ZTO Express (Cayman) Inc 6-K/A, filed Aug 24, 2022
ZTO Express (Cayman) Inc. (ZTO)
6-K/A
2022-08-24
For: 2022-08-23
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Added on
August 22, 2026
About this 6-K/A
ZTO Express (Cayman) Inc filed this 6-K/A on August 24, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K/A
(Amendment No. 1)
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2022
Commission File Number: 001-37922
ZTO Express (Cayman) Inc.
Building One, No. 1685 Huazhi Road
Qingpu District
Shanghai, 201708
People’s Republic of China
Qingpu District
Shanghai, 201708
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
EXPLANATORY NOTE
This Amendment No. 1 (the “Amendment No. 1”) is made to the current report on Form 6-K originally furnished by ZTO Express (Cayman) Inc. to the Securities and Exchange Commission on August 23, 2022 (the “Original 6-K”). Exhibit 99.1 and Exhibit 99.2 to the Amendment No. 1 replaces and supersedes the exhibits attached to the Original 6-K in their entirety.
Exhibit Index
99.1
Exhibit 99.1 sets forth the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included in the Registrant’s preliminary offering memorandum dated August 24, 2022 in connection with the proposed offering of convertible senior notes.
99.2
Exhibit 99.2 sets forth the unaudited interim condensed consolidated financial statements for the six months periods ended June 30, 2021 and 2022 included in the Registrant’s preliminary offering memorandum dated August 24, 2022 in connection with the proposed offering of convertible senior notes.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ZTO Express (Cayman) Inc.
By:
/s/ Huiping Yan
Name: Huiping Yan
Title: Chief Financial Officer
Date: August 24, 2022
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with “Item 5. Operating and Financial Review and Prospects”in our 2021 Annual Report, our consolidated financial statements and the related notes included in our 2021 Annual Report and this offering memorandum. This discussion contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.” In evaluating our business, you should carefully consider the information provided under the caption “Risk Factors” in this offering memorandum. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. This offering memorandum contains translations of RMB and Hong Kong dollar amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise stated, all translations of RMB and Hong Kong dollars into U.S. dollars and from U.S. dollars into RMB in this offering memorandum were made at a rate of RMB6.6981 to US$1.00 and HK$7.8472 to US$1.00, the respective exchange rates on June 30, 2022 set forth in the H.10 statistical release of the Federal Reserve Board.
General Factors Affecting Our Results of Operations
Demand from China’s e-commerce industry for express delivery services
We have benefited from the rapid growth of China’s e-commerce industry and its demand for more express delivery services, and our business and growth depend on and contribute to the viability and prospects of the e-commerce industry in China. We anticipate that the demand for express delivery services will continue to grow.
Market conditions and our market position
The market conditions, competitive landscape and our market position in the express delivery industry will affect the pricing of our services and in turn, our revenue and operating income.
Operating leverage of our network partner model
Our business model is highly scalable and flexible. It enables us to expand our business operation efficiently by leveraging the resources and operating capabilities of our network partners with minimum capital requirements and operating expenditures. In addition, we can proactively adjust our network capacity to address peak demands and respond to seasonality. For instance, we have the ability to allocate sorting capacity among adjacent sorting hubs, and our network partners have flexibility to add temporary workers. The scalability of our business model has helped us expand geographic coverage and capture incremental growth in parcel volume, as well as improve operating efficiencies.
Our continued investment in infrastructure, technology and people
We continue to invest in our sorting hubs and line-haul fleets, as well as technology infrastructure and people, particularly talent in overall management, business operation and information technology. We expect our continued investments to further improve our parcel handling capacity, increase market penetration, and enhance customer services and operational efficiency.
Our ability to broaden service offerings and diversify customer base
Our results of operations are also affected by our ability to introduce new service offerings and expand and further penetrate our customer base. We are exploring new service offerings to capture existing and new market growth opportunities, including cross-border e-commerce, less-than-truckload logistics and backhaul trucking logistics of agricultural products. We also plan to expand our customer base across different segments and industries.
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Impact of COVID-19 on Our Operations and Financial Performance
Substantially all of our revenues and workforce are concentrated in China. In connection with the intensifying efforts to contain the spread of COVID-19, the Chinese government has taken certain emergency measures, including extension of the Lunar New Year holidays, implementation of travel bans, blockade of certain roads and closure of factories and businesses, and may continue to take further measures to keep this epidemic outbreak in check. We temporarily closed our branch offices, sorting hubs and service outlets from late January to mid-to late February 2020 due to the COVID-19 outbreak, which resulted in a decline of parcel volume in January and February 2020, as compared with the same period in 2019. The measures and timelines for business resumption varied across different localities in the PRC, and our branch offices, sorting hubs and service outlets closed and opened in accordance with measures adopted by their respective local government authorities. We also experienced a temporary labor shortage in January and February 2020 which has caused delays in our delivery services. We have taken measures to reduce the impact of the COVID-19 outbreak, including strictly implementing self-quarantine and disinfection measures at our headquarters, sorting hubs and service outlets in accordance with government issued protocols. Our parcel volume was 714 million in January 2020 and 438 million in February 2020, representing a decrease of 9.1% and 14.2% year on year. Our revenues, cost of revenues and net income were RMB3,915.9 million, RMB3,097.2 million and RMB371.0 million in the first quarter of 2020, respectively, representing a decrease of 14.4%, 6.6% and 45.6% as compared to the same period of 2019, respectively. We gradually resumed our operations since March 2020. Despite the temporary negative impact in the first quarter of 2020, our revenues, cost of revenues and net income were RMB25,214.3 million, RMB19,377.2 million and RMB4,326.4 million in 2020, respectively, representing an increase of 14.0%, 25.1% and a decrease of 23.7% as compared to 2019, respectively. Our headquarters, dozens of our sorting hubs and thousands of service outlets across the country suspended operation from April to June 2022 due to the COVID-19 resurgence caused by the Omicron variants since early March 2022, resulting in delays and stoppage in express delivery and a decline of parcel volume in April.
While most of the restrictions on movement within China have been relaxed as of the date of this offering memorandum, there is great uncertainty as to the future development of the outbreak. Relaxation of restrictions on economic and social life may lead to new cases which may lead to the re-imposition of restrictions. Recently, there has been an increasing number of sporadic COVID-19 cases, including the COVID-19 Delta and Omicron variant cases, in multiple cities in China. The Chinese local authorities have reinstated certain measures to keep COVID-19 in check, including travel restrictions and stay-at-home orders, and we may have to adjust various aspects of our operations. In addition, the highly-contagious Delta and Omicron variants of COVID-19 have caused authorities in various countries to reimpose restrictions such as mask mandates, curfews and prohibitions on large gatherings. There remain significant uncertainties surrounding COVID-19, including the existing and new variants of COVID-19, and its further development as a global pandemic, including the effectiveness of vaccine programs against existing and any new variants of COVID-19. Consequently, the COVID-19 pandemic may materially adversely affect our business, financial condition and results of operations. The extent to which this pandemic impacts our results of operations will depend on future developments which are highly uncertain and unpredictable.
As of June 30, 2022, we had cash and cash equivalents of RMB9,927.8 million (US$1,482.2 million) and short-term investments of RMB5,211.0 million (US$778.0 million). Our short-term investments consist primarily of dual currency notes and deposits, investments in fixed deposits with maturities between three months and one year and wealth management products which we have the intent and the ability to hold to maturity within one year. We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty. See also “Risk Factors — Risks Related to Our Business and Industry — We face risks related to severe weather conditions and other natural disasters, health epidemics and other outbreaks, such as the outbreak of COVID-19, which could significantly disrupt our operations and adversely affect our business, financial condition or results of operations.”
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Key Line Items and Specific Factors Affecting Our Results of Operations
Revenues
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Year Ended December 31,
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(in thousands, except for percentage)
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| Express delivery services | | | | | 19,606,214 | | | | | | 88.7 | | | | | | 21,900,201 | | | | | | 86.9 | | | | | | 27,450,922 | | | | | | 4,098,315 | | | | | | 90.3 | | | | | | 12,325,745 | | | | | | 89.3 | | | | | | 15,151,869 | | | | | | 2,262,114 | | | | | | 91.5 | | |
| Freight forwarding services | | | | | 1,235,961 | | | | | | 5.6 | | | | | | 1,862,689 | | | | | | 7.4 | | | | | | 1,529,601 | | | | | | 228,363 | | | | | | 5.0 | | | | | | 806,540 | | | | | | 5.8 | | | | | | 661,044 | | | | | | 98,691 | | | | | | 4.0 | | |
| Sale of accessories | | | | | 1,089,977 | | | | | | 4.9 | | | | | | 1,133,712 | | | | | | 4.5 | | | | | | 1,231,283 | | | | | | 183,826 | | | | | | 4.0 | | | | | | 574,311 | | | | | | 4.2 | | | | | | 631,754 | | | | | | 94,318 | | | | | | 3.8 | | |
| Others | | | | | 177,794 | | | | | | 0.8 | | | | | | 317,688 | | | | | | 1.2 | | | | | | 194,033 | | | | | | 28,968 | | | | | | 0.7 | | | | | | 91,001 | | | | | | 0.7 | | | | | | 116,060 | | | | | | 17,328 | | | | | | 0.7 | | |
| Total revenues | | | | | 22,109,946 | | | | | | 100.0 | | | | | | 25,214,290 | | | | | | 100.0 | | | | | | 30,405,839 | | | | | | 4,539,472 | | | | | | 100.0 | | | | | | 13,797,597 | | | | | | 100.0 | | | | | | 16,560,727 | | | | | | 2,472,451 | | | | | | 100.0 | | |
We derive a substantial part of our revenues from express delivery services that we provide to our network partners, which mainly include parcel sorting and line-haul transportation. We charge our network partners a network transit fee for each parcel that is processed through our network. Such fees represented 86.4%, 83.7%, 83.2%, 83.5% and 84.4% of our total express delivery services revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively. In addition, we also directly provide express delivery services to certain enterprise customers, including vertical e-commerce and traditional merchants, in connection with the delivery of their products to end consumers. Revenues from our express delivery services to such enterprise customers accounted for 13.6%, 16.3%, 16.8%, 16.5% and 15.6% of our total express delivery services revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively. We also generate revenues from the sale of ancillary materials, such as portable barcode readers, thermal paper and ZTO-branded packing materials and uniforms, to our network partners.
Our revenues are primarily driven by our parcel volume and the network transit fee we charge our network partners for each parcel going through our network.
In general, our parcel volume is affected by the various factors driving the growth of China’s e-commerce industry, as we generate the majority of our parcel volume by having our network partners serving end customers that carry out business on various e-commerce platforms in China. Our parcel volume is also affected by our ability to scale our network to meet increases in demand and the ability of our network partners and us to provide high-quality services to our end customers at a competitive price. Our parcel volume increased from 17,003 million in 2020 to 22,289 million in 2021, increased from 10,247 million in the six months ended June 30, 2021 to 11,428 million in the same period of 2022.
We determine the level of pricing of our network transit fee based on the operating costs of our business while also considering other factors, including market conditions and competition as well as our service quality. The network transit fees we charge our network partners are primarily measured by (i) a fixed amount for a waybill attached to each parcel and (ii) a variable amount per parcel for sorting and line-haul transportation based on the parcel weight and route distance. The delivery service fees we charge the enterprise customers are also based on parcel weight and route distance.
Our network partners generally charge each parcel sender a delivery services fee directly. They have full discretion over the pricing of their services after taking into consideration certain of their costs, including the network transit fees we charge them and other factors, including market conditions and competition as well as their service quality. There has historically been decline in the delivery services fees charged by our network partners to parcel senders partially due to decreasing unit operational costs and market competition. We have been able to adjust the level of network transit fees based on market conditions and our operating costs.
We recognize revenues from express delivery services over time as we perform the services. We act as the principal rather than the agent for express delivery service provided to enterprise customers based on analysis of our revenue arrangements using a control model. In the majority of our arrangements, we consider the pickup outlets operated by our network partners to be our customers. Our revenues recorded for those
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arrangements do not include the last-mile delivery fee because we act as an agent for last-mile delivery services and we are only arranging for services to be provided by the last-mile network partner.
We also provide freight forwarding services through the acquired business of China Oriental Express Co., Ltd. and its subsidiaries, which we refer to as the COE Business, a freight forwarding and international logistics services provider in Hong Kong and Shenzhen. Revenue from freight forwarding services is recognized over time when services are rendered. Our freight forwarding revenue is primarily driven by our freight volume. We determine and periodically review and adjust our fee levels based on the prevailing market conditions, operating costs and service level.
Cost of Revenues
In addition to the level of network transit fees we charge our network partners, our profitability also depends on our ability to control our costs as we expand. Our cost of revenues mainly consists of (i) line-haul transportation cost, (ii) sorting hub cost, (iii) freight forwarding cost, (iv) cost of accessories sold, and (v) other costs. The following table sets forth the components of our cost of revenues, in absolute amounts and as percentages of our revenues for the periods indicated:
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Year Ended December 31,
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(in thousands, except for percentage)
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| Line-haul transportation cost | | | | | 7,466,043 | | | | | | 33.8 | | | | | | 8,697,081 | | | | | | 34.5 | | | | | | 11,487,810 | | | | | | 1,715,085 | | | | | | 37.8 | | | | | | 5,297,177 | | | | | | 38.4 | | | | | | 5,983,896 | | | | | | 893,372 | | | | | | 36.1 | | |
| Sorting hub cost | | | | | 4,109,338 | | | | | | 18.6 | | | | | | 5,224,544 | | | | | | 20.7 | | | | | | 6,774,595 | | | | | | 1,011,420 | | | | | | 22.3 | | | | | | 3,124,074 | | | | | | 22.6 | | | | | | 3,771,806 | | | | | | 563,115 | | | | | | 22.8 | | |
| Freight forwarding cost | | | | | 1,209,523 | | | | | | 5.5 | | | | | | 1,712,592 | | | | | | 6.8 | | | | | | 1,326,557 | | | | | | 198,050 | | | | | | 4.4 | | | | | | 702,621 | | | | | | 5.1 | | | | | | 614,906 | | | | | | 91,803 | | | | | | 3.7 | | |
| Cost of accessories sold | | | | | 544,166 | | | | | | 2.5 | | | | | | 391,253 | | | | | | 1.6 | | | | | | 349,647 | | | | | | 52,201 | | | | | | 1.1 | | | | | | 172,716 | | | | | | 1.3 | | | | | | 202,789 | | | | | | 30,276 | | | | | | 1.2 | | |
| Other costs | | | | | 2,159,708 | | | | | | 9.7 | | | | | | 3,351,714 | | | | | | 13.3 | | | | | | 3,877,853 | | | | | | 578,948 | | | | | | 12.7 | | | | | | 1,730,834 | | | | | | 12.5 | | | | | | 2,165,029 | | | | | | 323,231 | | | | | | 13.1 | | |
| Total cost of revenues | | | | | 15,488,778 | | | | | | 70.1 | | | | | | 19,377,184 | | | | | | 76.9 | | | | | | 23,816,462 | | | | | | 3,555,704 | | | | | | 78.3 | | | | | | 11,027,422 | | | | | | 79.9 | | | | | | 12,738,426 | | | | | | 1,901,797 | | | | | | 76.9 | | |
Line-haul transportation cost primarily includes (i) payment for services by outsourced fleets, (ii) truck fuel costs and tolls incurred by self-owned fleet, (iii) employee compensation and other benefits for drivers of self-owned fleet, (iv) air transportation cost and (v) depreciation and maintenance costs of self-owned fleet. Total line-haul transportation cost accounted for 33.8%, 34.5%, 37.8%, 38.4% and 36.1% of our revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively. Since 2019, we increased usage of self-owned fleet with an increasing number of higher-capacity trailer trucks, especially during the peak season, resulting in improved transportation cost efficiencies.
Sorting hub cost includes (i) labor costs, (ii) land lease costs, (iii) depreciation of property and equipment and amortization of land use rights and (iv) other operating costs. Total sorting hub cost accounted for 18.6%, 20.7%, 22.3%, 22.6% and 22.8% of our revenues 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively.
Freight forwarding costs relate to the freight forwarding services provided by the COE Business we acquired on October 1, 2017.
Cost of accessories sold, which mainly includes cost of accessories that we sell to our network partners, such as (i) portable bar code readers, (ii) thermal paper used for digital waybill printing, and (iii) ZTO-branded packing materials and uniforms, accounted for 2.5%, 1.6%, 1.1%, 1.3% and 1.2% of our revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively. Cost of accessories sold as a percentage of our revenues from sale of accessories was 49.9%, 34.5%, 28.4%, 30.1% and 32.1% in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively. The decrease from 2019 to 2021 was mainly due to the increased use of lower-cost single-sheet thermal waybill paper starting in the second half of 2019. The cost of accessories sold grew slower than the sale of accessories. The slight increase from the six months ended June 30, 2021 to the same period of 2022 was primarily due to uniform costs for dress code standardization which helps enhance our brand image.
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Other costs, which mainly include (i) information technology related cost, (ii) dispatching costs paid to network partners associated with serving enterprise customers, and (iii) business tax surcharges, accounted for 9.7% and 13.3%, 12.7%, 12.5% and 13.1% of our revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively.
To maintain competitive pricing and enhance profit per parcel, we must continue to control our costs and improve our operating efficiency. We have adopted various cost-control measures. For example, fuel cost can be reduced through the use of more fuel-efficient vehicles, and unit transportation cost can be reduced by adding cost efficient, high capacity line-haul trucks to our self-owned fleet and a gradual shift to a direct shipping model by selected network partners, and labor costs can be contained through wider implementation of automated sorting equipment.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses, which consist primarily of (i) salaries and other benefits for management and employees, (ii) depreciation and rental costs for office facilities, and (iii) legal, finance, and other corporate overhead costs, accounted for 7.0%, 6.6%, 6.2%, 7.4% and 6.5% of our revenues in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively, respectively. Our selling, general and administrative expenses also included share-based compensation expenses of RMB316.7 million, RMB264.2 million, RMB248.0 million (US$37.0 million), RMB248.0 million and RMB179.0 million (US$26.7 million) in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022, respectively, which accounted for 1.4%, 1.0%, 0.8%, 1.8% and 1.1% of our revenues in the corresponding periods. We expect that our selling, general and administrative expenses will continue to increase as we hire additional personnel and incur additional costs in connection with the expansion of our business operations, enhancement of management capabilities and grant of share incentives.
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total revenues. This information should be read together with our consolidated financial statements and related notes included in our 2021 Annual Report and elsewhere in this offering memorandum. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
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Year Ended December 31,
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(in thousands, except for percentage)
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| Revenues | | | | | 22,109,946 | | | | | | 100.0 | | | | | | 25,214,290 | | | | | | 100.0 | | | | | | 30,405,839 | | | | | | 4,539,472 | | | | | | 100.0 | | | | | | 13,797,597 | | | | | | 100.0 | | | | | | 16,560,727 | | | | | | 2,472,451 | | | | | | 100.0 | | |
| Cost of revenues | | | | | (15,488,778) | | | | | | (70.1) | | | | | | (19,377,184) | | | | | | (76.9) | | | | | | (23,816,462) | | | | | | (3,555,704) | | | | | | (78.3) | | | | | | (11,027,422) | | | | | | (79.9) | | | | | | (12,738,426) | | | | | | (1,901,797) | | | | | | (76.9) | | |
| Gross profit | | | | | 6,621,168 | | | | | | 29.9 | | | | | | 5,837,106 | | | | | | 23.1 | | | | | | 6,589,377 | | | | | | 983,768 | | | | | | 21.7 | | | | | | 2,770,175 | | | | | | 20.1 | | | | | | 3,822,301 | | | | | | 570,654 | | | | | | 23.1 | | |
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Operating income (expenses)(1)
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Selling, general and administrative
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| | | | (1,546,227) | | | | | | (7.0) | | | | | | (1,663,712) | | | | | | (6.6) | | | | | | (1,875,869) | | | | | | (280,060) | | | | | | (6.2) | | | | | | (1,014,230) | | | | | | (7.4) | | | | | | (1,075,106) | | | | | | (160,509) | | | | | | (6.5) | | |
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Other operating income, net
|
| | | | 387,890 | | | | | | 1.8 | | | | | | 580,973 | | | | | | 2.3 | | | | | | 789,503 | | | | | | 117,870 | | | | | | 2.6 | | | | | | 332,590 | | | | | | 2.4 | | | | | | 354,612 | | | | | | 52,942 | | | | | | 2.1 | | |
| Total operating expenses | | | | | (1,158,337) | | | | | | (5.2) | | | | | | (1,082,739) | | | | | | (4.3) | | | | | | (1,086,366) | | | | | | (162,190) | | | | | | (3.6) | | | | | | (681,640) | | | | | | (4.9) | | | | | | (720,494) | | | | | | (107,567) | | | | | | (4.4) | | |
| Income from operations | | | | | 5,462,831 | | | | | | 24.7 | | | | | | 4,754,367 | | | | | | 18.8 | | | | | | 5,503,011 | | | | | | 821,578 | | | | | | 18.1 | | | | | | 2,088,535 | | | | | | 15.1 | | | | | | 3,101,807 | | | | | | 463,087 | | | | | | 18.7 | | |
| Other income (expenses) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | | | | 585,404 | | | | | | 2.6 | | | | | | 442,697 | | | | | | 1.8 | | | | | | 363,890 | | | | | | 54,327 | | | | | | 1.2 | | | | | | 177,882 | | | | | | 1.3 | | | | | | 229,588 | | | | | | 34,277 | | | | | | 1.4 | | |
| Interest expense | | | | | — | | | | | | — | | | | | | (35,307) | | | | | | (0.1) | | | | | | (126,503) | | | | | | (18,886) | | | | | | (0.4) | | | | | | (49,380) | | | | | | (0.4) | | | | | | (82,737) | | | | | | (12,352) | | | | | | (0.5) | | |
|
Fair value change at derivatives
|
| | | | — | | | | | | — | | | | | | (877) | | | | | | — | | | | | | 52,909 | | | | | | 7,899 | | | | | | 0.2 | | | | | | 48,130 | | | | | | 0.3 | | | | | | (14,456) | | | | | | (2,158) | | | | | | (0.1) | | |
|
Gain/(loss) on disposal of
equity investees and subsidiary |
| | | | (2,860) | | | | | | — | | | | | | 1,086 | | | | | | — | | | | | | 2,357 | | | | | | 352 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Impairment of investment
in equity investee |
| | | | (56,026) | | | | | | (0.3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Unrealized gain from investment in equity investee
|
| | | | 754,468 | | | | | | 3.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
|
Foreign currency exchange
gain/(loss), before tax |
| | | | 13,301 | | | | | | 0.1 | | | | | | (127,180) | | | | | | (0.5) | | | | | | (56,467) | | | | | | (8,430) | | | | | | (0.2) | | | | | | (26,084) | | | | | | (0.2) | | | | | | 106,940 | | | | | | 15,966 | | | | | | 0.6 | | |
|
Income before income tax,
and share of loss in equity method investments |
| | | | 6,757,118 | | | | | | 30.6 | | | | | | 5,034,786 | | | | | | 20.0 | | | | | | 5,739,197 | | | | | | 856,840 | | | | | | 18.9 | | | | | | 2,239,083 | | | | | | 16.2 | | | | | | 3,341,142 | | | | | | 498,820 | | | | | | 20.2 | | |
| Income tax expense | | | | | (1,078,295) | | | | | | (4.9) | | | | | | (689,833) | | | | | | (2.7) | | | | | | (1,005,451) | | | | | | (150,110) | | | | | | (3.3) | | | | | | (404,497) | | | | | | (2.9) | | | | | | (693,424) | | | | | | (103,525) | | | | | | (4.2) | | |
|
Share of loss in equity method investments
|
| | | | (7,556) | | | | | | — | | | | | | (18,507) | | | | | | (0.1) | | | | | | (32,419) | | | | | | (4,840) | | | | | | (0.1) | | | | | | (28,835) | | | | | | (0.2) | | | | | | (13,492) | | | | | | (2,014) | | | | | | (0.1) | | |
| Net Income | | | | | 5,671,267 | | | | | | 25.7 | | | | | | 4,326,446 | | | | | | 17.2 | | | | | | 4,701,327 | | | | | | 701,890 | | | | | | 15.5 | | | | | | 1,805,751 | | | | | | 13.1 | | | | | | 2,634,226 | | | | | | 393,281 | | | | | | 15.9 | | |
|
Net loss/(income) attributable to noncontrolling
interests |
| | | | 2,878 | | | | | | 0.0 | | | | | | (14,233) | | | | | | (0.1) | | | | | | 53,500 | | | | | | 7,987 | | | | | | 0.2 | | | | | | 20,046 | | | | | | 0.1 | | | | | | 77,225 | | | | | | 11,529 | | | | | | 0.5 | | |
|
Net income attributable to
ZTO Express (Cayman) Inc. |
| | | | 5,674,145 | | | | | | 25.7 | | | | | | 4,312,213 | | | | | | 17.1 | | | | | | 4,754,827 | | | | | | 709,877 | | | | | | 15.6 | | | | | | 1,825,797 | | | | | | 13.2 | | | | | | 2,711,451 | | | | | | 404,810 | | | | | | 16.4 | | |
(1)
Our operating income (expenses) in 2019, 2020 and 2021 and the six months ended June 30, 2021 and 2022 includes RMB316.7 million, RMB264.2 million, RMB248.0 million (US$37.0 million), RMB248.0 million and RMB179.0 million (US$26.7 million), respectively, of share-based compensation expenses, accounting for 1.4%, 1.0%, 0.8%, 1.8% and 1.1% of our total revenues in the same periods, respectively.
6
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
Revenues
Our revenues increased by 20.0% to RMB16.6 billion (US$2.5 billion) in the six months ended June 30, 2022 from RMB13.8 billion in the same period of 2021. The increase was mainly driven by growth in parcel volume to 11,428.6 million in the six months ended June 30, 2022 from 10,247.2 million in the same period of 2021 as a result of growth in China’s e-commerce market and an increase in our market share and a 7.6% increase in unit price per parcel mainly due to the ease of price competition. Revenue from freight forwarding services decreased by 18.0% compared to the same period of 2021, mainly due to cross border e-commerce demand and pricing gradually returned to normal as countries recovered from the COVID-19 pandemic. Revenue from sales of accessories, largely consisting of the sales of thermal paper used for digital waybills printing, increased by 10.0% in line with parcel volume growth in the six months ended June 30, 2022.
Cost of Revenues
Our total cost of revenues increased by 15.5% to RMB12.7 billion (US$1.9 billion) in the six months ended June 30, 2022 from RMB11.0 billion in the same period of 2021. This increase primarily resulted from increases in line-haul transportation cost by RMB686.7 million (US$102.5 million), sorting hub operating cost by RMB647.7 million (US$96.7 million) and other costs by RMB434.2 million (US$64.8 million).
Line-haul transportation cost. Our line-haul transportation cost was RMB6.0 billion (US$893.4 million) in the six months ended June 30, 2022, an increase of 13.0% from RMB5.3 billion in the same period of 2021. The line-haul transportation cost per parcel increased 1.3% to RMB0.52. The increase was primarily due to a sharp increase in diesel price and a decrease in parcel volume during the COVID-19 resurgence, partially offset by the continued enhancement in transportation cost efficiency. We enhanced our transportation cost efficiency mainly by having a higher mix of high-capacity trailer trucks in our fleet and improving load rate through better route planning. During the period, we had approximately 1,100 more self-owned high-capacity vehicles in operation compared to the same period last year.
Sorting hub cost. Our sorting hub cost increased by 20.7% to RMB3.8 billion (US$563.1 million) in the six months ended June 30, 2022 from RMB3.1 billion in the same period of 2021. The increase was mainly due to (i) increased labor costs of RMB362.4 million (US$54.1 million) as a result of wage increases and sorting hub headcount increase, and (ii) an increase of RMB204.8 million (US$30.6 million) in depreciation expenses driven by the expansion of sorting hubs and installation of more automated sorting equipment. As of June 30, 2022, 431 sets of automated sorting equipment had been installed and put into operation. The sorting hub cost per parcel increased by 8.3% to RMB0.33.
Cost of accessories sold. Our cost of accessories sold increased by 17.4% to RMB202.8 million (US$30.3 million) in the six months ended June 30, 2022 from RMB172.7 million in the same period of 2021. The increase was mainly driven by growth in parcel volume in the six months ended June 30, 2022.
Other costs. Other costs increased to RMB2.2 billion (US$323.2 million) in the six months ended June 30, 2022 from RMB1.7 billion in the same period of 2021, primarily due to (i) an increase in costs associated with serving enterprise customers of RMB114.1 million (US$17.0 million), and (ii) an increase of RMB106.1 million (US$15.8 million) in tax surcharge as a result of the expiration of tax relief policies during COVID-19 pandemic from the end of March 2021, and (iii) an increase of RMB74.9 million (US$11.2 million) in costs resulting from last-mile business expansion.
Gross Profit
Our gross profit increased by 38.0% to RMB3.8 billion (US$570.7 million) in the six months ended June 30, 2022 from RMB2.8 billion in the same period of 2021. Our gross profit margin increased to 23.1% in the six months ended June 30, 2022 from 20.1% in the same period of 2021, as a result of the parcel volume growth and average selling price, or ASP, increase, partially offset by the cost increase.
Operating Expenses
Our total operating expenses increased by 5.7% to RMB720.5 million (US$107.6 million) in the six months ended June 30, 2022 from RMB681.6 million in the same period of 2021.
7
Selling, general and administrative expenses. Our selling, general and administrative expenses increased by 6.0% to RMB1,075.1 million (US$160.5 million) in the six months ended June 30, 2022 from RMB1,014.2 million in the same period of 2021. The increase was primarily due to an increase of RMB68.8 million (US$10.3 million) in wages and social welfare expenses.
Other operating income, net. We had a net other operating income of RMB354.6 million (US$52.9 million) in the six months ended June 30, 2022, compared to RMB332.6 million of net other operating income in the same period of 2021. The increase is mainly due to an increase in government subsidies and tax rebate of RMB67.5 million (US$10.1 million), partially offset by (i) a decrease of RMB27.5 million (US$4.1 million) in VAT super deduction, and (ii) a decrease of RMB18.0 million (US$2.7 million) in rental income.
Other Income and Expenses
Interest income. Interest income increased to RMB229.6 million (US$34.3 million) in the six months ended June 30, 2022 from RMB177.9 million in the same period of 2021, primarily due to the increased average daily balance of cash and interest-earning bank deposits.
Interest expense. Our interest expense increased to RMB82.7 million (US$12.4 million) in the six months ended June 30, 2022 from RMB49.4 million in the same period of 2021, primarily due to increased short-term bank borrowings during the six months ended June 30, 2022.
Foreign currency exchange gain. Our foreign currency exchange gain changed from a loss of RMB26.1 million in the same period of 2021 to a gain of RMB106.9 million (US$16.0 million) in the six months ended June 30, 2022 mainly due to the appreciation of the onshore U.S. dollar-denominated bank deposits against the Chinese Renminbi in the period.
Income Tax Expense
Our income tax expense was RMB693.4 million (US$103.5 million) in the six months ended June 30, 2022, representing an increase of 71.4% from RMB404.5 million in the same period of 2021, mainly due to the increase of both profit before tax and effective tax rate. Our effective tax rate in the six months ended June 30, 2022 was 20.8%, compared to 18.1% in the same period of 2021, primarily due to the taxable income mix, as taxable income generated by operating entities which are subject to the full 25% tax rate (as compared to entities subject to preferential tax treatment, e.g. entities with High and New Technology Enterprise qualifications which are subject to 15% preferential rate) as a percentage of our total taxable income increased during the same period.
Net Income
Our net income increased to RMB2.6 billion (US$393.3 million) in the six months ended June 30, 2022 from RMB1.8 billion in the same period of 2021 primarily as a result of the foregoing.
Liquidity and Capital Resources
Our principal sources of liquidity have been proceeds from cash flows from operating activities and financing activities. As of December 31, 2019, 2020 and 2021 and June 30, 2022, our cash and cash equivalents, restricted cash and short-term investments were RMB16.4 billion, RMB18.0 billion, RMB12.6 billion (US$1.9 billion) and RMB15.5 billion (US$2.3 billion), respectively. Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments, which are unrestricted as to withdrawal or use or have maturities of three months or less when purchased. Restricted cash represents secured deposits held in designated bank accounts for issuance of bank acceptance notes, settlement of derivatives and commencement of construction. Short-term investments consist primarily of dual currency notes and deposits, investments in fixed deposits with maturities between three months and one year and wealth management products which we have the intent and the ability to hold to maturity within one year. As of June 30, 2022, approximately 95.3% of our cash and cash equivalents, restricted cash and short-term investments were held by subsidiaries and affiliated entities incorporated in China, and approximately 84.0% of our cash and cash equivalents, restricted cash and short-term investments were denominated in Renminbi.
8
We believe that our existing cash and cash equivalents and anticipated cash flow from operations are sufficient to fund our operating activities, capital expenditures and other obligations for at least the next 12 months. However, we may decide to enhance our liquidity position or increase our cash reserve for future expansions and acquisitions through additional financing activities. The issuance and sale of additional equity would result in further dilution to our existing shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that may restrict our operations and ability to make distributions. However, financing may not be available in amounts or on terms acceptable to us, if at all.
Although we consolidate the results of our consolidated affiliated entities, we only have access to the assets or earnings of our consolidated affiliated entities through our contractual arrangements with ZTO Express. See “Item 4. Information on the Company — C. Organizational Structure.” For restrictions and limitations on our liquidity and capital resources as a result of our corporate structure, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Holding Company Structure.” In addition, we would need to accrue and pay withholding taxes currently at the rate of 10% if we were to distribute funds from our subsidiaries and consolidated affiliated entities in China to our offshore subsidiaries. We do not intend to repatriate such funds in the foreseeable future, as we plan to use existing cash balances in China for general corporate purposes and reinvestment to support our business growth.
In utilizing the proceeds we receive from the public offering of Class A ordinary shares in relation to our listing on the Main Board of the Hong Kong Stock Exchange and other cash received from subsequent transactions that we hold offshore, we may make additional capital contributions to our PRC subsidiaries, establish new PRC operating entities, make loans to our PRC operating entities, or acquire offshore entities with business operations in China in offshore transactions. Most of these uses are subject to PRC regulations and approvals.
The following table sets forth the movements of our cash, cash equivalents and restricted cash for the periods presented:
| | | |
Year Ended December 31,
|
| |
For the Six Months Ended June 30,
|
| ||||||||||||||||||||||||||||||||||||
| | | |
2019
|
| |
2020
|
| |
2021
|
| |
2021
|
| |
2022
|
| |||||||||||||||||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
RMB
|
| |
US$
|
| |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||||||||||||||
| | | |
(in thousands)
|
| |||||||||||||||||||||||||||||||||||||||
|
Summary Consolidated
Cash Flow Data: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Net cash provided by operating activities
|
| | | | 6,304,186 | | | | | | 4,950,749 | | | | | | 7,220,217 | | | | | | 1,077,950 | | | | | | 2,409,357 | | | | | | 4,886,147 | | | | | | 729,483 | | |
|
Net cash used in investing activities
|
| | | | (3,664,213) | | | | | | (3,549,341) | | | | | | (8,756,533) | | | | | | (1,307,316) | | | | | | (4,556,458) | | | | | | (6,924,369) | | | | | | (1,033,781) | | |
|
Net cash (used in)/ provided by financing activities
|
| | | | (1,982,306) | | | | | | 8,337,407 | | | | | | (2,903,985) | | | | | | (433,554) | | | | | | 50,462 | | | | | | 2,423,513 | | | | | | 361,821 | | |
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
| | | | (3,207) | | | | | | (656,137) | | | | | | (150,430) | | | | | | (22,458) | | | | | | (100,613) | | | | | | 172,835 | | | | | | 25,803 | | |
|
Net increase/ (decrease)
in cash, cash equivalents and restricted cash |
| | | | 654,460 | | | | | | 9,082,678 | | | | | | (4,590,731) | | | | | | (685,378) | | | | | | (2,197,252) | | | | | | 558,126 | | | | | | 83,326 | | |
|
Cash, cash equivalents
and restricted cash at beginning of year/ period |
| | | | 4,622,954 | | | | | | 5,277,414 | | | | | | 14,360,092 | | | | | | 2,143,905 | | | | | | 14,360,092 | | | | | | 9,769,361 | | | | | | 1,458,527 | | |
|
Cash, cash equivalents
and restricted cash at end of year/period |
| | | | 5,277,414 | | | | | | 14,360,092 | | | | | | 9,769,361 | | | | | | 1,458,527 | | | | | | 12,162,840 | | | | | | 10,327,487 | | | | | | 1,541,853 | | |
9
Operating Activities
Net cash provided by operating activities in the six months ended June 30, 2022 was RMB4.9 billion (US$729.5 million), which was mainly attributable to the following factors: (i) our express delivery services and other revenue streams generated net cash inflow of RMB16.9 billion (US$2.5 billion), while the aggregate cash outflow for transportation cost, sorting hubs operation cost, cost of accessories sold and other costs amounted to RMB7.4 billion (US$1.1 billion); (ii) cash flow in interest income of RMB149.4 million (US$22.3 million); (iii) cash in subsidy of RMB320.6 million (US$47.9 million); (iv) RMB4.5 billion (US$668.3 million) paid for labor related costs, including salaries, social insurances and other benefits; (v) income tax of RMB620.3 million (US$92.6 million); and (vi) RMB221.8 million (US$33.1 million) paid for other administrative costs.
Investing Activities
Net cash used in investing activities in the six months ended June 30, 2022 was RMB6.9 billion (US$1.0 billion), primarily due to (i) purchase of short-term investment products of RMB4.6 billion (US$688.0 million), while maturity of short-term investment products amounted to RMB2.3 billion (US$336.6 million); (ii) purchase of property and equipment of RMB3.2 billion (US$483.4 million), including the purchase of sorting hub facilities, office furnishing and furniture, trucks and sorting equipment; (iii) purchase of land use rights in an amount of RMB93.0 million (US$13.9 million); and (iv) payment for investments in equity investees of RMB85.0 million (US$12.7 million).
Financing Activities
Net cash provided by financing activities in the six months ended June 30, 2022 was RMB2.4 billion (US$361.8 million), which was mainly attributable to the following factors: (i) payment of dividends of RMB1.3 billion (US$195.4 million); and (ii) proceeds from short-term borrowings in an amount of RMB4.6 billion (US$685.9 million), partially offset by the repayment of short-term borrowings of RMB1.0 billion (US$155.3 million).
Material cash requirements
Our material cash requirements as of June 30, 2022 and any subsequent interim period primarily include our capital expenditures, capital commitments, operating lease commitments, investment commitments, short-term debt obligations and dividend payment.
In connection with the purchases of property and equipment, purchases of land use rights and the expansion of our self-owned truck fleet and upgrade of our equipment and facilities, we incurred capital expenditures of an aggregate of approximately RMB5.2 billion, RMB9.2 billion, RMB9.3 billion (US$1.4 billion) and RMB3.3 billion (US$0.5 billion) in 2019, 2020 and 2021 and the six months ended June 30, 2022, respectively. We intend to fund our future capital expenditures with our existing cash balance, proceeds from our public offering of Class A ordinary shares in relation to our listing on the Main Board of the Hong Kong Stock Exchange, proceeds from this offering and other financing alternatives. We will continue to make capital expenditures to support the growth of our business. Our capital commitments primarily relate to commitments on construction of office building, sorting hubs and warehouse facilities. Our capital commitments as of June 30, 2022 amounted to RMB6.0 billion (US$0.9 billion). All of these capital commitments will be fulfilled based on the construction progress.
Our operating lease commitments consist of the commitments under the lease agreements for our office space, sorting hubs and warehouse facilities. We lease office space, sorting hubs and warehouse facilities under non-cancellable operating lease agreements that expire at various dates through December 2034. Our operating lease commitments as of June 30, 2022 amounted to RMB815.3 million (US$121.7 million). All of these operating lease commitments were recognized as operating lease liabilities amounting to RMB737.2 million (US$110.1 million), certain of which were secured by the rental deposits and all of which were unguaranteed.
Our investment commitments primarily consist of our commitment to make capital contributions to certain equity investees. We were obligated to pay RMB124.4 million (US$18.6 million) for certain investment in equity investees as of June 30, 2022 with payment due within three years.
10
As of June 30, 2022, we had outstanding principal amount of short-term bank borrowings of RMB7.1 billion (US$1.1 billion), among which RMB4.8 billion (US$718.1 million) were unsecured and unguaranteed. In the six months ended June 30, 2022, we entered into bank loan contracts and discounted notes arrangements with several banks with an aggregate amount of RMB4.6 billion (US$685.9 million). The weighted average interest rate of borrowings drawn was 2.46% in the six months ended June 30, 2022. There are some financial covenants including liability/asset ratio being less than 65% and current ratio being not less than 0.8 related to one of the loan contracts and we were in compliance of those financial covenants as of June 30, 2022.
On March 15, 2022, our board of directors approved a special dividend of US$0.25 per ADS or share for 2021, and was paid to shareholders of record as of the close of business on April 8, 2022 with a total payment amount of US$202.4 million.
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred. We have not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets. We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of June 30, 2022.
Holding company structure
ZTO Express (Cayman) Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our wholly owned subsidiaries and consolidated affiliated entities in China. As a result, our ability to pay dividends may depend upon dividends paid by our wholly owned subsidiaries in the future. If our wholly owned subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly owned subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our wholly owned PRC subsidiaries and consolidated affiliated entities is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. We currently plan to reinvest all earnings from our PRC subsidiaries to their business development and do not plan to request dividend distributions from them.
11
Exhibit 99.2
ZTO EXPRESS (CAYMAN) INC.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| | | |
Page
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| | | | | F-2 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-7 | | | |
| | | | | F-8 | | | |
F-1
ZTO EXPRESS (CAYMAN) INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2021 AND JUNE 30, 2022
(Amounts in thousands, except for share and per share data)
AS OF DECEMBER 31, 2021 AND JUNE 30, 2022
(Amounts in thousands, except for share and per share data)
| | | |
Notes
|
| |
As of
December 31, 2021 |
| |
As of June 30, 2022
|
| ||||||||||||
| | | | | | |
RMB
|
| |
RMB
|
| |
US$
(Note 2) |
| |||||||||
| Assets | | | | | | | | | | | | | | | | | | | | | | |
|
Current assets
|
| | | | | | | | | | | | | | | | | | | | | |
|
Cash and cash equivalents
|
| | | | | | | 9,721,225 | | | | | | 9,927,765 | | | | | | 1,482,176 | | |
|
Restricted cash
|
| | | | | | | 27,736 | | | | | | 384,912 | | | | | | 57,466 | | |
|
Accounts receivable, net
|
| | | | | | | 933,444 | | | | | | 852,754 | | | | | | 127,313 | | |
|
Financing receivables, net
|
| | | | | | | 1,111,461 | | | | | | 939,689 | | | | | | 140,292 | | |
|
Short-term investment
|
| | | | | | | 2,845,319 | | | | | | 5,211,019 | | | | | | 777,985 | | |
|
Inventories
|
| | | | | | | 82,961 | | | | | | 28,746 | | | | | | 4,292 | | |
|
Advances to suppliers
|
| | | | | | | 667,855 | | | | | | 960,354 | | | | | | 143,377 | | |
|
Prepayments and other current assets
|
| | | | | | | 3,142,368 | | | | | | 2,738,674 | | | | | | 408,873 | | |
|
Amounts due from related parties
|
| |
8
|
| | | | 133,990 | | | | | | 133,362 | | | | | | 19,910 | | |
|
Total current assets
|
| | | | | | | 18,666,359 | | | | | | 21,177,275 | | | | | | 3,161,684 | | |
|
Investments in equity investees
|
| | | | | | | 3,730,448 | | | | | | 3,893,799 | | | | | | 581,329 | | |
|
Property and equipment, net
|
| |
3
|
| | | | 24,929,897 | | | | | | 26,848,485 | | | | | | 4,008,373 | | |
|
Land use rights, net
|
| | | | | | | 5,335,549 | | | | | | 5,437,844 | | | | | | 811,849 | | |
|
Intangible assets, net
|
| | | | | | | 35,634 | | | | | | 32,536 | | | | | | 4,857 | | |
|
Operating lease right-of-use assets
|
| | | | | | | 897,238 | | | | | | 810,107 | | | | | | 120,946 | | |
|
Goodwill
|
| | | | | | | 4,241,541 | | | | | | 4,241,541 | | | | | | 633,245 | | |
|
Deferred tax assets
|
| |
5
|
| | | | 934,848 | | | | | | 900,669 | | | | | | 134,466 | | |
|
Long-term investment
|
| | | | | | | 1,214,500 | | | | | | 2,360,500 | | | | | | 352,413 | | |
|
Long-term financing receivables, net
|
| | | | | | | 1,412,956 | | | | | | 1,514,933 | | | | | | 226,174 | | |
|
Other non-current assets
|
| | | | | | | 762,273 | | | | | | 656,721 | | | | | | 98,046 | | |
|
Amounts due from related parties-non current
|
| |
8
|
| | | | 611,100 | | | | | | 631,620 | | | | | | 94,298 | | |
| TOTAL ASSETS | | | | | | | | 62,772,343 | | | | | | 68,506,030 | | | | | | 10,227,680 | | |
| LIABILITIES AND EQUITY | | | | | | | | | | | | | | | | | | | | | | |
|
Current liabilities (including amounts of the consolidated VIE without recourse to ZTO Express (Cayman) Inc. See Note 2(b))
|
| | | | | | | | | | | | | | | | | | | | | |
|
Short-term bank borrowings
|
| |
4
|
| | | | 3,458,717 | | | | | | 7,059,620 | | | | | | 1,053,974 | | |
|
Accounts payable
|
| | | | | | | 1,957,529 | | | | | | 1,910,929 | | | | | | 285,294 | | |
|
Notes payable
|
| | | | | | | 174,920 | | | | | | 245,000 | | | | | | 36,578 | | |
|
Advances from customers
|
| | | | | | | 1,226,549 | | | | | | 1,406,445 | | | | | | 209,977 | | |
|
Income tax payable
|
| | | | | | | 86,789 | | | | | | 145,728 | | | | | | 21,757 | | |
|
Amounts due to related parties
|
| |
8
|
| | | | 22,786 | | | | | | 43,890 | | | | | | 6,553 | | |
|
Operating lease liabilities, current
|
| | | | | | | 250,995 | | | | | | 218,634 | | | | | | 32,641 | | |
|
Acquisition consideration payable
|
| | | | | | | 22,942 | | | | | | — | | | | | | — | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-2
| | | |
Notes
|
| |
As of
December 31, 2021 |
| |
As of June 30, 2022
|
| ||||||||||||
| | | | | | |
RMB
|
| |
RMB
|
| |
US$
(Note 2) |
| |||||||||
|
Dividends payable
|
| | | | | | | 708 | | | | | | 15,712 | | | | | | 2,346 | | |
|
Other current liabilities
|
| | | | | | | 5,794,380 | | | | | | 5,931,378 | | | | | | 885,528 | | |
|
Total current liabilities
|
| | | | | | | 12,996,315 | | | | | | 16,977,336 | | | | | | 2,534,648 | | |
|
Deferred tax liabilities
|
| |
5
|
| | | | 292,356 | | | | | | 272,399 | | | | | | 40,668 | | |
|
Non-current operating lease liabilities
|
| | | | | | | 556,091 | | | | | | 518,552 | | | | | | 77,418 | | |
| TOTAL LIABILITIES | | | | | | | | 13,844,762 | | | | | | 17,768,287 | | | | | | 2,652,734 | | |
| Commitments and contingencies (Note 9) | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | | | | | | | | | | | | | | | | | | | | |
|
Ordinary shares (US$0.0001 par value;
10,000,000,000 shares authorized; 826,943,309 shares issued and 808,448,289 shares outstanding as of December 31, 2021; 826,943,309 shares issued and 809,733,116 shares outstanding as of June 30, 2022) |
| | | | | | | 535 | | | | | | 535 | | | | | | 80 | | |
|
Additional paid-in capital
|
| | | | | | | 28,229,026 | | | | | | 27,090,866 | | | | | | 4,044,560 | | |
|
Treasury shares, at cost (11,683,474 and 11,185,518
shares as of December 31, 2021 and June 30, 2022, respectively) |
| | | | | | | (2,067,009) | | | | | | (1,977,983) | | | | | | (295,305) | | |
|
Retained earnings
|
| | | | | | | 22,716,799 | | | | | | 25,361,886 | | | | | | 3,786,430 | | |
|
Accumulated other comprehensive loss
|
| | | | | | | (242,104) | | | | | | (156,961) | | | | | | (23,434) | | |
| ZTO Express (Cayman) Inc. shareholders’ equity | | | | | | | | 48,637,247 | | | | | | 50,318,343 | | | | | | 7,512,331 | | |
| Non-controlling interests | | | | | | | | 290,334 | | | | | | 419,400 | | | | | | 62,615 | | |
| Total Equity | | | | | | | | 48,927,581 | | | | | | 50,737,743 | | | | | | 7,574,946 | | |
| TOTAL LIABILITIES AND EQUITY | | | | | | | | 62,772,343 | | | | | | 68,506,030 | | | | | | 10,227,680 | | |
| | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
ZTO EXPRESS (CAYMAN) INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
(Amounts in thousands, except for share and per share data)
| | | | | | |
Six months ended June 30,
|
| |||||||||||||||
| | | |
Notes
|
| |
2021
|
| |
2022
|
| ||||||||||||
| | | | | | |
RMB
|
| |
RMB
|
| |
US$
(Note 2) |
| |||||||||
|
Revenues (including related party revenue of RMB28,357 and
RMB561,809 for the six months ended June 30, 2021 and 2022, respectively) |
| | | | | | | 13,797,597 | | | | | | 16,560,727 | | | | | | 2,472,451 | | |
|
Cost of revenues (including related party cost of revenues of RMB199,982 and RMB260,663 for the six months ended June 30, 2021 and 2022, respectively)
|
| | | | | | | (11,027,422) | | | | | | (12,738,426) | | | | | | (1,901,797) | | |
| Gross profit | | | | | | | | 2,770,175 | | | | | | 3,822,301 | | | | | | 570,654 | | |
| Operating (expenses)/income | | | | | | | | | | | | | | | | | | | | | | |
|
Selling, general and administrative
|
| | | | | | | (1,014,230) | | | | | | (1,075,106) | | | | | | (160,509) | | |
|
Other operating income, net
|
| | | | | | | 332,590 | | | | | | 354,612 | | | | | | 52,942 | | |
|
Total operating expenses
|
| | | | | | | (681,640) | | | | | | (720,494) | | | | | | (107,567) | | |
| Income from operations | | | | | | | | 2,088,535 | | | | | | 3,101,807 | | | | | | 463,087 | | |
| Other income/(expenses) | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | 177,882 | | | | | | 229,588 | | | | | | 34,277 | | |
| Interest expense | | | | | | | | (49,380) | | | | | | (82,737) | | | | | | (12,352) | | |
|
Gain/(loss) from fair value changes of financial
instruments |
| | | | | | | 48,130 | | | | | | (14,456) | | | | | | (2,158) | | |
| Foreign currency exchange (loss)/gain | | | | | | | | (26,084) | | | | | | 106,940 | | | | | | 15,966 | | |
|
Income before income tax and share of loss in equity method investments
|
| | | | | | | 2,239,083 | | | | | | 3,341,142 | | | | | | 498,820 | | |
|
Income tax expense
|
| |
5
|
| | | | (404,497) | | | | | | (693,424) | | | | | | (103,525) | | |
|
Share of loss in equity method investments
|
| | | | | | | (28,835) | | | | | | (13,492) | | | | | | (2,014) | | |
| Net income | | | | | | | | 1,805,751 | | | | | | 2,634,226 | | | | | | 393,281 | | |
|
Net loss attributable to non-controlling interests
|
| | | | | | | 20,046 | | | | | | 77,225 | | | | | | 11,529 | | |
| Net income attributable to ZTO Express (Cayman) Inc. | | | | | | | | 1,825,797 | | | | | | 2,711,451 | | | | | | 404,810 | | |
| Net income attributable to ordinary shareholders | | | | | | | | 1,825,797 | | | | | | 2,711,451 | | | | | | 404,810 | | |
|
Net earnings per share attributable to ordinary
shareholders |
| |
7
|
| | | | | | | | | | | | | | | | | | |
|
Basic
|
| | | | | | | 2.21 | | | | | | 3.35 | | | | | | 0.5 | | |
|
Diluted
|
| | | | | | | 2.21 | | | | | | 3.35 | | | | | | 0.5 | | |
|
Weighted average shares used in calculating net earnings per ordinary share
|
| | | | | | | | | | | | | | | | | | | | | |
|
Basic
|
| | | | | | | 827,755,090 | | | | | | 809,214,926 | | | | | | 809,214,926 | | |
|
Diluted
|
| | | | | | | 827,755,090 | | | | | | 809,214,926 | | | | | | 809,214,926 | | |
| | |
|
| |
|
| |
|
| |
|
| ||||||||||
| Net income | | | | | | | | 1,805,751 | | | | | | 2,634,226 | | | | | | 393,281 | | |
| Other comprehensive (loss)/income, net of tax of nil | | | | | | | | | | | | | | | | | | | | | | |
|
Foreign currency translation adjustment
|
| | | | | | | (84,260) | | | | | | 85,143 | | | | | | 12,712 | | |
| Comprehensive income | | | | | | | | 1,721,491 | | | | | | 2,719,369 | | | | | | 405,993 | | |
|
Comprehensive loss attributable to non-controlling
interests |
| | | | | | | 20,046 | | | | | | 77,225 | | | | | | 11,529 | | |
|
Comprehensive income attributable to ZTO
Express(Cayman) Inc. |
| | | | | | | 1,741,537 | | | | | | 2,796,594 | | | | | | 417,522 | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
ZTO EXPRESS (CAYMAN) INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
| | | |
ZTO EXPRESS (CAYMAN) INC. Shareholders’ Equity
|
| | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
| | | |
Ordinary shares
|
| |
Additional
paid-in capital |
| |
Treasury
shares, at cost |
| |
Retained
earnings |
| |
Accumulated
other comprehensive loss |
| |
Total
|
| |
Non-controlling
interests |
| |
Total
Equity |
| ||||||||||||||||||||||||||||||
| | | |
Number of
outstanding shares |
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |||||||||||||||||||||||||||
| Balance at January 1, 2021 | | | | | 828,869,972 | | | | | | 553 | | | | | | 30,613,948 | | | | | | (2,578,870) | | | | | | 21,038,753 | | | | | | (95,571) | | | | | | 48,978,813 | | | | | | 120,885 | | | | | | 49,099,698 | | |
| Net income/(loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,825,797 | | | | | | — | | | | | | 1,825,797 | | | | | | (20,046) | | | | | | 1,805,751 | | |
|
Foreign currency translation adjustments
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (84,260) | | | | | | (84,260) | | | | | | — | | | | | | (84,260) | | |
|
Acquisition of non-controlling
interests of subsidiaries |
| | | | — | | | | | | — | | | | | | (16,301) | | | | | | — | | | | | | — | | | | | | — | | | | | | (16,301) | | | | | | (47,028) | | | | | | (63,329) | | |
|
Share-based compensation and
ordinary shares issued for share- based compensation |
| | | | 1,161,362 | | | | | | — | | | | | | 229,052 | | | | | | 49,496 | | | | | | (30,521) | | | | | | — | | | | | | 248,027 | | | | | | — | | | | | | 248,027 | | |
| Repurchase of ordinary shares | | | | | (3,028,386) | | | | | | — | | | | | | — | | | | | | (549,985) | | | | | | — | | | | | | — | | | | | | (549,985) | | | | | | — | | | | | | (549,985) | | |
|
Non-controlling interest recognized
from partial disposal |
| | | | — | | | | | | — | | | | | | 1,850 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,850 | | | | | | 11,083 | | | | | | 12,933 | | |
|
Capital contribution from non-controlling interest holders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 44,541 | | | | | | 44,541 | | |
| Distribution of dividends | | | | | — | | | | | | — | | | | | | (1,345,157) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,345,157) | | | | | | — | | | | | | (1,345,157) | | |
| Cancellation of ordinary shares | | | | | — | | | | | | (7) | | | | | | (387,311) | | | | | | 1,060,855 | | | | | | (673,537) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Balance at June 30, 2021 | | | | | 827,002,948 | | | | | | 546 | | | | | | 29,096,081 | | | | | | (2,018,504) | | | | | | 22,160,492 | | | | | | (179,831) | | | | | | 49,058,784 | | | | | | 109,435 | | | | | | 49,168,219 | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
ZTO EXPRESS (CAYMAN) INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022 (CONTINUED)
(Amounts in thousands, except for share and per share data)
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022 (CONTINUED)
(Amounts in thousands, except for share and per share data)
| | | |
ZTO EXPRESS (CAYMAN) INC. Shareholders’ Equity
|
| | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
| | | |
Ordinary shares
|
| |
Additional
paid-in capital |
| |
Treasury
shares, at cost |
| |
Retained
earnings |
| |
Accumulated
other comprehensive (loss)/income |
| |
Total
|
| |
Non-controlling
interests |
| |
Total
Equity |
| ||||||||||||||||||||||||||||||
| | | |
Number of
outstanding shares |
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |
RMB
|
| |||||||||||||||||||||||||||
| Balance at January 1, 2022 | | | | | 808,448,289 | | | | | | 535 | | | | | | 28,229,026 | | | | | | (2,067,009) | | | | | | 22,716,799 | | | | | | (242,104) | | | | | | 48,637,247 | | | | | | 290,334 | | | | | | 48,927,581 | | |
| Net income/(loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,711,451 | | | | | | — | | | | | | 2,711,451 | | | | | | (77,225) | | | | | | 2,634,226 | | |
|
Foreign currency translation adjustments
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 85,143 | | | | | | 85,143 | | | | | | — | | | | | | 85,143 | | |
|
Acquisition of non-controlling interests of subsidiaries
|
| | | | — | | | | | | — | | | | | | (5,060) | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,060) | | | | | | (34,069) | | | | | | (39,129) | | |
|
Share-based compensation and ordinary shares issued for share based compensation
|
| | | | 1,284,827 | | | | | | — | | | | | | 156,318 | | | | | | 89,026 | | | | | | (66,364) | | | | | | — | | | | | | 178,980 | | | | | | — | | | | | | 178,980 | | |
|
Non-controlling interest recognized
from partial disposal |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 49,159 | | | | | | 49,159 | | |
|
Capital contribution from non-controlling interest holders
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 191,201 | | | | | | 191,201 | | |
| Distribution of dividends | | | | | — | | | | | | — | | | | | | (1,289,418) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,289,418) | | | | | | — | | | | | | (1,289,418) | | |
| Balance at June 30, 2022 | | | | | 809,733,116 | | | | | | 535 | | | | | | 27,090,866 | | | | | | (1,977,983) | | | | | | 25,361,886 | | | | | | (156,961) | | | | | | 50,318,343 | | | | | | 419,400 | | | | | | 50,737,743 | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
ZTO EXPRESS (CAYMAN) INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
| | | |
Six months ended June 30,
|
| |||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
(Note 2) |
| |||||||||
| Cash flows from operating activities | | | | | | | | | | | | | | | | | | | |
|
Net cash provided by operating activities
|
| | | | 2,409,357 | | | | | | 4,886,147 | | | | | | 729,483 | | |
| Cash flows from investing activities | | | | | | | | | | | | | | | | | | | |
|
Purchases of property and equipment
|
| | | | (3,960,992) | | | | | | (3,243,620) | | | | | | (484,260) | | |
|
Purchases of land use rights
|
| | | | (544,074) | | | | | | (93,018) | | | | | | (13,887) | | |
|
Investments in equity investees
|
| | | | (185,187) | | | | | | (85,000) | | | | | | (12,690) | | |
|
Purchases of short-term investments
|
| | | | (10,477,021) | | | | | | (4,608,177) | | | | | | (687,983) | | |
|
Maturity of short-term investments
|
| | | | 11,050,276 | | | | | | 2,254,609 | | | | | | 336,604 | | |
|
Purchases of long-term investment
|
| | | | (305,000) | | | | | | (1,430,000) | | | | | | (213,493) | | |
|
Maturity of long-term investment
|
| | | | — | | | | | | 284,000 | | | | | | 42,400 | | |
|
Loan to employees
|
| | | | (237,315) | | | | | | (58,893) | | | | | | (8,792) | | |
|
Others
|
| | | | 102,855 | | | | | | 55,730 | | | | | | 8,320 | | |
|
Net cash used in investing activities
|
| | | | (4,556,458) | | | | | | (6,924,369) | | | | | | (1,033,781) | | |
| Cash flows from financing activities | | | | | | | | | | | | | | | | | | | |
|
Proceeds from short-term borrowing
|
| | | | 3,360,405 | | | | | | 4,594,520 | | | | | | 685,944 | | |
|
Repayment of short-term borrowing
|
| | | | (1,401,862) | | | | | | (1,040,457) | | | | | | (155,336) | | |
|
Repurchase of ordinary shares
|
| | | | (549,985) | | | | | | — | | | | | | — | | |
|
Proceeds from non-controlling interest recognized from partial disposal
|
| | | | 12,933 | | | | | | 26,217 | | | | | | 3,914 | | |
|
Proceeds from capital contribution from non-controlling interest shareholder
|
| | | | 44,541 | | | | | | 191,201 | | | | | | 28,545 | | |
|
Payment of dividends
|
| | | | (1,352,241) | | | | | | (1,308,611) | | | | | | (195,370) | | |
|
Others
|
| | | | (63,329) | | | | | | (39,357) | | | | | | (5,876) | | |
| Net cash provided by financing activities | | | | | 50,462 | | | | | | 2,423,513 | | | | | | 361,821 | | |
|
Effect of exchange rate changes on cash, cash equivalents and restricted
cash |
| | | | (100,613) | | | | | | 172,835 | | | | | | 25,803 | | |
|
Net change in cash, cash equivalents and restricted cash
|
| | | | (2,197,252) | | | | | | 558,126 | | | | | | 83,326 | | |
|
Cash, cash equivalents and restricted cash at beginning of period
|
| | | | 14,360,092 | | | | | | 9,769,361 | | | | | | 1,458,527 | | |
|
Cash, cash equivalents and restricted cash at end of period
|
| | | | 12,162,840 | | | | | | 10,327,487 | | | | | | 1,541,853 | | |
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.
| | | |
As of June 30,
|
| |||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
(Note 2) |
| |||||||||
| Cash and cash equivalents | | | | | 12,098,453 | | | | | | 9,927,765 | | | | | | 1,482,176 | | |
| Restricted cash | | | | | 51,716 | | | | | | 384,912 | | | | | | 57,466 | | |
| Restricted cash, non-current(1) | | | | | 12,671 | | | | | | 14,810 | | | | | | 2,211 | | |
|
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows
|
| | | | 12,162,840 | | | | | | 10,327,487 | | | | | | 1,541,853 | | |
Note: (1) The non-current restricted cash is included in other non-current assets on the unaudited interim condensed consolidated balance sheets.
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-7
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
1. Organization and Principal Activities
ZTO Express (Cayman) Inc. (“ZTO”) was incorporated under the laws of Cayman Islands on April 8, 2015. ZTO, its subsidiaries and its variable interest entity and subsidiaries of variable interest entity (“VIE”) (collectively also referred to as the “Company”) are principally engaged in express delivery services in the People’s Republic of China (the “PRC”) through a nationwide network partner model.
2. Summary of Significant Accounting Policies
(a) Basis of presentation
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The accompanying unaudited interim condensed consolidated financial statements include the financial information of the Company. All intercompany balances and transactions have been eliminated in consolidation. The unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission and U.S. generally accepted accounting standards for interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements, accounting policies and notes thereto included in the Company’s audited consolidated financial statements for the year ended December 31, 2021. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results for the full years.
In the opinion of the management, the accompanying unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited interim condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2021. The financial information as of December 31, 2021 presented in the unaudited interim condensed consolidated financial statements is derived from the audited consolidated financial statements for the year ended December 31, 2021.
(b) Principles of consolidation
The unaudited interim condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and VIE. All intercompany transactions and balances have been eliminated on consolidation.
The Company evaluates the need to consolidate its VIE of which the Company is the primary beneficiary. In determining whether the Company is the primary beneficiary, the Company considers if the Company (1) has power to direct the activities that most significantly affects the economic performance of the VIE, and (2) The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. If deemed the primary beneficiary, the Company consolidates the VIE.
F-8
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
2. Summary of Significant Accounting Policies (Continued)
(b) Principles of consolidation (Continued)
Consolidation of Variable Interest Entity
The amounts and balances of ZTO Express and its subsidiaries (the “VIE”) after the elimination of intercompany balances and transactions within the VIE are presented in the following table:
| | | |
As of
December 31, 2021 |
| |
As of June 30, 2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Assets | | | | | | | | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | | | | 930,942 | | | | | | 1,070,419 | | | | | | 159,809 | | |
| Accounts receivable, net | | | | | 671,277 | | | | | | 561,073 | | | | | | 83,766 | | |
| Financing receivables, net | | | | | 977,920 | | | | | | 803,412 | | | | | | 119,946 | | |
| Short-term investment | | | | | 320,000 | | | | | | 670,000 | | | | | | 100,028 | | |
| Inventories | | | | | 30,214 | | | | | | 21,989 | | | | | | 3,283 | | |
| Advances to suppliers | | | | | 55,013 | | | | | | 55,984 | | | | | | 8,358 | | |
| Prepayments and other current assets | | | | | 1,924,196 | | | | | | 1,393,637 | | | | | | 208,065 | | |
| Amounts due from related parties(1) | | | | | 440,190 | | | | | | 5,868,997 | | | | | | 876,218 | | |
| Total current assets | | | | | 5,349,752 | | | | | | 10,445,511 | | | | | | 1,559,473 | | |
| Investments in equity investees | | | | | 300,380 | | | | | | 347,454 | | | | | | 51,874 | | |
| Property and equipment, net | | | | | 5,866,534 | | | | | | 5,983,268 | | | | | | 893,278 | | |
| Land use rights, net | | | | | 1,194,308 | | | | | | 1,179,776 | | | | | | 176,136 | | |
| Operating lease right-of-use assets | | | | | 870,831 | | | | | | 754,941 | | | | | | 112,710 | | |
| Goodwill | | | | | 4,157,111 | | | | | | 4,157,111 | | | | | | 620,640 | | |
| Deferred tax assets | | | | | 650,709 | | | | | | 733,337 | | | | | | 109,484 | | |
| Long-term investment | | | | | — | | | | | | 600,000 | | | | | | 89,578 | | |
| Long-term financing receivables, net | | | | | 1,117,003 | | | | | | 1,269,667 | | | | | | 189,556 | | |
| Other non-current assets | | | | | 384,630 | | | | | | 430,816 | | | | | | 64,319 | | |
| Total assets | | | | | 19,891,258 | | | | | | 25,901,881 | | | | | | 3,867,048 | | |
| Liabilities | | | | | | | | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | | | | | | | | |
| Short-term bank borrowings | | | | | 2,821,457 | | | | | | 5,720,000 | | | | | | 853,974 | | |
| Accounts payable | | | | | 1,556,649 | | | | | | 1,421,204 | | | | | | 212,180 | | |
| Notes payable | | | | | 129,920 | | | | | | — | | | | | | — | | |
| Advances from customers | | | | | 1,213,797 | | | | | | 1,394,920 | | | | | | 208,256 | | |
| Income tax payable | | | | | — | | | | | | 12,330 | | | | | | 1,841 | | |
| Amounts due to related parties | | | | | 14,434 | | | | | | 41,625 | | | | | | 6,214 | | |
| Operating lease liabilities, current | | | | | 238,973 | | | | | | 204,664 | | | | | | 30,556 | | |
| Other current liabilities | | | | | 2,555,280 | | | | | | 4,544,369 | | | | | | 678,456 | | |
| Total current liabilities | | | | | 8,530,510 | | | | | | 13,339,112 | | | | | | 1,991,477 | | |
| Non-current operating lease liabilities | | | | | 533,740 | | | | | | 485,447 | | | | | | 72,475 | | |
| Deferred tax liabilities | | | | | 112,543 | | | | | | 104,860 | | | | | | 15,655 | | |
| Total liabilities | | | | | 9,176,793 | | | | | | 13,929,419 | | | | | | 2,079,607 | | |
(1)
Included amounts due from other consolidated subsidiaries of RMB402,488 and RMB5,840,083 as of December 31, 2021 and June 30, 2022, respectively.
F-9
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
2. Summary of Significant Accounting Policies (Continued)
(b) Principles of consolidation (Continued)
| | | |
Six months ended June 30,
|
| |||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Total revenue | | | | | 13,365,661 | | | | | | 16,234,689 | | | | | | 2,423,775 | | |
| Net income(1) | | | | | 381,265 | | | | | | 1,296,627 | | | | | | 193,581 | | |
| Net cash used in operating activities(2) | | | | | (1,382,221) | | | | | | (2,290,008) | | | | | | (341,889) | | |
| Net cash used in investing activities | | | | | (533,004) | | | | | | (469,058) | | | | | | (70,029) | | |
| Net cash provided by financing activities | | | | | 1,958,543 | | | | | | 2,898,543 | | | | | | 432,741 | | |
| Net increase in cash and cash equivalents | | | | | 43,318 | | | | | | 139,477 | | | | | | 20,823 | | |
|
Cash and cash equivalents and restricted cash at beginning of period
|
| | | | 776,725 | | | | | | 930,942 | | | | | | 138,986 | | |
| Cash and cash equivalents and restricted cash at end of period | | | | | 820,043 | | | | | | 1,070,419 | | | | | | 159,809 | | |
(1)
Included inter-company transportation fees, service fees and rental fees charged by other consolidated subsidiaries of RMB7,114,246 and RMB7,660,720 for the for the six months ended June 30, 2021 and 2022, respectively.
(2)
Included inter-company operating cash outflow of RMB9,386,251 and RMB13,098,315 for the six months ended June 30, 2021 and 2022, respectively.
The WFOE is entitled to receive substantially all of the net income and transfer a majority of the economic benefits in the form of service fees from the VIEs. These inter-company transactions and balances were eliminated in the unaudited interim condensed consolidated financial statements.
After all intercompany transactions eliminations, the VIE contributed 96.9% and 98.0% of the Company’s consolidated revenues for the six months ended June 30, 2021 and 2022, respectively. As of December 31, 2021 and June 30, 2022, the VIE accounted for an aggregate of 31.0% and 29.3%, respectively, of the consolidated assets, and 66.3% and 78.4%, respectively, of the consolidated liabilities.
There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company to provide financial support to the VIE. However, if the VIE was ever to need financial support, the Company may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIE or entrustment loans to the VIE.
The Company believes that there are no assets held in the consolidated VIE that can be used only to settle obligations of the VIE, except for registered capital and the PRC statutory reserves. As the consolidated VIE is incorporated as a limited liability company under the PRC Company Law, creditors of the VIE do not have recourse to the general credit of the Company for any of the liabilities of the consolidated VIE.
Relevant PRC laws and regulations restrict the VIE from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends.
(c) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may
F-10
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
2. Summary of Significant Accounting Policies (Continued)
(c) Use of estimates (Continued)
differ from these estimates. The Company bases its estimates on historical experience and other relevant factors.
(d) Convenience translation
The Company’s business is primarily conducted in PRC and almost all of the Company’s revenues are denominated in RMB. However, periodic reports made to shareholders will include current period amounts translated into US dollars using the then current exchange rates, solely for the convenience of the readers outside PRC. Translations of balances in the unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of comprehensive income and unaudited interim condensed consolidated statements of cash flows from RMB into US dollars as of and for the six months ended June 30, 2022 were calculated at the rate of US$1.00 = RMB6.6981 representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on June 30, 2022. No representation was made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2022, or at any other rate.
(e) Revenue recognition
Disaggregation of revenue
| | | |
Six months ended June 30,
|
| |||||||||||||||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||||||||||||||
| | | |
RMB
|
| |
%
|
| |
RMB
|
| |
US$
|
| |
%
|
| |||||||||||||||
| Express delivery services | | | | | 12,325,745 | | | | | | 89.3 | | | | | | 15,151,869 | | | | | | 2,262,114 | | | | | | 91.5 | | |
| Freight forwarding services | | | | | 806,540 | | | | | | 5.8 | | | | | | 661,044 | | | | | | 98,691 | | | | | | 4.0 | | |
| Sale of accessories | | | | | 574,311 | | | | | | 4.2 | | | | | | 631,754 | | | | | | 94,318 | | | | | | 3.8 | | |
| Others | | | | | 91,001 | | | | | | 0.7 | | | | | | 116,060 | | | | | | 17,328 | | | | | | 0.7 | | |
| Total revenues | | | | | 13,797,597 | | | | | | 100.0 | | | | | | 16,560,727 | | | | | | 2,472,451 | | | | | | 100.0 | | |
Contract assets and liabilities
Contract assets include billed and unbilled receivables resulting from in-transit parcels, which were recorded in accounts receivable and not material as of December 31, 2021 and June 30, 2022.
Contract liabilities consist of advance payments as well as deferred revenue, which were recorded in advances from customers and not material as of December 31, 2021 and June 30, 2022.
(f) Income taxes
As part of the process of preparing financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The Company accounts for income taxes using the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Net operating losses are carried forward by applying enacted statutory tax rates applicable to future years when the reported amounts of the asset or liability are expected to be recovered or settled, respectively. Deferred tax assets are
F-11
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
2. Summary of Significant Accounting Policies (Continued)
(f) Income taxes (Continued)
reduced by a valuation allowance when, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position.
According to ASC 740-270 Interim Reporting, an estimated annual effective tax rate (AETR) on full year estimated ordinary income should first be determined by the Company and the estimated AETR is then applied to year-to-date ordinary income to compute the interim tax provision on ordinary income.
(g) Earnings per share
Basic earnings per share are computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the periods.
Diluted earnings per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. Ordinary share equivalents are excluded from the computation of diluted earnings per ordinary share if their effects would be anti-dilutive.
On October 27, 2016, the Company’s shareholders voted in favor of a proposal to adopt a dual-class share structure, pursuant to which the Company’s authorized share capital were reclassified and redesigned into Class A ordinary shares and Class B ordinary shares. Both Class A ordinary shares and Class B ordinary shares are entitled to the same dividend right, as such, this dual class share structure has no impacts to the earnings per share calculation. Basic earnings per share and diluted earnings per share are the same for each Class A ordinary shares and Class B ordinary shares.
3. Property and Equipment, Net
Property and equipment, net consist of the following:
| | | |
As of
December 31, 2021 |
| |
As of June 30, 2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Buildings | | | | | 11,728,192 | | | | | | 13,233,985 | | | | | | 1,975,782 | | |
| Machinery and equipment | | | | | 6,378,741 | | | | | | 6,801,804 | | | | | | 1,015,483 | | |
| Leasehold improvements | | | | | 769,215 | | | | | | 871,189 | | | | | | 130,065 | | |
| Vehicles | | | | | 6,184,635 | | | | | | 6,161,493 | | | | | | 919,887 | | |
| Furniture, office and electric equipment | | | | | 765,551 | | | | | | 777,509 | | | | | | 116,079 | | |
| Construction in progress | | | | | 5,571,941 | | | | | | 6,661,574 | | | | | | 994,546 | | |
| Total | | | | | 31,398,275 | | | | | | 34,507,554 | | | | | | 5,151,842 | | |
| Accumulated depreciation | | | | | (6,468,378) | | | | | | (7,659,069) | | | | | | (1,143,469) | | |
| Property and equipment, net | | | | | 24,929,897 | | | | | | 26,848,485 | | | | | | 4,008,373 | | |
Depreciation expenses were RMB1,026,582 and RMB1,242,220 for the six months ended June 30, 2021 and 2022, respectively.
F-12
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
3. Property and Equipment, Net (Continued)
As at December 31, 2021 and June 30, 2022, the title certificates for certain buildings of the Company with an aggregate net book value of approximately RMB6,555,658 and RMB4,956,086, respectively, had not been obtained.
4. Short-term Bank Borrowings
Short-term bank borrowings consist of the following:
| | | |
As of
December 31, 2021 |
| |
As of June 30, 2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| The PRC domestic commercial banks | | | | | 2,821,457 | | | | | | 5,720,000 | | | | | | 853,974 | | |
| Oversea commercial banks | | | | | 637,260 | | | | | | 1,339,620 | | | | | | 200,000 | | |
| Total | | | | | 3,458,717 | | | | | | 7,059,620 | | | | | | 1,053,974 | | |
The weighted average interest rates of the short-term bank borrowings were 2.97% and 2.46% for the six months ended June 30, 2021 and 2022, respectively. Certain borrowings are subject to financial covenants such as liability/asset ratio less than 65% and current ratio not less than 0.8. As of June 30, 2022, the Company was in compliance with the financial covenants. The borrowings are repayable within one year.
5. Income Tax
The current and deferred portion of income tax expenses included in the unaudited interim condensed consolidated statements of comprehensive income, which were substantially attributable to the Company’s subsidiaries, are as follows:
| | | |
Six months ended June 30,
|
| |||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Current tax expenses | | | | | 599,244 | | | | | | 679,202 | | | | | | 101,402 | | |
| Deferred tax (benefits)/expenses | | | | | (194,747) | | | | | | 14,222 | | | | | | 2,123 | | |
| Total | | | | | 404,497 | | | | | | 693,424 | | | | | | 103,525 | | |
The effective tax rate is based on expected income and statutory tax rates. For interim financial reporting, the Company estimates the annual effective tax rate based on projected accounting incomes for the full year and records a quarterly income tax provision in accordance with the guidance on accounting for income taxes in a period. As the year progresses, the Company refines the estimates of the year’s taxable income as new information becomes available. This continual estimation process often results in a change to the expected effective tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate.
The Company’s effective tax rate for the six months ended June 30, 2021 and 2022 were 18.07% and 20.75%, respectively.
6. Share Based Compensation
Employee Share Holding Platform
In June 2016, the Company established an employee share holding platform (the “Share Holding Platform”). The purpose of the Share Holding Platform is to allow employees of the Company in PRC to receive equity
F-13
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
6. Share Based Compensation (Continued)
share incentives. ZTO ES Holding Limited (“ZTO ES”), a British Virgin Islands company was established as a holding vehicle for the Company’s Share Holding Platform. ZTO ES is held by Mr. Lai Meisong, chairman and chief executive officer of the Company and four limited liability partnerships (“LLPs”) formed in PRC. At the time of establishment of these LLPs, Mr. Lai Meisong and his wife, Ms. Lai Yufeng agreed to serve as the general partner and sole limited partner of the four LLPs. On behalf of the Company and subject to approval of board of director of the Company, Mr. Lai Meisong as the general partner of the LLPs, has the authority to select the eligible participants to whom awards will be granted.
On June 28, 2016, the Company issued 16 million ordinary shares to ZTO ES. All shareholder rights associated with these 16 million ordinary shares including but not limited to voting right and dividend right were waived until such time when the economic interests in the ordinary shares are granted to the employees, through transfer of interests in the LLPs. Pursuant to the terms of the partnership agreement, a recipient of limited partnership interests is entitled to indirectly all of the economic rights associated with the underlying ordinary shares of the Company and accordingly, at the direction of the employee, the LLPs will sell the Company’s ordinary shares held in connection with the limited partnership interest owned by the employee, and remit the proceeds to the employee. The other shareholder’s rights associated with the Company’s ordinary shares held by the partnership may be exercised by the general partner of these LLPs. The Company referred to these limited partner’s partnership interests as ordinary share units and five ordinary share units correspond to the indirect economic interest in one ordinary share of the Company.
In March 2021 and 2022, 3,178,835 and 3,934,355 ordinary share units corresponding to 635,767 and 786,871 Company’s ordinary shares were granted to certain officers and employees at the consideration of nil. These share awards vested immediately upon grant. The Company recorded the share based compensation of RMB135,778 and RMB109,614 based on the market price at US$32.83 and US$21.87 of ordinary shares on the grant date for six months ended June 30, 2021 and 2022, respectively.
2016 Share Incentive Plan
On June 20, 2016, the Board also approved a 2016 share incentive plan (the “2016 Share Incentive Plan”) in order to provide appropriate incentives to directors, executive officers and other employees of the Company, pursuant to which the maximum number of shares of the Company available for issuance pursuant to all awards under the 2016 Share Incentive Plan shall be 3,000,000 ordinary shares.
In September 2016, the Board approved 2016 Share Incentive Plan (as amended and restated), the maximum aggregate number of shares which may be issued pursuant to all awards under the 2016 Plan is initially 3,000,000, plus an annual increase, by an amount equal to the least of (i) 0.5% of the total number of shares issued and outstanding on the last day of the immediately preceding fiscal year; (ii) 3,000,000 shares or (iii) such number of shares as may be determined by the board of directors.
Restricted share units
On March 2021 and 2022, the Company granted 525,595 and 497,956 RSUs to certain director, executive offices and employees pursuant to the 2016 Share Incentive Plan. These grants are vested immediately upon grant. The Company recorded the share based compensation of RMB112,249 and RMB69,367 based on the market price of ordinary shares at US$32.83 and US$21.87 on the grant date for the six months ended June 30, 2021 and 2022, respectively.
F-14
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
7. Earnings Per Share
Basic and diluted earnings per share for each of the periods presented are calculated as follows:
| | | |
Six months ended June 30,
|
| |||||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Numerator: | | | | | | | | | | | | | | | | | | | |
|
Net income attributable to ordinary shareholders in computing basic and diluted earnings per share
|
| | | | 1,825,797 | | | | | | 2,711,451 | | | | | | 404,810 | | |
| Shares (Denominator): | | | | | | | | | | | | | | | | | | | |
| Weight average ordinary shares outstanding – basic | | | | | 827,755,090 | | | | | | 809,214,926 | | | | | | 809,214,926 | | |
| Weight average ordinary shares outstanding – diluted | | | | | 827,755,090 | | | | | | 809,214,926 | | | | | | 809,214,926 | | |
|
Earnings per share – basic
|
| | | | 2.21 | | | | | | 3.35 | | | | | | 0.5 | | |
|
Earnings per share – diluted
|
| | | | 2.21 | | | | | | 3.35 | | | | | | 0.5 | | |
6,811,546 and 6,024,675 ordinary shares transferred to ZTO ES were considered issued but not outstanding as of June 30, 2021 and June 30, 2022, respectively, and therefore not included in the calculation of basic and dilutive earnings per share.
8. Related Party Transactions
The table below sets forth the major related parties and their relationships with the Company:
|
Name of related parties
|
| |
Relationship with the Company
|
|
| Tonglu Tongze Logistics Ltd. and its subsidiaries | | | Majority equity interests held by the employees of the Company | |
| Shanghai Mingyu Barcode Technology Ltd. | | |
Controlled by brother of chairman of the Company
|
|
| Shanghai Kuaibao Network Technology Ltd. | | | The Company’s equity investee | |
| ZTO Supply Chain Management Co., Ltd. and its subsidiaries | | | The Company’s equity investee | |
| ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries | | | The Company’s equity investee | |
|
ZTO Yun Leng Network Technology
(Zhejiang) Co., Ltd. and its subsidiaries |
| | The Company’s equity investee | |
|
Zhejiang Tongyu Intelligent Industry
Development Co., Ltd. |
| | The Company’s equity investee | |
| Zhongkuai (Tonglu) Future City Industrial Development Co.,Ltd | | | Controlled by chairman of the Company | |
| Youmi Technology (Zhejiang) Co., Ltd. | | | The Company’s equity investee | |
| Tonglu Antong Enterprise Management Partnership and its subsidiaries | | | The Company’s equity investee | |
| Tuxi Honor Holding Limited | | |
Controlled by brother of chairman of the Company
|
|
| ZTO Freight (Cayman) Inc. and its subsidiaries | | | The Company’s equity investee | |
F-15
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
8. Related Party Transactions (Continued)
(a) The Company entered into the following transactions with its related parties:
| | | |
Six months ended June 30,
|
| |||||||||||||||
|
Transactions
|
| |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Revenues: | | | | | | | | | | | | | | | | | | | |
|
Transportation revenue from ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries
|
| | | | 26,642 | | | | | | 201,871 | | | | | | 30,139 | | |
|
Express delivery service revenue derived from Tonglu Antong Enterprise Management Partnership and its subsidiaries
|
| | | | — | | | | | | 308,503 | | | | | | 46,058 | | |
| Others | | | | | 1,715 | | | | | | 51,435 | | | | | | 7,679 | | |
| | | | | | 28,357 | | | | | | 561,809 | | | | | | 83,876 | | |
| Cost of revenues: | | | | | | | | | | | | | | | | | | | |
|
Transportation service fees paid to Tonglu Tongze Logistics Ltd. and its subsidiaries
|
| | | | 50,374 | | | | | | 127 | | | | | | 19 | | |
|
Transportation service fees paid to ZTO Supply Chain Management Co., Ltd. and its subsidiaries
|
| | | | 39,326 | | | | | | 47,247 | | | | | | 7,054 | | |
|
Transportation service fees paid to ZTO Freight (Cayman) Inc. and its subsidiaries
|
| | | | — | | | | | | 31,743 | | | | | | 4,739 | | |
|
Transportation service fees paid to ZTO Yun Leng Network Technology (Zhejiang) Co., Ltd. and its subsidiaries
|
| | | | — | | | | | | 29,756 | | | | | | 4,442 | | |
| Purchases of supplies from Shanghai Mingyu Barcode Technology Ltd. | | | | | 98,937 | | | | | | 117,462 | | | | | | 17,537 | | |
| Others | | | | | 11,345 | | | | | | 34,328 | | | | | | 5,125 | | |
| | | | | | 199,982 | | | | | | 260,663 | | | | | | 38,916 | | |
| Other operating income: | | | | | | | | | | | | | | | | | | | |
|
Rental income from ZTO Supply Chain Management Co., Ltd. and its subsidiaries
|
| | | | 18,189 | | | | | | 6,892 | | | | | | 1,029 | | |
|
Rental income from ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries
|
| | | | 16,117 | | | | | | 11,474 | | | | | | 1,713 | | |
| Others | | | | | 5,924 | | | | | | 4,683 | | | | | | 699 | | |
| | | | | | 40,230 | | | | | | 23,049 | | | | | | 3,441 | | |
| Other income: | | | | | | | | | | | | | | | | | | | |
|
Interest income derived from Zhongkuai (Tonglu) Future City Industrial Development Co., Ltd
|
| | | | 19,811 | | | | | | 16,981 | | | | | | 2,535 | | |
| Others | | | | | 66 | | | | | | 2,657 | | | | | | 397 | | |
| | | | | | 19,877 | | | | | | 19,638 | | | | | | 2,932 | | |
In the six months ended June 30, 2021 and 2022, the Company purchased trucks from Tonglu Tongze Logistics Ltd. and its subsidiaries at an aggregate price of nil and RMB53,626, respectively.
In June 2022, Tuxi Honor Holding Limited made RMB190,901 capital injection to one of the Company’s subsidiary.
F-16
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
8. Related Party Transactions (Continued)
(b) The Company had the following balances with its related parties:
| | | |
As of
December 31, |
| |
As of June 30,
|
| ||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Amounts due to related parties | | | | | | | | | | | | | | | | | | | |
|
Shanghai Mingyu Barcode Technology Ltd.
|
| | | | 3,049 | | | | | | 9,577 | | | | | | 1,430 | | |
|
ZTO Supply Chain Management Co., Ltd. and its subsidiaries
|
| | | | 9,983 | | | | | | 10,211 | | | | | | 1,524 | | |
|
Tonglu Antong Enterprise Management Partnership and its
subsidiaries |
| | | | 9,751 | | | | | | 24,099 | | | | | | 3,598 | | |
|
Others
|
| | | | 3 | | | | | | 3 | | | | | | 1 | | |
| Total | | | | | 22,786 | | | | | | 43,890 | | | | | | 6,553 | | |
Amounts due to related parties consisted of accounts payable to related parties for transportation, waybill material and deposits as of December 31, 2021 and June 30, 2022, respectively.
| | | |
As of
December 31, |
| |
As of June 30,
|
| ||||||||||||
| | | |
2021
|
| |
2022
|
| ||||||||||||
| | | |
RMB
|
| |
RMB
|
| |
US$
|
| |||||||||
| Amounts due from related parties | | | | | | | | | | | | | | | | | | | |
|
ZTO Cloud Warehouse Technology Co., Ltd. and its subsidiaries(1)
|
| | | | 41,118 | | | | | | 45,616 | | | | | | 6,810 | | |
|
Tonglu Tongze Logistics Ltd. and its subsidiaries
|
| | | | 22,262 | | | | | | 21,160 | | | | | | 3,159 | | |
|
Youmi Technology (Zhejiang) Co., Ltd(5)
|
| | | | 14,494 | | | | | | 7,545 | | | | | | 1,126 | | |
|
Zhongtong Yunleng Network Technology (Zhejiang) Co., Ltd. and its
subsidiaries(2) |
| | | | 49,501 | | | | | | 49,992 | | | | | | 7,464 | | |
|
Shanghai Kuaibao Network Technology Ltd.(3)
|
| | | | 6,510 | | | | | | 6,600 | | | | | | 985 | | |
|
Others
|
| | | | 105 | | | | | | 2,449 | | | | | | 366 | | |
| Total | | | | | 133,990 | | | | | | 133,362 | | | | | | 19,910 | | |
| Amounts due from related parties-non current | | | | | | | | | | | | | | | | | | | |
|
Zhongkuai (Tonglu) Future City Industrial Development Co., Ltd(4)
|
| | | | 539,000 | | | | | | 557,000 | | | | | | 83,158 | | |
|
Zhejiang Tongyu Intelligent Industry Development Co., Ltd.(4)
|
| | | | 72,100 | | | | | | 74,620 | | | | | | 11,140 | | |
| Total | | | | | 611,100 | | | | | | 631,620 | | | | | | 94,298 | | |
(1)
The amount comprised loan to related parties with no interest bearing and accounts receivable generated from the transportation service provided by the Company.
(2)
The amount comprised other receivable generated from disposal of subsidiaries and net off account payable generated from the transportation service that the subsidiaries provided to the Company.
(3)
Amounts due from related parties were loans to related parties with no interest bearing.
F-17
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
8. Related Party Transactions (Continued)
(b) The Company had the following balances with its related parties: (Continued)
(4)
The amount comprised three-year loans to this related party with 7.2% annualized interest rate. The balance of principle was RMB500,000 as of December 31, 2021 and June 30, 2022 in relation to the loan to Zhongkuai (Tonglu) Future City Industrial Development Co., Ltd. The balance of principle was RMB70,000 as of December 31, 2021 and June 30, 2022 in relation to the loan to Zhejiang Tongyu Intelligent Industry Development Co., Ltd., respectively.
(5)
The amount comprised a one-year loan to this related party with 6.6% annualized interest rate. The balances of principle were RMB10,000 as of December 31,2021 and RMB5,000 as of June 30, 2022 in relation to the loan to Youmi Technology (Zhejiang) Co., Ltd..
9. Commitments and Contingencies
Capital commitments
The Company’s capital commitments primarily relate to commitments on construction of office building, sorting hubs and warehouse facilities. Total capital commitments contracted but not yet reflected in the consolidated financial statements amounted to RMB5,813,823 and RMB6,036,231 as of December 31, 2021 and June 30, 2022, respectively. All of these capital commitments will be fulfilled in the following years based on the construction progress.
Investment commitments
The Company is committed to make further capital injection into certain investments in equity investees. Such investment commitment amounted to approximately RMB124,410 as of December 31, 2021 and June 30, 2022.
Contingencies
The Company is subject to periodic legal or administrative proceedings in the ordinary course of business. The Company does not believe that any currently pending legal or administrative proceeding to which the Company is a party will have a material effect on its business or financial condition.
The Company has not made adequate contributions to employee benefit plans, as required by applicable PRC laws and regulations, but the Company has recorded accruals for the estimated underpaid amounts in the consolidated financial statements. However, the Company has not made any accruals for the interest on underpayments and penalties that may be imposed by the relevant PRC government authorities in the consolidated financial statements as the Company believes it would be unlikely that the relevant PRC government authorities will impose any significant interests or penalties.
The Company, certain directors and officers of the Company, and the underwriters of the Company’s initial public offering in October 2016 have been named as defendants in a putative securities class actions. Management of the Company believes that the claims are without merit and intends to defend vigorously.
10. Repurchase of Ordinary Shares
On March 31, 2021, the board of directors approved changes to the share repurchase program, increasing the aggregate value of shares that may be repurchased from US$500 million to US$1 billion and extending the effective time by two years through June 30, 2023. The Company expects to fund the repurchases out of its existing cash balance. As of June 30, 2022, the Company had purchased an aggregate of 36,074,242 ADSs at an average purchase price of US$25.21, including repurchase commissions, which had been fully paid as of June 30, 2022.
F-18
ZTO EXPRESS (CAYMAN) INC.
NOTES TO THE UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2022
(Amounts in thousands, except for share and per share data)
11. Employee Benefit Plans
The Company’s PRC subsidiaries are required by law to contribute certain percentages of applicable salaries for retirement benefits, medical insurance benefits, housing funds, unemployment and other statutory benefits for full time employees. The Company contributed RMB178,104 and RMB213,222 for the six months ended June 30, 2021 and 2022, respectively, for such benefits and has no legal obligation for the benefits beyond the contribution made. The PRC government is responsible for the medical benefits and ultimate liability to those employees.
12. Segment Information
The Company has only one reportable segment since the Company does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole.
The Company’s chief operating decision maker, who has been identified as the Chief Executive Officer, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Company as a whole. The Company does not distinguish among markets or segments for the purpose of internal reports.
The majority of the Company’s revenues for the six months ended June 30, 2021 and 2022 were generated from the PRC. As of December 31, 2021 and June 30, 2022, the majority of the long-lived assets of the Company are located in the PRC, and therefore no geographical segments are presented.
F-19