Meituan - Interim / Quarterly Report 2021

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2021 Interim Report

CORPORATE INFORMATION	2
KEY HIGHLIGHTS	4
CHAIRMAN’S STATEMENT	7
MANAGEMENT DISCUSSION AND ANALYSIS	12
OTHER INFORMATION	32
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION	56
CONSOLIDATED INCOME STATEMENT	57
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS)/INCOME	58
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	59
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	61
CONSOLIDATED STATEMENT OF CASH FLOWS	63
NOTES TO THE INTERIM FINANCIAL INFORMATION	65
DEFINITIONS	117
GLOSSARY	124

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Wang Xing (王興) (Chairman of the Board) Mu Rongjun (穆榮均) Wang Huiwen (王慧文)

Non-Executive Directors

Lau Chi Ping Martin (劉熾平) Neil Nanpeng Shen (沈南鵬)

Independent Non-Executive Directors

Orr Gordon Robert Halyburton Leng Xuesong (冷雪松) Shum Heung Yeung Harry (沈向洋)

AUDIT COMMITTEE

Orr Gordon Robert Halyburton (Chairman) Leng Xuesong (冷雪松) Shum Heung Yeung Harry (沈向洋)

REMUNERATION COMMITTEE

Leng Xuesong (冷雪松) (Chairman) Shum Heung Yeung Harry (沈向洋) Mu Rongjun (穆榮均)

NOMINATION COMMITTEE

Leng Xuesong (冷雪松) (Chairman) Shum Heung Yeung Harry (沈向洋) Wang Huiwen (王慧文)

CORPORATE GOVERNANCE COMMITTEE

Leng Xuesong (冷雪松) (Chairman) Shum Heung Yeung Harry (沈向洋) Orr Gordon Robert Halyburton

JOINT COMPANY SECRETARIES

Xu Sijia (徐思嘉) Lau Yee Wa (劉綺華)

AUTHORIZED REPRESENTATIVES

Wang Xing (王興) Wang Huiwen (王慧文)

AUDITOR

PricewaterhouseCoopers Certified Public Accountants and Registered PIE Auditor 22/F, Prince’s Building Central Hong Kong

REGISTERED OFFICE

PO Box 309, Ugland House Grand Cayman, KY1-1104 Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN CHINA

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

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 Central Hong Kong

Skadden, Arps, Slate, Meagher & Flom 42/F, Edinburgh Tower The Landmark 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 26th Floor, Central Plaza 18 Harbour Road, Wanchai Hong Kong

HONG KONG SHARE REGISTRAR

Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wan Chai 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 China

COMPLIANCE ADVISOR

STOCK CODE

Guotai Junan Capital Limited 27/F, Low Block Grand Millennium Plaza 181 Queen’s Road Central Hong Kong

3690

COMPANY WEBSITE

about.meituan.com

MEITUAN | 2021 INTERIM REPORT

KEY HIGHLIGHTS

FINANCIAL SUMMARY

Unaudited

Three Months Ended

	June 30,	2021	June 30, 2020	June 30, 2020
		As a		As a
		percentage		percentage	Year-over-
	Amount	of revenues	Amount	of revenues	year change
		(RMB in thousands, except for percentages)
Revenues	43,759,232	100.0%	24,721,837	100.0%	77.0%
Operating (loss)/profit	(3,251,705)	(7.4%)	2,174,645	8.8%	NA
(Loss)/profit for the period	(3,356,375)	(7.7%)	2,210,181	8.9%	NA
Non-IFRS Measures:
Adjusted EBITDA	(1,239,986)	(2.8%)	2,610,255	10.6%	NA
Adjusted net (loss)/profit	(2,217,141)	(5.1%)	2,718,478	11.0%	NA
		Unaudited
		Six Months	Ended
	June 30,	2021	June 30, 2020
		As a		As a
		percentage		percentage	Year-over-
	Amount	of revenues	Amount	of revenues	year change
		(RMB in thousands, except for percentages)
Revenues	80,775,494	100.0%	41,475,724	100.0%	94.8%
Operating (loss)/profit	(8,018,712)	(9.9%)	459,115	1.1%	NA
(Loss)/profit for the period	(8,202,637)	(10.2%)	630,903	1.5%	NA
Non-IFRS Measures:
Adjusted EBITDA	(3,622,669)	(4.5%)	2,651,566	6.4%	NA
Adjusted net (loss)/profit	(6,108,858)	(7.6%)	2,502,130	6.0%	NA

KEY HIGHLIGHTS

FINANCIAL INFORMATION BY SEGMENT

Revenues:
Food delivery
In-store, hotel & travel
New initiatives and others
Total revenues
Operating (loss)/profit:
Food delivery
In-store, hotel & travel
New initiatives and others
Unallocated items1
Total operating (loss)/profit
Revenues:
Food delivery
In-store, hotel & travel
New initiatives and others
Total revenues
Operating (loss)/profit:
Food delivery
In-store, hotel & travel
New initiatives and others
Unallocated items1
Total operating (loss)/profit

Unaudited
Three Months Ended
June 30,
2021
June 30,
2020
Year-over-
year change
(RMB in thousands, except for percentages)
23,125,084
14,544,095
59.0%
8,602,179
4,543,982
89.3%
12,031,969
5,633,760
113.6%
43,759,232
24,721,837
77.0%
2,447,076
1,253,421
95.2%
3,663,818
1,891,563
93.7%
(9,238,125)
(1,459,539)
NA
(124,474)
489,200
NA
(3,251,705)
2,174,645
NA
Unaudited
Six Months Ended
June 30,
2021
June 30,
2020
Year-over-
year change
(RMB in thousands, except for percentages)
43,700,494
24,034,518
81.8%
15,186,570
7,638,960
98.8%
21,888,430
9,802,246
123.3%
80,775,494
41,475,724
94.8%
3,562,961
1,182,540
201.3%
6,412,023
2,571,742
149.3%
(17,282,570)
(2,823,256)
NA
(711,126)
(471,911)
50.7%
(8,018,712)
459,115
NA

1 Unallocated items mainly 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, and (iv) other gains, net.

MEITUAN | 2021 INTERIM REPORT

KEY HIGHLIGHTS

OPERATING METRICS

	Twelve Months Ended	Twelve Months Ended
	June 30,	June 30,	Year-over-
	2021	2020	year change
	(in millions,	except for percentages)
Number of Transacting Users	628.4	457.3	37.4%
Number of Active Merchants	7.7	6.3	23.5%
	(units, except for percentages)
Average number of transactions per annual
Transacting User	32.8	25.7	27.8%
	Three Months	Ended
	June 30,	June 30,	Year-over-
	2021	2020	year change
	(in millions,	except for percentages)
Gross Transaction Volume of food delivery	173,603.3	108,827.1	59.5%
Number of food delivery transactions2	3,541.4	2,228.9	58.9%
Number of domestic hotel room nights	140.8	78.0	80.5%

2 Our 1P model, for which we organize and provide food delivery services, accounts for about 66.7% and 66.5% of total food delivery transactions in the second quarter of 2021 and in the same period of 2020, respectively.

CHAIRMAN’S STATEMENT

To our Shareholders:

During the first half of 2021, we remained well-positioned to grow our business, upgrade our product and service qualities, and fulfill our mission that “We help people eat better, live better”, all of which were backed by the effective pandemic control from the government, as well as the sustained growth of the Chinese economy. Equipped by technology development and business innovations, we made progress in serving broader consumer base, especially those from lower-tier cities and rural areas, empowering millions of small and medium-sized merchants through digitization, and providing job opportunities, as well as steady income for delivery riders. We are very proud that common prosperity is built in the gene of Meituan, and going forward, we shall remain committed to shoulder our social responsibilities and create greater value for the society.

I am pleased to present the Group’s interim results for the six months ended June 30, 2021.

BUSINESS REVIEW

Company Financial Highlights

For the second quarter of 2021, Meituan continued to serve as China’s leading e-commerce platform for services, providing greater value for our consumers, merchants, delivery riders, business partners, and the larger society. We continued to showcase strong growth momentum, with revenues increasing by 77% in the second quarter of 2021 to RMB43.8 billion from RMB24.7 billion for the same period of 2020. Our food delivery and in-store, hotel & travel segments maintained high growth during the quarter, realizing an aggregate operating profit by segment of RMB6.1 billion in the second quarter of 2021, an increase from RMB3.1 billion for the same period of 2020. On the other hand, operating loss for the new initiatives and others segment widened as we continue to invest in areas that will bring long-term value to the Company and provide consumers and our merchants with better products and services. As a result, both adjusted EBITDA and adjusted net loss experienced negative year-over-year growth for the second quarter of 2021 and decreased to negative RMB1.2 billion and RMB2.2 billion, respectively. Our net cash flows generated from operating activities decreased to RMB2.9 billion in the second quarter of 2021 from RMB5.6 billion for the same period of 2020. We had cash and cash equivalents of RMB71.4 billion and short-term treasury investments of RMB51.1 billion as of June 30, 2021, compared to the balances of RMB17.8 billion and RMB35.3 billion as of March 31, 2021, respectively.

MEITUAN | 2021 INTERIM REPORT

CHAIRMAN’S STATEMENT

Company Business Highlights

Food delivery

In the second quarter of 2021, we continued to witness strong growth in the food delivery segment. As food delivery continued to be an essential service, we expanded our supplies with more depth and breadth to better meet the evolving demand from consumers. Furthermore, we continued to improve economies of scale and strengthen our advantages in consumer base, merchant base, and delivery network, enabling us to achieve solid growth and higher efficiency. During the second quarter of 2021, GTV of our food delivery business increased by 59.5% yearover-year to RMB173.6 billion. Daily average number of food delivery transactions increased by 58.9% year-overyear to 38.9 million. Revenue increased by 59.0% year-over-year to RMB23.1 billion. Operating profit increased 95.2% to RMB2.4 billion in the second quarter of 2021, with operating margin further improving to 10.6% from 8.6%.

As we continued to provide wider selections on our platform and offer longer distance deliveries, we were able to satisfy the increasingly diverse needs from consumers. We maintained solid growth in both transacting users and purchase frequency. Thanks to our enhancement in marketing efficiency, the effective membership program, and the stratified operations among various consumption scenarios. Moreover, we penetrated more deeply in lowertier markets, with most of our new users coming from lower-tier cities. Order contribution from breakfast, afternoon tea, and late-night snack further increased, and long-distance orders became a more meaningful part of the total food delivery orders. The growth in our consumer base and transaction frequency not only reflects consumers’ increasing preferences for food delivery, but also demonstrates their ongoing trust of our platform and services.

On the merchant side, we continued to onboard high-quality restaurants, as well as small and medium-sized merchants. We introduced a new fee structure that is more transparent and offers greater delivery flexibility to merchants, and it became widely adopted. This quarter, we also focused on helping restaurant merchants run online operations with higher efficiency. We launched a new “Food Delivery Manager” program, aiming to help small and medium-sized merchants adapt to online operations, especially in aspects such as operational diagnosis, store renovation, menu design, event planning, marketing, and so on. We are delighted to see that those who participated in the program posted visible business growth. As the industry leader, we are highly motivated to solve merchants’ pain points, provide more convenience and support, help merchants embrace digitization, and improve their operational efficiency.

With respect to our delivery network, we utilized differentiated delivery solutions to cope with different consumption scenarios and different merchant types. To effectively operate the world’s largest on-demand delivery network, we understand the importance of delivery riders, and we have launched several programs and measures to improve delivery riders’ overall benefits. Through panel discussions with delivery riders, we collected feedback to improve our business operations and enhance the delivery riders’ welfare. We also established and upgraded various charity programs that were designed to improve the well-being of delivery riders’ families and children, providing them with care and support. Moreover, we helped delivery riders with long-term career development through our “Delivery Station Manager” program. Going forward, we believe there are a lot more that we can do with the help of technology. For example, the assimilation of autonomous delivery vehicles and drones into our delivery network in the future would further relieve our delivery riders and help them improve delivery efficiency.

CHAIRMAN’S STATEMENT

In-store, hotel & travel

Our in-store, hotel & travel segment continued to post steady growth, with revenue growing by 89.3% year-overyear to RMB8.6 billion in the second quarter of 2021. Operating profit increased 93.7% to RMB3.7 billion in the second quarter of 2021 from RMB1.9 billion in the same period of 2020, and with operating margin increasing to 42.6% from 41.6%.

For in-store dining, GTV growth further accelerated from that of the previous quarter. We expanded the coverage of high-quality restaurants, introduced more light-meal options on our platform, and further enhanced operational capabilities. We also upgraded our transaction-based services and advertising products, and offered differentiated solutions to merchants. We intentionally lowered the price for subscription-based services to encourage more merchants to adopt our advertising products. Meanwhile, our CPC advertising products also penetrated more deeply to a broader merchant base. As a result, consumers became increasingly willing to use the transaction products on our platform to dine out, improving transaction frequency and user stickiness for the quarter.

For other in-store services, we continued to see accelerated GTV growth. Categories such as medical aesthetics, pet care, and healthcare all achieved stellar performance. We also leveraged various festivals and campaigns, such as “Labour Day”, “Tomb Sweeping Day”, and “Dragon Boat Festival”, to connect more merchants with consumers. On the operational side, we expanded our direct sales team to cover wider consumption categories and broader lower-tier markets, which effectively increased our annual active merchants base. Nevertheless, we believe that most lower-tier markets are still underserved, with consumer demand and merchant needs yet to be met, leaving ample room for future digitization. Thus going forward, we will continue to expand our direct sales team in the appropriate markets, while improving our products and services to reach more consumers.

For hotel bookings, demand for travel continued to rise compared to the previous quarter. Our domestic room nights surpassed 140 million for the second quarter of 2021, representing a stellar 81% year-over-year growth, and a two-year CAGR of 22% from the same period of 2019. For high-star hotels, we continued to increase platform supply to meet the changing demand from consumers, and further strengthened our service quality and operational capabilities. For low-star hotels, we solidified our leading position, and continued to penetrate further into lower-tier markets, through the accelerated digitization process and offline traffic conversion.

New initiatives and others

During the second quarter of 2021, we expanded investments in new initiatives, especially around retail, which corresponds perfectly with our “Food+Platform” strategy. Revenues from the new initiatives and others segment increased by 113.6% year-over-year to RMB12.0 billion, primarily driven by the growth in retail businesses, B2B food distribution services, and bike-sharing and moped services. Operating loss for the segment increased both year-over-year and quarter-over-quarter to RMB9.2 billion in the second quarter of 2021, while operating margin improved sequentially by 4.8 percentage points to negative 76.8%.

MEITUAN | 2021 INTERIM REPORT

CHAIRMAN’S STATEMENT

Meituan Select, our community e-commerce business, remained our largest investment area in this quarter. We further expanded our geographical footprints, and deepened our penetration into lower-tier markets. We helped hundreds of thousands of villagers to become group leaders, which effectively increased their personal income. We achieved solid user growth and further cultivated consumer behavior, and focused on providing consistently better products and experience to consumers. We also continued to make substantial investments to improve our product offerings, supply chain, and fulfillment capabilities. We built a nationwide cold chain logistics to ensure quality products and delivery of fresh produce. As our business scaled up, the operating efficiency and unit economics also improved. Going forward, we will continue to develop long-term capabilities, comply with regulations, create value for all participants in the ecosystem, and fulfill our social responsibility.

For Meituan Instashopping, we further expanded our merchant base and product coverage. By deepening our collaborations with FMCG brands directly, we help these brands reach more target customers and improve marketing efficiency. Moreover, our user growth accelerated, driving solid growth in transaction volume and GTV. With regard to category breakdown, flowers and medicine maintained high growth momentum, and continued to outperform other categories. We believe that the on-demand delivery of medicine has large potential, so we provided convenient delivery of medicine to consumers on a 24/7 basis to solve people’s most urgent medical needs. As a result, our quarterly number of transactions and GTV growing north of 140% year-over-year in the second quarter of 2021.

For Meituan Grocery, we strengthened our product and service qualities to provide our consumers with a better experience. We completed our coverage expansion in existing tier-1 cities, and increased our warehouse density. We also optimized our product structure, enhanced warehousing capabilities and strengthened delivery logistics to ensure quality. Thanks to our continuous investments and optimization, we are pleased to see that our quarterly transacting users and quarterly GTV both increased.

As the industry leader, we firmly believe in our mission that “We help people eat better, live better”, and set our business goals from a long-term perspective. In the second quarter of 2021, we broadened our service scope and optimized our product and service qualities to better satisfy consumer demand, enabling us to extend touchpoints with our consumers, particularly for those from lower-tier markets. We also worked towards serving a greater number of merchants, especially small and medium-sized merchants, helping them adapt to digitization and improve daily operations. Moreover, we further enhanced our on-demand delivery network to expand delivery service from food to non-food categories, bringing more convenience and wider selections for consumers. Most significantly, we know what we have achieved today is largely attributable to the hard work of our delivery riders, and we consider their welfare to be of the utmost importance. We have not only continued to improve their benefits, but have also taken steps to care for their personal and family well-being as well as their long-term career paths. Going forward, we will continue to listen attentively to our delivery riders, value their perspectives, improve their welfare to the best of our ability, and work side by side with them to jointly promote the development of the industry. During the recent unprecedented flood in Henan Province, our delivery riders stood firmly at their posts, and played valuable role ensuring the livelihood of people from flooded areas. Some even risked their own lives to save others and help evacuate trapped people. In addition, we opened up our warehouse inventories of the retail business in Zhengzhou, and donated food and daily necessities to victims at their most dire needs. We also assisted with the allocation and distribution of emergency goods under the leadership of local governments. Moreover, our hotel business reacted quickly to coordinate a number of hotels that were able to operate during the

CHAIRMAN’S STATEMENT

crisis to provide emergency refuge for the public. To express our sincere gratitude for the support that they offered, we will provide preferential terms such as special subsidies for these merchants in the future. Our Meituan Charity Foundation donated RMB100 million to provide shelter and post-disaster healthcare services to the suffering people. Our delivery riders, along with our business segments are trying our best to give back to the society for the trust in us, and take on more social responsibilities. We will never stop creating greater value for all the participants in our ecosystem and promoting “common prosperity” for the larger society.

APPRECIATION

On behalf of the board, I would like to express my sincere appreciation for our consumers, merchants, delivery riders, business partners, and our staff and management team for their support and contribution. I would also like to thank our shareholders and stakeholders for their continuous support and trust. Going forward, we will continue to build a sustainable ecosystem, help promote common prosperity, and support the advancement of the whole society.

Wang Xing

Chairman

Hong Kong, August 30, 2021

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

THE SECOND QUARTER OF 2021 COMPARED TO THE SECOND QUARTER OF 2020

The following table sets forth the comparative figures for the second quarter of 2021 and 2020:

Revenues
Commission
Online marketing services
Interest revenue
Other services and sales
Cost of revenues
Gross profit
Selling and marketing expenses
Research and development expenses
General and administrative expenses
Net provision for impairment losses on financial assets
Fair value changes on other financial investments
at fair value through profit or loss
Other gains, net
Operating (loss)/profit
Finance income
Finance costs
Share of gains of investments accounted for using the equity
method
(Loss)/profit before income tax
Income tax credits
(Loss)/profit for the period
Non-IFRS measures:
Adjusted EBITDA
Adjusted net (loss)/profit

Unaudited
Three Months Ended
June 30,
2021
June 30,
2020
(RMB in thousands)
26,900,050
15,911,364
7,215,696
4,323,011
341,468
201,730
9,302,018
4,285,732
43,759,232
24,721,837
(31,245,861)
(16,146,879)
12,513,371
8,574,958
(10,848,627)
(4,172,332)
(3,900,794)
(2,376,737)
(2,053,024)
(1,158,092)
(104,355)
(45,676)
164,748
346,689
976,976
1,005,835
(3,251,705)
2,174,645
112,118
40,352
(263,269)
(60,731)
38,251
42,881
(3,364,605)
2,197,147
8,230
13,034
(3,356,375)
2,210,181
(1,239,986)
2,610,255
(2,217,141)
2,718,478

MANAGEMENT DISCUSSION AND ANALYSIS

Revenues

Our revenues increased by 77.0% to RMB43.8 billion for the second quarter of 2021 from RMB24.7 billion for the same period of 2020. All business segments achieved growth on a year-over-year basis as we recovered from the COVID-19 pandemic, strengthened our food delivery and in-store, hotel & travel businesses, and strove to develop our new initiatives businesses.

The following table sets forth our revenues by segment and type in absolute amount for the second quarter of 2021 and 2020:

Revenues Commission Online marketing services Other services and sales (including interest revenue) Total Revenues Commission Online marketing services Other services and sales (including interest revenue) Total	Unaudited Three Months Ended June 30, 2021 Food delivery In-store, hotel & travel New initiatives and others (RMB in thousands) 20,353,682 4,352,601 2,193,767 2,764,255 4,234,620 216,821 7,147 14,958 9,621,381 23,125,084 8,602,179 12,031,969 Unaudited Three Months Ended June 30, 2020 Food delivery In-store, hotel & travel New initiatives and others (RMB in thousands) 12,719,014 2,092,858 1,099,492 1,795,740 2,445,305 81,966 29,341 5,819 4,452,302 14,544,095 4,543,982 5,633,760	Total 26,900,050 7,215,696 9,643,486
		43,759,232
		Total 15,911,364 4,323,011 4,487,462
		24,721,837

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Recovering from the COVID-19 pandemic, we continually optimized our marketing strategy to expand our Transacting Users base and enhance their stickiness. Meanwhile, we continued to stratify and diversify our platform selections to better satisfy consumers’ ever-growing demands. Our revenues from the food delivery segment increased by 59.0% to RMB23.1 billion for the second quarter of 2021 from RMB14.5 billion for the same period of 2020 as a result of the increase in order volume by 58.9% on a year-over-year basis.

Our revenues from the in-store, hotel & travel segment increased by 89.3% to RMB8.6 billion for the second quarter of 2021 from RMB4.5 billion for the same period of 2020. Commission revenue increased by 108.0% to RMB4.4 billion due to the increase in Gross Transaction Volume and number of domestic hotel room nights driven by the recovery in consumer consumption. Online marketing services revenue increased by 73.2% to RMB4.2 billion with the increase in both the number of online marketing Active Merchants and the revenue contributed by each merchant, driven by the increasing promotion willingness from our Active Merchants due to the recovery from the COVID-19 pandemic.

Our revenues from the new initiatives and others segment increased by 113.6% to RMB12.0 billion for the second quarter of 2021 from RMB5.6 billion for the same period of 2020. Driven by both the recovery from the COVID-19 pandemic and continued development in our new initiatives to satisfy consumers’ growing needs, the increase in revenues was mainly from our retail businesses, B2B food distribution services, and bikesharing and moped services.

Costs and Expenses

The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:

		Unaudited	Unaudited
		Three Months Ended
	June 30, 2021		June 30,	2020
		As a		As a
		percentage		percentage	Year-over-
	Amount	of revenues	Amount	of revenues	year change
	(RMB in	thousands, except for percentages)
Costs and Expenses:
Cost of revenues	31,245,861	71.4%	16,146,879	65.3%	93.5%
Selling and marketing expenses	10,848,627	24.8%	4,172,332	16.9%	160.0%
Research and development expenses	3,900,794	8.9%	2,376,737	9.6%	64.1%
General and administrative expenses	2,053,024	4.7%	1,158,092	4.7%	77.3%
Net provision for impairment losses
on financial assets	104,355	0.2%	45,676	0.2%	128.5%

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of Revenues

Our cost of revenues increased by 93.5% to RMB31.2 billion for the second quarter of 2021 from RMB16.1 billion for the same period of 2020 and increased by 6.1 percentage points to 71.4% from 65.3% 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 i) the increase in food delivery related costs which was in line with the increase in the food delivery order volume, and ii) the continued development and exploration in our retail businesses and other new initiatives. The food delivery related costs, which increased from RMB10.1 billion in the second quarter of 2020 to RMB15.5 billion in this quarter, represents the delivery cost of our 1P model under which we organize and provide delivery services.

Selling and Marketing Expenses

Our selling and marketing expenses were RMB10.8 billion for the second quarter of 2021 and RMB4.2 billion for the same period of 2020 and increased by 7.9 percentage points to 24.8% from 16.9% as a percentage of revenues on a year-over-year basis. As we recovered from the COVID-19 pandemic, we spent more in promotion, advertising and user incentives. In addition, the increased number of employees due to our business expansion resulted in an increase in employee benefits expenses.

Research and Development Expenses

Our research and development expenses increased to RMB3.9 billion for the second quarter of 2021 from RMB2.4 billion for the same period of 2020 but decreased by 0.7 percentage points to 8.9% from 9.6% as a percentage of revenues on a year-over-year basis. The increase in absolute amount was mainly driven by the increased number of employees due to our business expansion and higher average salary. The decrease as a percentage of revenues was driven by the improved operating leverage.

General and Administrative Expenses

Our general and administrative expenses increased to RMB2.1 billion for the second quarter of 2021 from RMB1.2 billion for the same period of 2020. The increase in amount was mainly driven by the increased number of employees due to our business expansion and higher average salary.

Net Provision for Impairment Losses on Financial Assets

Our net provision for impairment losses on financial assets increased to RMB104.4 million for the second quarter of 2021 from RMB45.7 million in the same period of 2020, which was primarily attributable to an increase in expected credit losses for financial assets.

Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss

Our fair value changes on other financial investments at fair value through profit or loss were a gain of RMB164.7 million for the second quarter of 2021, compared to a gain of RMB346.7 million for the same period of 2020. This was primarily due to the fair value changes in our investments in certain entities.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Other Gains, Net

Our other gains, net for the second quarter of 2021 decreased by 2.9%, or RMB28.9 million, to RMB977.0 million compared to RMB1.0 billion for the same period of 2020.

Operating (Loss)/Profit

As a result of the foregoing, our operating loss and margin for the second quarter of 2021 was RMB3.3 billion and negative 7.4%, respectively, compared to operating profit and margin of RMB2.2 billion and 8.8% for the same period of 2020.

Operating (loss)/profit and margin by segment are set forth in the table below.

Unaudited

Food delivery In-store, hotel & travel New initiatives and others Unallocated items Total operating (loss)/profit	Three Months Ended June 30, 2021 June 30, 2020 Amount As a percentage of revenues Amount As a percentage of revenues Year-over- year change (RMB in thousands, except for percentages) 2,447,076 10.6% 1,253,421 8.6% 95.2% 3,663,818 42.6% 1,891,563 41.6% 93.7% (9,238,125) (76.8%) (1,459,539) (25.9%) NA (124,474) NA 489,200 NA NA (3,251,705) (7.4%) 2,174,645 8.8% NA

Our operating profit from the food delivery segment was RMB2.4 billion for the second quarter of 2021, a 95.2% surge compared with RMB1.3 billion for the same period of 2020, mainly due to the expansion of order volume. Our operating margin for this segment increased by 2.0 percentage points to 10.6% from 8.6% on a year-over-year basis, primarily attributable to the improved operating efficiency.

MANAGEMENT DISCUSSION AND ANALYSIS

Our operating profit from the in-store, hotel & travel segment increased by 93.7% to RMB3.7 billion for the second quarter of 2021 from RMB1.9 billion for the same period of 2020. The operating margin for this segment increased by 1.0 percentage points to 42.6% from 41.6% on a year-over-year basis. The increase in both amount and as a percentage of revenues was mainly due to the increased operating efficiency because of the recovery from the COVID-19 pandemic, partially offset by the increase of user incentives ratio.

Our operating loss from the new initiatives and others segment expanded to RMB9.2 billion for the second quarter of 2021 from RMB1.5 billion for the same period of 2020 and our operating margin for this segment decreased by 50.9 percentage points to negative 76.8% from negative 25.9% on a year-over-year basis, as we continued to expand our investments in this segment, especially the retail businesses.

(Loss)/Profit before Income Tax

Primarily because of the foregoing, our loss before income tax for the second quarter of 2021 was RMB3.4 billion, compared to a profit before income tax of RMB2.2 billion for the same period of 2020.

Income Tax Credits

We had income tax credits of RMB8.2 million for the second quarter of 2021, which remained stable compared to the same period of 2020.

(Loss)/Profit for the Period

As a result of the foregoing, we had a loss of RMB3.4 billion for the second quarter of 2021, compared to a profit of RMB2.2 billion for the same period of 2020.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

2. THE SECOND QUARTER OF 2021 COMPARED TO THE FIRST QUARTER OF 2021

The following table sets forth the comparative figures for the second quarter of 2021 and the first quarter of 2021:

Revenues
Commission
Online marketing services
Interest revenue
Other services and sales
Cost of revenues
Gross profit
Selling and marketing expenses
Research and development expenses
General and administrative expenses
Net (provision for)/reversal of impairment losses on
financial assets
Fair value changes on other financial investments
at fair value through profit or loss
Other gains, net
Operating loss
Finance income
Finance costs
Share of gains/(losses) of investments accounted for using the
equity method
Loss before income tax
Income tax credits
Loss for the period
Non-IFRS measures:
Adjusted EBITDA
Adjusted net loss

Unaudited
Three Months Ended
June 30,
2021
March 31,
2021
(RMB in thousands)
26,900,050
23,454,460
7,215,696
5,665,135
341,468
175,322
9,302,018
7,721,345
43,759,232
37,016,262
(31,245,861)
(29,816,095)
12,513,371
7,200,167
(10,848,627)
(7,206,408)
(3,900,794)
(3,477,290)
(2,053,024)
(1,737,403)
(104,355)
33,775
164,748
42,034
976,976
378,118
(3,251,705)
(4,767,007)
112,118
77,855
(263,269)
(166,052)
38,251
(2,013)
(3,364,605)
(4,857,217)
8,230
10,955
(3,356,375)
(4,846,262)
(1,239,986)
(2,382,683)
(2,217,141)
(3,891,717)

MANAGEMENT DISCUSSION AND ANALYSIS

Revenues

Our revenues increased by 18.2% to RMB43.8 billion for the second quarter of 2021 from RMB37.0 billion for the first quarter of 2021. The growth was primarily due to the steady increase in Gross Transaction Volume from our food delivery business, the recovery of our in-store, hotel & travel businesses due to the effective control of the COVID-19 pandemic in certain areas and seasonality, and solid revenue growth of our new initiatives business.

The following table sets forth our revenues by segment and type in absolute amount for the second quarter of 2021 and the first quarter of 2021:

Revenues Commission Online marketing services Other services and sales (including interest revenue) Total Revenues Commission Online marketing services Other services and sales (including interest revenue) Total	Unaudited Three Months Ended June 30, 2021 Food delivery In-store, hotel & travel New initiatives and others Total (RMB in thousands) 20,353,682 4,352,601 2,193,767 26,900,050 2,764,255 4,234,620 216,821 7,215,696 7,147 14,958 9,621,381 9,643,486 23,125,084 8,602,179 12,031,969 43,759,232 Unaudited Three Months Ended March 31, 2021 Food delivery In-store, hotel & travel New initiatives and others Total (RMB in thousands) 18,370,710 3,255,587 1,828,163 23,454,460 2,192,127 3,315,840 157,168 5,665,135 12,573 12,964 7,871,130 7,896,667 20,575,410 6,584,391 9,856,461 37,016,262	Total 26,900,050 7,215,696 9,643,486
		43,759,232
		37,016,262

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Our revenues from the food delivery segment increased by 12.4% to RMB23.1 billion for the second quarter of 2021 from RMB20.6 billion for the first quarter of 2021. Commission revenue grew by 10.8% to RMB20.4 billion primarily attributable to the increase in order volume by 22.0% because of seasonality and more marketing campaigns, partially offset by the decrease in Monetization Rate due to higher user incentives ratio. Online marketing services revenue increased by 26.1% to RMB2.8 billion because of the growth in both Active Merchants and their average online marketing spending after Spring Festival.

Our revenues from the in-store, hotel & travel segment increased by 30.6% to RMB8.6 billion for the second quarter of 2021 from RMB6.6 billion for the first quarter of 2021. Commission revenue increased by 33.7% to RMB4.4 billion, which was primarily due to the increased number of domestic hotel room nights. Online marketing service revenue increased by 27.7% to RMB4.2 billion, primarily due to the growing willingness of the merchants to acquire online traffic during the holiday season and certain promotional campaigns.

Our revenues from the new initiatives and others segment increased by 22.1% to RMB12.0 billion for the second quarter of 2021 from RMB9.9 billion for the first quarter of 2021, which was primarily due to the continued business expansion in retail businesses and the rebound of bike-sharing and moped services due to seasonality.

Costs and Expenses

The following table sets forth a breakdown of our costs and expenses by function for the periods indicated:

		Unaudited	Unaudited
		Three Months	Ended
	June 30, 2021		March 31, 2021
		As a		As a
		percentage		percentage	Quarter-over-
	Amount	of revenues	Amount	of revenues	quarter change
	(RMB in thousands, except for percentages)
Costs and Expenses:
Cost of revenues	31,245,861	71.4%	29,816,095	80.5%	4.8%
Selling and marketing expenses	10,848,627	24.8%	7,206,408	19.5%	50.5%
Research and development
expenses	3,900,794	8.9%	3,477,290	9.4%	12.2%
General and administrative
expenses	2,053,024	4.7%	1,737,403	4.7%	18.2%
Net provision for/(reversal of)
impairment losses on financial
assets	104,355	0.2%	(33,775)	(0.1%)	NA

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of Revenues

Our cost of revenues increased by 4.8% to RMB31.2 billion for the second quarter of 2021 from RMB29.8 billion for the first quarter of 2021 and decreased by 9.1 percentage points to 71.4% from 80.5% as a percentage of revenues. The increase in amount was mainly attributable to continued investments in our new initiatives, especially the retail businesses. The decrease as a percentage of revenues was mainly attributable to seasonality and the improvement of the fulfillment efficiency in our new initiatives.

Selling and Marketing Expenses

Our selling and marketing expenses increased to RMB10.8 billion for the second quarter of 2021 from RMB7.2 billion for the first quarter of 2021 and increased by 5.3 percentage points to 24.8% from 19.5% as a percentage of revenues on a quarter-over-quarter basis. The increase was primarily attributable to increased promotion, advertising and user incentives during the holiday season and certain promotional campaigns.

Research and Development Expenses

Our research and development expenses increased to RMB3.9 billion for the second quarter of 2021 from RMB3.5 billion for the first quarter of 2021 and decreased by 0.5 percentage points to 8.9% from 9.4% as a percentage of revenues. The increase in amount was mainly driven by the increased number of employees due to our business expansion and higher average salary. The decrease as a percentage of revenues was driven by the improved operating leverage.

General and Administrative Expenses

Our general and administrative expenses increased to RMB2.1 billion for the second quarter of 2021 from RMB1.7 billion for the first quarter of 2021. The increase in amount was mainly driven by the increased number of employees due to our business expansion and higher average salary.

Net (Provision for)/Reversal of Impairment Losses on Financial Assets

Our net provision for impairment losses on financial assets was RMB104.4 million for the second quarter of 2021, compared to a net reversal of RMB33.8 million for the first quarter of 2021, which was primarily due to the increase in expected credit losses for financial assets.

Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss

Our fair value changes on other financial investments at fair value through profit or loss were a gain of RMB164.7 million for the second quarter of 2021, compared to a gain of RMB42.0 million for the first quarter of 2021. This was primarily due to the fair value changes in our investments in certain entities.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Other Gains, Net

Our other gains, net for the second quarter of 2021 increased to RMB977.0 million from RMB378.1 million for the first quarter of 2021, which was mainly attributable to the increase in tax return and preference.

Operating Loss

As a result of the foregoing, our operating loss for the second quarter of 2021 was RMB3.3 billion, compared to a loss of RMB4.8 billion for the first quarter of 2021.

Operating profit/(loss) and operating margin by segment are set forth in the table below.

Food delivery
In-store, hotel & travel
New initiatives and others
Unallocated items
Total operating loss

Unaudited
Three Months Ended
June 30, 2021
March 31, 2021
Amount
As a
percentage
of revenues
Amount
As a
percentage
of revenues
Quarter-
over-quarter
change
(RMB in thousands, except for percentages)
2,447,076
10.6%
1,115,885
5.4%
119.3%
3,663,818
42.6%
2,748,205
41.7%
33.3%
(9,238,125)
(76.8%)
(8,044,445)
(81.6%)
14.8%
(124,474)
NA
(586,652)
NA
(78.8%)
(3,251,705)
(7.4%)
(4,767,007)
(12.9%)
(31.8%)

Our operating profit from the food delivery segment to RMB2.4 billion for the second quarter of 2021 from RMB1.1 billion for the first quarter of 2021. The operating margin for this segment increased to 10.6% from 5.4% on a quarter-over-quarter basis. Both the increases in amount and as a percentage of revenues were mainly attributable to a decrease in temporary incentives paid to delivery riders due to seasonality, partially offset by the higher user incentives ratio.

MANAGEMENT DISCUSSION AND ANALYSIS

Our operating profit from the in-store, hotel & travel segment increased to RMB3.7 billion for the second quarter of 2021 from RMB2.7 billion for the first quarter of 2021. The operating margin for this segment increased by 0.9 percentage points to 42.6% on a quarter-over-quarter basis. Both the increases in amount and as a percentage of revenues were mainly attributable to the expansion of business scale driven by seasonality and certain promotion campaigns, partially offset by the seasonal increase of user incentives ratio.

Our operating loss from the new initiatives and others segment expanded to RMB9.2 billion for the second quarter of 2021 from RMB8.0 billion for the first quarter of 2021, and the operating margin for this segment increased by 4.8 percentage points to negative 76.8% from negative 81.6% on a quarter-over-quarter basis. The increase in operating loss was primarily attributable to our continued investment in retail businesses. The improvement in operating margin was driven by the improved operating efficiency.

Loss before Income Tax

Primarily because of the foregoing, our loss before income tax for the second quarter of 2021 was RMB3.4 billion, compared to a loss before income tax of RMB4.9 billion for the first quarter of 2021.

Income Tax Credits

We had income tax credits of RMB8.2 million for the second quarter of 2021, which remained stable compared to the previous quarter.

Loss for the Period

As a result of the foregoing, we had a loss of RMB3.4 billion for the second quarter of 2021, compared to a loss of RMB4.8 billion for the first quarter of 2021.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

3. 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 nonIFRS financial measures may be defined differently from similar terms used by other companies.

The following tables set forth the reconciliations of our non-IFRS financial measures for the three months ended June 30, 2021 and 2020, the three months ended March 31, 2021, and the six months ended June 30, 2021 and 2020 to the nearest measures prepared in accordance with IFRS.

MANAGEMENT DISCUSSION AND ANALYSIS

(Loss)/profit for the period
Adjusted for:
Share-based compensation expenses
Fair value gains on investments(1)
Losses/(gains) on disposal of investments
and subsidiaries
Amortization of intangible assets resulting
from acquisitions
Impairment and expense reversal of
Mobike restructuring plan
Net reversal of impairment losses on
financial assets
Tax effects on non-IFRS adjustments
Adjusted net (loss)/profit
Adjusted for:
Income tax credits, except for tax effects on
non-IFRS adjustments
Share of (gains)/losses of investments
accounted for using the equity method
Finance income
Finance costs
Other gains except for losses/(gains)
related to fair value change,
disposal and remeasurement of
investments and subsidiaries
Amortization of software and others
Depreciation on property, plant and equipment
Adjusted EBITDA

Unaudited
Three Months Ended
June 30,
2021
June 30,
2020
March 31,
2021
(RMB in thousands)
(3,356,375)
2,210,181
(4,846,262)
1,140,658
705,420
937,902
(164,748)
(347,393)
(42,034)
12,799
–
(749)
125,637
160,857
125,637
(97)
(2,953)
(1,735)
–
–
(55,000)
24,985
(7,634)
(9,476)
(2,217,141)
2,718,478
(3,891,717)
(33,215)
(5,400)
(1,479)
(38,251)
(42,881)
2,013
(112,118)
(40,352)
(77,855)
263,269
60,731
166,052
(989,775)
(1,005,131)
(377,369)
76,215
93,615
76,603
1,811,030
831,195
1,721,069
(1,239,986)
2,610,255
(2,382,683)

(1) Mainly includes fair value changes on other financial investments at fair value through profit or loss.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

(Loss)/profit for the period
Adjusted for:
Share-based compensation expenses
Fair value (gains)/losses on investments(1)
Losses on disposal of investments and subsidiaries
Amortization of intangible assets resulting from acquisitions
Impairment and expense reversal of Mobike restructuring plan
Net reversal of impairment losses on financial assets
Tax effects on non-IFRS adjustments
Adjusted net (loss)/profit
Adjusted for:
Income tax credits, except for tax effects
on non-IFRS adjustments
Share of gains of investments accounted for using the
equity method
Finance income
Finance costs
Other gains except for losses related
to fair value change, disposal and remeasurement
of investments and subsidiaries
Amortization of software and others
Depreciation on property, plant and equipment
Adjusted EBITDA

Unaudited
Six Months Ended
June 30,
2021
June 30,
2020
(RMB in thousands)
(8,202,637)
630,903
2,078,560
1,397,096
(206,782)
160,868
12,050
–
251,274
321,714
(1,832)
(3,191)
(55,000)
–
15,509
(5,260)
(6,108,858)
2,502,130
(34,694)
(123,012)
(36,238)
(54,009)
(189,973)
(98,282)
429,321
108,775
(1,367,144)
(1,404,576)
152,818
225,251
3,532,099
1,495,289
(3,622,669)
2,651,566

(1) Mainly includes fair value changes on other financial investments at fair value through profit or loss.

MANAGEMENT DISCUSSION AND ANALYSIS

4. 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 and debt securities. We had cash and cash equivalents of RMB71.4 billion and short-term treasury investments of RMB51.1 billion as of June 30, 2021.

The following table sets forth our cash flows for the periods indicated:

Net cash flows generated from/(used in) operating activities Net cash flows used in investing activities Net cash flows generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Exchange loss on cash and cash equivalents Cash and cash equivalents at the end of the period	Unaudited Three Months Ended Unaudited Six Months Ended June 30, 2021 June 30, 2021 (RMB in thousands) 2,880,431 (1,549,700) (21,166,288) (16,429,231) 72,148,443 72,590,345 53,862,586 54,611,414 17,792,902 17,093,559 (267,619) (317,104) 71,387,869 71,387,869

Net Cash Flows Generated from Operating Activities

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 loss for the second quarter of 2021, as adjusted by non-cash items and changes in working capital.

For the second quarter of 2021, net cash flows generated from operating activities was RMB2.9 billion, which was primarily attributable to our loss before income tax, as adjusted by (i) depreciation and amortization, share-based payments, and (ii) changes in working capital, which primarily consists of certain increased current liabilities in line with the business scale expansion.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

Net Cash Flows Used in Investing Activities

For the second quarter of 2021, net cash flows used in investing activities was RMB21.2 billion, which was mainly attributable to net cash flows used in treasury investments, purchase of property, plant and equipment and investments in some unlisted entities.

Net Cash Flows Generated from Financing Activities

For the second quarter of 2021, net cash flows generated from financing activities was RMB72.1 billion, which was mainly attributable to proceeds from issuance of shares upon placement, convertible bonds, and the net increase of borrowings.

Gearing Ratio

As of June 30, 2021, our gearing ratio, calculated as total borrowings and notes payable divided by total equity attributable to equity holders of the Company, was approximately 37%.

5. INDEBTEDNESS

As of June 30, 2021, we had total borrowings and notes payable of RMB49.7 billion. The maturity profile of our borrowings and notes payable are disclosed in Note 28 and Note 29 to the interim financial information, respectively.

6. CONTINGENT LIABILITIES

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. As of the date of the report, the investigation is ongoing and the Company is actively cooperating with SAMR. The Company is not able to predict the status or the results of the investigation at this stage, and the Company could be required to make changes to its business practices and/or be subject to a significant amount of fines.

CAPITAL EXPENDITURES AND LONG-TERM INVESTMENTS

Purchase of property, plant and equipment Purchase of intangible assets Purchase of land use rights Acquisition of other financial investments at fair value Prepayment for investments Total	Unaudited Six Months Ended June 30, 2021 June 30, 2020 (RMB in thousands) 3,358,165 2,984,545 27,982 8,447 2,158,629 – 1,691,595 1,190,123 – 96,385 7,236,371 4,279,500	Unaudited Six Months Ended June 30, 2021 June 30, 2020 (RMB in thousands) 3,358,165 2,984,545 27,982 8,447 2,158,629 – 1,691,595 1,190,123 – 96,385 7,236,371 4,279,500
		4,279,500

MANAGEMENT DISCUSSION AND ANALYSIS

8. OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

As of June 30, 2021, we had some capital commitments which are disclosed in Note 32 to the interim financial information.

9. MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES

During the six months ended June 30, 2021, we did not have any material acquisitions or disposals of subsidiaries, associates, joint ventures and affiliated companies.

10. EMPLOYEE AND REMUNERATION POLICY

As of June 30, 2021, we had 90,540 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 certain other incentives. The total remuneration expenses, for the first half of 2021 were RMB15.6 billion.

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 as required in accordance with government regulations. 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.

11. 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 June 30, 2021, our cash and cash equivalent balance was mainly denominated in US dollars and Renminbi. We manage foreign exchange risk by performing regular reviews of our net foreign exchange exposures and try to minimize 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. 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 June 30, 2021, we did not have significant foreign currency exposure from our operations.

MEITUAN | 2021 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS

12. 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 our operations and adversely affect our 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 our 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 our business and its related financial impact.

Since the outbreak of COVID-19, we have adopted a number of the following positive measures to address COVID-19 epidemic as set forth in detail in the 2019 Environmental, Social and Governance Report. The positive measures have demonstrated effective control and prevention of the spread of COVID-19, provided active support and assistance to our merchants’ operations and assurance to our customers. Highlight of the relevant measures and updates as follows:

On the consumer side, we (1) introduced and rolled out “contact free” delivery services; (2) ensured adequate supply and delivery service for food, medicine and daily necessities; (3) guaranteed timely refund on hotel booking cancellations without penalty; (4) provided food supply for medical staffs; (5) assisted local governments in virus transmission tracking; (6) launched various campaigns to help restore consumer confidence.

On the merchant side, we (1) established a dedicated fund to support local service merchants across the country; (2) partnered with banks to provide over RMB20 billion loans with favorable interest rates to eligible merchants; (3) for food delivery merchants, we waived commissions, refunded part of the commission for future marketing usage, and provided free traffic support and subsidies for merchants; (4) for in-store merchants, we waived commissions nationwide and extended subscription based services for eligible merchants; (5) for hotel & travel, we provided subsidies, anti-pandemic supplies and hotel management systems to eligible hotel merchants.

On the delivery rider side, we (1) implemented strict health surveillance procedures for delivery riders; (2) provided subsidies, antiseptic tools and instructions on pandemic prevention for delivery riders.

MANAGEMENT DISCUSSION AND ANALYSIS

13. SIGNIFICANT INVESTMENT HELD

As of June 30, 2021, we had no significant investment held.

14. PLEDGE OF ASSETS

As of June 30, 2021, we did not pledge any asset for fund raising.

15. INTERIM DIVIDENDS

The Board does not recommend the distribution of an interim dividend for the six months ended June 30, 2021.

16. FUTURE PLANS FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

Save as disclosed in this report, as of June 30, 2021, we did not have other plans for material investments and capital assets.

17. CHARGES ON ASSETS

As of June 30, 2021, we did not have any charges on our assets.

MEITUAN | 2021 INTERIM REPORT

OTHER INFORMATION

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As of June 30, 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 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
			Number	of interest in
Name of Director or			and class	each class
chief executive	Nature of interest(1)	Relevant company	of securities	of Shares(7)
WANG Xing(2)	Beneficiary and founder	Trust	489,600,000	72.19%
	of a Trust (L)		Class A Shares
	Interest in controlled	Songtao Limited	489,600,000	72.19%
	corporation (L)		Class A Shares
	Interest in controlled	Crown Holdings	489,600,000	72.19%
	corporation (L)		Class A Shares
	Interest in controlled	Shared Patience	26,269,783	3.87%
	corporation (L)		Class A Shares
			318	0.00%
			Class B Shares
	Interest in controlled	WAFO Global Inc.	421	0.00%
	corporation (L)		Class B Shares
	Interest in controlled	WangXing Foundation	47,964,542	0.88%
	corporation (L)		Class B Shares
MU Rongjun(3)	Beneficiary and founder	Trust	118,650,000	17.49%
	of a Trust (L)		Class A Shares
	Interest in controlled	Day One Holdings Limited	118,650,000	17.49%
	corporation (L)		Class A Shares
	Interest in controlled	Charmway Enterprises	118,650,000	17.49%
	corporation (L)		Class A Shares
	Interest in controlled	Shared Vision	7,330,000	1.08%
	corporation (L)		Class A Shares
			500,001	0.01%
			Class B Shares
	Beneficial interest (L)	–	5,499,999	0.10%
			Class B Shares

OTHER INFORMATION

				Approximate
				percentage
			Number	of interest in
Name of Director or			and class	each class
chief executive	Nature of interest(1)	Relevant company	of securities	of Shares(7)
WANG Huiwen(4)	Beneficiary and founder	Trust	36,400,000	5.37%
	of a Trust (L)		Class A Shares
			2,134,660	0.04%
			Class B Shares
	Interest in controlled	Aim Mars Investment Limited	36,400,000	5.37%
	corporation (L)		Class A Shares
			2,134,660	0.04%
			Class B Shares
	Interest in controlled	Kevin Sunny	36,400,000	5.37%
	corporation (L)		Class A Shares
			2,134,660	0.04%
			Class B Shares
	Interest in controlled	Galileo Space Limited	5,321,335	0.10%
	corporation (L)		Class B Shares
	Beneficial interest (L)	–	12,822,605	0.24%
			Class B Shares
SHEN Nanpeng Neil(5)	Interest in controlled	Sequoia Capital China Funds,	367,269,854	6.76%
	corporations (L)	Sequoia Capital Global	Class B Shares
		Growth Funds and Other
		Controlled Entities
	Interest in controlled	SCEP Master Fund	858,700	0.02%
	corporations (L)		Class B Shares
	Beneficial interest (L)	–	10,719,612	0.20%
			Class B Shares
ORR Gordon Robert	Beneficial interest (L)	–	60,000	0.00%
Halyburton(6)			Class B Shares
LENG Xuesong(6)	Beneficial interest (L)	–	60,000	0.00%
			Class B Shares
SHUM Heung Yeung	Beneficial interest (L)	–	60,000	0.00%
Harry(6)			Class B Shares

MEITUAN | 2021 INTERIM REPORT

OTHER INFORMATION

Notes:

1) The letter “L” denotes the person’s Long Position in such 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 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.
3) 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 June 30, 2021, 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.
4) 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 June 30, 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;
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 0.72%, 0.08%, 0.11%, 2.18%, 0.05%, 0.37%, 0.56%, 0.01%, 0.03%, 0.01%, 0.84%, 0.02%, 0.02% and 0.11%, 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 0.33%, 0.01% and 0.46%, 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.

OTHER INFORMATION

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 10,719,612 Class B Shares. Other Controlled Entities refers to URM Management Limited and N&J Investment Holdings Limited (which hold approximately 0.0013% and 0.11%, 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 6.20% interest in the share capital of the Company (or 6.97% of the total issued Class B Shares).

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.

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 June 30, 2021, the Company had 6,111,601,402 issued Shares in total, comprising of 678,249,783 Class A Shares and 5,433,351,619 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 June 30, 2021.

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 June 30, 2021.

Save as disclosed above, as of June 30, 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.

MEITUAN | 2021 INTERIM REPORT 35

OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As of June 30, 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:

			Approximate
			percentage of
		Number and	interest in
		class of	each class
Name of Substantial Shareholder	Capacity/Nature of interest	Shares held	of Shares(5)
Class A Shares – Wang Xing
Crown Holdings(1)	Beneficial interest	489,600,000	72.19%
		Class A Shares
Share Patience(1)	Beneficial interest	26,269,783	3.87%
		Class A Shares
Songtao Limited(1)	Interest in controlled corporation	489,600,000	72.19%
		Class A Shares
TMF (Cayman) Ltd.	Trustee	489,600,000	72.19%
		Class A Shares
Wang Xing	Beneficiary of a trust(1)	489,600,000	72.19%
		Class A Shares
	Founder of a trust(1)	489,600,000	72.19%
		Class A Shares
	Interest in controlled corporation(1)	26,269,783	3.87%
		Class A Shares
Class A Shares – Mu Rongjun
Charmway Enterprises(2)	Beneficial interest	118,650,000	17.49%
		Class A Shares
Shared Vision(2)	Beneficial interest	7,330,000	1.08%
		Class A Shares
Day One Holdings Limited(2)	Interest in controlled corporation	118,650,000	17.49%
		Class A Shares
TMF (Cayman) Ltd	Trustee	118,650,000	17.49%
		Class A Shares
Mu Rongjun	Beneficiary of a trust(2)	118,650,000	17.49%
		Class A Shares
	Founder of a trust(2)	118,650,000	17.49%
		Class A Shares
	Interest in controlled corporation(2)	7,330,000	1.08%
		Class A Shares

OTHER INFORMATION

			Approximate
			percentage of
		Number and	interest in
		class of	each class
Name of Substantial Shareholder	Capacity/Nature of interest	Shares held	of Shares(5)
Class B Shares – Tencent
Huai River Investment Limited(3)	Beneficial interest	623,420,905	11.47%
		Class B Shares
Tencent Mobility Limited(3)	Beneficial interest	395,308,305	7.28%
		Class B Shares
Morespark Limited(3)	Beneficial interest	8,850,245	0.16%
		Class B Shares
Great Summer Limited(3)	Beneficial interest	25,000,000	0.46%
		Class B Shares
THL A Limited	Beneficial interest	559,594	0.01%
		Class B Shares
THL A25 Limited	Beneficial interest	12,912	0.00%
		Class B Shares
Distribution Pool Limited	Beneficial interest	1,018,420	0.02%
		Class B Shares
Class B Shares – Sequoia
Sequoia Capital China Funds,	Beneficial interest	368,128,554	6.78%
Sequoia Capital Global Growth		Class B Shares
Funds and Other Controlled	Other	10,719,612	0.20%
Entities(4)		Class B Shares

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) 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.
3) 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, THL A25 Limited and Distribution Pool Limited, companies incorporated under the laws of the British Virgin Islands, are beneficially owned by Tencent.

MEITUAN | 2021 INTERIM REPORT

OTHER INFORMATION

4) 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 0.72%, 0.08%, 0.11%, 2.18%, 0.05%, 0.37%, 0.56%, 0.01%, 0.03%, 0.01%, 0.84%, 0.02%, 0.02% and 0.11%, 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 0.33%, 0.01% and 0.46%, 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.

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 10,719,612 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 0.11%, 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 6.20% interest in the share capital of the Company (or 6.97% 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 0.34% interest in the share capital of the Company (or 0.38% of the total issued Class B Shares).

OTHER INFORMATION

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 0.46% interest in the share capital of the Company (or 0.52% of the total issued Class B Shares).

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.

5) As at June 30, 2021, the Company had 6,111,601,402 issued Shares in total, comprising of 678,249,783 Class A Shares and 5,433,351,619 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 June 30, 2021.

PRE-IPO ESOP

The Pre-IPO ESOP 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 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.

MEITUAN | 2021 INTERIM REPORT

OTHER INFORMATION

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 Directors and other employees under the Pre-IPO ESOP:

Name Date of Grant Vesting Period(1) Exercise Price Directors Mu Rongjun July 1, 2017 to July 1, 2018 6 years US$3.86 – US$5.18 Wang Huiwen February 1, 2015 to July 1, 2018 4-6 years US$1.005 – US$5.18 Other Employees May 31, 2006 to August 1, 2018 0.5 to 6 years US$0.000017– US$5.18 Total	Number of Shares underlying options outstanding as of January 1, 2021 Number of options exercised during the Reporting Period and the exercise price Weighted average price of Class B Shares immediately before the date of exercise Number of options lapsed during the Reporting Period 5,000,000 0 0 0 5,055,940 0 0 0 37,781,674 2,980,199 US$0.000017- US$5.18 HKD343.9827 0 47,837,614 2,980,199 US$0.000017- US$5.18 HKD343.9827 0	Number of options cancelled during the Reporting Period 0 0 524,716 524,716	Number of Shares underlying options outstanding as of June 30, 2021 5,000,000 5,055,940 34,276,759
			44,332,699

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.

OTHER INFORMATION

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 RSUs granted to the Directors and other employees under the Pre-IPO ESOP.

			Number of				Number of
			Shares				Shares
			underlying				underlying
			RSUs				RSUs
			outstanding	RSUs vested	RSUs cancelled	RSUs lapsed	outstanding
			as of	during the	during the	during the	as of
			January 1,	Reporting	Reporting	Reporting	June 30,
Name	Date of Grant	Vesting Period	2021	Period	Period	Period	2021
Directors
Mu Rongjun	July 1, 2017	6 years	499,999	0	0	0	499,999
Wang Huiwen	January 1, 2016	4 to 6 years	7,766,665	0	0	0	7,766,665
	to July 1, 2018
Other Employees	December 29, 2010	0 to 6 years	41,764,788	17,968,489	638,178	0	23,158,121
	to August 2, 2018
Total			50,031,452	17,968,489	638,178	0	31,424,785

POST-IPO SHARE OPTION SCHEME

A post-IPO employee 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 as amended from time to time. The Post-IPO Share Option Scheme shall be valid and effective for a period of ten years commencing on the Listing Date. The terms of the Post-IPO Share Option Scheme are governed by Chapter 17 of the Listing Rules. 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 our Company and its Shares for the benefit of the Company and Shareholders as a whole. The Post-IPO ESOP will provide the Company with a flexible means of retaining, incentivising, rewarding, remunerating, compensating and/or providing benefits to selected participants.

MEITUAN | 2021 INTERIM REPORT

OTHER INFORMATION

Outstanding Share Options Granted under the Post-IPO Share Option Scheme

The table below shows the details of movement of share options granted under the Post-IPO Share Option Scheme:

							Number	Weighted
		Closing price			Number	Number	of options	Average			Number
		of the Shares			of Shares	of Shares	exercised	price of			of Shares
		immediately			underlying	underlying	during the	Class B	Number of	Number	underlying
		before the			options	options	Reporting	Shares	options	of options	options
		date on			outstanding	granted	Period	immediately	lapsed	cancelled	outstanding
		which the			as of	during the	and the	before	during the	during the	as of
		options were	Vesting	Exercise	January 1,	Reporting	exercise	the date	Reporting	Reporting	June 30,
Name	Date of Grant	granted	Period	Price	2021	Period	price	of exercise	Period	Period	2021
Other Employees	July 5, 2019	HK$70.0	4 years(1)	HK$69.1	710,000	0	0	HKD0.0000	0	0	710,000
Other Employees	April 24,2020	HK$100.0	5.2 years(2)	HK$100.15	1,130,000	0	0	HKD0.0000	0	0	1,130,000
Other Employees	July 20,2020	HK$191.1	4 years(3)	HK$195.98	1,255,316	0	3,700	HKD323.8000	0	0	1,251,616
Total					3,095,316	0	3,700	HKD323.8000	0	0	3,091,616

Notes:

(1) The share options are exercisable in instalments from the commencement of the relevant vesting period until July 5, 2029. Subject to the terms of the Post-IPO Share Option Scheme and the share option award agreements signed by the grantees, the first 25% of the options can be exercised 1 year after the grant date, and each 25% of the total options will become exercisable in each subsequent year.
(2) 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.
(3) 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.

OTHER INFORMATION

POST-IPO SHARE AWARD SCHEME

The Company has also adopted a share award scheme (the “Post-IPO Share Award Scheme”) pursuant to the written resolutions of the then shareholders passed on August 30, 2018.

The purpose of the Post-IPO Share Award Scheme is to align the interests of 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”) 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.

The Post-IPO Share Award Scheme shall terminate on the earlier of:

(i) 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
(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.

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OTHER INFORMATION

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:

Name Date of Grant Vesting Period Directors Orr Gordon Robert Halyburton November 23, 2018 6.25% to vest in each quarter commencing from December 20, 2018 until September 20, 2022 Leng Xuesong November 23, 2018 6.25% to vest in each quarter 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 Other Employees October 4, 2018 to June 1, 2021 4 to 6 years Total	Number of Shares underlying RSUs outstanding as of January 1, 2020 26,250 26,250 26,250 76,617,626 76,696,376	Number of Shares underlying RSUs granted during the Reporting Period 0 0 0 10,482,368 10,482,368	RSUs vested during the Reporting Period 7,500 7,500 7,500 13,939,846 13,962,346	RSUs cancelled during the Reporting Period 0 0 0 2,542,335 2,542,335	RSUs lapsed during the Reporting Period 0 0 0 0 0	Number of Shares underlying RSUs outstanding as of June 30, 2020 18,750 18,750 18,750 70,617,813
						70,674,063

OTHER 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 Interim Report, the WVR Beneficiaries are Wang Xing, Mu Rongjun and Wang Huiwen. Wang Xing beneficially owned 515,869,783 Class A Shares, representing approximately 42.2% 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 10.3% 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 3.0% 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 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 Interim 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 12.44% the total number of issued Class B Shares as at the Date of this Interim Report.

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) 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;

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OTHER INFORMATION

(ii) 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;
(iii) 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.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company is committed to maintaining and promoting stringent corporate governance standards. The principle of the Company’s corporate governance is to promote effective internal control measures and to enhance the transparency and accountability of the Board to all Shareholders.

The Company has adopted the principles and code provisions of the CG Code as set out in Appendix 14 to the Listing Rules as the basis of the Company’s corporate governance practices.

Save for code provision A.2.1, the Company has complied with all the code provisions as set out in the CG Code where applicable during the six months ended June 30, 2021. 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 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 Company and enables more effective and efficient overall strategic planning for the Company. 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 Company as a whole.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (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 during the six months ended June 30, 2021.

OTHER INFORMATION

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s securities listed on the Stock Exchange during the six months ended June 30, 2021.

CHANGES OF DIRECTORS’ INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES

Below is the changes of Directors’ information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules since the date of the 2020 Annual Report:

(1) Lau Chi Ping Martin, a non-executive director of the Company, was appointed as a director of DiDi Global Inc. in February 2015 of which DiDi Global Inc. was listed on the New York Stock Exchange since June 30, 2021 (NYSE Ticker: DIDI); and
(2) Li Auto Inc. was listed on the Stock Exchange since August 12, 2021 (HKEx Stock Code: 2015) of which Wang Xing, an executive director of the Company, was appointed as its non-executive director.

Save for the information disclosed herein, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

BIOGRAPHICAL INFORMATION OF THE DIRECTORS

During the Annual General Meeting of the Company dated June 23, 2021, Wang Huiwen was re-elected as the executive Director, and Lau Chi Ping Martin, Neil Nanpeng Shen as the non-executive Directors of the Company. For details, please refer the announcements and circular of the Company dated June 23 and May 21, 2021. Please refer to below biographical details of the directors.

Executive Directors

Wang Xing ( 王興 ), 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.

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 (校內網), 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 (校內網) 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 (飯否網), 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 2019 and Li Auto Inc. was listed on the Stock Exchange since August 12, 2021 (HKEx Stock Code: 2015) of which Wang Xing was appointed as its non-executive director.

Wang Xing received his bachelor’s degree in electronic engineering from Tsinghua University in July 2001 and his master’s degree in electrical engineering from University of Delaware in January 2005.

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OTHER INFORMATION

Mu Rongjun ( 穆榮均 ), 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.

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 (飯否網), 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 ( 王慧文 ), 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 the Company 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.

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 (校內網), China’s first college social network website, in December 2005 and worked there as co-founder from December 2005 to October 2006. xiaonei.com (校內網) 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 (淘房網) and worked there from June 2008 to October 2010. Wang Huiwen has become an independent non-executive director of Kuaishou Technology (HKEx Stock Code: 1024) since February 2021.

Wang Huiwen received his bachelor’s degree in electronic engineering from Tsinghua University in July 2001.

Non-executive Directors

Lau Chi Ping Martin ( 劉熾平 ), 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.

Lau Chi Ping Martin joined Tencent (HKEx Stock Code: 700) in February 2005 as the Chief Strategy and Investment Officer. In February 2006, Lau Chi Ping Martin was promoted as the president of Tencent to manage the day-to-day operation of Tencent. In March 2007, he was appointed as an executive director of Tencent. Prior to joining Tencent, Lau Chi Ping Martin was an executive director at Goldman Sachs (Asia) L.L.C.’s investment banking division and the Chief Operating Officer of its Telecom, Media and Technology Group. Prior to that, he worked at McKinsey & Company, Inc. as a management consultant.

Lau Chi Ping Martin received a Bachelor of Science degree in Electrical Engineering from the University of Michigan in July 1994, a Master of Science degree in Electrical Engineering from Stanford University in July 1995 and an MBA degree from Kellogg Graduate School of Management, Northwestern University in June 1998.

OTHER INFORMATION

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 was appointed as a director of DiDi Global Inc. in February 2015 of which DiDi Global Inc. was listed on the New York Stock Exchange since June 30, 2021 (NYSE Ticker: DIDI).

Neil Nanpeng Shen ( 沈南鵬 ), 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.

Neil Nanpeng Shen founded Sequoia Capital China in September 2005 and has been serving as the founding managing partner since then. Prior to founding Sequoia Capital China, he co-founded Trip.com Group Ltd. (NASDAQ Ticker: TCOM; HKEx Stock Code: 9961), formerly Ctrip.com International, Ltd. (NASDAQ Ticker: CTRP), or Ctrip, a leading travel service provider in China, in 1999. Neil Nanpeng Shen served as Ctrip’s president from August 2003 to October 2005 and its chief financial officer from 2000 to October 2005. Neil Nanpeng Shen also co-founded and served as non-executive Co-Chairman of Homeinns Hotel Group, a leading economy hotel chain in China, which commenced operations in July 2002.

Neil Nanpeng Shen received his bachelor’s degree in applied mathematics from Shanghai Jiao Tong University in July 1988 and his master’s degree from Yale University in November 1992.

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.

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.

Independent Non-executive Directors

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.

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.

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OTHER INFORMATION

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.

Leng Xuesong ( 冷雪松 ), 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.

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) since July 2019.

OTHER INFORMATION

Shum Heung Yeung Harry ( 沈向洋 ), 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 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 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.

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”). As of June 30, 2021, we have utilized an amount of RMB8,187.3 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 June 30. 2021, the unutilized net proceeds was in the amount of approximately RMB20,328.9 million. The Company intends to apply them in the same manner and proportion as stated in the Prospectus.

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OTHER INFORMATION

For the six months ended June 30, 2021, the Group applied the IPO Proceeds in the following manner:

	Use of proceeds	Utilization as of		Net proceeds
	as stated in	31 December	Utilization as of	unutilized as of	Expected time
	the Prospectus	2020	30 June 2021	30 June 2021	of use
	(in RMB’000)	(in RMB’000)	(in RMB’000)	(in RMB’000)
	(approximate)	(approximate)	(approximate)	(approximate)
35% to upgrade our technology and enhance
our research and development capabilities	9,980,661	1,964,198	3,128,057	6,852,604	by end of 2022
35% to develop new services and products	9,980,661	1,970,090	3,439,452	6,541,209	by end of 2022
20% to selectively pursue acquisitions or
investments in assets and businesses which
are complementary to our business and are
in line with our strategies	5,703,235	–	1,619,795	4,083,440	by end of 2022
10% for working capital and general corporate
purpose	2,851,617	–	–	2,851,617	by end of 2022
	28,516,174	3,934,288	8,187,304	20,328,870

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.

AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS

The Company has established an Audit Committee in compliance with Rule 3.21 of the Listing Rules and the CG Code. The primary duties of the Audit Committee are to review and supervise the financial reporting process and internal controls system of the Group, review and approve connected transactions and to advise the Board. The Audit Committee comprises three independent non-executive Directors, namely, Orr Gordon Robert Halyburton, Leng Xuesong and Shum Heung Yeung Harry. Orr Gordon Robert Halyburton is the chairman of the Audit Committee.

OTHER INFORMATION

The Audit Committee has reviewed the unaudited interim results of the Group for the six months ended June 30, 2021. The Audit Committee has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control with senior management members and the external auditor of the Company, PricewaterhouseCoopers.

The interim financial information of the Group for the six months ended June 30, 2021 has been reviewed by the Audit Committee of the Company and by the Company’s external auditor in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the HKICPA.

OTHER BOARD COMMITTEES

In addition to the Audit Committee, the Company has also established a corporate governance committee, a nomination committee and a remuneration committee.

CORPORATE GOVERNANCE COMMITTEE

The Company has established a corporate governance committee (the “Corporate Governance Committee”) in compliance with Rule 8A.30 of the Listing Rules and the CG Code. 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 weighted voting rights 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.

On August 25, 2021, the Corporate Governance Committee held a meeting, considered, approved and reviewed the following matters:

(a) reviewing and monitoring the training and continuous professional development of Directors and senior management;
(b) reviewing and monitoring the code of conduct applicable to employees and Directors;
(c) the re-appointment of the Company’s compliance advisor;
(d) the disclosure in the Corporate Governance Report and the Company’s compliance with the CG Code;
(e) the Conflict of Interest Declaration Policy of the Company and any potential conflict of interest between the Company and the WVR beneficiaries;
(f) 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;

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OTHER INFORMATION

(g) 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 period from the Listing Date to December 31, 2019;
(h) reviewing the Company’s various policies and practices on corporate governance; and
(i) reviewing and monitoring the Company policies and practices on compliance with legal and regulatory requirements.

QUALIFICATION REQUIREMENTS

Updates in Relation to the Qualification Requirements

On December 11, 2001, the State Council promulgated the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (the “FITE Regulations”), which were amended on September 10, 2008 and February 6, 2016. According to the FITE Regulations and the existing Special Administrative Measures for Entry of Foreign Investment (Negative List) (2020 Version), which became effective on July 23, 2020, foreign investors are not allowed to hold more than 50% of the equity interests in a company providing certain categories of value-added telecommunications services, including internet content provision services. In addition, a foreign investor who invests in a value-added telecommunications business in the PRC must possess prior experience in operating value-added telecommunications businesses and a proven track record of business operations overseas (the “Qualification Requirements”). Currently none of the applicable PRC laws, regulations or rules provides clear guidance or interpretation on the Qualification Requirements. According to our consultation with the Ministry of Industry and Information Technology (the “MIIT”) in May 2018, it confirms that there is no clear guidance about how a foreign investor could meet the Qualification Requirements, and it applies a relatively strict standard for identifying whether foreign investors meet the Qualification Requirements.

Efforts and Actions Undertaken to Comply with the Qualification Requirements

Despite the lack of clear guidance or interpretation on the Qualification Requirements, we have been gradually building up our track record of overseas telecommunications business operations for the purposes of being qualified, as early as possible, to acquire the entire equity interests in the Onshore Holdcos or any of our Consolidated Affiliated Entities when the relevant PRC laws allow foreign investors to invest and to hold entire equity interests in enterprises which engage in the value-added telecommunications business. For the purposes of meeting the Qualification Requirements, we have established and accumulated overseas operation experience, for example:

(a) Solid Bit Hong Kong Limited, Meituan Limited and Xigua Limited have been incorporated in Hong Kong in August 2010, November 2010 and September 2015, respectively, for the purposes of establishing and expanding the Company’s operations overseas.
(b) Xigua Limited has rented an office for the expansion of our business overseas. It has employed local employees in Hong Kong and obtained a travel agents license on November 7, 2018. It has also purchased fourth domain names outside of the PRC for display and promotion of our services since June 2015.
(c) Solid Bit Hong Kong Limited has employed local employees in Hong Kong.

OTHER INFORMATION

MATERIAL LITIGATION

During the Reporting Period, the Company was not involved in any material litigation or arbitration. Nor were the Directors aware of any material litigation or claims that were pending or threatened against the Company.

EVENTS AFTER THE END OF REPORTING PERIOD

There were no material subsequent events during the period from June 30, 2021 to the approval date of the interim financial information by the Board on August 30, 2021.

MEITUAN | 2021 INTERIM REPORT

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the Board of Directors of Meituan

(incorporated in the Cayman Islands with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 57 to 116, which comprises the consolidated statement of financial position of Meituan (the “Company”) and its subsidiaries (together, the “Group”) as of June 30, 2021 and the consolidated income statement, the consolidated statement of comprehensive (loss)/income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 “Interim Financial Reporting”. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with International Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of the Group is not prepared, in all material respects, in accordance with International Accounting Standard 34 “Interim Financial Reporting”.

PricewaterhouseCoopers

Certified Public Accountants Hong Kong, August 30, 2021

CONSOLIDATED INCOME STATEMENT

Note
Revenues
6, 7
Commission
Online marketing services
Interest revenue
Other services and sales
Cost of revenues
8
Gross profit
Selling and marketing expenses
8
Research and development expenses
8
General and administrative expenses
8
Net provision for impairment losses on financial assets
Fair value changes on other financial investments at fair value through
profit or loss
17
Other gains, net
9
Operating (loss)/profit
Finance income
10
Finance costs
10
Share of gains of investments accounted for using the equity method
11
(Loss)/profit before income tax
Income tax credits
12
(Loss)/profit for the period
(Loss)/profit for the period attributable to:
Equity holders of the Company
Non-controlling interests
(Loss)/earnings per share for (loss)/profit for the period attributable
to the equity holders of the Company
Basic (loss)/earnings per share (RMB)
13
Diluted (loss)/earnings per share (RMB)
13

Unaudited
Six months ended June 30,
2021
2020
RMB’000
RMB’000
50,354,510
26,711,465
12,880,831
7,187,420
516,790
413,875
17,023,363
7,162,964
80,775,494
41,475,724
(61,061,956)
(27,704,300)
19,713,538
13,771,424
(18,055,035)
(7,371,771)
(7,378,084)
(4,673,195)
(3,790,427)
(2,227,833)
(70,580)
(283,218)
206,782
(161,572)
1,355,094
1,405,280
(8,018,712)
459,115
189,973
98,282
(429,321)
(108,775)
36,238
54,009
(8,221,822)
502,631
19,185
128,272
(8,202,637)
630,903
(8,204,606)
631,411
1,969
(508)
(8,202,637)
630,903
(1.38)
0.11
(1.38)
0.11

The accompanying notes on pages 65 to 116 are an integral part of this interim financial information.

MEITUAN | 2021 INTERIM REPORT 57

CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS)/INCOME

Note
Other comprehensive (loss)/income:
Items that may be reclassified to profit or loss
Share of other comprehensive income of investments accounted
for using the equity method
11, 24
Changes in the fair value of debt instruments at fair value through
other comprehensive income
24
Impairment loss on debt instruments at fair value through other
comprehensive income
24
Items that will not be reclassified to profit or loss
Currency translation differences
24
Share of other comprehensive income of investments accounted
for using the equity method
11, 24
Changes in the fair value of other financial investments at fair value
through other comprehensive loss
18, 24
Other comprehensive (loss)/income for the period, net of tax
Total comprehensive (loss)/income for the period
Total comprehensive (loss)/income for the period
is attributable to:
Equity holders of the Company
Non-controlling interests

Unaudited
Six months ended June 30,
2021
2020
RMB’000
RMB’000
685
2,711
23,858
–
56,392
–
(1,085,847)
647,370
13,068
–
(9,548)
–
(1,001,392)
650,081
(9,204,029)
1,280,984
(9,205,998)
1,281,492
1,969
(508)
(9,204,029)
1,280,984

The accompanying notes on pages 65 to 116 are an integral part of this interim financial information.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note ASSETS Non-current assets Property, plant and equipment 14 Intangible assets 15 Deferred tax assets 16 Long-term treasury investments 19 Other financial investments at fair value through profit or loss 17 Investments accounted for using the equity method 11 Other financial investments at fair value through other comprehensive income 18 Prepayments, deposits and other assets 20 Current assets Inventories 21 Trade receivables 22 Prepayments, deposits and other assets 20 Short-term treasury investments 19 Restricted cash Cash and cash equivalents Total assets EQUITY Share capital 23 Share premium 23 Shares held for shares award scheme 23 Other reserves 24 Accumulated losses Equity attributable to equity holders of the Company Non-controlling interests Total equity	Unaudited As of June 30, 2021 RMB’000 14,609,590 31,302,234 599,441 1,321,698 10,848,234 13,105,479 1,658,249 10,840,478 84,285,403 504,035 1,445,305 15,948,096 51,121,790 12,435,628 71,387,869 152,842,723 237,128,126 410 307,842,958 (1) (5,552,372) (167,405,109) 134,885,886 (56,783) 134,829,103	Audited As of December 31, 2020 RMB’000 13,917,165 31,676,381 448,670 612,967 10,256,786 13,180,943 605,918 7,569,817 78,268,647 466,492 1,030,948 12,940,125 43,999,364 12,775,667 17,093,559 88,306,155 166,574,802 395 263,155,201 – (6,262,066) (159,200,503) 97,693,027 (58,752) 97,634,275

MEITUAN | 2021 INTERIM REPORT 59

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note LIABILITIES Non-current liabilities Deferred tax liabilities 16 Financial liabilities at fair value through profit or loss Deferred revenues 25 Borrowings 28 Notes payable 29 Lease liabilities 14 Other non-current liabilities Current liabilities Trade payables 26 Payables to merchants Advances from transacting users Deposits from transacting users Other payables and accruals 27 Borrowings 28 Deferred revenues 25 Lease liabilities 14 Income tax liabilities Total liabilities Total equity and liabilities	Unaudited As of June 30, 2021 RMB’000 752,263 – 52,421 7,591,910 30,594,676 1,949,452 247,091 41,187,813 12,114,001 10,198,454 4,424,449 2,178,129 13,664,740 11,562,939 5,477,350 1,424,446 66,702 61,111,210 102,299,023 237,128,126	Audited As of December 31, 2020 RMB’000 755,694 114,600 166,700 1,957,470 12,966,341 1,648,008 184,073 17,792,886 11,967,026 9,414,936 4,307,861 2,222,211 10,557,218 6,395,002 5,052,830 1,089,847 140,710 51,147,641 68,940,527 166,574,802

The accompanying notes on pages 65 to 116 are an integral part of this interim financial information.

On behalf of the Board

Wang Xing Director

Mu Rongjun Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Unaudited	Unaudited	Unaudited	Unaudited			Total RMB’000
	Attributable to equity holders of the Company				Sub-total RMB’000	Non- controlling interests RMB’000
Share capital RMB’000	Share premium RMB’000	Shares held for shares award scheme RMB’000	Other reserves RMB’000	Accumulated losses RMB’000
395	263,155,201	–	(6,262,066)	(159,200,503)	97,693,027	(58,752)	97,634,275


–	–	–	–	(8,204,606)	(8,204,606)	1,969	(8,202,637)

–	–	–	13,753	–	13,753	–	13,753
–	–	–	(1,085,847)	–	(1,085,847)	–	(1,085,847)
–	–	–	(9,548)	–	(9,548)	–	(9,548)
–	–	–	23,858	–	23,858	–	23,858
–	–	–	56,392	–	56,392	–	56,392

–	–	–	(1,001,392)	(8,204,606)	(9,205,998)	1,969	(9,204,029)


–	–	–	5,252	–	5,252	–	5,252
–	–	–	2,078,144	–	2,078,144	–	2,078,144
1	–	(1)	–	–	–	–	–
2	1,993,499	–	(1,918,742)	–	74,759	–	74,759
12	42,694,258	–	–	–	42,694,270	–	42,694,270
–	–	–	32,494	–	32,494	–	32,494
–	–	–	1,513,938	–	1,513,938	–	1,513,938

15	44,687,757	(1)	1,711,086	–	46,398,857	–	46,398,857

410	307,842,958	(1)	(5,552,372)	(167,405,109)	134,885,886	(56,783)	134,829,103

MEITUAN | 2021 INTERIM REPORT 61

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

			Unaudited
	Attributable to equity holders of		the Company	Sub-total RMB’000 92,112,445 631,411 2,711 647,370 1,281,492 1,393,787 274,154 1,667,941 95,061,878	Non- controlling interests RMB’000 (58,051) (508) – – (508) – – – (58,559)	Total RMB’000 92,054,394
Share capital RMB’000 389 – – – – – 4 4 393	Share premium RMB’000 260,359,929 – – – – – 2,007,631 2,007,631 262,367,560	Other reserves RMB’000 (4,447,252) – 2,711 647,370 650,081 1,393,787 (1,733,481) (339,694) (4,136,865)	Accumulated losses RMB’000 (163,800,621) 631,411 – – 631,411 – – – (163,169,210)
						630,903 2,711 647,370
						1,280,984
						1,393,787 274,154
						1,667,941
						95,003,319

The accompanying notes on pages 65 to 116 are an integral part of this interim financial information.

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities
Cash (used in)/generated from operations
Income tax paid
Net cash flows (used in)/generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposals of property, plant and equipment
Purchase of intangible assets
Purchase of land use rights
Purchase of treasury investments
Proceeds from disposals of treasury investments
Proceeds from disposals of equity investments
Acquisition of other financial investments at fair value
Net cash outflow arising from disposal of a subsidiary
Gains received from treasury investments and other
financial instruments
Dividends received
(Increase)/decrease in loans to investees and others
Increase in prepayment for investments
Net cash flows (used in)/generated from investing activities

Unaudited
Six months ended June 30,
2021
2020
RMB’000
RMB’000
(1,380,021)
636,052
(169,679)
(90,714)
(1,549,700)
545,338
(3,358,165)
(2,984,545)
39,394
141,601
(27,982)
(8,447)
(2,158,629)
–
(254,715,588)
(89,623,882)
246,137,750
93,389,672
67,400
295,137
(1,691,595)
(1,190,123)
(867,327)
–
599,022
821,471
16,972
17,197
(470,483)
37,081
–
(96,385)
(16,429,231)
798,777

MEITUAN | 2021 INTERIM REPORT 63

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from financing activities
Proceeds from borrowings, excluding asset-backed securities (“ABS”)
Repayments of borrowings, excluding ABS
Repayments of ABS
Finance costs paid
Proceeds from exercise of option
Repurchase of ordinary shares
Lease payments
Increase in financial liabilities
Proceeds from issuance of convertible bonds, net of issuance costs
Proceeds from issuance of shares, net of issuance costs
Net cash flows generated from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Exchange (loss)/gain on cash and cash equivalents
Cash and cash equivalents at the end of the period

Unaudited
Six months ended June 30,
2021
2020
RMB’000
RMB’000
13,630,748
2,467,000
(2,791,956)
(2,540,000)
–
(623,138)
(249,748)
(101,092)
89,319
220,440
–
(90)
(878,633)
(377,074)
791,400
40,950
19,304,945
–
42,694,270
–
72,590,345
(913,004)
54,611,414
431,111
17,093,559
13,396,185
(317,104)
107,760
71,387,869
13,935,056

NOTES TO THE INTERIM FINANCIAL INFORMATION

1 GENERAL INFORMATION

Meituan (formerly known as Meituan Dianping) (“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, KYl-1104, Cayman Islands.

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.

The interim condensed consolidated financial information comprises the consolidated statement of financial position as of June 30, 2021, the consolidated income statement and the consolidated statement of comprehensive (loss)/income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the six months then ended, and a summary of significant accounting policies and other explanatory notes (the “Interim Financial Information”). The Interim Financial Information is presented in Renminbi (“RMB”), unless otherwise stated.

2 BASIS OF PREPARATION

This Interim Financial Information for the six months ended June 30, 2021 has been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.

The Interim Financial Information does not include all the notes of the type normally included in an annual financial statements. Accordingly, it should be read in conjunction with the annual consolidated financial statements of the Group for the year ended December 31, 2020, which have been prepared in accordance with International Financial Reporting Standards, as set out in the 2020 annual report of the Group dated March 26, 2021 (the “2020 Financial Statements”).

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of the Interim Financial Information are consistent with those followed in the preparation of the 2020 Financial Statements, except for the estimation of income tax (see note 12) and the adoption of new and amended standards as set out below.

(a) New and amended standards adopted by the Group

The Group has adopted the following new and amended standards which are relevant to the Group’s operations and are mandatory for the financial year beginning on or after January 1, 2021:

Amendment to IFRS 16

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

COVID-19 related rent concessions beyond June 30, 2021 Interest Rate Benchmark Reform – phase 2

The adoption of the above new and amended standards did not have any significant financial impact on these consolidated financial statements.

(b) New and amended standards that have been issued but are not effective

The following new and amended standards 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.

		Effective for
		annual periods
		beginning
		on or after
Amendments to IAS 28	Sale or contribution of assets between an investor and	To be determined
and IFRS 10	its associate or joint venture
IAS 16 (Amendments)	Property, plant and equipment: proceeds before	January 1, 2022
	intended use
IAS 37 (Amendments)	Onerous contract – cost of fulfilling a contract	January 1, 2022
IAS 1 (Amendments)	Classification of liabilities as current and non-current	January 1, 2023
Amendment to IAS 12	Deferred tax related to assets and liabilities arising	January 1, 2023
	from a single transaction
IFRS 17	Insurance contracts	January 1, 2023
Amendments to IAS 1	Disclosure of Accounting Policies	January 1, 2023
and IFRS Practice
Statement 2
Amendments to IAS 8	Definition of Accounting Estimates	January 1, 2023

NOTES TO THE INTERIM FINANCIAL INFORMATION

3 SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) New and amended standards that have been issued but are not effective (Continued)

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. The management of the Group plans to adopt these new standards and amendments to existing standards when they become effective.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the Interim Financial Information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the Interim Financial Information, except as disclosed below, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the 2020 Financial Statements.

Provisions and contingent liabilities

A provision is recognised where all the following conditions are met:

the Group has a present obligation as a result of a past event
It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
A reliable estimate can be made of the amount of the obligation.

The PRC government has recently enhanced its enforcement of anti-monopoly laws and regulations, including conducting investigations and levying significant fines, with respect to concentration of undertakings, cartel activity, monopoly agreements as well as abusive behaviour by companies with market dominance. The changing macro-economic environment and regulatory risks exposed the Company to uncertainties relating to the ability to operate or invest in relevant businesses. 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 PRC Anti-monopoly Law. As of the date of the report, the investigation is ongoing and the Company is not able to predict the outcome of the investigation, and the Company could be required to make changes to its business practices and/or be subject to a significant amount of fines. In considering whether any provision should be made in this regard, significant judgment is required in assessing (i) the probability that an outflow of resources will be required, and (ii) whether a reliable estimate can be made of the amount to settle any obligation. Management considered that the Company cannot make a reliable estimate of the amount of any possible obligation at this stage.

MEITUAN | 2021 INTERIM REPORT 67

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 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.

(a) Financial risk factors

The Interim Financial Information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s financial information as set out in the 2020 Financial Statements.

There have been no changes in the risk management policies during the six months ended June 30, 2021.

(b) Fair value estimation

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the 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.

The table below analyzes the Group’s financial instruments carried at fair value as of June 30, 2021 and December 31, 2020 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:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
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
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(i) Fair value hierarchy (Continued)

The following table presents the Group’s assets that are measured at fair value as of June 30, 2021.

	Unaudited	Unaudited
Level 1	Level 2	Level 3	Total
RMB’000	RMB’000	RMB’000	RMB’000



–	–	35,865,529	35,865,529
–	2,185,083	4,339,385	6,524,468
–	–	620,698	620,698
–	–	1,503,561	1,503,561
1,902,739*	–	8,945,495	10,848,234
874,499*	–	783,750	1,658,249

2,777,238	2,185,083	52,058,418	57,020,739

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(i) Fair value hierarchy (Continued)

The following table presents the Group’s assets and liabilities that are measured at fair value as of December 31, 2020.

As of December 31, 2020 Financial assets Short-term treasury investments at fair value through profit or loss (Note 19) Short-term treasury investments at fair value through other comprehensive income (Note 19) Long-term treasury investments at fair value through profit or loss (Note 19) Other financial investments at fair value through profit or loss (Note 17) Other financial investments at fair value through other comprehensive income (Note 18) Financial liabilities Financial liabilities at fair value through profit or loss	Level 1 RMB’000 – – – 2,124,519 605,918 2,730,437 –	Audited Level 2 Level 3 RMB’000 RMB’000 – 32,083,979 65,442 900,111 – 612,967 – 8,132,267 – – 65,442 41,729,324 – 114,600	Total RMB’000 32,083,979 965,553 612,967 10,256,786 605,918
			44,525,203
			114,600

This presents investments in listed entities with observable quoted price.

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the end of the reporting period.

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include:

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.

There was no change to valuation techniques during the six months ended June 30, 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.

MEITUAN | 2021 INTERIM REPORT 71

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(iii) Fair value measurements using significant unobservable inputs (level 3)

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, loan receivables at fair value through other comprehensive income, investments in unlisted companies, and financial liabilities at fair value through profit or loss for the six months ended June 30, 2021 and 2020.

			Unaudited
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	Prepayments, deposits and other assets Loan receivables at fair value through other comprehensive income	Other financial investments at fair value through profit or loss Investments in unlisted companies	Other financial investments at fair value through other comprehensive income Investments in unlisted companies	Financial liabilities at fair value through profit or loss
RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000

32,083,979	900,111	612,967	–	8,132,267	–	114,600
242,264,075	3,742,720	–	3,766,667	2,261,746	–	791,400
(238,359,089)	(319,660)	(3,216)	(2,263,106)	(770,392)	–	(906,000)
–	–	–	–	(1,068,094)	783,750	–
562,578	15,661	13,781	–	428,562	–	–
(686,014)	553	(2,834)	–	(38,594)	–	–

35,865,529	4,339,385	620,698	1,503,561	8,945,495	783,750	–


144,489	19,479	14,748	–	428,562	–	–

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(iii) Fair value measurements using significant unobservable inputs (level 3) (Continued)

As of January 1, 2020 Addition Disposals Change in fair value Currency translation differences As of June 30, 2020 Net unrealized gains/(losses) for the period	Short-term treasury investments at fair value through profit or loss RMB’000 23,988,182 78,870,635 (71,904,239) 360,431 96,298 31,411,307 40,698	Unaudited Long-term treasury investments at fair value through profit or loss RMB’000 – 620,389 (6,205) 180 5,861 620,225 180	Other financial investments at fair value through profit or loss Investments in unlisted companies RMB’000 5,089,127 1,189,947 – (4,917) 52,190 6,326,347 (4,917)

(iv) 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 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, loan receivables at fair value through other comprehensive income, investments in unlisted companies, and financial liabilities at fair value through profit or loss. As these instruments are not traded in active markets, their fair values have been determined by using various applicable valuation techniques, including discounted cash flows and market approach.

MEITUAN | 2021 INTERIM REPORT 73

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(iv) 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.

				Range of inputs	Range of inputs
	Fair value as of	Fair value as of		As of	As of
	June 30,	December 31,	Un-observable	June 30,	December 31,	Relationship of unobservable
Description	2021	2020	inputs	2021	2020	inputs to fair value
	RMB’000	RMB’000
	(Unaudited)	(Audited)
Investments in unlisted	9,729,245	8,132,267	Expected	41.7%-49.8%	40%-49.3%	The higher the expected
companies			volatility			volatility, the lower the fair value
			Discount for lack	15%	20%-25%	The higher the DLOM, the lower
			of marketability			the fair value
			(“DLOM”)
Short-term treasury	35,865,529	32,083,979	Expected rate	0.00%~5.89%	(0.11%)~6.70%	The higher the expected rate of
investments at fair			of return			return, the higher the fair value
value through profit
or loss
Short-term treasury	4,339,385	900,111	Expected rate	0.43%~3.20%	2.80%~3.20%	The higher the expected rate of
investments at fair			of return			return, the higher the fair value
value through other
comprehensive
income
Long-term treasury	620,698	612,967	Expected rate	0.00%-2.40%	0.00%-2.40%	The higher the expected rate of
investments at fair			of return			return, the higher the fair value
value through profit
or loss
Loan receivables at fair	1,503,561	–	Note a	Note a	NA	The higher the risk-adjusted
value through other						discount rate, the lower the fair
comprehensive						value
income
Financial liabilities at fair	–	114,600	Note b	Note b	Note b	Note b
value through profit
or loss

Note a: Loan receivables at fair value through other comprehensive income

For loan receivables at fair value through other comprehensive income, the fair value is determined based on discounted cash flow model using unobservable discount rates that reflect credit risk.

NOTES TO THE INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT (Continued)

(b) Fair value estimation (Continued)

(iv) Valuation process, inputs and relationships to fair value (Continued)

Note b: Financial liabilities at fair value through profit or loss

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.

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 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.

6 SEGMENT REPORTING

6.1 Description of segments and principal activities

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 six months ended June 30, 2021 and 2020.

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.

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

6 SEGMENT REPORTING (Continued)

6.1 Description of segments and principal activities (Continued)

Food delivery

The food delivery segment offers food ordering and delivery services 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; and (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 related costs; (b) promotion, advertising and user incentives; (c) employee benefits expenses; and (d) other outsourcing 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) promotion, advertising and user incentives; (c) transaction costs; and (d) other outsourcing costs.

New initiatives and others

Revenues from the new initiatives and others segment are primarily derived from (a) B2B food distribution services; (b) Micro-credit related services; (c) Meituan Instashopping; and (d) Bike sharing and moped services. The cost of revenues and operating expenses for the new initiatives and others segment primarily consists of (a) transaction costs; (b) employee benefits expenses; (c) other outsourcing costs; (d) promotion, advertising and user incentives; and (e) depreciation of property, plant and equipment.

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 revenue is mainly generated in China.

NOTES TO THE INTERIM FINANCIAL INFORMATION

6 SEGMENT REPORTING (Continued)

6.1 Description of segments and principal activities (Continued)

The segment information provided to the Group’s CODM for the reportable segments for the relevant periods is as follows:

	Unaudited	Unaudited	Unaudited
	Six months ended June 30, 2021
Food delivery	In-store, hotel & travel	New initiatives and others	Unallocated items (Note i)	Total
RMB’000	RMB’000	RMB’000	RMB’000	RMB’000

38,724,392	7,608,188	4,021,930	–	50,354,510
4,956,382	7,550,460	373,989	–	12,880,831
19,720	27,922	17,492,511	–	17,540,153

43,700,494	15,186,570	21,888,430	–	80,775,494
(40,137,533)	(8,774,547)	(39,171,000)	(711,126)	(88,794,206)

3,562,961	6,412,023	(17,282,570)	(711,126)	(8,018,712)

Food delivery RMB’000 21,282,638 2,715,259 36,621 24,034,518 (22,851,978) 1,182,540	Unaudited Six months ended June 30, 2020 In-store, hotel & travel New initiatives and others Unallocated items (Note i) RMB’000 RMB’000 RMB’000 3,289,856 2,138,971 – 4,332,136 140,025 – 16,968 7,523,250 – 7,638,960 9,802,246 – (5,067,218) (12,625,502) (471,911) 2,571,742 (2,823,256) (471,911)			Total RMB’000 26,711,465 7,187,420 7,576,839 41,475,724 (41,016,609) 459,115

MEITUAN | 2021 INTERIM REPORT 77

NOTES TO THE INTERIM FINANCIAL INFORMATION

6 SEGMENT REPORTING (Continued)

6.1 Description of segments and principal activities (Continued)

(i) Unallocated items are cost of revenues and operating expenses which could not be categorized into a segment. These items mainly 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, and (iv) other gains, net.

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 six months ended June 30, 2021 and 2020.

The reconciliation of operating (loss)/profit to (loss)/profit before income tax of respective period during the six months ended June 30, 2021 and 2020 is shown in the consolidated income statement.

6.2 Segment assets

As of June 30, 2021 and December 31, 2020, substantially all of the non-current assets of the Group were located in the PRC.

7 REVENUES BY TYPE

Commission Online marketing services Other services and sales (including interest revenue)	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 50,354,510 26,711,465 12,880,831 7,187,420 17,540,153 7,576,839 80,775,494 41,475,724	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 50,354,510 26,711,465 12,880,831 7,187,420 17,540,153 7,576,839 80,775,494 41,475,724
		41,475,724

Further disaggregation of revenues are included in Note 6.

NOTES TO THE INTERIM FINANCIAL INFORMATION

8 EXPENSES BY NATURE

	Unaudited	Unaudited
	Six months ended June 30,
	2021	2020
	RMB’000	RMB’000
Food delivery related costs	30,837,158	17,228,393
Employee benefits expenses	15,558,485	9,329,956
Transaction costs (Note i)	11,179,691	5,294,792
Promotion, advertising and user incentives	10,337,653	3,446,272
Other outsourcing costs	9,793,263	2,396,028
Depreciation of property, plant and equipment	3,532,099	1,495,289
Amortization of intangible assets	404,092	546,965
Auditor’s remuneration
– Audit and audit-related services	25,269	27,903
– Non-audit services	3,342	460

(i) Transaction costs consist of cost of goods sold and certain costs from various businesses.

9 OTHER GAINS, NET

Subsidies and tax preference Fair value changes of treasury investments at fair value through profit or loss Foreign exchange gains, net Interest income from treasury investments at amortized cost Donation Others	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 674,722 960,875 576,359 360,611 85,532 13,190 54,639 283,451 (16,459) (200,199) (19,699) (12,648) 1,355,094 1,405,280	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 674,722 960,875 576,359 360,611 85,532 13,190 54,639 283,451 (16,459) (200,199) (19,699) (12,648) 1,355,094 1,405,280
		1,405,280

MEITUAN | 2021 INTERIM REPORT 79

NOTES TO THE INTERIM FINANCIAL INFORMATION

10 FINANCE INCOME/(COSTS)

Finance income Interest income from bank deposits Finance costs Interest expenses on bank borrowings and notes payable Interest in respect of lease liabilities Bank charges and others	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 189,973 98,282 (330,890) (63,003) (80,755) (35,845) (17,676) (9,927) (429,321) (108,775)

11 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Associates (Note (a)) Joint ventures (a) Investments in associates using the equity method Investments in associates – listed entities – unlisted entities	Unaudited As of June 30, 2021 RMB’000 13,092,559 12,920 13,105,479 Unaudited As of June 30, 2021 RMB’000 11,252,580 1,839,979 13,092,559	Audited As of December 31, 2020 RMB’000 13,167,893 13,050 13,180,943 Audited As of December 31, 2020 RMB’000 11,361,160 1,806,733 13,167,893

The quoted fair value of the investments in listed entities was RMB30,063 million and RMB25,224 million as of June 30, 2021 and December 31, 2020, respectively.

NOTES TO THE INTERIM FINANCIAL INFORMATION

11 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)

(a) Investments in associates using the equity method (Continued)

At the beginning of the period Dilution gain Dividends from associates Disposals Share of gains of investments accounted for using the equity method Other reserves Currency translation differences At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 13,167,893 2,269,638 – 704 (12,225) (5,369) (6,651) – 36,238 54,009 19,005 2,711 (111,701) 15,400 13,092,559 2,337,093

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.

Aggregate carrying amount of individually immaterial associates Aggregate amounts of the Group’s share of: – Profit from operations – Other comprehensive income/(loss) Total comprehensive income	Unaudited As of June 30, 2021 RMB’000 13,092,559 36,238 13,753 49,991	Audited As of December 31, 2020 RMB’000 2,797,677 311,278 (300) 310,978

RMB11.2 billion of investments accounted for using the equity method is denominated in USD (December 31, 2020: RMB11.3 billion), and other balances are denominated in RMB.

MEITUAN | 2021 INTERIM REPORT 81

NOTES TO THE INTERIM FINANCIAL INFORMATION

12 TAXATION

(a) Value Added Tax (“VAT”)

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 gains. 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.

Hong Kong

Hong Kong profits tax has been provided for at the rate of 16.5% on the estimated assessable profit for the six months ended June 30, 2021 and 2020.

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 six months ended June 30, 2021 and 2020.

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 six months ended June 30, 2021 and 2020. In addition, certain PRC subsidiaries of the Group are subject to “small and thin-profit enterprises” under the CIT Law, and accordingly, were eligible for a preferential income tax rate of 20% for the six months ended June 30, 2021 and 2020.

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.

NOTES TO THE INTERIM FINANCIAL INFORMATION

12 TAXATION (Continued)

(b) Income tax (Continued)

The income tax credits of the Group during the periods presented are analyzed as follows:

Current income tax Deferred income tax Total income tax credits – Net	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 (114,426) 29,201 133,611 99,071 19,185 128,272	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 (114,426) 29,201 133,611 99,071 19,185 128,272
		128,272

Income tax credits are recognised based on management’s best knowledge of the income tax rates that would be applicable to the full financial year.

13 (LOSS)/EARNINGS PER SHARE

(a) Basic (loss)/earnings per share for the six months ended June 30, 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 reporting period.

(Loss)/profit attributable to equity holders of the Company (RMB’000) Weighted average number of ordinary shares in issue (thousand) Basic (loss)/earnings per share (RMB)	Unaudited Six months ended June 30, 2021 2020 (8,204,606) 631,411 5,957,039 5,820,039 (1.38) 0.11	Unaudited Six months ended June 30, 2021 2020 (8,204,606) 631,411 5,957,039 5,820,039 (1.38) 0.11
		0.11

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

13 (LOSS)/EARNINGS PER SHARE (Continued)

(b) 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 Group incurred losses for the six months ended June 30, 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 six months ended June 30, 2021 were the same as basic loss per share of the same periods.

(Loss)/profit attributable to equity holders of the Company (RMB’000) Weighted average number of ordinary shares in issue (thousand) Adjustments for share options and RSUs (thousand) Weighted average number of ordinary shares used as the denominator in calculating diluted (loss)/earnings per share (thousand) Diluted (loss)/earnings per share (RMB)	Unaudited Six months ended June 30, 2021 2020 (8,204,606) 631,411 5,957,039 5,820,039 – 156,749 5,957,039 5,976,788 (1.38) 0.11	Unaudited Six months ended June 30, 2021 2020 (8,204,606) 631,411 5,957,039 5,820,039 – 156,749 5,957,039 5,976,788 (1.38) 0.11
		0.11

14 PROPERTY, PLANT AND EQUIPMENT

NOTES TO THE INTERIM FINANCIAL INFORMATION

		Unaudited	Unaudited
Computer equipment	Bikes and electric mopeds	Assets under construction	Right-of- use assets	Others	Total
RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000


5,644,530	11,837,828	241,703	3,756,829	1,218,979	22,699,869
(3,520,901)	(3,784,637)	(546)	(1,031,912)	(444,708)	(8,782,704)

2,123,629	8,053,191	241,157	2,724,917	774,271	13,917,165



2,123,629	8,053,191	241,157	2,724,917	774,271	13,917,165
1,458,386	117,424	1,158,125	1,498,837	136,068	4,368,840
–	597,338	(1,007,918)	–	410,580	–
(11,098)	(12,311)	(3,756)	(43,237)	(33,851)	(104,253)
(732,164)	(1,709,906)	–	(872,457)	(217,572)	(3,532,099)
–	–	(311)	–	(39,737)	(40,048)
–	–	–	(15)	–	(15)

2,838,753	7,045,736	387,297	3,308,045	1,029,759	14,609,590



7,074,922	12,350,551	387,926	5,005,921	1,713,509	26,532,829
(4,236,169)	(5,304,815)	(629)	(1,697,876)	(683,750)	(11,923,239)

2,838,753	7,045,736	387,297	3,308,045	1,029,759	14,609,590

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

14 PROPERTY, PLANT AND EQUIPMENT (Continued)

As of January 1, 2020 Cost Accumulated depreciation and impairment Net book amount Six months ended June 30, 2020 Opening net book amount Additions Transfers Disposal Depreciation charge Currency translation differences Closing net book amount As of June 30, 2020 Cost Accumulated depreciation and impairment Net book amount	Computer equipment RMB’000 4,505,983 (2,288,342) 2,217,641 2,217,641 405,316 – (4,999) (612,116) (1) 2,005,841 4,886,966 (2,881,125) 2,005,841	Bikes and electric mopeds RMB’000 5,781,823 (4,504,976) 1,276,847 1,276,847 1,865,144 645,304 (85,347) (432,084) – 3,269,864 6,877,375 (3,607,511) 3,269,864	Unaudited Assets under construction Right-of- use assets RMB’000 RMB’000 141,368 2,166,794 (7,945) (605,780) 133,423 1,561,014 133,423 1,561,014 895,124 487,429 (821,992) – – (16,103) – (383,349) – 4 206,555 1,648,995 214,500 2,424,054 (7,945) (775,059) 206,555 1,648,995	Others RMB’000 409,348 (222,056) 187,292 187,292 22,045 176,688 (3,915) (67,740) – 314,370 602,700 (288,330) 314,370	Total RMB’000 13,005,316 (7,629,099) 5,376,217 5,376,217 3,675,058 – (110,364) (1,495,289) 3 7,445,625 15,005,595 (7,559,970) 7,445,625

NOTES TO THE INTERIM FINANCIAL INFORMATION

14 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	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 2,832,853 1,071,960 348,666 225,230 183,358 125,265 167,222 72,834 3,532,099 1,495,289	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 2,832,853 1,071,960 348,666 225,230 183,358 125,265 167,222 72,834 3,532,099 1,495,289
		1,495,289

(a) Leases

(i) Amounts recognised in the consolidated statement of financial position

The consolidated statement of financial position shows the following amounts relating to leases:

Right-of-use assets

Offices Others Total	Unaudited As of June 30, 2021 RMB’000 2,121,708 1,186,337 3,308,045	Audited As of December 31, 2020 RMB’000 1,923,104 801,813
		2,724,917

MEITUAN | 2021 INTERIM REPORT 87

NOTES TO THE INTERIM FINANCIAL INFORMATION

14 PROPERTY, PLANT AND EQUIPMENT (Continued)

(a) Leases (Continued)

(i) Amounts recognised in the consolidated statement of financial position (Continued)

Lease liabilities

Current Non-current	Unaudited As of June 30, 2021 RMB’000 1,424,446 1,949,452 3,373,898	Audited As of December 31, 2020 RMB’000 1,089,847 1,648,008
		2,737,855

(ii) Amounts recognised in the consolidated income statement

The consolidated income statement shows the following amounts relating to leases:

	Unaudited	Unaudited
	Six months ended June 30,
	2021	2020
	RMB’000	RMB’000
Depreciation charge of right-of-use assets	872,457	383,349
Interest expenses (included in finance costs)	80,755	35,845

NOTES TO THE INTERIM FINANCIAL INFORMATION

15 INTANGIBLE ASSETS

Unaudited	Unaudited	Unaudited
Goodwill Other intangible assets arising from business combinations		Software and others	Total
RMB’000	RMB’000	RMB’000	RMB’000


27,849,022	7,671,830	1,892,709	37,413,561
(201,587)	(3,992,745)	(1,542,848)	(5,737,180)

27,647,435	3,679,085	349,861	31,676,381



27,647,435	3,679,085	349,861	31,676,381
–	–	29,945	29,945
–	(251,274)	(152,818)	(404,092)

27,647,435	3,427,811	226,988	31,302,234



27,849,022	7,671,830	1,922,654	37,443,506
(201,587)	(4,244,019)	(1,695,666)	(6,141,272)

27,647,435	3,427,811	226,988	31,302,234

The Group normally performs goodwill impairment test in the fourth quarter of each year, and there is no indicator for impairment of goodwill as of June 30, 2021. For details of goodwill impairment assessment for the year ended December 31, 2020, please refer to the 2020 Financial Statements.

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

15 INTANGIBLE ASSETS (Continued)

As of January 1, 2020 Cost Accumulated amortization and impairment Net book amount Six months ended June 30, 2020 Opening net book amount Additions Disposal Amortization charge Closing net book amount As of June 30, 2020 Cost Accumulated amortization and impairment Net book amount	Unaudited Goodwill Other intangible assets arising from business combinations Software and others RMB’000 RMB’000 RMB’000 27,849,022 7,671,830 1,877,633 (143,421) (3,377,167) (1,178,322) 27,705,601 4,294,663 699,311 27,705,601 4,294,663 699,311 – – 13,163 – – (2,949) – (321,714) (225,251) 27,705,601 3,972,949 484,274 27,849,022 7,671,830 1,878,149 (143,421) (3,698,881) (1,393,875) 27,705,601 3,972,949 484,274	Total RMB’000 37,398,485 (4,698,910) 32,699,575 32,699,575 13,163 (2,949) (546,965) 32,162,824 37,399,001 (5,236,177) 32,162,824

NOTES TO THE INTERIM FINANCIAL INFORMATION

15 INTANGIBLE ASSETS (Continued)

Amortization expenses have been charged to the consolidated income statement as follows:

Selling and marketing expenses Cost of revenues General and administrative expenses Research and development expenses	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 221,681 346,207 90,327 88,219 87,602 109,870 4,482 2,669 404,092 546,965	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 221,681 346,207 90,327 88,219 87,602 109,870 4,482 2,669 404,092 546,965
		546,965

MEITUAN | 2021 INTERIM REPORT 91

NOTES TO THE INTERIM FINANCIAL INFORMATION

16 DEFERRED INCOME TAXES

The following amounts, determined after appropriate offsetting, are shown in the consolidated statements of financial position:

(a) Deferred tax assets

The balance comprises temporary differences attributable to: – Tax losses – Others Total gross deferred tax assets Set-off of deferred tax assets Net deferred tax assets	Unaudited As of June 30, 2021 RMB’000 996,479 412,363 1,408,842 (809,401) 599,441	Audited As of December 31, 2020 RMB’000 1,009,919 314,032 1,323,951 (875,281) 448,670

(b) Deferred tax liabilities

The balance comprises temporary differences attributable to: – Investments accounted for using the equity method or at fair value – Intangible assets arising from business combinations – Deferred revenues – Others Total gross deferred tax liabilities Set-off of deferred tax liabilities Net deferred tax liabilities	Unaudited As of June 30, 2021 RMB’000 (792,267) (513,680) (74,809) (180,908) (1,561,664) 809,401 (752,263)	Audited As of December 31, 2020 RMB’000 (804,356) (620,647) (50,029) (155,943) (1,630,975) 875,281 (755,694)

NOTES TO THE INTERIM FINANCIAL INFORMATION

16 DEFERRED INCOME TAXES (Continued)

The movement on the gross deferred tax assets is as follows:

Tax losses RMB’000	Unaudited Others RMB’000	Total RMB’000
1,009,919	314,032	1,323,951
(45,934)	98,331	52,397
32,494	–	32,494

996,479	412,363	1,408,842


848,365 (164,925) 683,440	35,820 193,781 229,601	884,185 28,856 913,041

The movement on the gross deferred tax liabilities is as follows:

Intangible assets arising from business combinations RMB’000 As of January 1, 2021 (620,647) Credited/(charged) to consolidated income statement 106,967 Credited to other comprehensive loss – As of June 30, 2021 (513,680) As of January 1, 2020 (750,046) Credited/(charged) to consolidated income statement 68,007 Charged to other comprehensive income – As of June 30, 2020 (682,039)	Investments accounted for using the equity method or at fair value RMB’000	Unaudited Deferred revenues RMB’000	Others RMB’000	Total RMB’000
(620,647)	(804,356)	(50,029)	(155,943)	(1,630,975)
106,967	5,238	(24,780)	(24,965)	62,460
–	6,851	–	–	6,851

(513,680)	(792,267)	(74,809)	(180,908)	(1,561,664)


(750,046) 68,007 – (682,039)	(438,363) (16,381) (2,516) (457,260)	(469,175) 52,039 – (417,136)	(25,016) (33,450) – (58,466)	(1,682,600) 70,215 (2,516) (1,614,901)

MEITUAN | 2021 INTERIM REPORT 93

NOTES TO THE INTERIM FINANCIAL INFORMATION

16 DEFERRED INCOME TAXES (Continued)

The Group only recognises deferred 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 June 30, 2021 and December 31, 2020, the Group did not recognise deferred income tax assets of RMB11.8 billion and RMB9.3 billion in respect of cumulative tax losses amounting to RMB59.2 billion and RMB43.6 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.

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.

17 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

At the beginning of the period Additions (Note i) Change in fair value Disposals Transfer (Note ii) Currency translation differences At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 10,256,786 7,166,122 2,261,746 1,189,947 206,782 (161,572) (770,392) – (1,068,094) – (38,594) 52,190 10,848,234 8,246,687

NOTES TO THE INTERIM FINANCIAL INFORMATION

17 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

(i) During the six months ended June 30, 2021, the Group’s additions to other financial investments at fair value through profit or loss mainly comprised the investments in unlisted entities with the aggregate amount of RMB2,262 million.
(ii) During the six months ended June 30, 2021, transfers mainly comprised certain investments with an aggregate amount of RMB1,068 million designated as other financial investments at fair value through other comprehensive income due to the conversion of preferred shares into ordinary shares.

Investments in associates at fair value through profit or loss (Note i) Other investments at fair value through profit or loss (Note ii)	Unaudited As of June 30, 2021 RMB’000 3,450,648 7,397,586 10,848,234	Audited As of December 31, 2020 RMB’000 2,690,100 7,566,686 10,256,786

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

17 OTHER FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

(i) Investments in associates at fair value through profit or loss

At the beginning of the period Additions Change in fair value Disposals Transfer Currency translation differences At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 2,690,100 1,376,375 1,516,068 650,000 90,465 (642) (60,000) – (783,750) – (2,235) 3,759 3,450,648 2,029,492

As of June 30, 2021 and December 31, 2020, 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.

(ii) Other investments at fair value through profit or loss

At the beginning of the period Additions Change in fair value Disposals Transfer Currency translation differences At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 7,566,686 5,789,747 745,678 539,947 116,317 (160,930) (710,392) – (284,344) – (36,359) 48,431 7,397,586 6,217,195

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.

RMB4.4 billion of other financial investments at fair value through profit or loss is denominated in USD (December 31, 2020: RMB4.0 billion), and other balances are denominated in RMB.

NOTES TO THE INTERIM FINANCIAL INFORMATION

18 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 Equity investments in unlisted securities	Unaudited As of June 30, 2021 RMB’000 874,499 783,750 1,658,249	Audited As of December 31, 2020 RMB’000 605,918 –
		605,918

Movement of other financial investments at fair value through other comprehensive income is analysed as follows:

At the beginning of the period Change in fair value Transfer (Note 17) Currency translation differences At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 605,918 – (9,548) – 1,068,094 – (6,215) – 1,658,249 –	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 605,918 – (9,548) – 1,068,094 – (6,215) – 1,658,249 –
		–

Amounts recognised in other comprehensive income:

Gain recognised in other comprehensive income Related to equity investments (Note 24)	Unaudited As of June 30, 2021 RMB’000 (9,548) (9,548)	Audited As of December 31, 2020 RMB’000 –
		–

MEITUAN | 2021 INTERIM REPORT 97

NOTES TO THE INTERIM FINANCIAL INFORMATION

19 TREASURY INVESTMENTS

Long-term treasury investments at – Amortized cost – Fair value through profit or loss Short-term treasury investments at – Amortized cost – Fair value through profit or loss – Fair value through other comprehensive income	Unaudited As of June 30, 2021 RMB’000 701,000 620,698 1,321,698 8,731,793 35,865,529 6,524,468 51,121,790	Audited As of December 31, 2020 RMB’000 – 612,967 612,967 10,949,832 32,083,979 965,553 43,999,364

Treasury investments at amortized cost are fixed rate certificates of deposit and term deposits.

Treasury investments at fair value through profit or loss are wealth management products.

Treasury investments at fair value through other comprehensive income are large-denomination negotiable certificates of term deposit and other financial products.

Treasury investments are denominated in the following currencies:

USD RMB	Unaudited As of June 30, 2021 RMB’000 32,880,513 19,562,975 52,443,488	Audited As of December 31, 2020 RMB’000 31,828,437 12,783,894 44,612,331

NOTES TO THE INTERIM FINANCIAL INFORMATION

20 PREPAYMENTS, DEPOSITS AND OTHER ASSETS

Non-current Prepayment for land use rights Prepayments for fixed assets Loan receivables (Note i) Rental deposits Prepayment for investments Recoverable value-added tax Others Current Loan receivables (Note i) Receivables related to share options and RSUs Tax prepayments Contract assets Prepayments to merchants Amounts due from related parties (Note 33) Deposits Receivables from third-party payment service providers Prepayments for channel marketing fee Others	Unaudited As of June 30, 2021 RMB’000 6,737,539 2,012,014 827,249 299,372 297,044 268,952 398,308 10,840,478 5,697,804 2,734,088 2,499,842 856,923 515,980 394,539 243,292 207,563 79,732 2,718,333 15,948,096	Audited As of December 31, 2020 RMB’000 4,578,910 1,356,167 466,232 268,658 297,044 334,509 268,297 7,569,817 6,441,565 303,176 2,275,045 591,646 299,358 1,425,059 156,044 369,744 123,602 954,886 12,940,125

(i) 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, or at fair value through other comprehensive income, depending on the business models in which the loan receivable is held.

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 loss.

As of June 30, 2021 and December 31, 2020, the carrying value of prepayments, deposits and other assets was primarily denominated in RMB.

MEITUAN | 2021 INTERIM REPORT

NOTES TO THE INTERIM FINANCIAL INFORMATION

21 INVENTORIES Finished goods Raw materials Less: provision for impairment 22 TRADE RECEIVABLES Trade receivables Less: allowance for impairment	Unaudited As of June 30, 2021 RMB’000 470,954 38,523 509,477 (5,442) 504,035 Unaudited As of June 30, 2021 RMB’000 1,620,762 (175,457) 1,445,305	Audited As of December 31, 2020 RMB’000 439,130 41,109 480,239 (13,747) 466,492 Audited As of December 31, 2020 RMB’000 1,197,518 (166,570) 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 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.

100

NOTES TO THE INTERIM FINANCIAL INFORMATION

22 TRADE RECEIVABLES (Continued)

Movements on the Group’s allowance for impairment of trade receivables are as follows

At the beginning of the period Provision Reversal Receivables written off during the period as uncollectable At the end of the period	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 (166,570) (155,854) (41,870) (66,800) 13,639 48,538 19,344 17,584 (175,457) (156,532)

The Group considered that the carrying amounts of the trade receivables balances approximated their fair value as of June 30, 2021 and December 31, 2020.

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:

Trade receivables Up to 3 months 3 to 6 months 6 months to 1 year Over 1 year	Unaudited As of June 30, 2021 RMB’000 1,287,828 122,986 21,503 12,988 1,445,305	Audited As of December 31, 2020 RMB’000 889,861 94,088 39,416 7,583 1,030,948

The majority of the Group’s trade receivables were denominated in RMB.

The maximum exposure to credit risk as of June 30, 2021 and December 31, 2020 was the carrying value of the trade receivables. The Group did not hold any collateral as security.

MEITUAN | 2021 INTERIM REPORT 101

NOTES TO THE INTERIM FINANCIAL INFORMATION

23 SHARE CAPITAL, SHARE PREMIUM AND SHARES HELD FOR SHARES AWARD SCHEME

As of June 30, 2021 and 2020, the authorized share capital of the Company comprises 10,000,000,000 ordinary shares with par value of USD0.00001 per share.

Issued:

Number of ordinary shares ’000	Nominal value of ordinary shares USD’000	Share capital RMB’000	Share premium RMB’000	Shares held for shares award scheme RMB’000
5,885,649	59	395	263,155,201	–
187,000	2	12	42,694,258	–
30,656	–	2	1,993,499	–
9,809	–	1	–	(1)

6,113,114	61	410	307,842,958	(1)


5,808,666 51,939 5,860,605	58 1 59	389 4 393	260,359,929 2,007,631 262,367,560	– – –

102

NOTES TO THE INTERIM FINANCIAL INFORMATION

24 OTHER RESERVES

Capital reserve Share-based compensation reserve RMB’000 RMB’000	Capital reserve Share-based compensation reserve RMB’000 RMB’000	Unaudited Currency translation differences Changes in the fair value of other financial investments at fair value through other comprehensive income RMB’000 RMB’000	Unaudited Currency translation differences Changes in the fair value of other financial investments at fair value through other comprehensive income RMB’000 RMB’000	Conversion option RMB’000	Others RMB’000	Total RMB’000
20	4,150,291	(10,359,316)	84,387	–	(137,448)	(6,262,066)
–	2,078,144	–	–	–	–	2,078,144
–	(1,918,742)	–	–	–	–	(1,918,742)
–	–	–	–	–	13,753	13,753
–	–	–	–	–	5,252	5,252
–	–	–	–	1,513,938	–	1,513,938
–	–	–	(9,548)	–	–	(9,548)
–	–	–	–	–	23,858	23,858
–	–	–	–	–	56,392	56,392
–	–	–	–	–	32,494	32,494
–	–	(1,085,847)	–	–	–	(1,085,847)

20	4,309,693	(11,445,163)	74,839	1,513,938	(5,699)	(5,552,372)

MEITUAN | 2021 INTERIM REPORT 103

NOTES TO THE INTERIM FINANCIAL INFORMATION

24 OTHER RESERVES (Continued)

Capital reserve RMB’000 As of January 1, 2020 20 Share-based compensation expenses – Exercise of option and RSU vesting – Share of other comprehensive income of investments accounted for using the equity method – Currency translation differences – As of June 30, 2020 20 25 DEFERRED REVENUES Non-Current Business cooperation agreement with Maoyan Current Online marketing services and others Business cooperation agreement with Maoyan Bike-sharing and moped monthly pass	Share-based compensation reserve RMB’000 3,161,201 1,393,787 (1,733,481) – – 2,821,507	Unaudited Currency translation differences Others Total RMB’000 RMB’000 RMB’000 (7,439,014) (169,459) (4,447,252) – – 1,393,787 – – (1,733,481) – 2,711 2,711 647,370 – 647,370 (6,791,644) (166,748) (4,136,865) Unaudited Audited As of June 30, 2021 As of December 31, 2020 RMB’000 RMB’000 52,421 166,700 5,210,337 4,764,690 209,686 222,267 57,327 65,873 5,477,350 5,052,830

104

NOTES TO THE INTERIM FINANCIAL INFORMATION

25 DEFERRED REVENUES (Continued)

The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward deferred revenues:

Revenue recognised that was included in the deferred revenues balance at the beginning of the period Online marketing services and others Business cooperation agreement with Maoyan Bike-sharing and moped monthly pass	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 3,158,782 2,780,517 104,843 104,843 66,082 45,149 3,329,707 2,930,509	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 3,158,782 2,780,517 104,843 104,843 66,082 45,149 3,329,707 2,930,509
		2,930,509

26 TRADE PAYABLES

As of June 30, 2021 and December 31, 2020, 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	Unaudited As of June 30, 2021 RMB’000 11,589,895 339,360 132,435 52,311 12,114,001	Audited As of December 31, 2020 RMB’000 11,810,659 46,688 45,876 63,803
		11,967,026

The majority of the Group’s trade payables were denominated in RMB.

MEITUAN | 2021 INTERIM REPORT 105

NOTES TO THE INTERIM FINANCIAL INFORMATION

27 OTHER PAYABLES AND ACCRUALS

Salaries and benefits payable Other tax payable Deposits Amounts collected for third parties Accrued expenses Advance from customers Amounts due to related parties (Note 33) Undue interests accrued for notes payable (Note 29) Others 28 BORROWINGS Included in non-current liabilities USD bank loans – unsecured Included in current liabilities USD bank loans – unsecured RMB bank loans – unsecured	Unaudited As of June 30, 2021 RMB’000 4,025,082 3,521,047 3,084,903 746,364 429,247 372,220 327,800 61,119 1,096,958 13,664,740 Unaudited As of June 30, 2021 RMB’000 7,591,910 9,602,939 1,960,000 11,562,939	Audited As of December 31, 2020 RMB’000 4,124,807 1,150,193 2,680,966 601,193 312,481 367,960 395,785 61,732 862,101 10,557,218 Audited As of December 31, 2020 RMB’000 1,957,470 3,145,002 3,250,000 6,395,002

(a) As of June 30, 2021, the effective interest rates for bank loans were 0.99%-3.60%(2020: 1.54%-3.85%).

(b) For the six months ended June 30, 2021, the weighted average effective interest rate was 2.57% (2020: 3.21%). 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.

106

NOTES TO THE INTERIM FINANCIAL INFORMATION

29 NOTES PAYABLE

Included in non-current liabilities: Non-current portion of long-term USD notes payable Non-current portion of long-term USD convertible bonds (a) Included in current liabilities: Undue interests accrued for notes payable (Note 27)	Unaudited As of June 30, 2021 RMB’000 12,844,861 17,749,815 30,594,676 61,119	Audited As of December 31, 2020 RMB’000 12,966,341 – 12,966,341 61,732

The aggregate principal amounts of notes payable as of June 30, 2021 were USD4,984 million (December 31, 2020: USD2,000 million), including senior notes USD2,000 million (December 31, 2020: USD2,000 million) and convertible bonds USD2,984 million (December 31, 2020: nil). Applicable interest rates of senior notes are at 2.125%-3.05% per annum, and the interests will be payable semi-annually.

The notes payable and undue interests were repayable as follows:

Within 1 year (Note 27) Between 2 and 5 years More than 5 years	Unaudited As of June 30, 2021 RMB’000 61,119 22,568,376 8,026,300 30,655,795	Audited As of December 31, 2020 RMB’000 61,732 4,863,174 8,103,167 13,028,073

All of these notes payable issued by the Group were unsecured.

MEITUAN | 2021 INTERIM REPORT 107

NOTES TO THE INTERIM FINANCIAL INFORMATION

29 NOTES PAYABLE (Continued)

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. On April 27, 2021, the Company issued convertible bonds with an aggregate principal amount of USD2,984 million on the Stock Exchange of Hong Kong Limited. The aggregate principal amounts, applicable interest rates and due dates are as set out below.

2025 senior notes 2030 senior notes 2027 convertible bonds 2028 convertible bonds	Amount Interest Rate Due Date (USD million) (per annum) 750 2.125% October 28, 2025 1,250 3.05% October 28, 2030 1,484 0.00% April 27, 2027 1,500 0.00% April 27, 2028 4,984

As of June 30, 2021 the fair value of the notes payable amounted to RMB33,714 million (2020: RMB13,515 million). The respective fair values are assessed based on the quoted market price of these notes on the reporting date.

(a) The liability and equity components of the convertible bonds are presented as follows:

The face value of convertible bond issued on the issue date Issue premium Gross proceeds Less: issuance costs (Note i) Net proceeds Less: equity component (Note 24) Liability component on initial recognition Less: Interest expense recognised (Note 10) Currency translation differences Liability component as of June 30, 2021	Unaudited
	Six months ended June 30, 2021
	RMB’000

	19,370,725
	105,953

	19,476,678
	(184,635)

	19,292,043
	(1,513,938)

	17,778,105
	(65,750)
	37,460

	17,749,815

(i) Part of the issuance costs have not been paid as of June 30, 2021.

108

NOTES TO THE INTERIM FINANCIAL INFORMATION

30 SHARE-BASED PAYMENTS

For background of share-based payments, please refer to the 2020 Financial Statements.

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.

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 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 June 30, 2021, the Group has authorised and reserved a total of 644,798,544 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.

MEITUAN | 2021 INTERIM REPORT 109

NOTES TO THE INTERIM FINANCIAL INFORMATION

30 SHARE-BASED PAYMENTS (Continued)

Share options

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.

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.

Movements in the number of share options granted and their related weighted average exercise prices are as follows:

Outstanding as of January 1, 2021 Granted during the period Forfeited during the period Exercised during the period Outstanding as of June 30, 2021 Vested and exercisable as of June 30, 2021 Outstanding as of January 1, 2020 Granted during the period Forfeited during the period Exercised during the period Outstanding as of June 30, 2020 Vested and exercisable as of June 30, 2020	Unaudited Number of share options Weighted average exercise price per share option (HKD)	Unaudited Number of share options Weighted average exercise price per share option (HKD)
	50,893,174	33.95

	–	–
	(517,654)	23.68
	(3,072,414)	25.40

	47,303,106	34.62
	29,290,104	25.62

	73,710,007 1,356,000 (3,537,717) (12,532,358) 58,995,932 31,130,114	27.81 100.15 34.04 24.21 29.86 23.69

The weighted average remaining contractual life of outstanding share options was 6 years and 6 years as of June 30, 2021 and December 31, 2020, respectively. The weighted average price of the shares at the time these options were exercised was HKD345.86 per share (equivalent to approximately RMB288.66 per share) for the six months ended June 30, 2021.

110

NOTES TO THE INTERIM FINANCIAL INFORMATION

30 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. There was no option granted for the six months ended June 30, 2021. Key assumptions for the six months ended June 30, 2020 are set as below.

Risk-free interest rates	Unaudited Six months ended June 30, 2020 0.52%
Expected term – years	6.4
Expected volatility	45%
Fair value of ordinary shares (HKD)	43.20
Exercise price (HKD)	100.15
Dividend yield	–

The weighted average fair value of granted options was HKD43.20 per share for the six months ended June 30, 2020.

RSUs

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.

MEITUAN | 2021 INTERIM REPORT 111

NOTES TO THE INTERIM FINANCIAL INFORMATION

30 SHARE-BASED PAYMENTS (Continued)

RSUs (Continued)

Movements in the number of RSUs granted and the respective weighted average grant date fair value are as follows:

Outstanding as of January 1, 2021 Granted during the period Vested during the period Forfeited during the period Outstanding as of June 30, 2021 Outstanding as of January 1, 2020 Granted during the period Vested during the period Forfeited during the period Outstanding as of June 30, 2020	Unaudited Number of RSUs Weighted average grant date fair value per RSU (HKD)	Unaudited Number of RSUs Weighted average grant date fair value per RSU (HKD)
	126,541,129	90.18

	10,482,368	317.34
	(34,193,681)	66.01
	(3,176,963)	149.42

	99,652,853	120.47

	142,875,991 15,318,466 (39,407,464) (6,690,306) 112,096,687	47.26 103.08 43.60 42.95 56.25

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 RMB2,079 million and RMB1,397 million for the six months ended June 30, 2021 and 2020, respectively. The following table sets forth a breakdown of the share-based compensation expenses by nature:

Share options RSUs Others	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 71,494 74,121 2,006,650 1,319,666 416 3,309 2,078,560 1,397,096	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 71,494 74,121 2,006,650 1,319,666 416 3,309 2,078,560 1,397,096
		1,397,096

112

NOTES TO THE INTERIM FINANCIAL INFORMATION

31 DIVIDENDS

No dividends have been paid or declared by the Company during each of the six months ended June 30, 2021 and 2020.

32 CAPITAL COMMITMENTS

Property, plant and equipment Purchase of investments Purchase of land use rights	Unaudited As of June 30, 2021 RMB’000 3,205,995 210,681 – 3,416,676	Audited As of December 31, 2020 RMB’000 2,546,586 733,447 1,962,390 5,242,423

33 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 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 | 2021 INTERIM REPORT 113

NOTES TO THE INTERIM FINANCIAL INFORMATION

33 RELATED PARTY TRANSACTIONS (Continued)

(a) Names and relationships with related parties

The following companies are significant related parties of the Group that had transactions with the Group during the six months ended June 30, 2021 and 2020, and/or balances with the Group as of June 30, 2021 and December 31, 2020.

Name of related parties Relationship Tencent Group One of the Company’s shareholders AsiaSea Co., Ltd. Associate of the Group Dalian Tongda Group Associate of the Group Fujian Piaofeutong Information Technology Co., Ltd Associate of the Group Jilin Yillion Bank Co., Ltd. Associate of the Group Tianjin Maoyan and its subsidiaries Associate of the Group

(b) Significant transactions with related parties

(i) Rendering of services Associate of the Group One of the Company’s shareholders (ii) Receiving of services and purchasing of goods One of the Company’s shareholders Associate of the Group	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 543,901 479,447 172 2,965 544,073 482,412 1,416,824 708,627 591,476 335,377 2,008,300 1,044,004	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 543,901 479,447 172 2,965 544,073 482,412 1,416,824 708,627 591,476 335,377 2,008,300 1,044,004
		482,412
		708,627 335,377
		1,044,004

114

NOTES TO THE INTERIM FINANCIAL INFORMATION

33 RELATED PARTY TRANSACTIONS (Continued)

(c) Balances with related parties

(i) Due from related parties Associate of the Group One of the Company’s shareholders (ii) Due to related parties Associate of the Group One of the Company’s shareholders	Unaudited As of June 30, 2021 RMB’000 308,547 85,992 394,539 266,248 61,552 327,800	Audited As of December 31, 2020 RMB’000 1,136,433 288,626
		1,425,059
		362,708 33,077
		395,785

(d) Key management compensation

Share-based compensation expenses Basic salaries Director’s fees Pension costs and other employee benefits Bonuses Others	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 165,525 166,718 10,930 6,360 747 751 387 248 – 6,360 44 62 177,633 180,499	Unaudited Six months ended June 30, 2021 2020 RMB’000 RMB’000 165,525 166,718 10,930 6,360 747 751 387 248 – 6,360 44 62 177,633 180,499
		180,499

MEITUAN | 2021 INTERIM REPORT 115

NOTES TO THE INTERIM FINANCIAL INFORMATION

34 CONTINGENCIES

35 SUBSEQUENT EVENTS

There were no material subsequent events during the period from June 30, 2021 to the approval date of the Interim Financial Information by the Board on August 30, 2021.

36 RECLASSIFICATION OF COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period presentation.

116

DEFINITIONS

“Articles” or “Articles of Association” the articles of association of the Company adopted on August 30, 2018 with effect from the Listing Date, as amended from time to time “associate(s)” has the meaning ascribed to it under the Listing Rules “Beijing Kuxun Interaction” Beijing Kuxun Interaction Technology Co., Ltd. (北京酷訊互動科技有限公司), a limited liability company incorporated under the laws of the PRC on March 29, 2006 and our Consolidated Affiliated Entity “Beijing Kuxun Technology” Beijing Kuxun Technology Co., Ltd. (北京酷訊科技有限公司), a limited liability company incorporated under the laws of the PRC on April 27, 2006 and our indirect wholly-owned subsidiary “Beijing Mobike” Beijing Mobike Technology Co., Ltd. (北京摩拜科技有限公司), a limited liability company incorporated under the laws of the PRC on January 27, 2015 and our Consolidated Affiliated Entity “Beijing Sankuai Cloud Computing” Beijing Sankuai Cloud Computing Co., Ltd. (北京三快雲計算有限公司), a limited liability company incorporated under the laws of the PRC on June 17, 2015 and our Consolidated Affiliated Entity “Beijing Sankuai Online” Beijing Sankuai Online Technology Co., Ltd. (北京三快在線科技有限公司), a limited liability company incorporated under the laws of the PRC on May 6, 2011 and our indirect wholly-owned subsidiary “Beijing Sankuai Technology” Beijing Sankuai Technology Co., Ltd. (北京三快科技有限公司), a limited liability company incorporated under the laws of the PRC on April 10, 2007 and our Consolidated Affiliated Entity “Beijing Xinmeida” Beijing Xinmeida Technology Co., Ltd. (北京新美大科技有限公司), 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 “BVI” the British Virgin Islands “CG Code” the corporate governance code as set out in Appendix 14 to the Listing Rules

MEITUAN | 2021 INTERIM REPORT

117

DEFINITIONS

“Charmway Enterprises” 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”

Chengdu Meigengmei Information Technology Co., Ltd. (成都美更美信息技術有限公司), a limited liability company incorporated under the laws of the PRC on July 18, 2014 and our Consolidated Affiliated Entity

“Class A Shares”

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

“Class B Shares”

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

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Company”, “our Company”, “the Company”

Meituan (美团) (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 (美团) and its subsidiaries and Consolidated Affiliated Entities, as the case may be

“connected transaction(s)”

has the meaning ascribed to it under the Listing Rules

“Consolidated Affiliated Entities”

the entities we control through the Contractual Arrangements, namely, the Onshore Holdcos and their respective subsidiaries (each a “Consolidated Affiliated Entity”)

“Contractual Arrangement(s)”

the series of contractual arrangements entered into between WFOEs, Onshore Holdcos and Registered Shareholders (as applicable)

“Crown Holdings”

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

118

DEFINITIONS

“Date of this Interim Report”	August 30, 2021
“Director(s)”	the director(s) of the Company
“Group”, “our Group” or “the Group”,	the Company and its subsidiaries and Consolidated Affiliated Entities
“we”, “us”, or “our”	from time to time
“Hong Kong dollars” or “HK dollars” or	Hong Kong dollars, the lawful currency of Hong Kong
“HK$”
“Hong Kong Securities and Futures	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Ordinance” or “SFO”	Kong), as amended, supplemented or otherwise modified from time to
	time
“Hong Kong Share Registrar”	Computershare Hong Kong Investor Services Limited
“Hong Kong” or “HK”	the Hong Kong Special Administrative Region of the PRC
“IFRS”	International Financial Reporting Standards, as issued from time to time
	by the International Accounting Standards Board
“IPO”	initial public offering
“Kevin Sunny”	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”	the listing of the Class B Shares on the Main Board of the Stock
	Exchange
“Listing Date”	September 20, 2018
“Listing Rules”	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
“Main Board”	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
“Meituan Finance”	Beijing Meituan Finance Technology Co., Ltd. (北京美團金融科技有限公
	司), a limited liability company incorporated under the laws of the PRC on
	August 9, 2017 and our Consolidated Affiliated Entity

119

MEITUAN | 2021 INTERIM REPORT

DEFINITIONS

“Memorandum” or “Memorandum of	the memorandum of association of the Company adopted on August 30,
Association”	2018 with effect from the Listing Date, as amended from time to time
“Mobike”	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”	Mobike (Beijing) Information Technology Co., Ltd. (摩拜(北京)信息技術
	有限公司), a limited liability company incorporated under the laws of the
	PRC on January 12, 2016 and our indirect wholly owned subsidiary
“Model Code”	the Model Code for Securities Transactions by Directors of Listed Issuers
	as set out in Appendix 10 to the Listing Rules
“Onshore Holdcos,” each an	Tianjin Antechu Technology, Shanghai Lutuan, Beijing Kuxun Interaction,
“Onshore Holdco”	Shanghai Sankuai Technology, Meituan Finance, Beijing Sankuai Cloud
	Computing, Beijing Xinmeida, Chengdu Meigengmei, Beijing Mobike,
	Beijing Sankuai Technology and Shanghai Hantao
“Post-IPO Share Award Scheme”	the post-IPO share 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”	the People’s Republic of China
“Pre-IPO ESOP”	the pre-IPO employee stock incentive scheme adopted by the Company
	dated October 6, 2015, as amended from time to time
“Prospectus”	prospectus of the Company dated September 7, 2018
“Registered Shareholders”	the registered shareholders of the Onshore Holdcos
“Reporting Period”	the six months ended June 30, 2021
“Reserved Matters”	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

120

DEFINITIONS

“RMB” or “Renminbi”

Renminbi, the lawful currency of China

“RSU(s)”

restricted share unit(s)

“Sankuai Cloud Online”

Sankuai Cloud Online Technology Co., Ltd. (三快雲在線(北京)科技有限公司), 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. (漢海信息技術(上海) 有限公司), a limited liability company incorporated under the laws of the PRC on March 16, 2006 and our indirect wholly-owned subsidiary
“Shanghai Hantao”
Shanghai Hantao Information Consultancy Co., Ltd. (上海漢濤信息諮詢有限公司), a limited liability company incorporated under the laws of the PRC on September 23, 2003 and our Consolidated Affiliated Entity
“Shanghai Juzuo” Shanghai Juzuo Technology Co., Ltd. (上海駒座科技有限公司), a limited liability company incorporated under the laws of the PRC on April 12, 2018 and our indirect wholly-owned subsidiary
“Shanghai Lutuan” Shanghai Lutuan Technology Co., Ltd. (上海路團科技有限公司), a limited liability company incorporated under the laws of the PRC on January 12, 2017 and our Consolidated Affiliated Entity
“Shanghai Sankuai Technology” Shanghai Sankuai Technology Co., Ltd. (上海三快科技有限公司), a limited liability company incorporated under the laws of the PRC on September 19, 2012 and our Consolidated Affiliated Entity

“Share(s)”

the Class A Shares and Class B Shares in the share capital of the Company, as the context so requires

“Shareholder(s)”

holder(s) of the Share(s)

“Shared Patience”

Shared Patience Inc., a limited liability company incorporated under the laws of the BVI, which is wholly owned by Wang Xing

“Shared Vision”

Shared Vision Investment Limited, a limited liability company incorporated under the laws of the BVI, which is wholly owned by Mu Rongjun

“Shenzhen Sankuai Online”

Shenzhen Sankuai Online Technology Co., Ltd. (深圳三快在線科技有限公司), a limited liability company incorporated under the laws of the PRC on November 18, 2015 and our indirect wholly-owned subsidiary

The Stock Exchange of Hong Kong Limited

“Stock Exchange”

121

MEITUAN | 2021 INTERIM REPORT

DEFINITIONS

“subsidiary(ies)”	has the meaning ascribed to it in section 15 of the Companies Ordinance
“substantial shareholder”	has the meaning ascribed to it in the Listing Rules
“Tianjin Antechu Technology”	Tianjin Antechu Technology Co., Ltd. (天津安特廚科技有限公司), a limited
	liability company incorporated under the laws of the PRC on January 17,
	2018 and our Consolidated Affiliated Entity
“Tianjin Wanlong”	Tianjin Wanlong Technology Co., Ltd. (天津萬龍科技有限公司), a limited
	liability company incorporated under the laws of the PRC on August 18,
	2015 and our indirect wholly-owned subsidiary
“Tianjin Xiaoyi Technology”	Tianjin Xiaoyi Technology Co., Ltd. (天津小蟻科技有限公司), a limited
	liability company incorporated under the laws of the PRC on February 13,
	2018 and our indirect wholly-owned subsidiary
“Tencent”	Tencent Holdings Limited (HKEx Stock Code: 700), or Tencent Holdings
	Limited and/or its subsidiaries, as the case may be
“United States”, “U.S.” or “US”	the United States of America, its territories, its possessions and all areas
	subject to its jurisdiction
“US dollars”, “U.S. dollars” or “US$”	United States dollars, the lawful currency of the United States
“weighted voting right”	has the meaning ascribed to it in the Listing Rules
“WFOEs”, each a “WFOE”	Tianjin Xiaoyi Technology, Shanghai Juzuo, Beijing Kuxun Technology,
	Tianjin Wanlong, Beijing Sankuai Online, Shenzhen Sankuai Online,
	Shanghai Hanhai, Sankuai Cloud Online and Mobike Beijing
“WVR Beneficiaries”	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
“WVR Structure”	has the meaning ascribed to it in the Listing Rules
“%”	per cent

122

DEFINITIONS

Unless otherwise expressly stated or the context otherwise requires, all data in this document is as of the date of this document.

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.

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.

123

MEITUAN | 2021 INTERIM REPORT

GLOSSARY

“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 pointof-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 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 bikesharing and moped services, 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

124

AI assistant

Meituan — Interim / Quarterly Report 2021

50868_rns_2021-09-23_7966b5ce-f31e-4602-bef4-95e74da606c0.pdf

CONTENTS

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Non-Executive Directors

Independent Non-Executive Directors

AUDIT COMMITTEE

REMUNERATION COMMITTEE

NOMINATION COMMITTEE

CORPORATE GOVERNANCE COMMITTEE

JOINT COMPANY SECRETARIES

AUTHORIZED REPRESENTATIVES

AUDITOR

REGISTERED OFFICE

CORPORATE INFORMATION

LEGAL ADVISORS

HONG KONG SHARE REGISTRAR

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

PRINCIPAL BANKER

COMPLIANCE ADVISOR

STOCK CODE

COMPANY WEBSITE

KEY HIGHLIGHTS

FINANCIAL SUMMARY

Unaudited

Three Months Ended

KEY HIGHLIGHTS

FINANCIAL INFORMATION BY SEGMENT

KEY HIGHLIGHTS

OPERATING METRICS

CHAIRMAN’S STATEMENT

BUSINESS REVIEW

Company Financial Highlights

CHAIRMAN’S STATEMENT

Company Business Highlights

Food delivery

CHAIRMAN’S STATEMENT

In-store, hotel & travel

New initiatives and others

CHAIRMAN’S STATEMENT

CHAIRMAN’S STATEMENT

APPRECIATION

Wang Xing

Chairman

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

Revenues

MANAGEMENT DISCUSSION AND ANALYSIS

Costs and Expenses

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of Revenues

Selling and Marketing Expenses

Research and Development Expenses

General and Administrative Expenses

Net Provision for Impairment Losses on Financial Assets

Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss

MANAGEMENT DISCUSSION AND ANALYSIS

Other Gains, Net

Operating (Loss)/Profit

Unaudited

MANAGEMENT DISCUSSION AND ANALYSIS

(Loss)/Profit before Income Tax

Income Tax Credits

(Loss)/Profit for the Period

MANAGEMENT DISCUSSION AND ANALYSIS

2. THE SECOND QUARTER OF 2021 COMPARED TO THE FIRST QUARTER OF 2021

MANAGEMENT DISCUSSION AND ANALYSIS

Revenues

MANAGEMENT DISCUSSION AND ANALYSIS

Costs and Expenses

MANAGEMENT DISCUSSION AND ANALYSIS

Cost of Revenues

Selling and Marketing Expenses

Research and Development Expenses

General and Administrative Expenses

Net (Provision for)/Reversal of Impairment Losses on Financial Assets

Fair Value Changes on Other Financial Investments at Fair Value Through Profit or Loss

Meituan Interim / Quarterly Report 2021