Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2016shares | |
Entity Registrant Name | ZTO Express (Cayman) Inc. |
Entity Central Index Key | 1,677,250 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | FY |
Class A ordinary shares | |
Entity Common Stock, Shares Outstanding | 525,306,440 |
Class B ordinary shares | |
Entity Common Stock, Shares Outstanding | 206,100,000 |
Ordinary shares | |
Entity Common Stock, Shares Outstanding | 731,406,440 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Current assets: | |||
Cash and cash equivalents | $ 1,625,780 | ¥ 11,287,789 | ¥ 2,452,359 |
Restricted cash | 91,512 | 635,366 | 266,403 |
Accounts receivable, net of allowance for doubtful accounts of RMB536 and RMB5,124 at December 31, 2015 and 2016, respectively | 28,490 | 197,803 | 58,494 |
Inventories | 4,891 | 33,959 | 15,720 |
Advances to suppliers | 93,139 | 646,666 | 347,680 |
Prepayments and other current assets | 54,595 | 379,055 | 211,724 |
Amounts due from related parties | 778 | 5,400 | 85,740 |
Total current assets | 1,899,185 | 13,186,038 | 3,438,120 |
Investments in equity investees | 77,369 | 537,175 | 377,431 |
Property and equipment, net | 585,563 | 4,065,562 | 1,752,586 |
Land use rights, net | 187,652 | 1,302,869 | 821,131 |
Goodwill | 598,749 | 4,157,111 | 4,091,219 |
Deferred tax assets | 15,704 | 109,030 | 81,006 |
Other non-current assets | 6,619 | 45,953 | 20,730 |
TOTAL ASSETS | 3,370,841 | 23,403,738 | 10,582,223 |
Current liabilities (including amounts of the consolidated VIE without recourse to ZTO Express (Cayman) Inc. See Note 2(b)) | |||
Short-term bank borrowing | 64,813 | 450,000 | 300,000 |
Accounts payable | 91,664 | 636,422 | 294,199 |
Advances from customers | 33,087 | 229,724 | 298,865 |
Income tax payable | 60,249 | 418,310 | 301,932 |
Amounts due to related parties | 18,929 | 131,425 | 103,267 |
Acquisition consideration payable | 87,766 | ||
Other current liabilities | 238,601 | 1,656,590 | 1,264,914 |
Total current liabilities | 507,343 | 3,522,471 | 2,650,943 |
Deferred tax liabilities | 18,799 | 130,520 | 85,059 |
TOTAL LIABILITIES | 526,142 | 3,652,991 | 2,736,002 |
Commitments and contingencies (Note 15) | |||
Shareholders' equity | |||
Ordinary shares (US$0.0001 par value; 10,000,000,000 ordinary shares authorized as of December 31, 2015 and 2016; 600,000,000 ordinary shares issued and outstanding as of December 31, 2015; 525,306,440 Class A ordinary shares issued and 514,464,604 Class A ordinary shares outstanding as of December 31, 2016; 206,100,000 Class B ordinary shares issued and outstanding as of December 31, 2016) | 68 | 471 | 390 |
Additional paid-in capital | 2,295,867 | 15,940,206 | 4,281,321 |
Retained earnings | 505,503 | 3,509,707 | 1,589,420 |
Accumulated other comprehensive (loss)/gain | 42,438 | 294,649 | (13,749) |
ZTO Express (Cayman) Inc. shareholders' equity | 2,843,876 | 19,745,033 | 5,857,382 |
Noncontrolling interests | 823 | 5,714 | 11,984 |
Total Equity | 2,844,699 | 19,750,747 | 5,869,366 |
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY | $ 3,370,841 | ¥ 23,403,738 | 10,582,223 |
Series A convertible redeemable preferred shares | |||
Mezzanine equity: | |||
Series A convertible redeemable preferred shares (US$0.0001 par value; 30,079,918 and nil shares authorized, issued and outstanding as of December 31, 2015 and 2016, respectively) | ¥ 1,976,855 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands | Dec. 31, 2016$ / shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015$ / shares | Dec. 31, 2015CNY (¥)shares |
Accounts receivable, allowance for doubtful accounts | ¥ | ¥ 5,124 | ¥ 536 | ||
Ordinary shares, par value (in dollars per share) | (per share) | $ 0.0001 | $ 0.0001 | ||
Ordinary shares, share authorized | 10,000,000,000 | 10,000,000,000 | ||
Ordinary shares, shares issued | 600,000,000 | |||
Ordinary shares, shares outstanding | 600,000,000 | |||
Series A convertible redeemable preferred shares | ||||
Convertible redeemable preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Convertible redeemable preferred stock, shares authorized | 0 | 30,079,918 | ||
Convertible redeemable preferred stock, shares issued | 0 | 30,079,918 | ||
Convertible redeemable preferred stock, shares outstanding | 0 | 30,079,918 | ||
Class A ordinary shares | ||||
Ordinary shares, shares issued | 525,306,440 | |||
Ordinary shares, shares outstanding | 514,464,604 | |||
Class B ordinary shares | ||||
Ordinary shares, shares issued | 206,100,000 | |||
Ordinary shares, shares outstanding | 206,100,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)¥ / sharesshares | Dec. 31, 2014CNY (¥)¥ / sharesshares | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Revenues (including related party revenue of RMB200,171, RMB127,157 and nil for the years ended December 31, 2014, 2015 and 2016, respectively) | $ 1,409,876 | ¥ 9,788,768 | ¥ 6,086,455 | ¥ 3,903,572 |
Cost of revenues (including related party cost of revenues of RMB724,522, RMB783,467 and RMB954,861 for the years ended December 31, 2014, 2015 and 2016, respectively) | (914,000) | (6,345,899) | (3,998,737) | (2,770,530) |
Gross profit | 495,876 | 3,442,869 | 2,087,718 | 1,133,042 |
Operating income (expenses) | ||||
Selling, general and administrative | (101,684) | (705,995) | (591,738) | (534,537) |
Other operating income, net | (4,624) | (32,104) | (33,249) | (1,796) |
Total operating expenses | (97,060) | (673,891) | (558,489) | (532,741) |
Income from operations | 398,816 | 2,768,978 | 1,529,229 | 600,301 |
Other income (expenses) | ||||
Interest income | 6,451 | 44,791 | 15,091 | 3,408 |
Interest expense | (1,870) | (12,986) | (16,392) | (798) |
Gain on deemed disposal of equity method investments | 1,376 | 9,551 | 224,148 | |
Foreign currency exchange gain | 1,437 | 9,977 | ||
Income before income tax and share of profit (loss) in equity method investments | 406,210 | 2,820,311 | 1,752,076 | 602,911 |
Income tax expense | (105,428) | (731,987) | (419,999) | (202,486) |
Share of profit (loss) in equity method investments, net of tax of nil | (5,289) | (36,721) | (459) | 5,578 |
Net income | 295,493 | 2,051,603 | 1,331,618 | 406,003 |
Net loss attributable to noncontrolling interests | 324 | 2,252 | 137 | 423 |
Net income attributable to ZTO Express (Cayman) Inc. | 295,817 | 2,053,855 | 1,331,755 | 406,426 |
Change in redemption value of convertible redeemable preferred shares | (19,238) | (133,568) | (28,775) | |
Net income attributable to ordinary shareholders | $ 276,579 | ¥ 1,920,287 | ¥ 1,302,980 | ¥ 406,426 |
Net earnings per share attributable ordinary shareholders: | ||||
Basic | (per share) | $ 0.42 | ¥ 2.91 | ¥ 2.15 | ¥ 0.68 |
Diluted | (per share) | $ 0.42 | ¥ 2.91 | ¥ 2.15 | ¥ 0.68 |
Weighted average shares used in calculating net earnings per ordinary share: | ||||
Basic | 634,581,307 | 634,581,307 | 599,373,273 | 597,882,740 |
Diluted | 634,581,307 | 634,581,307 | 599,373,273 | 597,882,740 |
Other comprehensive income (loss), net of tax of nil | ||||
Foreign currency translation adjustments | $ 44,419 | ¥ 308,398 | ¥ (13,749) | |
Comprehensive income | 339,912 | 2,360,001 | 1,317,869 | ¥ 406,003 |
Comprehensive loss attributable to noncontrolling interests | 324 | 2,252 | 137 | 423 |
Comprehensive income attributable to ZTO Express (Cayman) Inc. | $ 340,236 | ¥ 2,362,253 | ¥ 1,318,006 | ¥ 406,426 |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Related party revenue | ¥ 0 | ¥ 127,157 | ¥ 200,171 |
Related party cost of revenue | 954,861 | 783,467 | 724,522 |
Share of profit (loss) in equity method investments, tax | 0 | 0 | 0 |
Other comprehensive loss, tax | ¥ 0 | ¥ 0 | ¥ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Parent CompanyCNY (¥) | Ordinary sharesCNY (¥)shares | Additional paid-in capitalCNY (¥) | Retained earnings/(accumulated deficit)CNY (¥) | Accumulated other comprehensive income/(loss)CNY (¥) | Noncontrolling interestsCNY (¥) | USD ($) | CNY (¥) |
Balance at beginning of the period at Dec. 31, 2013 | ¥ 314,648 | ¥ 390 | ¥ 319,244 | ¥ (4,986) | ¥ 17,516 | ¥ 332,164 | ||
Shares outstanding, beginning of the period at Dec. 31, 2013 | shares | 600,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Deemed distribution to shareholders of Shanghai Zhongtongji in connection with 2013 Restructuring | (222,401) | (222,401) | (222,401) | |||||
Net income (loss) | 406,426 | 406,426 | (423) | 406,003 | ||||
Fair value of ordinary shares issued for business acquisitions | 2,379,182 | 2,379,182 | 2,379,182 | |||||
Additional capital contribution from shareholders | 500,000 | 500,000 | 500,000 | |||||
Fair value of ordinary shares issued for acquisition of equity investees | 220,955 | 220,955 | 220,955 | |||||
Repurchase of ordinary shares (Note 16) | (230,000) | (230,000) | (230,000) | |||||
Repurchase of ordinary shares (Note 16) (in shares) | shares | (13,800,000) | |||||||
Capital contribution from noncontrolling interest shareholder | 9,800 | 9,800 | ||||||
Balance at ending of the period at Dec. 31, 2014 | 3,368,810 | ¥ 390 | 2,966,980 | 401,440 | 26,893 | 3,395,703 | ||
Shares outstanding, end of the period at Dec. 31, 2014 | shares | 586,200,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 1,331,755 | 1,331,755 | (137) | 1,331,618 | ||||
Distribution of dividends | (115,000) | (115,000) | (115,000) | |||||
Foreign currency translation adjustments | (13,749) | ¥ (13,749) | (13,749) | |||||
Ordinary shares consideration for business acquisitions | 1,314,569 | 1,314,569 | 1,314,569 | |||||
Ordinary shares consideration for business acquisitions (in shares) | shares | 13,800,000 | |||||||
Acquisition of noncontrolling interest of the Group's subsidiaries | (228) | (228) | (14,772) | (15,000) | ||||
Change in redemption value of convertible redeemable preferred shares | (28,775) | (28,775) | (28,775) | |||||
Balance at ending of the period at Dec. 31, 2015 | 5,857,382 | ¥ 390 | 4,281,321 | 1,589,420 | (13,749) | 11,984 | 5,869,366 | |
Shares outstanding, end of the period at Dec. 31, 2015 | shares | 600,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income (loss) | 2,053,855 | 2,053,855 | (2,252) | $ 295,493 | 2,051,603 | |||
Additional capital contribution from shareholders | 11,789 | 11,789 | 11,789 | |||||
Foreign currency translation adjustments | 308,398 | 308,398 | 44,419 | 308,398 | ||||
Ordinary shares consideration for business acquisitions | 30,066 | ¥ 9 | 30,057 | 30,066 | ||||
Ordinary shares consideration for business acquisitions (in shares) | shares | 13,826,522 | |||||||
Conversion of redeemable and contingently convertible share units | 236,181 | ¥ 2 | 236,179 | 236,181 | ||||
Conversion of redeemable and contingently convertible share units (in shares) | shares | 3,504,000 | |||||||
Ordinary shares issued for share based compensation | 71,019 | ¥ 1 | 71,018 | 71,019 | ||||
Ordinary shares issued for share based compensation (in shares) | shares | 1,054,164 | |||||||
Share based compensation related share options | 502 | 502 | 502 | |||||
Capital contribution from noncontrolling interest shareholder | 4,000 | 4,000 | 6,000 | 10,000 | ||||
Acquisition of noncontrolling interest of the Group's subsidiaries | 11,139 | 11,139 | (10,018) | 1,121 | ||||
Change in redemption value of convertible redeemable preferred shares | (133,568) | (133,568) | (133,568) | |||||
Conversion of preferred shares into Class A ordinary shares upon IPO | 2,110,423 | ¥ 20 | 2,110,403 | 2,110,423 | ||||
Conversion of preferred shares into Class A ordinary shares upon IPO (in shares) | shares | 30,079,918 | |||||||
Issuance of ordinary shares for initial public offering ("IPO"), net of issuance costs RMB339,355 | 9,183,847 | ¥ 49 | 9,183,798 | 9,183,847 | ||||
Issuance of ordinary shares for initial public offering ("IPO"), net of issuance costs RMB339,355 (in shares) | shares | 72,100,000 | |||||||
Balance at ending of the period at Dec. 31, 2016 | ¥ 19,745,033 | ¥ 471 | ¥ 15,940,206 | ¥ 3,509,707 | ¥ 294,649 | ¥ 5,714 | $ 2,844,699 | ¥ 19,750,747 |
Shares outstanding, end of the period at Dec. 31, 2016 | shares | 720,564,604 |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2016CNY (¥) | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |
Issuance cost on IPO | ¥ 339,355 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Operating activities | ||||
Net Income | $ 295,493 | ¥ 2,051,603 | ¥ 1,331,618 | ¥ 406,003 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Share-based compensation | 17,644 | 122,502 | 116,800 | |
Depreciation and amortization | 46,807 | 324,978 | 158,056 | 64,014 |
Loss on disposal of property and equipment | 69 | 477 | 7,293 | 3,132 |
Allowance for doubtful accounts | 365 | 2,536 | 2,588 | |
Deferred income tax | (4,400) | (30,553) | 5,047 | (80,309) |
Gain on deemed disposal of equity method investments | (1,376) | (9,551) | (224,148) | |
Share of (profit) loss in equity method investments | 5,289 | 36,721 | 459 | (5,578) |
Changes in operating assets and liabilities: | ||||
Restricted cash | (5,142) | (35,699) | (266,403) | |
Accounts receivable | (20,430) | (141,845) | (11,918) | (40,656) |
Inventories | (2,627) | (18,239) | (10,770) | (4,950) |
Advances to suppliers | (11,273) | (78,265) | (7,095) | (8,959) |
Prepayments and other current assets | (28,314) | (196,581) | (52,674) | (100,690) |
Amounts due from related parties | 1,388 | 9,640 | (11,179) | (1,161) |
Other non-current assets | (3,633) | (25,223) | 2,632 | (23,362) |
Accounts payable | 49,290 | 342,223 | 142,139 | 110,025 |
Advances from customers | (9,958) | (69,141) | 78,618 | 106,956 |
Amounts due to related parties | 4,056 | 28,158 | 2,448 | 100,819 |
Income tax payable | 16,762 | 116,378 | 83,717 | 217,646 |
Other current liabilities | 15,328 | 106,425 | 520,310 | 328,821 |
Net cash provided by operating activities | 365,338 | 2,536,544 | 1,867,538 | 1,071,751 |
Cash flows from investing activities | ||||
Purchases of property and equipment | (286,057) | (1,986,094) | (1,062,302) | (618,571) |
Purchases of land use rights | (101,270) | (703,115) | (413,562) | (171,510) |
Payment of amounts due from related parties | (15,000) | (228,509) | ||
Repayment of amounts due from related parties | 2,160 | 15,000 | 228,509 | |
Cash paid for business acquisitions, net of cash received | (16,628) | (115,454) | (20,604) | (13,793) |
Investments in equity investees | (45,430) | (315,426) | (193,803) | (95,400) |
Changes of restricted cash | (48,000) | (333,264) | ||
Others | 2,887 | 20,049 | 27,016 | 11,484 |
Net cash used in investing activities | (492,338) | (3,418,304) | (1,449,746) | (1,116,299) |
Cash flows from financing activities | ||||
Proceeds from issuance of convertible redeemable preferred shares | 1,934,331 | |||
Proceeds from capital contribution from shareholders | 1,698 | 11,789 | 500,000 | |
Proceeds from capital contribution from noncontrolling interest shareholder | 1,440 | 10,000 | 9,800 | |
Proceeds from short-term borrowing | 79,361 | 551,000 | 350,000 | 300,000 |
Proceeds from issuance of ordinary shares through IPO, net of issuance costs of RMB339,355 | 1,322,749 | 9,183,847 | ||
Proceeds from issuance of ordinary shares for shared based compensation | 9,852 | 68,400 | ||
Repayment of short-term borrowing | (59,044) | (409,943) | (300,000) | (50,000) |
Payment of dividends | (115,000) | |||
Repayment of amounts due to related parties | (404,736) | |||
Repurchase of ordinary shares | (184,000) | |||
Net cash provided by financing activities | 1,356,056 | 9,415,093 | 1,869,331 | 171,064 |
Effect of exchange rate changes on cash and cash equivalents | 43,511 | 302,097 | 1,877 | |
Net increase in cash and cash equivalents | 1,272,567 | 8,835,430 | 2,289,000 | 126,516 |
Cash and cash equivalents at beginning of year | 353,213 | 2,452,359 | 163,359 | 36,843 |
Cash and cash equivalents at end of year | 1,625,780 | 11,287,789 | 2,452,359 | 163,359 |
Supplemental disclosure of cash flow information | ||||
Income taxes paid | 93,067 | 646,162 | 331,235 | 65,148 |
Interest expense paid | $ 1,870 | ¥ 12,986 | ¥ 16,392 | ¥ 798 |
CONSOLIDATED STATEMENTS OF CAS9
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) ¥ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2016CNY (¥) | Oct. 31, 2015item | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥)item | |
Issuance cost on IPO | ¥ 339,355 | ||||
Supplemental disclosure on non-cash investing and financing activities: | |||||
Number of network partners acquired | item | 7 | ||||
Number of entities from which workforce was acquired | item | 6 | ||||
Payables for purchase of property and equipment | ¥ 574,811 | ¥ 68,900 | ¥ 91,106 | ||
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | |||||
Supplemental disclosure on non-cash investing and financing activities: | |||||
Interest acquired (as a percent) | 40.00% | ||||
Issuance of equity consideration | ¥ 30,066 | ||||
Cash consideration | 30,660 | ||||
Fair value of assets acquired and liabilities assumed | ¥ 85,923 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES ZTO Express (Cayman) Inc. (the “Company”) was incorporated under the laws of Cayman Islands on April 8, 2015. The Company, its subsidiaries and its variable interest entity and subsidiaries of variable interest entity (“VIE”) (collectively referred to as the “Group”) are principally engaged in express delivery services in the People’s Republic of China (“PRC”) through a nationwide network partner model. History of the Group and Restructuring Prior to 2013, the Group’s operations were conducted through Shanghai Zhongtongji Express Service Co., Ltd. (“Shanghai Zhongtongji”) located in Shanghai, PRC. Shanghai Zhongtongji served as the franchisor of the ZTO delivery service network (the “ZTO network”) which operated as a franchise. In addition to providing delivery services in Shanghai, Anhui, Jiangsu and Zhejiang province in PRC, Shanghai Zhongtongji determined the business strategies and coordinated the operations of our network partners. 2013 Restructuring In 2013, in order to obtain investments from outside investors, shareholders of Shanghai Zhongtongji and 15 network partners located in various provinces within PRC agreed to a restructuring plan. The main purpose of the restructuring is to create a holding company, which in turn holds the businesses of Shanghai Zhongtongji and 15 network partners across the ZTO network. Shanghai Zhongtongji did not hold direct ownership in any of these network partners and they were not under common control, however, there was significant commonality of shareholders of the network partners within the ZTO network. The restructuring was accomplished through a series of contemplated transactions (“2013 Restructuring”) summarized as follows: 1. 2. 3. The 2013 Restructuring was accounted for as a put-together transaction in accordance with ASC 805, Business Combination and Shanghai Zhongtongji has been identified as the accounting acquirer of ZTO Express and the 15 network partners. Operating assets and equity investments transferred from Shanghai Zhongtongji to ZTO Express were recognized and measured at their historical cost basis. Payment of cash consideration to Shanghai Zhongtongji of RMB222 million for the acquisition of these assets in accordance with the asset purchase agreement signed between Shanghai Zhongtongji and ZTO Express was recorded as deemed distribution to the shareholders of Shanghai Zhongtongji in the consolidated statements of changes in shareholders’ equity. Although there was common ownership amongst ZTO Express, Shanghai Zhongtongji, and the 15 network partners, neither ZTO Express nor Shanghai Zhongtongji had a majority of the voting interests or a controlling financial interest in any of the 15 network partners. The 2013 Restructuring involved acquisitions of Shanghai Zhongtongji and the 15 network partners with the initial acquisitions of Shanghai Zhongtongji and the 8 network partners on January 1, 2014. As more than one entity was involved in the acquisition, but none of the owners of the combining entities individually or as a group retain or receive a majority of the voting rights of the combined entities, the 2013 Restructuring is considered to be a put-together transaction accounted for as business combination for which the acquisition method of accounting was applied, and Shanghai Zhongtongji is the accounting acquirer. 2015 Restructuring In 2015, ZTO Express and its shareholders undertook another reorganization in order to establish the Company (the “2015 Restructuring”), which was executed in two steps as follows: · On April 8, 2015, the Company was incorporated by the shareholders of ZTO Express, each maintaining identical ownership interests as in ZTO Express, and · On August 18, 2015, the Company, through its wholly owned subsidiary in PRC, entered into a series of contractual arrangements, with ZTO Express and their respective shareholders. (see Note 2(b)) below for a description of the VIE arrangements pursuant to which the Company and its subsidiary were established as the primary beneficiary of ZTO Express. The main purpose of the 2015 Restructuring was to establish a Cayman holding company for the existing business in preparation for an overseas IPO. The reorganization was necessary to comply with the PRC law and regulations which restrict foreign ownership of companies that engage in delivery services in China. The Group has accounted for the 2015 Restructuring akin to a reorganization of entities under common control. Accordingly, the accompanying consolidated financial statements have been prepared by using historical cost basis and include the assets, liabilities, revenue, expenses and cash flows that were directly attributable to ZTO Express for all periods presented. The share and per share data relating to the ordinary shares issued by the Company during the 2015 Restructuring are presented as if the 2015 Restructuring transactions occurred at the beginning of the first period presented. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). (b) Principles of consolidation The 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 Group evaluates the need to consolidate certain VIE of which the Group is the primary beneficiary. In determining whether the Group is the primary beneficiary, the Group considers if the Group (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 Group consolidates the VIE. Consolidation of Variable Interest Entities Applicable PRC laws and regulations currently limit foreign ownership of companies that provide delivery services in PRC. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are ineligible to engage in provisions of delivery services. As discussed in Note 1, the Group undertook the 2015 Restructuring whereby ZTO Express and its subsidiaries became a VIE of the Group effective on August 18, 2015. To provide the Group effective control over ZTO Express and receive substantially all of the economic benefits of ZTO Express, the Company’s wholly owned subsidiary, Shanghai Zhongtongji Network Technology Ltd. (“Shanghai Zhongtongji Network”) entered into a series of contractual arrangements, described below, with ZTO Express and its individual shareholders. Agreements that provide the Company effective control over the VIE include: Voting Rights Proxy Agreement & Irrevocable Powers of Attorney Under which each shareholder of ZTO Express has executed a power of attorney to grant Shanghai Zhongtongji Network the power of attorney to act on his or her behalf on all matters pertaining ZTO Express and to exercise all of his or her rights as a shareholder of ZTO Express, including but not limited to convene, attend and vote at shareholders’ meetings, designate and appoint directors and senior management members. The proxy agreement will remain in effect unless Shanghai Zhongtongji Network terminates the agreement by giving a prior written notice or gives its consent to the termination by ZTO Express. Exclusive Call Option Agreement Under which the shareholders of ZTO Express granted Shanghai Zhongtongji Network or its designated representative(s) an irrevocable and exclusive option to purchase their equity interests in ZTO Express when and to the extent permitted by PRC law. Shanghai Zhongtongji Network or its designated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Shanghai Zhongtongji Network’s written consent, the shareholders of ZTO Express shall not transfer, donate, pledge, or otherwise dispose any equity interests of ZTO Express in any way. The acquisition price for the shares or assets will be the minimum amount of consideration permitted under the PRC law at the time when the option is exercised. The agreement can be early terminated by Shanghai Zhongtongji Network, but not by ZTO Express or its shareholders. Equity Pledge Agreement Under which the shareholders of ZTO Express pledged all of their equity interests in ZTO Express to Shanghai Zhongtongji Network as collateral to secure their obligations under the above agreement. If the shareholders of ZTO Express or ZTO Express breach their respective contractual obligations, Shanghai Zhongtongji Network, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the agreement, the shareholders of ZTO Express shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in ZTO Express without prior written consent of Shanghai Zhongtongji Network. The equity pledge right held by Shanghai Zhongtongji Network will expire when the shareholders of ZTO Express and Shanghai Zhongtongji Network have fully performed their respective obligations under the Consulting Services Agreement and Operating Agreement, or the shareholder is no longer a shareholder of ZTO Express or the satisfaction of all its obligations by ZTO under the VIE contractual arrangements. The agreements that transfer economic benefits to the Company include: Exclusive Consulting and Services Agreement Under which ZTO Express engages Shanghai Zhongtongji Network as its exclusive technical and operational consultant and under which Shanghai Zhongtongji Network agrees to assist in business development and related services necessary to conduct ZTO Express’s operational activities. ZTO Express shall not seek or accept similar services from other providers without the prior written approval of Shanghai Zhongtongji Network. The agreements will be effective as long as ZTO Express exists. Shanghai Zhongtongji Network may terminate this agreement at any time by giving a prior written notice to ZTO Express. Under the above agreements, the shareholders of ZTO Express irrevocably granted Shanghai Zhongtongji Network the power to exercise all voting rights to which they were entitled. In addition, Shanghai Zhongtongji Network has the option to acquire all of the equity interests in ZTO Express, to the extent permitted by the then-effective PRC laws and regulations, for nominal consideration. Finally, Shanghai Zhongtongji Network is entitled to receive service fees for certain services to be provided to ZTO Express. The Call Option Agreement and Voting Rights Proxy Agreement provide the Company with effective control over the VIE and its subsidiaries, while the Equity Interest Pledge Agreements secure the obligations of the shareholders of ZTO Express under the relevant agreements. Because the Company, through Shanghai Zhongtongji Network, has (i) the power to direct the activities of ZTO Express that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from ZTO Express, the Company is deemed the primary beneficiary of ZTO Express. Accordingly, the Company consolidates the ZTO Express’s financial results of operations, assets and liabilities in the Company’s consolidated financial statements. The aforementioned Control Documents are effective agreements between a parent and a consolidated subsidiary, neither of which is accounted for in the consolidated financial statements or is ultimately eliminated upon consolidation, such as the service fees provided under the Consulting Services Agreement and Operating Agreement. The Group believes that the contractual arrangements with the VIE are in compliance with the PRC law and are legally enforceable. However, the contractual arrangements are subject to risks and uncertainties, including: · ZTO Express and its shareholders may have or develop interests that conflict with the Group’s interests, which may lead them to pursue opportunities in violation of the aforementioned contractual arrangements. · ZTO Express and its shareholders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties on the VIE or the Group, mandate a change in ownership structure or operations for the VIE or the Group, restrict the VIE or the Group’s use of financing sources or otherwise restrict the VIE or the Group’s ability to conduct business. · The aforementioned contractual agreements may be unenforceable or difficult to enforce. The equity interests under the Equity Interest Pledge Agreement have been registered by the shareholders of ZTO Express with the relevant office of the administration of industry and commerce, however, the VIE or the Group may fail to meet other requirements. Even if the contractual agreements are enforceable, they may be difficult to enforce given the uncertainties in the PRC legal system. · The PRC government may declare the aforementioned contractual arrangements invalid. They may modify the relevant regulations, have a different interpretation of such regulations, or otherwise determine that the Group or the VIE have failed to comply with the legal obligations required to effectuate such contractual arrangements. The following amounts and balances of ZTO Express and its subsidiaries (the “VIE”) were included in the Group’s consolidated financial statements after the elimination of intercompany balances and transactions: As of 2015 2016 RMB RMB Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Advances to suppliers Prepayments and other current assets Amounts due from related parties Total current assets Investments in equity investees Property and equipment, net Land use rights, net Goodwill Deferred tax assets Other non-current assets TOTAL ASSETS Liabilities Current liabilities: Short-term bank borrowing Accounts payable Advances from customers Income tax payable Amounts due to related parties Acquisition consideration payables — Other current liabilities Total current liabilities Deferred tax liabilities TOTAL LIABILITIES Years ended December 31, 2014 2015 2016 RMB RMB RMB Total revenue Net income Net cash generated from operating activities Net cash used in investing activities ) ) ) Net cash provided by (used in) financing activities ) Net increase (decrease) in cash and cash equivalents ) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The VIE contributed 100% of the Group’s consolidated revenues for the years ended December 31, 2014, 2015 and 2016. As of December 31, 2015 and 2016, the VIE accounted for an aggregate of 76% and 41%, respectively, of the consolidated total assets, and 96% and 76%, respectively, of the consolidated total liabilities. Total assets not associated with the VIE mainly consisted of cash and cash equivalents. Beginning in January 2016, the VIE pay transportation fees and service fees pursuant to the Exclusive Consulting and Services Agreements to Shanghai Zhongtongji Network (the “WFOE”) based on the VIE’s operating results and WFOE’s operating cost of sorting hubs and the Group’s owned fleet. 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. The net income generated by the VIE after deductions of inter-company transportation fees and service fees charges by WFOE were RMB472,753 for the year ended December 31, 2016. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIE. However, if the VIE was ever to need financial support, the Company or its subsidiaries 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 Group 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. Please refer to Note 20 for disclosure of restricted net assets. Nonconsolidated Variable Interest Entity Tonglu Tongze Logistics Ltd. and its subsidiaries (“Tonglu”), established in 2013, is a transportation service company providing line-haul transportation services to the Group. Tonglu is majority owned by the employees of the Group who are considered as related parties to the Group. The Group has concluded that it is not the primary beneficiary of Tonglu as it does not have the obligation to absorb losses of Tonglu that could potentially be significant to Tonglu or the right to receive benefits from Tonglu that could potentially be significant to Tonglu. The Group held variable interests in Tonglu in the form of a waiver of management fees and an outstanding loan receivable of RMB15 million as of December 31, 2015 that was repaid in full in 2016. As of December 31, 2016, the Group has no exposure to loss included in the Group’s consolidated balance sheets as a result of the Group’s variable interest in Tonglu. The Group had transactions with Tonglu for the years ended December 31, 2014, 2015 and 2016 and amounts due to Tonglu as of December 31, 2015 and 2016 for transportation service received from Tonglu, in connection with a contractual arrangement and considered by management to be on terms that are commensurate with market. Transactions and balances relating to the transportation services are disclosed in Note 14 (a), (b) and (c). (c) Use of estimates The preparation of financial statements in conformity with US 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 differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements include assessment of useful lives of long-lived assets, valuation of ordinary shares and share-based compensation, realization of deferred tax assets, impairment assessment of long-lived assets and goodwill and assumptions used to determine the fair value of the assets acquired through business combination. Actual results may differ materially from those estimates. (d) Fair value Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Group has stock unit awards payable that was required to be measured at fair value on a recurring basis at the end of each reporting period. Change in fair value and inputs in the valuations are disclosed in Note 11. The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable, amounts due from related parties, advances to suppliers, prepayments and other current assets, short-term bank borrowing, accounts payable, advances from customers, amounts due to related parties and other current liabilities are recorded at cost which approximates their fair value due to the short-term nature of these instruments. We allocate the fair value of purchase consideration to the tangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets is recorded as goodwill. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. (e) Foreign currency translation The Group’s reporting currency is Renminbi (“RMB”). The functional currency of the Company and subsidiaries incorporated outside the mainland China are the United States dollar (“US dollar” or “US$”). The functional currency of all the other subsidiaries and the VIE is RMB. Foreign currency denominated monetary assets and liabilities have been translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies have been translated into the functional currency at the applicable rates of exchange prevailing on the date transactions occurred. Transaction gains and losses are recognized in the consolidated statements of comprehensive income. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the consolidated statements of comprehensive income. (f) Convenience translation The Group’s business is primarily conducted in China and almost all of our 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. Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from RMB into US dollars as of and for the year ended December 31, 2016 were calculated at the rate of US$1.00=RMB6.9430, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2016. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2016, or at any other rate. (g) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. (h) Restricted cash Restricted cash represents (a) cash received from network partners that was immediately restricted for use until the final delivery of parcel to the recipients; and (b) secured deposits held in designated bank accounts for issuance of bank acceptance notes and letter of guarantee for short-term borrowings. (i) Property and equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Leasehold improvements Lesser of lease term or estimated useful life of 3 years Furniture, office and electric equipment 3 to 5 years Machinery and equipment 10 years Vehicles 5 years Buildings 20 years (j) Investments in equity investees Investments in equity investees of the Group are comprised of investments in privately-held companies. The Group uses the equity method to account for an equity investment over which it has significant influence but does not own a majority equity interest or otherwise control. The Group records equity method adjustments in share of profits and losses. Equity method adjustments include the Group’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Group’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Dividends received are recorded as a reduction of carrying amount of the investment. Cumulative distributions that do not exceed the Group’s cumulative equity in earnings of the investee are considered as a return on investment and classified as cash inflows from operating activities. Cumulative distributions in excess of the Group’s cumulative equity in the investee’s earnings are considered as a return of investment and classified as cash inflows from investing activities. For equity investments over which the Group does not have significant influence or control, the cost method of accounting is used. Under the cost method, the Group carries the investment at cost and recognizes income to the extent of dividends received from the distribution of the equity investee’s post-acquisition profits. (k) Impairment of long-lived assets The Group evaluates the recoverability of long-lived assets with determinable useful lives whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Group measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows associated with it. Impairment exists when the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value is estimated based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Group to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. No impairment charge was recognized for the years ended December 31, 2014, 2015 and 2016. (l) Goodwill Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of business acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired businesses. Unless circumstances otherwise dictate, goodwill is reviewed annually at December 31 for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to a two-step process to test goodwill for impairment, including comparing the fair value the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations mainly include both internal and third-party valuations. No impairment charge was recognized for the years ended December 31, 2014, 2015 and 2016. (m) Share-based compensation The Group grants share options and Ordinary Share Units to eligible employees, management and directors and accounts for these share-based awards in accordance with ASC 718 Compensation—Stock Compensation. Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required; or b) using graded vesting method, net of forfeitures, over the requisite service period, which is the vesting period. When there is a modification of the terms and conditions of an award, the Group measures the pre-modification and post-modification fair value of the share-based awards as of the modification date and recognizes the incremental value as compensation cost over the remaining service period. All transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Prior to the IPO of the Company, the fair value of the share options and Ordinary Share Units were assessed using the income approach/discounted cash flow method, with a discount for lack of marketability given that the shares underlying the awards were not publicly traded at the time of grant. This assessment required complex and subjective judgments regarding the Company’s projected financial and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the time the grants were made. In addition, the binomial option-pricing model is used to measure the value of share options. The determination of the fair value is affected by the fair value of the ordinary shares as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected employee and non-employee share option exercise behavior, risk-free interest rates and expected dividends. The fair value of these awards was determined with the assistance from an independent valuation firm using management’s estimates and assumption. After the IPO of the Company, in determining the fair value of the share options and Ordinary Share Units, the closing market price of the underlying shares on the grant date is applied. The assumptions used in share-based compensation expense recognition represent management’s best estimates, but these estimates involve inherent uncertainties and application of management judgment. If factors change or different assumptions are used, the share-based compensation expenses could be materially different for any period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. (n) Revenue recognition The Group recognizes revenue when persuasive evidence of an arrangement exists, service has been performed, the fee is fixed or determinable and collectability is reasonably assured. While the Group serves as the franchisor in the ZTO network, it has not collected franchise fees from its network partners. The Group considers its customers to be the pickup outlets operated by the Group’s network partners. The Group’s revenue represents network transit fees derived from the provision of sorting and line-haul transportation services to the pickup outlets operated by the Group’s network partners. The network transit fees the Group charges its pickup outlets consist of (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. The Group recognizes revenue when the parcels are delivered from the Group’s sorting hubs to the delivery outlets in the network, assuming all other revenue recognition criteria have been met. A small percentage of the Group’s delivery services are performed for its enterprise customers; and enterprise customer revenues are recognized when the packages are delivered to the recipients. Revenues also include sales of accessories, such as portable barcode readers and ZTO-branded packing supplies and apparels. Revenues for the sales of accessories were RMB125,058, RMB173,166 and RMB419,075 for the years ended December 31, 2014, 2015 and 2016, respectively. (o) Cost of revenues Cost of revenues consists of the following: · Line-haul transportation costs, including payments to outsourced transportation companies, as well as costs associated with the Group’s own transportation infrastructure; including, labor costs of truck drivers, depreciation of self-owned trucks, airfare cost, fuel cost, and road toll, · operating costs for the ZTO delivery IT platform, · cost of hub operations, such as operators’ labor costs and depreciation and lease costs, and · cost of accessories including portable barcode readers, thermal papers and packaging materials. (p) Income taxes Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Group is required to estimate its income taxes in each of the jurisdictions in which it operates. The Group 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 loss are carried forwards and credited 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 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 components of the deferred tax assets and liabilities are individually classified as non-current. The Group recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. (q) Comprehensive income Comprehensive income is defined to include all changes in equity from transactions and other events and circumstances from non-owner sources. For the years presented, the Group’s comprehensive income includes net income and foreign currency translation adjustments and is presented in the consolidated statements of comprehensive income. (r) Operating leases as lessee Leases, including leases of offices and sorting hubs, where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Payments made under operating leases are recognized as an expense on a straight-line basis over the lease term. The Group had no capital leases for any of the years presented herein. (s) Concentration credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, amounts due from related parties, accounts receivable, other receivables and advances to suppliers and prepayments and other current assets. The Group places its cash and cash equivalents with financial institutions with high-credit ratings and quality. Accounts receivable primarily comprise amounts receivable from enterprise customers. The Group conducts |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2016 | |
Business Combination | |
Business Combination | 3. Business Combination In order to consolidate and optimize the Group’s delivery capacity in key geographic areas within PRC, in 2014 and 2015, the Group acquired substantially all of the operating assets of 8 and 16 network partners, respectively. The assets acquired from these entities constituted substantially all of the operating assets of the network partners including parcel sorting hubs, vehicles and miscellaneous furniture and fixture, and assumption of their respective assembled workforces. The Group accounted for these acquisitions as business combinations. Total consideration for 2014 acquisitions consisted of cash of RMB64,490 and 202,800,000 ordinary shares of ZTO Express at a determined per share fair value of RMB11.73. Total consideration for 2015 acquisitions consisted of cash of RMB57,673 and 26,336,657 ordinary shares of ZTO Express at a determined per share fair value of RMB48.64. The Group engaged a third party valuation firm to assist them with the valuation of ordinary shares as well as property, plant and equipment and intangible assets. The excess of the total cash and fair value of share-based consideration over the fair value of the assets acquired was recorded as goodwill which is not tax deductible. 2014 Acquisitions of Network Partners In January 2014, in connection with the Group’s 2013 Restructuring, the Group purchased 8 network partners located in various provinces in PRC, namely Henan, Sichuan, Hubei, Beijing, Guangdong and Hunan. The details of the considerations, fair value of fixed assets acquired and goodwill for the network partners acquired in 2014 are as follows: Henan Sichuan Hubei Beijing Guangdong (1) Total Consideration: Ordinary shares Cash Total Fair value of fixed assets acquired Goodwill (1) There are three entities in Guangdong, namely, Shenzhen Chengxin ZTO Industrial Co., Ltd., Guangzhou Xin ZTO Express Co., Ltd. and Dongguan Kaisheng ZTO Express Co., Ltd. The three network partners in Guangdong and one network partner in Hunan were owned by the same group of shareholders. 2015 Acquisitions of Network Partners In October 2015, the Group purchased 16 network partners, consisting of the following: 6 network partners identified in the 2013 Restructuring that were previously accounted for under the equity method for cash consideration of RMB22,680 and 3,915,720 ordinary shares, determined to have a per share fair value of RMB48.64. 3 network partners in Fujian province previously accounted for under the equity method for cash consideration of RMB761 and 4,440,132 ordinary shares, determined to have a per share fair value of RMB48.64. 7 network partners owned and operated by unrelated third parties for cash consideration of RMB34,232 and 17,980,805 ordinary shares, determined to have a per share fair value of RMB48.64. For the acquisitions of the 9 delivery companies which the Group had investments in these entities accounted for under the equity method, the Group’s existing equity interests in these entities were remeasured to a total aggregate fair value of RMB431,022, with the excess over the carrying amount recognized as gain on deemed disposal of equity method investments of RMB224,148 in the consolidated statements of comprehensive income. Each of the network partners acquired was insignificant individually and in aggregate. The aggregated consideration, fair value of operating assets acquired and goodwill resulted for these acquisitions in 2015 are as follows: 2015 RMB Consideration: Ordinary shares Cash Total Fair value of the Group’s existing equity interests at the time of acquisition Less: Fair value of fixed assets acquired Goodwill The fair value of the ordinary shares was determined by the Group using generally accepted valuation methodologies, including the discounted cash flow approach, which incorporates certain assumptions including the financial results and growth trends of the Group, to derive the total equity value of the Group. In accordance with ASC805, Business Combination, the Group’s pre-existing interest in these entities were remeasured at fair value, with a resulting gain in the amount of RMB224,148 recorded in earnings. The fair value of the pre-existing interest in the equity method investment on the acquisition date is calculated by deducting the total fair value of additional equity interest acquired in these entities from the fair value of 100% equity interest in these entities at the date of acquisition by adopting income approach, in particular, the discounted cash flow method to analyze the indicative value of all equity interests in the acquired entities. The fair value of the entities acquired are estimated based on significant inputs which mainly include the financial results, growth trends of the Group and discount rate. The identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are required to be recognized and measured at fair value as of the acquisition date. An intangible asset is identified if it meets either the separability criterion or the contractual-legal criteria in accordance with ASC 805, Business Combination. Fair value of fixed assets acquired approximates the net book value of these assets. The intangible assets acquired in these acquisitions were assembled workforce, client service capability and presence in geographic locations/market within PRC, which did not meet the separation criteria or the contractual-legal criteria, therefore, are not identifiable and not recognized apart from goodwill. The goodwill was assigned to the whole group as a result of these acquisitions. Cash consideration of RMB50,697 and RMB87,766 was not paid as of December 31, 2014 and 2015, respectively, and has been recorded in acquisition consideration payables. Those amounts have been paid in 2016. 13,226,525 ordinary shares relating to the equity consideration exchanged for the 2015 acquisitions were not issued as of December 31, 2015. However, RMB643,338 relating to these non-contingent shares has been recorded as additional paid-in capital in the consolidated statements of changes in shareholders’ equity. Such shares have been issued in 2016. The following table summarizes unaudited pro forma results of operations for the years ended December 31, 2014 and 2015 assuming that all acquisitions occurred as of the beginning of period. The pro forma results have been prepared for comparative purpose only based on management’s best estimate and do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred as of the beginning of period: Years ended December 31, 2014 2015 (Unaudited) (Unaudited) RMB RMB Pro forma revenue Pro forma income from operations Pro forma net income attributable to the Group Pro forma net income per share Basic Diluted Pro forma net income attributable to the Group for the year ended December 31, 2015 excluded the gain of RMB224,148 on the deemed disposal of equity investments based on the assumption that the deemed disposal gain would not have resulted in this period, had the acquisitions been acquired as of the beginning of the period. It should not be included in the pro forma net income attributable to the Group for the year ended December 31, 2014 as such gain did not have a continuing impact. Revenues and net income in the amount of RMB291,688 and RMB15,594, respectively, attributable to the network partners acquired in October 2015 were included in the consolidated statements of comprehensive income in 2015 since the acquisition date. 2016 Acquisition of Network Partner In January 2016, the Group purchased the remaining 40% equity interest of Suzhou Zhongtong Express Ltd. (“Suzhou ZTO”) that was previously accounted for under the equity method for cash consideration of RMB30,660 and equity consideration of 600,000 ordinary shares, determined to have a per share fair value of RMB50.11. The total consideration is RMB60,726, and the goodwill resulted from this acquisition is RMB65,892. As a result of acquiring Suzhou ZTO, the Group’s existing equity interests was remeasured to a fair value of RMB91,089, with the excess over the carrying amount recognized as gain on deemed disposal of equity method investment of RMB9,551 in the consolidated statement of comprehensive income for the year ended December 31, 2016. The acquisition of Suzhou ZTO was not material to the consolidated financial statements for the year ended December 31, 2016. |
Property and equipment, net
Property and equipment, net | 12 Months Ended |
Dec. 31, 2016 | |
Property and equipment, net | |
Property and equipment, net | 4. Property and equipment, net Property and equipment, net consist of the following: As of December 31, 2015 2016 RMB RMB Buildings Machinery and equipment Leasehold improvements Vehicles Furniture, office and electric equipment Construction in progress Total Accumulated depreciation ) ) Property and equipment, net Depreciation expenses were RMB56,037, RMB145,276 and RMB301,668 for the years ended December 31, 2014, 2015 and 2016, respectively. As at December 31, 2015 and 2016, the title certificates for certain buildings of the Group with an aggregate net book value of approximately RMB172,768 and RMB724,041, respectively, had not been obtained. |
Land use rights, net
Land use rights, net | 12 Months Ended |
Dec. 31, 2016 | |
Land use rights | |
Land use rights, net | |
Land use rights, net | 5. Land use rights, net There is no private land ownership in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government. Land use rights are amortized using the straight-line method over the lease term of around 50 years or less. As of December 31, 2015 2016 RMB RMB Cost Less: Accumulated amortization ) ) Land use rights, net Amortization expenses for land use rights were RMB7,977, RMB12,780 and RMB23,310 for the years ended December 31, 2014, 2015 and 2016, respectively. As at December 31, 2015 and 2016, the title certificates for certain land use right of the Group with carrying value of approximately RMB3,881 and RMB11,239, respectively, has not been obtained. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill | |
Goodwill | 6. Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2016 were as follows: Amount RMB Balance at January 1, 2015 Increase in goodwill related to acquisitions Balance at December 31, 2015 Increase in goodwill related to acquisition of Suzhou ZTO Balance at December 31, 2016 |
Investments in equity investees
Investments in equity investees | 12 Months Ended |
Dec. 31, 2016 | |
Investments in equity investees | |
Investments in equity investees | 7. Investments in equity investees The Group’s investments in equity investees comprise the following: As of December 31, 2015 2016 RMB RMB Investments accounted for under equity method: Shenzhen Feng Chao Technology Ltd. (“Feng Chao”) (1) — ZTO Supply Chain Management Co., Ltd. (“ZTO LTL”) (2) — Feng Wang Investment Co., Ltd. (“Feng Wang”) (3) Suzhou Zhongtong Express Ltd. (“Suzhou ZTO”) (Note 3) — Others Total investments accounted for under the equity method Investments accounted for under cost method: Cai Niao Smart Logistics Network Limited (“Cai Niao”) (4) Shenzhen Feng Chao Technology Ltd. (“Feng Chao”) (1) — Wheat Commune Group Inc. (“Wheat Commune) (5) Others Total investments accounted for under the cost method Total investments in equity investees (1) Feng Chao In June 2015, the Group entered into a subscription and contribution agreement with three other express delivery companies in PRC, to establish a new company named Feng Chao, which focuses on optimizing the delivery process, for example, by creating storage lockers for deliveries, innovating on the “last mile” delivery of express parcels. The capital contribution by the Group was RMB100 million in cash, representing 20% of the equity interest of Feng Chao. The Group has one board seat out of five of Feng Chao, and has significant influence on Feng Chao’s significant operating activities. Therefore, the investment is accounted for using the equity method. In May 2016, the Group entered into the capital increase agreement with Feng Chao, to increase its investment by RMB100,000 to maintain its equity shares in Feng Chao at 20%, which was closed in August 2016. In July 2016, to coordinate with the Feng Chao’s employee incentive plan, all the investors of Feng Chao has agreed to transfers totally 5% of equity interests of Feng Chao to the employee share holding platform. As a result, the Group agreed to sell 1% of its equity interests in Feng Chao with the consideration of RMB2,500. In November 2016, the Group quit the board seat of Feng Chao, and no longer has significant influence on Feng Chao’s significant operating activities. Thereafter, the Group accounts for this investment under cost method. (2) ZTO LTL On August 22, 2016, the Group has entered into an investment agreement with ZTO LTL and Mr. Jianfa Lai to invest cash of RMB54,000 in exchange of 18% equity interest in ZTO LTL. ZTO LTL is engaged in provision of less-than-truckload transportation services in China. The principal shareholders of ZTO LTL are also the principal shareholders of the Group. Owing to the shareholders’ structure of ZTO LTL, the Group has significant influence on ZTO LTL’s significant operating activities. Therefore, the investment is accounted for using the equity method. (3) Feng Wang In December 2013, the Group entered into an agreement with other three top express delivery companies in China, to establish Feng Wang, which is to invest in the upstream industries and integrate resources across the express delivery value chain. The capital contribution by the Group was RMB50 million in cash, representing 25% of the equity interest of Feng Wang. In 2015, the Group’s equity interest to Feng Wang decreased to 20% due to the additional capital contributions from other shareholders of Feng Wang. (4) Cai Niao In May 2013, the Group entered into an investment agreement with several prestigious e-Commerce firms, investment corporations and delivery companies, to launch a new company named Cai Niao, which provides a platform that connects with a network of logistics providers through a proprietary logistics information system and facilitates the delivery of packages across PRC. The Group invested RMB50 million in Cai Niao, and held 1% of its equity interests. In March, 2016, the Group subscribed for an additional 30,000,000 shares for consideration of RMB106 million pursuant to the share subscription agreement dated as of March 11, 2016 during the new round of financing by Cai Niao. The additional subscription did not change the percentage of equity interest the Group held in Cai Niao. (5) Wheat Commune In December 2015, the Group entered into a share purchase agreement to obtain 7.45% equity interest in Wheat Commune for US$12 million (equivalent to RMB83 million). Wheat Commune is a leading Omni-channel platform providing comprehensive campus service in more than 100 cities across the country. |
Short-term bank borrowing
Short-term bank borrowing | 12 Months Ended |
Dec. 31, 2016 | |
Short-term bank borrowing | |
Short-term bank borrowing | 8. Short-term bank borrowing Short-term bank borrowing consists of the following: As of December 31, 2015 2016 RMB RMB PRC domestic commercial banks On November 4, 2015, a PRC subsidiary of the Group entered into a short-term borrowing agreement for RMB300,000 with a commercial bank in the PRC with a fixed interest rate of 4.35% per annum. The borrowing was guaranteed by a related party and another PRC subsidiary of the Group and collateralized by certain of the Group’s assets. The Group fully repaid this borrowing in November 2016. On January 1, 2016, the Group acquired Suzhou ZTO, which has an outstanding short-term borrowing amounting to RMB8,943 due on January 2017, with a fixed interest rate of 6.4% per annum. The Group repaid in full as of December 31, 2016. On February 3, 2016, a PRC subsidiary of the Group entered into a short-term borrowing agreement of RMB100,000 with a commercial bank in the PRC at a fixed interest rate of 4.785% per annum, then repaid in full in July 2016. On December 29, 2016, a PRC subsidiary of the Group entered into a short-term borrowing agreement of RMB300,000 with a commercial bank in the PRC at a fixed interest rate of 4.35% per annum, collateralized by the letter of guarantee issued from the Group’s designated bank accounts by RMB333,264 for this short-term borrowings. On December 29, 2016, a PRC subsidiary of the Group entered into a short-term borrowing agreement of RMB150,000 with a commercial bank in the PRC at a fixed interest rate of 3.915% per annum. |
Other current liabilities
Other current liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Other current liabilities | |
Other current liabilities | 9. Other current liabilities Other current liabilities consist of the following: As of December 31, 2015 2016 RMB RMB Payables related to property and equipment Salary and welfare payable Deposits from network partners (1) Share unit awards payable (Note 11) — Construction deposits Others Total (1) Amount primarily represents the dispatching fee deposits collected from the pickup outlets operated by our network partners, which is refunded when the parcel is delivered to the recipients. |
Income tax
Income tax | 12 Months Ended |
Dec. 31, 2016 | |
Income tax | |
Income tax | 10. Income tax Under the current laws of the Cayman Islands, the Company is incorporated in the Cayman Islands and not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. Under the current laws of the British Virgin Islands, the Group’s subsidiary incorporated in British Virgin Island are not subject to tax. Under the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiary domiciled in Hong Kong is subject to 16.5% Hong Kong profit tax on its taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax. Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Group’s subsidiaries domiciled in the PRC are subject to statutory rate of 25%. The current and deferred portion of income tax expenses included in the consolidated statements of comprehensive income, which were substantially attributable to the Group’s PRC subsidiaries are as follows: Years ended December 31, 2014 2015 2016 RMB RMB RMB Current tax expenses Deferred tax ) ) Total Reconciliations of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2014, 2015 and 2016 are as follows: Years ended December 31, 2014 2015 2016 PRC statutory income tax rate % % % R&D super deduction )% )% )% Non-deductible expenses % % % Expired tax loss % — — Wavier of tax liabilities due to liquidation )% — — Non-taxable income — )% )% Different tax rate of group entities operating in other jurisdiction — — % True up — — )% Others )% )% — % % % The principal components of the Group’s deferred income tax assets and liabilities as of December 31, 2015 and 2016 are as follows: As of December 31, 2015 2016 Deferred tax assets: Accrued expense Unrealized gain for intragroup transaction Net loss carryforward Government subsidy Provision for allowance for doubtful accounts Depreciation for property and equipment Total deferred tax assets Deferred tax liabilities: Difference in basis of land use rights ) ) Total deferred tax liabilities ) ) The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the Group’s experience with tax attributes expiring unused and tax planning alternatives. Considering all the above factors, the management concluded that all the deferred tax assets could be utilized before its expiry. As such, no valuation allowances are provided to the deferred tax assets. As of December 31, 2016, the Group had tax loss carryforward in subsidiaries of RMB51,006 which will expire from 2019 to 2021. Uncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese Income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties, occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a statutory income tax rate of 25%. The Group is not subject to any other uncertain tax position. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. From inception to 2016, the Group is subject to examination of the PRC tax authorities. Aggregate undistributed earnings of the Group’s PRC subsidiaries and VIE that are available for distribution was RMB1,434,218 and RMB3,238,472 as of December 31, 2015 and 2016, respectively. In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Company has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. The Group plans to indefinitely reinvest undistributed profits earned from its China subsidiaries in its operations in the PRC. Therefore, no withholding income taxes for undistributed profits of the Group’s subsidiaries have been provided as of December 31, 2015 and 2016. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Group completed its feasibility analysis on a method, which the Group will ultimately execute if necessary to repatriate the undistributed earnings of the VIE without significant tax costs. As such, the Group does not accrue deferred tax liabilities on the earnings of the VIE given that the Group will ultimately use the means. |
Share-based compensation
Share-based compensation | 12 Months Ended |
Dec. 31, 2016 | |
Share-based compensation | |
Share-based compensation | 11. Share-based compensation On February 6, 2015, ZTO Express granted a total of 584,000 redeemable and contingently convertible share units to certain key employees. The key terms of these share unit grants are as follows: · Participating employees are required to pay a subscription price of RMB100 per share unit at the date of grant. · Participating employees have the right to request ZTO Express to repurchase their share units in January of each year subsequent to their subscription of the share units. The repurchase price is determined based on the original subscription price of RMB100 per unit plus a return based on a fixed compound annual rate of 35% for 2015, increasing by 5% in each of the following years. The annual return rate is capped at 50%. · Upon termination of employment or retirement, participating employees have the right to request ZTO Express to repurchase their share units based on a pro-rated return determined by the number of days they held the share units during the year. If the employee does not request for a cash redemption at the time they terminate their employment with ZTO Express, the repurchase right is terminated. · Participating employees do not have the option to convert their share units to equity of the ZTO Express. Conversion of these share units are contingent upon a qualified IPO. All outstanding units at the time of the Group’s IPO will be converted on ordinary shares based on a conversion ratio of 1:6. The repurchase provision terminates upon conversion of these share units to ordinary share upon IPO. In conjunction with the 2015 Restructuring in August 2015, all outstanding share units granted and outstanding were converted to the share units of the Company with the same terms and conditions noted above. As of December 31, 2015, none of the share units was forfeited. These awards are classified as liabilities and measured at fair value at the date of the grant and subsequently remeasured to fair value at the end of each reporting period. Changes in the fair value of the liabilities incurred for these awards are recognized as stock-based compensation. The Group uses a binominal option pricing model to estimate the fair value of the share units granted. The fair value per unit was determined at the date of grant to be RMB147.10 and at December 31, 2015 to be RMB300.00 using the following assumptions: February 6, 2015 December 31, 2015 Expected volatility % % Risk-free interest rate (per annum) % % Risk-based interest rate (per annum) % % Expected dividend yield — — Expected term (in years) Fair value of underlying ordinary shares Total fair value of the awards at the date of grant and December 31, 2015 were RMB85,906 and RMB175,200, respectively. A total fair value adjustment of RMB116,800 was recorded as selling, general and administrative expenses in the consolidated statements of comprehensive income for the year ended December 31, 2015. In June 2016, the Group established an employee share holding platform (the “Share Holding Platform”). The purpose of the Share Holding Platform is to allow employees of the Group in the PRC to receive equity share incentives. Zto Es Holding Limited (“ZTO ES”), a British Virgin Islands company was established as a holding vehicle for the Group’s Share Holding Platform. Four limited liability partnerships (“LLPs”) were established in the PRC as the shareholders of ZTO ES, each holding 25% equity interest in ZTO ES. At the time of establishment of these LLPs, Mr. Lai Meisong, chairman and chief executive officer of the Group, and his wife, Ms. Lai Yufeng agreed to serve as the general partner and sole limited partner of each of the four LLPs, respectively. ZTO ES and the LLPs have no activities other than administering the plan and does not have employees. On behalf of the Group 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; and determine the number of shares covered; establish the terms, conditions and provision of such awards. On June 28, 2016, the Company issued 16 million ordinary shares to ZTO ES. At the time of issuance, all shareholder rights associated with these 16 million ordinary shares including but not limited to voting right and dividend right were waived initially 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 Group 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. Pursuant to a board of director resolution, on June 28, 2016, the following awards were approved to be granted to certain of Group’s employees: · 584,000 outstanding redeemable and contingently convertible share units were converted to 17,520,000 Ordinary Share Units, which correspond to 3,504,000 Company’s ordinary shares. This conversion is calculated based on the original conversion ratio of one redeemable and contingently convertible share units to six ordinary shares. Upon conversion to the Ordinary Share Units, the cash redemption right and contingent conversion right were terminated. · 5,270,820 Ordinary Share Units corresponding to 1,054,164 Company’s ordinary shares were transferred to certain employees to award them for past performance. Of these awards, 1,540,500 Ordinary Share Units were granted to one employee with a cash subscription payment of RMB10,000, and the remaining 3,730,320 Ordinary Share Units were granted to employees for no cash subscription. · These Ordinary Share Units awards have no vesting conditions and can be transferred in accordance with the applicable limited liability partnership agreement. The conversion of 584,000 redeemable and contingently convertible share units to Ordinary Share Units was accounted for as a modification in accordance with ASC 718, Compensation—Stock Compensation. As a result of the modification, the cash redemption clause and contingent conversion upon IPO clause were terminated. As the Group is not obligated to settle the Ordinary Share Units in cash, this modification changed the award’s classification from liability to equity. The fair value of the modified awards on the date of the modification was RMB236,181. Compensation cost of RMB60,981 representing the difference between the fair value of the modified awards on the date of modification and the fair value of the redeemable and contingently convertible share units as of December 31, 2015 was recorded as shared-based compensation expenses and included in selling, general and administrative expenses in the consolidated statement of comprehensive income for the year ended December 31, 2016. As these Ordinary Share Units have no vesting condition, the total fair value of the modified award of RMB236,179 has been recorded as a credit to the additional paid in capital at the date of modification. Total fair value of redeemable and contingently convertible share units awards at the date of grant and December 31, 2015 were RMB85,906 and RMB175,200, respectively. A total fair value adjustment of RMB116,800 was recorded as selling, general and administrative expenses in the consolidated statement of comprehensive income for the year ended December 31, 2015. The Group accounted 5,270,820 Ordinary Share Units (equivalent to 1,054,164 ordinary shares) as equity awards and measured them at fair value at the date of the grant in accordance with ASC 718. As these awards vested immediately at the date of grant, the Group recorded share-based compensation of RMB61,019 at the date of the grant based on a determined per share fair value of ordinary shares at RMB67.37 in the consolidated statement of comprehensive income for the year ended December 31, 2016. A summary of changes in the ordinary share awards relating to the Share Holding Platform granted by the Group during the year ended December 31, 2016 is as follows: Number of Weighted average Awarded and outstanding at January 1, 2016 — — Granted and vested Vested and Outstanding at December 31, 2016 The fair value of Ordinary Share Units was based on the fair value of the underlying ordinary shares which was determined by using option-pricing method to allocate enterprise value to preferred and ordinary shares on a fully diluted basis. The method treats ordinary shares and preferred shares as call options on the enterprise’s value, with exercise prices on the liquidation preference of the preferred shares. 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 the relevant directors, executive officers and other employees of the Company and its affiliates, 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. On the same date, the Company granted options to purchase 300,000 ordinary shares to certain executive of the Company at an exercise price of US$9.97 per share under the 2016 Share Incentive Plan. The options expire in 10 years from the date of grant and vest ratably at each grant date anniversary over a requisite service period of five years. 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 on the first day of each of our fiscal year during the term of the 2016 Plan commencing with the fiscal year beginning January 1, 2017, 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 our board of directors. Following the annual incease on January 1, 2017 of 3,000,000 shares, the award pool under the 2016 Plan is 6,000,000 shares. The Group uses a binominal pricing model to estimate the fair value of the above options granted under the 2016 Share Incentive Plan. The fair value per option was estimated at the date of grant using the following weighted-average assumptions: June 20, 2016 Risk-free interest rate % Contract life Expected volatility range % Expected dividend yield % Exercise multiple x Fair value of underlying ordinary shares on the date of option grants (RMB) The Group estimated the risk free interest rate based on the yield to maturity of U.S. treasury bonds denominated in USD and adjusted for country risk premium of PRC at the option valuation date. The expected volatility at the date of grant date and each option valuation date was estimated based on the annualized standard deviation of the daily return embedded in historical share prices of comparable peer companies with a time horizon close to contract life. The Group estimated dividend yield based on the average dividend yield of comparable peer companies. A summary of changes in the share options relating to ordinary shares granted by the Company during the year ended December 31, 2016 is as follows: Number of Weighted Weighted average Aggregate Outstanding at January 1, 2016 — — Granted Outstanding at December 31, 2016 9.17 years Vested and exercisable at December 31, 2016 — — — — Vested and expected to vest at December 31, 2016 9.17 years The weighted average grant date fair value of options granted during the year ended December 31, 2016 was RMB15.89. There were no options granted during the year ended December 31, 2015. As of December 31, 2016, there was RMB4,265 of total unrecognized compensation expense related to unvested share options granted. That cost is expected to be recognized over a weighted-average period of 4.17 years. The total expense recorded in selling, general and administrative is RMB502 for the year ended December 31, 2016. |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2016 | |
Ordinary shares | |
Ordinary shares | 12. Ordinary shares As disclosed in Note 11, on June 28, 2016, 16 million ordinary shares of the Company were issued to ZTO ES to establish a reserve pool for future issuance of equity share incentive to the Group’s employees. All shareholder rights of these 16 million ordinary shares including but not limited to voting rights and dividend rights are unconditionally waived until the corresponding Ordinary Share Units are transferred to the employees. While the ordinary shares were legally issued to ZTO ES, ZTO ES does not have any of the rights associated with the ordinary shares, as such the Company accounted for these shares as issued but not outstanding ordinary shares until the waiver is released by the Company, which occurs when Ordinary Shares Units are awarded to the employees. 10,841,836 ordinary shares transferred to ZTO ES are considered issued but not outstanding as of December 31, 2016. Prior to the consummation of the IPO, on October 27, 2016, pursuant to the revised Articles of Association, the Company’s authorized share capital was reclassified and re-designated into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one vote and each Class B ordinary share being entitled to ten votes on all matters that are subject to shareholder vote. Both Class A ordinary shares and Class B ordinary shares are entitled to the same dividend right. The holders of the Group’s ordinary shares are entitled to such dividends as may be declared by the board of directors subject to the Companies Law. The authorized 10,000,000,000 share of the Company was comprised of 8,000,000,000 Class A ordinary shares, 1,000,000,000 Class B ordinary shares and 1,000,000,000 shares designated as the board of directors may determine. Upon such re-designation, the Company had 453,206,440 Class A ordinary shares issued and 442,364,604 Class A ordinary shares outstanding; and 206,100,000 Class B ordinary shares issued and outstanding. All of the Class B ordinary shares were held by the Chairman of the Company. Upon the IPO in October 2016, the Company issued 72,100,000 Class A ordinary shares. |
Earnings per share and dividend
Earnings per share and dividends per share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings per share and dividends per share | |
Earnings per share and dividends per share | 13. Earnings per share and dividends per share The Group has used the two-class method of computing earnings per share as its Series A convertible redeemable preferred shares participate in undistributed earnings on the same basis as the ordinary shares. Under this method, net income applicable to holders of ordinary shares is allocated on a pro-rata basis to the ordinary and preferred shares to the extent that each class may share in income for the period had it been distributed. Losses are not allocated to the participating securities. Diluted earnings per share are computed using the more dilutive of (a) the two-class method or (b) the if-converted method. Upon the consummation of the Company’s IPO on October 27, 2016, the convertible redeemable preferred shares were automatically converted into Class A ordinary shares. The two-class method of computing earnings per share ceased to apply on the conversion date. Basic and diluted earnings per share for each of the years presented are calculated as follows: Years ended December 31, 2014 2015 2016 RMB RMB RMB Numerator: Net income attributable to ZTO Express (Cayman) Inc. Less: Change in redemption value for redeemable preferred shares — ) ) Earnings attributable to participating securities — ) ) Net income attributable to ordinary shareholders in computing basic and diluted earnings per share Shares (Denominator): Weight average ordinary shares outstanding—basic and diluted Earnings per share—basic and diluted Diluted earnings per share were computed using the two-class method for the years ended December 31, 2014 and 2015 as it is more dilutive than the if-converted method. As of December 31, 2015, 30,079,918 convertible redeemable preferred shares were excluded from computation of diluted earnings per share as their effects would have been anti-dilutive. As of December 31, 2016, 300,000 share options were excluded from computation of diluted earnings per share as their effects would have been anti-dilutive. 13,226,525 non-contingent ordinary shares relating to the 2015 acquisitions that were not issued as of December 31, 2015 have been included in the calculations of basic and diluted earnings per share. Such ordinary shares have been issued in 2016. 10,841,836 ordinary shares transferred to ZTO ES were considered issued but not outstanding as of December 31, 2016 and therefore not included in the calculation of basic and dilutive earnings per share. Conversion of 584,000 redeemable and contingently convertible share units issued in February 2015 based on a conversion ratio of 1:6 are contingent upon an effective qualified IPO, a condition which is not met as of December 31, 2015. Therefore, these share units have been excluded from the denominator in the computation of basic and diluted EPS for the year ended December 31, 2015. On June 28, 2016, all the redeemable and contingently convertible share units have been converted to Ordinary Shares Units. The underlying ordinary shares associated with these Ordinary Share Units were included in the denominator in the computation of basic and diluted earnings per share for the year ended on December 31, 2016. Cash dividend of RMB0.19 per share were declared and paid on September 14, 2015, to shareholders of record as of December 31, 2014. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related party transactions | |
Related party transactions | 14. Related party transactions The table below sets forth the major related parties and their relationships with the Group: Name of related parties Relationship with the Group Tonglu Tongze Logistics Ltd and its subsidiaries Majority equity interests held by the employees of the Group Lai Yufeng Spouse of chairman of the Group Shanghai Mingyu Barcode Technology Ltd. Controlled by brother of chairman of the Group Fengwang Investments Ltd. Group’s equity investee Heilongjiang Ruston Express Ltd. Group’s equity investee Shanghai Kuaibao Network Technology Ltd. Group’s equity investee Quanzhou Zhongtong Express Ltd. Group’s equity investee Wuhan Chengxin Zhongtong Express Ltd. Entity controlled by principal shareholders of the Group Shanxi Zhongtong Daying Logistics Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Shenyang Changsheng Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Nanchang Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Tianjin Qianqiu Zhongtong Express Service Co. Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Shaanxi Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Jilin Zhongtong Daying Logistics Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Zhejiang Zhongtong Express Services Company Ltd. Entity controlled by principal shareholders of the Group until October 31, 2014 Shanghai Zhongtongji Express Service Co., Ltd. Entity controlled by principal shareholders of the Group until May 30, 2016 Suzhou Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in January 2016 ZTO Supply Chain Management Co., Ltd. Group’s equity investee Zto Es Holding Limited Entity controlled by Chairman of the Group (a) The Group entered into the following transactions with its related parties: Years ended December 31, 2014 2015 2016 RMB RMB RMB Delivery revenue derived from Quanzhou Zhongtong Express Ltd. — Suzhou Zhongtong Express Ltd. — Shenyang Changsheng Zhongtong Express Ltd. — Nanchang Zhongtong Express Ltd. — Tianjin Qianqiu Zhongtong Express Service Co., Ltd. — Shaanxi Zhongtong Express Ltd. — Shanxi Zhongtong Daying Logistics Ltd. — Jilin Zhongtong Daying Logistics Ltd. — Fengwang Investments Ltd. — Heilongjiang Ruston Express Ltd. — Zhejiang Zhongtong Express Services Company Ltd. — — Total — Transportation service fees paid to Tonglu Tongze Logistics Ltd and its subsidiaries ZTO Supply Chain Management Co., Ltd. — — Total Purchases of supplies from Shanghai Mingyu Barcode Technology Ltd. On June 28, 2016, the Company issued 16 million ordinary shares to ZTO ES. At the time of issuance, all shareholder rights associated with these 16 million ordinary shares including but not limited to voting right and dividend right were waived initially 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 board of director resolutions, 5,158,164 of which ordinary share were granted by the Group during the year ended December 31, 2016. As of December 31, 2016, all shareholder rights associated with the remaining 10,841,836 ordinary shares were still waived. In September, 2016, Mr. Meisong Lai paid RMB11,789 to the Company as additional capital contribution recorded in additional paid-in capital in its consolidated balance sheets as of December 31, 2016. On August 22, 2016, the Group has entered into an investment agreement with ZTO LTL and Mr. Jianfa Lai to invest cash of RMB54,000 in exchange of 18% equity interest in ZTO LTL. ZTO LTL is engaged in provision of less-than-truckload transportation services in China. The principal shareholders of ZTO LTL are also the principal shareholders of the Group. Owing to the shareholders’ structure of ZTO LTL, the Group has significant influence on ZTO LTL’s significant operating activities. Therefore, the investment is accounted for using the equity method. In 2014, the Group paid RMB213 million to certain principal shareholders of the Group who are also the owners of Zhejiang Zhongtong Express Services Company Ltd. to cease their delivery operations in Zhejiang province, PRC. As part of the 2013 Restructuring and pursuant to an agreement executed between Shanghai Zhongtongji and ZTO Express, ZTO Express has agreed to pay a cash consideration of RMB222 million for the acquisition of substantially all of the operating assets and equity investments held by Shanghai Zhongtongji. In 2014, ZTO Express paid approximately RMB158 million of deposits and other expenses on behalf of Shanghai Zhongtongji after the acquisition of Shanghai Zhongtongji’s business. The Group has agreed with the shareholders of Shanghai Zhongtongji to net settle these two balances and a cash payment for the net amount of RMB64 million was made in 2014. In 2013, Shanghai Zhongtongji provided RMB341 million of interest-free loan to ZTO Express to fund the registered capital injections for the establishment of ZTO Express’s subsidiaries. ZTO Express repaid the loan in 2014. (b) The Group had the following balances with its related parties: As of December 31, 2015 2016 RMB RMB Amounts due to Tonglu Tongze Logistics Ltd. and its subsidiaries Shanghai Mingyu Barcode Technology Ltd. — ZTO Supply Chain Management Co., Ltd. — Suzhou Zhongtong Express Ltd. — Quanzhou Zhongtong Express Ltd. — Shanxi Zhongtong Daying Logistics Ltd. — Total Amounts due to related parties consisted of accounts payable to related parties for transportation, waybill material and deposits as of December 31, 2015 and 2016, respectively. (c) The Group had the following balances with its related parties: As of December 31, 2015 2016 RMB RMB Amounts due from Shanghai Kuaibao Network Technology Ltd. (1) Lai Yufeng (2) — Tonglu Tongze Logistics Ltd. and its subsidiaries (3) — Shanxi Zhongtong Daying Logistics Ltd. (1) — Wuhan Chengxin Zhongtong Express Ltd. (1) — Total (1) Other amounts due from related parties consisted of prepaid transportation fee and loans to related parties as of December 31, 2015 and 2016, respectively. (2) As of December 31, 2015 and 2016, Ms. Lai Yufeng was holding RMB58,400 and nil, respectively in cash and cash equivalent on behalf of the Group. (3) As of December 31, 2015, the Group had an outstanding note receivable of RMB15,000, which bears interest of 20% per annum from Tonglu Tongze Logistics Ltd. and its subsidiaries (“Tonglu”). The amount, plus accrued interest of RMB1,500 was fully repaid to the Group in June 2016. The Group also prepaid transportation fee of RMB7,168 and nil to Tonglu as of December 31, 2015 and 2016, respectively. Historically, the Group’s employees have served as the key management of Tonglu, with compensation determined and paid by the Group. Such compensation paid has not been significant for the periods presented. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and contingencies | |
Commitments and contingencies | 15. Commitments and contingencies Operating Leases Commitments The Group leases office space, sorting hubs and warehouse facilities under non-cancellable operating lease agreements that expire at various dates through December 2032. During the three years ended December 31, 2014, 2015 and 2016, the Group incurred rental expenses amounting to RMB65,892, RMB105,235 and RMB146,780, respectively. As of December 31, 2016, minimum lease payments under all non-cancellable leases are as follows: Years ending RMB 2017 2018 2019 2020 2021 2022 and after Total lease commitment Capital Commitments The Group’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 RMB1,477,441 as of December 31, 2016. All of these capital commitments will be fulfilled in the following years based on the construction progress. Contingencies The Group is subject to periodic legal or administrative proceedings in the ordinary course of business. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material effect on its business or financial condition. The Group has not made adequate contributions to employee benefit plans, including retirement benefits, medical insurance benefits, housing funds, unemployment and other statutory benefits for full time employees as required by applicable PRC laws and regulations, but the Group has recorded accruals for the estimated underpaid amounts in the consolidated financial statements. However, the Group 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 Group believes it would be unlikely that the relevant PRC government authorities will impose any significant interests or penalties. |
Repurchase of ordinary share of
Repurchase of ordinary share of ZTO Express | 12 Months Ended |
Dec. 31, 2016 | |
Repurchase of ordinary share of ZTO Express | |
Repurchase of ordinary share of ZTO Express | 16. Repurchase of ordinary share of ZTO Express In November 2014, the Group repurchased an aggregate of 13,800,000 ordinary shares of ZTO Express from certain shareholders at RMB16.67 per share for total cash consideration of RMB230 million, which approximated fair value. Consideration of RMB46 million was not paid as of December 31, 2015 and 2016. |
Convertible redeemable preferre
Convertible redeemable preferred shares | 12 Months Ended |
Dec. 31, 2016 | |
Convertible redeemable preferred shares | |
Convertible redeemable preferred shares | 17. Convertible redeemable preferred shares In 2015, the Company issued 30,079,918 shares of Series A preferred shares (“Preferred Shares”) at a per-share purchase price of about US$9.97 (equivalent to RMB64.58) for a total consideration of US$300 million (equivalent to RMB1,943 million) to a group of unrelated third party investors. Given the nature of certain key terms of the Preferred Shares as listed below, the Company has classified the Preferred Shares as mezzanine equity. The key terms of the Preferred Shares are as follows: Conversion Each holder of Preferred Shares shall have the right, at such holder’s sole discretion, to convert all or any portion of the Preferred Shares into ordinary shares based on a one-for-one basis at any time. The initial conversion price is the issuance price of Preferred Shares, subject to adjustment in the event of (1) stock splits, share combinations, share dividends and distribution, recapitalizations and similar events, and (2) issuance of new securities at a price per share less than the conversion price in effect on the date of or immediately prior to such issuance. In that case, the conversion price shall be reduced concurrently to the subscription price of such issuance. The Preferred Shares will be automatically converted into ordinary shares at the then applicable conversion price upon the earlier of (1) the closing of a Qualified Initial Public Offering (QIPO), which refers to a firm underwritten initial public offering of the Company’s ordinary shares for trading on the New York Stock Exchange, NASDAQ Global Market, Main Board of the Hong Kong Stock Exchange or any other stock exchange as approved by a majority of the Company’s shareholders; or (2) the date specified by written consent or agreement of majority holders of Preferred Shares. Upon the closing of a QIPO, the conversion of the Preferred Share is subject to a Guarantee Return provision which is defined as below: Upon consummation of a QIPO, valuation of Preferred Shares determined by reference to the per-share offering price in the QIPO shall not be less than the Guaranteed Return which is the lower of (i) the aggregate purchase price for the Preferred Shares subscribed prior to the consummation of a QIPO plus return on such investment calculated based on 25% per annual compound rate of return; or (ii) 200% of the aggregate purchase price for the Preferred Shares. If the valuation of all or the portion of the Preferred Shares determined by reference to the offering price in the IPO shall be less than the Guaranteed Return upon the completion of the QIPO (such shortfall, the “Shortfall Amount”), the Company is obligated issue warrants to such preferred shareholders or have the conversion price or conversion rate applicable to the Preferred Shares automatically adjusted or cash or share compensation (at the election of preferred shareholders) shall be payable from the Company according to the shortfall amount. The Group has determined that there was no beneficial conversion feature (“BCF”) attributable to the Preferred Shares, as the effective conversion price was greater than the fair value of the ordinary shares on the respective commitment date. The Group will reevaluate whether additional BCF is required to be recorded upon the modification to the effective conversion price of the Preferred Shares, if any. Voting Rights The Preferred Shareholders are entitled to vote with ordinary shareholders on an as-converted basis. Dividends The Preferred Shareholders participate in dividends on an as-converted basis and must be paid prior to any payment on ordinary shares. Redemption In the event that a QIPO has not been completed by August 18, 2019 (the fourth anniversary of the first closing date), holders of the Preferred Shares may at any time thereafter require that the Company redeem all or a portion of the Preferred Shares held by such holder at a redemption price per share equal to the sum of (i) an amount equal to the original issuance price plus annual rate of return of 8% from the date that such holder made payment to the Company, and (ii) all dividends accrued and unpaid with respect thereto (as adjusted for any share splits, share dividends, combinations, recapitalizations and similar transactions). Management of the Group evaluated on the issuance date of preferred shares that the redemption is probable to occur until the occurrence of the IPO. Therefore, the preferred shares were recorded at fair value on closing dates, and subsequently accreted to redemption value based on the terms stipulated in the shareholder agreement. Changes in the redemption value are recorded against retained earnings. All of the preferred shares were converted to ordinary shares immediately upon the completion of the Group’s IPO on October 27, 2016. The following is the rollforward of the carrying amounts of Preferred Share for the years ended December 31, 2015 and 2016: Balance as of January 1, 2015 — Issuance of Preferred Shares Change in redemption value Balance as of December 31, 2015 Change in redemption value Conversion to ordinary shares upon IPO ) Balance as of December 31, 2016 — Liquidation In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, all assets and funds of the Company legally available for distribution to the shareholders (after satisfaction of all creditors’ claims and claims that may be preferred by law) shall be distributed to all shareholders on parity with each other and shall be made ratably to the holders of the outstanding Preferred Shares and Ordinary Shares, on an as-converted to Ordinary Share basis determined pursuant to an Optional Conversion as of the time of such distribution. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Employee Benefit Plans | |
Employee Benefit Plans | 18. Employee Benefit Plans The Group’s PRC subsidiaries are required by law to contribute a certain percentages of applicable salaries for retirement benefits, medical insurance benefits, housing funds, unemployment and other statutory benefits for full time employees. The Group contributed RMB120,521, RMB253,561 and RMB168,688 for the years ended December 31, 2014, 2015 and 2016, 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. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Segment Information | 19. Segment Information The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’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 Group as a whole. The Group does not distinguish among markets or segments for the purpose of internal reports. All of the Company’s revenues for the years ended December 31, 2014, 2015 and 2016 were generated from the PRC. As of December 31, 2015 and 2016, all of the long-lived assets of the Group are located in the PRC, and no geographical segments are presented. |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2016 | |
Restricted Net Assets | |
Restricted Net Assets | 20. Restricted Net Assets Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises and local enterprises, the Group’s entities in the PRC must make appropriation from after-tax profit to non-distributable reserve funds as determined by the Board of Directors of the Company. PRC laws and regulations permit payments of dividends by the Company’s subsidiaries and VIE incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s subsidiaries and VIE incorporated in the PRC are required to annually appropriate 10% of their net income to the statutory reserve prior to payment of any dividends, unless such reserve has reached 50% of their respective registered capital. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each subsidiary and VIE. The appropriation to these reserves by the Company’s PRC entities were RMB63,538, RMB91,633 and RMB180,976 for the years ended December 31, 2014, 2015 and 2016, respectively. The accumulated reserves as of December 31, 2015 and 2016 were RMB155,199 and RMB336,175, respectively. As a result of these PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid-in capital and the statutory reserves of the Company’s PRC subsidiaries and VIE. As of December 31, 2016, the aggregate amount of capital and statutory reserves restricted which represented the amount of net assets of the relevant subsidiaries and VIE in the Group not available for distribution was RMB3,937,496. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events On March 28, 2017, the Group granted restricted share units("RSU") to acquire 679,645 Class A ordinary shares of the Company at par value to certain director, executive offices and employees pursuit to the 2016 Share Incentive Plan. In addition, the Group also granted Ordinary Share Units through the Share Holding Platform corresponding to 789,150 Class A ordinary shares of the Company to certain executive officers and employees at nil value. These grants are subject to vesting ratably over a period of three. |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | (a) Basis of presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). |
Principles of consolidation | (b) Principles of consolidation The 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 Group evaluates the need to consolidate certain VIE of which the Group is the primary beneficiary. In determining whether the Group is the primary beneficiary, the Group considers if the Group (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 Group consolidates the VIE. Consolidation of Variable Interest Entities Applicable PRC laws and regulations currently limit foreign ownership of companies that provide delivery services in PRC. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are ineligible to engage in provisions of delivery services. As discussed in Note 1, the Group undertook the 2015 Restructuring whereby ZTO Express and its subsidiaries became a VIE of the Group effective on August 18, 2015. To provide the Group effective control over ZTO Express and receive substantially all of the economic benefits of ZTO Express, the Company’s wholly owned subsidiary, Shanghai Zhongtongji Network Technology Ltd. (“Shanghai Zhongtongji Network”) entered into a series of contractual arrangements, described below, with ZTO Express and its individual shareholders. Agreements that provide the Company effective control over the VIE include: Voting Rights Proxy Agreement & Irrevocable Powers of Attorney Under which each shareholder of ZTO Express has executed a power of attorney to grant Shanghai Zhongtongji Network the power of attorney to act on his or her behalf on all matters pertaining ZTO Express and to exercise all of his or her rights as a shareholder of ZTO Express, including but not limited to convene, attend and vote at shareholders’ meetings, designate and appoint directors and senior management members. The proxy agreement will remain in effect unless Shanghai Zhongtongji Network terminates the agreement by giving a prior written notice or gives its consent to the termination by ZTO Express. Exclusive Call Option Agreement Under which the shareholders of ZTO Express granted Shanghai Zhongtongji Network or its designated representative(s) an irrevocable and exclusive option to purchase their equity interests in ZTO Express when and to the extent permitted by PRC law. Shanghai Zhongtongji Network or its designated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Shanghai Zhongtongji Network’s written consent, the shareholders of ZTO Express shall not transfer, donate, pledge, or otherwise dispose any equity interests of ZTO Express in any way. The acquisition price for the shares or assets will be the minimum amount of consideration permitted under the PRC law at the time when the option is exercised. The agreement can be early terminated by Shanghai Zhongtongji Network, but not by ZTO Express or its shareholders. Equity Pledge Agreement Under which the shareholders of ZTO Express pledged all of their equity interests in ZTO Express to Shanghai Zhongtongji Network as collateral to secure their obligations under the above agreement. If the shareholders of ZTO Express or ZTO Express breach their respective contractual obligations, Shanghai Zhongtongji Network, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the agreement, the shareholders of ZTO Express shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in ZTO Express without prior written consent of Shanghai Zhongtongji Network. The equity pledge right held by Shanghai Zhongtongji Network will expire when the shareholders of ZTO Express and Shanghai Zhongtongji Network have fully performed their respective obligations under the Consulting Services Agreement and Operating Agreement, or the shareholder is no longer a shareholder of ZTO Express or the satisfaction of all its obligations by ZTO under the VIE contractual arrangements. The agreements that transfer economic benefits to the Company include: Exclusive Consulting and Services Agreement Under which ZTO Express engages Shanghai Zhongtongji Network as its exclusive technical and operational consultant and under which Shanghai Zhongtongji Network agrees to assist in business development and related services necessary to conduct ZTO Express’s operational activities. ZTO Express shall not seek or accept similar services from other providers without the prior written approval of Shanghai Zhongtongji Network. The agreements will be effective as long as ZTO Express exists. Shanghai Zhongtongji Network may terminate this agreement at any time by giving a prior written notice to ZTO Express. Under the above agreements, the shareholders of ZTO Express irrevocably granted Shanghai Zhongtongji Network the power to exercise all voting rights to which they were entitled. In addition, Shanghai Zhongtongji Network has the option to acquire all of the equity interests in ZTO Express, to the extent permitted by the then-effective PRC laws and regulations, for nominal consideration. Finally, Shanghai Zhongtongji Network is entitled to receive service fees for certain services to be provided to ZTO Express. The Call Option Agreement and Voting Rights Proxy Agreement provide the Company with effective control over the VIE and its subsidiaries, while the Equity Interest Pledge Agreements secure the obligations of the shareholders of ZTO Express under the relevant agreements. Because the Company, through Shanghai Zhongtongji Network, has (i) the power to direct the activities of ZTO Express that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from ZTO Express, the Company is deemed the primary beneficiary of ZTO Express. Accordingly, the Company consolidates the ZTO Express’s financial results of operations, assets and liabilities in the Company’s consolidated financial statements. The aforementioned Control Documents are effective agreements between a parent and a consolidated subsidiary, neither of which is accounted for in the consolidated financial statements or is ultimately eliminated upon consolidation, such as the service fees provided under the Consulting Services Agreement and Operating Agreement. The Group believes that the contractual arrangements with the VIE are in compliance with the PRC law and are legally enforceable. However, the contractual arrangements are subject to risks and uncertainties, including: · ZTO Express and its shareholders may have or develop interests that conflict with the Group’s interests, which may lead them to pursue opportunities in violation of the aforementioned contractual arrangements. · ZTO Express and its shareholders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties on the VIE or the Group, mandate a change in ownership structure or operations for the VIE or the Group, restrict the VIE or the Group’s use of financing sources or otherwise restrict the VIE or the Group’s ability to conduct business. · The aforementioned contractual agreements may be unenforceable or difficult to enforce. The equity interests under the Equity Interest Pledge Agreement have been registered by the shareholders of ZTO Express with the relevant office of the administration of industry and commerce, however, the VIE or the Group may fail to meet other requirements. Even if the contractual agreements are enforceable, they may be difficult to enforce given the uncertainties in the PRC legal system. · The PRC government may declare the aforementioned contractual arrangements invalid. They may modify the relevant regulations, have a different interpretation of such regulations, or otherwise determine that the Group or the VIE have failed to comply with the legal obligations required to effectuate such contractual arrangements. The following amounts and balances of ZTO Express and its subsidiaries (the “VIE”) were included in the Group’s consolidated financial statements after the elimination of intercompany balances and transactions: As of 2015 2016 RMB RMB Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Advances to suppliers Prepayments and other current assets Amounts due from related parties Total current assets Investments in equity investees Property and equipment, net Land use rights, net Goodwill Deferred tax assets Other non-current assets TOTAL ASSETS Liabilities Current liabilities: Short-term bank borrowing Accounts payable Advances from customers Income tax payable Amounts due to related parties Acquisition consideration payables — Other current liabilities Total current liabilities Deferred tax liabilities TOTAL LIABILITIES Years ended December 31, 2014 2015 2016 RMB RMB RMB Total revenue Net income Net cash generated from operating activities Net cash used in investing activities ) ) ) Net cash provided by (used in) financing activities ) Net increase (decrease) in cash and cash equivalents ) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The VIE contributed 100% of the Group’s consolidated revenues for the years ended December 31, 2014, 2015 and 2016. As of December 31, 2015 and 2016, the VIE accounted for an aggregate of 76% and 41%, respectively, of the consolidated total assets, and 96% and 76%, respectively, of the consolidated total liabilities. Total assets not associated with the VIE mainly consisted of cash and cash equivalents. Beginning in January 2016, the VIE pay transportation fees and service fees pursuant to the Exclusive Consulting and Services Agreements to Shanghai Zhongtongji Network (the “WFOE”) based on the VIE’s operating results and WFOE’s operating cost of sorting hubs and the Group’s owned fleet. 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. The net income generated by the VIE after deductions of inter-company transportation fees and service fees charges by WFOE were RMB472,753 for the year ended December 31, 2016. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIE. However, if the VIE was ever to need financial support, the Company or its subsidiaries 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 Group 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. Please refer to Note 20 for disclosure of restricted net assets. Nonconsolidated Variable Interest Entity Tonglu Tongze Logistics Ltd. and its subsidiaries (“Tonglu”), established in 2013, is a transportation service company providing line-haul transportation services to the Group. Tonglu is majority owned by the employees of the Group who are considered as related parties to the Group. The Group has concluded that it is not the primary beneficiary of Tonglu as it does not have the obligation to absorb losses of Tonglu that could potentially be significant to Tonglu or the right to receive benefits from Tonglu that could potentially be significant to Tonglu. The Group held variable interests in Tonglu in the form of a waiver of management fees and an outstanding loan receivable of RMB15 million as of December 31, 2015 that was repaid in full in 2016. As of December 31, 2016, the Group has no exposure to loss included in the Group’s consolidated balance sheets as a result of the Group’s variable interest in Tonglu. The Group had transactions with Tonglu for the years ended December 31, 2014, 2015 and 2016 and amounts due to Tonglu as of December 31, 2015 and 2016 for transportation service received from Tonglu, in connection with a contractual arrangement and considered by management to be on terms that are commensurate with market. Transactions and balances relating to the transportation services are disclosed in Note 14 (a), (b) and (c). |
Use of estimates | (c) Use of estimates The preparation of financial statements in conformity with US 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 differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements include assessment of useful lives of long-lived assets, valuation of ordinary shares and share-based compensation, realization of deferred tax assets, impairment assessment of long-lived assets and goodwill and assumptions used to determine the fair value of the assets acquired through business combination. Actual results may differ materially from those estimates. |
Fair value | (d) Fair value Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Group has stock unit awards payable that was required to be measured at fair value on a recurring basis at the end of each reporting period. Change in fair value and inputs in the valuations are disclosed in Note 11. The carrying values of financial instruments, which consist of cash and cash equivalents, accounts receivable, amounts due from related parties, advances to suppliers, prepayments and other current assets, short-term bank borrowing, accounts payable, advances from customers, amounts due to related parties and other current liabilities are recorded at cost which approximates their fair value due to the short-term nature of these instruments. We allocate the fair value of purchase consideration to the tangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets is recorded as goodwill. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. |
Foreign currency translation | (e) Foreign currency translation The Group’s reporting currency is Renminbi (“RMB”). The functional currency of the Company and subsidiaries incorporated outside the mainland China are the United States dollar (“US dollar” or “US$”). The functional currency of all the other subsidiaries and the VIE is RMB. Foreign currency denominated monetary assets and liabilities have been translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies have been translated into the functional currency at the applicable rates of exchange prevailing on the date transactions occurred. Transaction gains and losses are recognized in the consolidated statements of comprehensive income. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the consolidated statements of comprehensive income. |
Convenience translation | (f) Convenience translation The Group’s business is primarily conducted in China and almost all of our 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. Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from RMB into US dollars as of and for the year ended December 31, 2016 were calculated at the rate of US$1.00=RMB6.9430, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2016. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2016, or at any other rate. |
Cash and cash equivalents | (g) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. |
Restricted cash | (h) Restricted cash Restricted cash represents (a) cash received from network partners that was immediately restricted for use until the final delivery of parcel to the recipients; and (b) secured deposits held in designated bank accounts for issuance of bank acceptance notes and letter of guarantee for short-term borrowings. |
Property and equipment, net | (i) Property and equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Leasehold improvements Lesser of lease term or estimated useful life of 3 years Furniture, office and electric equipment 3 to 5 years Machinery and equipment 10 years Vehicles 5 years Buildings 20 years |
Investments in equity investees | (j) Investments in equity investees Investments in equity investees of the Group are comprised of investments in privately-held companies. The Group uses the equity method to account for an equity investment over which it has significant influence but does not own a majority equity interest or otherwise control. The Group records equity method adjustments in share of profits and losses. Equity method adjustments include the Group’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Group’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Dividends received are recorded as a reduction of carrying amount of the investment. Cumulative distributions that do not exceed the Group’s cumulative equity in earnings of the investee are considered as a return on investment and classified as cash inflows from operating activities. Cumulative distributions in excess of the Group’s cumulative equity in the investee’s earnings are considered as a return of investment and classified as cash inflows from investing activities. For equity investments over which the Group does not have significant influence or control, the cost method of accounting is used. Under the cost method, the Group carries the investment at cost and recognizes income to the extent of dividends received from the distribution of the equity investee’s post-acquisition profits. |
Impairment of long-lived assets | (k) Impairment of long-lived assets The Group evaluates the recoverability of long-lived assets with determinable useful lives whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Group measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows associated with it. Impairment exists when the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value is estimated based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Group to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. No impairment charge was recognized for the years ended December 31, 2014, 2015 and 2016. |
Goodwill | (l) Goodwill Goodwill is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible net assets of business acquired. Several factors give rise to goodwill in our acquisitions, such as the expected benefit from synergies of the combination and the existing workforce of the acquired businesses. Unless circumstances otherwise dictate, goodwill is reviewed annually at December 31 for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, we proceed to a two-step process to test goodwill for impairment, including comparing the fair value the reporting unit to its carrying value (including attributable goodwill). Fair value for our reporting units is determined using an income or market approach incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. Fair value determinations mainly include both internal and third-party valuations. No impairment charge was recognized for the years ended December 31, 2014, 2015 and 2016. |
Share-based compensation | (m) Share-based compensation The Group grants share options and Ordinary Share Units to eligible employees, management and directors and accounts for these share-based awards in accordance with ASC 718 Compensation—Stock Compensation. Employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required; or b) using graded vesting method, net of forfeitures, over the requisite service period, which is the vesting period. When there is a modification of the terms and conditions of an award, the Group measures the pre-modification and post-modification fair value of the share-based awards as of the modification date and recognizes the incremental value as compensation cost over the remaining service period. All transactions in which goods or services are received in exchange for equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Prior to the IPO of the Company, the fair value of the share options and Ordinary Share Units were assessed using the income approach/discounted cash flow method, with a discount for lack of marketability given that the shares underlying the awards were not publicly traded at the time of grant. This assessment required complex and subjective judgments regarding the Company’s projected financial and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the time the grants were made. In addition, the binomial option-pricing model is used to measure the value of share options. The determination of the fair value is affected by the fair value of the ordinary shares as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected employee and non-employee share option exercise behavior, risk-free interest rates and expected dividends. The fair value of these awards was determined with the assistance from an independent valuation firm using management’s estimates and assumption. After the IPO of the Company, in determining the fair value of the share options and Ordinary Share Units, the closing market price of the underlying shares on the grant date is applied. The assumptions used in share-based compensation expense recognition represent management’s best estimates, but these estimates involve inherent uncertainties and application of management judgment. If factors change or different assumptions are used, the share-based compensation expenses could be materially different for any period. Moreover, the estimates of fair value of the awards are not intended to predict actual future events or the value that ultimately will be realized by grantees who receive share-based awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company for accounting purposes. |
Revenue recognition | (n) Revenue recognition The Group recognizes revenue when persuasive evidence of an arrangement exists, service has been performed, the fee is fixed or determinable and collectability is reasonably assured. While the Group serves as the franchisor in the ZTO network, it has not collected franchise fees from its network partners. The Group considers its customers to be the pickup outlets operated by the Group’s network partners. The Group’s revenue represents network transit fees derived from the provision of sorting and line-haul transportation services to the pickup outlets operated by the Group’s network partners. The network transit fees the Group charges its pickup outlets consist of (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. The Group recognizes revenue when the parcels are delivered from the Group’s sorting hubs to the delivery outlets in the network, assuming all other revenue recognition criteria have been met. A small percentage of the Group’s delivery services are performed for its enterprise customers; and enterprise customer revenues are recognized when the packages are delivered to the recipients. Revenues also include sales of accessories, such as portable barcode readers and ZTO-branded packing supplies and apparels. Revenues for the sales of accessories were RMB125,058, RMB173,166 and RMB419,075 for the years ended December 31, 2014, 2015 and 2016, respectively. |
Cost of revenues | (o) Cost of revenues Cost of revenues consists of the following: · Line-haul transportation costs, including payments to outsourced transportation companies, as well as costs associated with the Group’s own transportation infrastructure; including, labor costs of truck drivers, depreciation of self-owned trucks, airfare cost, fuel cost, and road toll, · operating costs for the ZTO delivery IT platform, · cost of hub operations, such as operators’ labor costs and depreciation and lease costs, and · cost of accessories including portable barcode readers, thermal papers and packaging materials. |
Income taxes | (p) Income taxes Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, the Group is required to estimate its income taxes in each of the jurisdictions in which it operates. The Group 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 loss are carried forwards and credited 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 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 components of the deferred tax assets and liabilities are individually classified as non-current. The Group recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. |
Comprehensive income | (q) Comprehensive income Comprehensive income is defined to include all changes in equity from transactions and other events and circumstances from non-owner sources. For the years presented, the Group’s comprehensive income includes net income and foreign currency translation adjustments and is presented in the consolidated statements of comprehensive income. |
Operating leases as lessee | (r) Operating leases as lessee Leases, including leases of offices and sorting hubs, where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Payments made under operating leases are recognized as an expense on a straight-line basis over the lease term. The Group had no capital leases for any of the years presented herein. |
Concentration credit risk | (s) Concentration credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, amounts due from related parties, accounts receivable, other receivables and advances to suppliers and prepayments and other current assets. The Group places its cash and cash equivalents with financial institutions with high-credit ratings and quality. Accounts receivable primarily comprise amounts receivable from enterprise customers. The Group conducts a credit evaluation of these enterprise customers. With respect to advances to product suppliers, the Group performs on-going credit evaluations of the financial condition of its suppliers. The Group establishes an allowance for doubtful accounts based upon estimates, factors surrounding the credit risk of specific customers and other information. The allowance amounts were immaterial for all periods presented. |
Earnings per share | (t) 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 period. The Company’s convertible redeemable preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as-if-converted basis. Accordingly, the Company uses the two-class method whereby undistributed net income is allocated on a pro rata basis to each participating share to the extent that each class may share in income for the period. 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 in income periods should their effects be anti-dilutive. The Group had convertible redeemable preferred shares, which could potentially dilute basic earnings per share in the future. Diluted earnings per share are computed using the two-class method or the as-if converted method, whichever is more 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 (Note 12). 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. Upon the consummation of the Company’s IPO on October 27, 2016, the convertible redeemable preferred shares were automatically converted into Class A ordinary shares. The two-class method of computing earnings per share ceased to apply on such conversion date. |
Stock split | (u) Stock split In December 2014, the Company’s shareholders approved an increase of the total authorized and issued capital shares from 100,000,000 to 600,000,000 shares with the same per share par value of RMB1.00. All share and per share data in these financial statements and footnotes has been retrospectively adjusted to account for this stock split. |
Adoption of New Accounting Standards and Accounting Standards Issued But Not Yet Effective | (v) Adoption of New Accounting Standards In March 2016, Financial Accounting Standards Board (or “FASB”) issued Accounting Standards Updates (or “ASU”) 2016-09 related to stock compensation to facilitate improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; (c) accruals of compensation costs based on the forfeitures; (d) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Group has elected to early adopt this standard on a modified retrospective basis at the beginning of the period presented as the Group elected to account for forfeitures when they occur to reduce the complexity in the accounting of share based compensation. The adoption of this guidance did not have a material effect on the Group’s consolidated financial statements. (w) Accounting Standards Issued But Not Yet Effective In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP and International Financial Reporting Standards (“IFRS”). An entity has the option to apply the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this standard recognized at the date of initial application. ASU 2014-09 is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and early adoption is not permitted. In August, 2015, the FASB updated this standard to ASU 2015-14, the amendments in this Update defer the effective date of Update 2014-09, that the Update should be applied to annual reporting periods beginning after December 15, 2017 and earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In May 2016, FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)”: Narrow-Scope Improvements and Practical Expedients. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update affect only the narrow aspects of Topic 606. The areas improved include: (1) Assessing the Collectability Criterion in Paragraph 606-10-25-1(e) and Accounting for Contracts That Do Not Meet the Criteria for Step 1; (2) Presentation of Sales Taxes and Other Similar Taxes Collected from Customers; (3) Noncash Consideration; (4) Contract Modifications at Transition; (5) Completed Contracts at Transition; and (6) Technical Correction. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). The Group is planning to adopt the above standards on January 1, 2018. The Group may use either a full retrospective or a modified retrospective approach to adopt this standard. The Group is currently evaluating this standard and the related updates, including which transition approach to use as well as the impact of adoption on policies, practices and systems. The standard also requires the Group to evaluate whether its businesses promise to transfer services to the customer itself (as a principal) or to arrange for services to be provided by another party (as an agent). To make that determination, the standard uses a control model rather than the risks-and-rewards model in current U.S. GAAP. At this stage in the evaluation, the Group does not anticipate that the new guidance will have a material impact on its revenue recognition policies, practices or systems. The Group is currently assessing the impacts of this standard to its consolidated financial statements upon adoption. In July 2015, FASB issued ASU 2015-11 related to inventory as part of its simplification initiative. The ASU changes the way of measurement on inventory, which currently requires an entity to measure inventory at the lower of cost or market. The amendments in this Update require an entity to measure inventory within the scope of this Update at the lower of cost and net realizable value. The Group will adopt this standard on January 1, 2017, and does not expect a material impact to its consolidated financial statement. In January 2016, FASB issued ASU 2016-01, “Financial Instruments”, to improve the recognition and measurement of financial instruments. The new guidance requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. The guidance also eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities and the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Group is still in the process of assessing the impact of this ASU on its consolidated financial statements. In February 2016, FASB issued ASU 2016-02 related to Leases. Under the new guidance, lessees will be required to recognize all leases (with the exception of short-term leases) at the commencement date including a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees (for capital and operating leases) and must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). This new guidance requires modified retrospective application and becomes effective for the Group in the first quarter of 2019, but early adoption is permitted. The Group is currently evaluating this ASU to determine the full impact on its consolidated financial statements, as well as the impact of adoption on policies, practices and systems. As of December 31, 2016, the Group has RMB1.2 billion of future minimum operating lease commitments that are not currently recognized on its consolidated balance sheets (see note 15). Therefore, the Group would expect material changes to its consolidated balance sheets upon adoption. In March 2016, FASB issued ASU 2016-07, “Investments- Equity Method and Joint Ventures”, which eliminates the requirement to retroactively adopt the equity method of accounting. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The Group does not expect a material impact to its consolidated financial statement upon adoption of this ASU. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326)”. The pronouncement changes the impairment model for most financial assets, and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Group does not expect a material impact to its consolidated financial statement upon adoption of this ASU. In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”, which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. This ASU should be applied retrospectively and becomes effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, but early adoption is permitted. As a result of this update, restricted cash will be included within cash and cash equivalents on our statements of consolidated cash flows. The Group is in the process of evaluating the impact on its consolidated financial statements. As of December 31, 2015 and 2016, Group had RMB266 million and RMB635 million in restricted cash, respectively. In January 2017, FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The update affects all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The update is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update provides a more robust framework to use in determining when a set of assets and activities is a business, and also provides more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. For public companies, the update is effective for annual periods beginning after December 15,2017, including interim periods within those periods. The guidance should be applied prospectively upon its effective date. The effect of ASU 2017-01 on the consolidated financial statements will be dependent on any future acquisitions. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The update simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The update also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. For public companies, the update is effective for any annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The guidance should be applied prospectively upon its effective date. The Group does not anticipate that the adoption of ASU 2017-04 will have a material impact on the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of estimated useful lives for property and equipment | Leasehold improvements Lesser of lease term or estimated useful life of 3 years Furniture, office and electric equipment 3 to 5 years Machinery and equipment 10 years Vehicles 5 years Buildings 20 years |
ZTO Express and its subsidiaries (the "VIE") | |
Schedule of financial statements after elimination of intercompany balances and transactions | As of 2015 2016 RMB RMB Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Advances to suppliers Prepayments and other current assets Amounts due from related parties Total current assets Investments in equity investees Property and equipment, net Land use rights, net Goodwill Deferred tax assets Other non-current assets TOTAL ASSETS Liabilities Current liabilities: Short-term bank borrowing Accounts payable Advances from customers Income tax payable Amounts due to related parties Acquisition consideration payables — Other current liabilities Total current liabilities Deferred tax liabilities TOTAL LIABILITIES Years ended December 31, 2014 2015 2016 RMB RMB RMB Total revenue Net income Net cash generated from operating activities Net cash used in investing activities ) ) ) Net cash provided by (used in) financing activities ) Net increase (decrease) in cash and cash equivalents ) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combination | |
Summary of unaudited pro forma results of operations | Years ended December 31, 2014 2015 (Unaudited) (Unaudited) RMB RMB Pro forma revenue Pro forma income from operations Pro forma net income attributable to the Group Pro forma net income per share Basic Diluted |
2014 Acquisitions of Network Partners | |
Business Combination | |
Schedule of considerations, fair value of assets acquired and goodwill resulted from acquisitions | Henan Sichuan Hubei Beijing Guangdong (1) Total Consideration: Ordinary shares Cash Total Fair value of fixed assets acquired Goodwill (1) There are three entities in Guangdong, namely, Shenzhen Chengxin ZTO Industrial Co., Ltd., Guangzhou Xin ZTO Express Co., Ltd. and Dongguan Kaisheng ZTO Express Co., Ltd. The three network partners in Guangdong and one network partner in Hunan were owned by the same group of shareholders. |
2015 Acquisitions of Network Partners | |
Business Combination | |
Schedule of considerations, fair value of assets acquired and goodwill resulted from acquisitions | 2015 RMB Consideration: Ordinary shares Cash Total Fair value of the Group’s existing equity interests at the time of acquisition Less: Fair value of fixed assets acquired Goodwill |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and equipment, net | |
Schedule of property and equipment, net | As of December 31, 2015 2016 RMB RMB Buildings Machinery and equipment Leasehold improvements Vehicles Furniture, office and electric equipment Construction in progress Total Accumulated depreciation ) ) Property and equipment, net |
Land use rights, net (Tables)
Land use rights, net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Land use rights | |
Land use rights, net | |
Schedule of land use rights, net | As of December 31, 2015 2016 RMB RMB Cost Less: Accumulated amortization ) ) Land use rights, net |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill | |
Schedule of changes in carrying amount of goodwill | Amount RMB Balance at January 1, 2015 Increase in goodwill related to acquisitions Balance at December 31, 2015 Increase in goodwill related to acquisition of Suzhou ZTO Balance at December 31, 2016 |
Investments in equity investe37
Investments in equity investees (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments in equity investees | |
Schedule of investments in equity investees | As of December 31, 2015 2016 RMB RMB Investments accounted for under equity method: Shenzhen Feng Chao Technology Ltd. (“Feng Chao”) (1) — ZTO Supply Chain Management Co., Ltd. (“ZTO LTL”) (2) — Feng Wang Investment Co., Ltd. (“Feng Wang”) (3) Suzhou Zhongtong Express Ltd. (“Suzhou ZTO”) (Note 3) — Others Total investments accounted for under the equity method Investments accounted for under cost method: Cai Niao Smart Logistics Network Limited (“Cai Niao”) (4) Shenzhen Feng Chao Technology Ltd. (“Feng Chao”) (1) — Wheat Commune Group Inc. (“Wheat Commune) (5) Others Total investments accounted for under the cost method Total investments in equity investees (1) Feng Chao In June 2015, the Group entered into a subscription and contribution agreement with three other express delivery companies in PRC, to establish a new company named Feng Chao, which focuses on optimizing the delivery process, for example, by creating storage lockers for deliveries, innovating on the “last mile” delivery of express parcels. The capital contribution by the Group was RMB100 million in cash, representing 20% of the equity interest of Feng Chao. The Group has one board seat out of five of Feng Chao, and has significant influence on Feng Chao’s significant operating activities. Therefore, the investment is accounted for using the equity method. In May 2016, the Group entered into the capital increase agreement with Feng Chao, to increase its investment by RMB100,000 to maintain its equity shares in Feng Chao at 20%, which was closed in August 2016. In July 2016, to coordinate with the Feng Chao’s employee incentive plan, all the investors of Feng Chao has agreed to transfers totally 5% of equity interests of Feng Chao to the employee share holding platform. As a result, the Group agreed to sell 1% of its equity interests in Feng Chao with the consideration of RMB2,500. In November 2016, the Group quit the board seat of Feng Chao, and no longer has significant influence on Feng Chao’s significant operating activities. Thereafter, the Group accounts for this investment under cost method. (2) ZTO LTL On August 22, 2016, the Group has entered into an investment agreement with ZTO LTL and Mr. Jianfa Lai to invest cash of RMB54,000 in exchange of 18% equity interest in ZTO LTL. ZTO LTL is engaged in provision of less-than-truckload transportation services in China. The principal shareholders of ZTO LTL are also the principal shareholders of the Group. Owing to the shareholders’ structure of ZTO LTL, the Group has significant influence on ZTO LTL’s significant operating activities. Therefore, the investment is accounted for using the equity method. (3) Feng Wang In December 2013, the Group entered into an agreement with other three top express delivery companies in China, to establish Feng Wang, which is to invest in the upstream industries and integrate resources across the express delivery value chain. The capital contribution by the Group was RMB50 million in cash, representing 25% of the equity interest of Feng Wang. In 2015, the Group’s equity interest to Feng Wang decreased to 20% due to the additional capital contributions from other shareholders of Feng Wang. (4) Cai Niao In May 2013, the Group entered into an investment agreement with several prestigious e-Commerce firms, investment corporations and delivery companies, to launch a new company named Cai Niao, which provides a platform that connects with a network of logistics providers through a proprietary logistics information system and facilitates the delivery of packages across PRC. The Group invested RMB50 million in Cai Niao, and held 1% of its equity interests. In March, 2016, the Group subscribed for an additional 30,000,000 shares for consideration of RMB106 million pursuant to the share subscription agreement dated as of March 11, 2016 during the new round of financing by Cai Niao. The additional subscription did not change the percentage of equity interest the Group held in Cai Niao. (5) Wheat Commune In December 2015, the Group entered into a share purchase agreement to obtain 7.45% equity interest in Wheat Commune for US$12 million (equivalent to RMB83 million). Wheat Commune is a leading Omni-channel platform providing comprehensive campus service in more than 100 cities across the country. |
Short-term bank borrowing (Tabl
Short-term bank borrowing (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Short-term bank borrowing | |
Schedule of short-term bank borrowing | As of December 31, 2015 2016 RMB RMB PRC domestic commercial banks |
Other current liabilities (Tabl
Other current liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other current liabilities | |
Schedule of other current liabilities | As of December 31, 2015 2016 RMB RMB Payables related to property and equipment Salary and welfare payable Deposits from network partners (1) Share unit awards payable (Note 11) — Construction deposits Others Total (1) Amount primarily represents the dispatching fee deposits collected from the pickup outlets operated by our network partners, which is refunded when the parcel is delivered to the recipients. |
Income tax (Tables)
Income tax (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income tax | |
Schedule of current and deferred portion of income tax expenses | Years ended December 31, 2014 2015 2016 RMB RMB RMB Current tax expenses Deferred tax ) ) Total |
Schedule of reconciliations of differences between PRC statutory income tax rate and effective income tax rate | Years ended December 31, 2014 2015 2016 PRC statutory income tax rate % % % R&D super deduction )% )% )% Non-deductible expenses % % % Expired tax loss % — — Wavier of tax liabilities due to liquidation )% — — Non-taxable income — )% )% Different tax rate of group entities operating in other jurisdiction — — % True up — — )% Others )% )% — % % % |
Schedule of components of deferred income tax assets and liabilities | As of December 31, 2015 2016 Deferred tax assets: Accrued expense Unrealized gain for intragroup transaction Net loss carryforward Government subsidy Provision for allowance for doubtful accounts Depreciation for property and equipment Total deferred tax assets Deferred tax liabilities: Difference in basis of land use rights ) ) Total deferred tax liabilities ) ) |
Share-based compensation (Table
Share-based compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of changes in the ordinary share awards relating to the Share Holding Platform | Number of Weighted average Awarded and outstanding at January 1, 2016 — — Granted and vested Vested and Outstanding at December 31, 2016 |
Summary of changes in the share options relating to ordinary shares granted | Number of Weighted Weighted average Aggregate Outstanding at January 1, 2016 — — Granted Outstanding at December 31, 2016 9.17 years Vested and exercisable at December 31, 2016 — — — — Vested and expected to vest at December 31, 2016 9.17 years |
2016 Share Incentive Plan | |
Schedule of binominal option pricing model to estimate the fair value of the share units granted | June 20, 2016 Risk-free interest rate % Contract life Expected volatility range % Expected dividend yield % Exercise multiple x Fair value of underlying ordinary shares on the date of option grants (RMB) |
Contingently convertible share units | |
Schedule of binominal option pricing model to estimate the fair value of the share units granted | February 6, 2015 December 31, 2015 Expected volatility % % Risk-free interest rate (per annum) % % Risk-based interest rate (per annum) % % Expected dividend yield — — Expected term (in years) Fair value of underlying ordinary shares |
Earnings per share and divide42
Earnings per share and dividends per share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings per share and dividends per share | |
Schedule of basic and diluted earnings per share | Years ended December 31, 2014 2015 2016 RMB RMB RMB Numerator: Net income attributable to ZTO Express (Cayman) Inc. Less: Change in redemption value for redeemable preferred shares — ) ) Earnings attributable to participating securities — ) ) Net income attributable to ordinary shareholders in computing basic and diluted earnings per share Shares (Denominator): Weight average ordinary shares outstanding—basic and diluted Earnings per share—basic and diluted |
Related party transactions (Tab
Related party transactions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related party transactions | |
Schedule of major related party and their relationships | Name of related parties Relationship with the Group Tonglu Tongze Logistics Ltd and its subsidiaries Majority equity interests held by the employees of the Group Lai Yufeng Spouse of chairman of the Group Shanghai Mingyu Barcode Technology Ltd. Controlled by brother of chairman of the Group Fengwang Investments Ltd. Group’s equity investee Heilongjiang Ruston Express Ltd. Group’s equity investee Shanghai Kuaibao Network Technology Ltd. Group’s equity investee Quanzhou Zhongtong Express Ltd. Group’s equity investee Wuhan Chengxin Zhongtong Express Ltd. Entity controlled by principal shareholders of the Group Shanxi Zhongtong Daying Logistics Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Shenyang Changsheng Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Nanchang Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Tianjin Qianqiu Zhongtong Express Service Co. Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Shaanxi Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Jilin Zhongtong Daying Logistics Ltd. Group’s equity investee until the Group’s acquisition of this entity in October 2015 Zhejiang Zhongtong Express Services Company Ltd. Entity controlled by principal shareholders of the Group until October 31, 2014 Shanghai Zhongtongji Express Service Co., Ltd. Entity controlled by principal shareholders of the Group until May 30, 2016 Suzhou Zhongtong Express Ltd. Group’s equity investee until the Group’s acquisition of this entity in January 2016 ZTO Supply Chain Management Co., Ltd. Group’s equity investee Zto Es Holding Limited Entity controlled by Chairman of the Group |
Schedule of transactions with related parties | Years ended December 31, 2014 2015 2016 RMB RMB RMB Delivery revenue derived from Quanzhou Zhongtong Express Ltd. — Suzhou Zhongtong Express Ltd. — Shenyang Changsheng Zhongtong Express Ltd. — Nanchang Zhongtong Express Ltd. — Tianjin Qianqiu Zhongtong Express Service Co., Ltd. — Shaanxi Zhongtong Express Ltd. — Shanxi Zhongtong Daying Logistics Ltd. — Jilin Zhongtong Daying Logistics Ltd. — Fengwang Investments Ltd. — Heilongjiang Ruston Express Ltd. — Zhejiang Zhongtong Express Services Company Ltd. — — Total — Transportation service fees paid to Tonglu Tongze Logistics Ltd and its subsidiaries ZTO Supply Chain Management Co., Ltd. — — Total Purchases of supplies from Shanghai Mingyu Barcode Technology Ltd. |
Schedule of amounts due to related parties | As of December 31, 2015 2016 RMB RMB Amounts due to Tonglu Tongze Logistics Ltd. and its subsidiaries Shanghai Mingyu Barcode Technology Ltd. — ZTO Supply Chain Management Co., Ltd. — Suzhou Zhongtong Express Ltd. — Quanzhou Zhongtong Express Ltd. — Shanxi Zhongtong Daying Logistics Ltd. — Total |
Schedule of amounts due from related parties | As of December 31, 2015 2016 RMB RMB Amounts due from Shanghai Kuaibao Network Technology Ltd. (1) Lai Yufeng (2) — Tonglu Tongze Logistics Ltd. and its subsidiaries (3) — Shanxi Zhongtong Daying Logistics Ltd. (1) — Wuhan Chengxin Zhongtong Express Ltd. (1) — Total (1) Other amounts due from related parties consisted of prepaid transportation fee and loans to related parties as of December 31, 2015 and 2016, respectively. (2) As of December 31, 2015 and 2016, Ms. Lai Yufeng was holding RMB58,400 and nil, respectively in cash and cash equivalent on behalf of the Group. (3) As of December 31, 2015, the Group had an outstanding note receivable of RMB15,000, which bears interest of 20% per annum from Tonglu Tongze Logistics Ltd. and its subsidiaries (“Tonglu”). The amount, plus accrued interest of RMB1,500 was fully repaid to the Group in June 2016. The Group also prepaid transportation fee of RMB7,168 and nil to Tonglu as of December 31, 2015 and 2016, respectively. Historically, the Group’s employees have served as the key management of Tonglu, with compensation determined and paid by the Group. Such compensation paid has not been significant for the periods presented. |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and contingencies | |
Schedule of minimum lease payments under all non-cancellable leases | Years ending RMB 2017 2018 2019 2020 2021 2022 and after Total lease commitment |
Convertible redeemable prefer45
Convertible redeemable preferred shares (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Convertible redeemable preferred shares | |
Schedule of rollforward of carrying amounts of Preferred Share | Balance as of January 1, 2015 — Issuance of Preferred Shares Change in redemption value Balance as of December 31, 2015 Change in redemption value Conversion to ordinary shares upon IPO ) Balance as of December 31, 2016 — |
ORGANIZATION AND PRINCIPAL AC46
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2015item | Jan. 31, 2014CNY (¥)item | Jan. 31, 2013shareholderitem | Dec. 31, 2014CNY (¥)item | |
Restructuring activities | ||||
under restructuring plan | 7 | |||
Deemed distribution to shareholders of Shanghai Zhongtongji in connection with 2013 Restructuring | ¥ | ¥ 222,401 | |||
2013 Restructuring | ||||
Restructuring activities | ||||
Number of network partners engaged in restructuring plan | 15 | |||
Number of shareholders engaged in restructuring plan | shareholder | 11 | |||
under restructuring plan | 8 | |||
Number of network partners that had minority interest holders | 7 | |||
Number of network partners that had minority interest which is acquired fully | 6 | |||
Deemed distribution to shareholders of Shanghai Zhongtongji in connection with 2013 Restructuring | ¥ | ¥ 222,000 | |||
Number of owners of the combining entities individually or as a group retain or receive a majority of the voting rights of the combined entities | 0 |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Consolidated VIE Schedule) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Current assets: | ||||||||||
Cash and cash equivalents | $ 353,213 | ¥ 2,452,359 | $ 353,213 | ¥ 163,359 | ¥ 36,843 | $ 1,625,780 | ¥ 11,287,789 | $ 353,213 | ¥ 2,452,359 | ¥ 163,359 |
Restricted cash | 91,512 | 635,366 | 266,403 | |||||||
Accounts receivable, net | 28,490 | 197,803 | 58,494 | |||||||
Inventories | 4,891 | 33,959 | 15,720 | |||||||
Advances to suppliers | 93,139 | 646,666 | 347,680 | |||||||
Prepayments and other current assets | 54,595 | 379,055 | 211,724 | |||||||
Amounts due from related parties | 778 | 5,400 | 85,740 | |||||||
Total current assets | 1,899,185 | 13,186,038 | 3,438,120 | |||||||
Investments in equity investees | 77,369 | 537,175 | 377,431 | |||||||
Property and equipment, net | 585,563 | 4,065,562 | 1,752,586 | |||||||
Land use rights, net | 187,652 | 1,302,869 | 821,131 | |||||||
Goodwill | 598,749 | 4,157,111 | 4,091,219 | 2,379,182 | ||||||
Deferred tax assets | 15,704 | 109,030 | 81,006 | |||||||
Other non-current assets | 6,619 | 45,953 | 20,730 | |||||||
TOTAL ASSETS | 3,370,841 | 23,403,738 | 10,582,223 | |||||||
Current liabilities: | ||||||||||
Short-term bank borrowing | 64,813 | 450,000 | 300,000 | |||||||
Accounts payable | 91,664 | 636,422 | 294,199 | |||||||
Advances from customers | 33,087 | 229,724 | 298,865 | |||||||
Income tax payable | 60,249 | 418,310 | 301,932 | |||||||
Amounts due to related parties | 18,929 | 131,425 | 103,267 | |||||||
Acquisition consideration payables | 87,766 | 50,697 | ||||||||
Other current liabilities | 238,601 | 1,656,590 | 1,264,914 | |||||||
Total current liabilities | 507,343 | 3,522,471 | 2,650,943 | |||||||
Deferred tax liabilities | 18,799 | 130,520 | 85,059 | |||||||
TOTAL LIABILITIES | $ 526,142 | 3,652,991 | 2,736,002 | |||||||
Total revenue | 1,409,876 | 9,788,768 | 6,086,455 | 3,903,572 | ||||||
Net Income | 295,493 | 2,051,603 | 1,331,618 | 406,003 | ||||||
Net cash generated from operating activities | 365,338 | 2,536,544 | 1,867,538 | 1,071,751 | ||||||
Net cash used in investing activities | (492,338) | (3,418,304) | (1,449,746) | (1,116,299) | ||||||
Net cash provided by (used in) financing activities | 1,356,056 | 9,415,093 | 1,869,331 | 171,064 | ||||||
Net increase (decrease) in cash and cash equivalents | 1,272,567 | 8,835,430 | 2,289,000 | 126,516 | ||||||
Cash and cash equivalents at beginning of year | 353,213 | 2,452,359 | 163,359 | 36,843 | ||||||
Cash and cash equivalents at end of year | $ 1,625,780 | 11,287,789 | $ 353,213 | 2,452,359 | 163,359 | |||||
ZTO Express and its subsidiaries (the "VIE") | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 587,039 | 163,359 | 36,843 | 472,816 | 587,039 | ¥ 163,359 | ||||
Restricted cash | 302,102 | 266,403 | ||||||||
Accounts receivable, net | 197,559 | 56,262 | ||||||||
Inventories | 32,868 | 15,720 | ||||||||
Advances to suppliers | 420,948 | 256,955 | ||||||||
Prepayments and other current assets | 211,643 | 170,824 | ||||||||
Amounts due from related parties | 5,400 | 85,740 | ||||||||
Total current assets | 1,643,336 | 1,438,943 | ||||||||
Investments in equity investees | 236,515 | 249,508 | ||||||||
Property and equipment, net | 2,396,660 | 1,383,357 | ||||||||
Land use rights, net | 953,487 | 788,717 | ||||||||
Goodwill | 4,157,111 | 4,091,219 | ||||||||
Deferred tax assets | 89,954 | 81,006 | ||||||||
Other non-current assets | 37,953 | 15,707 | ||||||||
TOTAL ASSETS | 9,515,016 | 8,048,457 | ||||||||
Current liabilities: | ||||||||||
Short-term bank borrowing | 450,000 | 300,000 | ||||||||
Accounts payable | 582,271 | 280,774 | ||||||||
Advances from customers | 229,704 | 295,865 | ||||||||
Income tax payable | 54,774 | 300,864 | ||||||||
Amounts due to related parties | 127,471 | 103,267 | ||||||||
Acquisition consideration payables | 87,766 | |||||||||
Other current liabilities | 1,238,191 | 1,184,875 | ||||||||
Total current liabilities | 2,682,411 | 2,553,411 | ||||||||
Deferred tax liabilities | 98,800 | 85,059 | ||||||||
TOTAL LIABILITIES | ¥ 2,781,211 | ¥ 2,638,470 | ||||||||
Total revenue | 9,788,768 | 6,086,455 | 3,903,572 | |||||||
Net Income | 4,145,150 | 1,331,621 | 406,003 | |||||||
Net cash generated from operating activities | 1,415,617 | 1,898,426 | 1,071,751 | |||||||
Net cash used in investing activities | (1,680,896) | (1,409,746) | (1,116,299) | |||||||
Net cash provided by (used in) financing activities | 151,056 | (65,000) | 171,064 | |||||||
Net increase (decrease) in cash and cash equivalents | (114,223) | 423,680 | 126,516 | |||||||
Cash and cash equivalents at beginning of year | 587,039 | 163,359 | 36,843 | |||||||
Cash and cash equivalents at end of year | ¥ 472,816 | ¥ 587,039 | ¥ 163,359 | |||||||
VIE revenues as a percentage to consolidated revenues | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||
VIE assets as a percentage to consolidated assets | 41.00% | 41.00% | 76.00% | 76.00% | ||||||
VIE liabilities as a percentage to consolidated liabilities | 76.00% | 76.00% | 96.00% | 96.00% | ||||||
Net income generated by VIE after deductions of inter-company transportation fees and Service fees charges | ¥ 472,753 | |||||||||
Assets held in the consolidated VIE that can be used only to settle obligations of the VIE | ¥ 0 |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Nonconsolidated VIE Schedule) (Details) ¥ in Millions | Dec. 31, 2015CNY (¥) |
Tonglu | |
Variable Interest Entity | |
Loan receivable from VIE | ¥ 15 |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Convenience translation) (Details) | Dec. 31, 2016$ / ¥ |
Convenience translation | |
Convenience translation rate | 0.1440 |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property and equipment, net) (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Leasehold improvements | |
Property and equipment, net | |
Useful life | 3 years |
Furniture, office and electric equipment | Minimum | |
Property and equipment, net | |
Useful life | 3 years |
Furniture, office and electric equipment | Maximum | |
Property and equipment, net | |
Useful life | 5 years |
Machinery and equipment | |
Property and equipment, net | |
Useful life | 10 years |
Vehicles | |
Property and equipment, net | |
Useful life | 5 years |
Buildings | |
Property and equipment, net | |
Useful life | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN51
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Impairment of long-lived assets and goodwill | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Impairment of goodwill | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN52
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revenue recognition) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Revenue recognition | ||||
Total revenue | $ 1,409,876 | ¥ 9,788,768 | ¥ 6,086,455 | ¥ 3,903,572 |
Accessories | ||||
Revenue recognition | ||||
Total revenue | ¥ 419,075 | ¥ 173,166 | ¥ 125,058 |
SUMMARY OF SIGNIFICANT ACCOUN53
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stock split) (Details) | Dec. 31, 2016$ / sharesshares | Oct. 27, 2016shares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2014¥ / sharesshares | Nov. 30, 2014shares |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Ordinary shares, share authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 600,000,000 | 100,000,000 |
Ordinary shares, shares issued | 600,000,000 | 600,000,000 | 100,000,000 | ||
Ordinary shares, par value (in dollars per share) | (per share) | $ 0.0001 | $ 0.0001 | ¥ 1 |
SUMMARY OF SIGNIFICANT ACCOUN54
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accounting Standards Issued But Not Yet Effective) (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Future minimum operating lease commitments | ¥ 1,212,557 | ||
Restricted cash | $ 91,512 | ¥ 635,366 | ¥ 266,403 |
Business Combination - 2014 Acq
Business Combination - 2014 Acquisitions, Consideration (Details) ¥ / shares in Units, ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2015CNY (¥)item | Jan. 31, 2014CNY (¥)item | Dec. 31, 2015CNY (¥)item¥ / sharesshares | Dec. 31, 2014CNY (¥)item¥ / sharesshares | |
2014 Acquisitions of Network Partners | ||||
Business Combination | ||||
Number of network partners acquired | item | 8 | 8 | ||
Cash | ¥ | ¥ 64,490 | ¥ 64,490 | ||
2015 Acquisitions of Network Partners | ||||
Business Combination | ||||
Number of network partners acquired | item | 16 | 16 | ||
Cash | ¥ | ¥ 57,673 | ¥ 57,673 | ||
ZTO Express | 2014 Acquisitions of Network Partners | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 202,800,000 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 11.73 | |||
ZTO Express | 2015 Acquisitions of Network Partners | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 26,336,657 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 48.64 |
Business Combination - 2014 A56
Business Combination - 2014 Acquisitions of Network Partners (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2014CNY (¥)item | Dec. 31, 2014CNY (¥)item | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
Consideration: | |||||
Goodwill | ¥ 2,379,182 | $ 598,749 | ¥ 4,157,111 | ¥ 4,091,219 | |
2014 Acquisitions of Network Partners | |||||
Business Combination | |||||
Number of network partners acquired | item | 8 | 8 | |||
Consideration: | |||||
Ordinary shares | ¥ 2,379,182 | ||||
Cash | 64,490 | ¥ 64,490 | |||
Total | 2,443,672 | ||||
Fair value of fixed assets acquired | 64,490 | ||||
Goodwill | 2,379,182 | ||||
Henan | |||||
Consideration: | |||||
Ordinary shares | 70,390 | ||||
Cash | 953 | ||||
Total | 71,343 | ||||
Fair value of fixed assets acquired | 953 | ||||
Goodwill | 70,390 | ||||
Sichuan | |||||
Consideration: | |||||
Ordinary shares | 70,390 | ||||
Cash | 5,170 | ||||
Total | 75,560 | ||||
Fair value of fixed assets acquired | 5,170 | ||||
Goodwill | 70,390 | ||||
Hubei | |||||
Consideration: | |||||
Ordinary shares | 234,399 | ||||
Cash | 6,804 | ||||
Total | 241,203 | ||||
Fair value of fixed assets acquired | 6,804 | ||||
Goodwill | 234,399 | ||||
Beijing | |||||
Consideration: | |||||
Ordinary shares | 758,100 | ||||
Cash | 2,044 | ||||
Total | 760,144 | ||||
Fair value of fixed assets acquired | 2,044 | ||||
Goodwill | 758,100 | ||||
Guangdong and Hunan | |||||
Consideration: | |||||
Ordinary shares | 1,245,903 | ||||
Cash | 49,519 | ||||
Total | 1,295,422 | ||||
Fair value of fixed assets acquired | 49,519 | ||||
Goodwill | ¥ 1,245,903 | ||||
Guangdong | |||||
Consideration: | |||||
Number of entities acquired under network partners | item | 3 | ||||
Number of network partners owned by same group of shareholders | item | 3 | ||||
Hunan | |||||
Consideration: | |||||
Number of network partners owned by same group of shareholders | item | 1 |
Business Combination - 2015 Acq
Business Combination - 2015 Acquisitions, Consideration (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2015CNY (¥)itemcompany¥ / sharesshares | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥)item¥ / sharesshares | |
Business Combination | ||||
Gain on deemed disposal of equity method investments | $ 1,376 | ¥ 9,551 | ¥ 224,148 | |
2015 Acquisitions of Network Partners | ||||
Business Combination | ||||
Number of network partners acquired | item | 16 | 16 | ||
Cash | ¥ 57,673 | ¥ 57,673 | ||
Ordinary shares | 1,281,015 | |||
Fair value of the Group's existing equity interests at the time of acquisition | 431,022 | |||
Gain on deemed disposal of equity method investments | ¥ 224,148 | ¥ 224,148 | ||
Network partners identified in 2013 Restructuring and in Fujian province | ||||
Business Combination | ||||
Number of delivery companies acquired | company | 9 | |||
Fair value of the Group's existing equity interests at the time of acquisition | ¥ 431,022 | |||
Gain on deemed disposal of equity method investments | ¥ 224,148 | |||
Network partners identified in 2013 Restructuring | ||||
Business Combination | ||||
Number of network partners acquired | item | 6 | |||
Cash | ¥ 22,680 | |||
Network partners identified in 2013 Restructuring | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 3,915,720 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 48.64 | |||
Network partners in Fujian province | ||||
Business Combination | ||||
Number of network partners acquired | item | 3 | |||
Cash | ¥ 761 | |||
Network partners in Fujian province | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 4,440,132 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 48.64 | |||
Network partners owned and operated by unrelated third parties | ||||
Business Combination | ||||
Number of network partners acquired | item | 7 | |||
Cash | ¥ 34,232 | |||
Network partners owned and operated by unrelated third parties | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 17,980,805 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 48.64 | |||
ZTO Express | 2015 Acquisitions of Network Partners | Ordinary shares | ||||
Business Combination | ||||
Ordinary shares issued as part of consideration (in shares) | shares | 26,336,657 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 48.64 |
Business Combination - 2015 A58
Business Combination - 2015 Acquisitions of Network Partners (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2015CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2014CNY (¥) | |
Consideration: | |||||
Goodwill | ¥ 4,091,219 | $ 598,749 | ¥ 4,157,111 | ¥ 2,379,182 | |
2015 Acquisitions of Network Partners | |||||
Consideration: | |||||
Ordinary shares | ¥ 1,281,015 | ||||
Cash | 57,673 | ¥ 57,673 | |||
Total | 1,338,688 | ||||
Fair value of the Group's existing equity interests at the time of acquisition | 431,022 | ||||
Less: Fair value of fixed assets acquired | 57,673 | ||||
Goodwill | ¥ 1,712,037 |
Business Combination - 2015 A59
Business Combination - 2015 Acquisitions, Other Information (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2015CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2014CNY (¥) | |
Business Combination | |||||
Gain on deemed disposal of equity method investments | $ 1,376 | ¥ 9,551 | ¥ 224,148 | ||
Acquisition consideration payable | 87,766 | ¥ 50,697 | |||
2015 Acquisitions of Network Partners | |||||
Business Combination | |||||
Gain on deemed disposal of equity method investments | ¥ 224,148 | ¥ 224,148 | |||
Percentage of fair value of equity interest at acquisition date | 100.00% | ||||
Number of non-contingent shares not issued | shares | 13,226,525 | ||||
Non-contingent shares recorded as additional paid-in capital | ¥ 643,338 |
Business Combination - Pro form
Business Combination - Pro forma results of operations (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Oct. 31, 2015CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥)¥ / shares | Dec. 31, 2014CNY (¥)¥ / shares | |
Unaudited pro forma results of operations | ||||||
Pro forma revenue | ¥ 6,997,299 | ¥ 4,762,499 | ||||
Pro forma income from operations | 1,599,022 | 637,460 | ||||
Pro forma net income attributable to the Group | ¥ 1,154,382 | ¥ 434,133 | ||||
Pro forma net income per share | ||||||
Basic (in dollars per share) | ¥ / shares | ¥ 1.86 | ¥ 0.72 | ||||
Diluted (in dollars per share) | ¥ / shares | ¥ 1.86 | ¥ 0.72 | ||||
Gain on deemed disposal of equity method investments | $ 1,376 | ¥ 9,551 | ¥ 224,148 | |||
Total revenue | 1,409,876 | 9,788,768 | 6,086,455 | ¥ 3,903,572 | ||
Net Income | $ 295,493 | ¥ 2,051,603 | 1,331,618 | ¥ 406,003 | ||
2015 Acquisitions of Network Partners | ||||||
Pro forma net income per share | ||||||
Gain on deemed disposal of equity method investments | ¥ 224,148 | ¥ 224,148 | ||||
Total revenue | ¥ 291,688 | |||||
Net Income | ¥ 15,594 |
Business Combination - 2016 Acq
Business Combination - 2016 Acquisitions of Network Partners (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2016USD ($)shares | Jan. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
Consideration: | |||||
Goodwill acquired | ¥ 65,892 | ¥ 1,712,037 | |||
Gain on deemed disposal of equity method investments | $ 1,376 | ¥ 9,551 | ¥ 224,148 | ||
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | 2016 Acquisitions of Network Partners | |||||
Consideration: | |||||
Interest acquired (as a percent) | 40.00% | ||||
Cash | ¥ 30,660 | ||||
Cash consideration | 60,726 | ||||
Goodwill acquired | $ | $ 65,892 | ||||
Fair value of the Group's existing equity interests at the time of acquisition | 91,089 | ||||
Gain on deemed disposal of equity method investments | ¥ 9,551 | ||||
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | 2016 Acquisitions of Network Partners | Ordinary shares | |||||
Consideration: | |||||
Ordinary shares issued as part of consideration (in shares) | shares | 600,000 | 600,000 | |||
Share price (in dollars per share) | ¥ / shares | ¥ 50.11 |
Property and equipment, net (De
Property and equipment, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Property and equipment, net | |||||
Property, plant and equipment, gross | ¥ 1,947,421 | ¥ 4,565,725 | |||
Accumulated depreciation | (194,835) | (500,163) | |||
Property and equipment, net | 1,752,586 | $ 585,563 | 4,065,562 | ||
Depreciation | ¥ 301,668 | 145,276 | ¥ 56,037 | ||
Pending title of certificates buildings, net | 172,768 | 724,041 | |||
Buildings | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | 444,088 | 1,287,114 | |||
Machinery and equipment | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | 202,674 | 719,947 | |||
Leasehold improvements | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | 103,126 | 230,580 | |||
Vehicles | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | 538,235 | 1,059,067 | |||
Furniture, office and electric equipment | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | 81,653 | 152,973 | |||
Construction in progress | |||||
Property and equipment, net | |||||
Property, plant and equipment, gross | ¥ 577,645 | ¥ 1,116,044 |
Land use rights, net (Details)
Land use rights, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Land use rights, net | |||||
Land use rights, net | ¥ 821,131 | $ 187,652 | ¥ 1,302,869 | ||
Land use rights | |||||
Land use rights, net | |||||
Cost | 847,915 | 1,352,963 | |||
Less: Accumulated amortization | (26,784) | (50,094) | |||
Land use rights, net | 821,131 | 1,302,869 | |||
Amortization expenses for land use rights | ¥ 23,310 | 12,780 | ¥ 7,977 | ||
Title certificates for land use right with carrying value not obtained | ¥ 3,881 | ¥ 11,239 | |||
Land use rights | Maximum | |||||
Land use rights, net | |||||
Lease term (in years) | 50 years |
Goodwill (Details)
Goodwill (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
Goodwill | |||
Goodwill, balance at the beginning of period | ¥ 4,091,219 | ¥ 2,379,182 | |
Increase in goodwill related to acquisitions | 65,892 | 1,712,037 | |
Goodwill, balance at the end of period | $ 598,749 | ¥ 4,157,111 | ¥ 4,091,219 |
Investments in equity investe65
Investments in equity investees (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Investments in equity investees | |||
Total investments accounted for under the equity method | ¥ 129,330 | ¥ 237,628 | |
Total investments accounted for under the cost method | 407,845 | 139,803 | |
Total investments in equity investees | $ 77,369 | 537,175 | 377,431 |
Shenzhen Feng Chao Technology Ltd. ("Feng Chao") | |||
Investments in equity investees | |||
Total investments accounted for under the equity method | 92,468 | ||
Total investments accounted for under the cost method | 149,230 | ||
ZTO Supply Chain Management Co., Ltd. ("ZTO LTL") | |||
Investments in equity investees | |||
Total investments accounted for under the equity method | 53,925 | ||
Feng Wang Investment Co., Ltd. ("Feng Wang") | |||
Investments in equity investees | |||
Total investments accounted for under the equity method | 49,170 | 50,237 | |
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | |||
Investments in equity investees | |||
Total investments accounted for under the equity method | 81,538 | ||
Others | |||
Investments in equity investees | |||
Total investments accounted for under the equity method | 26,235 | 13,385 | |
Cai Niao Smart Logistics Network Limited ("Cai Niao") | |||
Investments in equity investees | |||
Total investments accounted for under the cost method | 163,419 | 50,000 | |
Wheat Commune Group Inc. ("Wheat Commune) | |||
Investments in equity investees | |||
Total investments accounted for under the cost method | 83,316 | 77,923 | |
Others | |||
Investments in equity investees | |||
Total investments accounted for under the cost method | ¥ 11,880 | ¥ 11,880 |
Investments in equity investe66
Investments in equity investees - Feng Chao, ZTO LTL and Feng Wang (Details) ¥ in Thousands, $ in Thousands | Aug. 22, 2016CNY (¥) | Jul. 31, 2016CNY (¥) | May 31, 2016CNY (¥) | Jun. 30, 2015CNY (¥)item | Dec. 31, 2013CNY (¥)item | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) |
Investments in equity investees | |||||||||
Cash consideration | $ 45,430 | ¥ 315,426 | ¥ 193,803 | ¥ 95,400 | |||||
Shenzhen Feng Chao Technology Ltd. ("Feng Chao") | |||||||||
Investments in equity investees | |||||||||
Number of top express delivery companies in agreement | item | 3 | ||||||||
Cash consideration | ¥ | ¥ 100,000 | ¥ 100,000 | |||||||
Equity interest in equity method investment (as a percent) | 20.00% | 20.00% | |||||||
Number of board seat allocated for equity method investment | item | 1 | ||||||||
Number of board seat available in equity method investee | item | 5 | ||||||||
Shenzhen Feng Chao Technology Ltd. ("Feng Chao") | Share Holding Platform | All investors | |||||||||
Investments in equity investees | |||||||||
Equity interest agreed to be transferred (as a percent) | 5.00% | ||||||||
Equity interests agreed to be sold (as a percent) | 1.00% | ||||||||
Equity interests agreed to be sold, consideration amount | ¥ | ¥ 2,500 | ||||||||
ZTO Supply Chain Management Co., Ltd. ("ZTO LTL") | |||||||||
Investments in equity investees | |||||||||
Cash consideration | ¥ | ¥ 54,000 | ||||||||
Equity interest in equity method investment (as a percent) | 18.00% | ||||||||
Feng Wang Investment Co., Ltd. ("Feng Wang") | |||||||||
Investments in equity investees | |||||||||
Number of top express delivery companies in agreement | item | 3 | ||||||||
Cash consideration | ¥ | ¥ 50,000 | ||||||||
Equity interest in equity method investment (as a percent) | 25.00% | 20.00% |
Investments in equity investe67
Investments in equity investees - Cai Niao and Wheat Commune (Details) ¥ in Millions, $ in Millions | 1 Months Ended | |||
Mar. 31, 2016CNY (¥)shares | Dec. 31, 2015USD ($)item | Dec. 31, 2015CNY (¥) | May 31, 2013CNY (¥) | |
Cai Niao Smart Logistics Network Limited ("Cai Niao") | ||||
Investments in equity investees | ||||
Capital contribution in cash | ¥ | ¥ 106 | ¥ 50 | ||
Equity interest in cost method investment (as a percent) | 1.00% | |||
Shares subscribed for consideration of cost method investment (in shares) | shares | 30,000,000 | |||
Wheat Commune Group Inc. ("Wheat Commune) | ||||
Investments in equity investees | ||||
Capital contribution in cash | $ 12 | ¥ 83 | ||
Equity interest in cost method investment (as a percent) | 7.45% | 7.45% | ||
Number of cities where comprehensive campus service provided | item | 100 |
Short-term bank borrowing (Deta
Short-term bank borrowing (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 29, 2016CNY (¥) | Feb. 03, 2016CNY (¥) | Jan. 01, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Nov. 04, 2015CNY (¥) |
Short-term bank borrowing | |||||||
Outstanding amount | $ 64,813 | ¥ 450,000 | ¥ 300,000 | ||||
PRC domestic commercial banks | |||||||
Short-term bank borrowing | |||||||
Outstanding amount | ¥ 450,000 | ¥ 300,000 | |||||
Short-term bank borrowing in November 2015 at 4.35% interest | |||||||
Short-term bank borrowing | |||||||
Principal amount | ¥ 300,000 | ||||||
Interest rate (as a percent) | 4.35% | ||||||
Short-term bank borrowing in January 2016 at 6.4% Interest | |||||||
Short-term bank borrowing | |||||||
Principal amount | ¥ 8,943 | ||||||
Interest rate (as a percent) | 6.40% | ||||||
Short-term bank borrowing in February 2016 at 4.785% Interest | |||||||
Short-term bank borrowing | |||||||
Principal amount | ¥ 100,000 | ||||||
Interest rate (as a percent) | 4.785% | ||||||
Short-term bank borrowing in December 2016 at 4.35% Interest | |||||||
Short-term bank borrowing | |||||||
Principal amount | ¥ 300,000 | ||||||
Interest rate (as a percent) | 4.35% | ||||||
Debt collateral amount | ¥ 333,264 | ||||||
Short-term bank borrowing in December 2016 at 3.915% Interest | |||||||
Short-term bank borrowing | |||||||
Principal amount | ¥ 150,000 | ||||||
Interest rate (as a percent) | 3.915% |
Other current liabilities (Deta
Other current liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Other current liabilities | |||
Payables related to property and equipment | ¥ 574,811 | ¥ 68,900 | |
Salary and welfare payable | 483,888 | 417,777 | |
Deposits from network partners | 470,642 | 380,776 | |
Share unit awards payable (Note 11) | 175,200 | ||
Construction deposits | 30,342 | 37,190 | |
Others | 96,907 | 185,071 | |
Total | $ 238,601 | ¥ 1,656,590 | ¥ 1,264,914 |
Income tax - Current and deferr
Income tax - Current and deferred portion of income tax (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2014CNY (¥) | |
Income tax | ||||
PRC statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% | 25.00% |
Current and deferred portion of income tax expenses | ||||
Current tax expenses | ¥ 762,540 | ¥ 414,952 | ¥ 282,795 | |
Deferred tax | $ (4,400) | (30,553) | 5,047 | (80,309) |
Total | $ 105,428 | ¥ 731,987 | ¥ 419,999 | ¥ 202,486 |
HONG KONG | ||||
Income tax | ||||
Statutory tax rate in the foreign (as a percent) | 16.50% | 16.50% |
Income tax - Reconciliations be
Income tax - Reconciliations between statutory income tax rate and effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliations of differences between statutory income tax rate and effective income tax rate | |||
PRC statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
R&D super deduction (as a percent) | (0.18%) | (0.25%) | (0.35%) |
Non-deductible expenses (as a percent) | 0.72% | 2.44% | 9.12% |
Expired tax loss (as a percent) | 0.78% | ||
Wavier of tax liabilities due to liquidation (as a percent) | (0.87%) | ||
Non-taxable income (as a percent) | (0.09%) | (3.20%) | |
Different tax rate of group entities operating in other jurisdiction (as a percent) | 0.58% | ||
True up (as a percent) | (0.08%) | ||
Others (as a percent) | (0.02%) | (0.10%) | |
Effective income tax rate (as a percent) | 25.95% | 23.97% | 33.58% |
Income tax - Deferred tax asset
Income tax - Deferred tax assets and liabilities (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Accrued expense | ¥ 80,099 | ¥ 64,398 |
Unrealized gain for intragroup transaction | 5,587 | 7,146 |
Net loss carryforward | 12,752 | 4,233 |
Government subsidy | 1,468 | 1,550 |
Provision for allowance for doubtful accounts | 1,281 | 513 |
Depreciation for property and equipment | 7,843 | 3,166 |
Total deferred tax assets | 109,030 | 81,006 |
Deferred tax liabilities: | ||
Difference in basis of land use rights | (130,520) | (85,059) |
Total deferred tax liabilities | (130,520) | (85,059) |
Valuation allowances | ¥ 0 | ¥ 0 |
Income tax - Other information
Income tax - Other information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income tax | |||
Tax loss carryforward | ¥ 51,006 | ||
PRC statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
Statute of limitations period (in years) | 3 years | ||
Extension period for statute of limitations under special circumstances (in years) | 5 years | ||
Underpayment of tax liability listed as special circumstance | ¥ 100 | ||
Statute of limitations period for related party transaction (in years) | 10 years | ||
Aggregate undistributed earnings of domestic subsidiaries and VIE | ¥ 3,238,472 | ¥ 1,434,218 | |
Withholding tax rate on dividends (as a percent) | 10.00% | ||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings above the threshold percentage (as a percent) | 5.00% | ||
Threshold beneficial owner percentage determining withholding income tax rate (as a percent) | 25.00% | ||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings below the threshold percentage (as a percent) | 10.00% | ||
Withholding income taxes for undistributed earnings of subsidiaries | ¥ 0 | ¥ 0 |
Share-based compensation (Detai
Share-based compensation (Details) - ZTO Express - Contingently convertible share units - ¥ / shares | Feb. 06, 2015 | Dec. 31, 2015 |
Share-based compensation | ||
Number of share units granted | 584,000 | |
Subscription price (in CNY or dollars per share) | ¥ 100 | |
Fixed annual compound annual rate (in percent) | 35.00% | |
Incremental rate of return (in percent) | 5.00% | |
Maximum annual return rate (in percent) | 50.00% | |
Unit conversion ratio | 0.1667 |
Share-based compensation - Fair
Share-based compensation - Fair value assumptions (Details) - Contingently convertible share units - CNY (¥) ¥ / shares in Units, ¥ in Thousands | Feb. 06, 2015 | Dec. 31, 2015 | Dec. 31, 2015 |
Share-based compensation | |||
Forfeited (in shares) | 0 | ||
Fair value of options granted (in dollars per share) | ¥ 147.10 | ¥ 300 | ¥ 300 |
Fair value per unit | |||
Expected volatility (as a percent) | 25.10% | 29.00% | |
Risk-free interest rate (per annum) (as a percent) | 1.50% | 1.51% | |
Risk-based interest rate (per annum) (as a percent) | 6.00% | 4.75% | |
Expected term (in years) | 1 year 10 months 24 days | 1 year | |
Fair value of underlying ordinary shares (in CNY/dollars per share) | ¥ 23.18 | ¥ 50.11 | ¥ 50.11 |
Fair value of awards | ¥ 85,906 | ¥ 175,200 | |
Selling, general and administrative expenses | |||
Fair value per unit | |||
Fair value adjustment | ¥ 116,800 |
Share-based compensation - Shar
Share-based compensation - Share Holding Platform (Details) ¥ / shares in Units, ¥ in Thousands | Jun. 28, 2016CNY (¥)employeeshares | Feb. 06, 2015CNY (¥)¥ / shares | Jun. 30, 2016entity | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)¥ / shares |
Zto Es Holding Limited ("ZTO ES") | Four limited liability partnerships ("LLPs") established as shareholders of ZTO ES | |||||
Share-based compensation | |||||
Number of LLPs established in PRC | entity | 4 | ||||
Equity interest hold by each of the four LLPs (as a percent) | 25.00% | ||||
Contingently convertible share units | |||||
Share-based compensation | |||||
Fair value of awards | ¥ | ¥ 85,906 | ¥ 175,200 | |||
Fair value of underlying ordinary shares (in CNY/dollars per share) | ¥ / shares | ¥ 23.18 | ¥ 50.11 | |||
Contingently convertible share units | Selling, general and administrative expenses | |||||
Share-based compensation | |||||
Share-based compensation expense recorded | ¥ | ¥ 116,800 | ||||
Share Holding Platform | Ordinary shares | |||||
Share-based compensation | |||||
Shares issued to related party | 16,000,000 | ||||
Granted | 1,054,164 | ||||
Number of units converted | 3,504,000 | ||||
Share Holding Platform | Contingently convertible share units | |||||
Share-based compensation | |||||
Granted | 584,000 | ||||
Conversion ratio of redeemable and contingently convertible share units | 0.1667 | ||||
Fair value of modified awards | ¥ | ¥ 236,181 | ||||
Share-based compensation expense recorded | ¥ | 60,981 | ||||
Fair value of awards | ¥ | ¥ 85,906 | 175,200 | |||
Share Holding Platform | Contingently convertible share units | Selling, general and administrative expenses | |||||
Share-based compensation | |||||
Share-based compensation expense recorded | ¥ | ¥ 116,800 | ||||
Share Holding Platform | Ordinary Share Units | |||||
Share-based compensation | |||||
Ratio or ordinary share units to ordinary share | 5 | ||||
Granted | 5,270,820 | ||||
Number of units converted | 17,520,000 | ||||
Share-based compensation expense recorded | ¥ | ¥ 61,019 | ||||
Fair value of underlying ordinary shares (in CNY/dollars per share) | ¥ / shares | ¥ 67.37 | ||||
Number of ordinary shares under Incentive Platform | |||||
Granted and vested | 4,558,164 | ||||
Vested and Outstanding at end of the year | 4,558,164 | ||||
Weighted average grant-date fair value | |||||
Granted and vested | ¥ / shares | ¥ 67.37 | ||||
Vested and Outstanding at end of the year | ¥ / shares | ¥ 67.37 | ||||
Share Holding Platform | Ordinary Share Units | Shares granted for cash subscription | |||||
Share-based compensation | |||||
Granted | 1,540,500 | ||||
Number of employees to whom shares were granted for cash | employee | 1 | ||||
Cash subscription payment | ¥ | ¥ 10,000 | ||||
Share Holding Platform | Ordinary Share Units | Noncash shares granted | |||||
Share-based compensation | |||||
Granted | 3,730,320 | ||||
Cash subscription payment | ¥ | ¥ 0 |
Share-based compensation - 2016
Share-based compensation - 2016 Share Incentive Plan (Details) - 2016 Share Incentive Plan - Options ¥ / shares in Units, ¥ in Thousands | Jan. 01, 2017¥ / sharesshares | Jun. 20, 2016$ / shares¥ / sharesshares | Sep. 30, 2016shares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015shares |
Share-based compensation | |||||
Shares available for issuance | 3,000,000 | ||||
Options granted | 300,000 | 300,000 | 0 | ||
Exercise price (in dollars per share) | $ / shares | $ 9.97 | ||||
Expiration period | 10 years | ||||
Requisite service period | 5 years | ||||
Shares authorized by the board under the plan | 6,000,000 | 3,000,000 | |||
Annual increase of shares authorized, on the first day of each of the company's fiscal year during the term of the 2016 Plan commencing with the fiscal year beginning January 1, 2017 (as a percent) | 0.50% | ||||
Annual increase of shares authorized, on the first day of each of the company's fiscal year during the term of the 2016 Plan commencing with the fiscal year beginning January 1, 2017, number of shares | 3,000,000 | ||||
Annual increase authorized by the board under the plan (in shares) | 3,000,000 | ||||
Fair value per unit | |||||
Risk-free interest rate (as a percent) | 2.54% | ||||
Contract life (in years) | 9 years 8 months 12 days | ||||
Expected volatility range (as a percent) | 31.25% | ||||
Expected dividend yield (as a percent) | 3.14% | ||||
Exercise multiple | 2.8 | ||||
Fair value of underlying ordinary shares (in CNY/dollars per share) | ¥ / shares | $ 67.37 | ||||
Number of share options | |||||
Outstanding at beginning of the year | 300,000 | ||||
Granted | 300,000 | 300,000 | 0 | ||
Outstanding at end of the year | 300,000 | ||||
Vested and expected to vest at end of the year | 300,000 | ||||
Weighted average exercise price | |||||
Outstanding at beginning of the year | ¥ / shares | ¥ 69.22 | ||||
Granted | ¥ / shares | ¥ 69.22 | ||||
Outstanding at end of the year | ¥ / shares | 69.22 | ||||
Vested and expected to vest at end of the year | ¥ / shares | ¥ 69.22 | ||||
Additional disclosures | |||||
Weighted average remaining contractual life, Outstanding at end of the year | 9 years 2 months 1 day | ||||
Weighted average remaining contractual life, Vested and expected to vest at end of the year | 9 years 2 months 1 day | ||||
Aggregate Intrinsic Value of option, Outstanding at end of the year | ¥ | ¥ 471 | ||||
Aggregate Intrinsic Value of option, Vested and expected to vest at end of the year | ¥ | ¥ 471 | ||||
Weighted average grant date fair value of options granted | ¥ / shares | ¥ 15.89 | ||||
Unrecognized compensation expense related to unvested share options | ¥ | ¥ 4,265 | ||||
Period of recognition of compensation cost | 4 years 2 months 1 day | ||||
Selling, general and administrative expenses | |||||
Additional disclosures | |||||
Share-based compensation expense recorded | ¥ | ¥ 502 |
Ordinary shares (Details)
Ordinary shares (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | Jun. 28, 2016shares | Oct. 31, 2016shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2016CNY (¥)shares | Oct. 27, 2016¥ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2014¥ / sharesshares | Nov. 30, 2014shares |
Proceeds from issuance of ordinary shares to related party | $ 9,852 | ¥ 68,400 | ||||||
Ordinary shares, share authorized | 10,000,000,000 | 10,000,000,000 | 10,000,000,000 | 600,000,000 | 100,000,000 | |||
Par value of ordinary shares | (per share) | $ 0.0001 | $ 0.0001 | ¥ 1 | |||||
Ordinary shares, shares issued | 600,000,000 | 600,000,000 | 100,000,000 | |||||
Ordinary shares, shares outstanding | 600,000,000 | |||||||
Ordinary shares | ||||||||
Number of shares issued | 72,100,000 | 72,100,000 | ||||||
Each of Common Class A or Common Class B or classes as the board of directors may determine | ||||||||
Ordinary shares, share authorized | 1,000,000,000 | |||||||
Class A ordinary shares | ||||||||
Number of votes entitled | ¥ / shares | ¥ 1 | |||||||
Ordinary shares, share authorized | 8,000,000,000 | |||||||
Ordinary shares, shares issued | 525,306,440 | 453,206,440 | ||||||
Ordinary shares, shares outstanding | 514,464,604 | 442,364,604 | ||||||
Class A ordinary shares | IPO | ||||||||
Number of shares issued | 72,100,000 | |||||||
Class B ordinary shares | ||||||||
Number of votes entitled | ¥ / shares | ¥ 10 | |||||||
Ordinary shares, share authorized | 1,000,000,000 | |||||||
Ordinary shares, shares issued | 206,100,000 | 206,100,000 | ||||||
Ordinary shares, shares outstanding | 206,100,000 | 206,100,000 | ||||||
Zto Es Holding Limited ("ZTO ES") | ||||||||
Number of shares considered issued to related party but not outstanding | 10,841,836 | |||||||
Zto Es Holding Limited ("ZTO ES") | Ordinary shares | ||||||||
Shares issued to related party | 16,000,000 | |||||||
Number of shares considered issued to related party but not outstanding | 10,841,836 |
Earnings per share and divide79
Earnings per share and dividends per share (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands | Sep. 14, 2015¥ / shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)¥ / sharesshares | Dec. 31, 2014CNY (¥)¥ / sharesshares |
Numerator: | |||||
Net income attributable to ZTO Express (Cayman) Inc. | $ 295,817 | ¥ 2,053,855 | ¥ 1,331,755 | ¥ 406,426 | |
Change in redemption value for redeemable preferred shares | $ (19,238) | (133,568) | (28,775) | ||
Earnings attributable to participating securities-basic | ¥ | (71,819) | (12,157) | |||
Earnings attributable to participating securities-diluted | ¥ | (71,819) | (12,157) | |||
Net income attributable to ordinary shareholders in computing basic and diluted earnings per share | ¥ | 1,848,468 | 1,290,823 | 406,426 | ||
Net income attributable to ordinary shareholders in computing basic and diluted earnings per share | ¥ | ¥ 1,848,468 | ¥ 1,290,823 | ¥ 406,426 | ||
Shares (Denominator): | |||||
Weight average ordinary shares outstanding-basic and diluted | 634,581,307 | 634,581,307 | 599,373,273 | 597,882,740 | |
Earnings per share-basic and diluted | ¥ / shares | ¥ 2.91 | ¥ 2.15 | ¥ 0.68 | ||
Number of unissued non-contingent ordinary shares relating to acquisitions that have been included in the calculations of earnings per share (in shares) | 13,226,525 | 13,226,525 | |||
Number of contingently convertible share units issued that have been excluded from the calculations of earnings per share (in shares) | 584,000 | ||||
Convertible preferred shares conversion ratio | 0.1667 | ||||
Dividend declared and paid (in dollars per share) | ¥ / shares | ¥ 0.19 | ||||
Zto Es Holding Limited ("ZTO ES") | |||||
Shares (Denominator): | |||||
Shares Issued, Not Considered Outstanding | 10,841,836 | 10,841,836 | |||
Series A convertible redeemable preferred shares | |||||
Shares (Denominator): | |||||
Anti-dilutive securities excluded from the calculation of diluted net loss per share | 30,079,918 | ||||
Options | |||||
Shares (Denominator): | |||||
Anti-dilutive securities excluded from the calculation of diluted net loss per share | 300,000 | 300,000 |
Related party transactions (Det
Related party transactions (Details) - CNY (¥) ¥ in Thousands | Aug. 22, 2016 | Jun. 28, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Related party transactions | ||||||
Delivery revenue derived | ¥ 0 | ¥ 127,157 | ¥ 200,171 | |||
Additional capital contribution from related party | 11,789 | 500,000 | ||||
Shanghai Zhongtongji Express Service Co Ltd Member | ||||||
Related party transactions | ||||||
Cash consideration | 64,000 | |||||
Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 127,157 | 200,171 | ||||
Transportation service fees paid | ||||||
Related party transactions | ||||||
Transportation service fees paid | 865,977 | 703,072 | 643,618 | |||
Quanzhou Zhongtong Express Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 49,019 | 68,326 | ||||
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 14,922 | 10,622 | ||||
Shenyang Changsheng Zhongtong Express Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 14,257 | 10,607 | ||||
Nanchang Zhongtong Express Ltd | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 13,598 | 12,700 | ||||
Tianjin Qianqiu Zhongtong Express Service Co., Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 10,580 | 10,193 | ||||
Shaanxi Zhongtong Express Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 10,346 | 10,135 | ||||
Shanxi Zhongtong Daying Logistics Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 7,051 | 6,017 | ||||
Jilin Zhongtong Daying Logistics Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 5,869 | 4,902 | ||||
Fengwang Investments Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 849 | 1,604 | ||||
Heilongjiang Ruston Express Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 666 | 398 | ||||
Zhejiang Zhongtong Express Services Company Ltd. | Delivery revenue | ||||||
Related party transactions | ||||||
Delivery revenue derived | 64,667 | |||||
Tonglu Tongze Logistics Ltd And Its Subsidiaries | Transportation service fees paid | ||||||
Related party transactions | ||||||
Transportation service fees paid | 853,198 | 703,072 | 643,618 | |||
ZTO Supply Chain Management Co., Ltd. ("ZTO LTL") | Transportation service fees paid | ||||||
Related party transactions | ||||||
Transportation service fees paid | 12,779 | |||||
Shanghai Mingyu Barcode Technology Ltd. | Purchases of supplies | ||||||
Related party transactions | ||||||
Purchases of supplies | ¥ 88,884 | ¥ 80,395 | 80,904 | |||
Zto Es Holding Limited ("ZTO ES") | Ordinary shares | ||||||
Related party transactions | ||||||
Shares issued to related party | 16,000,000 | |||||
Number of shares with economic interests granted | 5,158,164 | |||||
Number of shares waived | 10,841,836 | |||||
Mr. Meisong Lai | ||||||
Related party transactions | ||||||
Additional capital contribution from related party | ¥ 11,789 | |||||
ZTO LTL and Mr. Jianfa Lai | Investment Agreement | ZTO LTL | ||||||
Related party transactions | ||||||
Cash consideration | ¥ 54,000 | |||||
Equity interest in equity method investment (as a percent) | 18.00% | |||||
Certain principal shareholders | ||||||
Related party transactions | ||||||
Payments to cease delivery operations in Zhejiang province | 213,000 | |||||
ZTO Express | Shanghai Zhongtongji Express Service Co Ltd Member | ||||||
Related party transactions | ||||||
Cash consideration | ¥ 222,000 | |||||
Cash consideration | ¥ 158,000 | |||||
Interest-free loan | ¥ 341,000 |
Related party transactions - Du
Related party transactions - Due to Related party (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Related party transactions | |||
Amounts due to related parties | $ 18,929 | ¥ 131,425 | ¥ 103,267 |
Tonglu Tongze Logistics Ltd And Its Subsidiaries | |||
Related party transactions | |||
Amounts due to related parties | 121,540 | 84,646 | |
Shanghai Mingyu Barcode Technology Ltd. | |||
Related party transactions | |||
Amounts due to related parties | 5,663 | ||
ZTO Supply Chain Management Co., Ltd. ("ZTO LTL") | |||
Related party transactions | |||
Amounts due to related parties | ¥ 4,222 | ||
Suzhou Zhongtong Express Ltd. ("Suzhou ZTO") | |||
Related party transactions | |||
Amounts due to related parties | 10,909 | ||
Quanzhou Zhongtong Express Ltd. | |||
Related party transactions | |||
Amounts due to related parties | 5,590 | ||
Shanxi Zhongtong Daying Logistics Ltd. | |||
Related party transactions | |||
Amounts due to related parties | ¥ 2,122 |
Related party transactions - 82
Related party transactions - Due from Related party (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2016USD ($) | Dec. 31, 2016CNY (¥) | |
Related party transactions | ||||
Amounts due from related parties | ¥ 85,740 | $ 778 | ¥ 5,400 | |
Shanghai Kuaibao Network Technology Ltd | ||||
Related party transactions | ||||
Amounts due from related parties | 2,700 | ¥ 5,400 | ||
Lai Yufeng | ||||
Related party transactions | ||||
Amounts due from related parties | 58,400 | |||
Cash and cash equivalents held by related parties on behalf of the Group | 58,400 | |||
Tonglu Tongze Logistics Ltd And Its Subsidiaries | ||||
Related party transactions | ||||
Amounts due from related parties | 22,168 | |||
Notes receivable | ¥ 15,000 | |||
Tonglu Tongze Logistics Ltd And Its Subsidiaries | Notes receivable | ||||
Related party transactions | ||||
Interest rate (as a percent) | 20.00% | |||
Accrued interest on notes receivable | ¥ 1,500 | |||
Tonglu Tongze Logistics Ltd And Its Subsidiaries | Prepaid transportation service fees | ||||
Related party transactions | ||||
Prepaid transportation service fees | ¥ 0 | 7,168 | ||
Shanxi Zhongtong Daying Logistics Ltd. | ||||
Related party transactions | ||||
Amounts due from related parties | 2,297 | |||
Wuhan Chengxin Zhongtong Express Ltd. | ||||
Related party transactions | ||||
Amounts due from related parties | ¥ 175 |
Commitments and contingencies83
Commitments and contingencies (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and contingencies | |||
Operating lease rent expense | ¥ 146,780 | ¥ 105,235 | ¥ 65,892 |
Operating leases, minimum payments | |||
2,017 | 198,556 | ||
2,018 | 158,909 | ||
2,019 | 140,287 | ||
2,020 | 107,696 | ||
2,021 | 92,936 | ||
2022 and after | 514,173 | ||
Total lease commitment | ¥ 1,212,557 |
Commitments and contingencies -
Commitments and contingencies - Capital Commitments (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2016CNY (¥) | |
Capital Commitments | |
Capital Commitments | |
Capital commitments contracted | ¥ 1,477,441 |
Repurchase of ordinary share 85
Repurchase of ordinary share of ZTO Express (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Repurchase of ordinary share of ZTO Express | ||||
Total cash consideration for repurchase of ordinary shares | ¥ 230,000 | |||
Ordinary shares | ||||
Repurchase of ordinary share of ZTO Express | ||||
Repurchase of ordinary shares (in shares) | 13,800,000 | 13,800,000 | ||
Share Price | ¥ 16.67 | |||
Total cash consideration for repurchase of ordinary shares | ¥ 230,000 | |||
Consideration for repurchase of ordinary shares due | ¥ 46,000 | ¥ 46,000 |
Convertible redeemable prefer86
Convertible redeemable preferred shares (Details) - Series A convertible redeemable preferred shares ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2015¥ / shares | |
Convertible redeemable preferred shares | ||||
Issuance of stock (in shares) | shares | 30,079,918 | 30,079,918 | ||
Share price (in dollars per share) | (per share) | $ 9.97 | ¥ 64.58 | ||
Conversion basis for temporary equity to ordinary shares | shares | 1 | |||
Percentage of compound rate of return used in valuation of temporary equity pursuant to Guarantee Return provision (as a percent) | 25.00% | |||
Percentage of aggregate purchase price for valuation of temporary equity pursuant to Guarantee Return provision (as a percent) | 200.00% | |||
Annual rate of return (as a percent) | 8.00% | |||
Rollforward of carrying amounts of Preferred Share | ||||
Beginning balance | ¥ 1,976,855 | |||
Issuance of Preferred Shares | $ 300 | ¥ 1,948,080 | ||
Change in redemption value | 133,568 | 28,775 | ||
Conversion to ordinary shares upon IPO | ¥ (2,110,423) | |||
Ending balance | ¥ 1,976,855 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plans | |||
Defined benefit plan contributions | ¥ 168,688 | ¥ 253,561 | ¥ 120,521 |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended |
Dec. 31, 2016segment | |
Segment Information | |
Number of reportable segments | 1 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Net Assets | |||
Percentage of net income from subsidiaries and VIEs incorporated in the PRC to be appropriated to the statutory reserve | 10.00% | ||
Limit of statutory reserve fund as a percentage of registered capital, after which allocations to statutory reserve fund are no longer required | 50.00% | ||
Appropriation to statutory reserves | ¥ 180,976 | ¥ 91,633 | ¥ 63,538 |
Accumulated statutory reserves | 336,175 | ¥ 155,199 | |
Restricted net assets | ¥ 3,937,496 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - Restricted share units $ / shares in Thousands | Mar. 28, 2017$ / sharesshares |
Subsequent Events | |
Vesting period | 3 years |
Class A ordinary shares | Certain directors, members of the management, and the employees | |
Subsequent Events | |
Shares authorized by the board under the plan | 679,645 |
Share Holding Platform | Class A ordinary shares | Certain directors, members of the management, and the employees | |
Subsequent Events | |
Number of share units granted | 789,150 |
Value | $ / shares | $ 0 |