 and 2022.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+500
+Consideration provided to or receivable by third parties for making available Directors' services
+500
+Mu Rongjun
+Wang Huiwen
+Shum Heung Yeung Harry
+Wang Xing
+Pension costs
+and other
+employee compensation
+Fees
+RMB'000
+Basic salaries
+Bonuses
+benefits
+expenses
+Total
+RMB'000
+RMB'000
+Share-based
+RMB'000
+Lau Chi Ping Martin
+RMB'000
+11,616
+Orr Gordon Robert Halyburton
+7,379
+1551
+1,665
+4,080
+5,197
+157
+5,040
+RMB'000
+Neil Nanpeng Shen
+1,758,134
+Our operating loss from the New initiatives segment narrowed to RMB4.8 billion for the fourth quarter of 2023 from
+RMB5.1 billion for the third quarter of 2023, and our operating margin for this segment improved by 1.2 percentage
+points to negative 26.0% from negative 27.2% on a quarter-over-quarter basis. The improvements in operating loss
+and operating margin were primarily attributable to our efforts to improve operating efficiency, partially offset by the
+seasonality of our certain new initiatives.
+Our operating profit from the Core local commerce segment decreased to RMB8.0 billion for the fourth quarter of
+2023 from RMB10.1 billion for the third quarter of 2023. The operating margin for this segment decreased by 3.0
+percentage points to 14.5% from 17.5% on a quarter-over-quarter basis. The decrease in operating profit was
+mainly due to the decrease in GTV of Core local commerce segment on a quarter-over-quarter basis, as a result of
+seasonality. The decrease in operating margin was mainly due to (i) higher Transacting User incentive ratio, and (ii)
+higher courier incentives and lower average order value of our food delivery and Meituan Instashopping businesses
+due to seasonality.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2023 Annual Report 27
+4.4%
+3,358,533
+2.4%
+Share of Profits of Investments Accounted for Using the Equity Method
+ΝΑ
+ΝΑ
+(1,625,322)
+(1,428,599)
+Unallocated items
+17.5%
+(27.2%)
+(5,111,976)
+10,095,831
+Our share of profits of investments accounted for using the equity method increased to RMB705.5 million for
+the fourth quarter of 2023 from RMB434.5 million for the third quarter of 2023, which primarily resulted from the
+fluctuation of the financial results of our investees.
+14.5%
+(26.0%)
+Total operating profit
+Profit for the Period
+Cost of revenues
+EAT BETTER, LIVE BETTE
+(4,832,692)
+(58,616,997)
+Selling and marketing expenses
+61,752,979
+97,191,161
+(158,201,969)
+(179,553,793)
+219,954,948
+1,133,670
+1,449,743
+276,744,954
+As a result of the foregoing, we had a profit of RMB2.2 billion for the fourth quarter of 2023, compared to a profit of
+RMB3.6 billion for the third quarter of 2023.
+Gross profit
+Revenues
+(RMB in thousands)
+December 31,
+2022
+2023
+December 31,
+Year Ended
+The following table sets forth the comparative figures for the years ended December 31, 2023 and 2022:
+The Year ended December 31, 2023 Compared to the Year ended December 31, 2022
+MANAGEMENT DISCUSSION AND ANALYSIS
+28 Meituan 2023 Annual Report
+Including: Interest revenue
+8,019,425
+Our selling and marketing expenses was RMB16.7 billion for the fourth quarter of 2023, remaining stable on a
+quarter-over-quarter basis. The percentage of revenues increased by 0.6 percentage points to 22.7% from 22.1%
+on a quarter-over-quarter basis.
+of revenues
+Research and Development Expenses
+(39,745,112)
+Selling and Marketing Expenses
+Our cost of revenues decreased by 1.6% to RMB48.7 billion for the fourth quarter of 2023 from RMB49.5 billion
+for the third quarter of 2023, and increased by 1.4 percentage points to 66.1% from 64.7% as a percentage of
+revenues. The decrease in amount was primarily attributable to the decreases in delivery related costs driven by
+decreased Number of On-demand Delivery transactions and cost of revenues of our retail businesses. The increase
+in cost of revenues as a percentage of revenues was mainly due to higher courier incentives and lower average
+order value of our food delivery and Meituan Instashopping businesses due to seasonality, partially offset by the
+improved gross margin of our goods retail businesses.
+MANAGEMENT DISCUSSION AND ANALYSIS
+25
+Meituan 2023 Annual Report
+Cost of Revenues
+3.3%
+2,537,785
+3.7%
+2,700,281
+7.0%
+5,321,157
+7.4%
+5,425,285
+22.1%
+64.7%
+49,484,515
+16,905,422
+22.7%
+16,725,310
+Our research and development expenses was RMB5.4 billion for the fourth quarter of 2023, and the percentage of
+revenues was 7.4%, both of which remained stable on a quarter-over-quarter basis.
+General and Administrative Expenses
+Our general and administrative expenses increased by 6.4% to RMB2.7 billion for the fourth quarter of 2023 from
+RMB2.5 billion for the third quarter of 2023. The percentage of revenues was 3.7%, remaining stable on a quarter-
+over-quarter basis.
+EAT BETTER, LIVE BETTE
+As a
+percentage
+(RMB in thousands, except for percentages)
+Amount
+of revenues
+percentage
+Amount
+As a
+September 30, 2023
+December 31, 2023
+Three Months Ended
+Core local commerce
+New initiatives
+Unaudited
+As a result of the foregoing, our operating profit and operating margin for the fourth quarter of 2023 were RMB1.8
+billion and 2.4% respectively, compared to operating profit of RMB3.4 billion and operating margin of 4.4% for the
+third quarter of 2023.
+Operating Profit
+Our other gains, net for the fourth quarter of 2023 was RMB2.1 billion, compared to RMB1.4 billion for the third
+quarter of 2023, which was primarily attributable to the increase in the fair value changes and gains of treasury
+investments, as well as in the subsidies and tax preference.
+Other Gains, Net
+Our fair value changes of other financial investments at fair value through profit or loss changed to a loss of
+RMB61.7 million for the fourth quarter of 2023 from a gain of RMB28.1 million for the third quarter of 2023, which
+was mainly driven by the fluctuation in the fair value of our investment portfolios.
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+Our net provisions for impairment losses on financial and contract assets increased to RMB408.4 million for the
+fourth quarter of 2023 from RMB276.4 million for the third quarter of 2023, which reflected the changes in expected
+credit losses for financial assets.
+Net Provisions for Impairment Losses on Financial and Contract Assets
+MANAGEMENT DISCUSSION AND ANALYSIS
+26 Meituan 2023 Annual Report
+Operating profit/(loss) and operating margin by segment are set forth in the table below.
+Research and development expenses
+14,021,868
+(20,739,865)
+Revenues
+276,744,954
+69,838,022
+206,906,932
+77,352,215
+67,533,890
+9,818,325
+(including interest revenue)
+40,513,216
+246,326
+40,266,890
+76,688,543
+2,057,806
+74,630,737
+82,190,980
+82,190,980
+(RMB in thousands)
+Total
+New
+initiatives
+commerce
+Year Ended December 31, 2023
+Core local
+Delivery services
+Commission
+Year Ended December 31, 2022
+Core local
+EAT BETTER, LIVE BETTE
+59,195,926 219,954,948
+160,759,022
+Total
+62,612,751
+57,743,724
+4,869,027
+(including interest revenue)
+Other services and sales
+Online marketing services
+Total
+30,768,590
+30,683,079
+56,509,699
+1,366,691
+55,143,008
+70,063,908
+70,063,908
+(RMB in thousands)
+Total
+New
+initiatives
+commerce
+85,511
+Other services and sales
+Online marketing services
+Delivery services
+Commission
+657,908
+(1,628,825)
+(1,425,157)
+Finance costs
+818,986
+Finance income
+(5,820,448)
+13,415,387
+4,165,037
+6,315,473
+Operating profit/(loss)
+Share of profits of investments accounted
+Other gains, net
+234,227
+at fair value through profit or loss
+Fair value changes of other financial investments
+(468,620)
+(1,135,405)
+and contract assets
+Net provisions for impairment losses on financial
+(9,771,810)
+(9,372,067)
+General and administrative expenses
+(1,013,057)
+(21,201,005)
+for using the equity method
+35,848
+Revenues
+The following table sets forth our revenues by segment and type in 2023 and 2022:
+Our revenues increased by 25.8% to RMB276.7 billion in 2023 from RMB220.0 billion in 2022. The increase was
+primarily attributable to the revenue growth of our both reportable segments.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2023 Annual Report 29
+Revenues
+2,827,245
+23,253,418
+Adjusted net profit
+9,724,589
+1,212,652
+23,878,018
+Non-IFRS Accounting Standards measures:
+(6,685,323)
+13,857,331
+Profit/(loss) for the year
+70,194
+(164,537)
+Income tax (expenses)/credits
+(6,755,517)
+Selling and marketing expenses
+Research and development expenses
+General and administrative expenses
+Profit/(loss) before income tax
+Adjusted EBITDA
+66.1%
+Online marketing services
+Cost of revenues
+26,982,392
+24,993,339
+Gross profit
+(49,484,515)
+(48,702,612)
+Cost of revenues
+76,466,907
+385,674
+438,293
+73,695,951
+(RMB in thousands)
+2023
+September 30,
+2023
+December 31,
+Three Months Ended
+Unaudited
+Including: Interest revenue
+Revenues
+The following table sets forth the comparative figures for the fourth quarter of 2023 and the third quarter of 2023:
+The Fourth Quarter of 2023 Compared to the Third Quarter of 2023
+MANAGEMENT DISCUSSION AND ANALYSIS
+Selling and marketing expenses
+(16,725,310)
+(16,905,422)
+Research and development expenses
+201,225
+216,153
+Finance income
+3,358,533
+1,758,134
+Operating profit
+1,388,793
+2,085,740
+Other gains, net
+28,089
+22 Meituan 2023 Annual Report
+(61,652)
+Fair value changes of other financial investments
+(276,377)
+(408,417)
+and contract assets
+Net provisions for impairment losses on financial
+(2,537,785)
+(2,700,281)
+General and administrative expenses
+(5,321,157)
+(5,425,285)
+at fair value through profit or loss
+Finance costs
+EAT BETTER, LIVE BETTE
+Profit/(Loss) for the Period
+(RMB in thousands, except for percentages)
+Amount
+of revenues
+percentage
+Amount
+As a
+December 31, 2022
+December 31, 2023
+Three Months Ended
+Unaudited
+Operating profit/(loss) and operating margin by segment are set forth in the table below.
+As a result of the foregoing, our operating profit and operating margin for the fourth quarter of 2023 was RMB1.8
+billion and 2.4% respectively, compared to operating loss of RMB731.6 million and operating margin of negative
+1.2% for the same period of 2022.
+Operating Profit/(Loss)
+Our other gains, net for the fourth quarter of 2023 was RMB2.1 billion, compared to RMB588.5 million for the same
+period of 2022, which was primarily attributable to the increase in the fair value changes and gains of treasury
+investments, as well as in the subsidies and tax preference.
+Other Gains, Net
+Our fair value changes of other financial investments at fair value through profit or loss changed to a loss of
+RMB61.7 million for the fourth quarter of 2023 from a gain of RMB187.9 million for the same period of 2022, which
+was mainly driven by the fluctuation in the fair value of our investment portfolios.
+Fair Value Changes of Other Financial Investments at Fair Value Through Profit or Loss
+Our net (provisions for)/reversals of impairment losses on financial and contract assets changed to net provisions of
+RMB408.4 million for the fourth quarter of 2023 from net reversals of RMB19.2 million for the same period of 2022,
+which reflected the changes in expected credit losses for financial assets.
+Net (Provisions for)/Reversals of Impairment Losses on Financial and Contract Assets
+MANAGEMENT DISCUSSION AND ANALYSIS
+20 Meituan 2023 Annual Report
+As a
+percentage
+of revenues
+Core local commerce
+8,019,425
+Our share of profits/(losses) of investments accounted for using the equity method changed to a profit of RMB705.5
+million for the fourth quarter of 2023 from a loss of RMB95.9 million for the same period of 2022, which primarily
+resulted from the fluctuation of the financial results of our investees.
+Share of Profits/(Losses) of Investments Accounted for Using the Equity Method
+Our operating loss from the New initiatives segment narrowed to RMB4.8 billion for the fourth quarter of 2023
+from RMB6.4 billion for the same period of 2022, and the operating margin for this segment improved by 12.2
+percentage points to negative 26.0% from negative 38.2% on a year-over-year basis. The improvements in both
+operating loss and operating margin were primarily attributable to our efforts to improve operating efficiency.
+Our operating profit from the Core local commerce segment increased to RMB8.0 billion for the fourth quarter
+of 2023 from RMB7.2 billion for the same period of 2022 and the operating margin decreased by 2.1 percentage
+points to 14.5% from 16.6% on a year-over-year basis. The increase in operating profit was mainly attributable to:
+(i) the growth in the number of transactions of the Core local commerce segment, (ii) lower delivery related costs
+per order of our food delivery and Meituan Instashopping businesses, and partially offset by (i) lower average order
+value of food delivery and Meituan Instashopping businesses; and (ii) higher Transacting User incentives as well
+as more promotion and advertising expenses. The decrease in operating margin was mainly due to lower average
+order value of food delivery and Meituan Instashopping businesses, higher Transacting User incentive ratio and
+more promotion and advertising expenses.
+MANAGEMENT DISCUSSION AND ANALYSIS
+Meituan 2023 Annual Report 21
+(1.2%)
+(731,590)
+2.4%
+1,758,134
+As a result of the foregoing, we had a profit of RMB2.2 billion for the fourth quarter of 2023, compared to a loss of
+RMB1.1 billion for the same period of 2022.
+Total operating profit/(loss)
+(1,581,812)
+ΝΑ
+(1,428,599)
+Unallocated items
+16.6%
+(38.2%)
+(6,365,020)
+7,215,242
+14.5%
+(26.0%)
+(4,832,692)
+New initiatives
+ΝΑ
+48,702,612
+(366,725)
+Share of profits of investments accounted
+(including interest revenue)
+Other services and sales
+11,439,221
+69,641
+11,369,580
+21,536,708
+550,181
+20,986,527
+22,983,696
+22,983,696
+Total
+(RMB in thousands)
+initiatives
+New
+commerce
+Core local
+Three Months Ended September 30, 2023
+Unaudited
+Commission
+Delivery services
+Revenues
+2,351,205
+18,156,077
+20,507,282
+Total
+Costs and Expenses:
+(RMB in thousands, except for percentages)
+of revenues
+Amount
+of revenues
+Amount
+As a
+percentage
+percentage
+As a
+September 30, 2023
+73,695,951
+December 31, 2023
+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 segment decreased by 1.1% to RMB18.6 billion for the fourth quarter of 2023
+from RMB18.8 billion for the third quarter of 2023, mainly due to the seasonality of our certain new initiatives.
+Our revenues from the Core local commerce segment decreased by 4.4% to RMB55.1 billion for the fourth quarter
+of 2023 from RMB57.7 billion for the third quarter of 2023. The revenue decrease was primarily due to the decrease
+in the number of our food delivery business transactions and the decreased GTV of our in-store, hotel and travel
+businesses resulting from seasonality impact, partially offset by the increased number of transactions of Meituan
+Instashopping business.
+MANAGEMENT DISCUSSION AND ANALYSIS
+24 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+76,466,907
+18,775,899
+57,691,008
+Unaudited
+Three Months Ended
+(350,950)
+18,565,309
+Total
+Meituan 2023 Annual Report
+Revenues
+5,727,397
+4,374,712
+Adjusted net profit
+6,189,201
+3,744,406
+Adjusted EBITDA
+Non-IFRS Accounting Standards measures:
+3,593,234
+2,216,987
+(50,095)
+(96,059)
+Profit for the period
+Income tax expenses
+3,643,329
+2,313,046
+Profit before income tax
+434,521
+705,484
+for using the equity method
+23
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues decreased by 3.6% to RMB73.7 billion for the fourth quarter of 2023 from RMB76.5 billion for the
+third quarter of 2023. The decrease was primarily due to the seasonality of our businesses.
+The following table sets forth our revenues by segment and type for the fourth quarter of 2023 and the third quarter
+of 2023:
+20,788,622
+17,918,828
+2,869,794
+(including interest revenue)
+Other services and sales
+10,984,001
+76,905
+10,907,096
+19,996,305
+569,576
+55,130,642
+19,426,729
+21,927,023
+Delivery services
+Commission
+Revenues
+Total
+(RMB in thousands)
+New
+initiatives
+commerce
+Core local
+Three Months Ended December 31, 2023
+Unaudited
+21,927,023
+Online marketing services
+290
+Weighted average number of ordinary shares outstanding
+3,977,767
+16,963,677
+1,770,228
+8,826,992
+16,194,832
+Cost
+47,733,496
+As of December 31, 2023
+1,828,585
+12,379,416
+1,762,630
+2,138,653
+7,868,561
+Ending net book amount
+25,977,845
+Accumulated depreciation
+and impairment
+(8,326,271)
+1,762,630
+2,138,653
+7,868,561
+Net book amount
+(21,755,651)
+(2,149,182)
+(4,584,261)
+(7,598)
+(6,688,339)
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+13 TAXATION (Continued)
+(b) Income tax (Continued)
+Withholding tax on undistributed dividends
+132
+113
+19
+Currency translation differences
+(2,749,866)
+1,926,883
+3,073
+Transfers
+12,918,793
+324,094
+4,470,507
+3,436,946
+4,687,246
+Additions
+22,201,259
+1,734,181
+11,644,258
+1,163,695
+2,707,658
+819,910
+12,379,416
+Disposals
+(166,068)
+(34,188)
+(26,884)
+(5,857)
+(1,447)
+Impairment charges
+(7,829,299)
+(913,667)
+(2,881,187)
+(2,329,820)
+(1,704,625)
+Depreciation charges
+(1,278,852)
+(109,049)
+(854,275)
+(82,288)
+(67,172)
+4,951,467
+1,828,585
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+3,151,048
+2,742,454
+3,364,983
+Additions
+22,814,246
+1,146,261
+381,877
+11,399,979
+5,432,542
+3,892,988
+Opening net book amount
+December 31, 2022
+For the year ended
+22,814,246
+942,476
+9,640,362
+Transfers
+5,386
+(737,416)
+(2,721,496)
+(3,562,338)
+(2,290,456)
+Depreciation charges
+(838,300)
+(128,658)
+(185,258)
+(199,086)
+(304,029)
+(21,269)
+Disposals
+1,088,964
+(2,235,833)
+1,141,483
+1,146,261
+11,399,979
+942,476
+5,432,542
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Others
+assets
+Right-of-use
+Assets under
+construction
+Bikes and
+electric mopeds
+equipment
+Computer
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+For the year ended December 31, 2023
+RMB'000
+25,977,845
+As of January 1, 2022
+8,975,712
+3,892,988
+Net book amount
+(15,094,836)
+(890,334)
+(2,168,516)
+(524)
+(6,952,738)
+(5,082,724)
+and impairment
+Accumulated depreciation
+37,909,082
+2,036,595
+13,568,495
+943,000
+12,385,280
+Cost
+Opening net book amount
+December 31, 2023
+For the year ended
+(35,981)
+Total income tax (expenses)/credits
+- Others
+- Withholding tax
+(559,946)
+(332,021)
+81,357
+- Other temporary differences for which no deferred
+income tax assets was recognised, net
+850,268
+1,531,731
+1,874,565
+(229,507)
+86,758
+(1,459,002)
+(924,393)
+(38,597)
+(79,883)
+(164,537)
+Company (RMB'000)
+Profit/(loss) for the year attributable to the equity holders of the
+(a) Basic earnings/(loss) per share for the years ended December 31, 2023 and 2022 were calculated by
+dividing the profit/(loss) attributable to the Company's equity holders by the weighted average number
+of ordinary shares outstanding during the year.
+14 EARNINGS/(LOSS) PER SHARE
+Under the legislation, the Group is liable to Pillar Two income taxes from the constituent entities in
+these jurisdictions where the Pillar Two effective tax rate is below 15%. The Group is in the process of
+assessing its exposure to the Pillar Two legislation for when it comes into effect. Due to the complexities
+in applying the legislation and calculating Global Anti-Base Erosion Rules ("GloBE") income, the
+quantitative impact of the enacted or substantively enacted legislation is not yet reasonably estimable.
+The Group is currently engaged with tax specialists to assist it with applying the legislation.
+The Group is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted or
+substantively enacted in certain jurisdictions the Group operates (e.g. South Korea, the Netherlands, Italy
+and Japan). The legislation will come into effect from January 1, 2024. Since the Pillar Two legislation
+was not effective at the reporting date, the Group has no related current tax exposure for the reporting
+period. The Group applies the temporary exception to recognising and disclosing information about
+deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to
+IAS 12 issued in May 2023.
+OECD Pillar Two model rules
+(b) Income tax (Continued)
+13 TAXATION (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+292
+EAT BETTER, LIVE BETTE
+70,194
+708,080
+20,958
+227,858
+- Super deduction for research and development expenses
+- Tax losses utilised from previous periods/(for which no
+deferred income tax assets was recognised), net
+Meituan 2023 Annual Report 291
+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, 2023 and 2022, being the tax rate of the
+major subsidiaries of the Group.
+70,194
+(164,537)
+447,442
+223,763
+(377,248)
+(388,300)
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+Total income tax (expenses)/credits
+Deferred income tax credits (Note 18)
+Current income tax expenses
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Weighted average number of ordinary shares outstanding
+(thousands)
+For the year ended December 31, 2023
+(b) Income tax (Continued)
+- Preferential income tax rates applicable to subsidiaries
+Non-deductible expenses and non-taxable income, net
+- Different tax rates available to different jurisdictions
+Tax effects of:
+-
+1,688,879
+(3,505,467)
+in mainland China
+Tax calculated at statutory income tax rate of 25%
+(6,755,517)
+14,021,868
+Profit/(loss) before income tax
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+The difference is analysed as follows:
+13 TAXATION (Continued)
+Basic earnings/(loss) per share (RMB)
+Year ended December 31,
+2023
+9,391,090
+12,166,263
+Cost
+As of January 1, 2023
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+Others
+assets
+Right-of-use
+Assets under
+construction
+1,250,535
+electric mopeds
+15,227,521
+41,239,544
+22,201,259
+1,734,181
+11,644,258
+1,163,695
+2,707,658
+4,951,467
+Net book amount
+(19,038,285)
+(1,469,954)
+(3,583,263)
+(86,840)
+(6,683,432)
+(7,214,796)
+and impairment
+Accumulated depreciation
+3,204,135
+(9,311,706)
+equipment
+Computer
+Profit/(loss) for the year attributable to the equity holders of the
+2022
+Year ended December 31,
+2023
+(b) The Company has three categories of dilutive potential ordinary shares: share options, RSUs and
+convertible bonds. Diluted earnings/(loss) per share is calculated by adjusting the weighted average
+number of ordinary shares (denominator) outstanding to assume conversion of all potential dilutive
+ordinary shares arising from share options and RSUs granted by the Company. As the inclusion of
+potential ordinary shares from the convertible bonds would be anti-dilutive, it is not included in the
+calculation of diluted earnings/(loss) per share. In addition, profit/(loss) for the year attributable to the
+equity holders of the Company (numerator) has been adjusted by all the dilutive effects.
+14 EARNINGS/(LOSS) PER SHARE (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 293
+(1.09)
+2.23
+6,156,595
+6,212,999
+(6,686,110)
+13,855,828
+2022
+Company used as the numerator in calculating diluted
+earnings/(loss) per share (RMB'000)
+Bikes and
+13,270,533
+(thousands)
+15 PROPERTY, PLANT AND EQUIPMENT
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+294
+EAT BETTER, LIVE BETTE
+(1.09)
+2.11
+Diluted earnings/(loss) per share (RMB)
+6,156,595
+6,300,268
+Weighted average number of ordinary shares used as the
+denominator in calculating diluted earnings/(loss) per share
+(thousands)
+87,269
+Adjustments for the dilutive impact of share options and RSUs
+(thousands)
+6,156,595
+6,212,999
+(6,686,110)
+Impairment charges
+Meituan 2023 Annual Report 295
+(86,316)
+Other intangible
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 297
+16 INTANGIBLE ASSETS
+266,053
+assets arising
+260,678
+2,721,496
+2,881,187
+Depreciation charges of right-of-use assets
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+Interest expenses (included in finance costs)
+from business
+Software
+Goodwill
+Net book amount
+impairment
+Accumulated amortisation and
+37,721,636
+2,016,238
+7,730,260
+27,975,138
+Cost
+As of January 1, 2023
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+and others
+combinations
+The consolidated financial statements shows the following amounts relating to leases:
+11,644,258
+12,379,416
+1,956,725
+327,830
+General and administrative expenses
+604,034
+592,405
+Research and development expenses
+1,166,851
+1,499,261
+Selling and marketing expenses
+6,916,879
+5,268,327
+Cost of revenues
+2022
+RMB'000
+RMB'000
+2023
+Year ended December 31,
+506,816
+(201,587)
+Assets under construction
+117,126
+1,756,446
+3,149,108
+4,043,206
+6,538,425
+6,579,764
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+Others
+Offices
+Land use rights
+The carrying amounts of right-of-use assets by category are as follows:
+(a) Leases
+9,311,706
+7,829,299
+141,476
+(165)
+(1,917,004)
+(7,078,661)
+RMB'000
+RMB'000
+RMB'000
+and others
+combinations
+Goodwill
+Software
+assets arising
+from business
+Other intangible
+16 INTANGIBLE ASSETS (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+298
+EAT BETTER, LIVE BETTE
+Total
+RMB'000
+30,397,947
+As of January 1, 2022
+27,932,090
+For the year ended
+31,048,814
+92,379
+3,225,932
+27,730,503
+(6,554,138)
+(1,863,853)
+(4,488,698)
+(201,587)
+Net book amount
+impairment
+Accumulated amortisation and
+37,602,952
+1,956,232
+7,714,630
+Cost
+Depreciation charges were expensed or capitalised in the following categories in the consolidated income
+statement or the consolidated statement of financial position respectively:
+98,765
+27,773,551
+64,876
+63,245
+(63,714)
+30,642,975
+99,234
+2,770,190
+1,631
+(246,190)
+Amortisation charges
+Additions
+27,773,551
+Opening net book amount
+December 31, 2023
+For the year ended
+30,642,975
+99,234
+2,770,190
+27,773,551
+(309,904)
+2,525,631
+Ending net book amount
+2,525,631
+Net book amount
+(7,375,713)
+(1,967,866)
+(5,206,260)
+(201,587)
+impairment
+Accumulated amortisation and
+37,773,660
+2,066,631
+7,731,891
+27,975,138
+Cost
+As of December 31, 2023
+30,397,947
+98,765
+27,773,551
+15 PROPERTY, PLANT AND EQUIPMENT (Continued)
+(4,960,070)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+18,950,647
+Bike sharing and e-moped sharing services
+3,707,427
+Other CGUs
+270,248
+27,773,551
+In-store, hotel & travel
+3,707,427
+27,773,551
+Opening
+Additions
+Ending
+Year ended December 31, 2022
+RMB'000
+270,248
+4,845,229
+Food delivery
+Year ended December 31, 2023
+177,387
+Assets under construction
+970
+Impairment of goodwill
+309,904
+535,734
+Management reviews the business performance based on type of business and monitors the goodwill at the
+CGU level. The following is a summary of goodwill allocation for CGUs:
+Opening
+Additions
+Ending
+RMB'000
+RMB'000
+RMB'000
+4,845,229
+18,950,647
+RMB'000
+Food delivery
+4,845,229
+4,845,229
+12,166,263
+Cost
+As of December 31, 2022
+22,201,259
+1,734,181
+11,644,258
+1,163,695
+2,707,658
+4,951,467
+Ending net book amount
+(15)
+Currency translation differences
+(103,328)
+(16,847)
+For the year ended December 31, 2023
+9,391,090
+173,547
+1,250,535
+3,204,135
+In-store, hotel & travel
+18,950,647
+18,950,647
+Bike sharing and e-moped sharing services
+3,707,427
+3,707,427
+Other CGUS
+227,200
+43,048
+270,248
+27,730,503
+43,048
+27,773,551
+LEAT BETTER, LIVE BETTE
+41,239,544
+15,227,521
+General and administrative expenses
+RMB'000
+Meituan 2023 Annual Report
+27,730,503
+3,225,932
+92,379
+31,048,814
+Additions
+43,048
+15,630
+71,217
+129,895
+Amortisation charges
+(471,372)
+(64,362)
+(535,734)
+Ending net book amount
+27,773,551
+December 31, 2022
+2,770,190
+Accumulated depreciation
+(7,214,796)
+28,073
+296
+EAT BETTER, LIVE BETTE
+22.201.259
+1,734,181
+11,644,258
+1,163,695
+2,707,658
+4,951,467
+Net book amount
+(19,038,285)
+(1,469,954)
+(3,583,263)
+(86,840)
+(6,683,432)
+and impairment
+99,234
+Opening net book amount
+30,464
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+16 INTANGIBLE ASSETS (Continued)
+Amortisation charges were expensed or capitalised in the following categories in the consolidated income
+statement or the consolidated statement of financial position respectively:
+Year ended December 31,
+RMB'000
+2022
+RMB'000
+Cost of revenues
+60,759
+159,683
+Selling and marketing expenses
+44,164
+170,591
+Research and development expenses
+30,642,975
+Meituan 2023 Annual Report 299
+30,642,975
+2023
+As of December 31, 2022
+99,234
+Cost
+27,975,138
+7,730,260
+2,016,238
+Accumulated amortisation and
+impairment
+37,721,636
+(4,960,070)
+(1,917,004)
+(7,078,661)
+Net book amount
+27,773,551
+2,770,190
+(201,587)
+11,127,265
+2,314,536
+- Loan receivables at fair value through other comprehensive income 22(a)
+- Other financial investments at fair value through other
+comprehensive income
+7,798,413
+7,124,305
+20
+30,707,168
+22
+Financial assets at amortised cost:
+- Trade receivables
+24
+24
+- Prepayments, deposits and other assets (excluding
+non-financial assets items)
+22
+20,594,219
+20,573,435
+21
+18,481,104
+- Treasury investments at fair value through other
+- Treasury investments at amortised cost
+15,073,013
+109,674,420
+92,918,129
+EAT BETTER, LIVE BETTE
+302
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+17 FINANCIAL INSTRUMENTS BY CATEGORY (Continued)
+As of December 31,
+Note
+2023
+RMB'000
+2022
+RMB'000
+Financial assets at fair value through other comprehensive income:
+comprehensive income
+- Restricted cash
+8,547,635
+Liabilities as per consolidated statement of financial position
+14,605,601
+25(a)
+33,339,754
+20,158,606
+69,963,325
+54,119,714
+29
+29
+378,720
+100,000
+22,980,506
+17,379,302
+23,798,004
+12,432,342
+19
+19,373,229
+- Cash and cash equivalents
+25(b)
+8,560,286
+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 (excluding
+non-financial liabilities items)
+- Borrowings
+- Notes payable
+- Lease liabilities
+2,742,999
+2,052,731
+5,947,057
+6,287,829
+21
+11,014,947
+77,845,116
+300
+21
+services
+3%-15%
+3%-33%
+1%-9%
+28%
+84%
+28%-36%
+2.5%
+2.5%
+2.5%
+26%
+26%
+25%
+Meituan 2023 Annual Report 301
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+sharing
+For the year ended December 31, 2023
+In-store,
+hotel & travel
+Bike sharing
+and e-moped
+5,081,178
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+16 INTANGIBLE ASSETS (Continued)
+Impairment of goodwill (Continued)
+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.
+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.
+Impairment review on the goodwill of the Group has been conducted by the management as of December 31,
+2023 and 2022, according to IAS 36 "Impairment of assets".
+The key assumptions used in the value-in-use calculations for significant group of CGUS allocated with
+goodwill are as follows:
+As of December 31, 2023
+Annual revenue growth rate for 5-year period
+Gross margin
+Terminal revenue growth rate
+Pre-tax discount rate
+Food delivery
+91,193,316
+16 INTANGIBLE ASSETS (Continued)
+As of December 31, 2022
+3.0%
+26%
+26%
+28%
+The budgeted gross margin used in the goodwill impairment testing are 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. Pre-tax discount rates reflect market assessments of
+the time value and the specific risks relating to the industry.
+Other CGUS cover the business of RMS, micro-credit business and Meituan Instashopping. As of December
+31, 2023 and 2022, the pre-tax discount rates used in the impairment testing for other CGUS were from 21%
+to 30% and 20% to 29%, while the terminal revenue growth rate were 2.5% and 3.0%.
+Management had not identified any reasonably possible change in key assumptions that could cause carrying
+amounts of CGUS to exceed the recoverable amounts.
+17
+FINANCIAL INSTRUMENTS BY CATEGORY
+The Group holds the following financial instruments:
+Note
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Assets as per consolidated statement of financial position
+Financial assets at fair value through profit or loss:
+- Treasury investments at fair value through profit or loss
+- Other financial investments at fair value through profit or loss
+3.0%
+Impairment of goodwill (Continued)
+3.0%
+85%
+Annual revenue growth rate for 5-year period
+Gross margin
+Terminal revenue growth rate
+Pre-tax discount rate
+Bike sharing
+and e-moped
+In-store,
+sharing
+Food delivery
+hotel & travel
+services
+3%-16%
+3%-28%
+11%-12%
+25%
+24%-42%
+35300
+2,321,865
+8,736,708
+(410,827)
+As of December 31, 2022
+(Restated)
+(2,345)
+(2,345)
+Business combination
+111,995
+(124,209)
+22,893
+(21,019)
+(146,111)
+(999,646) (1,048,294)
+154,673
+(103,190)
+80,540
+consolidated income statement
+Credited/(charged) to
+(184,038) (2,626,372)
+(902,183)
+(489,022) (1,051,129)
+As of January 1, 2022 (Restated)
+(902,177)
+Charged to other reserves
+(182,164) (2,640,931)
+The Group 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.
+Meituan 2023 Annual Report 307
+At the beginning of the year
+2022
+RMB'000
+Year ended December 31,
+2023
+RMB'000
+(a) Associates
+RMB7,742 million of other financial investments at fair value through profit or loss was denominated in USD
+(2022: RMB5,541 million), and other balances were denominated in RMB.
+15,073,013
+18,481,104
+7,171,526
+7,761,724
+7,901,487
+10,719,380
+2022
+RMB'000
+2023
+RMB'000
+Other investees (b)
+Associates (a)
+As of December 31,
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+(902,177)
+7,901,487
+(184,038) (1,724,195)
+(489,022) (1,051,129)
+(999,646)
+(410,827)
+As of December 31, 2022
+Total
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+(4)
+Others
+at fair value
+combinations
+method or Right-of-use
+business
+the equity
+arising from
+for using
+assets
+assets
+(182,164)
+(1,592,641)
+Adjustment on Amendments to
+As of December 31, 2021
+Adjustment on Amendments
+to IAS 12 (Note 2.1.1(a))
+(385,833) (3,145,372)
+(1,088,421) (1,296,868)
+(374,250)
+As of December 31, 2023
+(162,574) (447,181)
+(41,095) (57,260)
+(248,574)
+(72,610)
+(16,165)
+Charged to other reserves
+36,577
+consolidated income statement
+(Charged)/credited to
+(182,164) (2,640,931)
+(999,646) (1,048,294)
+(410,827)
+As of January 1, 2023 (Restated)
+(1,048,290)
+(1,048,290)
+IAS 12 (Note 2.1.1(a))
+(6)
+accounted
+4,453,450
+2,802,076
+Movement of other financial investments at fair value through other comprehensive income is analysed as
+follows:
+2,321,865
+2,314,536
+1,413,000
+1,413,000
+908,865
+901,536
+2022
+RMB'000
+Year ended December 31,
+2023
+RMB'000
+Equity investments in an unlisted entity
+Equity investments in listed entities
+Other financial investments at fair value through other comprehensive income comprise the following:
+20 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 309
+During the year ended December 31, 2023, the Group transferred an investment from other financial
+investments at fair value through profit or loss to other financial investments at fair value through other
+comprehensive income as a result of conversion of the preferred shares into ordinary shares upon the
+investee's completion of Initial Public Offering.
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+10,061,018
+EAT BETTER, LIVE BETTE
+2,321,865
+2,314,536
+At the end of the year
+100,099
+18,923
+Currency translation differences
+(64,542)
+400,261
+Transfers, net (Note 19(b)(i))
+(442,897)
+(426,513)
+Changes in fair values
+706,500
+Additions
+2,022,705
+2,321,865
+At the beginning of the year
+Note (i):
+Additions
+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.
+7,761,724
+Meituan 2023 Annual Report
+308
+EAT BETTER, LIVE BETTE
+7,901,487
+10,719,380
+At the end of the year
+79,094
+33,212
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Currency translation differences
+Transfer, net
+(246,092)
+(85,065)
+Disposals
+155,665
+67,670
+Changes in fair values
+2,241,531
+1,217,839
+For the year ended December 31, 2023
+19 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
+(b) Other investees
+350,709
+(2,162,543)
+(400,261)
+57,867
+(602,789)
+(1,168,722)
+166,557
+908,464
+766,035
+9,846,407
+7,171,526
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+Currency translation differences
+Transfers, net (Note (i))
+Disposals
+Changes in fair values
+Additions
+At the beginning of the year
+7,171,526
+intangible
+At the end of the year
+The movement on the gross deferred tax liabilities is as follows:
+liabilities
+Tax losses
+Lease
+The movement on the gross deferred tax assets is as follows:
+(a) Deferred tax assets (Continued)
+18 DEFERRED INCOME TAXES (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+RMB'000
+Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+1,497,106
+1,914,449
+978,965
+965,097
+- to be recovered within 12 months
+518,141
+949,352
+304
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+(280,967)
+260,552
+691,359
+income statement
+Credited/(charged) to consolidated
+3,291,934
+405,282
+1,050,416
+1,836,236
+As of January 1, 2023 (Restated)
+1,048,290
+1,048,290
+IAS 12 (Note 2.1.1(a))
+Adjustment on Amendments to
+2,243,644
+405,282
+2,126
+1,836,236
+As of December 31, 2022
+- to be recovered after 12 months
+670,944
+2022
+RMB'000
+As of December 31,
+The balance comprises temporary differences attributable to:
+(a) Deferred tax assets
+The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
+financial position:
+For the year ended December 31, 2023
+18 DEFERRED INCOME TAXES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 303
+101,717,155
+As of December 31,
+126,008,062
+6,078,037
+33,607,372
+34,610,966
+32
+19,111,112
+19,931,896
+Other Investments
+31
+5,369,141
+2023
+RMB'000
+2022
+RMB'000
+Deferred tax assets:
+1,497,106
+1,914,449
+Net deferred tax assets
+(1,794,828)
+(2,177,142)
+Set-off of deferred tax assets pursuant to set-off provisions
+3,291,934
+4,091,591
+Total gross deferred tax assets
+111,242
+- Others
+1,050,416
+1,310,968
+- Lease liabilities
+1,836,236
+2,669,381
+- Tax losses
+(Restated)
+2023
+RMB'000
+Credited/(charged) to other reserves
+405,282
+(13,073)
+1,794,828
+2,177,142
+Set-off of deferred tax liabilities pursuant to set-off provisions
+(2,640,931)
+(3,145,372)
+Total gross deferred tax liabilities
+(182,164)
+(385,833)
+- Others
+(1,048,294)
+(1,296,868)
+(999,646)
+(1,088,421)
+- Investments accounted for using the equity method or at fair value
+- Right-of-use assets
+(410,827)
+(374,250)
+- Other intangible assets arising from business combinations
+(Restated)
+2022
+RMB'000
+Net deferred tax liabilities
+2023
+RMB'000
+(968,230)
+As of December 31,
+(b) Deferred tax liabilities (Continued)
+18 DEFERRED INCOME TAXES (Continued)
+141,786
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+306
+EAT BETTER, LIVE BETTE
+(846,103)
+(968,230)
+(21,539)
+(66,899)
+- to be recovered within 12 months
+(824,564)
+(901,331)
+- to be recovered after 12 months
+Deferred tax liabilities:
+2022
+RMB'000
+2023
+(846,103)
+As of December 31,
+RMB'000
+(b) Deferred tax liabilities
+508,386
+904,999
+1,695,764
+As of January 1, 2022 (Restated)
+902,177
+902,177
+IAS 12 (Note 2.1.1(a))
+2,206,972
+508,386
+2,822
+1,695,764
+As of December 31, 2021
+4,091,591
+111,242
+1,310,968
+128,713
+The balance comprises temporary differences attributable to:
+2,669,381
+As of December 31, 2023
+3,109,149
+Credited/(charged) to consolidated
+Adjustment on Amendments to
+265,619
+For the year ended December 31, 2023
+income statement
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 305
+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, 2023 and 2022, the
+Group did not recognise deferred tax assets of RMB14,290 million and RMB15,374 million in respect of
+cumulative tax losses amounting to RMB88,482 million and RMB91,891 million including the tax losses
+arising from the excess deduction of share-based payments. These tax losses will expire from 2024 to
+2028 (2022: 2023 to 2027), and certain subsidiaries of the Group may extend to 2033 (2022: 2032).
+3,291,934
+405,282
+1,836,236
+As of December 31, 2022 (Restated)
+1,050,416
+(152,662)
+335,447
+(75,589)
+(27,515)
+(125,147)
+Charged to other reserves
+18 DEFERRED INCOME TAXES (Continued)
+145,417
+414,836
+4,903,068
+1,201,428
+4,011,247
+591,157
+Rental deposits
+372,688
+Others
+Current
+449,792
+46,159
+Loan receivables (a)
+1,711,802
+Prepayments to merchants
+6,043,377
+5,203,420
+2,115,482
+1,475,951
+420,159
+Deductible value-added tax
+728,714
+813,390
+Prepayments on behalf of third parties
+1,303,839
+1,582,525
+Contract assets
+Prepayments for PP&E and other assets
+2023
+RMB'000
+2,375,377
+20,594,219
+11,127,265
+70,479,938
+83,395,830
+Prepayments for purchased goods or services
+111,820,679
+91,873,270
+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 primarily wealth management products on which
+the principal and returns were not guaranteed. Treasury investments at fair value through other comprehensive
+income were large-denomination negotiable certificates of term deposits and other financial products.
+Treasury investments were denominated in the following currencies:
+USD
+RMB
+As of December 31,
+2022
+RMB'000
+3,240,645
+28,970,000
+91,377,821
+72,371,683
+120,347,821
+99,987,328
+Meituan 2023 Annual Report 311
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS
+Non-current
+For the year ended December 31, 2023
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Loan receivables (a)
+27,615,645
+685,739
+Allowances for impairment losses on loan receivables at fair value
+Receivables upon share-based payments vesting or exercise
+1,319,760
+Loan receivables at fair value through other comprehensive income
+Less: fair value changes of loan receivables
+7,939,460
+7,175,335
+(141,047)
+(51,030)
+7,798,413
+7,124,305
+through other comprehensive income (Note 3.1.2)
+(411,632)
+(234,463)
+23 INVENTORIES
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Finished goods
+Raw materials
+1,238,098
+1,084,379
+101,712
+102,989
+1,339,810
+1,187,368
+Less: provisions for impairment
+10,266,067
+(35,215)
+(24,603)
+1,304,595
+620,341
+639,763
+(74,992)
+Less: allowance for impairment (Note 3.1.2)
+623,089
+1,468,075
+Deposits in third-party payment processors
+360,971
+357,408
+Amounts due from related parties (Note 38)
+70,211
+107,519
+Others
+891,699
+1,446,517
+14,534,923
+13,292,494
+EAT BETTER, LIVE BETTE
+312
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+22 PREPAYMENTS, DEPOSITS AND OTHER ASSETS (Continued)
+(a) Loan receivables
+Loan receivables are derived from micro-credit business and are 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:
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Loan receivables at amortised cost
+640,961
+1,394,752
+(20,620)
+7,830,630
+4,205,521
+8,527,142
+2023
+RMB'000
+2022
+RMB'000
+Online marketing services and others
+4,558,722
+Various packages for bike sharing and e-moped sharing services
+Business cooperation agreement with Maoyan (Note 38)
+42,886
+57,596
+157,264
+4,248,407
+4,773,582
+29
+TRADE PAYABLES
+Meituan 2023 Annual Report 319
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+As of December 31, 2023 and 2022, the aging analysis of the trade payables based on invoice date is as
+follows:
+Trade payables
+Within 3 months
+3 to 6 months
+6 months to 1 year
+Over 1 year
+The Group's trade payables was primarily denominated in RMB.
+30 OTHER PAYABLES AND ACCRUALS
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Year ended December 31,
+22,467,344
+Revenues recognised that was included in the deferred revenues
+balance at the beginning of the year
+5,053,375
+17,458
+1,162,765
+(719,053)
+17,458
+38,695
+38,695
+20
+10,322,138 (10,705,249)
+1,513,938
+353,340
+1,484,187
+EAT BETTER, LIVE BETTE
+318
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+28 DEFERRED REVENUES
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Online marketing services and others
+5,538,424
+5,010,489
+Various packages for bike sharing and e-moped sharing services
+59,708
+42,886
+5,598,132
+The following table shows the amount of the revenues recognised in the current reporting period relating to
+carried-forward deferred revenues:
+8,114,058
+16,960,247
+221,416
+Undue interests accrued for senior notes (Note 32)
+67,009
+65,892
+Others
+1,117,873
+919,167
+17,942,215
+16,655,307
+EAT BETTER, LIVE BETTE
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+21 TREASURY INVESTMENTS
+Long-term treasury investments at
+- Amortised cost
+- Fair value through profit or loss
+Short-term treasury investments at
+- Amortised cost
+- Fair value through profit or loss
+- Fair value through other comprehensive income
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+729,656
+748,880
+7,797,486
+7,365,178
+304,501
+194,288
+360,139
+676,758
+129,805
+87,595
+189,069
+110,044
+22,980,506
+17,379,302
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Employee payroll and benefits payables
+6,468,239
+6,548,048
+Deposits from merchants and transacting users
+5,941,154
+5,634,670
+Amounts collected on behalf of third parties
+1,846,855
+1,206,368
+Customer advances
+778,055
+626,134
+Taxes and surcharges payables
+738,151
+673,769
+Accrued expenses
+624,740
+Amounts due to related parties (Note 38)
+24
+bonds
+RMB'000
+Meituan 2023 Annual Report 313
+As of December 31, 2022
+6,193,151
+415
+316,743,344
+As of December 31, 2023, there were 604,519,783 Class A Shares amongst the total issued Shares and the
+remainders were Class B Shares.
+27 OTHER RESERVES
+Meituan 2023 Annual Report
+317
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Conversion
+Currency
+3
+option of
+translation
+convertible
+reserve
+RMB'000
+payments
+RMB'000
+differences
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+As of January 1, 2023
+20
+Equity-settled share-based payments
+Capital Share-based
+43,126
+Shares held for shares award scheme
+3
+6,193,151
+415
+316,743,344
+As of January 1, 2023
+Exercise of share options and
+RSUs vesting
+11,538
+1
+8,835,268
+2
+Shares held for shares award scheme
+39,860
+2
+(2)
+As of December 31, 2023
+6,244,549
+418
+325,578,612
+As of January 1, 2022
+6,136,145
+411
+311,221,237
+Exercise of share options and
+RSUs vesting
+13,880
+1
+5,522,107
+Exercise of share options and RSUs vesting
+10,322,138
+8,394,315
+(8,739,989)
+(10,705,249) 1,513,938
+353,340
+As of December 31, 2022
+Conversion
+Currency
+option of
+Capital Share-based
+translation
+reserve
+RMB'000
+payments
+differences
+RMB'000
+RMB'000
+convertible
+bonds
+RMB'000
+Others
+RMB'000
+Total
+RMB'000
+20
+6,835,306
+(11,899,519) 1,513,938
+683,580
+(2,866,675)
+8,742,962
+(5,256,130)
+8,742,962
+(5,256,130)
+332,660
+332,660
+310
+(719,053)
+Tax benefit from share-based payments
+Appropriations to general reserves
+for shares
+award scheme
+RMB'000
+Fair value changes of and net provisions for
+impairment losses on financial assets
+Exercise of share options and RSUs vesting
+Share of changes in net assets of associates
+1,484,187
+8,394,315
+(8,739,989)
+Share of changes in net assets of associates |---- 364,222
+364,222
+Currency translation differences
+275,055
+275,055
+Fair value changes of and net provisions for
+impairment losses on financial assets
+Appropriations to general reserves
+As of December 31, 2023
+Tax benefit from share-based payments
+50,228
+50,228
+216,667
+216,667
+6,377
+6,377
+20
+9,976,464
+(10,430,194)
+1,513,938
+990,834
+2,051,062
+As of January 1, 2022
+Equity-settled share-based payments
+Currency translation differences
+premium
+RMB'000
+Share
+Share
+capital
+RMB'000
+The Group considered that the carrying amounts of the trade receivables approximated their fair values as of
+December 31, 2023 and 2022.
+EAT BETTER, LIVE BETTE
+314
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+24
+TRADE RECEIVABLES (Continued)
+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:
+Trade receivables
+Within 3 months
+3 to 6 months
+6 months to 1 year
+Over 1 year
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+2,411,778
+1,867,157
+250,334
+142,353
+66,861
+33,060
+14,026
+10,161
+2,742,999
+2,052,731
+(315,226)
+The majority of the Group's trade receivables was denominated in RMB.
+(291,649)
+61,317
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+TRADE RECEIVABLES
+Trade receivables
+Less: allowance for impairment
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+3,034,648
+2,367,957
+(291,649)
+(315,226)
+2,742,999
+2,052,731
+Movements on the Group's allowance for impairment of trade receivables are as follows:
+At the beginning of the year
+Credit loss allowance recognised, net
+Write-offs
+At the end of the year
+Year ended December 31,
+2023
+RMB'000
+2022
+RMB'000
+(315,226)
+(225,994)
+(37,740)
+(91,260)
+2,028
+24
+The maximum exposure to credit risk as of December 31, 2023 and 2022 was the carrying value of the trade
+receivables. The Group did not hold any collateral as security.
+(a) Cash and cash equivalents
+33,339,754
+20,158,606
+(b) Restricted cash
+Restricted cash are denominated in the following currencies:
+RMB
+USD
+Others
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+19,353,690
+11,274
+8,265
+14,538,896
+33,286
+33,419
+19,373,229
+14,605,601
+Restricted cash balances were those held in bank accounts subject to certain restriction according to
+agreement with certain parties.
+EAT BETTER, LIVE BETTE
+316
+Meituan 2023 Annual Report
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+26 SHARE CAPITAL, SHARE PREMIUM AND SHARES HELD FOR SHARES AWARD SCHEME
+As of December 31, 2023 and 2022, the authorised share capital of the Company comprised 10,000,000,000
+ordinary shares with par value of USD0.00001 per share. The number of authorised share capital of Class A
+and Class B Share is 735,568,783 and 9,264,431,217, respectively. Each Class A Share will entitle the holder
+to exercise 10 votes, and each Class B Share will entitle the holder to exercise one vote, respectively, on any
+resolution tabled at the Company's general meetings, except for resolutions with respect to a limited number
+of reserved matters, in relation to which each Share is entitled to one vote. Class A Shares may be converted
+into Class B Shares on a one to one ratio. The weighted voting rights attached to the Company's Class A
+Shares will cease when none of the holders of the Class A Shares have beneficial ownership of any of our
+Class A Shares.
+Issued and fully paid:
+Number
+of ordinary
+Shares held
+shares
+'000
+1,199,030
+211,378
+25 CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS
+18,748,198
+Others
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+Cash on hand and cash in bank
+29,071,668
+13,347,292
+Term deposits with initial terms three months or less
+Cash held in other financial institutions (Note (i))
+3,397,467
+870,619
+6,033,425
+777,889
+33,339,754
+20,158,606
+Cash and cash equivalents of the Group primarily represents bank deposits and fixed deposits with
+maturities three months or less.
+1,194,270
+Note (i):
+As of December 31, 2023 and 2022, 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.
+25
+Meituan 2023 Annual Report 315
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+CASH AND BALANCES WITH BANKS AND FINANCIAL INSTITUTIONS (Continued)
+(a) Cash and cash equivalents (Continued)
+Cash and cash equivalents are denominated in the following currencies:
+As of December 31,
+2023
+RMB'000
+2022
+RMB'000
+RMB
+USD
+30,554,315
+2,510,334
+275,105
+1,194,270
+6,078,037
+320 Meituan 2023 Annual Report
+468,620
+1,135,405
+and contract assets
+Net provisions for impairment losses on financial
+9,730,314
+7,996,757
+15,16
+Depreciation and amortisation
+Adjusted for:
+Share-based compensation expenses
+Profit/(loss) before income tax
+14,021,868
+2022
+RMB'000
+2023
+RMB'000
+Note
+Year ended December 31,
+(a) Cash generated from operations
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report
+(6,755,517)
+328
+33
+8,742,962
+Finance costs
+(1,740,091)
+(4,143,108)
+treasury investments and others
+Fair value changes and interest income related to
+1,013,057
+(234,227)
+19
+fair value through profit or loss
+8,383,353
+Fair value changes of other financial investments at
+(1,212,652)
+12
+103,328
+219,752
+12,15,16
+Net provisions for impairment of non-financial assets
+Share of profits of investments accounted for using
+the equity method
+(224,358)
+(95,307)
+Net gains arising from disposals or deemed disposals
+of subsidiaries and investees
+(35,848)
+EAT BETTER, LIVE BETTE
+Reference is made to the announcement of the Company dated June 29, 2023 in relation to the acquisitions
+of Light Year. In August 2023, the said acquisitions have been completed, upon which, the consideration of
+approximately RMB1,675 million (equivalent to approximately US$234 million) have been paid and a total of
+approximately RMB1,675 million identifiable net assets (arrived after taking into account the cash position of
+approximately US$286 million offset by the Assumed Liabilities of approximately RMB367 million) have been
+acquired.
+36 BUSINESS COMBINATION
+2,782,808
+10,482,123
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+1-2 years
+Within 1 year
+CAPITAL COMMITMENTS
+35
+1,003,032
+No dividends have been paid or declared by the Company during each of the years ended December 31,
+2023 and 2022.
+8,742,962
+8,383,353
+Share-based compensation expenses
+(10,962)
+Amount capitalised
+8,742,962
+8,394,315
+Total share-based payments charges
+50,559
+34 DIVIDENDS
+1,573,132
+166,419
+969,314
+5,372,493
+11,651,634
+1,516,072
+1,167,823
+3,856,421
+10,483,811
+Purchase of property, plant and equipment
+Investments
+2022
+RMB'000
+RMB'000
+2023
+As of December 31,
+For the year ended December 31, 2023
+35 CAPITAL COMMITMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 327
+11,651,634
+More than 5 years
+2-5 years
+5,372,493
+47,239
+60
+10
+3,510
+1,423,853
+Foreign exchange gains, net
+475,496
+Cash flows
+5,369,141
+100,000
+33,673,264
+19,111,112
+Liabilities as of
+January 1, 2023
+RMB'000
+RMB'000
+(390,548)
+RMB'000
+RMB'000
+Liabilities
+liabilities
+profit or loss
+interests
+Borrowings
+Assumed
+Lease
+value through
+RMB'000
+and undue
+278,720
+(366,924)
+378,720
+34,677,975
+19,931,896
+December 31, 2023
+Liabilities as of
+111
+572,844
+4,528
+differences
+(2,969,089)
+Currency translation
+822,415
+340,760
+Finance costs
+(870,506)
+Deductions
+4,287,702
+Other additions
+366,924
+Business combination
+260,678
+Notes payable liabilities at fair
+Financial
+(c) Reconciliation of liabilities related to cash flows generated from financing activities
+Increase in trade payables
+(481,072)
+(141,830)
+Increase in inventories
+(150,117)
+(1,984,534)
+Increase in prepayments, deposits and other assets
+(377,239)
+(727,944)
+4,381,206
+Increase in trade receivables
+(4,760,593)
+Increase in restricted cash
+Changes of working capital:
+(59,191)
+(151,527)
+Net gains on sales of non-current assets
+(354,271)
+(74,998)
+9
+(1,327,089)
+2,357,980
+Increase in payables to merchants
+11,368,449
+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 years ended
+December 31, 2023 and 2022.
+(b) Major non-cash transactions
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 329
+11,658,706
+40,744,699
+Cash generated from operations
+(22,527)
+(6,874)
+Decrease in other non-current liabilities
+(1,784,268)
+1,335,720
+Increase/(decrease) in other payables and accruals
+(425,105)
+544,757
+Increase/(decrease) in deferred revenues
+(87,112)
+3,467,173
+Increase/(decrease) in advances from transacting users
+1,483,065
+1,583,185
+Share options
+8,692,403
+8,390,805
+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 and US$1,500,000,000 zero coupon convertible bonds
+("Series 2 Bonds") due on April 27, 2028 (together, the "Bonds") to third party professional investors (the
+"Bondholders").
+As of December 31, 2023, the fair value of the senior notes was RMB12,498 million (2022: RMB11,493
+million). The respective fair values were assessed based on the quoted market price of these senior
+notes at the end of each reporting period.
+(b)
+On October 29, 2020, the Company issued senior notes on the Hong Kong Stock Exchange which were
+comprised of 2.125% senior notes in the aggregate principal amount of US$750 million due October 28,
+2025 and 3.05% senior notes in the aggregate principal amount of US$1,250 million due October 28,
+2030.
+(a)
+32 NOTES PAYABLE (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+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.
+322
+33,673,264
+34,677,975
+8,660,587
+24,946,785
+65,892
+67,009
+15,581,442
+10,216,809
+8,812,715
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+EAT BETTER, LIVE BETTE
+33,673,264
+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. 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.
+Meituan 2023 Annual Report 323
+As of December 31, 2023, the total fair value of the Bonds was RMB18,839 million (2022: RMB17,794 million).
+Such fair values were assessed based on the quoted market price of these Bonds at the end of each reporting
+period.
+The equity component of the Bonds of RMB1,514 million was included in "Other reserves" (Note 27) of the
+Group as of December 31, 2023 and 2022.
+19,742,317
+20,498,835
+1,649,070
+392,057
+419,410
+337,108
+17,701,190
+19,742,317
+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.
+2022
+RMB'000
+Year ended December 31,
+At the end of the year
+Currency translation differences
+Interest expenses
+At the beginning of the year
+The movement of the liability component of the Bonds for the years ended December 31, 2023 and 2022 is
+set out below:
+32 NOTES PAYABLE (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2023
+RMB'000
+34,677,975
+65,892
+67,009
+The amount of borrowing costs capitalised during the years ended December 31, 2023 and 2022 was
+immaterial.
+As of December 31, 2023, the effective interest rates for bank borrowings were 1.10%-3.40% (2022: 1.77%-
+3.65%). For the year ended December 31, 2023, the weighted average effective interest rate was 1.92% per
+annum (2022: 2.39% per annum).
+17,562,145
+19,321,793
+1,548,967
+610,103
+152,967
+610,103
+1,396,000
+Note (i):
+2022
+RMB'000
+As of December 31,
+RMB bank borrowings - unsecured
+Included in current liabilities:
+RMB bank borrowings - secured (Note (i))
+RMB bank borrowings - unsecured
+Included in non-current liabilities:
+31 BORROWINGS
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+2023
+RMB'000
+As of December 31, 2023, the Group's land use rights with an original book value and a net book value of
+RMB6,738 million and RMB6,398 million (2022: RMB6,738 million and RMB6,538 million, respectively) had been
+charged as collateral for borrowings.
+32 NOTES PAYABLE
+Meituan 2023 Annual Report 321
+33,607,372
+34,610,966
+All of these notes payable issued by the Group were unsecured.
+More than 5 years
+Between 2 and 5 years
+Within 1 year (Note 30)
+Between 1 and 2 years
+The notes payable and undue interests were repayable as follows:
+Undue interests accrued for senior notes (Note 30)
+Included in current liabilities:
+19,742,317
+20,498,835
+Non-current portion of long-term USD convertible bonds (b)
+13,865,055
+14,112,131
+Non-current portion of long-term USD senior notes (a)
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+Included in non-current liabilities:
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+33 SHARE-BASED PAYMENTS
+As of December 31, 2023, there was a total of 609,351,099 share options and RSUs available for further grant
+under all schemes of the Company.
+Share options
+Share options granted typically expire in 10 years from the respective grant dates, and vest in tranches from
+the vesting commence date over the vesting period, on condition that participants remain in service without
+any performance requirements.
+Granted during the year
+Outstanding as of January 1, 2022
+167.29
+119,992,525
+Outstanding as of December 31, 2023
+139.36
+(26,823,099)
+Forfeited during the year
+186.50
+Vested during the year
+(51,377,038)
+128.21
+65,990,343
+Granted during the year
+188.60
+132,202,319
+Outstanding as of January 1, 2023
+per RSU (HKD)
+Number of RSUs
+Weighted
+average grant
+date fair value
+Vested during the year
+Forfeited during the year
+Outstanding as of December 31, 2022
+125,367,125
+RSUs
+2022
+RMB'000
+2023
+RMB'000
+Year ended December 31,
+The total share-based payments charges were expensed or capitalised in the following categories in the
+consolidated income statement or the consolidated statement of financial position respectively:
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+326
+EAT BETTER, LIVE BETTE
+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.
+188.60
+132,202,319
+201.46
+(12,380,617)
+136.55
+(43,295,263)
+185.06
+62,511,074
+173.66
+Movements in the number of RSUs and the respective weighted average grant date fair value are as follows:
+EAT BETTER, LIVE BETTE
+The Company also grants RSUs to employee participants, related entity participants, and service providers
+under the Post-IPO Share Award Scheme. The RSUs awarded vest in tranches from the vesting commence
+date over a certain service period. Once the vesting conditions of RSUs are met, the RSUs are considered
+duly and validly issued to the holder, and free of restrictions on transfer.
+RSUs
+32.94
+(3,253,146)
+Exercised during the year
+60.74
+(1,921,391)
+Forfeited during the year
+38.31
+27,067,581
+Outstanding as of January 1, 2023
+Outstanding as of December 31, 2023
+(HKD)
+Number of
+share options
+Movements in the number of share options and their related weighted average exercise prices are as follows:
+Share options (Continued)
+33 SHARE-BASED PAYMENTS (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+324 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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.
+Weighted
+average exercise
+price per
+share option
+21,893,044
+37.14
+Vested and exercisable as of December 31, 2023
+33 SHARE-BASED PAYMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report 325
+The weighted average remaining contractual life of outstanding share options was 3.7 years as of December
+31, 2023 (2022: 4.7 years). The weighted average price of the shares at the time these share options were
+exercised was HKD128.49 per share (equivalent to approximately RMB116.04 per share) during the year
+ended December 31, 2023 (2022: HKD177.25 per share (equivalent to approximately RMB152.51 per share)).
+There was no share option granted during the years ended December 31, 2023 and 2022.
+30.94
+17,276,823
+38.31
+27,067,581
+27.21
+(10,468,483)
+144.17
+(452,234)
+36.51
+37,988,298
+Vested and exercisable as of December 31, 2022
+Outstanding as of December 31, 2022
+Exercised during the year
+Forfeited during the year
+Outstanding as of January 1, 2022
+33.18
+18,246,636
+For the year ended December 31, 2023
+330
+Meituan 2023 Annual Report
+Fair value changes of and net
+Exercise of share options and
+8,742,962
+Equity-settled share-based payments
+capacity as owners
+Transaction with owners in their
+Total other comprehensive income
+8,964,459
+(334,186)
+9,298,645
+(334,186)
+RSUS vesting
+(334,186)
+9,298,645
+provisions for impairment
+losses on financial assets
+Fair value changes of and net
+Currency translation differences
+Other comprehensive income,
+net of tax
+(4,425,554)
+7,039
+1,513,938
+(12,781,857)
+6,835,306
+9,298,645
+20
+(5,256,130)
+(5,256,130)
+the forthcoming annual general meeting of the Company to be held on June 21,
+2024
+"AGM"
+DEFINITIONS
+Meituan 2023 Annual Report
+336
+EAT BETTER, LIVE BETTE
+Save as aforesaid, there were no other material subsequent events during the period from January 1, 2024 to
+the approval date of these consolidated financial statements by the Board on March 22, 2024.
+The Company repurchased 44,131,100 of Class B Shares in the open market in January 2024 and
+subsequently cancelled in February 2024. Such Class B Shares were repurchased at prices ranging from
+HKD68.20 to HKD77.05 per share.
+For the year ended December 31, 2023
+41 SUBSEQUENT EVENTS
+8,742,962
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+8,025,737
+(327,147)
+1,513,938
+10,322,138 - (3,483,212)
+20
+As of December 31, 2022
+3,486,832
+3,486,832
+in their capacity as owners
+Total transaction with owners
+Meituan 2023 Annual Report 335
+As of January 1, 2022
+9,682,271
+(134,559)
+1,513,938
+(3,483,212)
+10,322,138
+20
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+RMB'000
+Total
+(327,147)
+Others
+differences
+payments
+reserve
+RMB'000
+convertible
+translation
+Share-based
+Capital
+option of
+Currency
+Conversion
+bonds
+8,025,737
+1,809,620
+1,809,620
+1,513,938
+9,976,464 (1,673,592)
+20
+As of December 31, 2023
+(345,674)
+(345,674)
+in their capacity as owners
+Total transaction with owners
+(8,739,989)
+8,394,315
+(8,739,989)
+RSUS vesting
+Exercise of share options and
+8,394,315
+Equity-settled share-based payments
+capacity as owners
+Transaction with owners in their
+Total other comprehensive income
+2,002,208
+192,588
+1,809,620
+192,588
+192,588
+"Articles" or "Articles of
+Association"
+"associate(s)"
+"Assumed Liabilities"
+"Audit Committee❞
+International Financial Reporting Standards, as issued from time to time by the
+International Accounting Standards Board
+the HKD counter for trading in the Class B Shares on the Stock Exchange
+the Hong Kong Special Administrative Region of the PRC
+Computershare Hong Kong Investor Services Limited
+the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong),
+as amended, supplemented or otherwise modified from time to time
+Hong Kong dollars, the lawful currency of Hong Kong
+the Company and its subsidiaries and Consolidated Affiliated Entities from time
+to time
+Beijing Guangnianzhiwai Technology Co., Ltd.* (±ÀŒ¾Ð³), a
+limited liability company incorporated under the laws of the PRC
+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
+Meituan 2023 Annual Report 339
+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
+"IFRS Accounting Standards"
+"HKD counter"
+"Hong Kong" or "HK"
+"Hong Kong Share Registrar"
+Futures Ordinance" or "SFO❞
+"Hong Kong Securities and
+"HK dollars" or "HK$" or "HKD❞
+"Hong Kong dollars" or
+"Group", "our Group" or "the
+Group", "we", "us", or "our"
+"Domestic Light Year"
+the series of contractual arrangements entered into between WFOES, Onshore
+Holdcos and Registered Shareholders (as applicable)
+DEFINITIONS
+"Independent Third Party(ies)"
+"IPO"
+the Model Code for Securities Transactions by Directors of Listed Issuers as set
+out in Appendix C3 to the Listing Rules
+Mobike (Beijing) Information Technology Co., Ltd. (ĦÀ)£¾Ð¶ĦRA),
+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
+"Offshore Light Year"
+"Model Code"
+"Mobike Beijing"
+"Mobike"
+the memorandum of association of the Company adopted on August 30, 2018
+"Memorandum of Association" with effect from the Listing Date, as amended from time to time
+Beijing Meituan Finance Technology Co., Ltd. (À¤ŒÂ¾ÃƑ), a
+limited liability company incorporated under the laws of the PRC on August 9,
+2017 and our Consolidated Affiliated Entity
+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
+"Memorandum" or
+"Meituan Finance"
+"Main Board"
+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
+collectively, Offshore Light Year and Domestic Light Year
+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
+“Listing Rules"
+“Listing Date"
+"Listing"
+"Light Year"
+"Director(s)"
+provisions for impairment
+losses on financial assets
+"Crown Holdings"
+"Contractual Arrangement(s)"
+"Beijing Xinmeida"
+DEFINITIONS
+Meituan 2023 Annual Report 337
+Beijing Sankuai Technology Co., Ltd. (2), 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. (À=REĦĦĦì), 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. (=REH¶ÐR), 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. (À), 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.
+company incorporated under the laws of the PRC on April 27, 2006 and our
+indirect wholly-owned subsidiary
+), a limited liability
+Beijing Kuxun Interaction Technology Co., Ltd. (UÀÆSONR¬), a
+limited liability company incorporated under the laws of the PRC on March 29,
+2006 and our Consolidated Affiliated Entity
+Beijing Xinmeida Technology Co., Ltd. (¤¾£&2), a limited
+liability company incorporated under the laws of the PRC on March 17, 2016
+and our Consolidated Affiliated Entity
+the external auditor of the Company
+the outstanding principal amount payable by Domestic Light Year to certain
+bondholders
+has the meaning ascribed to it under the Listing Rules
+the articles of association of the Company adopted on June 30, 2023, as
+amended from time to time
+"Beijing Sankuai Technology"
+"Beijing Sankuai Online"
+"Beijing Sankuai Cloud
+Computing"
+"Beijing Mobike"
+"Beijing Kuxun Technology"
+"Beijing Kuxun Interaction"
+"Auditor"
+the audit committee of the Company
+"Board"
+"BVI"
+"CG Code"
+"Consolidated Affiliated Entities” the entities we control through the Contractual Arrangements, namely, the
+Onshore Holdcos and their respective subsidiaries (each a "Consolidated
+Affiliated Entity")
+has the meaning ascribed to it under the Listing Rules
+"connected transaction(s)"
+has the meaning ascribed to it under the Listing Rules
+"connected person(s)"
+DEFINITIONS
+338 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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
+"Company", "our Company",
+"the Company"
+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. (£¤Â½Ð
+A), 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
+corporate governance code as set out in Appendix C1 to the Listing Rules
+the British Virgin Islands
+the board of Directors
+"Companies Ordinance" or
+"Hong Kong Companies
+Ordinance"
+"Class B Shares"
+"Class A Shares"
+"Chengdu Meigengmei❞
+"Charmway Enterprises"
+"Controlling Shareholder(s)"
+Light Year Al Limited, a company incorporated in the Cayman Islands
+EAT BETTER, LIVE BETTE
+Other comprehensive income,
+net of tax
+One of the Company's shareholders
+1,256,223
+1,468,202
+Associates of the Group
+Purchases of goods and services
+(ii)
+541,482
+421,242
+521,001
+20,481
+One of the Company's shareholders
+2,847,498
+421,242
+Sales of services
+(i)
+2022
+RMB'000
+Year ended December 31,
+2023
+RMB'000
+(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. On November 16, 2022, the Board of Tencent Group
+has resolved to declare a special interim dividend in the form of a distribution in specie of approximately
+958,121,562 Class B ordinary shares of Meituan. Following the declaration of the distribution and the
+resignation of Tencent's board representative with immediate effect, Tencent Group lost significant
+influence and was not considered as the Group's related party.
+Note (i):
+Jilin Yillion Bank Co., Ltd.
+Tianjin Maoyan and its subsidiaries
+Associate of the Group
+Associate of the Group
+Associates of the Group
+1,468,202
+4,103,721
+EAT BETTER, LIVE BETTE
+Pension costs and other employee benefits
+Share-based compensation expenses
+Basic salaries and bonuses
+Fees
+(d) Key management compensation
+304,501
+360,139
+Associates of the Group
+Due to related parties
+(ii)
+107,519
+70,211
+Associates of the Group
+Due from related parties
+(i)
+2022
+RMB'000
+2023
+RMB'000
+As of December 31,
+(c) Balances with related parties
+38 RELATED PARTY TRANSACTIONS (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+332
+Associate of the Group
+39 CONTINGENCIES
+Dalian Tongda Enterprise Management Co., Ltd.
+Guangxi Dossen Hotel Management Group Co., Ltd.
+Relationship
+(2,619,636)
+480,448
+(366,455)
+(7,654,899)
+Cash flows
+4,750,785
+30,443,698
+23,784,867
+Liabilities as of January 1, 2022
+RMB'000
+Additions
+RMB'000
+profit or loss
+interests
+RMB'000
+RMB'000
+Borrowings
+Lease
+Financial
+liabilities at fair
+value through
+Notes payable
+and undue
+(c) Reconciliation of liabilities related to cash flows generated from financing activities (Continued)
+37 NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+liabilities
+3,151,048
+Deductions
+(393,304)
+Tencent Group
+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
+38 RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended December 31, 2023
+Meituan 2023 Annual Report 331
+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 or joint 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 or joint control.
+Members of key management and their close family members are also considered as related parties of the
+Group.
+38 RELATED PARTY TRANSACTIONS
+5,369,141
+100,000
+33,673,264
+19,111,112
+Liabilities as of December 31, 2022
+(20)
+12,856
+266,053
+766,464
+2,829,557
+550,668
+2,430,476
+Currency translation differences
+Finance costs
+(179,089)
+One of the Company's shareholders
+(Prior to November 16, 2022, Note (i))
+Associate of the Group
+Currency translation differences
+Year ended December 31,
+2022
+RMB'000
+Total liabilities
+Other payables and accruals
+Borrowings
+Current liabilities
+Notes payable
+Deferred tax liabilities
+Non-current liabilities
+LIABILITIES
+189,155,813
+197,955,317
+Total equity and liabilities
+Total equity
+8,025,737
+9,682,271
+(137,305,984)
+Accumulated losses
+26
+40(b)
+Other reserves
+Shares held for shares award scheme
+316,743,344
+325,578,612
+26
+Share premium
+(135,613,683)
+32
+3,073
+34,610,966
+33,607,372
+As of January 1, 2023
+(b) Other reserves movement of the Company
+40 FINANCIAL POSITION AND OTHER RESERVES MOVEMENT OF THE COMPANY (Continued)
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Meituan 2023 Annual Report
+334
+LEAT BETTER, LIVE BETTE
+Mu Rongjun
+Director
+Director
+Wang Xing
+The statement of financial position of the Company was approved by the Board of Directors on March
+22, 2024 and was signed on its behalf.
+229,098,396
+239,615,666
+39,942,583
+41,660,349
+6,335,211
+7,046,310
+6,335,211
+6,398,398
+647,912
+33,607,372
+34,614,039
+415
+2023
+RMB'000
+418
+Share capital
+Non-current assets
+2022
+RMB'000
+2023
+RMB'000
+Note
+As of December 31,
+ASSETS
+(a) Financial position of the Company
+40 FINANCIAL POSITION AND OTHER RESERVES MOVEMENT OF THE COMPANY
+For the year ended December 31, 2023
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Investments in subsidiaries
+Meituan 2023 Annual Report 333
+406,369
+463,832
+329,760
+376,771
+967
+903
+74,142
+84,156
+1,500
+2,002
+The Group did not have any material contingent liabilities as of December 31, 2023 and 2022.
+26
+Intangible assets
+82,365,622
+EQUITY
+229,098,396
+239,615,666
+Total assets
+25,116,342
+20,530,789
+1,189,591
+612,755
+255,770
+2,083,676
+Cash and cash equivalents
+Prepayments, deposits and other assets
+23,313,996
+18,191,343
+Short-term treasury investments
+Current assets
+203,982,054
+219,084,877
+307
+4,358,598
+117,257,527
+125,724,237
+Prepayments, deposits and other assets
+2,646,902
+Long-term treasury investments
+90,712,346
+1,392
+"Post-IPO Share
+Option Scheme"
+"PRC"
+Shenzhen Sankuai Online Technology Co., Ltd. (U=RESARÁ§Ã¬), a
+limited liability company incorporated under the laws of the PRC on November
+18, 2015 and our indirect wholly-owned subsidiary
+has the meaning ascribed to it in the Listing Rules
+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
+"WVR Beneficiaries"
+"WFOES", each a "WFOE"
+"weighted voting right"
+"VIE(s)"
+"US dollars", "U.S.
+dollars" or "US$"
+"U.S." or "US"
+"United States",
+DEFINITIONS
+Meituan 2023 Annual Report 343
+Tianjin Xiaoyi Technology Co., Ltd. (X), a limited liability
+company incorporated under the laws of the PRC on February 13, 2018 and our
+indirect wholly-owned subsidiary
+Tianjin Wanlong Technology Co., Ltd. (N), a limited liability
+company incorporated under the laws of the PRC on August 18, 2015 and our
+indirect wholly-owned subsidiary
+Tianjin Antechu Technology Co., Ltd. (2), 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 page 78
+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
+consolidated affiliated entity of Tencent
+Shenzhen Tencent Computer Systems Co., Ltd. (
+"Post-IPO Share
+Award Scheme"
+has the meaning ascribed to it in page 76
+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
+"Tianjin Xiaoyi
+Technology"
+"Tianjin Wanlong"
+variable interest entity(ies)
+"Tianjin Hanbo"
+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 and Mu Rongjun, being the holders of
+the Class A Shares, entitling each to weighted voting rights
+344
+Meituan 2023 Annual Report
+GLOSSARY
+"Active Merchant"
+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
+"DAU"
+"Gross Transaction Volume" or
+"GTV"
+"Number of On-demand
+Delivery transactions"
+"Transacting User"
+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
+include number of transactions from food delivery and Meituan Instashopping
+businesses
+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
+"transaction"
+the number of transactions is generally recognized based on the number
+of payments made; whereas (i) with respect to our instore 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 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 monthly pass, then one transaction is recognized for every
+ride
+"Option(s)"
+"Onshore Holdcos," each an
+"Onshore Holdco"
+DEFINITIONS
+340 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+them.
+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
+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
+"WVR Structure"
+Tianjin Xiaoyi Technology, Beijing Kuxun Technology, Tianjin Wanlong, Beijing
+Sankuai Online, Shenzhen Sankuai Online, Shanghai Hanhai, Sankuai Cloud
+Online, Mobike Beijing and Tianjin Hanbo
+"Tianjin Antechu
+Technology"
+Tianjin Hanbo Information Technology Co., Ltd. (¥¤¶§³), a
+limited liability company incorporated under the laws of the PRC on September
+19, 2014 and our indirect wholly-owned subsidiary
+"Tencent"
+"Scheme Limit"
+"Scheme Administrator"
+"Sankuai Cloud Online"
+DEFINITIONS
+Meituan 2023 Annual Report 341
+restricted share unit(s)
+the RMB counter for trading in the Class B Shares on the Stock Exchange under
+the HKD-RMB Dual Counter Model program launched by the Stock Exchange
+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, 2023
+the registered shareholders of the Onshore Holdcos
+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
+"service provider(s)"
+"Tencent Distribution"
+the post-IPO share option scheme adopted by the Company on August 30,
+2018 and subsequent amended on June 30, 2023
+the post-IPO scheme award scheme adopted by the Company on August 30,
+2018 and subsequent amended on June 30, 2023
+a right granted to subscribe for Class B Shares
+Tianjin Antechu Technology, Beijing Kuxun Interaction, Shanghai Sankuai
+Technology, Meituan Finance, Beijing Sankuai Cloud Computing, Beijing
+Xinmeida, Chengdu Meigengmei, Beijing Mobike, Beijing Sankuai Technology
+and Shanghai Hantao
+"RSU(s)"
+"RMB counter"
+"RMB" or "Renminbi❞
+"Reserved Matters"
+"Reporting Period"
+"Registered Shareholders"
+"Prospectus"
+"Pre-IPO ESOP"
+"PRC Legal Advisor"
+the People's Republic of China
+"Service Provider Sublimit"
+Han Kun Law Offices, legal advisor to the Company as to PRC laws
+"Shanghai Hantao❞
+"Shanghai Hanhai"
+"substantial shareholder"
+"subsidiary(ies)"
+"Stock Exchange"
+"Shenzhen Tencent
+Computer"
+Sankuai Online"
+"Shenzhen
+"Shares Repurchased"
+"Shared Patience"
+DEFINITIONS
+342 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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
+"Shared Vision"
+the committee of the Board or person(s) to which the Board has delegated its
+authority (as applicable) to administer the Post-IPO Share Award Scheme
+Shanghai Hantao Information Consultancy Co., Ltd. (CEDAR
+A), a limited liability company incorporated under the laws of the PRC on
+September 23, 2003 and our Consolidated Affiliated Entity
+]), a limited liability company incorporated under the laws of the PRC on March
+16, 2006 and our indirect wholly-owned subsidiary
+(L)ĦRA
+Hanhai Information Technology (Shanghai) Co., Ltd.
+a sublimit under the Scheme Limit for share options and/or awards over new
+shares of the Company under all share schemes adopted by the Company
+granted to the Service Providers, which must not exceed 62,421,252 (being
+1% of the total number of issued Shares as at the date of the Shareholders'
+approval of the Service Provider Sublimit)
+shall have the same meaning as set out in Rule 17.03A of the Listing Rule and
+permitted under the Post-IPO Share Award Scheme
+the limit on grant(s) of share option(s) and/or award(s) over new Shares under all
+share schemes of the Company approved by the Shareholders, which must not
+exceed 624,212,527 (being 10% of the total number of issued Shares as at the
+date of the Shareholders' approval of the Scheme Limit)
+Beijing Sankuai Internet Technology Co., Ltd. (UÀ=RAĦĦARA)
+(formerly known as Sankuai Cloud Online Technology Co., Ltd. (=REEK
+ÀĦĦĦRA)), a limited liability company incorporated under the laws of the
+PRC on November 3, 2015 and our indirect wholly-owned subsidiary
+"Shareholder(s)"
+"Shanghai Sankuai
+Technology"
+"Share(s)"
+Shanghai Sankuai Technology Co., Ltd. (RHBGR2=), a limited
+liability company incorporated under the laws of the PRC on September 19,
+2012 and our Consolidated Affiliated Entity
+Adjusted for:
+Income tax expenses, except for tax effects
+Amortisation of intangible assets resulting from acquisitions
+2,827,245
+228,264
+on non-IFRS Accounting Standards adjustments
+23,253,418
+246,190
+(218,110)
+(63,727)
+Tax effects on non-IFRS Accounting Standards adjustments
+471,372
+322,872
+147,916
+Adjusted net profit
+Share of (profits)/losses of investments accounted for using
+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.
+(1,554,673)
+Employees
+817,785
+As of December 31, 2023, we had a total of approximately 114,731 full-time employees. Substantially all of our
+employees are based in China, primarily at our headquarters in Beijing and Shanghai, with the rest in Shijiazhuang,
+Chengdu, Wuhan, Shenzhen and other cities.
+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.
+EAT BETTER, LIVE BETTE
+1,425,157
+(657,908)
+(818,986)
+Adjusted EBITDA
+Amortisation of software and others
+Other gains, net not adjusted for adjusted net profit
+Finance costs
+Finance income
+290,822
+the equity method not adjusted for adjusted net profit
+Impairment and expense provision
+Depreciation of property, plant and equipment
+12,486
+2,960,883
+3,744,406
+Adjusted EBITDA
+1,995,332
+2,351,756
+1,851,853
+6,189,201
+Depreciation of property, plant and equipment
+16,038
+16,037
+Amortisation of software and others
+(2,085,740)
+for adjusted net profit
+Save as disclosed in this report, as of December 31, 2023, we did not have other plans for material investments and
+capital assets.
+(1,299,789)
+15,799
+Note (i)
+Mainly include fair value changes related to certain investments, gains or losses on disposal of investees or
+subsidiaries, dilution gains or losses and certain share of profits or losses of investments accounted for using the
+equity method.
+Meituan 2023 Annual Report 35
+8,742,962
+8,383,353
+Net losses from investments
+Share-based compensation expenses
+Adjusted for:
+Profit/(loss) for the year
+(6,685,323)
+13,857,331
+(RMB in thousands)
+2023
+2022
+December 31,
+December 31,
+Year Ended
+MANAGEMENT DISCUSSION AND ANALYSIS
+193,472
+Future Plans for Material Investments and Capital Assets
+As of December 31, 2023, our gearing ratio, calculated as total borrowings and notes payable divided by total
+equity attributable to equity holders of the Company, was approximately 36%.
+Meituan 2023 Annual Report 39
+For the year ended December 31, 2023, net cash flows generated from operating activities was RMB40.5 billion,
+which was primarily attributable to our profit before income tax, as adjusted by (i) share-based compensation
+expenses, depreciation and amortisation and fair value changes and gains related to treasury investments and other
+investments, and (ii) the changes in working capital, which primarily consisted of the increase in certain current
+liabilities driven by business recovery.
+Net cash flows generated from operating activities represents the cash generated from our operations minus the
+income tax paid. Cash generated from our operations primarily consisted of our profit for the year, as adjusted by
+non-cash items and changes in working capital.
+Net Cash Flows Generated from Operating Activities
+20,158,606
+33,339,754
+Cash and cash equivalents at the end of the year
+Meituan 2023 Annual Report
+937,500
+32,513,428
+20,158,606
+(13,292,322)
+13,076,703
+Net increase/(decrease) in cash and cash equivalents
+Cash and cash equivalents at the beginning of the year
+Exchange gains on cash and cash equivalents
+(9,990,201)
+104,445
+(2,781,303)
+37
+Net Cash Flows Used in Investing Activities
+EAT BETTER, LIVE BETTE
+Changes in respective items in the consolidated statement of financial position have been disclosed in the Note 12,
+Note 19 and Note 20 to the consolidated financial statements in this annual report.
+other financial investments at fair value through other comprehensive income.
+other financial investments at fair value through profit or loss; and
+investments accounted for using the equity method;
+As of December 31, 2023, our investment portfolio amounted to approximately RMB39,085 million (December 31,
+2022: RMB33,977 million) as recorded in the consolidated statement of financial position under various categories
+including:
+MANAGEMENT DISCUSSION AND ANALYSIS
+Investments Held
+Contingent Liabilities
+Other gains, net not adjusted
+Gearing ratio
+For the year ended December 31, 2023, net cash flows used in financing activities was RMB2.8 billion, which was
+mainly attributable to the payments of lease liabilities.
+Net Cash Flows Used in Financing Activities
+For the year ended December 31, 2023, net cash flows used in investing activities was RMB24.7 billion, which
+was composed of purchase of treasury investments and property, plant and equipment, as well as some other
+investments.
+The Group did not have any material contingent liabilities as of December 31, 2023.
+(14,713,569)
+11,411,448
+40,521,850
+(24,663,844)
+(6,405,729)
+1,628,825
+38
+Meituan 2023 Annual Report
+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.
+(3,771,253)
+The fair value of our stakes in listed investee entities amounted to RMB37,331 million as of December 31, 2023
+(December 31, 2022: RMB21,628 million). There was no investment of which the carrying amount individually
+constituted 5% or more of our total assets as of December 31, 2023.
+Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies
+For the year ended December 31, 2023, we did not have any material acquisitions or disposals of subsidiaries and
+affiliated companies.
+Foreign Exchange Risk
+The functional currency of the Company is US dollars whereas the functional currency of the subsidiaries operating
+in the PRC is Renminbi. As of December 31, 2023, our cash and cash equivalents balance was mainly denominated
+in US dollars and Renminbi. We manage foreign exchange risk by performing periodic reviews of our net foreign
+exchange exposures and try to minimise these exposures through natural hedges, wherever possible and may
+enter into forward foreign exchange contracts, when necessary. We operate mainly in the PRC with most of the
+transactions settled in Renminbi. The management considers that the business is not exposed to any significant
+foreign exchange risk, as there are no significant financial assets or liabilities denominated in the currencies other
+than the respective functional currencies of our entities. As of December 31, 2023, we did not have significant
+foreign currency exposure from our operations.
+Pledge of Assets
+As of December 31, 2023, we did not pledge any assets for fund raising and we had some charges on our assets
+which are disclosed in Note 31 to the consolidated financial statements.
+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 D2 to the Listing Rules.
+62,744
+7,687,823
+64,362
+9,194,580
+Net cash flows generated from operating activities
+Net cash flows used in investing activities
+Net cash flows used in financing activities
+(RMB in thousands)
+2022
+2023
+December 31,
+December 31,
+Year Ended
+The following table sets forth our cash flows for the years indicated:
+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 held cash and cash equivalents of RMB33.3 billion and
+short-term treasury investments of RMB111.8 billion as of December 31, 2023.
+Liquidity and Capital Resources
+MANAGEMENT DISCUSSION AND ANALYSIS
+36 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+9,724,589
+23,878,018
+MANAGEMENT DISCUSSION AND ANALYSIS
+350,950
+(539,832)
+366,725
+Our other gains, net in 2023 was RMB6.3 billion, compared to RMB4.2 billion in 2022, which was primarily due to
+the increase in the fair value changes and gains of treasury investments.
+Other Gains, Net
+Our fair value changes of other financial investments at fair value through profit or loss changed to a gain of
+RMB234.2 million in 2023 from a loss of RMB1.0 billion in 2022, which was mainly driven by the fluctuation in the
+fair value of our investment portfolios.
+Fair Value Changes of Other Financial Investments at Fair Value through Profit or Loss
+MANAGEMENT DISCUSSION AND ANALYSIS
+32 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Our net provisions for impairment losses on financial and contract assets increased to RMB1.1 billion in 2023 from
+RMB468.6 million in 2022, which reflected the changes in expected credit losses for financial assets.
+Net Provisions for Impairment Losses on Financial and Contract Assets
+Our general and administrative expenses was RMB9.4 billion in 2023, remaining stable on a year-over-year basis.
+The percentage of revenues decreased by 1.0 percentage points to 3.4% from 4.4% on a year-over-year basis,
+primarily due to improved operating leverage.
+General and Administrative Expenses
+Our research and development expenses was RMB21.2 billion in 2023, remaining stable on a year-over-year basis.
+The percentage of revenues decreased by 1.7 percentage points to 7.7% from 9.4% on a year-over-year basis,
+primarily due to improved operating leverage.
+30
+Meituan 2023 Annual Report
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our revenues from the Core local commerce segment increased by 28.7% to RMB206.9 billion in 2023 from
+RMB160.8 billion in 2022. The revenue growth in delivery services and commission was mainly due to the increase
+in the Number of On-demand Delivery transactions and GTV of our in-store, hotel and travel businesses. The growth
+in online marketing services was mainly attributable to the increase in the number of and the average revenue from
+online marketing Active Merchants.
+Our revenues from the New initiatives segment increased by 18.0% to RMB69.8 billion in 2023 from RMB59.2
+billion in 2022, mainly due to the growth of our goods retail businesses and partially offset by the contraction of our
+self-operated ride sharing business.
+Operating Profit/(Loss)
+Costs and Expenses
+As a result of the foregoing, our operating profit and operating margin in 2023 was RMB13.4 billion and 4.8%
+respectively, compared to operating loss of RMB5.8 billion and operating margin of negative 2.6% in 2022.
+Year Ended
+18.7%
+(28.9%)
+(20,166,484)
+38,698,847
+ΝΑ
+Total operating profit/(loss)
+Unallocated items
+New initiatives
+Core local commerce
+(RMB in thousands, except for percentages)
+of revenues
+of revenues
+Amount
+As a
+percentage
+percentage
+As a
+December 31, 2022
+December 31, 2023
+Operating profit/(loss) and operating margin by segment are set forth in the table below.
+29,502,669
+The following table sets forth a breakdown of our costs and expenses by function for the years indicated:
+December 31, 2023
+Research and development expenses
+21,201,005
+7.7%
+20,739,865
+9.4%
+General and administrative expenses
+9,372,067
+3.4%
+9,771,810
+4.4%
+Cost of Revenues
+Meituan 2023 Annual Report 31
+MANAGEMENT DISCUSSION AND ANALYSIS
+Our cost of revenues increased by 13.5% to RMB179.6 billion in 2023 from RMB158.2 billion in 2022 and
+decreased by 7.0 percentage points to 64.9% from 71.9% as a percentage of revenues on a year-over-year basis.
+The increase in amount was primarily due to the increases in: (i) delivery related costs of our food delivery and
+Meituan Instashopping businesses, and (ii) cost of revenues of our goods retail businesses. The decrease in cost
+of revenues as a percentage of revenues on a year-over-year basis was mainly attributable to: (i) the change of
+revenue mix, (ii) lower delivery related costs per order of our food delivery and Meituan Instashopping businesses,
+and (iii) the improved gross margin of our goods retail businesses.
+Selling and Marketing Expenses
+Our selling and marketing expenses increased by 47.5% to RMB58.6 billion in 2023 from RMB39.7 billion in 2022,
+and increased by 3.1 percentage points to 21.2% from 18.1% as a percentage of revenues on a year-over-year
+basis. Both the increases in amount and as a percentage of revenues were primarily attributable to the increases
+in Transacting User incentives as well as promotion and advertising expenses, resulting from the consumption
+recovery, evolving business circumstances and business strategies. In addition, the increase in employee benefits
+expenses contributed to the increase in amount of selling and marketing expenses.
+Research and Development Expenses
+18.1%
+Year Ended
+39,745,112
+58,616,997
+December 31, 2022
+As a
+percentage
+As a
+percentage
+Amount
+of revenues
+Amount
+of revenues
+405,168
+(RMB in thousands, except for percentages)
+Costs and Expenses:
+Cost of revenues
+179,553,793
+64.9%
+158,201,969
+71.9%
+Selling and marketing expenses
+21.2%
+(28,379,210)
+Amount
+(5,116,976)
+103,083
+(83,678)
+Adjusted net profit
+Standards adjustments
+Tax effects on non-IFRS Accounting
+42,793
+117,779
+18.4%
+(47.9%)
+from acquisitions
+Amortisation of intangible assets resulting
+55,183
+(238,687)
+242,223
+Impairment and expense provision/(reversal)
+(95,835)
+(390,604)
+98,933
+(6,421)
+4,374,712
+829,145
+5,727,397
+Finance costs
+(201,225)
+(147,391)
+(216,153)
+Finance income
+(455,779)
+150,781
+(742,765)
+Net losses/(gains) from investments (Note (i))
+not adjusted for adjusted net profit
+Share of (profits)/losses of investments
+56,516
+(104,782)
+179,737
+Standards adjustments
+effects on non-IFRS Accounting
+Income tax expenses/(credits), except for tax
+Adjusted for:
+accounted for using the equity method
+2,138,443
+42,825
+1,857,422
+To supplement our consolidated results which are prepared and presented in accordance with IFRS Accounting
+Standards, we also use adjusted EBITDA and adjusted net profit as additional financial measures, which are
+not required by, or presented in accordance with IFRS Accounting Standards. We believe that these non-IFRS
+Accounting Standards 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 Accounting Standards 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
+or financial conditions as reported under IFRS Accounting Standards. In addition, these non-IFRS Accounting
+Standards measures may be defined differently from similar terms used by other companies.
+Reconciliation of Non-IFRS Accounting Standards Measures to the Nearest IFRS Accounting Standards
+Measures
+As a result of the foregoing, we had a profit of RMB13.9 billion in 2023, compared to a loss of RMB6.7 billion in
+2022.
+Profit/(Loss) for the Year
+Our share of profits of investments accounted for using the equity method increased to RMB1.2 billion in 2023 from
+RMB35.8 million in 2022, which primarily resulted from the fluctuation of the financial results of our investees.
+Share of Profits of Investments Accounted for Using the Equity Method
+Our operating loss from the New initiatives segment narrowed to RMB20.2 billion in 2023 from RMB28.4 billion
+in 2022, and our operating margin for this segment improved by 19.0 percentage points to negative 28.9% from
+negative 47.9% on a year-over-year basis. The improvements in both operating loss and operating margin were
+primarily attributable to our efforts to improve operating efficiency, particularly in our goods retail businesses.
+Adjusted EBITDA represents profit/(loss) for the year/period adjusted for (i) fair value changes of other financial
+investments at fair value through profit or loss, other gains, net, finance income, finance costs, share of profits/
+(losses) of investments accounted for using the equity method and income tax credits/(expenses); and (ii) certain
+non-cash or one-off items, consisting of share-based compensation expense, amortisation of intangible assets,
+depreciation of property, plant and equipment, and certain impairment and expense reversal/(provision).
+2,321,115
+Our operating profit from the Core local commerce segment increased to RMB38.7 billion in 2023 from RMB29.5
+billion in 2022. The operating margin for this segment increased by 0.3 percentage points to 18.7% from 18.4%
+on a year-over-year basis. The increase in operating profit was mainly attributable to revenue growth and
+partially offset by higher Transacting User incentives. The increase in operating margin was mainly due to: (i) the
+improvement of the unit economics for our food delivery and Meituan Instashopping businesses, and (ii) partially
+offset by higher Transacting User incentive ratio.
+(2.6%)
+(5,820,448)
+4.8%
+13,415,387
+(6,943,907)
+ΝΑ
+Meituan 2023 Annual Report 33
+Adjusted net profit represents profit/(loss) for the year/period adjusted for (i) certain non-cash or one-off items,
+consisting of share-based compensation expense, amortisation of intangible assets resulting from acquisitions, and
+certain impairment and expense reversal/(provision); (ii) net gains/(losses) from certain investments; and (iii) related
+income tax effects.
+MANAGEMENT DISCUSSION AND ANALYSIS
+3,593,234
+Adjusted for:
+Profit/(loss) for the period
+(1,083,541)
+2,216,987
+(RMB in thousands)
+Share-based compensation expenses
+September 30,
+2023
+December 31,
+2023
+Three Months Ended
+Unaudited
+The following tables set forth the reconciliations of our non-IFRS Accounting Standards measures for the three
+months ended December 31, 2023 and 2022, the three months ended September 30, 2023, and the years ended
+December 31, 2023 and 2022 to the nearest measures prepared in accordance with IFRS Accounting Standards.
+MANAGEMENT DISCUSSION AND ANALYSIS
+34 Meituan 2023 Annual Report
+December 31,
+2022
+EAT BETTER, LIVE BETTE
+The Board did not recommend the payment of a final dividend for the year ended December 31, 2023.
+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 Accounting Standards. 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.
+DIVIDEND POLICY AND FINAL DIVIDENDS
+The results of the Group for the year ended December 31, 2023 are set out in the consolidated statement of
+comprehensive income contained in this annual report.
+RESULTS
+3.
+PRINCIPAL ACTIVITIES
+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.
+GLOBAL OFFERING
+EAT BETTER, LIVE BETTE
+The Board is pleased to present its report together with the audited consolidated financial statements of the Group
+for the Reporting Period.
+Meituan is a tech-driven retail company. 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.
+48
+Meituan 2023 Annual Report 49
+REPORT OF DIRECTORS
+BUSINESS REVIEW
+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.
+USE OF NET PROCEEDS
+1.
+Use of Net Proceeds from Issuance of the 2027 Bonds and 2028 Bonds
+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. During the Reporting Period, approximately US$1,307.7 million
+of the net proceeds of the 2027 Bonds and 2028 Bonds have been utilised for technology innovations, and as
+of December 31, 2023 and 2022, US$241.2 million and US$1,548.9 million remained unutilised, respectively.
+The Company expects to fully utilise the residual amount of the net proceeds in accordance with such
+intended purposes within 5 years from the issuance of the 2027 Bonds and 2028 Bonds. 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.
+Use of Net Proceeds from Issuance of the 2021 Placing and Subscription
+REPORT OF DIRECTORS
+2.
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report
+Meituan 2023 Annual Report 47
+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.
+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.
+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 and a non-executive director of Fidelity China Special Situations PLC (LSE Stock Code:
+FCSS) since January 2023. He is also the vice chairman of China-Britain Business Council. He was the independent
+non-executive director of Sondrel (Holdings) PLC (LSE Stock Code: SND) from October 2022 to January 2024.
+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.
+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 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, aged 61, is an independent non-executive Director. He was appointed as Director
+in September 2018 and 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.
+Independent Non-executive Directors
+DIRECTORS AND SENIOR MANAGEMENT
+42 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Neil Nanpeng Shen served as an independent non-executive director of Pinduoduo Inc. (NASDAQ Ticker: PDD)
+from April 2018 to November 2022, a non-executive director of Noah Holdings Limited (NYSE Ticker: NOAH; HKEX
+Stock Code: 6686) from January 2016 to August 2023, and a non-executive director of Ninebot Limited (SHSE
+Stock Code: 689009) from July 2015 to December 2023.
+Neil Nanpeng Shen has been an independent 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) since
+October 2008, and a non-executive director of BTG Hotels Group Co., Ltd. (SHSE Stock Code: 600258) since
+January 2017.
+Neil Nanpeng Shen received his bachelor's degree in applied mathematics from Shanghai Jiao Tong University in
+1988 and his master's degree from Yale University in 1992.
+Neil Nanpeng Shen founded HongShan (formerly known as Sequoia China) in September 2005 and has been
+serving as the founding managing partner since then. Prior to founding HongShan, he co-founded Trip.com Group
+Ltd. (NASDAQ Ticker: TCOM; HKEx Stock Code: 9961), formerly known as 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 (), aged 56, 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.
+Leng Xuesong (A), aged 55, 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.
+Non-executive Director
+Meituan 2023 Annual Report 41
+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 15 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 (), aged 44, 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.
+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. During the Reporting Period, approximately US$347.6
+million of the net proceeds of the 2021 Placing and Subscription have been utilised for technology innovations
+and general corporate purposes, and as of December 31, 2023 and 2022, US$3.3 billion and US$3.6 billion
+remained unutilised, respectively. The Company expects to fully utilise the residual amount of the net
+proceeds in accordance with such intended purposes within 5 years from the completion of the 2021 Placing
+and Subscription. 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 and April
+28, 2021.
+Wang Xing has over 15 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 (¼) 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 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 (E), aged 45, 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.
+Executive Directors
+DIRECTORS
+The biographical details of the Directors and senior management of the Company as at the date of this annual
+report are set out as follows:
+DIRECTORS AND SENIOR MANAGEMENT
+40 Meituan 2023 Annual Report
+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, 2023, 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 from the completion of the Tencent Subscription. 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.
+EAT BETTER, LIVE BETTE
+DIRECTORS AND SENIOR MANAGEMENT
+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.
+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.
+DIRECTORS AND SENIOR MANAGEMENT
+Zhang Chuan (II), aged 48, is a Senior Vice President and is responsible for overseeing the Company's
+Dianping, RMS, bike and e-moped sharing, and power bank business.
+DIRECTORS AND SENIOR MANAGEMENT
+46 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Wang Puzhong received his bachelor's degree in engineering from North China Electric Power University in June
+2006.
+Since joining the Company in 2015, Wang Puzhong has successfully led the Company's food delivery business and
+on-demand delivery network to become global leaders while achieving sustainable growth. In his role as the head
+of the on-demand delivery business, he introduced the "Everything Now ()" concept and actively promoted
+the business development of Meituan Instashopping, drones, and other new businesses.
+Wang Puzhong (+), aged 40, currently serves as the CEO of the Core local commerce segment of Meituan. He
+is responsible for nine divisions including Meituan platform, Meituan infrastructure platform, in-store dining, in-store
+other services, hotel and travel, food delivery, Meituan Delivery, Meituan Instashopping, and Meituan Medicine. He
+leads the development of strategic planning for the core business segment and executes operational strategies for
+the Company.
+Chen Shaohui was a director of Beijing Enlight Media Co., Ltd. (SZSE Stock Code: 300251) from August 2018 to
+March 2023.
+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.
+In July 2018, Chen Shaohui was appointed as a non-executive director of Maoyan Entertainment (HKEx Stock
+Code: 1896).
+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.
+Meituan 2023 Annual Report 43
+Mu Rongjun (1), aged 44, 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 Xing (E), aged 45, 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.
+DIRECTORS AND SENIOR MANAGEMENT
+Chen Shaohui (), aged 43, 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.
+SENIOR MANAGEMENT
+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 served as independent director of China Index Holdings Limited (NASDAQ Ticker: CIH)
+from July 2019 to May 2022.
+Meituan 2023 Annual Report 45
+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 been an independent non-executive director of Youdao, Inc. (NYSE
+Ticker: DAO) since October 2019 and an independent non-executive director of China Vanke Co., Ltd. (HKEx Stock
+Code: 2202) since June 2023.
+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.
+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 (), aged 57, 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.
+44 Meituan 2023 Annual Report
+DIRECTORS AND SENIOR MANAGEMENT
+Yang Marjorie Mun Tak (), aged 71, is an independent non-executive Director. She was appointed as
+Director in June 2023 and responsible for providing independent advice on the Company's business development
+and corporate governance matters, and bring a broader perspective to the Board.
+Yang Marjorie Mun Tak has been the chairwoman of Esquel Group since April 1995, the appointed representative
+of Hong Kong, China, to the APEC Business Advisory Council since December 2017 and the co-chairwoman of the
+advisory board of Computer Science and Artificial Intelligence Lab at the Massachusetts Institute of Technology
+since March 2015. She has also been the chairperson of the Steering Committee of Coolthink@JC created and
+funded by The Hong Kong Jockey Club Charities Trust since April 2016. She also serves on Harvard University's
+Global Advisory Council and the Tsinghua University School of Economics and Management advisory board since
+August 2012 and October 2003, respectively.
+Yang Marjorie Mun Tak has been an Executive Board member of the International Chamber of Commerce since
+July 2022. She has been an independent non-executive director of Budweiser Brewing Company APAC Limited
+(HKEx Stock Code: 1876) since May 2019, and was an independent non-executive director of The Hongkong and
+Shanghai Banking Corporation Limited, a subsidiary of HSBC Holdings plc (HKEx Stock Code: 0005), from July
+2003 to April 2019 and Swire Pacific Limited (HKEx Stock Codes: 0019 and 0087) from October 2002 to May 2017.
+Yang Marjorie Mun Tak obtained a Bachelor's Degree of Science from the Massachusetts Institute of Technology
+in February 1974 and a Master of Business Administration Degree from the Harvard Business School in June 1976.
+She was awarded Justice of the Peace and the Gold Bauhinia Star by the Hong Kong Special Administrative Region
+Government in July 2009 and July 2013, respectively.
+EAT BETTER, LIVE BETTE
+Use of Net Proceeds from Issuance of the Tencent Subscription
+SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND
+UNDERLYING SHARES
+Save as disclosed above, as of December 31, 2023, 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, 2023.
+Interests of Directors and Chief Executives in Associated Corporations of the Company
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 59
+As at December 31, 2023, the Company had 6,244,375,781 issued Shares in total, comprising of 604,519,783 Class A
+Shares and 5,639,855,998 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, 2023.
+As of December 31, 2023, 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:
+percentage of
+Capacity/Nature of interest(¹)
+Number and class of
+Shares held
+interest in each
+class of Shares (4)
+Name of Substantial Shareholder
+Class A Shares-Wang Xing
+Crown Holdings (2)
+In view of the above, each of HongShan Funds are deemed to be interested in Shares held by each other and by Neil
+Nanpeng Shen and his controlled entities and vice versa; and is therefore each deemed to be interested in 1.68% interest in
+the share capital of the Company (or 1.86% of the total issued Class B Shares).
+Approximate
+Neil Nanpeng Shen is the sole shareholder of SNP China Enterprises Limited, and has a beneficial interest of 9,476,400
+Class B Shares. Other Controlled Entities refers to URM Management Limited, N&J Investment Holdings Limited and Smart
+Master International Limited (which hold approximately 0.00004%, 0.16% and 0.001%, respectively, of the outstanding
+Shares) and are controlled by Neil Nanpeng Shen.
+Mr. Wang Huiwen was re-designated from an executive Director to a non-executive Director with effect from March
+25, 2023, as he would like to devote more time to his other commercial and personal affairs, and he resigned as
+a non-executive Director with effect from June 26, 2023, due to personal health reasons. On June 30, 2023, Ms.
+Yang Marjorie Mun Tak was elected as an independent non-executive Director at the annual general meeting of the
+Company.
+(5)
+securities
+88,650,000
+Class A Shares
+Approximate
+percentage of
+interest in each
+class of Shares (5)
+14.66%
+26,000,000
+0.46%
+Class B Shares
+Interest in controlled corporation (L)
+Day One Holdings Limited
+88,650,000
+Class A Shares
+14.66%
+26,000,000
+0.46%
+Class B Shares
+Interest in controlled corporation (L)
+Charmway Enterprises
+88,650,000
+14.66%
+Class A Shares
+26,000,000
+0.46%
+Class B Shares
+Number
+and class of
+Interest in controlled corporation (L)
+Trust
+MU Rongjun (3)
+Beneficial interest (L)
+4.35%
+318
+0.00%
+Class B Shares
+Interest in controlled corporation (L)
+WAFO Global Inc.
+1,121
+0.00%
+Class B Shares
+Interest in controlled corporation (L)
+WangXing Foundation
+47,789,542
+Class B Shares
+0.85%
+Interest of spouse (L)
+200
+0.00%
+Class B Shares
+EAT BETTER, LIVE BETTE
+56 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+Name of Director or
+chief executive
+Nature of interest(1)
+Relevant company
+Beneficiary and founder of a Trust (L)
+Shared Vision
+7,996,668
+0.14%
+The letter "L" denotes the person's Long Position in such Shares.
+Approximate
+percentage of
+interest in each
+securities
+class of Shares (5)
+72,914
+0.00%
+Class B Shares
+46,714
+Class B Shares
+0.00%
+72,914
+0.00%
+Class B Shares
+25,721
+0.00%
+Class B Shares
+(2) 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 March 24, 2023, 200 Class B ordinary shares of the Company were distributed to Guo
+Wanhuai (the spouse of Wang Xing) following completion of the distribution in specie by Tencent, details of which were
+disclosed in the announcement of Tencent dated November 16, 2022.
+(4)
+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 88,650,000 Class A Shares and 26,000,000 Class B Shares held by Charmway
+Enterprises under the SFO. Shared Vision is wholly owned by Mu Rongjun.
+HongShan Funds (formerly known as Sequoia Capital China Funds) refers to HongShan Capital I, L.P. (formerly known as
+Sequoia Capital China I, L.P.), HongShan Capital Partners Fund I, L.P. (formerly known as Sequoia Capital China Partners
+Fund I, L.P.), HongShan Capital Principals Fund I, L.P. (formerly known as Sequoia Capital China Principals Fund I, L.P.),
+HongShan Capital II, L.P. (formerly known as Sequoia Capital China II, L.P.), HongShan Capital Partners Fund II, L.P.
+(formerly known as Sequoia Capital China Partners Fund II, L.P.), HongShan Capital Principals Fund II, L.P. (formerly known
+as Sequoia Capital China Principals Fund II, L.P.), HSG 2010 CV Holdco, Ltd. (formerly known as Sequoia Capital 2010
+CV Holdco, Ltd.), HSG Venture V Holdco I, Ltd. (formerly known as SCC Venture V Holdco I, Ltd.), HSG Venture VI Holdco,
+Ltd. (formerly known as SCC Venture VI Holdco, Ltd.), HSG Venture VI Holdco B, Ltd. (formerly known as SCC Venture VI
+Holdco B, Ltd.), HSG Growth 2010-Top Holdco, Ltd. (formerly known as SCC Growth 2010-Top Holdco, Ltd.), HSG Growth
+IV Holdco A, Ltd. (formerly known as SCC Growth IV Holdco A, Ltd.) and HongShan Capital Growth Fund IV, L.P. (formerly
+known as Sequoia Capital China Growth Fund IV, L.P.) (which hold approximately 0.19%, 0.02%, 0.03%, 0.58%, 0.01%,
+0.10%, 0.15%, 0.001%, 0.003%, 0.01%, 0.23%, 0.02% and 0.01%, respectively, of the outstanding Shares).
+EAT BETTER, LIVE BETTE
+58
+Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+(1)
+Notes:
+Number
+and class of
+Relevant company
+Class B Shares
+Beneficial interest (L)
+5,000,000
+0.09%
+Class B Shares
+SHEN Nanpeng Neil(4)
+Interest in controlled corporations (L)
+HongShan Funds (formerly
+known as Sequoia Capital
+China Funds) and Other
+Controlled Entities
+95,174,222
+1.69%
+Class B Shares
+Beneficial interest (L)
+The general partner of each of HongShan Capital I, L.P. (formerly known as Sequoia Capital China I, L.P.), HongShan
+Capital Partners Fund I, L.P. (formerly known as Sequoia Capital China Partners Fund I, L.P.) and HongShan Capital
+Principals Fund I, L.P. (formerly known as Sequoia Capital China Principals Fund I, L.P.) is HongShan Capital Management I,
+L.P. (formerly known as Sequoia Capital China Management I, L.P.) ("HSG Management I"). The general partner of each of
+HongShan Capital II, L.P. (formerly known as Sequoia Capital China II, L.P.), HongShan Capital Partners Fund II, L.P. (formerly
+known as Sequoia Capital China Partners Fund II, L.P.) and HongShan Capital Principals Fund II, L.P. (formerly known as
+Sequoia Capital China Principals Fund II, L.P.) is HongShan Capital Management II, L.P. (formerly known as Sequoia Capital
+China Management II, L.P.) ("HSG Management II"). The sole shareholder of HSG 2010 CV Holdco, Ltd. (formerly known as
+Sequoia Capital 2010 CV Holdco, Ltd.) is HongShan Capital Venture 2010 Fund, L.P. (formerly known as Sequoia Capital
+China Venture 2010 Fund, L.P.), whose general partner is HSG Venture 2010 Management, L.P. (formerly known as SC
+China Venture 2010 Management, L.P.) ("HSGV 2010 Management"). The sole shareholder of HSG Venture V Holdco I, Ltd.
+(formerly known as SCC Venture V Holdco I, Ltd.) is HongShan Capital Venture Fund V, L.P. (formerly known as Sequoia
+Capital China Venture Fund V, L.P.), whose general partner is HSG Venture V Management, L.P. (formerly known as SC
+China Venture V Management, L.P.) ("HSGV V Management"). The sole shareholder of each of HSG Venture VI Holdco,
+Ltd. (formerly known as SCC Venture VI Holdco, Ltd.) and HSG Venture VI Holdco B, Ltd. (formerly known as SCC Venture
+VI Holdco B, Ltd.) is HongShan Capital Venture Fund VI, L.P. (formerly known as Sequoia Capital China Venture Fund VI,
+L.P.), whose general partner is HSG Venture VI Management, L.P. (formerly known as SC China Venture VI Management,
+L.P.) ("HSGV VI Management”). The controlling shareholder of HSG Growth 2010-Top Holdco, Ltd. (formerly known as SCC
+Growth 2010-Top Holdco, Ltd.) is HongShan Capital Growth 2010 Fund, L.P. (formerly known as Sequoia Capital China
+Growth 2010 Fund, L.P.) ("HongShan Growth Fund 2010"), whose general partner is HSG Growth 2010 Management, L.P.
+(formerly known as SC China Growth 2010 Management, L.P.) ("HSGGF 2010 Management”). In respect of the casting of
+votes held by HongShan Growth Fund 2010 in HSG Growth 2010-Top Holdco, Ltd. (formerly known as SCC Growth 2010-
+Top Holdco, Ltd.), HongShan Growth Fund 2010 is accustomed to act in accordance with the instructions of HongShan
+Capital Growth Fund I, L.P. (formerly known as Sequoia Capital China Growth Fund I, L.P.), whose general partner is
+HongShan Capital Growth Fund Management I, L.P. (formerly known as Sequoia Capital China Growth Fund Management I,
+L.P.) ("HSGGF Management I"). The sole shareholder of HSG Growth IV Holdco A, Ltd. (formerly known as SCC Growth IV
+Holdco A, Ltd.) is HongShan Capital Growth Fund IV, L.P. (formerly known as Sequoia Capital China Growth Fund IV, L.P.),
+whose general partner is HSG Growth IV Management, L.P. (formerly known as SC China Growth IV Management, L.P.)
+("HSGGF IV Management" and, together with HSG Management I, HSG Management II, HSGV 2010 Management, HSGV
+V Management, HSGV VI Management, HSGGF 2010 Management and HSGGF Management I, collectively, the "General
+Partners"). The general partner of each of the General Partners is HSG Holding Limited (formerly known as SC China
+Holding Limited), which is a wholly-owned subsidiary of SNP China Enterprises Limited.
+9,476,400
+Class B Shares
+Name of Director or
+chief executive
+Nature of interest(1)
+ORR Gordon Robert
+Halyburton
+Beneficial interest (L)
+LENG Xuesong
+Beneficial interest (L)
+SHUM Heung Yeung
+Harry
+Beneficial interest (L)
+YANG Marjorie Mun Tak Beneficial interest (L)
+Meituan 2023 Annual Report 57
+REPORT OF DIRECTORS
+0.17%
+Share Patience (2)
+Mr. Wang Xing (E) (Chairman and Chief Executive Officer)
+489,600,000 Class A Shares
+26,269,783 Class A Shares
+EAT BETTER, LIVE BETTE
+52 Meituan 2023 Annual Report
+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. Save as disclosed in this annual report, no other changes
+in the information of directors and chief executive which shall be subject to disclosure according to Rule 13.51B(1)
+of the Listing Rules since the date of publication of 2023 interim report of the Company.
+CONFIRMATION OF INDEPENDENCE OF INDEPENDENT NON-EXECUTIVE DIRECTORS
+The Company has reviewed the independence of independent non-executive Directors and considers each of the
+independent non-executive Directors to be independent and meet the independence guidelines as set out in Rule
+3.13 of the Listing Rules.
+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, 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.
+Each of the non-executive Directors has entered into an appointment letter with the Company. Their appointment
+as a Director shall continue for a term of three years and will automatically renew after that 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. No annual director's fees are payable to the non-executive Directors under
+the current arrangement.
+Meituan 2023 Annual Report 53
+REPORT OF DIRECTORS
+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 and will automatically renew after that 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, Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong,
+and Dr. Shum Heung Yeung Harry entered into an appointment letter, respectively, with the Company for three
+years, under which each of them 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. On June 30, 2023, Ms. Yang Marjorie Mun Tak
+entered into an appointment letter with the Company on similar terms for three years, under which she is entitled to
+receive (i) a fixed cash compensation of RMB500,000 per annum; and (ii) a share based compensation per annum,
+in the amount of RMB1,000,000, subject to certain conditions of grant and relevant rules.
+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.
+DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF
+SIGNIFICANCE
+Saved as disclosed in this annual report, no Director or an entity connected with a 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.
+Beneficial interest (L)
+Save for the Directors' service contracts and appointment letters, 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.
+DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
+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.
+EAT BETTER, LIVE BETTE
+54 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+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.
+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.
+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, past Directors or the five highest paid individuals during the Reporting Period, as an
+inducement to join, or upon joining the Group, or as compensation for the loss of office.
+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.
+Ms. Yang Marjorie Mun Tak () (appointed on June 30, 2023)
+Dr. Shum Heung Yeung Harry (Á¥)
+Mr. Leng Xuesong (AA)
+50 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+MAJOR CUSTOMERS AND SUPPLIERS
+Major Customers
+For the year ended December 31, 2023, the Group's five largest customers accounted for less than 30% of the
+Group's total revenue.
+Major Suppliers
+For the year ended December 31, 2023, the Group's five largest suppliers accounted for less than 30% of the
+Group's total purchases.
+PROPERTY, PLANT AND EQUIPMENT
+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.
+SHARE CAPITAL
+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.
+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.
+DISTRIBUTABLE RESERVES
+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.
+Meituan 2023 Annual Report 51
+As of December 31, 2023, the Company's reserves available for distribution, amounted to approximately RMB325.6
+billion.
+BANK LOANS AND OTHER BORROWINGS
+Particulars of bank loans and other borrowings of the Group as of December 31, 2023 are set out in Note 31 to the
+consolidated financial statements.
+ISSUANCE OF DEBT SECURITIES
+For the year ended December 31, 2023, the Company did not issue any debt security.
+DIRECTORS
+The Directors during the Reporting Period and up to date of this annual report are:
+Executive Directors
+Mr. Mu Rongjun ()
+Non-executive Directors
+Mr. Wang Huiwen (X) (redesignated from an executive Director to a non-executive Director with effect
+from March 25, 2023, and resigned with effect from June 26, 2023)
+Mr. Neil Nanpeng Shen ()
+Independent Non-executive Directors
+Mr. Orr Gordon Robert Halyburton
+REPORT OF DIRECTORS
+RETIREMENT AND EMPLOYEE BENEFITS SCHEME
+MANAGEMENT CONTRACTS
+55
+Beneficiary of a trust (3) (L)
+14.66%
+88,650,000 Class A Shares
+Trustee (L)
+14.66%
+88,650,000 Class A Shares
+Interest in controlled corporation (L)
+14.66%
+88,650,000 Class A Shares
+Beneficial interest (L)
+Meituan 2023 Annual Report
+4.35%
+26,269,783 Class A Shares
+80.99%
+88,650,000 Class A Shares
+489,600,000 Class A Shares
+80.99%
+489,600,000 Class A Shares
+Beneficiary and founder of a trust (²) (L)
+80.99%
+489,600,000 Class A Shares
+26,269,783
+Class A Shares
+Trustee (L)
+TMF (Cayman) Ltd.
+Wang Xing
+80.99%
+489,600,000 Class A Shares
+Interest in controlled corporation (L)
+Songtao Limited (2)
+4.35%
+80.99%
+Interest in controlled corporation (2) (L)
+14.66%
+Class A Shares-Mu Rongjun
+Charmway Enterprises(3)
+Day One Holdings Limited (3)
+TMF (Cayman) Ltd.
+Mu Rongjun
+88,650,000 Class A Shares
+REPORT OF DIRECTORS
+Details of the retirement and employee benefits scheme of the Company are set out in Note 8 to the consolidated
+financial statements.
+Founder of a trust(³) (L)
+As of December 31, 2023, 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 C3 of the Listing Rules were as follows:
+Interests of Directors and Chief Executives in the Company
+Approximate
+Name of Director or
+Number
+and class of
+percentage of
+chief executive
+Nature of interest(1)
+Relevant company
+securities
+interest in each
+class of Shares (5)
+WANG Xing(2)
+DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
+UNDERLYING SHARES AND DEBENTURES
+Trust
+Beneficiary and founder of a Trust (L)
+14.66%
+Shared Patience
+Interest in controlled corporation (L)
+80.99%
+80.99%
+EAT BETTER, LIVE BETTE
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+489,600,000
+Class A Shares
+Crown Holdings
+Interest in controlled corporation (L)
+Songtao Limited
+80.99%
+Interest in controlled corporation (L)
+380,000
+2023
+Employees
+July 5, 2019 4 years
+June 30, 2020 to
+0
+695.000
+315,000
+0
+Period
+0
+HK$69.1
+Period
+Reporting December 31,
+Period
+2023
+Exercise Price
+Period
+Period
+Reporting
+Reporting
+Reporting
+of January 1,
+Exercise
+Vesting
+July 5, 2029
+Period
+April 24, 2020 5.2 years
+during the
+HK$100.15
+Date of
+Grant
+EAT BETTER, LIVE BETTE
+For employees, the weighted average closing price of Class B Shares immediately before the date on which the above
+options were exercised in 2023 was HKD115.3667 per share.
+1,706,198
+0
+283,212
+315,000
+0
+2,304,410
+(1)
+Note:
+Total
+July 20, 2030
+648,198
+283,212
+0
+0
+931,410
+HK$195.98
+April 24, 2030
+June 30, 2021 to
+July 20, 2020 4 years
+678,000
+0
+0
+0
+0
+678,000
+June 30, 2020 to
+Name
+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.
+during the
+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
+Outstanding Share Options Granted under the Pre-IPO ESOP
+The Company has not granted further share options under the Pre-IPO ESOP after the Listing Date. The table below
+shows the details of movements of share options granted to the relevant Directors and other employee participants
+under the Pre-IPO ESOP.
+Number
+of Shares
+Number
+of options
+Number of
+exercised
+Number of
+REPORT OF DIRECTORS
+underlying
+Number of
+options
+Shares
+underlying
+options
+options
+outstanding as
+Reporting options lapsed
+cancelled
+outstanding
+Period and
+during the
+during the
+as of
+Name
+during the
+Date of Grant
+64 Meituan 2023 Annual Report
+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.
+LEAT BETTER, LIVE BETTE
+62 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+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 to whom awards in the form of
+Options, restricted share awards and RSUs (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.
+Administration
+EAT BETTER, LIVE BETTE
+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.
+Meituan 2023 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 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. As disclosed in the Prospectus, the
+Company would not grant further share options and RSUs under the Pre-IPO ESOP after the Listing.
+Options
+i.
+Exercise price
+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.
+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.
+Payment
+Grant of Awards
+Vesting
+Period (¹)
+Exercise
+of January 1,
+0
+0
+US$5.18
+May 31, 2006 to
+August 1, 2018
+0.5 to 6 years US$0.000017-
+US$5.18
+18,629,546
+2,937,855
+US$0.000017-
+US$5.18
+504,845
+0
+15,186,846
+24,762,880
+1,133,334
+2,937,855
+0
+20,186,846
+Meituan 2023 Annual Report 65
+REPORT OF DIRECTORS
+Note:
+(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
+The Company has not granted further RSUs under the Pre-IPO ESOP after the Listing Date. The table below shows
+the details of movements of outstanding RSUs granted to the Directors and other employees under the Pre-IPO
+ESOP.
+RSUS
+RSUS
+RSUs
+1,638,179
+0
+1,133,334
+5,000,000
+the exercise
+Reporting
+Reporting December 31,
+Price
+2023
+price
+Period
+Period
+2023
+Directors
+Mu Rongjun
+Wang Huiwen
+(redesignated from an executive
+Director to a non-executive Director
+with effect from March 25, 2023, and
+resigned with effect from June 26, 2023)
+Other grantees save for Directors
+Other employees
+Total
+July 1, 2017 to
+July 1, 2018
+February 1, 2015 to
+July 1, 2018
+6 years
+4 to 6 years
+US$3.86-
+US$5.18
+US$1.005-
+5,000,000
+0
+0
+0
+It would be equally financially advantageous for the securityholders of the 2027 Bonds and the 2028 Bonds to
+convert or redeem the convertible securities thereunder based on the implied internal rate of return thereof, when
+the Company's share price approximates to the conversion price in the future.
+To the best of the Directors' knowledge, having made all reasonable enquiries and having considered the financial
+and liquidity position of the Group, the Directors expected that the Company has the ability to meet its redemption
+obligations in respect of all outstanding convertible securities under the 2027 Bonds and the 2028 Bonds when they
+become due.
+As the potential issuance and allotment of the relevant Class B Shares upon full conversion of the outstanding
+convertible securities under the 2027 Bonds and the 2028 Bonds would have anti-dilutive effect on the earnings
+per share, the relevant Class B Shares upon full conversion has not been included in calculating diluted earnings
+per share of the Company for the year ended December 31, 2023. For further details, please refer to Note 14 of the
+consolidated financial statements.
+100.00%
+0.08%
+in shares (L)
+Trustee (L)
+43,010 Class B Shares
+0.00%
+Approved lending agent (L)
+111,108,574 Class B Shares
+1.97%
+Brown Brothers Harriman & Co.
+Approved lending agent (L)
+295,591,050 Class B Shares
+5.24%
+Notes:
+4,352,486 Class B Shares
+(1)
+(2)
+(3)
+(4)
+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 88,650,000
+Class A Shares held by Charmway Enterprises under the SFO.
+As at December 31, 2023, the Company had 6,244,375,781 issued Shares in total, comprising of 604,519,783 Class A
+Shares and 5,639,855,998 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, 2023.
+Save as disclosed above, as at December 31, 2023, the Company had not been notified by any other persons (other
+than the Directors of the Company) who had an interest or short position in the Shares or underlying Shares of the
+Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, or which were required to
+be entered in the register required to be kept by the Company pursuant to Section 336 of the SFO.
+DILUTION EFFECT OF THE CONVERSION OF CONVERTIBLE BOND
+Meituan 2023 Annual Report 61
+REPORT OF DIRECTORS
+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.
+If all outstanding 2027 Bonds and 2028 Bonds were converted as at December 31, 2023, 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:
+The letter "L" denotes the person's Long Position in such Shares.
+Person having a security interest
+0.01%
+829,521 Class B Shares
+60 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+Approximate
+percentage of
+Name of Substantial Shareholder
+Capacity/Nature of interest(¹)
+Number and class of
+interest in each
+Shares held
+class of Shares (4)
+Class B Shares
+BlackRock, Inc.
+Interest in controlled corporation (L)
+Interest in controlled corporation (S)
+331,564,182 Class B Shares
+5.88%
+27,900 Class B Shares
+0.00%
+JPMorgan Chase & Co.
+Interest in controlled corporation (L)
+132,265,101 Class B Shares
+2.35%
+Interest in controlled corporation (S)
+79,352,629 Class B Shares
+1.41%
+Investment manager (L)
+54,866,137 Class B Shares
+0.97%
+Investment manager (S)
+Assuming the 2027 Bonds are fully
+converted into Class B Shares
+(subject to adjustment) at the initial
+2027 CB Conversion Price of
+HK$431.24 per Share
+Approximately Number of Shares
+Number of Shares
+as of
+converted into Class B Shares
+(subject to adjustment) at the initial
+2028 CB Conversion Price of
+HK$431.24 per Share
+Approximately
+%
+26,734,628
+0.42%
+2028 CB Bondholders
+Other Shareholders
+0
+0.00%
+0
+0.00%
+27,030,158
+0.43%
+27,030,158
+0.43%
+5,640,125,781
+0.00%
+90.32%
+89.93%
+5,640,125,781
+89.93%
+5,640,125,781
+89.56%
+Total:
+6,244,375,781
+100.00% 6,271,110,409
+100.00%
+6,271,405,939
+100.00%
+6,298,140,567
+5,640,125,781
+0
+0.43%
+26,734,628
+Approximately Number of Shares
+%
+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
+Number of Shares Approximately
+%
+Shareholders
+As at the date of December 31, 2023
+Number of Shares
+Crown Holdings
+489,600,000
+7.84%
+489,600,000
+7.81%
+489,600,000
+7.81%
+489,600,000
+7.77%
+Charmway Enterprises
+114,650,000
+1.84%
+114,650,000
+1.83%
+114,650,000
+1.83%
+114,650,000
+1.82%
+2027 CB Bondholders
+0
+0.00%
+Assuming the 2028 Bonds are fully
+vested
+%
+underlying RSUs
+(v)
+(iv) grants of Options the timing of which is determined by administrative or compliance requirements not
+connected with the performance of the relevant Employee Participant, in which case the Vesting Date may
+be adjusted to take account of the time from which the Option would have been granted if not for such
+administrative or compliance requirements;
+(iii) grants of Options which are subject to fulfillment of performance targets as determined in the conditions of
+their grant;
+grants to an Employee Participant whose employment is terminated due to death or disability or event of force
+majeure;
+grants of "make whole" Options to new Employee Participant to replace awards or options such Employee
+Participants forfeited when leaving their previous employers;
+(ii)
+(i)
+The Board or the Scheme Administrator may from time to time while the Post-IPO Share Option Scheme is in force
+and subject to all applicable laws, determine such vesting criteria and conditions or periods for the Options to be
+vested hereunder, provided however that the vesting period for Options shall not be less than 12 months, except
+that any Options granted to an Employee Participant is subject to a shorter vesting period, including where:
+Vesting of Option
+the nominal value of a Class B Share 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
+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;
+(iii)
+grants of Options with a mixed vesting schedule such that the Options vest evenly over a period of 12 months;
+(ii)
+The amount payable for each Class B Share to be subscribed for under an option (the "Subscription Price”) in the
+event of the option being exercised shall be determined by the Board but shall be not less than the greater of:
+Subscription Price
+Any Option granted may be exercised during a period, which is to be determined and notified by the Board to each
+grantee in the grant letter, and shall not expire later than ten years from the date of grant of the Option (the "Option
+Period”).
+Option Period
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report
+68
+EAT BETTER, LIVE BETTE
+No consideration is payable on acceptance of each grant of Option(s) and there is no period within which payments
+or calls must or may be made or loans for such purposes must be repaid.
+Grant of Option
+Where any grant of Options to a substantial shareholder of the Company or an independent non-executive Director
+(or any of their respective associates) would result in the number of Class B Shares issued and to be issued upon
+exercise of all options and vesting of all awards already granted and to be granted pursuant to the Post-IPO Share
+Option Scheme and any other share schemes adopted by the Company (excluding options or awards lapsed in
+accordance with relevant scheme rules) to such person in the 12-month period up to and including the date of
+such grant, representing in aggregate over 0.1% of the total number of issued Shares (for the avoidance of doubt,
+includes Class A Shares which carry weighted voting rights and Class B Shares) at the relevant time, such further
+grant of Options shall be subject to prior approval by the Shareholders (voting by way of poll) in general meeting.
+0.1% Limit
+Where any grant of Options to a grantee would result in the Class B Shares issued and to be issued in respect
+of all options and awards granted to such person, pursuant to the Post-IPO Share Option Scheme and any other
+share schemes adopted by the Company (excluding options or awards lapsed in accordance with relevant scheme
+rules), in the 12-month period up to and including the date of such grant representing in aggregate over 1% of the
+total number of issued Shares (for the avoidance of doubt, includes Class A Shares which carry weighted voting
+rights and Class B Shares) at the relevant time, such grant must be separately approved by Shareholders in general
+meeting with such grantee and their close associates (or associates if the grantee is a connected person of the
+Company) abstain from voting.
+(i)
+or
+Meituan 2023 Annual Report 69
+REPORT OF DIRECTORS
+cancelled
+during the
+during the
+outstanding as
+underlying
+options
+outstanding
+cancelled
+lapsed
+exercised
+granted
+options
+of options
+options
+of options
+options
+underlying
+Number
+Number of
+Number
+underlying
+of Shares
+Number
+Number
+of Shares
+Number
+of Shares
+The table below shows the details of options granted under the Post-IPO Share Option Scheme:
+The numbers of options available for grant under the Post-IPO Share Option Scheme on January 1, 2023 is
+472,240,496. On December 31, 2023, after adopting the Scheme Limit and Service Provider Sublimit, 609,351,099
+and 62,401,365 underlying Shares will be available for grants under the Scheme Limit and Service Provider Sublimit,
+respectively. During the Reporting Period, no option was granted under the Post-IPO Share Option Scheme.
+Outstanding Options Granted under the Post-IPO Share Option Scheme
+The Post-IPO Share Option Scheme shall be valid and effective for the period of ten years from September 20,
+2018, 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. As at December
+31, 2023, the remaining life of the Post-IPO Share Option Scheme was approximately four years and nine months.
+Duration
+(vi) grant of Options with a total vesting period of more than 12 months, such as where the Options may vest by
+several batches with the first batch to vest within 12 months of the grant date and the last batch to vest 12
+months after the grant date.
+1% Individual Limit
+The Company shall not make any further grant of Options to Service Providers which will result in the aggregate
+number of Class B Shares to be issued by the Company in respect of all grants of options and awards made after
+June 30, 2023 pursuant to the Post-IPO Share Option Scheme and any other share schemes adopted by the
+Company (excluding options and/or awards lapsed in accordance with relevant scheme rules) to exceed 62,421,252
+(representing approximately 1% of the total number of issued Shares as at the date of this annual report) unless the
+Shareholders approve a further refreshment of the Service Provider Sublimit or Shareholders' approval is obtained
+in compliance with the Listing Rules.
+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 Options to selected participants (in the case of the Board's delegate(s), to
+any selected participant other than a Director) by way of a grant letter. The grant letter will specify the date of grant,
+the number of options, the vesting criteria and conditions, the vesting period and such other details as the Board or
+its delegate(s) may consider necessary.
+0
+and resigned with effect from
+June 26, 2023)
+Other grantees save for Directors
+Other Employees
+December 29, 2010 to 0 to 6 years
+August 2, 2018
+3,377,862
+1,139,793
+0
+1,073,069
+Total
+11,311,192
+1,306,458
+0
+8,931,665
+with effect from March 25, 2023,
+1,073,069
+66 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+POST-IPO SHARE OPTION SCHEME
+The Post-IPO Share Option Scheme was adopted and amended as approved by Shareholders at the general
+meetings on August 30, 2018 and June 30, 2023, respectively. The Post-IPO Share Option Scheme shall be valid
+and effective for a period of ten years commencing on the Listing Date.
+The following is a summary of certain principal terms of the Post-IPO Share Option Scheme. For further details of
+the Post-IPO Share Option Scheme, please refer to the announcement of the Company dated March 24, 2023,
+the circular of the Company dated June 8, 2023 and the poll results announcement of the Company dated June
+30, 2023. Unless otherwise indicated, capitalized terms used in this section shall have the same meaning as those
+defined in the circular of the Company dated June 8, 2023.
+Purpose
+The purpose of the Post-IPO Share Option Scheme is to provide eligible persons with the opportunity to acquire
+proprietary interests in the Company and to encourage eligible persons 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, incentivizing, rewarding, remunerating,
+compensating and/or providing benefits to eligible persons.
+Eligible Participants
+during the
+The eligible persons who may be selected to become a participant of the Post-IPO Share Option Scheme are any
+individuals, or corporate entities (as the case may be), being any of (i) an Employee Participant; (ii) a Related Entity
+Participant; and (iii) a Service Provider, who the Board or its delegates considers, in its sole discretion, to have
+contributed or will contribute to the Group. No individual who is resident in a place where the grant, acceptance
+or exercise of the 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 make it necessary or expedient to exclude such individual, shall be entitled to participate
+in the Post-IPO Share Option Scheme.
+Scheme Limit and Service Provider Sublimit
+The Company shall not make any further grant of Options which will result in the aggregate number of Class B
+Shares to be issued by the Company in respect of all grants of options and awards made after June 30, 2023
+pursuant to the Post-IPO Share Option Scheme and any other share schemes adopted by the Company (excluding
+options and/or awards lapsed in accordance with relevant scheme rules) to exceed 624,212,527 (representing
+approximately 10% of the total number of issued Shares as at the date of this annual report) unless Shareholders
+approve a further refreshment of the Scheme Limit or Shareholders' approval is obtained in compliance with the
+Listing Rules.
+Meituan 2023 Annual Report 67
+REPORT OF DIRECTORS
+EAT BETTER, LIVE BETTE
+Director to a non-executive Director
+1,165,000
+7,766,665
+during the
+0
+outstanding as of
+Reporting
+Reporting
+Reporting
+Name
+Date of Grant
+Vesting Period
+January 1, 2023
+Period
+Period
+outstanding as of
+Period December 31, 2023
+Directors
+Mu Rongjun
+lapsed Number of Shares
+during the underlying RSUs
+July 1, 2017
+Wang Huiwen
+0
+0
+0
+166,665
+0
+4 to 6 years
+January 1, 2016 to
+July 1, 2018
+(redesignated from an executive
+6 years
+166,665
+7,766,665
+65,900,265
+4,468,591
+0
+3,170,312
+0
+0
+2023
+35,196,664
+58,261,362
+5,195,494
+16,936,092
+2 months to 4 years
+Service Providers (2)
+0
+4 years
+8,786
+0
+8,786
+0
+9,417
+0
+30,296
+4 years
+0
+2020
+0
+2019
+57,328,250
+1 to 6 years
+2022
+REPORT OF DIRECTORS
+Notes:
+(1)
+RSUS granted to Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong and Dr. Shum Heung Yeung Harry on September
+23, 2022, may be satisfied through issue of new Class B Shares or on-market purchase of the Class B Shares. For more
+details, please refer to the announcements and circular of the Company dated May 25, June 8, and June 30, 2023,
+respectively.
+(2) RSUS granted to Ms. Yang Marjorie Mun Tak on July 24, 2023, was funded by new Class B Shares issued and to be issued
+under the Scheme Limit, which was approved by Shareholders at the annual general meeting of the Company on June 30,
+2023.
+For Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong, Dr. Shum Heung Yeung Harry and Ms. Yang Marjorie Mun Tak,
+the weighted average closing price of the Class B Shares immediately before the dates on which the RSUs were vested in
+2023 was HKD116.8875, HKD116.8875, HKD116.8875, and HKD98.2500, respectively.
+(4)
+Purchase price for RSUs in the table above is nil.
+74 Meituan 2023 Annual Report
+(5)
+All of the grant of RSUs mentioned above during the year ended December 31, 2023 were made without any performance
+targets.
+The closing price of Class B Shares immediately before July 24, 2023 is HKD128.20 per share. Fair value of RSUs granted
+on July 24, 2023, as at the date of grant, was HKD125.00, and as for relevant accounting standard and policy adopted,
+please refer to Note 2.1.15(b) to the consolidated financial statements.
+The table below show details of RSUs granted to employees of the Group and service providers under the Post-IPO
+Share Award Scheme, which shall be funded by new Class B Shares issued or to be issued by the Company for
+incentive purpose:
+Number of RSUs
+Category
+Year of Grant
+Vesting Period
+Outstanding as of
+January 1,
+2023
+(6)
+EAT BETTER, LIVE BETTE
+35,967
+0
+2022(1)
+quarter commencing from
+December 20, 2022 until
+September 20, 2024
+YANG Marjorie Mun July 24, 202312)
+Tak
+8.33% to vest in each
+0
+25,721
+4,286
+0
+0
+21,435
+quarter commencing from
+September 30, 2023 until
+Total
+June 30, 2026
+33,900
+25,721
+23,654
+0
+Granted during
+8,989
+Vested during
+the Reporting
+0
+68,800
+2020
+4 to 5.2 years
+19,369,790
+0
+8,426,934
+3,026,712
+334,243
+0
+2021
+2 to 6 years
+35,169,206
+0
+13,457,728
+4,845,481
+0
+16,865,997
+7,916,144
+7,457,998
+0
+7,861,041
+Lapsed during Cancelled during Outstanding as of
+the Reporting
+the Reporting
+December 31,
+Period
+Period
+Period
+Period
+2023
+Employees(1)
+2018
+4 years
+29,525
+0
+29,525
+0
+0
+0
+2019
+4 years
+the Reporting
+0
+77.05
+2021
+4,974
+HK$125.00
+HK$128.20
+14,913
+HK$140.40
+HK$135.60
+44,470
+12 months to 48 months from the date of grant
+13 months from the date of grant
+23 months to 35 months from the date of grant
+October 26, 2023
+July 24, 2023
+April 20, 2023
+Service Providers
+HK$109.60
+HK$109.80
+11,473,733
+HK$124.80
+HK$125.70
+286,701
+13 months to 47 months from the date of grant
+23 months to 67 months from the date of grant
+October 26, 2023
+September 12, 2023
+HK$125.00
+HK$128.20
+3,712,582
+6 months to 48 months from the date of grant
+July 24, 2023
+HK$109.60
+HK$140.40
+HK$109.80
+As for the accounting standard and policy adopted for estimating the fair value of RSUs, please refer to Note 2.1.15(b) to
+the consolidated financial statements.
+44,131,100
+(HK$)
+Aggregate
+Consideration
+Lowest
+(HK$)
+Price Paid per Share
+Highest
+(HK$)
+No. of Shares
+Repurchased
+Total
+January 2024
+Month of Repurchase
+Following the year ended December 31, 2023 and as at the date of this annual report, the Company repurchased
+a total of 44,131,100 Class B Shares (the "Shares Repurchased") on the Stock Exchange at the aggregate
+consideration of HK$3,199,839,636.20 before expenses. The repurchase was effected to benefit the Company and
+create value to its Shareholders. Particulars of the Shares Repurchased are as follows:
+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
+(5)
+Other than the Pre-IPO ESOP, Post-IPO Share Option Scheme and Post-IPO Share Award Scheme, and 2027
+Bonds and 2028 Bonds, 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 2023.
+REPORT OF DIRECTORS
+76 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+80,603,799 Shares which may be issued in respect of outstanding RSUs.
+(iii)
+1,691,345 Shares which may be issued upon exercise of outstanding Options; and
+(ii)
+609,701,980 Shares which may be issued in respect of Options or RSUs to be granted under the Scheme
+Limit;
+(i)
+As at the date of this annual report, total number of Shares available for issue under the Post-IPO Share Option
+Scheme and the Post-IPO Share Award Scheme is 691,997,124, representing approximately 11.10% of the total
+number of issued Shares, comprising:
+The numbers of Shares that may be issued in respect of options and awards granted under all share schemes of
+the Company during the Reporting Period divided by the weighted average number of Class B Shares in issue for
+the Reporting Period is 1.17%.
+All of the grant of RSUs mentioned above during the year ended December 31, 2023 were made without any performance
+targets.
+EQUITY-LINKED AGREEMENTS
+HK$135.60
+2,371,351
+2 months to 48 months from the date of grant
+Total
+64,357
+0
+0
+0
+64,357
+1 to 4 years
+2023
+44,449
+0
+2,935
+19,430
+120,472,853
+0
+2 to 4 years
+2022
+453,826
+0
+8,989
+3,199,839,636.20
+4,844
+68.20
+146,330
+0
+609,145
+2 to 6 years
+66,814
+65,964,622
+49,662,552
+17,891,434
+April 20, 2023
+HK$130.90
+HK$131.00
+46,041,476
+HK$163.60
+HK$164.80
+2,014,422
+22 months to 48 months from the date of grant
+6 months to 48 months from the date of grant
+April 13, 2023
+Employees
+January 18, 2023
+at the Date of
+Grant per RSU
+Fair Value of
+RSUs as
+Closing Price of
+Class B Shares
+immediately before
+the Date of Grant
+Number of
+RSUS Granted
+Vesting Period
+Date of Grant
+The following grants were made in 2023:
+(4)
+(3) Purchase price for RSUs in the table above is nil.
+For service providers, the weighted average closing price of Class B Shares immediately before the date on which the RSUs
+were vested in 2023 was HKD125.8363 per share.
+ล
+(1) For employees, the weighted average closing price of Class B Shares immediately before the date on which the RSUs were
+vested in 2023 was HKD124.6346 per share.
+Notes:
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 75
+118,883,489
+0
+11,890
+0
+(iv) grants of Awards the timing of which is determined by administrative or compliance requirements not
+connected with the performance of the relevant Employee Participant, in which case the vesting date may
+be adjusted to take account of the time from which the Award would have been granted if not for such
+administrative or compliance requirements;
+6,456
+REPORT OF DIRECTORS
+POST-IPO SHARE AWARD SCHEME
+The Post-IPO Share Award Scheme was adopted and amended as approved by Shareholders at the general
+meetings on August 30, 2018 and June 30, 2023, respectively. The Post-IPO Share Award Scheme shall be valid
+and effective for a period of ten years commencing on the Listing Date. 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 Option Scheme. For further details
+of the Post-IPO Share Award Scheme, please refer to the announcement of the Company dated March 24, 2023,
+the circular of the Company dated June 8, 2023 and the poll results announcement of the Company dated June
+30, 2023. Unless otherwise indicated, capitalized terms used in this section shall have the same meaning as those
+defined in the circular of the Company dated June 8, 2023.
+Purpose
+The purposes of the Post-IPO Share Award Scheme are (i) to align the interests of eligible persons with those of the
+Group through ownership of Shares, dividends and other distributions paid on Shares and/or the increase in value
+of the Shares; and (ii) to encourage and retain eligible persons to make contributions to the long-term growth and
+profits of the Group.
+Eligible Participants
+The eligible persons who may be selected to become a participant of the Post-IPO Share Award Scheme are any
+individuals, or corporate entities (as the case may be), being any of (i) an Employee Participant; (ii) a Related Entity
+Participant; and (iii) a Service Provider, who the Board or its delegates considers, in its sole discretion, to have
+contributed or will contribute to the Group. No individual who is resident in a place where the grant, acceptance
+or vesting of the Awards pursuant to the Post-IPO Share Award 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 make it necessary or expedient to exclude such individual, shall be entitled to participate
+in the Post-IPO Share Award Scheme.
+Scheme Limit and Service Provider Sublimit
+The Company shall not make any further grant of Awards which will result in the aggregate number of Class
+B Shares to be issued by the Company in respect of all grants of options and awards made after the June 30,
+2023 pursuant to the Post-IPO Share Award Scheme and any other share schemes adopted by the Company
+(excluding options or awards lapsed in accordance with relevant scheme rules) to exceed 624,212,527 (representing
+approximately 10% of the total number of issued Shares as at the date of this annual report) unless Shareholders
+approve a further refreshment of the Scheme Limit or Shareholders' approval is obtained in compliance with the
+Listing Rules.
+Meituan 2023 Annual Report 71
+REPORT OF DIRECTORS
+The Company shall not make any further grant of Awards to Service Providers which will result in the aggregate
+number of Class B Shares to be issued by the Company in respect of all grants of options and awards made after
+the June 30, 2023 pursuant to the Post-IPO Share Award Scheme and any other share schemes adopted by the
+Company (excluding options or awards lapsed in accordance with relevant scheme rules) to exceed the 62,421,252
+(representing approximately 1% of the total number of issued Shares as at the date of this annual report) unless the
+Shareholders approve a further refreshment of the Service Provider Sublimit or Shareholders' approval is obtained
+in compliance with the Listing Rules.
+70 Meituan 2023 Annual Report
+1% Individual Limit
+0.1% Limit
+Any grant of Awards to a Director, chief executive (as defined in the Listing Rules), or substantial shareholder of the
+Company (or any of their respective associates), must be approved by the independent non-executive Directors
+(excluding any independent non-executive Director who is the grantee of the Awards). Where any of Awards to a
+Director (other than an independent non-executive Director) or chief executive (as defined in the Listing Rules), or
+any of their associates would result in the Class B Shares issued and to be issued in respect of all Awards granted
+(excluding any Awards lapsed in accordance with the terms of Scheme) to such person in the 12-month period up
+to and including the date of such grant, representing in aggregate over 0.1% of the total number of issued Shares
+(for the avoidance of doubt, includes Class A Shares which carry weighted voting rights and Class B Shares) at the
+relevant time, such further grant of Awards must be approved by Shareholders in general meeting in the manner set
+out in Listing Rule 17.04(4).
+Grant of Award
+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 selected participants (in the case of the Board's delegate(s),
+to any selected participant other than a Director) by way of an award letter. The award letter will specify the date of
+grant, the number of Award Shares underlying the Award, the vesting criteria and conditions, the vesting period and
+such other details as the Board or its delegate(s) may consider necessary.
+No consideration is payable on acceptance of each grant of Award(s) and there is no period within which payments
+or calls must or may be made or loans for such purposes must be repaid.
+EAT BETTER, LIVE BETTE
+72 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+Purchase Price
+The purchase price payable (if any) for the Award Shares will be stated in the Award Letter, to be determined by
+the Board or the Scheme Administrator in accordance with the purpose of the Post-IPO Share Award Scheme,
+taking into account (including but not limited to) the prevailing closing price of the Class B Shares and profile of the
+selected participant.
+Vesting of Awards
+The Board or Scheme Administrator may from time to time while the Post-IPO Share Award Scheme is in force and
+subject to all applicable laws, determine such vesting criteria and conditions or periods for the Award to be vested
+hereunder, provided however that the vesting period for Awards shall not be less than 12 months, except that any
+Awards granted to an Employee Participant may be subject to a shorter vesting period, including where:
+(i)
+Where any grant of Awards to a grantee would result in the Class B Shares issued and to be issued in respect of all
+options and awards granted to such person, pursuant to the Post-IPO Share Award Scheme and any other share
+schemes adopted by the Company (excluding options or awards lapsed in accordance with relevant scheme rules),
+in the 12-month period up to and including the date of such grant representing in aggregate over 1% of the total
+number of issued Shares (for the avoidance of doubt, includes Class A Shares which carry weighted voting rights
+and Class B Shares) at the relevant time (i.e. the 1% Individual Limit), such grant must be separately approved
+by Shareholders in general meeting with such grantee and their close associates (or associates if the grantee is a
+connected person of the Company) abstain from voting.
+(ii)
+All Shares Repurchased were subsequently cancelled on February 20, 2024. On the same date, Mr. Mu Rongjun, as
+a WVR beneficiary, simultaneously converted 4,248,771 Class A Shares into Class B Shares on a one-to-one ratio
+pursuant to Rule 8A.21 of the Listing Rules, such that the proportion of Shares carrying WVR shall not be increased,
+pursuant to the requirements under Rules 8A.13 and 8A.15 of the Listing Rules.
+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.
+3,199,839,636.20
+EAT BETTER, LIVE BETTE
+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.
+0
+The annual cap payable by the Company to Tencent for the year ended December 31, 2023 is RMB690 million,
+while the actual transaction amount for the period from January 1, 2023 to March 24, 2023 is approximately RMB50
+million Note. The annual cap payable by Tencent to the Company for the year ended December 31, 2023 is RMB120
+million, while the actual transaction amount for the period from January 1, 2023 to March 24, 2023 is zero Note
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 79
+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 expired 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.
+Cloud Services and Technical Services Framework Agreement
+The annual cap payable by the Company to Tencent for the year ended December 31, 2023 is RMB1,830 million,
+while the actual transaction amount for the period from January 1, 2023 to March 24, 2023 is approximately
+RMB180 million Note. The annual cap payable by Tencent to the Company for the year ended December 31, 2023
+is RMB90 million, while the actual transaction amount for the period from January 1, 2023 to March 24, 2023 is
+approximately RMB7 million Note
+PRE-EMPTIVE RIGHTS
+Shenzhen Tencent Computer is a subsidiary of Tencent. Tencent was a substantial shareholder of the Company
+during the period from January 1 to March 24, 2023, and therefore, a connected person of the Company during
+such period. On March 24, 2023, 958,121,562 Class B Shares were distributed by Tencent to its shareholders (the
+"Tencent Distribution"), after which Tencent ceased to be a substantial shareholder of the Company.
+REPORT OF DIRECTORS
+78 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+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
+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 HongShan (formerly known as 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 HongShan (formerly known as
+Sequoia Capital China) participates in its day-to-day management.
+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.
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 77
+DIRECTORS' INTEREST IN COMPETING BUSINESS
+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-mile, 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.
+grants of "make whole" Awards to new Employee Participant to replace awards or options such Employee
+Participants forfeited when leaving their previous employers;
+NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
+(iii) grants of Awards which are subject to fulfillment of performance targets as determined in the conditions of
+his/her grant;
+11,300
+0
+6,456
+0
+0
+4,844
+quarter commencing from
+December 20, 2022 until
+September 20, 2024
+LENG Xuesong
+September 23,
+12.5% to vest in each
+11,300
+12.5% to vest in each
+0
+0
+0
+4,844
+Say
+2022(1)
+quarter commencing from
+December 20, 2022 until
+September 20, 2024
+SHUM Heung Yeung September 23,
+Harry
+12.5% to vest in each
+11,300
+0
+grants to an Employee Participant whose employment is terminated due to death or disability or event of force
+majeure;
+6,456
+September 23,
+2022 (1)
+44,131,100
+as of
+December 31,
+2023
+ORR Gordon Robert
+Halyburton
+(v)
+or
+(vi) grant of Awards with a total vesting period of more than 12 months, such as where the Awards may vest by
+several batches with the first batch to vest within 12 months of the grant date and the last batch to vest 12
+months after the grant date.
+Termination
+The Post-IPO Share Award Scheme shall terminate on the earlier of:
+(i)
+the end of the period of ten years from September 20, 2018, 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
+Meituan 2023 Annual Report 73
+REPORT OF DIRECTORS
+(ii) 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.
+As at December 31, 2023, the remaining life of the Post-IPO Share Award Scheme was approximately four years
+and nine months.
+Outstanding RSUs Granted under the Post-IPO Share Award Scheme
+The numbers of RSUs available for grant under the Post-IPO Share Award Scheme on January 1, 2023, is
+86,973,192. On December 31, 2023, after adopting the Scheme Limit and Service Provider Sublimit, 609,351,099
+and 62,401,365 underlying Shares will be available for grants under the Scheme Limit and Service Provider Sublimit,
+respectively.
+grants of Awards with a mixed vesting schedule such that the Awards vest evenly over a period of 12 months;
+Number of RSUs
+Lapsed during Cancelled during
+the Reporting the Reporting
+Period
+Period
+Period
+Period
+the Reporting
+Outstanding as of
+January 1, 2023
+the Reporting
+Date of Grant
+Name
+Vested during
+Granted during
+Outstanding
+Vesting Period
+The table below show details of RSUs granted to Directors under the Post-IPO Share Award Scheme:
+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.
+(5)
+denotes a direct legal and beneficial ownership in the equity interest.
+-->” denotes a contractual relationship.
+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.
+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:
+EAT BETTER, LIVE BETTE
+86 Meituan 2023 Annual Report
+REPORT OF DIRECTORS
+Exclusive Business Cooperation Agreements
+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) (2022 Version) and other laws and regulations. For further details of the
+subsidiaries of the Onshore Holdcos, see the section headed "History, Reorganization and Corporate Structure -
+Corporate Structure" of the Prospectus.
+(4)
+REPORT OF DIRECTORS
+(2)
+Shanghai Hantao is owned by Wang Xing as to 95% and Mu Rongjun as to 5%.
+Beijing Sankuai Technology is owned by Wang Xing as to 50.97% and Mu Rongjun as to 49.03%; and
+85
+Meituan 2023 Annual Report
+(x)
+(ix)
+(viii) Beijing Mobike is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vii) Chengdu Meigengmei is owned as to 50% and 50% by Li Huijuan () and Fu Dongping (1), respectively,
+or consultants. The arrangement was the result of a commercial decision as agreed between Chengdu Meigengmei
+and its investee companies when Chengdu Meigengmei commenced operations;
+Beijing Xinmeida is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(vi)
+(3)
+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.
+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.
+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).
+EAT BETTER, LIVE BETTE
+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 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 Foreign Investment Access (Negative List) (2022 Version) and other laws and regulations. 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.
+Reasons for Adopting the Contractual Arrangements
+The revenue of the Onshore Holdcos and their respective subsidiaries amounted to RMB13.0 billion for the year
+ended December 31, 2023, representing approximately 4.7% of the total revenue for the year of the Group. The
+total assets of the Onshore Holdcos and their respective subsidiaries amounted to RMB17.3 billion as of December
+31, 2023, representing approximately 5.9% of the total assets of the Group.
+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,
+2023, 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.
+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.
+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.
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 89
+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.
+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 Foreign Investment Law
+Beijing Sankuai Cloud Computing is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+Loan Agreements
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report
+88
+EAT BETTER, LIVE BETTE
+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.
+Powers of Attorney
+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.
+Equity Pledge Agreements
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 87
+Exclusive Option Agreements
+(v)
+Notes:
+(iv)
+Reference is made to the announcement of the Company dated September 23, 2022, in which it was disclosed that,
+on September 23, 2022, an aggregate of 38,742 Award Shares in the form of RSUs were granted to independent
+non-executive Directors, namely Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong and Dr. Shum Heung Yeung
+Harry (collectively, "Connected Grantees"), under the Post-IPO Share Award Scheme subject to the terms and
+conditions of the Post-IPO Share Award Scheme.
+Issue of Class B Shares to Connected Grantees of Restricted Share Units
+NON-EXEMPT CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+82 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+Details of related party transactions carried out in the normal course of business are set out in Note 38 to the
+consolidated financial statements. Save as disclosed above and payments of remuneration to certain Directors,
+which constitute continuing connected transactions fully exempt from the connected transaction requirements
+under Rule 14A.92 or Rule 14A.95 of the Listing Rules, no related party transactions disclosed in the consolidated
+financial statements constitutes a connected transaction or a continuing connected transaction as defined under
+Chapter 14A of the Listing Rules. During the Reporting Period, the Company has fully complied with the disclosure
+requirements under Chapter 14A of the Listing Rules.
+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.
+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.
+(c)
+on normal commercial terms or better; and
+(b)
+in the ordinary and usual course of business of the Group;
+(a)
+The independent non-executive Directors have reviewed the continuing connected transactions outlined above, and
+confirmed that such continuing connected transactions had been entered into:
+Annual Review by the Independent Non-executive Directors and the Auditor
+REPORT OF DIRECTORS
+Meituan 2023 Annual Report 81
+Note: As the relevant parties to the transactions are no longer connected persons of the Company following the completion of the
+Tencent Distribution on March 24, 2023, the transaction amounts during 2023 as stated above were incurred prior to the
+completion of the Tencent Distribution.
+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.
+The annual cap for the year ended December 31, 2023 is RMB3,840 million, while the actual transaction amount for
+the period from January 1, 2023 to March 24, 2023 is approximately RMB679 million Note
+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.
+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.
+REPORT OF DIRECTORS
+80 Meituan 2023 Annual Report
+Amongst the 38,742 Award Shares in the form of RSUs granted to the Connected Grantees under the Post-
+IPO Share Award Scheme in September 2022, 9,684 existing Class B Shares were repurchased from the open-
+market to satisfy 9,684 RSUs vested in favour of the Connected Grantees. On May 25, 2023, the Board resolved to
+propose to issue an aggregate of 29,058 Class B Shares to the Connected Grantees upon vesting of the remaining
+RSUs. For further details, please refer to the announcements and circular of the Company dated September 23,
+2022, May 25, 2023 and June 8, 2023, respectively.
+Meituan Finance is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+PARTIALLY-EXEMPT CONNECTED TRANSACTIONS
+REPORT OF DIRECTORS
+Shanghai Sankuai Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(iii)
+Beijing Kuxun Interaction is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(ii)
+(i) Tianjin Antechu Technology is owned by Wang Xing as to 95% and Mu Rongjun as to 5%;
+(1) Registered Shareholders refer to the registered shareholders of the Onshore Holdcos, namely, (i) Tianjin Antechu
+Technology; (ii) Beijing Kuxun Interaction; (iii) Shanghai Sankuai Technology; (iv) Meituan Finance; (v) Beijing Sankuai Cloud
+Computing; (vi) Beijing Xinmeida; (vii) Chengdu Meigengmei; (viii) Beijing Mobike; (ix) Beijing Sankuai Technology; and (x)
+Shanghai Hantao.
+Onshore Holdcos and their subsidiaries
+100%
+Registered Shareholders (1)
+Service
+Fees
+Management and
+consulting services
+WFOES
+100%
+Our Company
+The following simplified diagram illustrates the flow of economic benefits from the Consolidated Affiliated Entities to
+the Group stipulated under the 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.
+CONTRACTUAL ARRANGEMENTS
+REPORT OF DIRECTORS
+84 Meituan 2023 Annual Report
+EAT BETTER, LIVE BETTE
+As the highest applicable percentage ratio (calculated in accordance with Rule 14.07 of the Listing Rules) in
+respect of the Connected Acquisitions, on an aggregated basis, exceeds 0.1% but is less than 5%, the Connected
+Acquisitions are subject to reporting and announcement requirements but are exempt from the circular and
+independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
+Light Year is a leading AGI innovator in the PRC, which was founded and previously controlled by Mr. Wang
+Huiwen, the co-founder of Meituan, a former director and a connected person of the Company. Each of Mr. Wang
+Xing and Mr. Neil Nanpeng Shen is a Director. Thus, each of (i) the Founder Seller, being an associate of Mr. Wang
+Huiwen; (ii) Qimai, being an associate of Mr. Wang Xing; and (iii) SCC Growth VII Holdco, Ltd., being an associate
+of Mr. Neil Nanpeng Shen, is a connected person of the Company at the issuer level. Accordingly, the Transfer
+Agreements and the transactions contemplated thereunder with these connected sellers constituted connected
+transactions of the Company under Chapter 14A of the Listing Rules.
+On June 29, 2023, (i) the Offshore Buyer entered into the Offshore Share Purchase Agreement with, among others,
+Founder Seller, Qimai and SCC Growth VII Holdco, Ltd., and (ii) the Onshore Buyer entered into the Onshore Equity
+Transfer Agreement, to acquire the entire interest in Light Year. In August 2023, the said acquisitions have been
+completed, upon which, the consideration of approximately RMB1,675 million (equivalent to approximately US$234
+million) have been paid and a total of approximately RMB1,675 million identifiable net assets (arrived after taking
+into account the cash position of approximately US$286 million offset by the Assumed Liabilities of approximately
+RMB367 million) have been acquired. Following completion of the aforesaid transactions, the Company held 100%
+interest in Light Year. For further details, please refer to the announcement of the Company dated June 29, 2023.
+Unless otherwise indicated, capitalized terms used in this section shall have the same meaning as those defined in
+the announcement of the Company dated June 29, 2023.
+Acquisition of the Entire Interest in Light Year
+Meituan 2023 Annual Report 83
+Mr. Orr Gordon Robert Halyburton, Mr. Leng Xuesong and Dr. Shum Heung Yeung Harry are Directors. Therefore,
+they are connected persons of the Company at the issuer level. 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 annual
+general meeting held on June 30, 2023.