|Item 1. Identity of Directors, Senior Management and Advisers|
|Item 2. Offer Statistics and Expected Timetable|
|Item 3. Key Information|
|Item 4. Information on The Company|
|Item 4A. Unresolved Staff Comments|
|Item 5. Operating and Financial Review and Prospects|
|Item 6. Directors, Senior Management and Employees|
|Item 7. Major Shareholders and Related Party Transactions|
|Item 8. Financial Information|
|Item 9. The Offer and Listing|
|Item 10. Additional Information|
|Item 11. Quantitative and Qualitative Disclosures About Market Risk|
|Item 12. Description of Securities Other Than Equity Securities|
|Item 13. Defaults, Dividend Arrearages and Delinquencies|
|Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds|
|Item 15. Controls and Procedures|
|Item 16A. Audit Committee Financial Expert|
|Item 16B. Code of Ethics|
|Item 16C. Principal Accountant Fees and Services|
|Item 16D. Exemptions From The Listing Standards for Audit Committees|
|Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers|
|Item 16F. Change in Registrant's Certifying Accountant|
|Item 16G. Corporate Governance|
|Item 16H. Mine Safety Disclosure|
|Item 17. Financial Statements|
|Item 18. Financial Statements|
|Item 19. Exhibits|
|Balance Sheet||Income Statement||Cash Flow|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report……………
For the transition period from to
Commission file number
(Exact name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
eight Ordinary Shares
The Stock Exchange of Hong Kong Limited
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
◻ Yes ⌧
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ◻
Non-accelerated filer ◻
Emerging growth company
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act ◻
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
International Financial Reporting Standards as issued
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
◻ Item 17 ◻ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
◻ Yes ◻ No
TABLE OF CONTENTS
LETTER FROM OUR CHAIRMAN AND CEO TO SHAREHOLDERS
Thank you for your continued help, support and trust in Alibaba Group.
This is my first letter to you as the Chairman of Alibaba Group. More than half of 2020 will have passed by the time you read this and all that has happened over the last six months has been an unprecedented test on all of us. We can already see the profound impact on the future of our economy and society.
There remains intense global uncertainty due to the unexpected endurance of the COVID-19 pandemic. It is clear that participants in the market, whether organizations or individuals, need to look beyond their own personal welfare. No one can defeat the pandemic alone and it is a challenge that we must face collectively as a global community. But, even in a highly uncertain world, we can always find some certainty. We know without doubt that the ongoing digital transformation of our economy and society will be unstoppable. COVID-19 has made us fundamentally re-evaluate our relationship with the world around us. It has catalyzed development of brand-new digital solutions in life, work, education, business management and public services. Today, digitalization is the new norm.
This past year, we celebrated Alibaba’s 20th anniversary. Over the last 20 years, Alibaba has benefited from the supercharged evolution of the Chinese Internet landscape as well as the prosperity of the China economy. The trajectories of Alibaba and China are inextricably linked. Over the last 20 years, Alibaba has been preparing for the arrival of the digital economy era. We have assembled a digital economy that encompasses commerce, finance, logistics and big data powered by cloud computing. Along the way, a dynamic and rich ecosystem made up of hundreds of millions of consumers and tens of millions of merchants, service providers and partners emerged. Not only did we forge an entirely new commercial ecosystem online, we also helped traditional businesses to embrace digital transformation and find innovative hybrid models that integrate online with offline. We are the provider of utility services for global digital commerce, and became the essential infrastructure for businesses pursuing digital transformation across all industries.
COVID-19 forced all of us to develop a deeper and more concrete understanding of “infrastructure.” During the pandemic, Alibaba mobilized the full spectrum of our digital infrastructure to contribute to the global fight against COVID-19, to meet the essential needs of our communities and to provide support for economic recovery. Alibaba owes its growth and development over the past 20 years to society and to the era that we belong. We believe the best way to show our gratitude is to help address the challenges that we collectively face and drive progress to the benefit of the whole society. In the face of the hardships created by the pandemic, it was our duty and responsibility to give back.
During this past fiscal year, despite the impact of the pandemic, Alibaba still delivered on a strategic goal that we had established five years ago, which was to surpass US$1 trillion in GMV. This was an important milestone for Alibaba, especially in the context of US$6 trillion in total annual retail sales of consumer goods in China today. Our next goal is to serve more than 1 billion consumers in China and facilitate more than RMB10 trillion of consumption on our platforms in the next five years as we continue on the path of globalization. Our longer-term goals are to serve 2 billion consumers globally, create 100 million jobs and provide the necessary infrastructure to support 10 million small businesses to become profitable on our platforms by 2036. We will continue to pursue our three strategic pillars of globalization, China domestic consumption and big data powered by cloud computing. Globalization is our long-term battle; Chinese domestic consumption is our cornerstone battle and big data powered by cloud computing is our battle for the future.
This past year, we also celebrated a series of momentous events. Alibaba migrated its core system onto the public cloud, paving the way to build a cloud-native infrastructure for the future. We came home to Hong Kong for a secondary listing. Wang Jian became the first representative from a private Chinese enterprise appointed to the Chinese Academy of Engineering. He is the pride of all Aliren, and his appointment represents a validation of the commitment and investment made by Alibaba engineers over the years.
True creativity is original. Alibaba prioritized self-innovation and incubation of new ideas above all else over the past 20 years. From Taobao to Alipay to Cainiao to Alibaba Cloud, from DingTalk to Freshippo to Taobao Live – all of these new “animals” helped to improve the lives of consumers, advance development of commerce and drive progress in society. We have re-defined management of consumer lifestyles and business operations. Our digital economy infrastructure – from digital commerce to digital finance to logistics to cloud computing – empowers the whole society with the potential and opportunity to innovate and incubate even more new ideas.
Over the past 20 years, Alibaba has grown up surrounded by competition. Competition has made us better. Competition has strengthened our creativity and innovation. Competition has inspired us to become a “future shaper”. Only those who have experienced zero to one, created something from nothing, and possess the stamina to continually create value for customers through innovation will stand the test of time in this fast-moving world of digitalization. Alibaba is unique in our commitment to being true to ourselves and in our firm belief that customer value creation should be at the root of all innovation. Alibaba’s past 20 years has been defined by our own continuous self-innovation, and helping our customers and partners to foster new ideas. We will continue to build and develop the infrastructure for the digital economy. We will continue to invest for the future. We will continue to incubate for the future. We want Alibaba’s innovations to contribute to a better tomorrow for everyone.
On the eve of our 20th anniversary, we laid out our vision to be a good company for 102 years. We are standing at an important intersection in history and our mission is being tested. Alibaba’s ultimate goal is to create value for society and help find solutions for society’s challenges. We want to convert Alibaba’s resources into fuel for small and medium businesses, which will in turn support the advancement of the whole society. We want our society to be better because of Alibaba’s contributions. We believe that once our society is better, once our economy is better, and once people’s lives are better, then Alibaba will be better!
Chairman and Chief Executive Officer
Alibaba Group Holding Limited
CONVENTIONS THAT APPLY TO THIS ANNUAL REPORT ON FORM 20-F
Unless the context otherwise requires, references in this annual report on Form 20-F to:
|●||“2019 PRC Foreign Investment Law” are to the PRC Foreign Investment Law, promulgated by the National People’s Congress in March 2019, which became effective on January 1, 2020;|
|●||“ADSs” are to the American depositary shares, each of which represents eight Shares;|
|●||“AI” are to artificial intelligence;|
|●||“Alibaba,” “Alibaba Group,” “company,” “our company,” “we,” “our” or “us” are to Alibaba Group Holding Limited, a company incorporated in the Cayman Islands with limited liability on June 28, 1999 and, where the context requires, its consolidated subsidiaries and its affiliated consolidated entities, including its variable interest entities and their subsidiaries, from time to time;|
|●||“Alibaba Health” are to Alibaba Health Information Technology Limited, a company incorporated in Bermuda on March 11, 1998 and the shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 0241), and, except where the context otherwise requires, its consolidated subsidiaries;|
|●||“Alibaba Pictures” are to Alibaba Pictures Group Limited, a company incorporated in Bermuda with limited liability on January 6, 1994, the shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 1060) and also have a secondary listing on the Singapore Exchange Securities Trading Limited (SGX-ST) (Stock Code: S91) and, except where the context otherwise requires, its consolidated subsidiaries; on June 18, 2020, Alibaba Pictures announced the proposed voluntary delisting of its shares from the main board of the SGX-ST, subject to certain conditions;|
|●||“Alipay” are to Alipay.com Co., Ltd., a company incorporated under the laws of the PRC on December 8, 2004, with which we have a long-term contractual relationship and which is a wholly-owned subsidiary of Ant Group or, where the context requires, its predecessor entities;|
|●||“Altaba” are to Altaba Inc. (formerly known as Yahoo! Inc.) and where the context requires, its consolidated subsidiaries;|
|●||“Amap” are to AutoNavi Holdings Limited, a company incorporated under the laws of the Cayman Islands on June 2, 2006 and our indirect wholly-owned subsidiary, and, except where the context otherwise requires, all of its consolidated subsidiaries and (if applicable) its affiliated consolidated entities, including its variable interest entities and their subsidiaries; where the context requires, also refers to our business in providing mobile digital map, navigation and real time traffic information under the Amap brand;|
|●||“Analysys” are to Analysys, a research institution;|
|●||“annual active consumers” are to user accounts that placed one or more confirmed orders through the relevant platform during the previous twelve months, regardless of whether or not the buyer and seller settle the transaction;|
|●||“annual active users” or “AAUs” for Ant Group are to the user accounts that accessed one or more services provided by Ant Group and/or its investees during the previous twelve months; in the context of global AAUs, it refers to annual active users of Alipay in China and overseas annual active payment users served by Ant Group and/or its strategic local e-wallet partners;|
|●||“Ant Group” are to Ant Small and Micro Financial Services Group Co., Ltd., a company organized under the laws of the PRC on October 19, 2000 and, as context requires, its consolidated subsidiaries; starting from September 2019, we have held a 33% equity interest in Ant Group (formerly known as Ant Financial);|
|●||“Articles” or “Articles of Association” are to our Articles of Association (as amended and restated from time to time), adopted on September 2, 2014;|
|●||“board” or “board of directors” are to our board of directors, unless otherwise stated;|
|●||“Bulletin 7” are to the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, issued by the STA on February 3, 2015;|
|●||“Bulletin 37” are to Announcement on Issues Concerning the Withholding of Enterprise Income Tax at Source on Non-PRC Resident Enterprises, issued by the STA on October 17, 2017;|
|●||“business day” are to any day (other than a Saturday, Sunday or public holiday) on which banks in relevant jurisdictions are generally open for business;|
|●||“Cainiao Network” are to Cainiao Smart Logistics Network Limited, a company incorporated on May 20, 2015 under the laws of the Cayman Islands and our consolidated subsidiary, together with its subsidiaries;|
|●||“CCASS” are to the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited, a wholly-owned subsidiary of Hong Kong Exchange and Clearing Limited;|
|●||“China” and the “PRC” are to the People’s Republic of China;|
|●||“Circular 82” are to the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the basis of de facto management bodies, issued on April 22, 2009 and further amended on December 29, 2017;|
|●||“Companies (WUMP) Ordinance” are to the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong), as amended or supplemented from time to time;|
|●||“CRM” are to customer relationship management;|
|●||“CSRC” are to the China Securities Regulatory Commission of the PRC;|
|●||“Damai” are to Pony Media Holdings Inc., a company incorporated under the laws of the British Virgin Islands on December 17, 2004 and our indirect wholly-owned subsidiary, and, except where the context otherwise requires, all of its consolidated subsidiaries and its affiliated consolidated entities, including its variable interest entities and their subsidiaries; where the context requires, Damai also refers to our online ticketing platform under the Damai brand;|
|●||“Deposit Agreement” are to the deposit agreement, dated as of September 24, 2014, as amended, among us, Citibank, N.A. and our ADS holders and beneficial owners from time to time;|
|●||“director(s)” are to member(s) of our board, unless otherwise stated;|
|●||“DTC” are to The Depository Trust Company, the central book-entry clearing and settlement system for equity securities in the United States and the clearance system for our ADSs;|
|●||“EIT” are to enterprise income tax under the EIT Law;|
|●||“EIT Law” are to the PRC Enterprise Income Tax Law;|
|●||“Ele.me” are to Rajax Holding, a company incorporated under the laws of the Cayman Islands on June 8, 2011 and our consolidated subsidiary, and, except where the context otherwise requires, its consolidated subsidiaries and its affiliated consolidated entities, including its variable interest entities and their subsidiaries; where the context requires, also refers to our on-demand delivery and local services platform under the Ele.me brand;|
|●||“ERP” are to enterprise resource planning;|
|●||“EU” are to the European Union;|
|●||“FMCG” are to fast-moving consumer goods;|
|●||“foreign private issuer” are to such term as defined in Rule 3b-4 under the U.S. Exchange Act;|
|●||“Gartner” are to Gartner, Inc.; the Gartner content described herein (the “Gartner Content”) represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact; Gartner Content speaks as of its original publication date (and not as of the date of this annual report), and the opinions expressed in the Gartner Content are subject to change without notice;|
|●||“GDP” are to gross domestic product;|
|●||“GDPR” are to the EU General Data Protection Regulation;|
|●||“GMV” or “Gross Merchandise Value” are to the value of confirmed orders of products and services on our marketplaces, regardless of how, or whether, the buyer and seller settle the transaction; unless otherwise stated, GMV in reference to our marketplaces includes only GMV transacted through our China retail marketplaces; our calculation of GMV for our China retail marketplaces includes shipping charges paid by buyers to sellers; as a prudential matter aimed at eliminating any influence on our GMV of potentially fraudulent transactions, we exclude from our calculation of GMV transactions in certain product categories over certain amounts and transactions by buyers in certain product categories over a certain amount per day;|
|●||“HK$” or “Hong Kong dollars” or “HK dollars” are to Hong Kong dollars, the lawful currency of Hong Kong;|
|●||“Hong Kong” or “HK” or “Hong Kong S.A.R.” are to the Hong Kong Special Administrative Region of the PRC;|
|●||“Hong Kong Listing Rules” are to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended or supplemented from time to time;|
|●||“Hong Kong Share Registrar” are to Computershare Hong Kong Investor Services Limited;|
|●||“Hong Kong Stock Exchange” are to The Stock Exchange of Hong Kong Limited;|
|●||“IaaS” are to infrastructure-as-a-service;|
|●||“ICP(s)” are to Internet content provider(s);|
|●||“IDC” are to International Data Corporation, a research institution;|
|●||“Internet Advertising Measures” are to the Interim Administrative Measures on Internet Advertising, promulgated by the SAIC on July 4, 2016;|
|●||“Intime” are to Intime Retail (Group) Company Limited, a company incorporated under the laws of the Cayman Islands on November 8, 2006 and our consolidated subsidiary and, except where the context otherwise requires, its consolidated subsidiaries;|
|●||“IoT” are to Internet of things;|
|●||“IT” are to information technology;|
|●||“Junao” are to Hangzhou Junao Equity Investment Partnership, a limited liability partnership incorporated under the laws of the PRC;|
|●||“Junhan” are to Hangzhou Junhan Equity Investment Partnership, a limited liability partnership incorporated under the laws of the PRC;|
|●||“Kaola” are to HQG, Inc., a company incorporated under the laws of the Cayman Islands on September 30, 2014 and our indirect wholly-owned subsidiary, and, except where the context otherwise requires, its consolidated subsidiaries and affiliated consolidated entities; where the context requires, Kaola also refers to our import e-commerce platform in China under the Kaola brand;|
|●||“Koubei” are to Koubei Holding Limited, a company incorporated under the laws of the Cayman Islands on March 29, 2006 and our consolidated subsidiary, and, except where the context otherwise requires, its consolidated subsidiaries and its affiliated consolidated entities, including its variable interest entities and their subsidiaries; where the context requires, Koubei also refers to our restaurant and local services guide platform for in-store consumption;|
|●||“Lazada” are to Lazada Group S.A., a company incorporated under the laws of Luxembourg on March 6, 2015 and our consolidated subsidiary, and, except where the context otherwise requires, its consolidated subsidiaries and affiliated consolidated entities;|
|●||“M&A Rules” are to the Rules on the Merger and Acquisition of Domestic Enterprises by Foreign Investors jointly issued by MOFCOM, SASAC, STA, CSRC, SAIC and SAFE on August 8, 2006, effective on September 8, 2006 and further amended on June 22, 2009 by the MOFCOM;|
|●||“Main Board” are to the stock market (excluding the option market) operated by the Hong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Hong Kong Stock Exchange;|
|●||“major subsidiaries” and “major variable interest entities” refer to the entities identified in our corporate structure chart in “Item 4. Information on the Company — C. Organizational Structure”;|
|●||“Memorandum” or “Memorandum of Association” are to our memorandum of association (as amended from time to time);|
|●||“MIIT” are to the Ministry of Industry and Information Technology;|
|●||“mobile MAUs” in a given month, are to the number of unique mobile devices that were used to visit or access certain of our mobile apps at least once during that month;|
|●||“MOF” are to the Ministry of Finance of the PRC;|
|●||“MOFCOM” are to the Ministry of Commerce of the PRC;|
|●||“National Security Law” are to the PRC National Security Law, promulgated by the PRC National People’s Congress Standing Committee on July 1, 2015;|
|●||“NDRC” are to the National Development and Reform Commission;|
|●||“Negative List” are to the Special Administrative Measures (Negative List) for Foreign Investment Access, the currently effective version of which was jointly promulgated by the MOFCOM and the NDRC on June 30, 2019 and which became effective on July 30, 2019, as amended, supplemented or otherwise modified from time to time; the most recent amendment of the Negative List was promulgated on June 23, 2020 and will take effect on July 23, 2020;|
|●||“NYSE” are to the New York Stock Exchange;|
|●||“orders” unless the context otherwise requires, are to each confirmed order from a transaction between a buyer and a seller for products and services on the relevant platform, even if the order includes multiple items, during the specified period, whether or not the transaction is settled;|
|●||our “China retail marketplaces” are to Taobao Marketplace and Tmall, collectively;|
|●||our “wholesale marketplaces” or “B2B business” are to 1688.com and Alibaba.com, collectively;|
|●||“P4P” are to pay-for-performance;|
|●||“PaaS” are to platform-as-a-service;|
|●||“PBOC” are to the People’s Bank of China;|
|●||“PCAOB” are to the Public Company Accounting Oversight Board;|
|●||“PRC Government” or “State” are to the central government of the PRC, including all political subdivisions (including provincial, municipal and other regional or local government entities) and its organs or, as the context requires, any of them;|
|●||“Principal Share Registrar” are to Maples Fund Services (Cayman) Limited;|
|●||“QuestMobile” are to QuestMobile, a research institution;|
|●||“RMB” or “Renminbi” are to Renminbi, the lawful currency of the PRC;|
|●||“RSU(s)” are to restricted share unit(s);|
|●||“SAFE” are to the State Administration of Foreign Exchange of the PRC, the PRC governmental agency responsible for matters relating to foreign exchange administration, including local branches, when applicable;|
|●||“SAFE Circular 37” are to the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles promulgated by SAFE with effect from July 4, 2014;|
|●||“SAIC” are to State Administration for Industry and Commerce of the PRC, currently known as SAMR;|
|●||“SAMR” are to the PRC State Administration for Market Regulation (formerly known as the SAIC);|
|●||“SAPA” are to a share and asset purchase agreement by and among us, Ant Group, Altaba, SoftBank and the other parties named therein, dated August 12, 2014, together with all subsequent amendments;|
|●||“SASAC” are to State-owned Assets Supervision and Administration Commission of the PRC State Council;|
|●||“SEC” are to the United States Securities and Exchange Commission;|
|●||“SFC” are to the Securities and Futures Commission of Hong Kong;|
|●||“SFO” are to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time;|
|●||“Share Split” are to the subdivision of each ordinary share into eight Shares, pursuant to which the par value of our Shares was correspondingly changed from US$0.000025 per Share to US$0.000003125 per Share, with effect from July 30, 2019; immediately after the Share Split became effective, our authorized share capital became US$100,000 divided into 32,000,000,000 Shares of par value US$0.000003125 per Share;|
|●||“shareholder(s)” are to holder(s) of Shares and, where the context requires, ADSs;|
|●||“Share(s)” or “ordinary share(s)” are to ordinary share(s) in our capital with par value of US$0.000003125 each;|
|●||“SMEs” are to small and medium-sized enterprises;|
|●||“SoftBank” are to SoftBank Group Corp. (formerly known as SoftBank Corp.), and, except where the context otherwise requires, its consolidated subsidiaries;|
|●||“STA” are to the State Taxation Administration of the PRC;|
|●||“Sun Art” are to Sun Art Retail Group Limited, a company incorporated under the laws of Hong Kong on December 13, 2000 with limited liability, the shares of which are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 6808);|
|●||“Takeovers Codes” are to Hong Kong’s Codes on Takeovers and Mergers and Share Buy-backs issued by the SFC;|
|●||“UK” are to the United Kingdom of Great Britain and Northern Ireland;|
|●||“U.S.” or “United States” are to the United States of America, its territories, its possessions and all areas subject to its jurisdiction;|
|●||“US$” or “U.S. dollars” are to the lawful currency of the United States;|
|●||“U.S. Exchange Act” are to the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;|
|●||“U.S. GAAP” are to accounting principles generally accepted in the United States;|
|●||“U.S. Securities Act” are to the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;|
|●||“USTR” are to the Office of the U.S. Trade Representative;|
|●||“variable interest entities” or “VIE(s)” are to our variable interest entities that are 100% owned by PRC citizens or by PRC entities owned by PRC citizens, where applicable, that hold the ICP licenses, or other business operation licenses or approvals, and generally operate the various websites and/or mobile apps for our Internet businesses or other businesses in which foreign investment is restricted or prohibited, and are consolidated into our consolidated financial statements in accordance with U.S. GAAP as if they were our wholly-owned subsidiaries;|
|●||“VAT” are to value-added tax; all amounts are exclusive of VAT in this annual report except where indicated otherwise;|
|●||“VIE structure” or “Contractual Arrangements” are to the variable interest entity structure;|
|●||“VIE Structure Enhancement” are to the process of enhancing the structure of our major variable interest entities and certain other variable interest entities;|
|●||“Youku” are to Youku Tudou Inc., a company incorporated under the laws of the Cayman Islands on September 20, 2005 and our consolidated subsidiary, and, except where the context otherwise requires, its consolidated subsidiaries and its affiliated consolidated entities, including its variable interest entities and their subsidiaries; where the context requires, Youku also refers to our online video platform under the Youku brand; and|
|●||“Yunfeng Fund(s)” are to one or more Yunfeng investment funds established by Yunfeng Capital Limited or its affiliates, in which Jack Ma currently holds minority interest in the general partners.|
Exchange Rate Information
Our reporting currency is the Renminbi. This annual report contains translations of Renminbi and Hong Kong dollar amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise stated, all translations of Renminbi and Hong Kong dollars into U.S. dollars and from U.S. dollars into Renminbi in this annual report were made at a rate of RMB7.0808 to US$1.00 and HK$7.7513 to US$1.00, the respective exchange rates on March 31, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. We make no representation that any Renminbi, Hong Kong dollar or U.S. dollar amounts referred to in this annual report could have been, or could be, converted into U.S. dollars, Renminbi or Hong Kong dollars, as the case may be, at any particular rate or at all. On July 2, 2020, the noon buying rate for Renminbi and Hong Kong dollars was RMB7.0660 to US$1.00 and HK$7.7501 to US$1.00, respectively.
The U.S. dollar amounts of annual GMV for fiscal year 2020 represent the sum of GMV in U.S. dollars for the quarters ended June 30, September 30 and December 31, 2019 and March 31, 2020, each converted from the RMB amounts at the average daily exchange rate for each relevant quarter.
This annual report on Form 20-F contains forward-looking statements. These statements are made under the “safe harbor” provision under Section 21E of the U.S. Exchange Act, and as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “future,” “aim,” “estimate,” “intend,” “seek,” “plan,” “believe,” “potential,” “continue,” “ongoing,” “target,” “guidance,” “is/are likely to” or other similar expressions. The forward-looking statements included in this annual report relate to, among others:
|●||our growth strategies and business plans;|
|●||our future business development, results of operations and financial condition;|
|●||trends in commerce, the overall technology and the other industries in which we operate, both in China and globally;|
|●||competition in our industries;|
|●||fluctuations in general economic and business conditions in China and globally;|
|●||expected changes in our revenues and certain cost and expense items and our operating margins;|
|●||the completion of our investment transactions and regulatory approvals as well as other conditions that must be met in order to complete investment transactions;|
|●||the completion of our VIE Structure Enhancement;|
|●||international trade policies, protectionist policies and other policies (including those relating to export control and economic or trade sanctions) that could place restrictions on economic and commercial activity;|
|●||the regulatory environment in which we and companies integral to our digital economy operate in China and globally;|
|●||impacts of the COVID-19 pandemic; and|
|●||assumptions underlying or related to any of the foregoing.|
Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. The global and China Internet, retail, wholesale, online and mobile commerce, cloud computing, and digital media and entertainment industries or markets may not grow at the rates projected by market data, or at all. The failure of these industries or markets to grow at the projected rates may have a material adverse effect on our business, financial condition and results of operations and the market price of our ADSs and Shares. If any one or more of the assumptions underlying the industry or market data turns out to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements. Please also see “Item 3. Key Information—D. Risk Factors.”
The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report and are based on current expectations, assumptions, estimates and projections. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we have referred to in this annual report completely and with the understanding that our actual future results may be materially different from what we expect.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
A. Selected Financial Data
The selected consolidated statements of operations data for the years ended March 31, 2018, 2019 and 2020, and the selected consolidated balance sheet data as of March 31, 2019 and 2020 have been derived from our audited consolidated financial statements included in this annual report. Our selected consolidated statements of operations data for the years ended March 31, 2016 and 2017 and the selected consolidated balance sheet data as of March 31, 2016, 2017 and 2018 have been derived from our audited consolidated financial statements not included in this annual report. Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
The following selected consolidated financial data for the periods and as of the dates indicated are qualified by reference to and should be read in conjunction with our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects,” both of which are included in this annual report.
Our historical results for any prior period do not necessarily indicate our results to be expected for any future period.
Consolidated Statements of Operations Data:
Year ended March 31,
(in millions, except per share data)
Cost of revenue
Product development expenses
Sales and marketing expenses
General and administrative expenses
Amortization and impairment of intangible assets
Impairment of goodwill
Income from operations
Interest and investment income, net
Other income, net
Income before income tax and share of results of equity investees
Income tax expenses
Share of results of equity investees
Net loss attributable to noncontrolling interests
Net income attributable to Alibaba Group Holding Limited
Accretion of mezzanine equity
Net income attributable to ordinary shareholders
Earnings per share attributable to ordinary shareholders(1):
Earnings per ADS attributable to ordinary shareholders(1):
Weighted average number of shares used in computing earnings per ordinary share (million shares)(1):
Marketplace-based core commerce adjusted EBITA
Non-GAAP net income
Non-GAAP diluted earnings per share(1)
Non-GAAP diluted earnings per ADS(1)
Free cash flow
|(1)||Each ADS represents eight Shares. For the years ended March 31, 2016, 2017, 2018 and 2019, weighted average number of shares and earnings per share have been retrospectively adjusted for the Share Split that became effective on July 30, 2019.|
|(2)||See “Non-GAAP Measures” below.|
We use adjusted EBITDA (including adjusted EBITDA margin), adjusted EBITA (including adjusted EBITA margin), marketplace-based core commerce adjusted EBITA, non-GAAP net income, non-GAAP diluted earnings per share/ADS and free cash flow, each a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes.
We believe that adjusted EBITDA, adjusted EBITA, marketplace-based core commerce adjusted EBITA, non-GAAP net income and non-GAAP diluted earnings per share/ADS help identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income from operations, net income and diluted earnings per share/ADS. We believe that these non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present three different income measures, namely adjusted EBITDA, adjusted EBITA and non-GAAP net income, as well as one measure that provides supplemental information on our core commerce segment, namely marketplace-based core commerce adjusted EBITA, in order to provide more information and greater transparency to investors about our operating results.
We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic corporate transactions, including investing in our new business initiatives, making strategic investments and acquisitions and strengthening our balance sheet.
Adjusted EBITDA, adjusted EBITA, marketplace-based core commerce adjusted EBITA, non-GAAP net income, non-GAAP diluted earnings per share/ADS and free cash flow should not be considered in isolation or construed as an alternative to income from operations, adjusted EBITA for core commerce, net income, diluted earnings per share/ADS, cash flows or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here do not have standardized meanings prescribed by U.S. GAAP and may not be comparable to similarly-titled measures presented by other companies. Other companies may calculate similarly-titled measures differently, limiting their usefulness as comparative measures to our data.
Adjusted EBITDA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, depreciation of property and equipment, operating lease cost relating to land use rights, amortization and impairment of intangible assets and impairment of goodwill and (iii) settlement of a U.S. federal class action lawsuit, which we do not believe are reflective of our core operating performance during the periods presented.
Adjusted EBITA represents net income before (i) interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of intangible assets and impairment of goodwill and (iii) settlement of a U.S. federal class action lawsuit, which we do not believe are reflective of our core operating performance during the periods presented.
Marketplace-based core commerce adjusted EBITA represents adjusted EBITA for core commerce excluding the effects of (i) local consumer services, (ii) Lazada, (iii) New Retail and direct import and (iv) Cainiao Network. Marketplace-based core commerce adjusted EBITA reflects the performance of our most established businesses, namely, those of our China retail marketplaces and wholesale marketplaces, which primarily adopt a marketplace-based approach. By excluding certain businesses that are in the earlier stages of their development and with business approaches that continue to evolve, marketplace-based core commerce adjusted EBITA enables investors to clearly evaluate the performance of our most established businesses on a like-for-like basis.
Non-GAAP net income represents net income before share-based compensation expense, amortization and impairment of intangible assets, impairment of investments and goodwill, gain or loss on deemed disposals/disposals/revaluation of investments, gain in relation to the receipt of the 33% equity interest in Ant Group, settlement of a U.S. federal class action lawsuit, amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Group, immediate recognition of unamortized professional fees and upfront fees upon early repayment/termination of bank borrowings and others, as adjusted for the tax effects on non-GAAP adjustments.
Non-GAAP diluted earnings per share represents non-GAAP net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods on a diluted basis. Non-GAAP diluted earnings per ADS represents non-GAAP diluted earnings per share after adjustment to the ordinary share-to-ADS ratio.
Free cash flow represents net cash provided by operating activities as presented in our consolidated cash flow statement less purchases of property and equipment (excluding acquisition of land use rights and construction in progress relating to office campuses), licensed copyrights and other intangible assets, as well as adjustments to exclude from net cash provided by operating activities the consumer protection fund deposits from merchants on our China retail marketplaces and changes in loan receivables relating to micro loans of our SME loan business (which we transferred to Ant Group in February 2015) and others. We deduct certain items of cash flows from investing activities in order to provide greater transparency into cash flow from our revenue-generating business operations. We exclude “acquisition of land use rights and construction in progress relating to office campuses” because the office campuses are used by us for corporate and administrative purposes and is not directly related to our revenue-generating business operations. We also exclude consumer protection fund deposits from merchants on our China retail marketplaces because these deposits are restricted for the purpose of compensating consumers for claims against merchants. We present the adjustment for changes in loan receivables because these receivables are reflected under cash flows from operating activities, whereas the secured borrowings and other bank borrowings used to finance them are reflected under cash flows from financing activities, and accordingly, the adjustment is made to show cash flows from operating activities net of the effect of changes in loan receivables.
The following table sets forth a reconciliation of our net income to adjusted EBITA and adjusted EBITDA for the periods indicated:
Year ended March 31,
Less: Interest and investment income, net
Add: Interest expense
Less: Other income, net
Add: Income tax expenses
Add: Share of results of equity investees
Income from operations
Add: Share-based compensation expense
Add: Amortization and impairment of intangible assets
Add: Impairment of goodwill
Add: Settlement of U.S. federal class action lawsuit(1)
Add: Depreciation of property and equipment, and operating lease cost relating to land use rights
|(1)||For a description of the relevant U.S. federal class action lawsuit and settlement, see “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal and Administrative Proceedings.”|
The following table sets forth a reconciliation of adjusted EBITA for core commerce to marketplace-based core commerce adjusted EBITA for the periods indicated:
Year ended March 31,
Adjusted EBITA for core commerce
Less: Effects of local consumer services, Lazada, New Retail and direct import and Cainiao Network
Marketplace-based core commerce adjusted EBITA