MANGO EXCELLENT MEDIA CO., Ltd.
2020 Annual Report
April 2021
Section I Important Notes, Content and Definitions
The board of directors, board of supervisors, directors, supervisors, andofficers of the Company certify that this report is free from anymisrepresentations, misleading statements or material omissions, and are jointlyand severally liable for the authenticity, accuracy and completeness of thecontent.ZHANG Huali, the legal representative, LIANG Deping, the chief financialofficer, and TAO Jinyu, the head of accounting department (the person incharge of accounting) of the Company undertake that the financial statementscontained herein are authentic, accurate and complete.All directors of the Company attended the board meeting with respect to thereview of the annual report.The forward-looking contents in respects of future development outlook, etc.,herein are plans in nature, which shall in no event constitute the Company’ssubstantive commitment to investors and related persons. The investors andrelated persons should maintain sufficient risk awareness thereof andunderstand the differences between plans, forecasts, and commitments.
The Company describes the possible risks in its operations and themeasures to be taken in Section IV "Discussion and Analysis of BusinessConditions - Development Outlook" for investors’ review.
The proposal for profit distribution approved by the Board is as follows: onthe basis of 1,780,377,511 shares in total, all shareholders will be paid cashdividends (including tax) at RMB1.3 and given 0 bonus shares (including tax)per 10 shares and awarded with additional stock of 0 shares per 10 shares withcorresponding consideration to be paid by capital reserve.
Content
Section I Important Notes, Content and Definitions ...... 2
Section II General Information and Financial Indicators of the Company ...... 7
Section Ⅲ Overview of the Company’ s Business ...... 12
Section IV Discussion and Analysis of Business Conditions ...... 19
Section V Important Events ...... 43
Section VI Share Changes and Information of Shareholders ...... 83
Section VII Preferred Shares ...... 93
Section VIII Convertible Bonds ...... 94
Section IX Directors, Supervisors, Officers and Employees ...... 95
Section X Governance ...... 107
Section Ⅺ Corporate Bonds ...... 116
Section XII Financial Report ...... 117
Section XIII List of Documents Available for Inspection ...... 254
Definitions
| Words | Refers to | Definition |
| Mango Excellent Media, Company, the Company or Listed Company | Refers to | Mango Excellent Media Co., Ltd. |
| Mango Excellent Media Co., Ltd. | Refers to | The full name of 芒果超媒股份有限公司 in English |
| MANGO | Refers to | The abbreviated name of 芒果超媒股份有限公司in English |
| Happy Sunshine | Refers to | Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd., a wholly-owned company of the Listed Company |
| Mango Studios | Refers to | Mango Studios Culture Co., Ltd., a wholly-owned company of the Listed Company |
| Mango Entertainment | Refers to | Hunan Mango Entertainment Co., Ltd., a wholly-owned company of the Listed Company |
| EE-Media | Refers to | Shanghai EE-Media Co., Ltd., a wholly-owned company of the Listed Company |
| Mangofun | Refers to | Shanghai Mangofun Technology Co., Ltd., a wholly-owned company of the Listed Company |
| Happigo | Refers to | Happigo Co. Ltd., a wholly-owned company of the Listed Company, |
| Happy Money | Refers to | Hunan Happy Money Microfinance Co., Ltd., a wholly-owned company of the Listed Company |
| Mango TV | Refers to | An internet video platform subordinated to the Listed Company and operated by Happy Sunshine |
| China Mobile | Refers to | China Mobile Communications Group Co., Ltd. |
| IPTV | Refers to | Internet Protocol Television, a technology integrated with internet, multimedia, communication, and other technologies through broadband network to provide family users a variety of interactive services including digital television |
| OTT | Refers to | Over the Top, which provides a variety of video and data services to users via the Internet |
| IP | Refers to | Intellectual property, the property rights of an obligee to the results of his or her intellectual work |
| APP | Refers to | Application |
| PAD | Refers to | Portable Device |
| PC | Refers to | Personal computer |
| TV | Refers to | Television |
| AR | Refers to | Augmented Reality |
| VR | Refers to | Virtual Reality |
| 5G | Refers to | 5G Network |
| KOL | Refers to | Key Opinion Leader |
| UGC | Refers to | User Generated Content |
Section II General Information and Financial Indicators of the
Company
I. Company profile
| Stock abbreviation | Mango Excellent Media | Stock code | 300413 |
| Company name in Chinese | 芒果超媒股份有限公司 | ||
| Abbreviation name in Chinese | 芒果超媒 | ||
| Company name in English (if any) | Mango Excellent Media Co., Ltd. | ||
| Abbreviation name in English (if any) | Mango | ||
| Legal representative | ZHANG Huali | ||
| Registration address | Golden Eagle TV Culture City, Changsha City, Hunan Province | ||
| Post code of registration address | 410003 | ||
| Office address | Golden Eagle TV Culture City, Changsha City, Hunan Province | ||
| Post code of office address | 410003 | ||
| Website | https://www.mgtv.com | ||
| mangocm@mangocm.com | |||
II. Contact and contact information
| Secretary of the Board | Representative of Security Affairs | |
| Name | WU Jun | HUANG Jianyong |
| Address | Golden Eagle TV Culture City, Changsha City, Hunan Province | Golden Eagle TV Culture City, Changsha City, Hunan Province |
| Telephone | (0731) 82967188 | (0731)82967188 |
| Fax | (0731) 82897962 | (0731) 82897962 |
| mangocm@mangocm.com | mangocm@mangocm.com |
III. Information disclosure and the locations
| Designated newspapers for information disclosure | China Securities Journal, Securities Times, Securities Daily and Shanghai Securities News |
| Website designated by CSRC for the publication of the Company's annual report | http://www.cninfo.com.cn |
| The Company's annual report is available at | Golden Eagle TV Culture City, Changsha City, Hunan Province |
VI. Other relevant information
The certified public accountants engaged by the Company
| Name | Pan-China Certified Public Accountants LLP |
| Office address | 19/F, New Century Building, No.198, Furong Middle Road, Changsha City, Hunan Province |
| Certified Public Accountant in signature | LI Xinkui, ZHANG Hong |
Sponsor performing continuous supervision duties in the Reporting Period
□ Applicable √ N/A
Financial advisor performing continuous supervision duties in the Reporting Period
□ Applicable √ N/A
V. Major accounting data and financial indicatorsWhether it is necessary for the Company to make retrospective adjustment or restatement on the accounting data in previous years
□ Yes √ No
| 2020 | 2019 | Year-on-year increase or decrease | 2018 | |
| Operating income (in RMB) | 14,005,534,955.36 | 12,500,664,232.05 | 12.04% | 9,660,661,413.72 |
| Net profit attributable to shareholders of the listed company (in RMB) | 1,982,159,476.82 | 1,156,285,253.73 | 71.42% | 865,568,532.45 |
| Net profit attributable to shareholders of the listed company, net of non-recurring profit or loss (in RMB) | 1,846,203,181.73 | 1,093,036,165.68 | 68.91% | 287,569,612.17 |
| Net cash flows from operating activities (in RMB) | 580,970,353.08 | 292,866,711.18 | 98.37% | -376,920,617.58 |
| Basic earnings per share (RMB/share) | 1.11 | 0.66 | 68.18% | 0.54 |
| Diluted earnings per share (RMB/share) | 1.11 | 0.66 | 68.18% | 0.54 |
| Weighted average return on equity | 20.46% | 15.68% | 4.78% | 17.43% |
| At the end of 2020 | At the end of 2019 | Year-on-year increase or decrease | At the end of 2018 | |
| Total assets (in RMB) | 19,265,699,802.98 | 17,078,206,149.68 | 12.81% | 12,111,376,784.55 |
| Net asset attributable to shareholders of the listed company (in RMB) | 10,587,978,185.42 | 8,783,859,219.07 | 20.54% | 5,639,373,295.72 |
Whether the lower of the Company’s net profit before and after deduction of the non-recurring profit or loss in the past threeaccounting years is negative, and the audit report of the last year shows that it remains uncertain as to the Company’s ability tocontinue as a going concern.
□ Yes √ No
Whether the lower of the net profit before and after deduction of the non-recurring profit or loss is negative
□ Yes √ No
VI. Major financial indicators by quarter
In RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 2,727,232,097.21 | 3,046,531,909.01 | 3,696,934,898.85 | 4,534,836,050.29 |
| Net profit attributable to shareholders of the listed company | 479,871,363.62 | 623,504,210.38 | 508,514,082.57 | 370,269,820.25 |
| Net profit attributable to shareholders of the listed company, net of non-recurring profit or loss | 441,483,222.17 | 533,648,020.70 | 475,483,944.20 | 395,587,994.66 |
| Net cash flows from operating activities | -353,131,865.13 | 364,640,666.35 | 349,564,689.33 | 219,896,862.53 |
Whether there is any material difference between the above financial indicators, or their aggregates, and those disclosed in theCompany's quarterly and semi-annual reports
□ Yes √ No
VII. Differences between accounting data under foreign and domestic accounting principles
1. Differences between net profit and net assets disclosed in the financial report under Chinese AccountingStandards and International Accounting Standards
□ Applicable √ N/A
There is no difference between net profit and net assets disclosed in the financial report under Chinese Accounting Standards and
International Accounting Standards during the Company’s Reporting Period.
2. Differences between net profit and net assets disclosed in the financial report under Chinese AccountingStandards and Oversea Accounting Standards
□ Applicable √ N/A
There is no difference between net profit and net assets disclosed in the financial report under Chinese Accounting Standards andOversea Accounting Standards during the Company’s Reporting Period.
VIII. Items and amounts of non-recurring profit or loss
√ Applicable □ N/A
In: RMB
| Items | 2020 Amount | 2019 Amount | 2018 Amount | Note |
| Profit or loss from disposal of non-current assets (including the offset part of the retained asset impairment provisions) | 70,055,759.62 | -253,138.65 | -592,600.43 | Mainly due to income from equity disposal |
| Governmental grants included in the current profit or loss (except for those closely related with the normal operation of the Company and gained at a fixed amount or quantity according to certain standards based on State policies) | 49,700,923.82 | 57,599,556.19 | 30,084,939.12 | |
| Profit or loss from entrusting others with investment or asset management | 3,906,349.28 | 7,344,704.18 | 29,283,549.28 | |
| Enterprises’ reorganization fees, such as staffing expenses and integration fees | -6,109,972.47 | |||
| Current net profit or loss of the subsidiaries established by merger of enterprises under common control from the opening of the accounting period to the date of consolidation | 633,706,593.00 | |||
| Reversal of impairment provisions of accounts receivable and contract assets that have been tested for impairment separately | 31,747,600.00 | 1,800,000.00 | ||
| Other non-operating income and expenses besides the above items | -18,913,395.60 | -111,786.45 | -31,529,319.92 | |
| Less: impact on income tax | 1,209.77 | 2,138,585.88 | 2,610,651.01 | |
| Impact on minority equity (net of tax) | 539,732.26 | 991,661.34 | 74,233,617.29 | |
| Total | 135,956,295.09 | 63,249,088.05 | 577,998,920.28 | -- |
It is required to explain the basis on which the Company defined the items as those of non-recurring profit or loss under theInformation Disclosure and Explanation Announcement No. 1 for Companies with Publicly Offered Securities- Non-recurring Profit
or Loss, and the reason why the Company defined as items of recurring profit or loss for those are illustrated as items ofnon-recurring profit or loss pursuant to the Information Disclosure and Explanation Announcement No. 1 for Companies withPublicly Offered Securities- Non-recurring Profit or Loss.
□ Applicable √ N/A
The Company has no cases described above during the Reporting Period.
Section Ⅲ Overview of the Company’ s BusinessI. Principal Activities of the Company within the Reporting Period
(I) About the principal activitiesThe Company carries out its principal activities through Mango TV Internet Video Business, New Media InteractiveEntertainment Content Production and Media Retail, among other businesses. By leveraging its distinctive green media convergence,and in light of its media attributes and content genes, the Company has built an ecology of entire media industry chain aroundinternet video platform operation with coordinated development of upstream and downstream businesses covering membership,advertising, IPTV, OTT, movie and TV drama, variety show, artists agency, music copyright operation, game and IP derivativedevelopment, and content e-commerce, etc.
1. Mango TV internet video business
Taking the channel synergy advantage of “one cloud for multiple screens”, the Company is committed to building a highthreshold long video platform. Facing the global user group, featured by “self-made competitive products + Mango exclusivebroadcast + high quality selection” and relying on the increasingly mature self-made content ecosystem and differentiated qualitycontent matrix, the Company has launched a wide range of content products covering variety show, movie and TW drama, film,animation and short video, etc. Through the self-developed and operation Mango TV internet video platform, IPTV, OTT, and otherchannels, it provides content services across the full screens to cover PC web terminal, PC client, mobile APP, internet TV and so on.
The sales modes for the Mango TV internet video business are mainly divided into advertising sales, member sales and operatorbusiness sales. Advertising sales are primarily sub-divided into soft sales and hard sales, of which the soft sales refer to a modearound the content of fully exploring the marketing value of high-quality content IP to provide customers with advertising productssuch as naming and placement, while hard sales refer to a mode of continuous expansion of the platform popularity and enhancingthe number of platform visits through high-quality content services to provide customers with advertising products such as pre-rollsand spots. Member sales are primarily sub-divided into online sales and offline sales, of which online sales refer to a mode whereby
the Company attracts users to buy membership packages on a monthly, seasonal, and annual basis, etc., through online consumptionby virtue of its advantages of rich copyright resources and high-quality exclusive broadcasting content, while offline sales refer to amode of selling membership cards to users. The operator large-screen business sales mainly refer to a mode of entering intocooperation agreements with major operators and cable TV operators based on which the Company will provide content products andcooperate with marketing, and the operators will develop users, with the relevant revenue to be shared between them after the usersplace orders.
Mobile APP Homepage of Mango TV PC Web Homepage of Mango TV
2. New media interactive entertainment content production
(1) Content production and operation. As one of the leading content producers in the market, the Company has an open andinnovative talent incentive mechanism and continuously produces high-quality content that meets the needs of the public, creating abusiness closed-loop of the entire industry chain to cover IP copyright, planning and creation, shooting and production, commercialdistribution, and copyright sales, among others.
(2) Artist agency. By exploring and cultivating potential new talents, the Company provides artists with all-round services frompositioning, publicity, modeling, and business endorsement, etc. to form a mature artist echelon with rich levels and complete types.It maximizes the commercial value of artists by organizing them to participate in movie and TV dramas, variety shows, commercialperformances, brand concerts, brand endorsements, and peripheral derivative product licenses.
(3) Music copyright. Based on the long-term accumulation and constant enlarging of music IP resources by artist brokers, theCompany carries out exclusive digital music licensing businesses such as online APP licensing, overseas digital music licensing,game licensing, program use licensing, movie, and TV soundtrack cooperation.
(4) Game and IP derivative development. The Company creates competitive game products by virtue of Mango’s high-qualityIP resources; operates e-sports IP events and creates IPTV e-sports channel to provide value-added services; carries out IP derivativeslicensing and development, IP offline entertainment entity projects, among other businesses; and develop prime game products basedon Mango’s excellent IP resources.
3. Content e-commerce business
(1) The traditional media retail business mainly includes TV shopping, media e-commerce and outbound call. In terms of TVshopping, the cable TV network is leveraged to provide shopping display scenes on the large screen; in terms of media e-commerce,IPTV and OTT channels are expanded to create e-commerce live broadcast format; and in terms of outbound call, the private IP isbuilt to release commodity information to target groups.
(2) With the advantages of its long video content, the Company launches a vertical content e-commerce platform “XIAOMANG”for the Z era, using contents as a basis to evoke resonance and further create demands, thus stimulating consumption. Through thecontent creation sharing based on short videos and the e-commerce shopping platform featured by sharing and recommendation, anew video content e-commerce mode with “video + content + e-commerce” as the core is formed.
4. Other business
Relying on the content production matrix and internet TV license, the Company continues to cooperate with intelligent hardwaremanufacturers, and precisely participates in the innovative R&D, design and production of intelligent hardware based on 5G, AI,VR/AR, Ultra HD, and other new technology applications.
(II) About the Industry
1. The outline of the national development plan clearly emphasizes the continuous promotion of in-depth media convergence
In June 2020, the Central Committee for Deepening Overall Reform passed a new round of reform plan, requiring continuingthe intensified reform of state-owned enterprises and deepen the promotion of media convergence. In September, the General Officeof the CPC Central Committee and the General Office of the State Council issued the Opinions on Accelerating the In-depth MediaConvergence and Development with a notice to clarify the overall requirements for the in-depth media convergence and developmentto optimize the allocation of resources with internet thinking and give full play to the main force in an all-round way, and stress thatparty committees and governments at all levels should strengthen the guarantee of funds and policies to support the in-depthconvergence and development of media. In November, the National Radio and Television Administration issued the Opinions onAccelerating the In-depth Convergence and Development of Radio and Television Media, pointing out that in order to speed up thereform of deepening system and mechanism, it is encouraged to support radio and television institutions to hold or participate ininternet and technology enterprises. In March 2021, the “fourteenth five-year plan” of the State was officially released, furtheremphasizing the promotion of in-depth media convergence and improvement of new mainstream media.
2. High-loyalty individuals become the main driving force for the online video development, and the platform is activelyconstructing a multi-level membership system
According to the QuestMobile data, in 2020 the penetration of online video users exceeds 75%, and the average monthly percapita usage duration of pan-entertainment users increases by more than 13% year on year. High-loyalty individuals become the maindriving force for the industry development, and the growth rate of vertical video platforms exceeds the average level of the industry.Each platform actively seeks to change the traditional “bulk-cheap” strategy by increasing the benchmark price for platform membersand decreasing the promotion for members. While speeding up the refinement of content and enhancing the originality andself-making, the Company is constantly innovating and diversifying the payment methods, with the mode of preview screening formembers and video-on-demand after payment for a single drama becoming a new normal in the industry; continues to boost theplatforms to build multi-level and refined member price and service operation systems, so as to keep pace with the increasingly richcontent needs and viewing habits of different customer groups; and builds a more diversified and reasonable membership system, tofurther facilitate the expansion of revenue sources for video platforms, so as to achieve long-term sustainable development.
3. Branding, digitization and precision become the core competitiveness in the advertising market
According to the CTR Market Research Report, the advertising market continued to differentiate throughout the year, with thegrowth rate of internet brand advertising exceeding that of traditional leading industries, and the internet platforms having high trafficand strong transformation ability becoming popular among advertisers. Relying on independent broadcast control platforms, creativecontent production capacity, matrix advertising products, full chain after-sales service systems, global marketing channels anddigitally precise advertising abilities, main competitors show significant global advantages with respect to the actual effectiveconversion rate in the terminal market, core customer loyalties, brand premium and ecological innovation and development, thusobtaining the continuous appreciation by the market.
4. The supply-clearing of drama market maintains, and the proportion of self-made high-quality drama on video platformincreases
According to the data from the National Radio and Television Administration, 670 TV dramas with 23,500 episodes werefilmed, produced, and filed nationwide in 2020, 26% and 31.7% lower than the 905 TV dramas with 34,400 episodes in 2019respectively. The risks and challenges faced by well-founded movie and TV companies are increasing, regulatory policies keepintensifying to regulate movie and television content frauds and other issues, the number of movie and TV episodes is constantlystreamlined, and the multi-dimensional clearing of supply in the industry runs through the whole year, resulting in a main trend of“reducing quantity and improving quality” and a mainstream consensus on best quality. The first-line movie and televisioncompanies continue to show their competitive advantages by virtue of high-quality content production and stable financial situation.In respect of the video platforms, by integrating content creativity, production, distribution, broadcast operation, member derivation,advertising, marketing, and other key business segments, and further participating in the key links of the upstream and downstreamindustries of movie and television drama production, the quantity of original self-made and high-quality drama is creased, raisingtheir proportions in the total constantly.
5. Content e-commerce keeps upgrading, and the platforms’ advantages of “brand promotion and sales efficiency” combinedmarketing become prominent
The new e-commence competition involving video, content, personality, and social contact remains intense. By reconstructingsuch elements as users, products and scenes, the new content e-commerce upgrades the simple “shopping environment” to “social +shopping environment”, creates an immersive shopping experience by combining multiple scenes and digital technology, thusimproving the monetization efficiency of supply and demand. Each flow platform actively expands the new mode of e-commerce,and widely cooperates with leading IP, creative contents, stars, artists and KOL talents to jointly innovate the new generation ofe-commerce channels with short and medium contents, IP derivatives and live-streaming sales, among others. With the industrialclosed-loop building capability of complete product R&D, content creativity, and “brand promotion and sales efficiency” combinedmarketing, the internet platforms have significant advantages in the new round of content e-commerce competition.
6. The two-way integration of long and short videos is intensified, and the vertical competition is upgraded
The traffic competition among platforms focusing on contents becomes fiercer. The two-way penetration of long and shortvideos and the multi-dimensional integration are accelerated, with the “long-short linkage” becoming the industry norm. High qualityvariety shows, dramas and other professional content products are still the core competitiveness in the long video industry. Relyingon high-quality copyright and self-made content, the long video platforms accelerate the upgrade of content and users, continue tolaunch innovative short and medium video services, strengthen the traffic support and business incentives for UP in various fields,and seek to improve their own PUGC ecosystem, with the purpose to actively create a compound content ecology and diversifiedderivative business model. The short video platforms show more intensive multi-dimensional competition with respect to contents,traffics and users, by continuing to expand the layout of professional content fields such as movies, movie and TV dramas, microvariety shows, short plays and music libraries, accelerating the improvement of traffic commercialization operation efficiency, andupgrading and improving the user value realization mode around “short video + e-commerce”.
7. The distribution of digital copyrights and cross-platform contents is regulated, and the crackdown on copyright infringementis intensified with the joint efforts of the content industry
The protection of content keeps improving. Meanwhile, the distribution of cross-platform and cross-terminal video and audiocontents, as well as the establishment of digital copyrights management system standards continue to be strengthened. In order tofurther implement the new requirements for the media convergence and development, ultra HD TV, 5G applications and other fields,the National Radio and Television Administration officially released the Management Standard System on Digital Copyrights forVideo and Audio Content Distribution in February 2021, covering cable digital TV, IPTV, internet TV and internet video, amongother business fields, further regulating the digital copyrights protection in the process of video and audio content distribution,terminal receiving and broadcasting, and terminal-to-terminal transmission. The crackdown efforts and coverage on UGC and shortvideo copyrights infringements continue to increase, in which scenario the popular TV dramas, variety shows, cinema movies andother long video content products become the main force of rights protection. On the one hand, the forms of short video copyrightinfringement are diversified and complicated. On the other hand, the improvement of platform review, real-time monitoring, natureidentification, right confirmation and protection, supervision, and protection in response to all kinds of infringement are sped up. InApril 2021, more than 70 movie and television media entities and enterprises issued a joint statement on the protection of movie andtelevision copyrights, indicating that they would initiate centralized and necessary legal actions against the public account producersand operators for their unauthorized editing, cutting, transferring and communicating of movie and television works, and meanwhilecalling for the producers and operators of short video platforms and public accounts to enhance the awareness of copyrightprotection.
8. The market share of IPTV continues to rise, the industry standards are regulated, and the brand building is accelerated
According to the Ministry of Industry and Information Technology of the PRC, by the end of 2020, the three leading operatorshad 484 million broadband access users and 315 million IPTV users, a net increase of 21.2 million in the whole year, and an IPTVbusiness revenue of RMB33.5 billion, an increase of 13.6% compared with that in 2019. In 2020, the revenue from fixed value-addedtelecom services based on IPTV, cloud computing and big data increases by 26.9% compared with that in 2019, representing ayear-on-year growth rate of 5.7%, with a revenue growth contribution rate of 79.1%. Additionally, new industry standards,represented by the Specification of Interfaces for User “Double Authentication and Accounting” for Both IPTV Integrated PlayoutManagement Platform and Transmission System issued by the National Radio and Television Administration, are being rolled out,further upgrading, and improving the management on the development of radio and television as well as network audio-visualindustry. With the constant expansion of the IPTV market and its value highlights, the brand construction of IPTV platforms aroundthe world has accelerated, promoting the simultaneous improvement of industry content, experience, and service quality.
II. Significant changes in major assets
1. Significant changes in major assets
| Major assets | Explanation on significant changes |
| Equity assets | The long-term equity investments decreased by RMB187.5532 million at the end of the period compared with the beginning of the period, mainly due to the transfer of 40% equity in Malanshan Cultural and Creative Investment Co., Ltd.. |
| Fixed assets | The fixed assets increased by RMB6.3181 million at the end of the period compared with the beginning of the period, mainly due to the purchase of machinery and equipment, electronic equipment, and other fixed assets in the current period. |
| Intangible assets |
| Prepayments | The prepayments increased by RMB270.616 million at the end of the period compared with the beginning of the period, mainly due to the increase in prepayments for copyright purchase and investments in movie and TV dramas. |
| Contract assets | The contract assets increased by RMB244.5826 million at the end of the period compared with the beginning of the period, mainly due to the expansion of operator business scale. |
2. Major overseas assets
□ Applicable √ N/A
III. Analysis of core competence
1. The advantages for the main platform involving in-depth media convergence and developmentOn August 18, 2014, the fourth meeting of the Central Committee for Deepening Overall Reform was held under the presidingof the General Secretary Mr. XI Jinping, at which the Guiding Opinions on Promoting the Convergence and Development ofTraditional Media and New Media was deliberated and adopted. The media convergence and development has become a focus of thenational strategy. Since then, the CPC and the State have made multiple deployments for the media convergence and development; inSeptember 2020, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinionson Facilitating the Promotion of In-depth Media Convergence and Development, putting forward further requirements and givingpolicy supports for promoting the in-depth media convergence and development. As a state-owned enterprise of party media, theCompany is bound to become the main platform for in-depth media convergence and development, give full play to its dominant role,and accordingly get more policy supports; meanwhile, in light of its rich experience in content control and value orientation, etc., ithas generated the main platform advantages in the in-depth media deep convergence and development.
2. Ecological advantages of Mango based on dual-platform linkage development
In order to further promote the in-depth media convergence and development, as the new mainstream media of HunanBroadcasting System, the Company has, relying on the Mango ecology, formed a dual-platform linkage advantage with HunanBroadcasting System's traditional media. By actively exploring and promoting the co-creation and sharing mechanism of dualplatforms, fully opening up the field of content creation, jointly increasing content innovation and improving product cluster links,the Company is expected to normalize the popular content products that meet the value orientation and market demand, so as to lay asolid foundation to continuously create the new mainstream media group with strong communication, guidance, influence, andcredibility.
3. Advantages of innovation mechanism taking “Innovation or Death” as the idea
The Company follows the innovation principle of Hunan Broadcasting System, always adhering to the innovative concept of“Innovation or Death”. It kept giving full play to the team vitality and activating the innovation power through the establishment ofan incentive mechanism for open innovation, the vigorous implementation of the studio system, the creation of a good externalenvironment for employees’ innovation, and the provision of sufficient resource allocation, while disclosing the innovation risks;built a platform for employees to actively participate in innovation and creative activities through the organization of strategicseminars, “Mango Youth Talk” and other activities; constantly improved the innovative talent reserve system and echelonconstruction system through the implementation of “Mango Youth CEO Club”, “Green Mango Plan” and other youth trainingprograms; and accurately grasped the development trend of the industry as well as prospectively arranged new technologies andbusinesses in the face of the rapid technological progress to construct strategic innovation advantages.
4. Advantages of systematic self-production content enabled by middle ground
Based on its own strong content production team, and adhering to the strategy of “locking core production factors and creatinghigh threshold long videos”, the Company has established a unique self-made content production system; and by building a smartmiddle ground, reconstructing the standardized linkage mechanism in the evaluation, operation, product and technology, etc., ofcontent production, and in light of the AI technology application, it has effectively improved the level of large-scale collaborationamong various parts to minimize the costs and controls the risks, thus freeing the content team for their focusing on innovation,thereby forming the Company’s self-made content production advantages. It is under the support of this standardized self-madecontent production system that the Company launched more than 40 self-made variety shows throughout the year.
5. Advantages of differentiated user positioning of “youth, city and women”
With the unique content strategy, the Company adheres to the platform user positioning of “youth, city and women”, ensuringthe connection and high coincidence among clear user groups, accurate content products and advertisers. Overall, the Mango TVusers have distinctive profiles such as “vitality, fashion and high quality”, the female users accounting for a higher proportion thanthe industry level. The definite user profiles and platform positioning has strengthened the Company’s unique advantages in themulti-channel and multi-way release of content IP composite value, as well as the construction of member-fan combined operationsystem. On this basis, the Company keeps attracting more diverse users through the rich content matrix.
6. Advantages of ecological “moat” in the coordinated development of the whole upstream and downstream industrial chain
Taking the advantages of content production, the Company continues to build a new media ecological closed-loop around thewhole upstream and downstream industry chain of the media internet: the upstream mainly includes artist agency, variety show aswell as movie and TV production businesses; the midstream relies on strong content self-making ability and high-quality contentproduct matrix to conduct multi-channel content operation and distribution through internet video platforms; the downstream focuseson the IP classification, adaptation and development around Mango series, and form a new video content e-commerce mode with“video + content + e-commerce” as the core based on the content, so as to realize multi-channel derivative realization online andoffline. With strong synergy and complementarity, each part of the industry chain joins together to form an integral and uniqueecological “moat” for the whole industry chain of Mango in the context of media convergence.
7. Full terminal linkage advantages of “one cloud for multiple screens” supported by multiple licenses
Mango TV is the only competitive market player in the internet video industry with IPTV and OTT business licenses at thesame time. The smart large screen business has covered 31 provincial administrative regions such as Hunan, Jiangsu, and Zhejiang,which is of importance to support the Company’s layout of 5G and smart economy. Relying on the advantages of complete licenses,the Company has had its audio-visual business covering all terminals including mobile phone, PAD, PC, TV, IPTV and OTT, beingthe first video media in the industry to truly realize “one cloud for multiple screens”.
8. Benign business model of sustainable development
Based on the accurate user positioning, strong content self-making ability, refined member operation system and advertisingmarketing system with combination of brand promotion and sales efficiency, the Company has been able to greatly improve theoperation efficiency of membership and advertising businesses, increase the operating income, and establish an industry-leading andunique benign business model while effectively controlling the costs, especially the costs of content production, thus becoming theonly market player in the online video industry to make and maintain profitability.
Section IV Discussion and Analysis of Business ConditionsI. OverviewIn 2020, under the background of deep industrial reform and COVID-19 outbreak control normalization, the Company alwaysshouldered its mission to lead the in-depth media convergence and development. By strengthening the strategic orientation, closelyfocusing on the high-quality development of the listed company, attaching great importance to the content with the high thresholdlong video as the core business strategy, and continuously giving full play to its advantages in content self-making, it repeatedlyoutperformed others in content innovation. Meanwhile, the operation efficiency of Mango TV was improved steadily, and therevenue structure was optimized for the coordinated development of upstream and downstream businesses in the whole industrychain. During the Reporting Period, the Company had a total operating income of RMB 14,005.5350 million, a year-on-year increaseof 12.04%; and a net profit attributable to the shareholders of the listed company of RMB 1,982.1595 million, a year-on-year increaseof 71.42%. Mango TV membership, advertising, operators, and other businesses kept growing in a steady and rapid manner. HappySunshine, another operating entity, had an operating income of RMB 10.003 billion, a year-on-year increase of 23.36%, and a netprofit of RMB 1.775 billion, a year-on-year increase of 83.17%.
1. Keep in mind the mission of the party media and insist on the lead of the main force
The Company always adhered to the principle of innovation by constant creation of high-quality content, and expanded themainstream force to firmly keep its leading position in the mainstream publicity. In terms of grand theme publicity: the specialreports on major events such as the “Two Sessions” and the 70th anniversary of the founding of the PRC were successfully
completed, which were highly appreciated by competent authorities at all levels; during the outbreak, the first-level response to thecontrol and containment propaganda was initiated at the first time whereupon the Mango TV launched COVID-19 Control andContainment, a large-scale convergence media topic, and Will Win One Day, a short play acting against the outbreak, in whichtouching stories of the first line anti-outbreak heroes were shown to pay high respect to the medical staff. In terms of news films,youth elements were particularly integrated into the works to endow the main themes with more vitality and further realize theefficient dissemination of mainstream values: Picturesque Battle Flag told the stories of Chinese soldiers’ dedication to the country,inspiring young groups to “pay homage to Chinese soldiers”; Flowering Pomegranate 2 focused on poverty alleviation, telling thestories of all ethnic groups working together for common development; CHINA summarized the context of Chinese history to deeplyexplore the source of strength for the great rejuvenation of the Chinese nation; The Day I Ran China which told China stories in anunique perspective to represent the image of China in the new era won the 30th “China News Award”. In terms of major literary andartistic projects: A LAND SO RICH IN BUAUTY praised poverty alleviation to attract concerns of the young to rural issues; BeSteeled in Repeated Struggles reproduced the glorious history of the Communist Party of China in a freehand way; and Ideal ShiningChina focused on the historic leap of the Communist Party of China in leading the Chinese people to stand up, get rich and be strong,drawing a grand picture of the party history in the past 100 years. In terms of promoting international communication, theinternational APP of Mango TV sought to tell sound Chinese stories and spread sound Chinese voices, having recommended morethan 100 high-quality Chinese cultural documentaries in 18 languages, with its overseas business services covering more than 195countries and regions around the world, thereby to keep building a new open and diversified international communication system,which won the “China - ASEAN Excellent Communication Case” award in 2020.
2. Enrich the program matrix and actively build own long video ecology
In terms of variety shows, during the Reporting Period, Mango TV launched more than 40 self-made variety shows, withexcellent performance of newly created programs and continuous upgrading of N-generation variety shows to continue the buildingof a firm “moat” for contents: Sisters Who Brave Winds and Waves spreads the positive energy of being brave through the strugglesof young ladies, and presents the new-era women’s encouragement, value building and beauty at their thirties, which has become aphenomenal innovation program leading the trend; such innovative variety shows as Welcome Back to Sound, Lady Land and ListenUp, and such N-generation variety shows as GREAT ESCAPT (Season II), Meeting Mr. Right (Season III) and Viva La Romance(Season IV) have been popular and highly appraised. In terms of drama, the Company adhered to the two-pronged developmentstrategy of self-built studio and external strategic studio, based on which Mango TV has made every endeavor to build anindependent and self-control movie and television production system with 12 movie and television production teams and 30 strategicstudios under the “New Mango Plan” as the core productivity, gradually building a high-quality, benign and sustainable self-dramacontent ecology. During the Reporting Period, Mango TV launched a total of 57 key movie and TV dramas: Find Yourself conveysthe infinite positive life concept and creates happiness during the outbreak; Go Ahead interprets that family members will make eachother better; Fearless Whispers, a realistic era drama produced by Mango Studios has been broadcast on CCTV-8, Mango TV andother network platforms at the same time, ranking the first in the ratings for 25 consecutive days; and Living Toward the Sun,produced by Mango Entertainment, was premiered on Hunan Satellite TV Channel and broadcast alone on Mango TV, ranking thefirst as to the premiere in the provincial satellite TV network.
3. Strengthen the middle ground empowerment and promote the iterative upgrade of platform operationThe Company strengthened the construction of smart middle ground, transformed the organization management, and improvedthe business process quality and efficiency, with all business sectors of multi-screen integration, advertising, member and operatorjoining each other to make efforts. In terms of membership business, the Company, based on a deep study on the membership rightsand interests, implemented the “3
rd
Youth Mango Festival” for the upgrade of “cultural + city” brand and introduced specialprograms for high-quality IP members; the revenue from membership business has been promoted by implementing the diversifiedpayment policy for contents , the proportion of member life cycle and health types being steadily increased; more diverse users havebeen obtained by enriching the content matrix, with the male user preference (TGI) up to 124% for the self-made drama StageBuilder. By the end of 2020, the number of effective members of Mango TV reached 36.13 million, an increase of 96.68% over theend of 2019. During the Reporting Period, the income from membership reached RMB3.255 billion, an increase of 92% over thesame period of last year. In terms of advertising business, on the basis of safeguarding high-quality content of Mango TV, newmarketing mode was actively explored to excavate the program advertising value and widen the cooperation space for advertisingwith brand promotion and sales efficiency: Sisters Who Brave Winds and Waves has attracted investment that breaks many recordswith more than 40 program advertisers; Find Yourself has created a new high of drama-related advertising investment; and thecustomized variety shows have created a new mode of “live + variety show”, excavating more than 40 advertisers. During theReporting Period, the income from advertising reached RMB4.139 billion, a year-on-year increase of 24%. In terms of operatorbusiness, the Company broke through the existing cooperation mode, expanded the scale of channel revenue, and focused onimproving the revenue volume of single province, and through the multi-dimensional interaction of “contents + members + activities+ brands”, explored the innovation of local content and vertical fields, with the income from operator reaching RMB1.667 billion, up31% year on year, during the Reporting Period.
4. Promote ecological collaboration and continue to build the whole media industrial links
Around Mango TV, the Company kept building the industrial links such as media retail, artist agency, music copyright, game,and IP derivative development. As of the end of the Reporting Period, there were a total of 163 contractual artists including suchwell-known ones as YANG Shuo, HUANG Shengyi and YUAN Yonglin who were newly come in EE-Media, Happy Sunshine,Mango Entertainment and Mango Studios subordinated to the Company. There were nearly 1,400 songs in EE-Media record and filmmusic library. HUA Chenyu’s album New World had a total sales volume of exceeding 1.73 million, winning the sales champion inNetease CloudMusic for 2020. During the Reporting Period, Mango TV launched more than 100 kinds of stand-alone, online gamesand H5 games; the e-sport channel has begun to take shape, with its own video content of exclusive copyright for 5,000 hours, the
user scale of the e-sport channel IPTV in Hunan Province has maintained a rapid growth, and the e-sport channel products outside theprovince have covered 14 provinces. In terms of media retail: the TV shopping business actively compressed the market with lowoutput efficiency, focused on the profitable market, and continued to expand the IPTV + OTT channel; the outbound call businesswas upgraded, and more focus has been put on the core member operation. The “Mango Poverty Alleviation Cloud Supermarket” hasbeen built, covering 41 counties and cities in Hunan Province, which was selected by the New Media Professional Committee ofACJA into the “Top Ten Outstanding Cases of Poverty Alleviation by China’s New Media in 2020”.
5. Optimize the structure of talents and construct the person-post matching mechanism in selecting, employing, and appointingThe Company kept improving the open and innovative incentive mechanism and distinctive refresh mechanism by giving fullplay to talent vitality through strengthening talent reserve and echelon construction and enriching more young and middle-agedtalents who were familiar with new media to key positions. On the one hand, the advantages of creative talents were consolidated, theexisting talent team was transformed and upgraded during which the business backbones were transformed to project leaders andproduct managers taking the project as the guide, the evaluation echelon rewards were clarified, super studios were upgraded, and acompletely new outlook of team was encouraged to maximize the team creativity. As of the end of the Reporting Period, Mango TVhad a total of 20 variety show teams, 12 movie and television drama production teams and 30 strategic cooperation studios, and hasestablished multi-dimensional studios to cover music, directing and vision. On the other hand, the training and introduction of talentswere strengthened by quick supplement of new media and technical talents in such fields as software engineering, product researchand development, data operation and maintenance to make up for the shortage of professional talents.
6. Incubate new business forms and explore new ways of high-quality development
In June 2020, the Company held a strategic seminar with the theme of “Let the youth ride the wind and waves”, deeplydiscussing the Company’s strategy from the aspects of content innovation, operation management, commercialization, capitaloperation, new products, new technology and new racetracks, among others. In the second half of 2020, the Company made everyeffort to promote the launching and implementation of the key new racetracks and products discussed in the said seminar. The“Mango Monsoon” plan was initiated to innovate the production and business operation mode of TV series, reconstruct theproduction system of Mango TV series, and create the first weekly broadcasting theater linking TV and network. Meanwhile,“XIAOMANG” APP was launched to explore and build vertical communities in respects of “great escape”, “fashion” and “cute pet”,etc. and give full play to the Company’s advantages in IP creativity, thus forming a brand-new e-commerce model for video “content+ social contact” around “video + content + e-commerce”. Through pioneering a new track and exploring a new growth for businessdevelopment, the Company has created a Mango ecosystem with richer connotations.
7. Explore technological innovation to drive the in-depth media convergence and development
During the Reporting Period, the Company actively explored the integration of content and technology, integrating newtechnology into the whole process of content production, dissemination, and service. A Mango holographic light field system hasbeen build with the first 4K light field shed in China, applying the dynamic holographic light field acquisition system to special effectproduction of program and automatic dynamic 3D modeling, among others. A Mango VR system has been developed to explore VRinnovation on suspenseful and mentally absorbing topics such as GREAT ESCAPT, and conduct research on VR interaction. Besides,the Company made efforts to develop an interactive drama production platform, actively participated in the formulation of nationalindustry standards, and launched the interactive derivative micro drama TARGET PERSON corresponding to Who's the Murderer,with the score of 8.7 on Douban. Mango TV hosted the first “Malanshan Cup” international audio and video algorithm optimizationcompetition, during which nearly 1,300 teams of algorithm elites from more than 20 countries and regions gathered in Malanshan toraise the technology in respects of image, picture quality and recommendation to the leading level in the industry. Five of the top 10winners of the said competition have joined Mango TV to accelerate its development in algorithm. During the Reporting Period,Mango TV was rated as one of the top 100 software and information technology service competitive enterprises of the 24th ChinaInternational Software Expo in 2020, ranking 20th among the top 100 internet enterprises of China in 2020.
The Company is required to observe the disclosure requirements in No. 6 Guideline of Shenzhen Stock Exchange RegardingInformation Disclosure in Growth Enterprise Market Industry – Listing Company Engaged in Internet Video Business.
II. Analysis on principal activities
1. Overview
For relevant details, see “I. Overview” in the Section “Discussion and Analysis of Business Conditions” hereof.
2. Revenue and cost
(1) Composition of operating income
Overall description of operating income
In: RMB
| 2020 | 2019 | Year-on-year increase or decrease | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Total operating income | 14,005,534,955.36 | 100% | 12,500,664,232.05 | 100% | 12.04% |
| By industry | |||||
| Mango TV internet video business | 9,060,568,867.27 | 64.69% | 6,318,231,214.48 | 50.54% | 43.40% |
| New media interactive entertainment content production | 2,764,980,756.83 | 19.74% | 3,902,187,958.57 | 31.22% | -29.14% |
| Media retail | 2,104,532,724.46 | 15.03% | 2,007,314,831.02 | 16.06% | 4.84% |
| Other principal businesses | 61,533,468.52 | 0.44% | 56,234,849.86 | 0.45% | 9.42% |
| Other business income | 13,919,138.28 | 0.10% | 216,695,378.12 | 1.73% | -93.58% |
| By product | |||||
| Mango TV internet video business | 9,060,568,867.27 | 64.69% | 6,318,231,214.48 | 50.54% | 43.40% |
| New media interactive entertainment content production | 2,764,980,756.83 | 19.74% | 3,902,187,958.57 | 31.22% | -29.14% |
| Media retail | 2,104,532,724.46 | 15.03% | 2,007,314,831.02 | 16.06% | 4.84% |
| Other principal | 61,533,468.52 | 0.44% | 56,234,849.86 | 0.45% | 9.42% |
| businesses | |||||
| Other business income | 13,919,138.28 | 0.10% | 216,695,378.12 | 1.73% | -93.58% |
| By region | |||||
| Within Hunan | 4,513,906,434.72 | 32.23% | 4,354,887,302.09 | 34.84% | 3.65% |
| Outside Hunan | 9,491,628,520.64 | 67.77% | 8,145,776,929.96 | 65.16% | 16.52% |
(2) Industries, products, or geographical areas having operating income or operating profitaccounting for more than 10% of that of the Company
√ Applicable □ N/A
In: RMB
| Operating income | Operating costs | Gross profit margin | Year-on-year increase or decrease of operating income | Year-on-year increase or decrease of operating costs | Year-on-year increase or decrease of gross profit margin | |
| By industry | ||||||
| Mango TV internet video business | 9,060,568,867.27 | 5,373,904,985.43 | 40.69% | 43.40% | 40.74% | 1.12% |
| New media interactive entertainment content production | 2,764,980,756.83 | 2,146,888,764.52 | 22.35% | -29.14% | -24.84% | -4.45% |
| Media retail | 2,104,532,724.46 | 1,676,380,697.52 | 20.34% | 4.84% | 14.12% | -6.48% |
| Others | 75,452,606.80 | 33,114,196.97 | 56.11% | -72.35% | -76.49% | 7.73% |
| By product | ||||||
| Mango TV internet video business | 9,060,568,867.27 | 5,373,904,985.43 | 40.69% | 43.40% | 40.74% | 1.12% |
| New media interactive entertainment content production | 2,764,980,756.83 | 2,146,888,764.52 | 22.35% | -29.14% | -24.84% | -4.45% |
| Media retail | 2,104,532,724.46 | 1,676,380,697.52 | 20.34% | 4.84% | 14.12% | -6.48% |
| Others | 75,452,606.80 | 33,114,196.97 | 56.11% | -72.35% | -76.49% | 7.73% |
| By region | ||||||
| Within Hunan | 4,513,906,434.72 | 3,049,636,842.23 | 32.44% | 3.65% | -1.27% | 3.37% |
| Outside Hunan | 9,491,628,520.64 | 6,180,651,801.71 | 34.88% | 16.52% | 18.95% | -1.33% |
The Company’s principal business data in the most recent year that has been adjusted subject to the closing balance of the report asthere are certain adjustments on the statistical data of the Company's principal businesses in the Reporting Period.
□ Applicable √ N/A
(3) Whether the Company’s income from physical sales is greater than its labor income
□ Yes √ No
(4) Performance of significant sales contracts concluded by the Company as of the ReportingPeriod
□ Applicable √ N/A
(5) Composition of operating costs
By industry
In: RMB
| By industry | Item | 2020 | 2019 | Year-on-year increase or decrease | ||
| Amount | Proportion to operating costs | Amount | Proportion to operating costs | |||
| Mango TV internet video business | Internet video business | 4,841,068,825.32 | 52.45% | 3,399,238,963.61 | 41.03% | 42.42% |
| Mango TV internet video business | Operator business | 532,836,160.11 | 5.77% | 419,175,433.87 | 5.06% | 27.12% |
| New media interactive entertainment content production | Copyright and production costs | 1,980,061,842.66 | 21.45% | 2,616,039,876.07 | 31.58% | -24.31% |
| New media interactive entertainment content production | Employee benefits and others | 166,826,921.86 | 1.81% | 240,425,514.40 | 2.90% | -30.61% |
| Media retail | Media retail | 1,676,380,697.52 | 18.16% | 1,468,987,207.33 | 17.73% | 14.12% |
| Other principal businesses | Other principal businesses | 26,844,714.41 | 0.29% | 37,320,352.51 | 0.45% | -28.07% |
| Other business | Other business | 6,269,482.56 | 0.07% | 103,553,601.63 | 1.25% | -93.95% |
| costs | costs |
ExplanationNone
(6) Whether there is any change in the scope of consolidation during the Reporting Period
□ Yes √ No
During the Reporting Period, Happy Sunshine Hongmang Education Technology Co., Ltd. and Xiaomang Electronic Commerce Co.,Ltd. are newly established, while Doug (Shanghai) Investment Management Limited Liability Company, Ningbo Free Trade ZoneHappigo International Trade Co., Ltd. and Damei Fashion (Shanghai) Culture Media Co., Ltd. are deregistered. For details, see VIII.Change in Scope of Consolidation in Section XII. Financial Report hereof.
(7) Descriptions of significant changes or adjustments on the Company’s businesses, products,or services
□ Applicable √ N/A
(8) Major clients and suppliers
Major clients of the Company
| Total sales of top 5 clients (in RMB) | 4,968,532,823.01 |
| Proportion of total sales from top 5 clients to total annual sales | 35.48% |
| Proportion of sales from the related parties among top 5 clients to total annual sales | 27.59% |
Information of top 5 clients of the Company
| S.N. | Name of client | Sales (in RMB) | Proportion to total annual sales |
| 1 | The First | 3,038,207,506.39 | 21.69% |
| 2 | The Second | 826,176,362.97 | 5.90% |
| 3 | The Third | 451,961,458.28 | 3.23% |
| 4 | The Fourth | 400,492,950.89 | 2.86% |
| 5 | The Fifth | 251,694,544.48 | 1.80% |
| Total | -- | 4,968,532,823.01 | 35.48% |
Other information of major clients of the Company
√ Applicable □ N/A
The client ranked first refers to Hunan Broadcasting System, the de facto controller of the Company, and its subsidiaries under itscontrol, with which the transaction are recorded in aggregation. The client ranked second refers to MIGU Culture Technology Co.Ltd., a related party of the Company, and its subsidiaries under its control, with which the transaction are recorded in aggregation.
Major suppliers of the Company
| Total purchase amount of top 5 suppliers (in RMB) | 2,075,853,242.53 |
| Proportion of total purchase amount of top 5 suppliers to total annual purchase amount | 22.49% |
| Proportion of the purchase amount of the related parties among top 5 suppliers to the total purchase amount | 13.11% |
Information of top 5 suppliers of the Company
| S.N. | Name of supplier | Purchase amount (in RMB) | Proportion to total annual purchase amount |
| 1 | The First | 1,210,045,246.96 | 13.11% |
| 2 | The Second | 269,699,812.24 | 2.92% |
| 3 | The Third | 226,415,094.34 | 2.45% |
| 4 | The Fourth | 212,264,150.94 | 2.30% |
| 5 | The Fifth | 157,428,938.05 | 1.71% |
| Total | -- | 2,075,853,242.53 | 22.49% |
Other information of major suppliers of the Company
√ Applicable □ N/A
The supplier ranked first refers to Hunan Broadcasting System, the de facto controller of the Company, and its subsidiaries under itscontrol, with which the transaction are recorded in aggregation.
3. Expenses
In: RMB
| 2020 | 2019 | Year-on-year increase or decrease | Explanation on significant changes | |
| Selling expenses | 2,164,415,269.87 | 2,140,684,155.45 | 1.11% | Mainly caused by the increase in promotion and advertising agency fees, resulted from increased program releases and advertising revenue, and by the enhancement of marketing and sale team incentives. |
| Administrative expenses | 629,200,722.73 | 610,138,439.92 | 3.12% | Mainly caused by the increase in human resources investment. |
| Financial expenses | -86,619,854.07 | -36,576,566.73 | Mainly caused by the increase in interest income. |
| Research and development expenses | 184,384,948.72 | 239,299,331.86 | -22.95% | Mainly caused by the increase of R&D resources invested in cloud storage platform projects and the corresponding decrease of expensed R&D expenditure. |
4. Research and development expenditures
√ Applicable □ N/A
The Company aims to provide customers with more types of products for a better service by accelerating the company's technologyupdates in products and business operations for keeping up with industry development trends and guaranteeing in-depth productproject research and development, so as to ensure that the Company is more competitive in the market with a broader channel andspace for performance growth.
Proportion of the Company’s R&D investments to the operating income in the past three years
| 2020 | 2019 | 2018 | |
| Number of R&D personnel (person) | 622 | 645 | 645 |
| Proportion of number of R&D personnel | 13.91% | 15.41% | 15.49% |
| R&D investments (in RMB) | 319,282,521.92 | 280,287,866.02 | 225,112,126.76 |
| Proportion of R&D investments to operating income | 2.28% | 2.24% | 2.33% |
| Amount of R&D expenditure capitalization (in RMB) | 134,897,573.20 | 40,988,534.16 | 4,556,241.12 |
| Proportion of R&D expenditure capitalization to R&D investments | 42.25% | 14.62% | 2.02% |
| Proportion of R&D expenditure capitalization to current net profit | 6.82% | 3.54% | 0.49% |
Reasons for significant changes in the proportion of the Company’s R&D investments to the operating income
□ Applicable √ N/A
Reasons for significant changes in capitalization rate of R&D investments and the description of their rationality
√ Applicable □ N/A
During the Reporting Period, the Company made great efforts to promote the equity investment project concerning the constructionof Mango TV cloud storage and multi-screen broadcast platform, and the R&D expenditure of the project was capitalized. Given thelarge scale of the project, the proportion of capitalized R&D expenditure in R&D investment increased.
5. Cash flow
In: RMB
| Item | 2020 | 2019 | Year-on-year increase or decrease |
| Sub-total of cash inflows from operating activities | 13,357,032,896.39 | 11,017,337,848.86 | 21.24% |
| Sub-total of cash outflows from operating activities | 12,776,062,543.31 | 10,724,471,137.68 | 19.13% |
| Net cash flow from operating activities | 580,970,353.08 | 292,866,711.18 | 98.37% |
| Sub-total of cash inflows from investing activities | 886,489,234.84 | 922,908,322.83 | -3.95% |
| Sub-total of cash outflows from investing activities | 692,459,021.89 | 813,567,045.02 | -14.89% |
| Net cash flow from investing activities | 194,030,212.95 | 109,341,277.81 | 77.45% |
| Sub-total of cash inflows from financing activities | 160,436,700.00 | 2,380,419,369.03 | -93.26% |
| Sub-total of cash outflows from financing activities | 662,272,824.91 | 255,743,249.75 | 158.96% |
| Net cash flow from financing activities | -501,836,124.91 | 2,124,676,119.28 | -123.62% |
| Net increase in cash and cash equivalents | 273,387,984.85 | 2,526,488,344.91 | -89.18% |
Explanations on main factors affecting significant differences between data compared on a year-on-year basis
√ Applicable □ N/A
The net cash flow from operating activities in the current period was RMB580.9704 million, an increase of 98.37%, mainly due tothe increase in cash received from sales of goods.The net cash flow from investing activities in the current period was RMB194.0302 million, an increase of 77.45%, mainly due to theincrease in cash received from equity transfer in the Reporting Period.The subtotal of cash inflow from financing activities in the period was RMB160.4367 million, a decrease of 93.26%, mainly due tothe decrease in cash received from loans in the current period and the availability of funds raised in the same period of last year.The subtotal of cash outflow from financing activities in the current period was RMB662.2728 million, an increase of 158.96%,mainly due to repayment of loans and distribution of dividends.The net cash flow from financing activities was RMB-501.8361 million in the current period, a decrease of 123.62% compared withRMB2,124.6761 million in the prior period, mainly due to the repayment of bank loans and the distribution of dividends in thecurrent period, as well as the availability of funds raised in the same period of last year.
The net increase in cash and cash equivalents in the current period was RMB273.388 million, a decrease of 89.18%, mainly due tothe acquisition of matching financing funds in the same period of last year without such acquisition in this year.
Explanations on reasons for significant differences between the net cash flow from the Company’s operating activities during theReporting Period and the net profit for the year
√ Applicable □ N/A
This is mainly due to the cash outflow caused by the Company’s copyright reserves and substantial investment in movie andtelevision dramas during the Reporting Period.
III. Non-principal activities
√ Applicable □ N/A
In: RMB
| Amount | Proportion to total profits | Reasons | Continual or not | |
| Investment income | 80,792,516.40 | 4.07% | Mainly due to financial management income and long-term equity investment disposal income | No |
| Impairment of assets | -89,388,881.81 | -4.50% | Mainly due to the provision for bad debts and inventory impairment. | No |
| Non-operating income | 26,886,284.35 | 1.35% | Mainly due to income from safeguarding rights. | No |
| Non-operating expenses | 46,535,880.99 | 2.34% | Mainly due to compensation expenditure, losses from outbreak containment and donation expenditure. | No |
IV. Assets and liabilities
1. Significant changes in asset composition
The Company adopted new revenue standards or new lease standards for the first time in 2020, with adjustments to the openingbalance of relevant items in the financial statementsApplicable
In: RMB
| At the end of 2020 | At the beginning of 2020 | Increase or decrease | Explanation for significant changes | |||
| Amount | Proportion to total assets | Amount | Proportion to total assets | |||
| Cash and bank balances | 5,336,319,786.70 | 27.70% | 5,064,224,581.46 | 29.65% | -1.95% | Mainly due to the increase in sales receipts inflow. |
| Accounts receivable | 2,976,696,672.95 | 15.45% | 2,424,141,754.09 | 14.19% | 1.26% | Mainly due to the expansion of internet video business scale. |
| Inventories | 1,660,324,608.09 | 8.62% | 1,916,375,338.89 | 11.22% | -2.60% | Mainly due to the decrease in the number of movie and TV dramas in production at the end of the report period. |
| Long-term equity investments | 22,882,969.51 | 0.12% | 210,436,179.18 | 1.23% | -1.11% | Mainly due to the transfer of 40% equity in Malanshan Cultural and Creative Investment Co., Ltd. during the Reporting Period. |
| Fixed assets | 186,924,296.25 | 0.97% | 180,606,150.34 | 1.06% | -0.09% | Mainly due to the increase in fixed assets such as machinery and equipment, electronic equipment, etc. purchased in the current period. |
| Short-time borrowings | 39,789,110.68 | 0.21% | 349,816,947.83 | 2.05% | -1.84% | Mainly due to the decrease in bank credit loans in response to the needs of funds. |
2. Assets and liabilities measured at fair value
□ Applicable √ N/A
3. Restricted asset rights as of the end of the Reporting Period
As of the end of the Reporting Period, the Company’s assets with restricted asset rights amounted to RMB21,856,300.00, in whichRMB21,625,200.00 were frozen due to litigation, RMB230,100.00 were used as third-party deposits, and RMB1,000 were used asPOS deposits.
V. Analysis on investment
1. Overview
√ Applicable □ N/A
| Investments in the Reporting Period (in RMB) | Investment of the same period in the previous year | Change % |
| 60,000,000.00 | 50,000,000.00 | 20.00% |
2. Significant equity investments acquired during the Reporting Period
□ Applicable √ N/A
3. Significant non-equity investments proceeding during the Reporting Period
□ Applicable √ N/A
4. Financial assets measured at fair value
□ Applicable √ N/A
5. Use of financing funds
√ Applicable □ N/A
(1) Overall introduction
√ Applicable □ N/A
In: RMB0'000
| Year | Financing modes | Total financing funds | Total financing funds used | Total financing funds accumulatively used | Total financing funds used whose usage is changed within the reporting period | Total financing funds accumulatively used whose usage is changed | Proportion of total financing funds accumulatively used whose usage is changed | Total financing funds not used | Usage and whereabouts of total financing funds not used | Financing funds which have been idle for more than two years |
| 2019 | Non- public offering of stocks | 198,270.07 | 94,438.71 | 94,651.01 | 0 | 0 | 0.00% | 103,619.06 | Deposited in the special account for financing funds | 0 |
| Total | -- | 198,270.07 | 94,438.71 | 94,651.01 | 0 | 0 | 0.00% | 103,619.06 | -- | 0 |
| Explanation for general use of financing funds | ||||||||||
| According to the Approval on Issuance of Shares by Happigo Inc. to Mango Media Co., Ltd. and Other Entities for Purchase of Assets and Raising of Matching Funds (Zheng Jian Xu Ke [2018] No.999) issued by the China Securities Regulatory Commission ("CSRC"), and with the consent, the Company, through CICC as the lead underwriter, issued 57,257,371 shares of ordinary shares (A shares) by private offering at an issue price of RMB34.93 per share, and actually raised matching funds of RMB1,999,999,969.03 in total. After deduction of the underwriting fee (including tax) of RMB17,680,000.00, the funds raised was RMB1,982,319,969.03 which was remitted by CICC to the Company’s financing fund escrow account on May 21, 2019. By deducting other issuance expenses (including tax) such as the legal fees and capital verification fees amounting to RMB657,257.37 in total, and adding the deductible input tax of RMB1,037,957.96, the net funds raised was RMB1,982,700,669.62. Pan-China Certified Public Accountants LLP audited has verified the availability of the corresponding financing funds and issued a Capital Verification Report (Tian Jian Yan [2019] No. 2-16). The 23rd session of the third board of directors of the Company deliberated and passed the Proposal on Using the Financing Funds for Capital Increase in the Subsidiary Implementing the Equity Investment Project, whereby it is agreed the Company shall allocate the balance of the financing funds (including interest) amounting to RMB1,983,911,813.91 as of June 30, 2019 in a lump sum to Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. (“Happy Sunshine Company”), a subsidiary to implement the equity investment project, for the construction of the “Mango TV Copyright Library Expansion Project” and the “Mango TV Cloud Storage and Multi-screen Broadcast Platform Project”. On July | ||||||||||
(2) Committed items of financing funds
√ Applicable □ N/A
In: RMB0'000
11, 2019, the Company and Happy Sunshine, the subsidiary to implement the equity investment project, entered into a four-partyescrow agreement on the financing funds with the Bank of Changsha Dianguang Sub-branch, Huarong Xiangjiang BankXiangjiang New Area Branch, and the independent financial consultant. In 2020, the Company actually used RMB944.3871million among the financing funds, with a cumulative use of RMB946.5101 million. As of the end of 2020, the net interest receivedfrom bank deposits with the deduction of bank service charges amounted to RMB46.6480 million. As of December 31, 2020, theCompany’s special account for offering projects had a balance of RMB1,082.8386 million (comprising RMB1,036.1906 million ofprincipal and RMB46.6480 million of interest).
Committedinvestmentitems andinvestmentdirection of
excessfinancing
funds
| Committed investment items and investment direction of excess financing funds | Change items or not (incl. partial change) | Total commitments of financing funds | Total after-adjusted investments (1) | Investments within the reporting period | Accumulative investments as of the end of the period (2) | Investment progress as of the end of the period (3)＝(2)/(1) | Date when the items are ready for intended use | Revenues achieved within the reporting period | Revenues accumulatively achieved as of the end of the period | Achieve expected revenues or not | Significantly change item feasibility or not |
| Committed investment items | |||||||||||
| 1. Mango TV copyright library expansion project | No | 148,674 | 148,674 | 83,550 | 83,550 | 56.20%Note1 | 21,839.47 | 21,839.47 | N/A | No | |
| 2. Mango TV cloud storage and multi-screen broadcast platform project | No | 49,558 | 49,558 | 10,888.71 | 11,101.01 | 22.40% | Note 2 | N/A | No | ||
| Subtotal of committed | -- | 198,232 | 198,232 | 94,438.71 | 94,651.01 | -- | -- | 21,839.47 | 21,839.47 | -- | -- |
| investment items | |||||||||||
| Investment direction of excess financing funds | |||||||||||
| / | |||||||||||
| Total | -- | 198,232 | 198,232 | 94,438.71 | 94,651.01 | -- | -- | 21,839.47 | 21,839.47 | -- | -- |
| Failure to reach the expected progress or revenues and reasons therefor | Mango TV Cloud Storage and Multi-screen Broadcast Platform Project: The project was duly planned in 2017 and implemented in 2019 upon completion of the matching funds raising. Due to certain changes in the marker and technological environments in the industry during the implementation, the Company adjusted the plan for using the funds upon receipt of the same by extending the fund use period to 2021, resulting a difference between the progress of the actual use of the funds in the Reporting Period and the original plan for the use thereof. On April 23, 2020, the Company held the 29th meeting of the third board of directors, deliberating and approving the Proposal on Adjusting the Fund Use Plan for Some Investment Projects with Financing Funds, whereby to adjust the plan of using the funds for the Mango TV cloud storage and multi-screen broadcast platform project. On January 26, 2021, the Company held the 35th meeting of the third board of directors, deliberating and approving the Proposal on Adjusting the Fund Use Plan for Some Investment Projects with Financing Funds, adjusting the plan of using the funds for the Mango TV cloud storage and multi-screen broadcast platform project. | ||||||||||
| Explanation for significant changes to item feasibility | / | ||||||||||
| Amount, usage and use progress of excess financing funds | N/A | ||||||||||
| Changes to implementation locations of investment items of financing funds | N/A | ||||||||||
| Adjustment on implementation methods of | N/A | ||||||||||
| committed items | |
| Advance investment of committed funds and swap | N/A |
| Temporally using idle funds raised as working capital | N/A |
| Balance of financing funds in the implementation of items and the reasons therefor | N/A |
| Usage and whereabouts of unused financing funds | The unused financing funds were all deposited in the special account for the financing funds to be used for subsequent investment in committed items. |
| Problems and other matters occurring in the use and disclosure of financing funds. | / |
Note 1- Mango TV Copyright Library Expansion Project: As of December 31, 2020, the Company has completed the purchase andlaunching of 5 annual key satellite TV dramas, the investment and construction progress proceeding as expected. The actualinvestment therein is lower than the planned one, mainly because the price of a single episode of such TV dramas actually purchasedby the Company has decreased compared with the previous forecast due to the content copyright price returning to rationality as aresult of policy changes in the industry.Note 2 - Mango TV Cloud Storage and Multi-screen Broadcast Platform Project: Aiming at comprehensively improving the users’all-platform viewing experience, the project did not directly generate economic benefits, and accordingly the benefits therefor cannotbe calculated separately.
(3) Changes in financing funds
□ Applicable √ N/A
There is no change in financing funds during the Company’s Reporting Period.
VI. Disposal of major assets and equities
1. Disposal of major assets
□ Applicable √ N/A
No major assets were disposed by the Company during the reporting period
2. Disposal of major equities
√ Applicable □ N/A
| Counterparty | Equity sold | Date of sale | Transaction price (RMB0’000) | Net profit contributed by the equity to the listed company from the beginning of the current period to the date of sale (RMB0’000) | Impact of the sale on the Company | Proportion of net profit contributed by the equity sale to the total net profit of the listed company | Pricing principle of equity sale | Is it a related party transaction | Related party relationship with the counterparty | Have all the equity involved been transferred | Whether the implement proceeded as planned; if not, the associated reasons and the measures taken by the Company | Disclosure date | Disclosure index |
| Mango Media Co., Ltd. | 40 equity in Malanshan Cultural and Creative Investm | April 16, 2020 | 25,967.92 | 6,986.47 | Improving the efficiency of resource allocation which is conduci | 3.52% | Appraisal price | Yes | Parent company | Yes | Yes | March 18, 2020 | Published at: www.cninfo.com.cn; Announcement Title: Announ |
| ent Co., Ltd. | ve to the Company’s focus on the main activities | cement on Transfer of Equity in Joint-stock Company and Related Party Transactions |
VII. Analysis on companies which the Company controls or where the Company holds shares
√ Applicable □ N/A
Description of major subsidiaries and shareholding companies that affect more than 10% of the Company’s net profits
In: RMB
| Name | Type | Principal business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. | Subsidiary | Internet video, operator business and content operation | 242,470,013.00 | 14,414,311,959.06 | 7,585,980,153.09 | 10,003,418,341.98 | 1,775,612,503.28 | 1,774,508,059.40 |
| Happigo Co., Ltd. | Subsidiary | Media retail | 401,000,000.00 | 922,763,445.78 | 564,695,994.13 | 2,119,393,865.59 | 11,945,182.50 | 14,290,415.35 |
| Shanghai EE-Media Co., Ltd. | Subsidiary | Artist agency, program and movie and TV dramas production and copyright business | 90,000,000.00 | 979,117,598.65 | 667,951,411.82 | 720,405,395.27 | 62,288,627.55 | 54,390,878.73 |
| Mango Studios Culture Co., Ltd. | Subsidiary | Movie and TV dramas production | 80,000,000.00 | 1,333,051,206.95 | 350,229,784.90 | 910,857,365.37 | 68,702,883.77 | 68,702,883.77 |
| Hunan Mango Entertainment Co., Ltd. | Subsidiary | Programs, movie and TV dramas production and | 48,306,424.00 | 1,261,568,969.27 | 331,472,172.44 | 665,063,351.96 | 84,094,351.71 | 80,267,532.81 |
| artist agency | ||||||||
| Shanghai Mangofun Technology Co., Ltd. | Subsidiary | Games and interactive marketing | 72,968,014.00 | 371,199,881.96 | 328,579,954.84 | 146,201,916.76 | 76,390,577.82 | 61,461,281.29 |
| Hunan Happy Money Microfinance Co., Ltd. | Subsidiary | Financing services | 300,000,000.00 | 478,705,422.13 | 303,479,002.83 | 40,570,639.57 | 3,485,652.23 | 3,529,029.51 |
Acquisition and disposal of subsidiaries during the Reporting Period
□ Applicable √ N/A
Description of major shareholding companiesDuring the Reporting Period, the business of Happy Sunshine, the operating entity of the Company’s main platform Mango TV,continued to maintain rapid growth, with significant growth in advertising and membership revenue, and operating income and netprofits up 23.36% and 83.17% respectively.
VIII. Structured entities controlled by the Company
□ Applicable √ N/A
IX. Company development outlook(I) Company development outlookThe year 2021 marks the centenary of the founding of the CPC and the beginning of the 14th Five-Year Plan. In context of thenew development stage, guided by the socialist ideology of XI Jinping’s new era with Chinese characteristics, and bearing in mindthe principles of the 19th National Congress of the CPC and the Second, Third, Fourth and Fifth Plenary Session of the 19th CPCCentral Committee, the Company will fulfill the mission and responsibilities of party media, give full play to the main force to buildthe new mainstream media group, and make every endeavor to achieve innovation, development, integration and communication topractically celebrate the 100th anniversary of the founding of the CPC.
1. Create an atmosphere for the education and study of party history, and gather powerful energy for entrepreneurshipThe Company will thoroughly study and implement the principles of the important speech given by the General Secretary XIJinping at the conference on party history education and mobilization, conscientiously organize and carefully plan and carry out theeducation of CPC history learning for the objectives of “in-depth understanding, self-confidence enhancement, moralaccomplishment and competence improvement” and “study the Party's history, understand its theories, do practical work and makenew advances”, strengthen the party spirit, and improve political standing and earnestly learn the party history to gather the powerfulenergy of action and entrepreneurship for transferring the organizational advantages of the party media as a state-owned enterpriseinto the Company’s competitive and development advantages. With an overarching view and a sense of responsibility for the stateand the times, the Company will be brave to make further great achievements in media construction and content innovation, activelyundertaking the historical mission of promoting the in-depth media convergence and development.
2. Give full play to the main force and seek to build a new mainstream media group
With the coming of the second half of in-depth media convergence, in accordance with the Opinions on Accelerating theIn-depth Media Convergence and Development issued by the CPC Central Committee and the General Office of the State Council ,and in light of the practical experience in the process of promoting media convergence, Mango Excellent Media has found out theideas and measures to play a good second half, that is, to give full play to the main force, seek to build a new industry-leading
mainstream media group with strong influence and competitiveness adapting to the development trend of the all-media era byreducing the construction blueprint into practice according to: the party media attribute of integrity and innovation, the convergencewith matrix communication, the organization form of middle ground empowerment, the talent structure of the all-media era, theproduct cluster with complete links, the leading application technology, and the open and cooperative operation ecology.
3. Build a good ecology of corporate governance for business development
While keeping revering the market, rule of law, specialized knowledge and investor, the Company will actively implement therelevant requirements of the CSRC on carrying out the special actions on the governance of listed companies, conscientiouslyconduct self-examination and self-correction, upgrade itself through rectification, and keep improving various internal controlsystems to form a long-term mechanism for standardized governance. Close attention will be paid to the controlling shareholders,directors, supervisors, and other key personnel to enhance their legal awareness, strengthen their bottom line thinking and improvetheir ability to perform their duties, so as to give full play to their leading role in improving the corporate governance. In addition, theCompany will earnestly fulfill its obligation of information disclosure, improve the good communication mechanism between theboard of directors and investors, fully protect the investors’ right to know, and continuously improve the transparency of theCompany. It will also actively practice the equity culture, keep optimizing the mechanism of returns for investors, and share itsdevelopment achievements. A solid and in-depth corporate governance capacity will be built to guarantee the sustainable and steadydevelopment of the Company in various businesses.
4. Actively practice the equity culture and constantly optimize the return mechanism of investors
A listed company will survive and thrive with the concurrent involvement of investors in the capital market, and can win therecognition and respect of the market only by respecting and rewarding the investors. On the one hand, the Company will activelypractice the equity culture by properly conducting investor relationship management, actively understanding the demands of minorityinvestors, revering investors, and constantly optimizing the return mechanism of investors to be responsible listed company stickingon principles. On the other hand, bearing in mind that achieving high-quality development is the best return to investors, theCompany will always adhere to the correct strategic direction around its principal activities to continuously improve itscomprehensive strength for high-quality development with the audio-visual content of Mango TV as the core, the industrialderivation as the matrix, the content and technological innovation as the driving force, and the whole industry chain control andecological collaboration as the important channel.
5. Adhere to the strategy concerning long video content and explore the dual-platform innovation and sharing mechanism
Adhering to the core concept of focusing on the content and driving the platform development with content innovation, theCompany will, for the purpose of establishing a more efficient and self-consistent content ecosystem, continuously improve itspersonnel training mechanism, content evaluation system, self-made production process, external innovation cooperation mechanism,among others, and industrialized content production system with Mango characteristics, to win and consolidate the developmentadvantages with content strength. Meanwhile, it will actively implement the development strategy of in-depth media convergence tocontinue the promotion of in-depth convergence between Mango TV as a new media platform and Hunan Satellite TV as a traditionalmedia platform, and actively explore and boost the dual-platform innovation and sharing mechanism to increase and give full play tothe advantages of the content innovation as well as stimulate the innovation potential of content-related talents for the constantimprovement of content quality and the expansion of production volume, thereby building a “moat” of competitive long video.
6. Steadily promote the implementation of new business forms and drive the iterative upgrade of “Mango Mode”
The Company will accelerate the planning and implementation of brand building in new fields and new business forms, extendthe industrial chain and enlarge the industrial value through high-value content service-oriented products. It will implement the“Mango Monsoon Plan” by carrying out the dual-platform customization of TV series to create common brands, reconstruct theproduction system of Mango movie and television dramas, and make “Mango Monsoon” a new brand in the industry. “XIAOMANG”will keep moving forward and explore its internal sub-track according to the competitive advantage of long video content to form amature business model. Meanwhile, with long video as the core competitiveness, and relying on the open and cooperative operation
ecology, the Company will continue to explore new business forms and models to form a more complete product cluster, shape awell-known all-media brand and enrich the profit model for sustainable development.
(II) Potential risks and countermeasures
1. Macroeconomic fluctuation risks
The cultural media industry has a strong correlation with the macro economy. As one of the optional consumer industries, themedia industry is affected by many factors, such as the level of consumers’ actual disposable income, the structure of consumers’income, the index of consumers’ confidence and the tendency of consumption. Under the influence of Sino-US trade war andCOVID-19 outbreak, the macroeconomic situation is complex and changeable, which may bring uncertainty to the Company’smedium and long-term development. The Company will thus stick to the principal activities, continue to refine, and strengthen itself,and adopt business strategies of steady development.
2. Policy supervision risks
The cultural media industry where the Company locates has a special ideological attribute, with policy supervision runningthrough the whole business process of the industry. There may be changes in the industrial regulatory policies thereby bringinguncertainty to the Company’s business operation. The Company will carry out content production in strict accordance with therequirements of industry regulations and policies, and establish a sound internal quality management and control mechanism to avoidthe risks from policies and regulations.
3. Industrial competition risks
The long video involved by the Company is in fierce competition, with each long video platform strengthening the contentself-making ability, the homogenization of content becoming more and more serious. The short video platforms have developedrapidly to enter the long video field. The mutual penetration of long and short videos has intensified to change the industry pattern,which poses great challenges to the Company’s business model and management level, and may have adverse effects on its marketshare and profitability. The Company will, accordingly, improve its ability to run the long video, consolidate its own competitiveadvantage, and explore the layout of new business.
4. Business qualification risks
The Company is subject to specific business qualifications for relevant business operations. If the Company fails to timelyrenew the relevant business qualifications, obtain new business qualification, and meet the latest requirements of the regulatoryauthorities, an adverse effect will be resulted in its business development. The Company will thus strengthen the businessqualification management, properly communicate with the business qualification administrations, and handle the renewal of variousexpired qualifications in a timely manner.
5. Movie and television production risks
(1) The risk of movie and television works failing to pass the examination. A TV series after production must be examined andapproved by the National Radio and Television Administration or its branch at the provincial level before it can be released. Duringthe movie and television drama production, the Company may be unable to have the drama filed, obtain production license, acquiredistribution license due to theme and other issues after production, or broadcast the same after acquiring the distribution license, etc.In case of the foregoing, the Company’s operating performance will be affected. As such, the Company will carry out movie andtelevision production in strict accordance with the policy guidance of the State and the review process of competent authorities, andplan the movie and television themes taking into account of both social and economic benefits.
(2) The risk of higher uncertainty exposed to the return on investment in movie and television business. As a kind of culturalproduct, a movie and television work will depend on the subjective preference, life experience and public opinion environment,among other factors, to determine the audience’s acceptance of it. It is highly uncertain as to the viewing effect of a movie andtelevision drama after its broadcasting. The investment in movie and television dramas is attached with such natural attributes aslarge scale of single investment, long payback period of investment, direct connection between revenue and box office performances
or ratings, and unpredictable market reaction. The return on investment has relatively high uncertainty. In response thereto, theCompany has established a scientific project pre-approval and approval system as well as set up a special evaluation department tomitigate the risks associated with movie and television drama investment.
6. Technological innovation risks
With the continuous maturity and application of 5G, cloud computing, artificial intelligence, AR/VR and other technologies,new business forms and models may appear, bringing new cultural and entertainment experience to users. The business remodelingas a result of technological changes may have adverse effects on the Company’s operation. Accordingly, the Company has set up aninnovation research institute to strengthen the research on new technologies, new models and future industry trends and conductstudy, judgment, and layout ahead of time to respond to the risks of technological innovation with ease.
7. Brain drain risks
The Company’s new media business, movie and TV drama production and artist agency put forward high professionalrequirements for practitioners. The professional and well-experienced talents are a valuable fortune of the Company, and their drainwill affect the normal conduct of business. Furthermore, the Company’s business will be adversely affected if it fails to continueintroduction of external talents. As such, the Company will create an ecosystem suitable for the talents to exert their abilities andkeep improving the competitive incentive mechanism to retain and attract talents and inspire creativity and vitality of key employees,thus promoting its business growth.
8. Intellectual property infringement risks
Due to the complexity of the development of movie and television dramas as well as audio-visual products, the diversity of theuse of works, the rapid development of internet applications and the complexity of copyright protection, the copyrights purchased bythe Company may infringe on the interests of the legitimate owners due to defects, or the licenses purchased by the Company mayfail to cover the development and use of emerging businesses, resulting in the loss of compensation for infringement. In addition,there are copyright infringements upon the legitimate rights and interests of the Company with respect to its exclusive movie andtelevision dramas as well as audio-visual products. To this end, the Company has established a copyright protection system and acopyright procurement management system, and strengthened the protection of intellectual property rights to safeguard its legitimaterights and interests through legal means.
X. Registration form of reception survey, communication, interviews, and other activities
1. Registration form of reception survey, communication, interviews, and other activities in theReporting Period
√ Applicable □ N/A
| Reception date | Reception place | Reception method | Type of object in reception | Object in reception | Main content discussed and materials provided | Index of basic information |
| February 7, 2020 | Online | Telephone | Institution | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-01) | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-01) | http://www.cninfo.com.cn/ |
| April 28, 2020 | Online | Telephone | Institution | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-02) | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-02) | http://www.cninfo.com.cn/ |
| April 30, 2020 | Online | Others | Others | Investors | Presentation of performance briefing on the Company’s 2019 Annual Report | http://rs.p5w.net |
| August 27, 2020 | Meeting room of the Company | Field Survey | Institution | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-03) | See the record form of investor relation activity of Mango Excellent Media Co., Ltd. (2020-03) | http://www.cninfo.com.cn/ |
| September 11, 2020 | Online | Others | Others | Investors | Online collective reception of listed companies in Hunan Province in 2020 | http://rs.p5w.net |
Section V Important EventsI. Dividend distribution for ordinary shares and capitalization of capital reservePolicies of dividend distribution for ordinary shares during the Reporting Period, especially the development, implementation, oradjustment of cash dividend distribution.
√ Applicable □ N/A
During the Reporting Period, the Company implemented the 2019 profit distribution plan as follows: an aggregate ofRMB178,037,751.1 as cash dividends are distributed to all shareholders at RMB1.00 (including tax) per 10 shares based on the totalshare capital of 1,780,377,511 shares, with 0 bonus shares and 0 capitalized stock involved.
| Special explanation for cash dividend policies | |
| Do they comply with the provisions of the Company’s Articles of Association or the requirements of the resolutions of general meeting of shareholders? | Yes |
| Are dividend standards and ratios clear and explicit? | Yes |
| Are decision-making procedures and mechanisms complete? | Yes |
| Do independent directors diligently perform their duties and play their roles? | Yes |
| Do minority shareholders have the opportunity to fully express their opinions and demands? Are their legal rights and interests fully protected? | Yes |
| Are conditions and procedures for adjusted or changed cash dividend policies compliant and transparent? | Yes |
The Company's proposed profit distribution plan and proposed capitalization of capital reserve in the Reporting Period are consistentwith relevant provisions of the Company’s Articles of Association and dividend management methods
√ Yes □ No □ N/A
The Company's proposed profit distribution plan and proposed capitalization of capital reserve in the Reporting Period are consistentwith relevant provisions of the Company’s Articles of Association and other regulations.Description of the profit distribution and capitalization of capital reserve
| Number of bonus shares distributed for each 10 shares (unit: share) | 0 |
| Amount of dividends distributed for each 10 shares (in RMB) (including tax) | 1.3 |
| Number of shares transferred from capital reserve per ten shares (unit: share) | 0 |
| Basic number of the share capital for the distribution proposal | 1,780,377,511 |
| Amount of cash dividends (in RMB) (including tax) | 231,449,076.43 |
| Amount of cash dividends through other methods (e.g., repurchase of shares) (in RMB) | 0.00 |
| Total cash dividends (including those distributed through other methods) (in RMB) | 231,449,076.43 |
| Attributable profits (in RMB) | 1,783,943,529.14 |
| Proportion of total cash dividends (including those distributed through other methods) to the total profits distributed | 100.00% |
| Cash dividends distributed this time | |
| If the Company is at the growth period and has any major asset arrangement, then at the time of distribution of profits, its cash dividends shall account for at least 20% of profits distributed this time. | |
| Descriptions on proposal of profit distribution and capitalization of capital reserve | |
| In accordance with the relevant provisions of the Notice of CSRC Concerning Further Implementation of Matters on Distribution of Cash Dividends of Listed Companies, the No. 3 Regulatory Guideline for Listed Companies—Distribution of Cash Dividends of Listed Companies and the Articles of Associations, through seeking opinions and demands from minority shareholders and independent directors and in view of the Company’ actual situation, the Company intends to distribute to all shareholders the cash dividends at RMB1.3 (including tax) per 10 shares, 0 bonus shares and 0 stock transferred from capital reserve per 10 shares based on the total share capital of 1,780,377.51 shares, with the remaining undistributed profits to be carried forward to the following year. Such proposal has been adopted at the 36th meeting of the third board of directors of the Company through deliberation, and the independent directors have given their consent independently, pending deliberation by the general meeting of shareholders. | |
The Company’s dividend distribution plan (proposal) for ordinary shares and capital reserve capitalization plan (proposal) in recentthree years (including the Reporting Period)
1. 2020 profit distribution proposal: all shareholders will be paid cash dividends at RMB1.3 (including tax) per 10 shares and given 0bonus shares based on the total share capital of 1,780,377.51 shares, and awarded with 0 additional stock per 10 shares inconsideration of the capital reserve, with the undistributed profits to be carried forward to the following year.
2. 2019 profit distribution plan: all shareholders will be paid cash dividends at RMB1.00 (including tax) per 10 shares and given 0bonus shares based on the total share capital of 1,780,377,511 shares, and awarded with 0 additional stock per 10 shares inconsideration of the capital reserve, with the undistributed profits to be carried forward to the following year.
3. 2019 semi-annual capital reserve capitalization plan: all shareholders will be awarded with 7 shares per 10 shares based on thetotal share capital of 1,047,280,889 shares, with corresponding consideration to be paid by the balance of capital reserve within thescope of consolidated financial report, resulting in an aggregate of additional stock of 733,096,622 shares. Except the above shareawards, all shareholders will be paid with no bonus shares and cash dividends.
4. 2018 profit distribution plan: all shareholders will be paid cash dividends at RMB0.00 (including tax) and given 0 bonus shares(including tax) per 10 shares based on the total share capital of 990,023,518 shares, and awarded with 0 additional stock per each 10shares in consideration of the capital reserve, with the remaining undistributed profits to be carried forward to the following year.
Cash dividend distribution for ordinary shares of the Company in recent three years (including the Reporting Period)
In: RMB
| Year | Cash dividends distributed (including tax) | Net profit in the consolidated statements attributable to ordinary shareholders of the listed company | Proportion of cash dividends distributed to net profit in the consolidated statements attributable to ordinary shareholders of the listed company | Cash dividends distributed through other methods (e.g., repurchase of shares) | Proportion of cash dividends distributed through other methods to net profit in the consolidated statements attributable to ordinary shareholders of the listed company | Total cash dividends distributed (including those distributed through other methods) | Proportion of total cash dividends distributed (including those distributed through other methods) to net profit in the consolidated statements attributable to ordinary shareholders of the listed company |
| 2020 | 231,449,076.43 | 1,982,159,476.82 | 11.68% | 0.00 | 0.00% | 231,449,076.43 | 11.68% |
| 2019 | 178,037,751.10 | 1,156,285,253.73 | 15.40% | 0.00 | 0.00% | 178,037,751.10 | 15.40% |
| 2018 | 0.00 | 865,568,532.45 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
The Company puts forward no proposal for cash dividend distribution of ordinary shares despite profitable and positive profits of itsparent company attributable to shareholders of ordinary shares during the Reporting Period
□ Applicable √ N/A
II. Performance of commitments
1. Commitments completed in the Reporting Period or not completed as of the end of theReporting Period by de facto controllers, shareholders, related parties, purchaser, theCompany, or others relating to commitments
√ Applicable □ N/A
| Sources of commitments | Promiser | Type | Content | Date | Deadline | Performance |
| Commitments made in the Acquisition Report or Equity Change Report | ||||||
| Commitments made at the time of assets restructuring | Mango Media Co., Ltd. | Commitments on Share Lock-up | 1. Within thirty-six months of the end of this offering, we will not transfer the listed company’s shares acquired by us in this restructuring in any form (including but not limited to the public transfer through securities market or | July 12, 2018 | July 12, 2021 | Outstanding |
| investigated by the judicial authority or the CSRC, we will not transfer the beneficial interest held by us in the listed company before the investigation conclusion of the case is determined. | |||||
| Mango Media Co., Ltd.; and Hunan Hi-tech Investment Group Co., Ltd. | Commitments on Share Lock-up | 1. Within twelve months of completion of registration of consideration shares involved by the listed company’s issue of shares this time to purchase assets (i.e. the date when China Securities Depository and Clearing Co., Ltd Shenzhen Branch completes registration of consideration shares), we will not transfer the listed company’s shares held by us as of the date when this Letter of Commitments is issued in any form (including but not limited to the public transfer through securities market or transfer by agreement), nor will we entrust others with management of the listed company’s shares above held by us; 2.The aforesaid share lock-up arrangements shall also apply to the increase in holdings of shares by us due to placement of shares, bonus share distribution and capitalization of capital reserve by the listed company and other reasons within the aforesaid lock-up period; 3. If the aforesaid commitments on share lock-up arrangements are inconsistent with the latest regulatory opinions issued by the securities regulatory authority, then we agree to make adjustments accordingly pursuant to the regulatory opinions issued by the competent securities regulatory authority; after the expiry of the aforesaid lock-up period, the shares will be exercised pursuant to the | July 12, 2018 | July 12, 2019 | Fulfilled |
| relevant regulations of CSRC and Shenzhen Stock Exchange. | |||||
| Beijing Zhonghe Dingyuan Equity Investment Management Center (L.P.); Guangzhou Yuexiu Lichuang No.3 Industrial Investment Partnership (L.P.）; Hunan Mango Haitong Creative Cultural Investment Partnership (L.P.); Hunan Cultural Creative Tourism Venture Capital Fund (L.P.); Jiantou Huawen Investment Co., Ltd.; Mango Wenchuang (Shanghai) Equity Investment Fund (L.P.); Shanghai Guohe Modern Service Industry Capital Fund (L.P.); Shanghai Huawei Equity Investment Fund (L.P.); Shanghai Junyong Investment Management Co., Ltd.; Shanghai Lianxin Phase II Equity Investment Center; Shenzhen Guangda New Entertainment Industry Fund (L.P.); Tibet Taifu Cultural Media Co., Ltd.; Xiamen C&D | Commitments on Share Lock-up | 1. Within twelve months of the end of this offering, we will not transfer the listed company’s shares acquired by us in this restructuring in any form (including but not limited to the public transfer through securities market or transfer by agreement), nor will we entrust others with management of the listed company’s shares held by us; 2. The aforesaid share lock-up arrangements shall also apply to the increase in holdings of consideration shares acquired by us in this restructuring due to placement of shares, bonus share distribution and capitalization of capital reserve by the listed company and other reason within the share lock-up period; 3. If the commitments on the aforesaid lock-up period are inconsistent with the latest regulatory opinions issued by the securities regulatory authority, then we agree to make adjustments accordingly pursuant to the regulatory opinions issued by the competent securities regulatory authority; after the expiry of the aforesaid lock-up period, the relevant regulations of CSRC and Shenzhen Stock Exchange shall apply; 4. If we are suspected of providing or disclosing any information containing misrepresentations, misleading statements or material omissions in this transaction and are therefore investigated by the judicial authority or the CSRC, we will not transfer the beneficial interest held by us in the listed company before | July 12, 2018 | July 12, 2019 | Fulfilled |
| Emerging Industry Equity Investment Co., Ltd.; Zhejiang Chengzhang Cultural Industry Equity Investment Fund (L.P.); and Zhongnan Red Cultural Group Co., Ltd. | the investigation conclusion of the case is determined. | ||||
| Mango Media Co., Ltd. | Earnings Commitment and Compensation Arrangement | Mango Media Co., Ltd. makes the specific commitments as follows: with respect to the net profit within the earnings commitment period of the target companies in this restructuring including Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. (“Happy Sunshine”), Shanghai Mangofun Technology Co., Ltd. (Mangofun), Shanghai EE-Media Co., Ltd. (“E.E. Media”), Mango Studios Culture Co., Ltd. (‘Mango Studios“) and Hunan Mango Entertainment Co., Ltd. (“Mango Entertainment”) (“net profit” refers to the net profit net of non-recurring profit or loss attributable to the owners of the parent companies of target companies in each of the target companies’ consolidated statements): (1) the committed net profit of Happy Sunshine is RMB 315,494,700.00 in 2017, RMB 679,457,800.00 in 2018, RMB 910,215,000.00 in 2019 and 1,293,696,000.00 in 2020; (2) the committed net profit of Mangofun is 41,329,100.00 in 2017, RMB 50,708,100.00 in 2018, RMB 48,765,400.00 in 2019 and RMB 50,915,600.00 in 2020; (3) the committed net profit of E.E. Media is 95,486,200.00 in 2017, RMB | July 12, 2018 | December 31, 2020 | Ongoing |
| 20,874,600.00 in 2018, RMB 25,389,600.00 in 2019 and 28,444,100.00 in 2020; (4) the committed net profit of Mango Studios is RMB 41,503,900.00 in 2017, RMB 49,446,700.00 in 2018, RMB 45,319,600.00 in 2019 and RMB 46,880,700.00 in 2020; (5) the committed net profit of Mango Entertainment is 27,737,400.00 in 2017, RMB 74,513,000.00 in 2018, RMB 64,329,100.00 in 2019 and 74,957,600.00 in 2020. | |||||
| Hunan Broadcasting System; and Mango Media Co., Ltd. | Commitments on Avoiding Horizontal Competition, Related-party Transactions and Fund Use | In order to avoid the horizontal competition with the listed company, Mango Media and Hunan Broadcasting System have respectively issued their own Letter of Commitments on Avoiding Horizontal Competition, undertaking that, during the period of acting as the controlling shareholder and de facto controller of the listed company, “1. We and the channels and companies controlled by us are not engaged in any business or activity in any form that competes or would compete with the business of the listed company and/or its controlled companies, directly or indirectly. 2. After completion of this restructuring, we will take and procure the channels and companies controlled by us to take effective measures to avoid: (1) engaging in any business or activities directly or indirectly in any form that competes or would compete with the business of the listed company and/or its controlled companies, or holding any interests or benefits in such business; (2) supporting in any form any other persons other than the | July 12, 2018 | 9999-12-31 | Ongoing |
| listed company and/or its controlled companies in engagement in any business or activity that competes or would compete with the business being conducted or to be conducted by the listed company and/or its controlled companies. 3. If we and the channels and companies controlled by us have any commercial opportunity to engage, join or participate in any business or activity that would compete with the business of the listed company and/or its controlled companies, then the listed company and/or its controlled companies will have a priority with respect to the aforesaid commercial opportunities. 4. If any business of mine and the channels and companies controlled by us competes with that of the listed company and its controlled enterprise, then we and the channels and companies controlled by us will cease engaging in any business similar with or identical with the principal business of the listed company and/or its controlled companies to avoid the horizonal competition by stopping conduct of the relevant competitive business, including the relevant competitive business in that of the listed company or transferring the relevant competitive business to any unrelated third party. 5. We agree to bear and be liable for all losses, damage and costs caused to the listed company and/or its controlled companies due to breach of the aforesaid commitments.” | |||||
| Hunan Broadcasting System; and Mango Media Co., Ltd. | Commitments on Avoiding Horizontal | “In order to reduce and regulate the related-party transactions and safeguard the legal rights and | July 12, 2018 | 9999-12-31 | Ongoing |
| Competition, Related-party Transactionsand Fund Use | interests of Happigo and minority shareholders, Hunan Broadcasting System and Mango Media have issued the Letter of Commitments on Regulating Related-party transactions with the contents as follows: we and the channels and other public institutions or economic organizations controlled by us will take measures to avoid dealing with the related-party transactions with the listed company and its controlled companies as far as possible; regarding the related-party transactions that cannot be avoided or are definitely necessary (including but not limited to product transactions, mutual offer of services/labor and etc.), we undertake that we will follow and urge the channels and other public institutions or economic organizations controlled by us to follow the principles of market fairness, justice and openness, legally sign agreements and perform the legal procedures in accordance with the provisions on the decision-making and abstention of related-party transactions of the relevant laws and regulations, normative documents and the listed company to guarantee the fairness and compliance of the related-party transactions, will not harm the legitimate rights and interests of shareholders of the listed company and its controlled subsidiaries as well as shareholders of the listed company through related-party transactions, and will promptly disclose the information as required by the relevant laws and regulations and normative documents; we and |
| the channels and other public institutions or economic organizations controlled by us will eliminate any illegal use of assets and funds of the listed company. | ||||||
| Commitments made at the time of IPO or re-financing | China Life Asset Management Company Limited; and China Mobile Capital Holding Co., Ltd. | Commitments on Share Lock-up | A-share stocks non-publicly issued by Mango Excellent Media Co., Ltd. this time that we acquire will not be transferred within twelve months from the date of the issue completion, including but not limited to the public transfer through securities market or the transfer by agreement, unless otherwise provided for in the laws and regulations. | May 30, 2019 | May 30, 2020 | Ongoing |
| Hunan Hi-tech Investment Group Co., Ltd.; Mango Media Co., Ltd.; and No. 2 Account for Accepted Shares of National Council for Social Security Fund, PRC | Commitments on Share Stock-up | The Company’s controlling shareholder Mango Media Co., Ltd. (“Mango Media”) and its party acting in concert Hunan Hi-tech Investment Group Co., Ltd. make the following commitments with respect to circulation restrictions and voluntary lock-up: (1)within thirty-six months from the listing date of the shares of the listed company, we will not transfer or entrust others with management of any pre-IPO shares of the issuer held by us, nor propose the repurchase of such shares by the Company. (2) If, within six months of the listing of the issuer, the daily closing price of its shares is lower than the issue price for 20 consecutive trading days, or the daily closing price of the listed company’s shares is lower than the issue price at the end of a six-month period of the listing (i.e. July 21, 2015, not the extended trading day), then the lock-up period of the issuer’ shares held by us will automatically extended for six | January 21, 2015 | January 21, 2018 | Fulfilled |
| months. (3) If we reduce our shareholdings within two years after the expiry of lock-up period, the reduction price will not be lower than 100% of the issue price. If we fail to fulfill these commitments, the proceeds from reduction of shareholdings in the Company will belong to the Company. During the period from the listing of the Company’s shares until reduction of shareholdings, if the Company has paid dividends, given bonus shares, capitalized capital reserve, issued new shares or had other ex-right and ex-dividend matters, the floor reduction price and number of reduced shares will be adjusted accordingly. | |||||
| Hongyi Investment Industry Phase I Fund (Tianjin) (L.P.); Mianyang Science and Technology Industry Investment Fund (L.P.); Tianjin Sequoia Capital Investment Fund Center (L.P.); and Tibet Hongzhi Investment Consulting Partnership Enterprise (L.P.) | Commitments on Share Stock-up | Within twelve months from the listing date of the issuer, we will not transfer or entrust others with management of any pre-IPO shares of the issuer held by us, nor propose the repurchase of such shares by the listed company. | January 21, 2015 | January 21, 2016 | Fulfilled |
| Mango Media Co., Ltd. | Commitments on Reducing Shareholdings | Mango Media Co., Ltd., as the Company’s controlling shareholder, makes the following commitments with respect to the intention to reduce shareholdings: (1) If we intend to reduce our shareholdings in the Company after the expiry of the lock-up period of shares held by us in the Company, we will legally | January 21, 2015 | January 21, 2018 | Ongoing |
| do same, and make a public announcement within three trading days prior to reduction through the Company. The shareholdings we reduce in aggregate within two years after the expiry of the lock-up period will not exceed 5% of the total IPO shares of the Company held by us and the reduction price will not lower than 100% of the IPO price of the Company. If we reduce our shareholdings after two years upon expiry of the lock-up period, the price for the shareholdings reduced through the centralized quotation trading system of the stock exchange will not lower than the daily closing price for one trading day prior to the public announcement of reduction. (2) The reduction period will be six months after the public announcement of the reduction plan, if we continue to reduce our shareholdings after expiry of the reduction period, we will make the public announcement anew in accordance with the aforesaid arrangements. | |||||
| Hunan Hi-tech Investment Group Co., Ltd. | Commitments on Reducing Shareholdings | Hunan Hi-tech Investment Group Co., Ltd., as the party acting in concert of the Company’s controlling shareholder Mango Media, makes the following commitments with respect to the intention to reduce shareholdings: (1) If we intend to reduce our shareholdings in the Company after the expiry of the lock-up period of shares held by us in the Company, we will legally do same, and make a public announcement within three trading days prior to reduction through the Company. If the Company’s shareholders intend to | January 20, 2015 | January 21, 2018 | Ongoing |
| reduce their shareholdings in within two years after the lock-up period, the number of reduced shares will not exceed the issuer’s shares held in total by the Company’s shareholders; (2) Mode of reduction: the shareholdings will be reduced through the centralized quotation or block trading system of the stock exchange or through transfer by agreement (but if the number of the released lock-up shares in stock that the Company’s shareholders expect to publicly sell within one coming month accumulatively exceeds 1% of total shares of the Company, the shares will not be transferred through centralized quotation trading system of the stock exchange), or will be transferred in accordance with the provisions of other laws and regulations then in effect or the rules of the stock exchange; (3) Reduction price: if we reduced our shareholdings within two years upon expiry of the lock-up period, the reduction price will not lower than 100% of the issue price (if the Company has paid dividends, given bonus shares, capitalized capital reserve, issued new shares or had other ex-right and ex-dividend matters, the issue price will be adjusted accordingly). | |||||
| Hongyi Investment Industry Phase I Fund (Tianjin) (L.P.); Mianyang Science and Technology Industry Investment Fund (L.P.); and Tianjin Sequoia Capital | Commitments on Reducing Shareholdings | “Hongyi Investment Industry Phase I Fund (Tianjin) (L.P.) (“Hongyi Investment”), Mianyang Science and Technology Industry Investment Fund (L.P.) (“Mianyang Fund”), Tianjin Sequoia Capital Investment Fund Center (L.P.) (“Sequoia Capital Tianjin”), as other existing shareholders of the | January 21, 2015 | January 21, 2018 | Mianyang Fund and Sequoia Capital disclosed on November 19, 2016 and Hongyi Investment disclosed on |
| Investment Fund Center (L.P.) | Company, make the following commitments with respect to the intention to reduce shareholdings: (1) We will not transfer or entrust others with management of any pre-IPO shares of the issuer held by us, nor propose the repurchase of such shares by the Company within twelve months from the listing date of the issuer. (2) If we intend to reduce our shareholdings in the Company after the expiry of the lock-up period of shares held by us in the Company, we will legally do same, and make a public announcement within three trading days prior to reduction through the Company. The shareholdings we reduce in aggregate within two years after the expiry of the lock-up period will equal to the issuer’s shares held in total by us and the reduction price will not lower than 80% of the IPO price of the Company. The reduction period will be six months after the public announcement of the reduction plan, and if we continue to reduce our shareholdings after expiry of the reduction period, we will make the public announcement anew in accordance with the aforesaid arrangements. During the period from the listing of the Company’s shares until reduction of shareholdings, if the Company has paid dividends, given bonus shares, capitalized capital reserve, issued new shares or had other ex-right and ex-dividend matters, the floor reduction price and number of reduced shares will be adjusted accordingly. If the Company’s shareholders fail to fulfill these | December 10, 2016 the Announcement on Prompt of Shareholdings Reduction Plan for Shareholders Holding 5% or More of Shares Prior to IPO through the Company, and as of the end of 2017, all of them have completed reduction of their shareholdings. |
| commitments, the proceeds from reduction of shareholdings in the Company will belong to the listed Company. | |||||
| Mango Excellent Media Co., Ltd. | Commitments on Use of Financing Funds | 1. Strengthening the management of financing funds. After financing funds issued this time are received, the Company’s directors will strictly comply with the requirements of the Measures for Management of Financing Funds of Happigo Inc., open the special account for financing funds, ensure the funds are used exclusively and strictly control all links in the use of financing funds. 2. Actively implementing committed projects. The funds raised this time will closely focus on the Company’s principal business, conforming to the Company’s future growth strategy and facilitating improvement of the Company’s sustainable profitability. The Company has fully demonstrated the investment projects of the financing funds, and invest its own or self-raised funds in the aforesaid projects in advance before the financing funds are received so as to yield profits as soon as possible. | January 21, 2015 | 9999-12-31 | Fulfilled, and all IPO committed projects have been closed. |
| Mango Excellent Media Co., Ltd. | Commitments on Distributing Dividends | Improving the profit distribution system, in particular cash dividends policy. The Company improved the Articles of Associations (Draft) at the 1st extraordinary general meeting of shareholders, stipulating the Company’s profit distribution policy, the procedures of decision-making and implementation of the profit distribution policy, preparation and adjustment mechanism of the profit distribution policy, and the plan for | January 21, 2015 | 9999-12-31 | Ongoing |
| shareholders’ dividend returns in order to enhance the protection over minority shareholders. The Articles of Associations (Draft) further defines the Company’s profit distribution, especially the specific conditions, percentages, and forms of the cash dividend distribution as well as the conditions of the bonus share distribution, and clarifies that the cash dividends are superior to bonus shares; and the Company prepared the Plan on Dividend Returns for the Coming Three Years of Happigo Inc. to further implement the profit distribution system. | ||||||
| Hunan Broadcasting System; and Mango Media Co., Ltd. | Commitments on Avoiding Horizontal Competition, Related-party transaction, and Fund Use | “ (I) Commitments on Avoiding Horizontal Competition: In order to avoid the horizontal competition and protect the interests of the Company and other shareholders, Hunan Broadcasting System, as the de facto controller, and Mango Media, as the controlling shareholder of the Company, have respectively issued their own Letter of Commitments on Avoiding Horizontal Competition. 1. Controlling Shareholder: Mango Media, as the controlling shareholder of the Company, issued the Letter of Commitments on Avoiding Horizontal Competition. (1) Mango Media and its other subordinate enterprises (excluding issuer) are not engaged in any business or activity in any form that competes or would compete with the business of the issuer and/or its subordinate enterprises directly or indirectly. (2) Mango Media will take and procure any enterprises controlled by Mango Media to take | January 21, 2015 | 9999-12-31 | Ongoing |
| join or participate in any business or activity that would compete with the business of the issuer and/or its subordinate enterprises, then the issuer and/or its subordinate enterprises will have a priority with respect to the aforesaid commercial opportunities. Hunan Broadcasting System agrees to bear and be liable for all losses, damage and costs caused to the issuer and its subordinate enterprises due to breach of the aforesaid commitments. (II) Letter of Commitments on Avoiding Fund Use: The controlling shareholders and de facto controllers of the Company undertake that: they will strictly comply with the provisions of the laws, regulations, normative documents and the Company’s relevant rules and systems, not appropriate or use the Company’s assets or resources in any form, nor do anything directly or indirectly which harms or would harm the interests of the Company and other shareholders. If the rights and interests of the Company or other shareholders are harmed due to violations of the aforesaid commitments and undertakings, the controlling shareholders and de facto controllers will be liable for compensation according to law.” | ||||||
| CHEN Gang; JIANG Yingxing; Happigo Inc.; LI Niu; LI Xiang; Mango Media Co., Ltd.; OUYANG Wen, TANG Liang; TANG Weimin; WU Junyun; ZHANG | Commitments on Stabilizing IPO Stock Price | “Specific measures to stabilize the stock: 1. Shareholding increases by the controlling shareholders: (1) The controlling shareholders shall, within 10 trading days after triggering the obligations of shareholding increases, notify the Company in writing as to whether or not they have the specific plan to | January 21, 2015 | January 21, 2018 | Fulfilled |
| Xiaoxue; ZHANG Yong; ZHANG Zhifang; and ZHU Deqiang | increase A-share stocks of the Company, and the Company will make the public announcement; if increasing shareholdings, they shall disclose the range of shares to be increased, range of price, date of competition and other information, and the amount of shares to be increased this time will not exceed 30% of cash dividends received from the Company in aggregate after the listing of the Company. (2) If the Company’s stock price has not met the conditions for starting measures to stabilize stock price of the Company before the plan on shareholding increases of the controlling shareholders is implemented, such plan may cease. (3) The price of shares increased by the controlling shareholders will not exceed audited net asset per share for the latest period. 2. Repurchase by the Company: (1) If the controlling shareholders fail to announce the aforesaid specific plan on shareholding increases on time, or clearly state that they have no plan to increase their shareholdings, the Company’s board of directors shall, within 20 trading days after the obligations of shareholding increases are triggered firstly, make the public announcement as to whether there is the specific share repurchase plan, and if there is, they shall disclose the range of shares to be repurchased, range of price, date of completion and other information, and total repurchase amount will not exceed 30% of audited net profit attributable to the parent company’s shareholders for the previous fiscal year. (2) After |
| plan fails to be approved at the general meeting of shareholders (or if the directors and officers are restricted to trade shares for N days during this period, within 10+N trading days after the aforesaid share repurchase plan fails to be approved at the general meeting of shareholders), unconditionally increase the Company’s A-share stocks , and the amount of shares to be increased in aggregate by each of the directors and officers will not exceed 30% of the accumulative amount of after-tax remunerations or allowances received from the Company for the previous fiscal year. (2) If the daily closing price of the Company’s shares has not met the conditions for starting the measures to stabilize the stock price before the plan on shareholding increases by the directors and officers is implemented, the directors and officers may cease to implement the aforesaid measures to stabilize the stock price. (3) The price of shareholding increases by the directors and officers will not exceed the audited net asset per share for the latest period.” | ||||||
| Hunan Broadcasting System; Mango Media Co., Ltd. | Other commitments | “(1) We commit that we will not interfere in the Company’s operation and management activities beyond our authority, nor will we encroach on the Company’s interests; (2) From the date hereof to the completion of the Company’s issuance of A shares to specific objects, if securities regulatory authorities such as the CSRC and Shenzhen Stock Exchange make separate provisions or put forward | September 25, 2020 | 9999-12-31 | Ongoing |
| other requirements on the recovery measures for returns and the commitments thereon, and the above commitments cannot meet such provisions, we will then make supplementary commitments in accordance with the latest provisions; (3) We will effectively take relevant recovery measures for returns formulated by the Company and fulfill our corresponding commitments on recovery measures for returns. Besides, we will, in case of violating or refusing to fulfill the above commitments, undertake the corresponding obligations of explanation, apology and so on in accordance with the relevant provisions, and will be liable for compensation as appropriate according to law if losses are thus caused to the Company or its shareholders.” | ||||||
| CAI Huaijun; HE Jin; LIANG Deping; LIU Xin; LIU Yuhui; LUO Weixiong; TANG Liang; WANG Ke; WU Jun; XIAO Xing; ZHANG Huali; ZHANG Yong; ZHENG Huaping; ZHONG Hongming | Other commitments | “(1) I will faithfully and diligently perform my duties and safeguard the legitimate rights and interests of the Company and all shareholders; (2) I will not to transfer benefits to other entities or individuals free of charge or under unfair conditions, nor otherwise damage the Company’s interests; (3) I will restrict my position-related consumption; (4) I will not use the Company’s assets to engage in investing or consumption activities irrelevant to performance of my duties; (5) I will procure the linkage of the compensation system formulated by the board of directors or the remuneration and appraisal assessment committee with the implementation of the Company’s |
| recovery measures for returns within my legal authority; (6) if the Company subsequently implements the equity incentive plan, I will procure the linkage of exercise conditions for the Company’s equity incentives to be announced with the implementation of the Company’s recovery measures for returns within my legal authority; (7) from the date hereof to the completion of the Company’s issuance of A shares to specific objects, if securities regulatory authorities such as the CSRC and Shenzhen Stock Exchange make separate provisions or put forward other requirements on the recovery measures for returns and the commitments thereon, and the above commitments cannot meet such provisions, I will then make supplementary commitments in accordance with the latest provisions; (8) I will effectively take relevant recovery measures for returns formulated by the Company and fulfill my corresponding commitments on recovery measures for returns. Besides, I will, in case of violating or refusing to fulfill the above commitments, undertake the corresponding obligations of explanation, apology and so on in accordance with the relevant provisions, and will be liable for compensation as appropriate according to law if losses are thus caused to the Company or its shareholders.” | ||||||
| Mango Excellent Media Co., Ltd. | Other commitments | 1. We have never engaged in any investment financial business within six months prior to the date of the board meeting concerning this offering; from the date of issuing | December 25, 2020 | 9999-12-31 | Ongoing |
| this commitment letter (December 25, 2020) to the end of the use of the financing funds or within 36 months after availability of the financing funds, we undertake not to increase the capital investment (including capital increase, loan, guarantee and other forms of capital investment) in such financial business. 2. We will initiate as soon as possible, and complete within six months from the date of issuing this commitment letter, the disposal of Happy Money’s micro-loan business by means of dissolution and liquidation, business closure or equity transfer to accredited entities, etc. After the disposal, we will no longer engage in micro-loan business. | ||||||
| Commitments on equity incentives | ||||||
| Other commitments made to the Company’s minority shareholders | ||||||
| Fulfill the commitments on time or not | Yes | |||||
2. Explanation of the original profit estimate with respect to the assets or projects of theCompany and reasons for realization if the Company makes a profit estimate for its assets orprojects which is still in progress during the Reporting Period
√ Applicable □ N/A
| Asset or project with | Commence | End date of forecast | Current estimated | Current achieved | Reason for not achieving the | Disclosure date of the original | Index of the original |
| profit estimates | date of forecast | performance (in 0’000) | performance(in 0’000) | estimate (if applicable) | estimate | estimate | |
| Happy Sunshine | January 1,2017 | December 31,2020 | 129,369.6 | 145,838.81 | N/A | June 22,2018 | Announcement: Report for Issuance of Shares for Purchase of Assets and Raising of Matching Funds and Related Party Transactions, disclosed at http://www.cninfo.com.cn/ |
| Mango Fun, | January 1,2017 | December 31,2020 | 5,091.56 | 7,674.53 | N/A | June 22,2018 | |
| EE-Media, | January 1,2017 | December 31,2020 | 2,844.41 | 4,987.54 | N/A | June 22,2018 | |
| Mango Studios | January 1,2017 | December 31,2020 | 4,688.07 | 6,756.92 | N/A | June 22,2018 | |
| Mango Entertainment | January 1,2017 | December 31,2020 | 7,495.76 | 8,364.43 | N/A | June 22,2018 |
Commitments made by the Company's shareholders and counterparties to the annual operating results of the Company or relatedassets
√ Applicable □ N/A
On September 27, 2017, the Agreement on Profit Estimating Compensation for the Issuance of Shares to Purchase Assets witheffectiveness subject to certain conditions were made and entered into by and between the Listed Company and Mango Media actingas the restructuring counterparty and the controlling shareholder of the Company. On November 20, 2017, the two parties aboveconcluded the Supplemental Agreement to Agreement on Profit Estimating Compensation for the Issuance of Shares to PurchaseAssets with effectiveness subject to certain conditions. According to the two agreements, Mango Media has agreed to make thefollowing specific commitments to net profits arising from the performance commitment period of the target companies:
In: RMB0'000
| Target Company | Committed net profits in 2017 | Committed net profits in 2018 | Committed net profits in 2019 | Committed net profits in 2020 |
| Happy Sunshine | 31,549.47 | 67,945.78 | 91,021.50 | 129,369.60 |
| Mango Fun, | 4,132.91 | 5,070.81 | 4,876.54 | 5,091.56 |
| EE-Media, | 9,548.62 | 2,087.46 | 2,538.96 | 2,844.41 |
| Mango Studios | 4,150.39 | 4,944.67 | 4,531.96 | 4,688.07 |
| Mango Entertainment | 2,773.74 | 7,451.30 | 6,432.91 | 7,495.76 |
Completion of performance commitments and their impacts on goodwill impairmentIn 2020, all of the 5 targeted companies in asset restructuring completed their performance commitments successfully, evidenced by
112.73%, 150.73%, 175.35%, 144.13%, 111.59% performance achieved by Happy Sunshine, Mango Fun, EE-Media, Mango Studiosand Mango Entertainment respectively. No goodwill is caused from this restructuring.
III. Appropriation of non-operating funds of the Listed Company by the controllingshareholder and its related parties
□ Applicable √ N/A
The Company’s controlling shareholder and its related parties have appropriated no non-operating funds of the Listed Companyduring the Reporting Period.
IV. Explanations from the board of directors for the “Modified Auditor’s Report” Issued MostRecently
□ Applicable √ N/A
V. Explanations from the board, the board of supervisors, the independent directors (if any)for the “Modified Auditor’s Report” issued by the engaged accounting firm in the ReportingPeriod
□ Applicable √ N/A
VI. Explanation from the board for reasons and effects of accounting policies and accounting
estimate change and significant accounting mistake correction
√ Applicable □ N/A
On April 23, 2020, the Company held the 29th meeting of the third board of directors and the 19th meeting of the third board ofsupervisors , deliberating and approving the Proposal to Changes in Accounting Policies, as detailed below:
(1) Reasons for changes
On July 5, 2017, the Ministry of Finance issued the Notice on Issuing the Revised Accounting Standards for BusinessEnterprises No. 14 - Revenue (Cai Kuai [2017] No. 22), requiring that enterprises listed concurrently at home and abroad andenterprises that are listed abroad and prepare financial statements by adopting the International Financial Reporting Standards or theAccounting Standards for Business Enterprises shall implement the revised standards as of January 1, 2018; other domestic listedenterprises shall implement the revised standards as of January 1, 2020; and non-listed enterprises that adopt the AccountingStandards for Business Enterprises shall implement the same as of January 1, 2021.
As a domestic listed company, the Company shall implement the said revised standards from January 1, 2020, and adjust theoriginal accounting policies accordingly.
(2) Accounting policies before this change
Before this change, the Company implemented its accounting policies in accordance with the Accounting Standards forBusiness Enterprises - Basic Standards issued by the Ministry of Finance as well as the specific accounting standards, the applicationguidelines, and interpretations to accounting standards for business enterprises and other relevant provisions.
(3) Accounting policies after this change
After this change, the Company will implement the relevant provisions of the Accounting Standards for Business EnterprisesNo. 14 - Revenue revised by the Ministry of Finance on July 5, 2017. In addition to the above accounting policy changes, theremaining unchanged parts are still implemented in accordance with the Accounting Standards for Business Enterprises - Basic
Standards issued by the Ministry of Finance previously, as well as the specific accounting standards, the application guidelines, andinterpretations to accounting standards for business enterprises and other relevant provisions.
VII. Explanation for changes in the scope of consolidated financial statements comparing withthose in prior year
√ Applicable □ N/A
During the Reporting Period, Happy Sunshine Hongmang Education Technology Co., Ltd. and XiaomangElectronic Commerce Co., Ltd. are newly established, while Doug (Shanghai) Investment Management LimitedLiability Company, Ningbo Free Trade Zone Happigo International Trade Co., Ltd., and Damei Fashion(Shanghai) Culture Media Co., Ltd. are deregistered. For details, see VIII. Change in Scope of Consolidation inSection XII. Financial Report hereof.
VIII. Engagement and dismissal of the accounting firmCurrent certified public accountants
| Domestic certified public accountants | Pan-China Certified Public Accountants LLP |
| Remuneration paid to the domestic certified public accountants (in RMB0'000) | 198 |
| Audit period of the domestic accounting firm | 5 |
| Name of the engaged certified public accountants | LI Xinkui, ZHANG Hong |
| Audit period of the engaged certified public accountants | 5 |
Whether the certified public accountant is changed
□ Yes √ No
Description of engaging certified public accountants, financial adviser, or sponsor for internal control
□ Applicable √ N/A
IX. Delisting subsequent to the disclosure of the annual report
□ Applicable √ N/A
X. Bankruptcy and reorganization
□ Applicable √ N/A
The Company has no matters with respect to bankruptcy and reorganization during the Reporting Period.
XI. Material litigation or arbitration
□ Applicable √ N/A
The Company involves no material litigation or arbitration during the Reporting Period.
XII. Penalty and rectification
□ Applicable √ N/A
The Company has no penalty and rectification during the Reporting Period.
XIII. Integrity of the Company and its controlling shareholders and de facto controllers
□ Applicable √ N/A
XIV. Implementation of the Company’s equity incentive plan, employee shareholding plan orother employee incentive measures
□ Applicable √ N/A
The Company has no equity incentive plan, employee shareholding plan or other employee incentive measures as well as theimplementation thereof during the Reporting Period.
XV. Significant related-party transactions
1. Related-party transactions related to daily operations
√ Applicable □ N/A
| Related party | Related party relationship | Type | Content | Pricing principal | Price | Amount (in RMB0’000) | Proportion of similar trading amount | Approved trading amount (in RMB0’000) | Exceed the approved amount or not | Mode of settlement | Available market price of similar transactions | Disclosure date | Disclosure index |
| Hunan Radio, Film and Television Group Co., Ltd. | Under common control of the same de facto controller | Acceptance of labor service | Copyright, etc. | Market pricing | 66,211.43 | 66,211.43 | 7.17% | 62,855 | Yes | By transfer | 66,211.43 | April 25, 2020 | Published at the official website of cninfo; Announcement Title: Announcement on the Occurrence of Related-party Transactions Concerning Daily Operations in |
| 2019 and the Forecast of Related-party Transactions Concerning Daily Operations in 2020, and Announcement on Adjusting the Forecast of Transactions Concerning Daily Operations in 2020 | |||||||||||||
| Hunan Radio, Film and Television Group Co., Ltd. | Under common control of the same de facto controller | Offer of labor service | Advertising release | Market pricing | 80,190.06 | 80,190.06 | 5.73% | 101,950 | No | By transfer | 80,190.06 | April 25, 2020 | Published at the official website of cninfo; Announcement Title: Announcement on the Occurrence of Related-party Transactions |
| Concerning Daily Operations in 2019 and the Forecast of Related-party Transactions Concerning Daily Operations in 2020, and Announcement on Adjusting the Forecast of Transactions Concerning Daily Operations in 2020 | |||||||||||||
| Yunhong Communication Technology (Guangzhou) Co., Ltd. | Company materially affected by the de facto controller | Offer of labor service | Advertising release | Market pricing | 77,148.37 | 77,148.37 | 5.51% | 104,000 | No | By transfer | 77,148.37 | April 25, 2020 | Published at the official website of cninfo; Announcement Title: Announcement on the Occurrence of |
| Related-party Transactions Concerning Daily Operations in 2019 and the Forecast of Related-party Transactions Concerning Daily Operations in 2020 | |||||||||||||
| Hunan EE Advertising Co., Ltd. | Under common control of the same de facto controller | Offer of labor service | Advertising release | Market pricing | 55,646.59 | 55,646.59 | 3.97% | 32,187 | Yes | By transfer | 55,646.59 | April 25, 2020 | Published at the official website of cninfo; Announcement Title: Announcement on the Occurrence of Related-party Transactions Concerning Daily Operations in 2019 and the |
| Forecast of Related-party Transactions Concerning Daily Operations in 2020 | |||||||||||||
| MIGU Culture Technology Co., Ltd. | Sharing the key manager | Offer of labor service | Operator revenue | Market pricing | 82,617.64 | 82,617.64 | 5.98% | 82,716 | Yes | By transfer | 82,617.64 | April 25, 2020 | Published at the official website of cninfo; Announcement Title: Announcement on the Occurrence of Related-party Transactions Concerning Daily Operations in 2019 and the Forecast of Related-party Transactions Concerning Daily Operations in |
| 2020, and Announcement on Adjusting the Estimated Amount of Related-party transactions Concerning Daily Operations with MIGU Culture Technology Co., Ltd. in 2020 | ||||||||||
| Total | -- | -- | 361,814.09 | -- | 383,708 | -- | -- | -- | -- | -- |
| Details of return of goods with large sales | None | |||||||||
| Actual performance within the reporting period (if any) in the event that the total amount of the daily related-party transactions to occur in the current period is expected by categories | None | |||||||||
| Reasons for the large difference between the trading price and the market reference price (if applicable) | N/A | |||||||||
2. Related-party transactions related to acquisition or disposal of assets and equities
√ Applicable □ N/A
| Related party | Related party relationship | Type | Content | Pricing principal | Carrying amount of transferred assets (RMB0’0 | Appraisal value of transferred assets (RMB0’0 | Transfer price (RMB0’000) | Mode of settlement | Trading profit or loss (RMB0’000) | Disclosure date | Disclosure index |
| 00) | 00) | ||||||||||
| Mango Media Co., Ltd. | Parent company | Equity transfer | Equity transfer | Appraisal | 18,929.58 | 25,967.92 | 25,967.92 | By transfer | 7,038.34 | March 18, 2020 | Published at the official website of cninfo; Announcement on Transfer of Equity in Joint- stock Company and Related Party Transaction |
| Reasons for significant difference between transfer price and carrying amount or appraisal value (if any) | None | ||||||||||
| Impact on the Company’s operating results and financial situation | An amount of RMB70.3834 was recognized for investment income from equity transfer, accounting for 3.56% of the net profit in the consolidated statements. | ||||||||||
| The performance realization in the Reporting Period if the related party transaction involves performance agreement | None | ||||||||||
3. Related-party transactions related to joint external investment
□ Applicable √ N/A
The Company has no related-party transactions related to joint external investment during the Reporting Period.
4. Credits and debits with related parties
√ Applicable □ N/A
Where there is any non-operating credits and debits with related parties
□ Yes √ No
The Company has no non-operating credits and debits with related parties during the Reporting Period.
5. Other significant related-party transactions
□ Applicable √ N/A
The Company has no other significant related-party transactions during the Reporting Period.
XVI. Significant contracts and performances thereof
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ N/A
The Company has no trusteeship during the Reporting Period.
(2) Contracting
□ Applicable √ N/A
The Company has no contracting during the Reporting Period.
(3) Leasing
□ Applicable √ N/A
The Company has no lease during the Reporting Period.
2. Significant guarantee
□ Applicable √ N/A
The Company has no guarantee during the Reporting Period.
3. Significant contracts for daily operation
Unit:
| Name of contracting party of the Company | Name of counter party | Total contract price | Progress of contract performance | Sales revenue amount recognized in the current period | Accumulated sales revenue amount recognized | Collection of accounts receivable | Whether the conditions affecting the performance of significant contracts have material changes | Is there any significant risk that may result in the non-performance of contract |
4. Cash asset management by others under entrustment
(1) Entrusted financing
√ Applicable □ N/A
Overview of entrusted financing in the Reporting Period
In: RMB0’000
| Specific type | Capital sources of entrusted financing | Amount of entrusted financing | Undue balance | Amount overdue and not recovered |
| Bank financing product | Own funds | 25,150 | 0 | 0 |
| Total | 25,150 | 0 | 0 | |
Details of high-risk entrusted financing with significant single amount or low security, poor liquidity and non-break-even
□ Applicable √ N/A
Expected unavailability to recover the principal or other situations that may lead to impairment with respect to entrusted financing
□ Applicable √ N/A
(2) Entrusted loans
□ Applicable √ N/A
The Company has no entrusted loan in the Reporting Period.
5. Other significant contracts
□ Applicable √ N/A
The Company has no other significant contracts in the Reporting Period.
XVII. Social Responsibilities
1. Performance of social responsibilities
For details, refer to 2020 Social Responsibility Report disclosed by the Company at www.cninfo.com.cn.
2. Description of targeted poverty alleviation activities
(1) Plan for targeted poverty alleviation
In response to the national, provincial, and municipal calls for poverty alleviation in a serious attitude, the Company actively carryout targeted poverty alleviation activities by giving full play to the advantages of the Company’s platform and industrial chains.
(2) Overview of annual targeted poverty alleviation
For details, refer to the 2020 Social Responsibility Report disclosed by the Company at www.cninfo.com.cn.
(3) Effects of targeted poverty alleviation
| Indicator | Unit of measurement | Quantity/Development |
| I. Overall | —— | —— |
| Including: 1. funds | RMB0’000 | 1,509.64 |
| II. Subdivided investments | —— | —— |
| 1. Poverty alleviation via industry development | —— | —— |
| Including: 1.1 Type of poverty alleviation projects involving industrial development | —— | E-commerce poverty alleviation |
| 1.2 Number of poverty alleviation projects involving industrial development | Unit | 1 |
| 1.3 Investment amount of poverty alleviation projects involving industrial development | RMB0’000 | 1,489.641 |
| 2. Poverty alleviation via employment transfer | —— | —— |
| 3. Poverty alleviation via relocation | —— | —— |
| 4. Poverty alleviation via education | —— | —— |
| 5. Health poverty alleviation | —— | —— |
| 6. Ecological poverty alleviation | —— | —— |
| 7. Underwritten protection | —— | —— |
| 8. Poverty alleviation via social resources | —— | —— |
| 9. Other items | —— | —— |
| 9.2. Investment amounts | RMB0’000 | 20 |
| III. Awards (content, level) | —— | —— |
Note: 1 It refers to the amount of investment in the project i.e. “Mango Poverty Alleviation Cloud Supermarket” of Happigo Co., Ltd.,a wholly-owned subsidiary of the Company, during the Reporting Period.
(4) Supplementary plan for targeted approach to alleviating povertyIn 2021, the Company will earnestly fulfill its social responsibility by continuing the active response to the national, provincial, andmunicipal call for rural revitalization.
3. Environmental protection
Whether the Listed Company and its subsidiaries are in high pollution industries regulated by the State Department of EnvironmentalProtection.
□ Yes √ No
NoThe Listed Company and its subsidiaries are not in high pollution industries regulated by the State Department of EnvironmentalProtection.
XVIII. Description of other significant matters
√ Applicable □ N/A
On April 14, 2021, 100% of the equity in Mango Studios Cultural Co., Ltd. and Hunan Mango Entertainment Co., Ltd.,wholly-owned subsidiaries of the Company, were transferred to Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd.,another wholly-owned subsidiary of the Company.
XIV. Significant matters of subsidiaries of the Company
□ Applicable √ N/A
Section VI Share Changes and Information of ShareholdersI. Share changes
1. Share changes
Unit: share
| Before this change | Increase or decrease this time (+,-) | After this change | |||||||
| Quantity | Ratio | New shares | Bonus shares | Capitalization of capital reserve | Others | Sub-total | Quantity | Ratio | |
| I. Restricted share | 946,357,263 | 53.15% | 0 | 0 | 0 | -97,336,406 | -97,336,406 | 849,020,857 | 47.69% |
| 1. Shareholdings by the State | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shareholdings by the State-owned legal persons | 926,889,757 | 52.06% | 0 | 0 | 0 | -77,870,025 | -77,870,025 | 849,019,732 | |
| 3. Other shareholdings by domestic investors | 19,467,506 | 1.09% | 0 | 0 | 0 | -19,466,381 | -19,466,381 | 1,125 | 0.00% |
| Including: shareholdings by domestic legal persons | 19,467,506 | 1.09% | 0 | 0 | 0 | -19,467,506 | -19,467,506 | 0 | 0.00% |
| Shareholdings by domestic natural persons | 0 | 0.00% | 0 | 0 | 0 | 1,125 | 1,125 | 1,125 | 0.00% |
| 4. Shareholdings by foreign investors | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Including: Shareholdings by overseas legal persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0.00% | |
| Shareholdings by overseas natural persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Unrestricted share | 834,020,248 | 46.85% | 0 | 0 | 0 | 97,336,406 | 97,336,406 | 931,356,654 | 52.31% |
| 1. RMB ordinary share | 834,020,248 | 46.85% | 0 | 0 | 0 | 97,336,406 | 97,336,406 | 931,356,654 | 52.31% |
| 2. Domestic listed foreign share | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Overseas listed foreign share | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Others | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total | 1,780,377,511 | 100.00% | 0 | 0 | 0 | 0 | 0 | 1,780,377,511 | 100.00% |
Reason for share changes
√ Applicable □ N/A
The restriction on the restricted shares is released as the restriction period has expired.
Approval of share changes
□ Applicable √ N/A
Description of registration of share changes
□ Applicable √ N/A
Progress of share repurchase
□ Applicable √ N/A
Progress of reducing repurchased shares through centralized competitive pricing
□ Applicable √ N/A
Effect of share changes on financial indicators in the most recent year and the most recent period, such as basic earnings per share,diluted earnings per share, net assets per share attributable to the Company’s shareholders of ordinary shares
□ Applicable √ N/A
Other information that the Company deemed as necessary, or security regulators require to be disclosed
□ Applicable √ N/A
2. Restricted share changes
√ Applicable □ N/A
Unit: share
| Name of shareholder | Opening restricted shares | Increase in restricted shares for the current period | Restricted shares released for the current period | Closing restricted shares | Reasons for restriction | Date of proposed release of restriction |
| China Life Insurance Company Limited－Dividend－Individual Dividend-005L-FH002 Shen | 19,467,506 | 0 | 19,467,506 | 0 | Additional restricted shares in private placement for raising matching funds | Listing and circulating on July 3, 2020 |
| China Mobile Capital Holding | 77,870,025 | 0 | 77,870,025 | 0 | Additional restricted shares in private placement for raising | Listing and circulating on |
| Co., Ltd. | matching funds | July 3, 2020 | ||||
| Mango Media Co., Ltd. | 849,019,732 | 0 | 0 | 849,019,732 | Additional restricted shares in offering of shares for purchasing assets | July 12, 2021 |
| YANG Yun | 0 | 1,125 | 0 | 1,125 | Restricted shares for directors, supervisors, and officers | During the term of office, the restriction in 25% of the number of shares held at the end of last year will be lifted at the beginning of each year. |
| Total | 946,357,263 | 1,125 | 97,337,531 | 849,020,857 | -- | -- |
II. Shares issuing and listing
1. Securities issuing in the Reporting Period (excluding preferred shares)
□ Applicable √ N/A
2. Explanation for changes in the Company’s total shares, shareholder structure, andstructure of assets and liabilities
□ Applicable √ N/A
3. Current shares subject to employee share ownership plan
□ Applicable √ N/A
III. Shareholders and de facto controllers
1. Description of the quantity of the Company’s shareholders and shares held by them
Unit: share
| Total ordinary shareholders as of the end of the period | 24,773 | Total ordinary shareholders as of the end of the month prior to the disclosure date of annual report | 36,311 | Total preferred shareholders with recovered voting rights as of the end of the period (if any) (refer to Note 9) | 0 | Total preferred shareholders with recovered voting rights as of the end of the month prior to the disclosure date of annual report (refer to Note 9) | 0 | |
| Information of shareholders holding 5% or more of shares or top 10 shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Closing shareholding quantity | Increase or decrease | Quantity of restricted shares held | Quantity of unrestricted shares held | Pledged or frozen | |
| Status | Quantity | |||||||
| Mango Media Co., Ltd. | State-owned legal person | 58.94% | 1,049,300,301 | -93,647,857 | 849,019,732 | 200,280,569 | ||
| Haiyan Ali Venture Capital Co., Ltd. | Domestic non-state-owned legal persons | 5.26% | 93,647,857 | 93,647,857 | 0 | 93,647,857 | ||
| China Mobile Capital Holding Co., Ltd. | State-owned legal person | 3.99% | 70,959,923 | -6,910,102 | 0 | 70,959,923 | ||
| HONG KONG SECURITIES CLEARING COMPANY LIMITED | Foreign legal person | 2.42% | 43,127,568 | 20,186,145 | 0 | 43,127,568 | ||
| CHINA CITIC BANK CORPORATION LIMITED - BOCOM Schroders Xinshenghuoli Flexible Allocation Hybrid Securities Investment Fund | Others | 0.96% | 17,177,141 | 2,633,288 | 0 | 17,177,141 | ||
| China Merchants Bank Co., Ltd. - Xingquan Heyi Flexible Allocation Hybrid Securities Investment Fund (LOF) | Others | 0.74% | 13,089,224 | -11,373,582 | 0 | 13,089,224 | ||
| China Postal Savings Bank Co., Ltd.-China-Europe Small and Medium Equity Securities Investment Fund (LOF) | Others | 0.69% | 12,325,850 | 1,106,951 | 0 | 12,325,850 | ||
| China Construction Bank Corporation - BOCOM Schroders Kernel-Driven Hybrid Securities Investment Fund | Others | 0.68% | 12,091,876 | 12,091,876 | 0 | 12,091,876 | ||
| China Life Insurance Company Limited - Dividends - Individual Dividends-005L-FH002 Shen | Others | 0.58% | 10,262,239 | -10,461,440 | 0 | 10,262,239 |
| China Merchants Bank Co., Ltd. - Xingquan Herun Graded Hybrid Securities Investment Fund | Others | 0.53% | 9,394,546 | 3,018,554 | 0 | 9,394,546 | ||
| Explanation for related-party relationship or concerted action of above shareholders | Mango Media Co., Ltd. as the controlling shareholder of the Company has no related-party relationship or concerted action relationship with other top ten shareholders, and it remains unknown whether or not there is a related-party relationship or concerted action relationship among other top ten shareholders. | |||||||
| Shareholdings of top 10 unrestricted shareholders | ||||||||
| Name of shareholders | Quantity of unrestricted shares held at the end of the Reporting Period | Type | ||||||
| Type | Quantity | |||||||
| Mango Media Co., Ltd. | 200,280,569 | RMB ordinary shares | 200,280,569 | |||||
| Haiyan Ali Venture Capital Co., Ltd. | 93,647,857 | RMB ordinary shares | 93,647,857 | |||||
| China Mobile Capital Holding Co., Ltd. | 70,959,923 | RMB ordinary shares | 70,959,923 | |||||
| HONG KONG SECURITIES CLEARING COMPANY LIMITED | 43,127,568 | RMB ordinary shares | 43,127,568 | |||||
| CHINA CITIC BANK CORPORATION LIMITED - BOCOM Schroders Xinshenghuoli Flexible Allocation Hybrid Securities Investment Fund | 17,177,141 | RMB ordinary shares | 17,177,141 | |||||
| China Merchants Bank Co., Ltd. - Xingquan Heyi Flexible Allocation Hybrid Securities Investment Fund (LOF) | 13,089,224 | RMB ordinary shares | 13,089,224 | |||||
| China Postal Savings Bank Co., Ltd.-China-Europe Small and Medium Equity Securities Investment Fund (LOF) | 12,325,850 | RMB ordinary shares | 12,325,850 |
| China Construction Bank Corporation - BOCOM Schroders Kernel-Driven Hybrid Securities Investment Fund | 12,091,876 | RMB ordinary shares | 12,091,876 |
| China Life Insurance Company Limited - Dividends - Individual Dividends-005L-FH002 Shen | 10,262,239 | RMB ordinary shares | 10,262,239 |
| China Merchants Bank Co., Ltd. - Xingquan Herun Graded Hybrid Securities Investment Fund | 9,394,546 | RMB ordinary shares | 9,394,546 |
| Explanation for related-party relationship or concerted actions between top 10 unrestricted outstanding shareholders, and between top 10 unrestricted outstanding shareholders and top 10 shareholders | There is no related-party relationship or concerted action relationship between the Mango Media Co., Ltd. as the controlling shareholder of the Company and other top 10 unrestricted outstanding shareholders; it remains unknown whether or not there is a related-party relationship or concerted action relationship among top 10 unrestricted outstanding shareholders and between top 10 unrestricted outstanding shareholders and top 10 shareholders. | ||
| Explanation for shareholders participating in the margin trading and short-selling (if any) (refer to Note 5) | None | ||
Whether the Company's top 10 ordinary shareholders and top 10 unrestricted ordinary shareholders have engaged in an agreedrepurchase transaction during the Reporting Period
□ Yes √ No
The Company's top 10 ordinary shareholders and top 10 unrestricted ordinary shareholders have no agreed repurchase transactionduring the Reporting Period.
2. The Company’s controlling shareholder
Nature of the controlling shareholder: local state-owned holding companyType of the controlling shareholder: legal person
| Controlling shareholder | Legal representative/ responsible person | Date of incorporation | Organization code | Principal activities |
| Mango Media Co., Ltd | ZHANG Huali | July 10, 2007 | 914300006707880875 | Planning, production and operation of radio and television programs; asset management and investment subject to laws and regulations (excluding national financial supervision and financial credit businesses such as deposit absorption, fund collection, entrusted loans, notes, and loans issuance); advertising planning, production and operation; multimedia technology development and operation. (Projects required for legal approval shall be operated on the premise of being approved by relevant authorities) |
Change of the controlling shareholder in the Reporting Period
□ Applicable √ N/A
The Company has not changed the controlling shareholder in the Reporting Period.
3. The Company’s de facto controller and its acting-in-concert parties
Nature of the de facto controller: Local state capital management institutionType of the controlling shareholder: Legal person
| De facto controller | Legal representative/ responsible person | Date of incorporation | Organization code | Principal activities |
| Hunan Broadcasting System | GONG Zhengwen | January 25, 2010 | 12430000444877954G | Broadcasting news and other information, and television programs to promote socio-economic and cultural development; news, thematic, literary, and artistic broadcasts, consulting services, advertising, broadcasting technical services, broadcasting research, broadcast business trainings, publishing and distribution of audiovisual products, television program production, television programs broadcasting and rebroadcasting, television industry business, and television research. |
| Equity of other domestic and oversea listed companies controlled by the de facto controller in the Reporting Period | According to the guideline of the Hunan Provincial CPC Committee and Hunan Provincial Government for the integration and reform of Hunan Broadcasting System, despite a related relationship between Hunan Broadcasting System and Hunan TV & Broadcast Intermediary Co., Ltd., the de facto controller, and its subordinate companies hold no shares in Hunan TV & Broadcast Intermediary Co., Ltd. | |||
Change of the de facto controller in the Reporting Period
□ Applicable √ N/A
The Company has not changed the de facto controller in the Reporting PeriodBlock diagram for the ownership and controlling relationship between the Company and the de facto controller
The Company is controlled by the de facto controller through trust funds or other asset management methods
□ Applicable √ N/A
4. Other legal person shareholders with more than 10% shares in the Company
□ Applicable √ N/A
5. Restriction on reduction of shares to the controlling shareholder, the de facto controller, therestructuring party, and other committed entity
□ Applicable √ N/A
Hunan Broadcasting SystemMango Media Co., Ltd.
Mango Media Co., Ltd.
Mango Excellent Media Co., Ltd..
Mango Excellent Media Co., Ltd..
100% shares
100% shares
58.94% shares
Section VII Preferred Shares
□ Applicable √ N/A
The Company has no preferred shares in the Reporting Period.
Section VIII Convertible Bonds
□ Applicable √ N/A
The Company has no convertible bonds in the Reporting Period.
Section IX Directors, Supervisors, Officers and EmployeesI. Changes in shares held by directors, supervisors, and officers
| Name | Position | Status | Gender | Age | Office term from | Office term to | Number of shares held at the beginning of the period: (unit: share) | Number of increased shares for the current period (unit: share) | Number of reduced shares for the current period (unit: share) | Other increases or decreases (unit: share) | Number of shares held at the end of the period (unit: share) |
| ZHANG Huali | Chairman of the board | Current | Male | November 16, 2017 | 0 | 0 | 0 | 0 | 0 | ||
| ZHONG Hongming | Independent director | Current | Male | June 14, 2017 | 0 | 0 | 0 | 0 | 0 | ||
| XIAO Xing | Independent director | Current | Female | January 8, 2019 | 0 | 0 | 0 | 0 | 0 | ||
| LIU Yuhui | Independent director | Current | Male | January 8, 2019 | 0 | 0 | 0 | 0 | 0 | ||
| LUO Weixiong | Director | Current | Male | September 19, 2019 | 0 | 0 | 0 | 0 | 0 | ||
| ZHANG Yong | Director | Current | Male | May 25, 2011 | 0 | 0 | 0 | 0 | 0 | ||
| CAI Huaijun | Director, general manager | Current | Male | September 12, 2018 | 0 | 0 | 0 | 0 | 0 | ||
| LIU Xin | Director | Current | Male | September 19, 2019 | 0 | 0 | 0 | 0 | 0 | ||
| TANG Liang | Director | Current | Male | June 1, 2014 | 0 | 0 | 0 | 0 | 0 | ||
| YANG Yun | Chairman of the board of supervisors | Current | Male | June 14, 2017 | 0 | 0 | 0 | 0 | 0 | ||
| LI Jiaochun | Supervisor | Current | Male | June 14, 2017 | 0 | 0 | 0 | 0 | 0 | ||
| FANG Fei | Employee supervisor | Current | Male | August 19, 2020 | 0 | 0 | 0 | 0 | 0 |
| HE Jin | Deputy general manager | Current | Female | August 16, 2018 | 0 | 0 | 0 | 0 | 0 | ||
| ZHENG Huaping | Deputy general manager | Current | Male | August 16, 2018 | 0 | 0 | 0 | 0 | 0 | ||
| WANG Ke | Deputy general manager | Current | Male | August 16, 2018 | 0 | 0 | 0 | 0 | 0 | ||
| LIANG Deping | Deputy general manager and finance director | Current | Male | August 16, 2018 | 0 | 0 | 0 | 0 | 0 | ||
| WU Jun | Secretary of the board of directors | Current | Female | April 27, 2019 | 0 | 0 | 0 | 0 | 0 | ||
| JIANG Qian | Employee supervisor | Former | Female | May 12, 2015 | August 19, 2020 | ||||||
| XIAO Ning | Deputy general manager | Former | Female | August 16, 2018 | August 8, 2020 | 0 | 0 | 0 | 0 | 0 | |
| Total | -- | -- | -- | -- | -- | -- | 0 | 1,500 | 0 | 0 | 1,500 |
II. Changes of directors, supervisors, and officers
√ Applicable □ N/A
| Name | Position | Type | Date | Reasons |
| JIANG Qian | Employee supervisor | Resigned upon expiry of the term | August 19, 2020 | She resigned due to expiry of her term of office. |
| FANG Fei | Employee supervisor | Newly elected | August 19, 2020 | He was elected as an employee supervisor by the workers and employees’ congress to replace the former employee supervisor upon her resign from officer upon expiry of the term. |
| XIAO Ning | Deputy general manager | Resigned | August 19, 2020 | She resigned as deputy general manager of the Company due to work transfer arrangement. |
III. Job TitlesAbout the education backgrounds and main work experiences of the existing directors, supervisors and officers of the Company andtheir current job duties in the Company
1. Directors
ZHANG Huali, male, Han nationality, born in December 1964, a member of the Communist Party of China and a first-classliterary editor. He graduated from the Chinese Department of Fudan University in 1986 and joined Hunan TV in the same year. Hiswork experiences are as follows: the reporter of the Hunan News Network and Focus, the producer of Evening News and News Watch,the deputy director of the News Center of Hunan TV from July 1986 to December 1998; the first deputy director of Hunan TV'sCultural and Sports Channel from December 1998 and January 2001; the director of Hunan TV's Entertainment Channel fromJanuary 2001 to September 2002; the director and the deputy secretary of the CPC General Branch of Hunan TV's EntertainmentChannel from September 2002 to October 2004; the director and the deputy secretary of the Party Committee of Hunan TV'sEntertainment Channel from October 2004 to December 2006; the deputy general manager of Golden Eagle Broadcasting Systemand the director of Entertainment Channel and the deputy secretary of the Party Committee of Hunan TV from December 2006 toJuly 2008; the deputy general manager of Golden Eagle Broadcasting System, the chief editor and deputy head (ranking first) ofHunan TV (headquarters), the director and the deputy secretary of the CPC General Branch of Hunan TV's Entertainment Channelfrom July 2008 to September 2009; the deputy general manager of Golden Eagle Broadcasting System and the chief editor anddeputy head (ranking first) of Hunan TV (headquarters) from September 2009 to March 2010; a member of the Party Committee andthe deputy head of Hunan Broadcasting System from March 2010 to August 2020; a member of the Party Committee, the deputyhead and the chief editor of Hunan Broadcasting System from August 2010 to December 2010; a member of the Party Committee,the deputy head and chief editor of Hunan Broadcasting System and the director of Hunan Satellite TV Channel from December2010 to May 2015; a member of the Party Committee, the deputy head and the chief editor of Hunan Broadcasting System and thegeneral manager of Golden Eagle Broadcasting System and the director of Hunan Satellite TV Channel from May 2015 to June 2017;a member of the Party Committee, the deputy head and chief editor of Hunan Broadcasting System, the deputy secretary of the PartyCommittee and the general manager of Golden Eagle Broadcasting System from June 2017 to June 2020; the secretary of the PartyCommittee, the chairman and chief editor of Golden Eagle Broadcasting System (Hunan Broadcasting System) from June 2020 toNovember 2020; the secretary of the Party Committee and the chairman of Golden Eagle Broadcasting System (Hunan BroadcastingSystem) since November 2020. He acted as the chairman of the Company since November 2017 and the secretary of the PartyCommittee of the Company since November 2018.ZHONG Hongming, male, Han nationality, born in January 1975, graduated from the Law School of Renmin University ofChina with a doctor's degree of Law. He worked in Shenzhen Stock Exchange and now serves as an associate researcher at theInstitute of Law, Sichuan Academy of Social Sciences and concurrently works as a member of the council of the China SecuritiesLaw Research Association, the secretary-general of Sichuan Commercial Law Research Association, and an independent director ofFIYTA Precision Technology Co., Ltd. And from June 2017 to present, he has been serving as an independent director of theCompany.
XIAO Xing, female, born in March 1971, a member of the Communist Party of China, graduated from Tsinghua Universitywith a doctor's degree of Accounting. She joints in the School of Economics and Management of Tsinghua University in 1971 tosuccessively serve as teaching assistant, lecturer, associate professor, long-term external associate professor and professor. Now sheworks as the professor of the School of Economics and Management, the head of the Department of Accounting and the deputyexecutive dean of the Global Equity Private Research Institute of Tsinghua University, and concurrently serves as a member of theNational Accounting Professional Master Education Steering Committee, a member of the Accounting Teaching Steering Committeeof the Ministry of Education, and an independent director of Agricultural Bank of China Co., Ltd. and Bloomage BiotechnologyCorporation Limited. And from January 2019 to present, she has been serving as an independent director of the Company.
LIU Yuhui, male, born in October 1970, a member of the Communist Party of China, graduated from Chinese Academy ofSocial Sciences with a doctor's degree of Quantitative Economics. He worked as the head of Key Financing Laboratory in theInstitute of Finance of Chinese Academy of Social Sciences from August 2003 to April 2017, joined in the Institution of Economicsof Chinese Academy of Social Sciences in April 2017 to serve as a researcher, and now serves as the professor and the doctoral tutorof economics in Chinese Academy of Social Sciences and is also the chief economist in TF Securities, a member of the council of
China Chief Economist Forum, a member of the Annuity Council of China National Petroleum Corporation and an independentdirector in Bank of Jiangsu Co., Ltd.; and from January 2019 to present, he has been serving as an independent director of theCompany.LUO Weixiong, male, Han nationality, born in November 1962, a member of the Communist Party of China, obtained abachelor's degree of Arts and the title of chief editor. His work experiences are as follows: the deputy director of the ManagerialDepartment of Hunan TV and Broadcasting Agency, the deputy director and then director of the Advertising Information Departmentof Hunan TV and Broadcasting News Agency, the director of the Editor Department of Hunan Radio and TV News Agency, deputyeditor-in-chief and then chief editor of Hunan Radio and TV News Agency, the general manager of Hunan TV & BroadcastIntermediary Co., Ltd. Advertising Branch and the director of the Advertising Operation and Management Center of Golden EagleBroadcasting System from April 1988 to April 2005; the deputy general manager of Golden Eagle Broadcasting System, the deputyeditor-in-chief of Hunan Provincial Radio and Television Bureau and the Editor Committee of Golden Eagle Broadcasting Systemfrom April 2005 to March 2010; a director and the deputy general manager of Hunan TV & Broadcast Intermediary Co., Ltd. fromApril 2005 to April 2012; a member of the Party Committee and the deputy head of Hunan Broadcasting System, and the director ofOperation and Industry Management Committee of Hunan Broadcasting System and a director of Mango Media Co., Ltd. fromMarch 2010 to June 2018; a member of the Party Committee of Golden Eagle Broadcasting System in June 2018; a member of theParty Committee and the deputy head of Hunan Broadcasting System, and a member of the Party Committee and the deputy generalmanager of Golden Eagle Broadcasting System and a director of Mango Media Co., Ltd. from July 2018 to present; and a director ofthe Company from September 2019 to present.ZHANG Yong, male, born in 1962, a member of the Communist Party of China, graduated from Zhengzhou University ofLight Industry with a bachelor’s degree of Electromechanics and was conferred the title of senior engineer. His work experiences areas follows: the deputy director of Hunan TV’s Entertainment Channel, the director of the Program Marketing Center of Golden EagleBroadcasting System, the head assistant of Hunan TV, the director of the Production Dispatch Center of Hunan TV and the headassistant of Hunan Broadcasting System from April 1984 to present; the general manager of Mango Media Co., Ltd. since May 2012;a director of Mango Media Co., Ltd. since December 2013; the chairman since August 2017 and the chief editor since March 2018 inHunan Happy Sunshine Interactive Entertainment Media Co., Ltd.; the general manager assistant of Golden Eagle Broadcasting Co.,Ltd. since April 2019. He serves as the general manager assistant of Gold Eagle Broadcasting System Co., Ltd., a director and thegeneral manager of Mango Media Co., Ltd., the chairman and the chief editor of Hunan Happy Sunshine Interactive EntertainmentMedia Co., Ltd.; and since May 2011, he has been acting a director of the Company (including “Happigo Co., Ltd.” as thepredecessor of the Company).
CAI Huaijun, male, born in December 1977, a member of the Communist Party of China, graduated from Accounting major ofHunan University with a doctorate in management. His work experiences are as follows: worked in Hunan Economic TV from July2000 and March 2002; worked in the Planning and Finance Department of Hunan TV from March 2002 to April 2004; the deputydirector at the Planning and Statistics Division of the Finance Department of Hunan TV from April 2004 to March 2006; the directorat the Planning and Statistics Division of the Finance Department of Hunan TV from March 2006 to April 2011; the deputy directorof the Mango Media Restructuring and Listing Office from April 2011 to October 2011; the deputy director of the FinanceDepartment of Hunan Broadcasting System from October 2011 to March 2014; the head of the Strategic Investment Department ofMango Media Co., Ltd. from March 2014 to April 2017; the deputy general manager and the head of the Strategic InvestmentDepartment of Mango Media Co., Ltd. from April 2017 to June 2017; the deputy general manager of Mango Media Co., Ltd., and thechairman and the general manager of Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. from June 2017 to May 2018;the deputy general manager of Mango Media Co., Ltd., and the secretary of the Party Committee, a director and the general managerof Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. from May 2018 to July 2018; the secretary of the PartyCommittee, a director and the general manager of Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. since July 2018;the general manager of the Company since August 2018; a director of the Company since September 2018; the deputy secretary ofthe Party Committee of the Company since November 2018; and the chief editor of the Company since April 2020..
LIU Xin, male, born in October 1971, a member of the Communist Party of China, obtained a doctor's degree. His workexperiences are as follows: the industry solution manager, the technical team leader and the customer technical director of the PublicUtilities Department of International Business Machines (China) Co., Ltd. from August 2004 to December 2009; the deputy generalmanager of the Data Department of China Mobile Communications Group Co., Ltd. from December 2009 to November 2013; thegeneral manager of the Data Department of China Mobile Communications Group Co., Ltd. from November 2013 to February 2015;the secretary of the Party Committee, the chairman and general manager of MIGU Culture Technology Co., Ltd., and the chairman ofMingu Music Co., Ltd., MIGU Video Technology Co., Ltd., Migu Digital Media Co., Ltd., Migu Interactive Entertainment Co., Ltd.and MIGU Cartoon Co., Ltd. from November 2014 to present; a director of IFLYTEK Co., Ltd. since January 2013; a director ofChina Mobile SDIC Innovation Investment Management Co., Ltd.; and a director of the Company from September 2019 to present.
TANG Liang, male, born in 1976, a member of the Communist Party of China, graduated from Hunan Normal University witha bachelor's degree of English Education, and is studying EMBA in Hunan University. His work experiences are as follows: an editor,editor in charge, producer, the deputy director of the News Center, and the director of Beijing Program Center of Hunan EconomicTV from June 1997 to November 2005; was sent to study at the University of Westminster, UK, funded by the government, fromNovember 2005 to March 2006; the deputy general manager of Happigo Co., Ltd. from March 2006 to May 2011; the deputy generalmanager of Happigo Inc. from May 2011 to November 2011; the deputy executive general manager of Happigo Inc. from November2011 to June 2014; the deputy executive general manager and a director of Happigo Inc. from June 2014 to April 2015; the generalmanager and a director of Happigo Inc. from April 2015 to July 2018; the secretary of the Party Committee of Happigo Inc. fromDecember 2016 to July 2018; the deputy general manager of the Company from August 2018 to June 2019; a director of theCompany since August 2018; the deputy secretary of the Party Committee of the Company since November 2018; and the secretaryof the Discipline Inspection Committee of the Company since April 2020.
2. Supervisors
YANG Yun, male, born in July 1973, obtained a master's degree, an accountant. He currently serves as the head of the FinanceDepartment of Hunan Broadcasting System and also works as an external instructor for postgraduate students at Hunan University.He joined Hunan Broadcasting System in 1999, and successively worked as the head and deputy director at the Finance Departmentof the Entertainment Channel of Hunan Broadcasting System, the deputy general manager and the head of the Asset and FinanceDepartment of Mango Media Co., Ltd., with rich experience in financial management and media operations. From June 2017 topresent, he has been serving as the chairman of the board of supervisor in the Company.
LI Jiaochun, male, born in January 1964, a member of the Communist Party. He previously worked as the chief editor of themagazine and the director of the Cultural Industry Office in Hunan Provincial Party Committee Organ., and now serves as the deputysecretary of the Party Committee, the secretary of the Discipline Inspection Committee and the chairman of the board of supervisorsof Mango Media Co., Ltd.; and since June 2017, he has been serving as a supervisor of the Company.
FANG Fei, male, born in December 1985, a member of the Communist Party of China, obtained a master's degree. Hesuccessively served as the planning director of the Advertising Department under the Advertising Operation and Management Centerof Hunan Broadcasting System; a director of the Integrated Marketing Department under the Advertising Marketing Center and thesenior director, general manager and assistant president of the Advertising Marketing Center of Hunan Happy Sunshine InteractiveEntertainment Media Co., Ltd. He is now the deputy general manager of Hunan Happy Sunshine Interactive Entertainment MediaCo., Ltd.; a director and general manager of Horgos Happy Sunshine Media Co., Ltd.; and a director and general manager of HappySunshine Xingmang Interactive Entertainment Media Co., Ltd. Since August 2020, he has been serving as an employee supervisor ofthe Company.
3. Officers (Other than those who currently work as a director)
HE Jin, female, born in April 1971, a member of the Communist Party of China, a master of Statistics and Risk Management,University of South Australia. Her work experiences are as follows: worked in Hunan KAMP Medical and Health Products Co., Ltd.from September 1991 to January 1993; worked in Hainan Juchuan Industry Company and Suzhou Shihu Development Co., Ltd. fromJanuary 1993 to October 1995; worked in Hunan Economic TV from October 1995 to March 2003 (concurrently worked as the
secretary of the Youth League Committee of Hunan Economic TV from July 2000 and March 2003); the manager of the FinanceDepartment of Changsha Colorful World Co., Ltd. from March 2003 to December 2004; the deputy director of the FinanceDepartment of Hunan Economic TV from December 2004 to March 2006; the deputy general manager of Hunan Jingshi CulturalCommunication Co., Ltd. from March 2006 to December 2007; the vice chairman of the Trade Union of Hunan Economic TV fromDecember 2007 to August 2010; the general manager of Hunan Jingshi Cultural Communication Co., Ltd. from August 2010 to May2012; the general manager of Hunan Jingshi Cultural Communication Co., Ltd. from May 2012 to June 2015; the general manager ofMango Studios Culture Co., Ltd. since June 2015; the deputy general manager of the Company since August 2018; and a member ofthe Party Committee of the Company from November 2018.ZHENG Huaping, male, born in October 1976, a member of the Communist Party of China, graduated from Central SouthUniversity with a master's degree of Philosophy. His work experiences are as follows: the reporter of the News Center of Hunan TVfrom June 2000 to December 2004; the director of the Golden Eagle Cartoon Channel Administration Department of Hunan TV fromDecember 2004 to March 2006; worked in the Planning and Promotion Department of the Chief Editor Office of Hunan TV fromMarch 2006 to December 2006; the director of the Planning and Promotion Department of the Chief Editor Office of Hunan TV fromDecember 2006 to April 2011; the deputy director of Mango Media Restructuring and Listing Office and the deputy director of theChief Editor Office of Hunan Satellite TV Channel from April 2011 to October 2011; the deputy director of the Program TransactionManagement Center of Hunan Broadcasting System from October 2011 to August 2014; the joint general manager of ShanghaiMangofun Technology Co., Ltd. and the chairman of Hunan Happy Mangofun Technology Co., Ltd. from August 2014 to April 2016;the general manager of Shanghai Mangofun Technology Co., Ltd. and chairman of Hunan Happy Mangofun Technology Co., Ltd.from April 2016 to October 2017; the deputy general manager of Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd.,the chairman and general manager of Shanghai Mangofun Technology Co., Ltd. and the chairman of Hunan Happy MangofunTechnology Co., Ltd. from October 2017 to September 2019; the deputy general manager of Hunan Happy Sunshine InteractiveEntertainment Technology Co., Ltd. since September 2019; the deputy general manager of the Company since August 2018; and amember of the Party Committee of the Company from November 2018.WANG Ke, male, born in March 1979, a member of the Communist Party of China, graduated from Cheung Kong GraduateSchool of Business with MBA. His work experiences are as follows: the reporter, program coordinator and production manager ofHunan TV's Cultural and Sports Channel from June 2001 to January 2004; the deputy director of the Performance Department ofHunan TV's Entertainment Channel from January 2004 to April 2005; the director of the Artists Development Department ofShanghai EE-Media Co., Ltd. from April 2005 to October 2005; the deputy general manager of Shanghai EE-Media Co., Ltd. fromOctober 2005 to July 2014 (studied EMBA at Cheung Kong Graduate School of Business from September 2008 to May 2010); thedeputy general manager of Hunan Mango Entertainment Co., Ltd. from July 2014 to August 2017 (a member of the Party Committeeof Entertainment Channel of Hunan Broadcasting System from November 2006 to August 2017); the general manger of BeijingHappy Mango Cultural Media Co., Ltd. since July 2014; the general manager of Hunan Mango Entertainment Co., Ltd. Since August2017 (a member of the Party Committee of the Entertainment Channel of Hunan Broadcasting System from August 2017 to January2018, a member of the CPC General Branch of Hunan Mango Entertainment Co., Ltd. from July 2018 to January 2019 and thesecretary of the CPC General Branch of Hunan Mango Entertainment Co., Ltd. since January 2019); the deputy general manager ofMango Excellent Media Co., Ltd. since August 2018; a member of the Party Committee of Mango Excellent Media Co., Ltd. fromNovember 2018.
LIANG Deping, male, born in February 1979, a member of the Communist Party of China, graduated from ChangshaUniversity of Science and Technology with MBA. His work experiences are as follows: the accounting head of the FinanceDepartment of Entertainment Channel of Hunan Broadcasting System from August 1998 to October 2004; the deputy director of theFinance Department of Hunan TV's Entertainment Channel from October 2004 to January 2008; the director of the FinanceDepartment of Hunan TV’s Entertainment Channel from January 2008 to January 2013 (studied the MBA in Changsha University ofScience and Technology from March 2009 to January 2012); the director assistant and the head of the Finance Department of theEntertainment Channel of Hunan Broadcasting System from January 2013 to April 2013; the director assistant of the Entertainment
Channel of Hunan Broadcasting System, the head of the Finance Department and the head of the Production Department of theEntertainment Channel of Hunan Broadcasting System from April 2013 to April 2014; the deputy director of Entertainment Channelof Hunan Broadcasting System from April 2014 to November 2014; the deputy director of Entertainment Channel of HunanBroadcasting System and the deputy general manager of Hunan Mango Entertainment Co., Ltd. from November 2014 to October2017; the deputy director of Entertainment Channel of Hunan Broadcasting System and the deputy general manager of Hunan MangoEntertainment Co., Ltd. from October 2017 to July 2018; the deputy general manager of Hunan Happy Sunshine InteractiveEntertainment Media Co., Ltd. since October 2017; an executive director of Hunan Happy Money Microfinance Co., Ltd. since May2019; an executive director of Shanghai Mangofun Technology Co., Ltd. from September 2019 to January 2021; the deputy generalmanager of and the finance director of the Company since August 2018; and a member of the Party Committee of the Company sinceNovember 2018.WU Jun, female, born in February 1983, a member of the Communist Party of China, obtained a doctor's degree. Shesuccessively served as the reporter and editor in charge for Hunan News Network of Hunan TV, and the deputy manager of HRDepartment, the director of the General Manager Office and the secretary of CPC Branch of Mango Media Co., Ltd. from June 2007;she has been working as the director of Board Office of Mango Excellent Media Co., Ltd. from August 2018 to present and sinceApril 2019, been working as the secretary of the board of director of the Company.
Positions in shareholder entities
√ Applicable □ N/A
| Name | Shareholder entity | Position(s) in the shareholder entity | Commence date of tenure | End date of tenure | If receive remunerations or allowances from the shareholder entity |
| ZHANG Huali | Mango Media Co., Ltd. | Chairman | |||
| LUO Weixiong | Mango Media Co., Ltd. | Director | |||
| ZHANG Yong | Mango Media Co., Ltd. | Director and general manager | |||
| LI Jiaochun | Mango Media Co., Ltd. | Deputy secretary of the Party Committee, the secretary of the Discipline Inspection Committee and the chairman of the board of supervisors | |||
| HE Jin | Mango Media Co., Ltd. | Supervisor |
Positions in other entities
√ Applicable □ N/A
| Name | Other entity | Position(s) in the other entity | Commence date of tenure | End date of tenure | If receive remunerations or allowances from the shareholder entity |
| ZHANG Huali | Hunan Broadcasting System | Secretary of the Party Committee, chairman | |||
| ZHANG Huali | Golden Eagle Broadcasting System Co., Ltd. | Secretary of the Party Committee, chairman | |||
| ZHONG Hongming | Institute of Law, Sichuan Academy of Social Sciences | Associate researcher, and director of Financing Law Government Research Office | |||
| ZHONG Hongming | Dagang Holding Group Co., Ltd. | Independent director | |||
| ZHONG Hongming | FIYTA Precision Technology Co., Ltd. | Independent director | |||
| XIAO Xing | School of Economics and Management of Tsinghua University | Professor, and head of the Department of Accounting | |||
| XIAO Xing | Global Private Equity Research Institute of Tsinghua University | Deputy executive dean | |||
| XIAO Xing | National Accounting Professional Master Education Steering Committee | Member | |||
| XIAO Xing | Accounting Teaching Steering Committee of the Ministry of Education | Member | |||
| XIAO Xing | Agricultural Bank of China Co., Ltd. | Independent director | |||
| XIAO Xing | Bloomage Biotechnology Corporation Limited | Independent director | |||
| LIU Yuhui | Chinese Academy of Social Sciences | Professor and doctoral supervisor |
| LIU Yuhui | TF Securities Co., Ltd. | Chief economist | |||
| LIU Yuhui | China Chief Economist Forum | Member of the council | |||
| LIU Yuhui | Annuity Council of China National Petroleum Corporation | Member of the council | |||
| LIU Yuhui | Bank of Jiangsu Co., Ltd. | Independent director | |||
| LUO Weixiong | Hunan Broadcasting System | Member of the Party Committee and deputy head | |||
| LUO Weixiong | Golden Eagle Broadcasting System Co., Ltd. | Member of the Party Committee and deputy general manager | |||
| ZHANG Yong | Shanghai EE-Media Co., Ltd. | Executive director | |||
| ZHANG Yong | Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. | Chairman of the board | |||
| ZHANG Yong | Yize Capital Management Co., Ltd. | Director | |||
| LIU Xin | MIGU Culture Technology Co., Ltd. | Secretary of the Party Committee and chairman | |||
| LIU Xin | IFLYTEK Co., Ltd. | Director | |||
| LIU Xin | China Mobile SDIC Innovation Investment Management Co., Ltd. | Director | |||
| YANG Yun | Hunan Broadcasting System | Head of the Asset and Finance Department | |||
| YANG Yun | Hunan University | External instructor for postgraduate students |
Penalty by regulators to the Company’s current directors, supervisors, and officers, including those resigned in the Reporting Period,
in recent three years
□ Applicable √ N/A
IV. Remuneration of directors, supervisors, and officersDecision-making process, determination basis and actual payment of remuneration of directors, supervisors, and officers,For independent directors, their remunerations are paid subject to the resolution of the shareholders' meeting; for officers, theirremunerations are determined by the board of directors; for directors, supervisors and officers who hold positions in the Company,their remunerations are paid by the company; and for directors and supervisors, the Company do not pay allowances separately.
Total remuneration of directors, supervisors and officers received during the Reporting Period
In: RMB0'000
| Name | Position | Gender | Age | Status | Total remunerations received from the Company (including tax) | Whether or not receiving remunerations from the related parties of the Company |
| ZHANG Huali | Chairman of the board | Male | 56 | Current | 0 | Yes |
| ZHONG Hongming | Independent director | Male | 46 | Current | 22 | No |
| XIAO Xing | Independent director | Female | 49 | Current | 22 | No |
| LIU Yuhui | Independent director | Male | 50 | Current | 22 | No |
| LUO Weixiong | Director | Male | 58 | Current | 0 | Yes |
| ZHANG Yong | Director | Male | 58 | Current | 0 | Yes |
| CAI Huaijun | Director and general manager | Male | 43 | Current | 700 | No |
| LIU Xin | Director | Male | 49 | Current | 0 | Yes |
| TANG Liang | Director | Male | 44 | Current | 256 | No |
| YANG Yun | Chairman of the board of supervisors | Male | 47 | Current | 0 | Yes |
| LI Jiaochun | Supervisor | Male | 56 | Current | 0 | Yes |
| FANG Fei | Employee supervisor | Male | 35 | Current | 650 | No |
| HE Jin | Deputy general manager | Female | 49 | Current | 319.4 | No |
| ZHENG Huaping | Deputy general manager | Male | 44 | Current | 449 | No |
| WANG Ke | Deputy general manager | Male | 41 | Current | 320 | No |
| LIANG Deping | Deputy general manager and finance director | Male | 41 | Current | 450 | No |
| WU Jun | Secretary of the board of directors | Female | 37 | Current | 256 | No |
| JIANG Qian | Employee supervisor | Female | 50 | Former | 68.39 | No |
| XIAO Ning | Deputy general manager | Female | 52 | Former | 186.7 | No |
| Total | -- | -- | -- | -- | 3,721.49 | -- |
Equity incentives awarded to the Company’s directors and officers
□ Applicable √ N/A
V. Employees
1. Employees and their composition by specialization and education background
| Employees of the parent company (person) | 28 |
| Employees of main subsidiaries (person) | 4,443 |
| Total of employees on active duty (person) | 4,471 |
| Total of employees receiving remuneration for the current period (person) | 4,471 |
| Retired employees whose expense is undertaken by parent company and main subsidiaries (person) | 2 |
| Composition of employees by specialization | |
| Areas of specialization | Headcounts |
| Production personnel | 1,480 |
| Sales personnel | 1,758 |
| Technical personnel | 780 |
| Finance personnel | 121 |
| Administrative personnel | 332 |
| Total | 4,471 |
| Composition of employees by education background | |
| Education background | Headcount |
| Doctorate | 5 |
| Master’s degree or above | 548 |
| Bachelor’s degree | 2,664 |
| Junior college or below | 1,254 |
| Total | 4,471 |
2. Remuneration policy
In order to establish and improve the market-based salary determination mechanism and internal incentive and restraint mechanism,and effectively promote the scientific development of the Company, the Company has formulated and promulgated the TrialMeasures of Gross Payroll Determination Mechanism and Management of Mango Excellent Media Co., Ltd., which providesdetailed provisions on the method of determining the gross payroll of the Company’s employees, reasonable intervals, formula,management procedures and supervision and inspection mechanisms. This measure strictly complies with the relevant provisions ofthe policy documents and adheres to the basic principles of "strategic orientation, dual-effect unification, benefits synergy anddynamic supervision". According to this measure, the annual gross payrolls of employees of the Company are determined reasonablyby taking the total annual salary of prior year as the basis and considering the Company's salary-income ratio and market andindustry benchmark, the completion of the assessment goals, the rate of value preservation and appreciation of state-owned assets,labor productivity, labor cost production ratio and other factors in accordance with the Company's development strategy andremuneration strategy, annual production and operation goals, social benefits, economic benefits and other factors.
3. Training plan
The Company continuously establishes and improves a systematic employee training system and cultivation system, and carries outtraining work by categories and levels to strengthen the management ability of middle and senior staff, improve the professionalability of key personnel and the job skills of basic staff. In terms of content, based on an in-depth understanding of the training needsof employees, the Company has developed interesting and practical courses for employees of different functions, and established acomprehensive training system covering vocational training, theoretical education, professional training, marketing, new technology,new media operation, etc., to support the comprehensive development of the Company's talents and enhance the Company's brand asan employer and employees' sense of belonging.
4. Outsourcing
√ Applicable □ N/A
| Total outsourced working hours (in hour) | 906,548 |
| Total compensation paid for outsourced work (in RMB) | 36,778,400.00 |
Section X GovernanceI. Basic introduction
During the Reporting Period, in accordance with the relevant requirements of laws and regulations such as the Company Law,the Securities Law, the Code of Corporate Governance of Listed Companies, the Rules Governing the Listing of Shares on theChiNext Market of Shenzhen Stock Exchange, and Guidelines for the Standardized Operation of Listed Companies on the ChiNext ofthe Shenzhen Stock Exchange, the Company has continuously improved its corporate governance structure under established soundinternal management and control system and continuous in-depth corporate governance activities to promote the normative operationof the Company and improve its corporate governance. In response to the latest requirements from regulators, the Company hasamended the Articles of Association, Rules of Procedure for the Board of Directors, and other institutional documents subject to itsactual changes during the Reporting Period, so as to provide a more improved institutional protection for the normative operation ofthe Company. As of the end of the Reporting Period, the Company’s actual governance is in compliance with the Code of CorporateGovernance of Listed Companies and Guidelines for the Standardized Operation of Listed Companies on the ChiNext of theShenzhen Stock Exchange.
1. Shareholders and the general meetings of shareholder
The Company convenes and holds general meetings of shareholder in strict accordance with provisions as required by theArticles of Association and the Rules of Procedure for the Shareholders' Meetings, treating all shareholders equally and facilitatingshareholders' participation in general meetings of shareholder as far as possible to ensure they can fully exercise their shareholders'rights.
2. The Company and the controlling shareholder
The controlling shareholder of the Company strictly regulates its own conduct without any direct or indirect interference to theCompany's decision-making and business activities beyond the general meeting of shareholders. The Company has independent andcomplete businesses and is able to operate independently. It is independent of the controlling shareholders in terms of business,personnel, assets, institutions, and finances, which is evidenced by independent operations of the Company's board of directors,board of supervisors and internal institutions.
3. Directors and the boards of directors
The Board of Directors of the Company consists of 9 directors, including 3 independent directors. Members and the compositionthereof are in line with the requirements of relevant laws and regulations and the Articles of Association. Each director is able tocarry out their work and attend the Board of Directors and general meetings of shareholders in accordance with the Company Law,Guidelines for the Standardized Operation of Listed Companies on the ChiNext of the Shenzhen Stock Exchange, the Articles ofAssociation, and the Rules of Procedure for the Board of Directors, as to perform their duties and obligations diligently andconscientiously. Meanwhile, they can actively participate in relevant trainings and become familiar with relevant laws andregulations. The procedures for convening and holding board meetings comply with the requirements of relevant regulations. Themeeting minutes of the Board of Directors are true, accurate, and complete, and kept in safety. Resolutions made in the meeting ofthe Board of Directors are disclosed in a timely manner.
4. Supervisors and the board of supervisors
The Board of Supervisors of the Company consists of 3 supervisors, including 1 employee supervisor. Members and thecomposition thereof are in line with the requirements of relevant laws and regulations. During the Reporting Period, each supervisorcan conscientiously perform their duties in accordance with the requirements of the Rules of Procedure for the Board of Supervisors,supervising the legality and compliance of the Company's significant matters, related-party transactions, insider, internal control,financial position, and the execution of duties of directors and officers.
5. Establishment and implementation of the internal audit system
The Audit Committee under the Board of Directors is responsible for communication, supervision, organization of meetings andverification with respect to the internal and external audits of the Company. The Audit Department under the Audit Committee is itsexecuting agency which inspects and supervises the establishment and implementation of the Company's internal control system andthe authenticity and integrity of the Company's financial information, etc.
6. Performance evaluation and incentive binding mechanisms
The Committee for Remuneration and Appraisal under the Board of Directors of the Company is responsible for formulation ofremuneration policies, determination of remuneration proposal, and remuneration appraisal of officers. The Company has establishedan incentive system for enterprise performance evaluation, according to which the income of operators is linked to the businessperformance, and the officers is employed in an open and transparent way subject to provisions of laws and regulations.
7. Information disclosure and transparency
The Company discloses relevant information in a true, accurate, timely, fair and complete manner in strict accordance withrelevant laws and regulations and the requirements of the Information Disclosure Management System and the Investor RelationsManagement System, and designates the Secretary of the Board of Directors of the Company to be responsible for informationdisclosure, coordination of the Company's relationship with investors, reception of shareholders’ visits, response to investor inquiriesfrom various channels such as the interactive platform and telephone in a timely manner, and supply of information disclosed by theCompany to investors. The Company also designates several websites and newspapers including www.cninfo.com.cn, ChinaSecurities Journal, Shanghai Securities News, Securities Times and Securities Daily to disclose its information. The Company’sdisclosure of relevant information is made in a true, accurate, complete, and timely manner subject to relevant laws and regulationsand the requirements of the Information Disclosure Management System, as to ensure all shareholders are equally accessible toinformation of the Company.
8. Stakeholders
The company fully respects and protects the legitimate rights and interests of relevant stakeholders to balance interests ofshareholders, employees, partners, the society, and others in an effort to promote the sustainable and healthy development of theCompany.
Whether there is any material difference between the Company’s actual governance and that stated in the normative documents onthe governance of listed companies issued by the CSRC
□ Yes √ No
There is no material difference between the Company’s actual governance and that stated in the normative documents on thegovernance of listed companies issued by the CSRC.
II. The Company’s independence from its the controlling shareholder in terms of business,personnel, assets, institutions, and financesThe Company is independent from the controlling shareholder and the de facto controller of the Company in terms of business,personnel, assets, institutions, and finances. The Company’s controlling shareholder, de facto controller and their related parties havenot appropriated the company's funds illegally, nor required the Company to provide guarantees in violation of laws and regulations.
1. Business: As an independent legal entity under self-management, the Company has independent and complete businessesand is able to operate independently.
2.Personnel: The Company has set up an independent human resource management department and established a series ofhuman resource management systems according to which the general manager, the deputy general manager, the financial director, thesecretary of the board of directors and other officers are paid by the Listed Company during their tenure.
3. Separation of assets: The Company has completed assets with clear property rights, and independent procurement,production, sales systems and supporting facilities.
4. Institution: The Company has owned an organizational structure that meets its development needs and independent operationrequirements, with functional departments operating independently from those of the controlling shareholders.
5. Finance: The Company has set up an independent financial department with independent accounting system and financialmanagement system. The Company also opens separate bank accounts and pays taxes independently as required by laws.
III. Horizontal competition
□ Applicable √ N/A
IV. Description of annual and extraordinary general meetings of shareholders during theReporting Period
1. Description of general meetings of shareholders during the Reporting Period
Sequence
| Sequence | Type | Ratio of participating investors | Convening date | Disclosure date | Disclosure index |
| 2019 annual general meeting of shareholders | Annual general meeting of shareholders | 80.71% | June 22, 2020 | June 23, 2020 | Announcement of the Resolution of the 2019 Annual General Meeting of Shareholders (2020-032) at http://www.cninfo.com.cn/ |
| The first extraordinary general meeting of shareholders in 2020 | Extraordinary general meeting of shareholders | 77.41% | October 23, 2020 | October 24, 2020 | Announcement of the Resolution of the First Extraordinary General Meeting of Shareholders in 2020 (2020-062) at http://www.cninfo.com.cn/ |
| The second extraordinary general meeting of shareholders in 2020 | Extraordinary general meeting of shareholders | 79.48% | December 24, 2020 | December 25, 2020 | Announcement of the Resolution of the Second Extraordinary General Meeting of Shareholders in 2020 (2020-084) at http://www.cninfo.com.cn/ |
2. Extraordinary general meetings of shareholders required by preferred shareholders with voting rights
□ Applicable √ N/A
V. Execution of duties by independent directors during the Reporting Period
1. Independent directors’ attendance at meetings of the board of directors and the general meetings ofshareholders
Name ofindependent
director
| Name of independent director | Number of attendances at meetings of the board of directors during the Reporting Period | On site | Through communications | Through entrustment | Absence | Whether absent from attendance in person for two consecutive times | Number of attendances at general meetings of shareholders |
| ZHONG Hongming | 7 | 1 | 6 | 0 | 0 | No | 2 |
| XIAO Xing | 7 | 1 | 6 | 0 | 0 | No | 0 |
| LIU Yuhui | 7 | 1 | 6 | 0 | 0 | No | 2 |
Description of two consecutive absences at meetings of the board of directors
2. Description of dissents by independent directors for matters of the CompanyWhether independent directors put forward any dissent for matters of the Company
□ Yes √ No
The independent directors have no dissent for matters of the Company during the Reporting Period.
3. Other descriptions on execution of duties by the independent directorsWhether the Company adopts any recommendation from the independent directors
□ Yes √ No
Description of adopting or refusing to adopt a recommendation from independent directorsDuring the Reporting Period, the independent directors of the Company have performed their duties diligently, independentlyand conscientiously in accordance with the relevant provisions of the Guiding Opinions on Establishing the Independent DirectorSystem in Listed Companies, the Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange and theArticles of Association by attending the meetings of the board of directors, the general meetings of shareholders as well as meetingsheld by special committees under the board of directors. Before attending these meetings, they actively understood and obtained theinformation required for decision-makings, and at these meetings, they carefully considered each proposal, actively participated indiscussions, and provided rationalization proposals. They have expressed independent, impartial, and objective opinions onsignificant matters of the Company such as production and operation, financial management, internal control and related-partytransactions, and played an appropriate role in safeguarding the legitimate rights and interests of all shareholders, especially minorityshareholders. During the Reporting Period, the Company adopted all reasonable recommendations from the independent directors.
VI. Execution of duties by special committees under the board of directors during theReporting Period
1. Strategy Committee
The Strategy Committee met once during the Reporting Period, with the specific date of meeting and matters for deliberationstated as below:
On September 25, 2020, the first session of the Strategy Committee under the third Board of Directors in 2020 was held, at
which the following proposals were deliberated the approved: the Proposal on Exempting the Notice Period for the First Meeting ofthe Strategy Committee under the Third Board of Directors in 2020, the Proposal on the Eligibility of Mango Excellent Media Co.,Ltd. for Issuing A Shares to Specific Offerees, the Proposal on the Plan of Issuance by Mango Excellent Media Co., Ltd. of A Sharesto Specific Offerees in 2020, the Proposal on the Pre-arranged Plan of Issuance by Mango Excellent Media Co., Ltd. of A Shares toSpecific Offerees in 2020, the Proposal on the Argumentation and Analysis Report Concerning the Plan of Issuance by MangoExcellent Media Co., Ltd. of A Shares to Specific Offerees in 2020, and the Proposal on the Feasibility Study Report Concerning theUses of Proceeds from the Issuance by Mango Excellent Media Co., Ltd. of A Shares to Specific Offerees in 2020.
2. Audit Committee
During the Reporting Period, the Audit Committee held a total of 5 meetings, with the specific dates of meetings and matters fordeliberation stated as below:
On January 17, 2020, the first session of the Audit Committee under the third Board of Directors in 2020 was held, at which thefollowing were deliberated and approved: The Annual Internal Audit of the Company for 2020, the Audit Plan of 2019 Annual Report(Pan-China) and the Proposal on the Audit Report for Implementing Internal Control by Mango Studios Cultural Co., Ltd. overMonetary Funds in 2019; and the Audit Department’s Summary on Audit in 2019 and Plan for 2020 Audit was reviewed.
On April 10, 2020, the second session of the Audit Committee under the third Board of Directors in 2020 was held, at which thefollowing proposals were deliberated and approved: The Proposal on the Company’s 2019 Annual Audit Report, the Proposal on theCompany’s 2019 Internal Control Self-evaluation Report, the Proposal for the Company's 2019 Special Report on the Deposit andUse of Funds Raised, and the Proposal for the Company's 2019 Performance Commitment;
On April 17, 2020, the third session of the Audit Committee under the third Board of Directors in 2020 was held, at which theProposal on the Company's 2020 Q1 Financial Report and the Proposal on Changes in Accounting Standards were deliberated andapproved; the Proposal for the Company's 2020 Q1 Special Report on Funds Raised, and the Proposal on the Audit Report forImplementing Internal Control by Happy Purchase Limited Liability Company over Monetary Funds in 2020 were reviewed andapproved; and the Audit Department's Summary on 2020 Q1 Audit and Plan for 2020 Q2 Audit was reviewed;
On August 18, 2020, the fourth session of the Audit Committee under the third Board of Directors in 2020 was held, at whichthe Proposal on the Company's 2020 Semi-Annual Financial Report and the Proposal for the Company's 2020 Semi-Annual SpecialReport on the Deposit and Use of Funds Raised were deliberated and approved; the Proposal on the Audit Report for ImplementingInternal Control by Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. over Monetary Funds in 2020 was reviewedand approved; and the Audit Department's Summary on 2020 Q2 Audit and Plan for 2020 Q3 Audit was reviewed;On October 21, 2020, the fifth session of the Audit Committee under the third Board of Directors in 2020 was held, at which theProposal on the Company's 2020 Q3 Financial Report and the Proposal on Further Employing the Accounting Law Firm weredeliberated and approved; the Proposal for the Company's 2020 Q3 Special Report on the Deposit and Use of Funds Raised and theProposal on the Audit Report for Implementing Internal Control by Shanghai E.E. Media Co., Ltd. over Monetary Funds in 2020were reviewed and approved; and the Audit Department's Summary on 2020 Q3 Audit and Plan for 2020 Q4 Audit was reviewed.
3. Nomination Committee
During the Reporting Period, the Nomination Committee met once, with the specific date of meeting and matters fordeliberation stated as below:
On July 15, 2020, the first session of the Nomination Committee under the third Board of Directors in 2020 was held, at whichthe Proposal on Exempting the Notice Period for the First Meeting of the Nomination Committee under the Third board of Directorsin 2020, the Proposal on the Nomination of Non-independent Director Candidates for the Fourth Board of Director and the Proposalon the Nomination of the Independent Director Candidates for the Fourth Board of Director were deliberated and approved.
4. Remuneration and Appraisal Committee
During the Reporting Period, the Remuneration and Appraisal Committee met once, with the specific date of meeting andmatters for deliberation stated as below:
On April 23, 2020, the first session of the Remuneration and Appraisal Committee under the third Board of Directors in 2020was held, at which the Proposal on 2019 Annual Remuneration and 2020 Annual Remuneration Appraisal Program for theCompany's Officers was deliberated and approved.
VII. Work of the Board of Supervisors
Whether the Board of Supervisors detect the Company is exposed to any risk through its supervision activities during the ReportingPeriod
□ Yes √ No
The Company’s Board of Supervisors has no dissent to matters under supervision during the Reporting Period.
VIII. Appraisal and incentive of the officers
For the purpose of further improving the binding mechanism for incentive of the Company's officers and fully mobilize theirenthusiasm and creativity, the Company has formulated the Management Measures for the Annual Performance Appraisal ofOfficers of Mango Excellent Media Co., Ltd. pursuant to the Articles of Association of Mango Excellent Media Co., Ltd. and theDetailed Rules of Work for the Remuneration and Appraisal Committee of the Board of Directors of Mango Excellent Media Co.,Ltd., as to standardize the performance management of the Company's performance objectives and to conduct objective and fairexamination and assessment on the value creation process and results of the officers. Annual salaries to the Company’s officers arecomposed of two parts, “basic annual salary” and “annual performance bonus”, in which the “annual performance bonus” shouldaccount for 60 % at least, and closely linked to the annual performance appraisal results of the officers.
IX. Internal control evaluation report
1. Details of material internal control deficiencies identified during the Reporting Period
□ Yes √ No
2. Internal control self-evaluation report
Disclosure date
| Disclosure date | April 26, 2021 | |
| Index of disclosure | http://www.cninfo.com.cn/ | |
| Proportion of the total assets of the entities included in the evaluation scope to the total assets recorded in the Company’s consolidated financial statements | 100.00% | |
| Proportion of the operating income of the entities included in the evaluation scope to the operating income recorded in the Company’s consolidated financial statements | 100.00% | |
| Identification Standard of Deficiencies | ||
| Type | Financial Report | Non-financial Report |
Qualitative standard
| Qualitative standard | 1. General deficiencies: other internal control deficiencies under the threshold of material weakness and significant deficiencies. 2 significant deficiencies: the selection and application of accounting policies inconsistent with the generally accepted accounting standards; the absence of anti-fraud procedures and control measures; the absence of appropriate control mechanisms, the absence of compensatory controls or failure in the implementation thereof for the accounting treatment of irregular or special transactions; the existence of one or more deficiencies in the control of the financial reporting process at the end of the period and the absence of reasonable assurance that the financial statements prepared are true and accurate. 3. Material weakness: fraud acts of the Company’s directors, supervisors, or officers; correction of published financial reports by the Company, and material misstatements in the current financial reports detected by the certified public accountants but not identified by the Company's internal control process; ineffective supervision by the Audit Committee and the internal audit institution on internal control. | 1. General deficiencies: other internal control deficiencies under the threshold of material weakness and significant deficiencies. 2. Significant deficiencies: general mistakes resulting from decision-making procedures; violation of internal rules and regulations, resulting in losses; deficiencies in significant business mechanisms or systems; significant or general deficiencies in internal control that have not been rectified. 3. Material weakness: significant mistakes due to lack of democratic decision-making procedures or unscientific decision-making procedures, resulting in significant property losses to the Company; serious violations of national laws and regulations; lack of significant business mechanisms, or ineffectiveness of implementation thereof; continuous or a large quantity of significant internal control deficiencies in the Company. |
Quantitative standard
| Quantitative standard | 1. General deficiencies: potential misstatement of total consolidated profit <3%, potential misstatement of total consolidated owner's equity <0.5%, potential misstatement of total consolidated assets <0.5%, potential misstatement of total consolidated operating income <0.5%. 2. Significant deficiencies, 3% ≤ potential misstatement of total consolidated profit <5%, 0.5% ≤ potential misstatement of total consolidated owner's equity <1%, 0.5% ≤ potential misstatement of total consolidated assets <3%, 0.5% ≤ potential misstatement of total consolidated operating income <1%. 3. Material weakness, potential misstatement of total consolidated profit ≥5%, potential misstatement of total consolidated owner's equity ≥1%, potential misstatement of total consolidated assets ≥3%, potential misstatement of total consolidated operating income ≥1%. | 1. General deficiencies: direct property loss subsequent to consolidation <0.5% of total assets of the Company; 2. Significant deficiencies: 0.5% of total assets of the Company ≤ direct property loss subsequent to consolidation <1% of total assets of the Company; 3. Material weakness: 1% of total assets of the Company ≤ direct property loss subsequent to consolidation. |
| Number of material weakness of financial reports (piece) | 0 | |
| Number of material weakness of non-financial reports (piece) | 0 | |
| Number of significant deficiencies of financial reports (piece) | 0 | |
| Number of significant deficiencies of non-financial reports (piece) | 0 | |
X. Audit or assurance report of internal controlInternal control verification report
| The comment-related content in the internal control verification report | |
| Mango Excellent Media Co., Ltd. has maintained effective internal control over financial reporting in all material respects as of December 31, 2020 in accordance with the Guidelines for the Standardized Operation of Listed Companies in Shenzhen Stock Exchange (Revised in 2020). | |
| Disclosure of the report | Disclosed |
| Full text of the report was disclosed on | April 26, 2021 |
| Disclosure index for the full text of the report | http://www.cninfo.com.cn/ |
Comment type of the report
| Comment type of the report | Unmodified opinion |
| Whether there is a material defect in the non-financial report | No |
Whether the accounting firm issues an internal control verification report with non-standard opinion
□ Yes √ No
Whether the internal control verification report issued by the accounting firm is consistent with the self-evaluation report made by theboard of directors
√ Yes □ No
Section Ⅺ Corporate Bonds
Whether the Company has any corporate bonds that are publicly issued and listed on the stock exchange, but not matured orredeemed in full on mature date as of the date of approval of the annual reportNo
Section XII Financial ReportI. AUDITOR’S REPORT
| Audit opinion | Unmodified Opinion |
| Signing date of audit report | April 22, 2021 |
| Auditor | Pan-China Certified Public Accountants LLP |
| Auditor report document number | Tian Jian Shen [2021] No. 2-227 |
| Name of certified public accountants | LI Xinkui and ZHANG Hong |
Auditor’s ReportI. Audit opinionWe have audited the financial statements of Mango Excellent Media Co., Ltd. (“MangoExcellent Media”), which comprise the consolidated and the company’s balance sheets as atDecember 31, 2020, and the consolidated and the company’s income statements, the consolidatedand the parent company’s statements of cash flow and the consolidated and the company’sstatements of changes in owners’ equity for the year then ended, and the notes to the financialstatements.In our opinion, the accompanying financial statements are prepared in all material respects inaccordance with Accounting Standards for Business Enterprises and fairly present the consolidatedand the company’s financial position as of December 31, 2020, and the consolidated and thecompany’s operating results and cash flows for the year then ended.
II. Basis for OpinionWe conducted our audit in accordance with the Auditing Standards for Certified PublicAccountants of China. Our responsibilities under those standards are further described in the“Auditor's Responsibilities for the Audit of the Financial Statements” section of our report. We areindependent of Mango Excellent Media in accordance with the Code of Ethics for Chinese CertifiedPublic Accountants, and we have fulfilled our other ethical responsibilities in accordance with theCode. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, are of most significancein our audit of the financial statements for the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, andwe do not express a separate opinion on these matters.(I) Revenue recognition
1. Descriptions
Details of relevant information are disclosed in Note III (XXII), V(II)1 and XIII to the
financial statements.The operating income of Mango Excellent Media is mainly from new media platformoperation, new media interactive entertainment content production and media retail businesses, etc.In 2020, the operating income of Mango Excellent Media amounted to RMB14,005,535,000.00, ofwhich the operating income from the segments including new media platform operation and newmedia interactive entertainment content production amounted to RMB11,827,906,500.00,accounting for 84.45% thereof.As the operating income is one of Mango Excellent Media’s KPIs, there may be an inherentrisk that the management of Mango Excellent Media (hereinafter referred to as “management”) mayrecognize the revenue inappropriately to achieve specific objectives or expectations. Meanwhile,revenue recognition also needs complex information systems and significant managementjudgement. Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
For revenue recognition, our audit procedures include, inter alia:
(1) Understand the key internal controls related to revenue recognition, evaluate the design ofthose controls, determine whether they are implemented, and test the operational effectiveness ofthe relevant internal controls;
(2) Test general information system controls and application controls related to the revenuerecognition process by virtue of the work results of the in-house information technology experts;
(3) Examine major sales contracts, understand the major provisions or conditions thereof, andevaluate whether revenue recognition methods are proper;
(4) Implement substantive analysis procedures for operating income and gross margin bymonth, product, customer, etc., to identify whether there are significant or unusual fluctuations andto find out the causes of such fluctuations;
(5) Sample contracts, licenses, final statements, receipts and sign-offs to make test of detailsaccording to different types of revenues, and pay attention to the business content of the relatedsales and their commercial reasonableness;
(6) In conjunction with accounts receivable confirmation procedures, send confirmation tomajor customers to recognize the current sale volumes on a sample basis;
(7) Conduct the cut-off test on the operating incomes recognized about the balance sheet dateto evaluate whether the operating incomes are recognized appropriately;
(8) Obtain a record of sales returns after the balance sheet date to check if there is any instancethat conditions for revenue recognition were not met at the balance sheet date; and
(9) Check whether information relating to operating income is properly presented anddisclosed in the financial statements.
(II) Impairment of accounts receivable
1. Descriptions
Details of relevant information are disclosed in Note III (X), V(I)3 and V(II)10 to the financialstatements.
As of December 31, 2020, the Mongo Excellent Media Company’s gross carrying amount ofaccounts receivable amounted to RMB3,124,103,900.00, the provision for bad debts amounted toRMB147,407,200.00 and the carrying amount amounted to RMB2,976,696,700.00.
In view of credit risk characteristics of each account receivable, the management measures itsloss provision based on the single account receivable or a combination of account receivables and
with reference to the expected credit loss amount within the entire duration. For receivables whoseexpected credit losses are measured on a single basis, the management comprehensively considersreasonable and well-founded information about past events, current conditions, and predictions offuture economic conditions, estimates the expected cash flows, and accordingly determines theprovisions for bad debts to be accrued; for receivables whose expected credit losses are measuredon a combination basis, the management divides the combination based on aging and adjusts it withreference to historical credit loss experience and based on forward-looking estimates, prepares thecomparison table of between the aging of accounts receivable and expected credit loss ratio, andaccordingly determines the provision for bad debts to be accrued.
The amount of accounts receivable is material, and the impairment of accounts receivableinvolves significant management judgment, therefore, we identified accounts receivable as a criticalaudit matter.
2. Audit response
For impairment of accounts receivable, our audit procedures include, inter alia:
(1) Understand the key internal controls related to impairment of accounts receivable, evaluatethe effectiveness of their design and implementation, determine whether they are implemented, andtest the operational effectiveness of the relevant internal controls;
(2) Review the subsequent actual write-off or reversal of accounts receivable for which aprovision for bad debts was made in prior years, and evaluate the accuracy of management’sprevious projections;
(3) Review the considerations and objective evidence related to the management’s evaluationof credit risks of accounts receivable and evaluate whether the management has adequatelyidentified the credit risk characteristics of accounts receivable;
(4) For accounts receivable for which the expected credit loss has been measured on a singlebasis, obtain, and review the management’s projections on estimated cash flows that can bereceived, evaluate the reasonableness of the key assumptions and the accuracy of the data used inthe projections, and check them with the external evidence obtained;
(5) For accounts receivable for which the expected credit loss has been measured by group,evaluate the reasonableness of the classification of groups by the management subject to credit riskcharacteristics; evaluate the reasonableness of the matching relationship between the aging ofaccounts receivable and the expected credit loss rates determined by the management based onhistorical experience on credit loss and forward-looking estimation; and test the accuracy andcompleteness of the data used by the management and the accuracy of the management’scalculation of the provisions for bad debt.
(6) Review the post-period recovery of accounts receivable and evaluate the reasonableness ofthe management's provisions for bad debts on accounts receivable; and
(7) Check whether information relating to impairment of accounts receivable is properlypresented and disclosed in the financial statements.
IV. Other Information
The management is responsible for other information. The other information comprises theinformation included in the Annual Report, but does not include the financial statements and ourauditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.If, based on the work we have performed, we conclude that there is any material misstatementof other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for theFinancial Statements
The management of Mango Excellent Media is responsible for the preparation and fairpresentation of the financial statements in accordance with Accounting Standards for BusinessEnterprises, and designing, implementing, and maintaining internal control that is necessary toenable the financial statements that are free from material misstatement, whether due to fraud orerror.
In preparing the financial statements, the management is responsible for assessing MangoExcellent Media’s ability to continue as a going concern, disclosing, as applicable, matters relatedto going concern and using the going concern basis of accounting unless the management eitherintends to liquidate Mango Excellent Media or to cease operations, or have no realistic alternativebut to do so.
Those charged with governance of Mango Excellent Media (hereinafter referred to as “thosecharged with governance”) are responsible for overseeing Mango Excellent Media’s financialreporting process.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion solely to you. Reasonable assurance is a high level of assurance, butis not a guarantee that an audit conducted in accordance with China Standards on Auditing willalways detect a material misstatement when it exists. Misstatements can arise from fraud or errorand are considered material if, individually or in the aggregate, they could reasonably be expectedto influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than that resulting from error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override ofinternal control;
(II) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose to express opinions onthe effectiveness of internal control.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.(IV) Conclude on the appropriateness of the management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on Mango Excellent Media’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required todraw attention in our auditor's report to the related disclosures in the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However, future events or conditions may cause theMango Excellent Media to cease to continue as a going concern;(V) Evaluate the overall presentation, structure, and content of the financial statements andwhether the financial statements represent the underlying transactions and events in a manner thatachieves fair presentation;(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of theentities or business activities within the Mango Excellent Media to express an opinion on thefinancial statements. We are responsible for the direction, supervision, and performance of thegroup audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and communicate with them all relationshipsand other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the financial statements for the current periodand are therefore key audit matters. We describe these matters in our audit report unless laws orregulations preclude public disclosure of the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.II. FINANCIAL STATEMENTSStatements in notes to the financial statements are dominated in RMB.
1. Consolidated balance sheet
Prepared by: Mango Excellent Media Co., Ltd.
In: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and bank balances | 5,336,319,786.70 | 5,064,224,581.46 |
| Balances with clearing agencies |
| Placements with banks and other financial institutions | ||
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivable | 95,456,357.50 | |
| Accounts receivable | 2,976,696,672.95 | 2,997,010,508.82 |
| Receivable financing | 164,410,000.00 | |
| Prepayments | 1,398,350,153.72 | 1,127,734,126.28 |
| Premiums receivable | ||
| Amounts receivable under reinsurance contracts | ||
| Reinsurer’s share of insurance contract reserves | ||
| Other receivables | 51,168,090.47 | 35,946,262.96 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 1,660,324,608.09 | 1,916,375,338.89 |
| Contract assets | 817,451,396.56 | |
| Held-for-sale assets | ||
| Non-current assets due within one year | ||
| Other current assets | 520,087,664.20 | 491,278,913.90 |
| Total current assets | 12,924,808,372.69 | 11,728,026,089.81 |
| Non-current Assets: | ||
| Loans and advances to customers | ||
| Debt investments | ||
| Other debt investments | ||
| Long-term receivables | ||
| Long-term equity investments | 22,882,969.51 | 210,436,179.18 |
| Other investments in equity instruments | ||
| Other non-current financial assets | 6,946,466.60 | |
| Investment properties | ||
| Fixed assets | 186,924,296.25 | 180,606,150.34 |
| Construction in progress | ||
| Bearer biological assets | ||
| Oil and gas assets | ||
| Right of use assets | ||
| Intangible assets | 5,894,454,399.68 | 4,851,078,019.24 |
| Development expenditure | 157,264,231.85 | 38,338,883.84 |
| Goodwill | ||
| Long-term prepaid expenses | 77,342,051.99 | 61,646,861.37 |
| Deferred income tax assets | ||
| Other non-current Assets | 2,023,481.01 | 1,127,499.30 |
| Total non-current assets | 6,340,891,430.29 | 5,350,180,059.87 |
| Total assets | 19,265,699,802.98 | 17,078,206,149.68 |
| Current liabilities: | ||
| Short-term borrowings | 39,789,110.68 | 349,816,947.83 |
| Loans from the central bank | ||
| Taking from banks and other financial institutions | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 712,292,035.75 | 325,880,463.11 |
| Accounts payable | 5,217,087,330.62 | 5,048,443,928.94 |
| Receipts in advance | 1,192,477,979.60 | |
| Contract liabilities | 1,330,475,023.10 | |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and deposits from banks and other financial institutions | ||
| Funds from securities trading agency | ||
| Funds from underwriting securities agency | ||
| Employee benefits payable | 856,712,827.84 | 589,359,251.74 |
| Taxes payable | 131,527,885.95 | 137,563,508.65 |
| Other payables | 160,651,194.91 | 202,952,467.24 |
| Including: Interest payable | ||
| Dividends payable | ||
| Fees and commissions payable | ||
| Amounts payable under reinsurance contracts | ||
| Held-for-sale liabilities | ||
| Non-current liabilities due within one years | 10,400,000.00 | |
| Other current liabilities | 138,698,825.59 | 78,695,861.52 |
| Total current liabilities | 8,587,234,234.44 | 7,935,590,408.63 |
| Non-current liabilities: | ||
| Insurance contract reserves | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | 8,305,486.15 | 14,232,872.30 |
| Deferred income | 48,938,835.69 | 308,425,484.68 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total Non-current Liabilities | 57,244,321.84 | 322,658,356.98 |
| Total liabilities | 8,644,478,556.28 | 8,258,248,765.61 |
| Owner’s equity: | ||
| Share capital | 1,780,377,511.00 | 1,780,377,511.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 4,838,937,706.35 | 4,838,937,706.35 |
| Less: Treasury shares | ||
| Other comprehensive income | -2,759.37 | |
| Special reserve |
| Surplus reserve | 87,139,560.14 | 84,782,321.71 |
| General risk reserve | ||
| Undistributed profit | 3,881,526,167.30 | 2,079,761,680.01 |
| Total owners’ equity attributable to equity holders of the parent company | 10,587,978,185.42 | 8,783,859,219.07 |
| Minority interests | 33,243,061.28 | 36,098,165.00 |
| Total owners’ equity | 10,621,221,246.70 | 8,819,957,384.07 |
| Total liabilities and owners’ Equity | 19,265,699,802.98 | 17,078,206,149.68 |
Legal representative: ZHANG Huali Chief financial officer: LIANG Deping Head of accounting department: TAO Jinyu
2. Balance sheet of the Company
In: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and bank balances | 405,729,095.82 | 359,847,797.79 |
| Held-for-trading financial assets | ||
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | ||
| Receivable financing | ||
| Prepayments | 270,000.00 | 88,060.80 |
| Other receivables | 260,068,347.20 | 260,036,746.64 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | ||
| Contract assets | ||
| Held-for-sale assets | ||
| Non-current assets due within one year | ||
| Other current assets | 3,194,254.68 | 2,275,609.21 |
| Total current assets | 669,261,697.70 | 622,248,214.44 |
| Non-current Assets: | ||
| Debt investments | ||
| Other debt investments |
| Long-term receivables | ||
| Long-term equity investments | 7,780,583,738.35 | 7,970,398,191.17 |
| Other investments in equity instruments | ||
| Other non-current financial assets | ||
| Investment properties | ||
| Fixed assets | 1,305,884.91 | 343,638.91 |
| Construction in progress | ||
| Bearer biological assets | ||
| Oil and gas assets | ||
| Right of use assets | ||
| Intangible assets | 803,907.00 | 776,485.36 |
| Development expenditure | ||
| Goodwill | ||
| Long-term prepaid expenses | 5,579,058.77 | 6,052,764.08 |
| Deferred income tax assets | ||
| Other non-current Assets | ||
| Total non-current assets | 7,788,272,589.03 | 7,977,571,079.52 |
| Total assets | 8,457,534,286.73 | 8,599,819,293.96 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Accounts payable | ||
| Receipts in advance | ||
| Contract liabilities | ||
| Employee benefits payable | 31,708,478.30 | 19,164,650.75 |
| Taxes payable | 545,679.40 | 316,522.46 |
| Other payables | 7,672,949.27 | 8,093,306.17 |
| Including: Interest payable | ||
| Dividends payable | ||
| Held-for-sale liabilities | ||
| Non-current liabilities due within |
| one years | ||
| Other current liabilities | ||
| Total current liabilities | 39,927,106.97 | 27,574,479.38 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 172,268.06 | |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total Non-current Liabilities | 172,268.06 | |
| Total liabilities | 39,927,106.97 | 27,746,747.44 |
| Owner’s equity: | ||
| Share capital | 1,780,377,511.00 | 1,780,377,511.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserve | 6,179,334,010.36 | 6,179,334,010.36 |
| Less: Treasury shares | ||
| Other comprehensive income | ||
| Special reserve | ||
| Surplus reserve | 87,139,560.14 | 84,782,321.71 |
| Undistributed profit | 370,756,098.26 | 527,578,703.45 |
| Total owners’ equity | 8,417,607,179.76 | 8,572,072,546.52 |
| Total liabilities and owners’ Equity | 8,457,534,286.73 | 8,599,819,293.96 |
3. Consolidated income statement
In: RMB
| Item | 2020 | 2019 |
| I. Total operating income | 14,005,534,955.36 | 12,500,664,232.05 |
| Including: Operating income | 14,005,534,955.36 | 12,500,664,232.05 |
| Interest income | ||
| Premiums earned | ||
| Fee and commission income | ||
| II. Total operating costs | 12,143,647,482.17 | 11,334,717,041.48 |
| Including: Operating costs | 9,230,288,644.44 | 8,284,740,949.42 |
| Interest expenses | ||
| Fee and commission expenses | ||
| Surrenders | ||
| Claims and policyholder benefits (net of mounts recoverable from reinsurers) | ||
| Charges in insurance contract reserves (net of reinsurers’ share) | ||
| Insurance policyholder dividends | ||
| Expenses for reinsurance accepted | ||
| Taxes and levies | 21,977,750.48 | 96,430,731.56 |
| Selling expenses | 2,164,415,269.87 | 2,140,684,155.45 |
| General and administrative expenses | 629,200,722.73 | 610,138,439.92 |
| Research and development expenses | 184,384,948.72 | 239,299,331.86 |
| Financial expenses | -86,619,854.07 | -36,576,566.73 |
| Including: Interest expenses | 13,532,130.10 | 15,981,713.90 |
| Interest income | 116,608,027.78 | 65,976,045.63 |
| Add: Other income | 152,751,572.29 | 58,722,830.21 |
| Investment income (Loss is indicated by “-”) | 80,792,516.40 | 6,466,901.43 |
| Including: Income from investments in associates and joint ventures | 72,125,990.33 | -5,105,446.79 |
| Income from derecognition of financial assets measured at amortized cost | ||
| Foreign exchange gains (Loss is indicated by “-”) | ||
| Net exposure hedging income (Loss is indicated by “-”) | ||
| Income from changes in fair value (Loss is indicated by “-”) | -1,370,986.18 | |
| Impairment losses of credit (Loss is indicated by “-”) | -52,586,997.38 | -51,242,827.14 |
| Impairment losses of assets (Loss is indicated by “-”) | -36,801,884.43 | -624,124.49 |
| Income from disposal of assets (Loss is indicated by “-”) | 354,684.48 | -168,797.67 |
| III. Operating profit (Loss is indicated by “-”) | 2,006,397,364.55 | 1,177,730,186.73 |
| Add: Non-operating income | 26,886,284.35 | 25,843,091.28 |
| Less: Non-operating expenses | 46,535,880.99 | 26,039,218.71 |
| IV. Total profit (Total losses are indicated by “-”) | 1,986,747,767.91 | 1,177,534,059.30 |
| Less: Income tax expenses | 7,411,218.58 | 20,031,543.84 |
| V. Net profit (Net loss is indicated by “-”) | 1,979,336,549.33 | 1,157,502,515.46 |
| (I) Categorized by the nature of continuing operation | ||
| 1. Net profit from continuing operations (Net loss is indicated by “-”) | 1,979,336,549.33 | 1,157,502,515.46 |
| 2. Net profit from discontinued operations (Net loss is indicated by “-”) | ||
| (II) Categorized by ownership | ||
| Net profit attributable to shareholders of the parent company | 1,982,159,476.82 | 1,156,285,253.73 |
| 2. Profit or loss attributable to minority interests | -2,822,927.49 | 1,217,261.73 |
| VI. Other comprehensive income, net of tax | -2,759.37 | |
| Other comprehensive income attributable to owners of the parent | -2,759.37 |
| company, net of tax | ||
| (I) Other comprehensive income that cannot be subsequently reclassified to profit or loss | ||
| 1. Changes from re-measurement of defined benefit plans | ||
| 2. Other comprehensive income that cannot be reclassified to profit or loss under the equity method | ||
| 3. Changes in fair value of other investments in equity instruments | ||
| 4. Changes in fair value of enterprises’ own credit risks | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified to profit or loss | -2,759.37 | |
| 1. Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amounts of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Reserve for cash flow hedges | ||
| 6. Translation differences of financial statements denominated in foreign currencies | -2,759.37 | |
| 7. Others | ||
| Other comprehensive income attributable to minority interests, net of tax | ||
| VII. Total comprehensive income | 1,979,333,789.96 | 1,157,502,515.46 |
| Total comprehensive income attributable to owners of the parent company | 1,982,156,717.45 | 1,156,285,253.73 |
| Total comprehensive income attributable to minority interests | -2,822,927.49 | 1,217,261.73 |
| VIII. Earnings per share | ||
| (I) Basic earnings per share | 1.11 | 0.66 |
| (II) Diluted earnings per share | 1.11 | 0.66 |
For any business combination involving enterprises under common control for the current period, the net profits of the absorbed partyprior to the combination are RMB in the current period, and were RMB in prior period.Legal representative: ZHANG Huali Chief financial officer: LIANG Deping Head of accounting department: TAO Jinyu
4. Income statement of the Company
In: RMB
| Item | 2020 | 2019 |
| I. Total operating income | 0.00 | 0.00 |
| Less: Operating costs | 0.00 | 0.00 |
| Taxes and levies | 6,923.08 | 1,211.60 |
| Selling expenses | ||
| General and administrative expenses | 72,126,384.06 | 45,738,735.45 |
| Research and development expenses | ||
| Financial expenses | -26,287,586.49 | -23,110,120.24 |
| Including: Interest expenses | ||
| Interest income | 26,296,386.01 | 23,126,974.14 |
| Add: Other income | 227,348.06 | 3,127,731.94 |
| Investment income (Loss is indicated by “-”) | 69,864,747.18 | -4,561,270.99 |
| Including: Income from investments in associates and joint ventures | 69,864,747.18 | -7,121,117.50 |
| Income from derecognition of financial assets measured at amortized cost (Loss is indicated by “-”) | ||
| Net exposure hedging income (Loss is indicated by “-”) |
| Income from changes in fair value (Loss is indicated by “-”) | ||
| Impairment losses of credit (Loss is indicated by “-”) | -1,040.99 | -101.18 |
| Impairment losses of assets (Loss is indicated by “-”) | ||
| Income from disposal of assets (Loss is indicated by “-”) | ||
| II. Operating profit (Loss is indicated by “-”) | 24,245,333.60 | -24,063,467.04 |
| Add: Non-operating income | 20,000.74 | 0.43 |
| Less: Non-operating expenses | 692,950.00 | |
| III. Total profit (Total losses are indicated by “-”) | 23,572,384.34 | -24,063,466.61 |
| Less: Income tax expenses | ||
| Ⅳ. Net profit（(Net loss is indicated by “-”) | 23,572,384.34 | -24,063,466.61 |
| (I) Net profit from continuing operation (Net loss is indicated by “-”) | 23,572,384.34 | -24,063,466.61 |
| (II) Net profit from discontinued operations (Net loss is indicated by “-”) | ||
| V. Other comprehensive income, net of tax | ||
| (I) Other comprehensive income that cannot be subsequently reclassified to profit or loss | ||
| 1. Changes from re-measurement of defined benefit plans | ||
| 2. Other comprehensive income that cannot be reclassified to profit or loss under the equity method | ||
| 3. Changes in fair value of other investments in equity instruments | ||
| 4. Changes in fair value of enterprises’ own credit risks | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified to profit or loss |
| 1. Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 2. Changes in fair value of other debt investments | ||
| 3. Amounts of financial assets reclassified into other comprehensive income | ||
| 4. Provision for credit impairment of other debt investments | ||
| 5. Reserve for cash flow hedges | ||
| 6. Translation differences of financial statements denominated in foreign currencies | ||
| 7. Others | ||
| VI. Total comprehensive income | 23,572,384.34 | -24,063,466.61 |
| VII. Earnings per share: | ||
| (I) Basic earnings per share | ||
| (II) Diluted earnings per share |
5. Consolidated statements of cash flows
In: RMB
| Item | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash receipts from the sale of goods and the rendering of services; | 13,100,389,646.19 | 10,639,452,867.62 |
| Net increase in customer deposits and deposits from banks and other financial institutions | ||
| Net increase in loans from the central bank | ||
| Net increase in taking from other financial institutions | ||
| Cash payments for claims and policyholders' benefits under direct insurance contracts |
| Net cash receipts from reinsurance business | ||
| Net cash receipts from policyholders' deposits and investment contract liabilities | ||
| Cash receipts from interest, fees and commissions | ||
| Net increase in taking from banks and other financial institutions | ||
| Net increase in financial assets sold under repurchase arrangements | ||
| Net cash received from securities trading agency | ||
| Receipts of tax refunds | 2,974,027.99 | 6,431,647.66 |
| Other cash receipts relating to operating activities | 253,669,222.21 | 371,453,333.58 |
| Sub-total of cash inflows from operating activities | 13,357,032,896.39 | 11,017,337,848.86 |
| Cash payments for goods purchased and services received | 9,520,378,278.33 | 7,014,189,213.84 |
| Net increase in loans and advances to customers | 11,344,610.37 | 311,444,470.47 |
| Net increase in balance with the central bank and due from banks and other financial institution | ||
| Cash payments for claims and policyholders’ benefits under direct insurance contracts | ||
| Net increase in placements with banks and other financial institutions | ||
| Cash payments for interest, fees and commissions | ||
| Cash payments for insurance policyholder dividends | ||
| Cash payments to and on behalf of employees | 1,280,202,698.37 | 1,257,941,352.73 |
| Payments of various types of taxes | 176,899,520.26 | 198,848,248.38 |
| Other cash payments relating to operating activities | 1,787,237,435.98 | 1,942,047,852.26 |
| Sub-total of cash outflows from operating activities | 12,776,062,543.31 | 10,724,471,137.68 |
| Net cash flow from operating activities | 580,970,353.08 | 292,866,711.18 |
| II. Cash Flows from Investing Activities: | ||
| Cash receipts from disposals and recovery of investments | 259,679,200.00 | 63,804,483.36 |
| Cash receipts from investment income | ||
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 403,685.56 | 323,367.83 |
| Net cash receipts from disposals of subsidiaries and other business entities | ||
| Other cash receipts relating to investing activities | 626,406,349.28 | 858,780,471.64 |
| Sub-total of cash inflows from investing activities | 886,489,234.84 | 922,908,322.83 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 69,959,021.89 | 155,967,045.02 |
| Cash payments to acquire investments | ||
| Net increase in pledged loans receivables | ||
| Net cash payments for acquisitions of subsidiaries and other business units; | ||
| Other cash payments relating to investing activities. | 622,500,000.00 | 657,600,000.00 |
| Sub-total of cash outflows from investing activities | 692,459,021.89 | 813,567,045.02 |
| Net cash flow from investing activities | 194,030,212.95 | 109,341,277.81 |
| III. Cash Flows from Financing Activities: | ||
| Cash receipts from capital contributions | 1,987,819,969.03 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries |
| Cash receipts from borrowings | 160,436,700.00 | 392,599,400.00 |
| Other cash receipts relating to financing activities | ||
| Sub-total of cash inflows from financing activities | 160,436,700.00 | 2,380,419,369.03 |
| Cash repayments of borrowings | 470,057,800.00 | 239,344,400.00 |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 192,215,024.91 | 15,741,592.38 |
| Including: payments for distribution of dividends or profits to minority owners of subsidiaries | ||
| Other cash payments relating to financing activities | 657,257.37 | |
| Sub-total of cash outflows from financing activities | 662,272,824.91 | 255,743,249.75 |
| Net cash flow from financing activities | -501,836,124.91 | 2,124,676,119.28 |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 223,543.73 | -395,763.36 |
| V. Net Increase in Cash and Cash Equivalents | 273,387,984.85 | 2,526,488,344.91 |
| Add: Opening balance of cash and cash equivalents | 5,041,075,499.16 | 2,514,587,154.25 |
| VI. Closing Balance of Cash and Cash Equivalents | 5,314,463,484.01 | 5,041,075,499.16 |
6. Statement of cash flows of the Company
In: RMB
| Item | 2020 | 2019 |
| I. Cash Flows from Operating Activities: | ||
| Cash receipts from the sale of goods and the rendering of services; | 27,000.00 | |
| Receipts of tax refunds | ||
| Other cash receipts relating to operating activities | 41,857,033.57 | 117,743,252.37 |
| Sub-total of cash inflows from operating activities | 41,857,033.57 | 117,770,252.37 |
| Cash payments for goods purchased and services received | ||
| Cash payments to and on behalf of employees | 33,162,880.94 | 16,608,439.68 |
| Payments of various types of taxes | 1,211.60 | |
| Other cash payments relating to operating activities | 42,247,660.59 | 290,480,238.38 |
| Sub-total of cash outflows from operating activities | 75,410,541.53 | 307,089,889.66 |
| Net cash flow from operating activities | -33,553,507.96 | -189,319,637.29 |
| II. Cash Flows from Investing Activities: | ||
| Cash receipts from disposals and recovery of investments | 259,679,200.00 | 60,000,000.00 |
| Cash receipts from investment income | ||
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | ||
| Net cash receipts from disposals of subsidiaries and other business entities | ||
| Other cash receipts relating to investing activities | 74,243,568.71 | |
| Sub-total of cash inflows from investing activities | 259,679,200.00 | 134,243,568.71 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 2,206,642.91 | 7,515,394.30 |
| Cash payments to acquire investments | 1,989,411,813.91 | |
| Net cash payments for acquisitions of subsidiaries and other business units; | ||
| Other cash payments relating to investing activities. | ||
| Sub-total of cash outflows from investing activities | 2,206,642.91 | 1,996,927,208.21 |
| Net cash flow from investing activities | 257,472,557.09 | -1,862,683,639.50 |
| III. Cash Flows from Financing |
| Activities: | ||
| Cash receipts from capital contributions | 1,987,819,969.03 | |
| Cash receipts from borrowings | ||
| Other cash receipts relating to financing activities | ||
| Sub-total of cash inflows from financing activities | 1,987,819,969.03 | |
| Cash repayments of borrowings | ||
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 178,037,751.10 | |
| Other cash payments relating to financing activities | 657,257.37 | |
| Sub-total of cash outflows from financing activities | 178,037,751.10 | 657,257.37 |
| Net cash flow from financing activities | -178,037,751.10 | 1,987,162,711.66 |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | ||
| V. Net Increase in Cash and Cash Equivalents | 45,881,298.03 | -64,840,565.13 |
| Add: Opening balance of cash and cash equivalents | 359,847,797.79 | 424,688,362.92 |
| VI. Closing Balance of Cash and Cash Equivalents | 405,729,095.82 | 359,847,797.79 |
7. Consolidated statement of changes in owners’ equity
Amount in the current period
In: RMB
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Sub-total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing | 1,780 | 4,838, | 84,782 | 2,079, | 8,783,85 | 36,098,1 | 8,819, | ||||||||
| balance of the preceding year | ,377,511.00 | 937,706.35 | ,321.71 | 761,680.01 | 9,219.07 | 65.00 | 957,384.07 | ||||||||
| Add: Changes in accounting policies | |||||||||||||||
| Corrections of prior period errors | |||||||||||||||
| Business combination involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current year | 1,780,377,511.00 | 4,838,937,706.35 | 84,782,321.71 | 2,079,761,680.01 | 8,783,859,219.07 | 36,098,165.00 | 8,819,957,384.07 | ||||||||
| III. Changes for the year (decrease is indicated by “-”) | -2,759.37 | 2,357,238.43 | 1,801,764,487.29 | 1,804,118,966.35 | -2,855,103.72 | 1,801,263,862.63 | |||||||||
| (I) Total comprehensive income | -2,759.37 | 1,982,159,476.82 | 1,982,156,717.45 | -2,822,927.49 | 1,979,333,789.96 | ||||||||||
| (II) Owners’ contributions and reduction in capital | -32,176.23 | -32,176.23 | |||||||||||||
| 1. Ordinary shares contributed by owners | |||||||||||||||
| 2. Capital |
| contribution from holders of other equity instruments | |||||||||||||||
| 3. Share-based payment recognized in owners’ equity | |||||||||||||||
| 4. Others | -32,176.23 | -32,176.23 | |||||||||||||
| (III) Profit distribution | 2,357,238.43 | -180,394,989.53 | -178,037,751.10 | -178,037,751.10 | |||||||||||
| 1. Transfer to surplus reserve | 2,357,238.43 | -2,357,238.43 | |||||||||||||
| 2. Transfer to general risk reserve | |||||||||||||||
| 3. Distributions to owners (or shareholders) | -178,037,751.10 | -178,037,751.10 | -178,037,751.10 | ||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within owners’ equity | |||||||||||||||
| 1. Capitalization of capital reserve | |||||||||||||||
| 2. Capitalization of surplus reserve | |||||||||||||||
| 3. Loss offset by surplus reserve | |||||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||||||
| 5. Retained |
| earnings carried forward from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Transfer to special reserve in the current period | |||||||||||||||
| 2. Amount utilized in the current period | |||||||||||||||
| (VI) Others | |||||||||||||||
| VI. Closing balance of the current period | 1,780,377,511.00 | 4,838,937,706.35 | -2,759.37 | 87,139,560.14 | 3,881,526,167.30 | 10,587,978,185.42 | 33,243,061.28 | 10,621,221,246.70 |
Amount in prior period
In: RMB
| Item | 2019 | ||||||||||||||
| Equity attributable to owners of the parent company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Others | Sub-total | |||||
| Preferred shares | Perpetual bonds | Others | |||||||||||||
| I. Closing balance of the preceding year | 990,023,518.00 | 3,641,091,029.73 | 84,782,321.71 | 923,476,426.28 | 5,639,373,295.72 | 34,880,903.27 | 5,674,254,198.99 | ||||||||
| Add: Changes in accounting policies | |||||||||||||||
| Corrections of prior period | |||||||||||||||
| errors | |||||||||||||||
| Business combination involving enterprises under common control | |||||||||||||||
| Others | |||||||||||||||
| II. Opening balance of the current year | 990,023,518.00 | 3,641,091,029.73 | 84,782,321.71 | 923,476,426.28 | 5,639,373,295.72 | 34,880,903.27 | 5,674,254,198.99 | ||||||||
| III. Changes for the year (Decrease is indicated by “-”) | 790,353,993.00 | 1,197,846,676.62 | 1,156,285,253.73 | 3,144,485,923.35 | 1,217,261.73 | 3,145,703,185.08 | |||||||||
| (I) Total comprehensive income | 1,156,285,253.73 | 1,156,285,253.73 | 1,217,261.73 | 1,157,502,515.46 | |||||||||||
| (II) Owners’ contributions and reduction in capital | 57,257,371.00 | 1,930,943,298.62 | 1,988,200,669.62 | 1,988,200,669.62 | |||||||||||
| 1. Ordinary shares contributed by owners | 57,257,371.00 | 1,925,443,298.62 | 1,982,700,669.62 | 1,982,700,669.62 | |||||||||||
| 2. Capital contribution from holders of other equity instruments | |||||||||||||||
| 3. Share-based payment recognized in owners’ equity | |||||||||||||||
| 4. Others | 5,500,000.00 | 5,500,000.00 | 5,500,000.00 | ||||||||||||
| (III) Profit |
| distribution | |||||||||||||||
| 1. Transfer to surplus reserve | |||||||||||||||
| 2. Transfer to general risk reserve | |||||||||||||||
| 3. Distributions to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within owners’ equity | 733,096,622.00 | -733,096,622.00 | |||||||||||||
| 1. Capitalization of capital reserve | 733,096,622.00 | -733,096,622.00 | |||||||||||||
| 2. Capitalization of surplus reserve | |||||||||||||||
| 3. Loss offset by surplus reserve | |||||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | |||||||||||||||
| 5. Retained earnings carried forward from other comprehensive income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | |||||||||||||||
| 1. Transfer to |
| special reserve in the current period | |||||||||||||||
| 2. Amount utilized in the current period | |||||||||||||||
| (VI) Others | |||||||||||||||
| VI. Closing balance of the current period | 1,780,377,511.00 | 4,838,937,706.35 | 84,782,321.71 | 2,079,761,680.01 | 8,783,859,219.07 | 36,098,165.00 | 8,819,957,384.07 |
8. Statement of changes in owners’ equity of the Company
Amount in the current period
In: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Closing balance of the preceding year | 1,780,377,511.00 | 6,179,334,010.36 | 84,782,321.71 | 527,578,703.45 | 8,572,072,546.52 | |||||||
| Add: Changes in accounting policies | ||||||||||||
| Corrections of prior period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the current year | 1,780,377,511.00 | 6,179,334,010.36 | 84,782,321.71 | 527,578,703.45 | 8,572,072,546.52 | |||||||
| III. Changes for the year | 2,357,238.43 | -156,822,605.1 | -154,465,366.76 | |||||||||
| (Decrease is indicated by “-”) | 9 | |||||||||||
| (I) Total comprehensive income | 23,572,384.34 | 23,572,384.34 | ||||||||||
| (II) Owners’ contributions and reduction in capital | ||||||||||||
| 1. Ordinary shares contributed by owners | ||||||||||||
| 2. Capital contribution from holders of other equity instruments | ||||||||||||
| 3. Share-based payment recognized in owners’ equity | ||||||||||||
| 4. Others | ||||||||||||
| (III) Profit distribution | 2,357,238.43 | -180,394,989.53 | -178,037,751.10 | |||||||||
| 1. Transfer to surplus reserve | 2,357,238.43 | -2,357,238.43 | 2,357,238.43 | |||||||||
| 2. Distributions to owners (or shareholders) | -178,037,751.10 | -178,037,751.10 | ||||||||||
| 3. Others | ||||||||||||
| (IV) Transfers within owners’ equity | ||||||||||||
| 1. Capitalization of capital reserve | ||||||||||||
| 2. Capitalization of surplus reserve |
| 3. Loss offset by surplus reserve | ||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | ||||||||||||
| 5. Retained earnings carried forward from other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Transfer to special reserve in the current period | ||||||||||||
| 2. Amount utilized in the current period | ||||||||||||
| (VI) Others | ||||||||||||
| VI. Closing balance of the current period | 1,780,377,511.00 | 6,179,334,010.36 | 87,139,560.14 | 370,756,098.26 | 8,417,607,179.76 |
Amount in prior period
In: RMB
| Item | 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Others | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Others | ||||||||||
| I. Closing balance of the preceding year | 990,023,518.00 | 4,981,487,333.74 | 84,782,321.71 | 551,642,170.06 | 6,607,935,343.51 | |||||||
| Add: Changes in accounting policies | ||||||||||||
| Corrections of prior period errors | ||||||||||||
| Others | ||||||||||||
| II. Opening balance of the current year | 990,023,518.00 | 4,981,487,333.74 | 84,782,321.71 | 551,642,170.06 | 6,607,935,343.51 | |||||||
| III. Changes for the year (Decrease is indicated by “-”) | 790,353,993.00 | 1,197,846,676.62 | -24,063,466.61 | 1,964,137,203.01 | ||||||||
| (I) Total comprehensive income | -24,063,466.61 | -24,063,466.61 | ||||||||||
| (II) Owners’ contributions and reduction in capital | 57,257,371.00 | 1,930,943,298.62 | 1,988,200,669.62 | |||||||||
| 1. Ordinary shares contributed by owners | 57,257,371.00 | 1,925,443,298.62 | 1,982,700,669.62 | |||||||||
| 2. Capital contribution from holders of other equity instruments | ||||||||||||
| 3. Share-based payment recognized in owners’ equity | ||||||||||||
| 4. Others | 5,500,000.00 | 5,500,000.00 | ||||||||||
| (III) Profit |
| distribution | ||||||||||||
| 1. Transfer to surplus reserve | ||||||||||||
| 2. Distributions to owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (IV) Transfers within owners’ equity | 733,096,622.00 | -733,096,622.00 | ||||||||||
| 1. Capitalization of capital reserve | 733,096,622.00 | -733,096,622.00 | ||||||||||
| 2. Capitalization of surplus reserve | ||||||||||||
| 3. Loss offset by surplus reserve | ||||||||||||
| 4. Retained earnings carried forward from changes in defined benefit plans | ||||||||||||
| 5. Retained earnings carried forward from other comprehensive income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | ||||||||||||
| 1. Transfer to special reserve in the current period |
| 2. Amount utilized in the current period | ||||||||||||
| (VI) Others | ||||||||||||
| VI. Closing balance of the current period | 1,780,377,511.00 | 6,179,334,010.36 | 84,782,321.71 | 527,578,703.45 | 8,572,072,546.52 |
III. BASIC INFORMATIONMango Excellent Media Co., Ltd. (hereinafter referred to as the “Company”), formerly known as HappigoInc., was established on the basis of the overall change of Happigo Co., Ltd. It completed the registration with theAdministration for Industry and Commerce of Changsha City, Hunan Province on December 28, 2005, with theheadquarter located in Changsha City, Hunan Province. In July 2018, the Company changed its name from“Happigo Inc.” to “Mango Excellent Media Co., Ltd”. Currently, the Company holds a business license withunified social credit code numbered 91430100782875193K, with registered capital amounting toRMB1,780,377,511.00 and a total of 1,780,377,511 shares (with the par value of RMB 1 per share) comprisingrestricted outstanding A-share of 849,020,900 shares and unrestricted A-share of 931,356,700 shares as ofDecember 31, 2020. The Company’s shares were listed for trading on the Shenzhen Stock Exchange on January21, 2015.The Company is an entity in the internet new media industry. Its principal operating activities can be dividedinto three parts, namely new media platform operation, new media interactive entertainment content productionand media retail business.These financial statements were approved by the 36
thmeeting of the third board of directors of the Companyon April 22, 2021 for issuance.
27 companies including Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. (hereinafterreferred to as “Happy Sunshine Company”), Shanghai Mangofun Technology Co., Ltd. (hereinafter referred to as“Mangofun”), Shanghai EE-Media Co., Ltd. (hereinafter referred to as “EE-Media”), Mango Studios Co., Ltd.,(hereinafter referred to as “Mango Studios”), Hunan Mango Entertainment Co., Ltd. ( hereinafter referred to as“Mango Entertainment”), Happigo Co., Ltd. and Hunan Happy Money Microfinance Co., Ltd. were included inthe scope of the consolidated financial statements for the current period. For details, please see Note VIII Changesin Scope of Consolidation and Note IX Interests in Other Entities.
IV. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Company’s financial statements are prepared on a going-concern basis.
2. Going-concerning
The Company has detected no events or circumstances that may cast significant doubt upon its ability to continueas a going concern within 12 months from the reporting period.
V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
Reminders on specific accounting policies and accounting estimates:
Notice: The Company has formulated the specific accounting policies and made the specific accounting estimateswith respect to the impairment of financial instruments, depreciation of fixed assets, amortization of intangibleassets, recognition of revenues and other transactions and events according to the actual production and operationcharacteristics of the Company.
1. Statement of compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company conform to the requirements of the Accounting Standardsfor Business Enterprises and truly and completely reflect the Company’s financial position, operating results, cashflows and other related information.
2. Accounting period
The Company’s accounting year is from January 1 to December 31 of each calendar year.
3. Operating cycle
The Company has a relatively short operating cycle, and determines the liquidity of assets and liabilities onthe basis of 12 months.
4. Functional currency
The Company and its domestic subsidiaries adopt RMB as its functional currency, while Mgtv.com (HongKong) Media Company Limited engages in overseas operations and accordingly selects the US dollar, thecurrency used in the main economic environment in which it operates, as its functional currency.
5. Accounting treatment of business combinations involving enterprises under common control andbusiness combinations not involving enterprises under common control
1. Accounting treatment of business combinations involving entities under common control
Assets and liabilities that are obtained by the Company in a business combination shall be measured at theircarrying amounts in the consolidated financial statements of the ultimate controller at the combination date asrecorded by the acquiree. The difference between the carrying amount of the owners’ equity of the acquiree asstated in the consolidated financial statements of the ultimate controller and the carrying amount of the totalconsideration paid or total par value of the shares issued in connection with the combination is treated as anadjustment to the capital reserve. In case the capital reserve is not sufficient to absorb the difference, theremaining balance is adjusted against the retained earnings.
2. Accounting treatment of business combinations not involving entities under common control
Where the cost of the combination exceeds the Company’s share of the fair value of the acquiree’sidentifiable net assets, the difference is recognized as goodwill at the date of acquisition. Where the cost ofcombination is lower than the Company’s share of the fair value of the acquiree’s identifiable net assets, the
Company reviews the measurement of the fair value of each of the identifiable assets, liabilities and contingentliabilities acquired from the acquiree and the cost of combination, and if the cost of combination as reviewed isstill lower than the Company’s share of the fair value of the acquiree’s identifiable net assets, the difference isrecognized in profit or loss for the current period.
6. Method of preparation of financial statements
The parent company includes all of its controlled subsidiaries in its consolidated financial statements. Theconsolidated financial statements are prepared by the parent company in accordance with the AccountingStandards for Business Enterprises No. 33——Consolidated Financial Statements, on the basis of the respectivefinancial statements of the parent company and its subsidiaries, by reference to other relevant data.
7. Classification of joint arrangements and accounting treatment of joint operations
1. Joint arrangements are classified into joint operations and joint ventures.
2. When the Company is a party to a joint operation, the Company recognizes the following items relating toits interest in the joint operation:
(1) the assets individually held by the Company, and the Company’s share of the assets held jointly;
(2) the liabilities incurred individually by the Company, and the Company’s share of the liabilities incurredjointly;
(3) the Company’s revenue from the sale of its share of output of the joint operation;
(4) the Company’s share of revenue from the sale of assets by the joint operation; and
(5) the expenses incurred individually by the Company, and the Company’s share of the expenses incurredjointly.
8. Recognition of cash and cash equivalents
For the purpose of the statement of cash flows, cash comprises cash on hand and demand deposits, and cashequivalents comprise short-term, highly liquid investments that are readily convertible into known amounts ofcash and which are subject to an insignificant risk of changes in value.
9. Foreign currency transactions and translation of foreign currency financial statements
1. Translation of foreign currency transactions
Upon initial recognition, foreign currency transactions are translated into RMB using the exchange ratesprevailing at the transaction dates. At the balance sheet date, monetary items denominated in foreign currenciesare translated into RMB using the spot exchange rates at the balance sheet date. Exchange differences arising fromsuch translations are recognized in profit or loss for the current period, except for those attributable to foreigncurrency borrowings that have been taken out specifically for the acquisition or construction of qualifying assetsand accrued interest. Non-monetary items denominated in foreign currencies that are measured at historical costare translated using the foreign exchange rates ruling at the transaction dates, without adjusting the amounts inRMB. Non-monetary items denominated in foreign currencies that are measured at fair value are translated usingthe foreign exchange rates prevailing at the dates the fair value was determined, and exchange differences arisingfrom such translations are recognized in profit or loss for the current period or other comprehensive income.
2. Translation of foreign currency financial statements
The asset and liability items in the balance sheet are translated at the spot exchange rates at the balance sheetdate. The owners’ equity items other than “retained profits” are translated at the spot exchange rates at thetransaction dates. The income and expense items in the income statements are translated at the spot exchange ratesat the transaction dates. Exchange differences arising from such translations are recognized in othercomprehensive income.
10. Financial instruments
1. Classification of financial assets and financial liabilities
Upon initial recognition, financial assets are classified into: (1) financial assets at amortized cost; (2)financial assets at fair value through other comprehensive income; and (3) financial assets at fair value throughprofit or loss.
Upon initial recognition, financial liabilities are classified into: (1) financial liabilities at fair value throughprofit or loss; (2) financial liabilities arising as a result of the transfer of financial assets not meeting the criteriafor derecognition or continuing involvement in the financial assets transferred; (3) financial guarantee contractsnot falling under items (1) and (2), and loan commitments not falling under item (1) and below market interestrate; and (4) financial liabilities at amortized cost.
2. Recognition, measurement and derecognition of financial assets and financial liabilities
(1) Recognition and initial measurement of financial assets and financial liabilities
When the Company becomes a party to a financial instrument contract, a financial asset or liability isrecognized. Financial assets and liabilities are initially measured at fair value. Transaction costs relating tofinancial assets or liabilities at fair value through profit or loss are directly recognized in profit or loss for thecurrent period. Transaction costs relating to other kinds of financial assets or liabilities are included in theirinitially recognized amount. However, where the accounts that do not contain any significant financingcomponent or are recognized by the Company without taking into consideration the significant financingcomponents under the contracts with a term of less than one year upon initial recognition are initially measured attransaction price defined in the Accounting Standard for Business Enterprises No. 14 —Revenue.
(2) Subsequent measurement of financial assets
1) Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured at amortized cost using the effective interestmethod. Gains or losses on financial assets at amortized cost that do not belong to any hedging relationship arerecognized in profit or loss for the current period upon derecognition, reclassification, amortization using theeffective interest method or recognition of impairment.
2) Investments in debt instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are subsequentlymeasured at fair value. Interest, impairment losses or gains and exchange gains or losses calculated using theeffective interest method are recognized in profit or loss for the current period, and other gains or losses arerecognized in other comprehensive income. On derecognition, the cumulative gain or loss previously included inother comprehensive income is removed out from other comprehensive income and included in profit or loss forthe current period.
3) Investments in equity instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are subsequentlymeasured at fair value. Dividends received (other than those received as recovery of investment cost) arerecognized in profit or loss for the current period, and other gains or losses are recognized in other comprehensive
income. On derecognition, the cumulative gain or loss previously included in other comprehensive income isremoved out from other comprehensive income and included in retained earnings.
4) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are subsequently measured at fair value. Gains or lossesthereon, including interest and dividend income, are recognized in profit or loss for the current period, except thefinancial assets belonging to any hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading (includingderivatives classified as financial liabilities), and financial liabilities directly designated as at fair value throughprofit or loss. Such financial liabilities are subsequently measured at fair value. Changes in the fair value offinancial liabilities designated as at fair value through profit or loss arising out of changes in the Company’s creditrisk are recognized in other comprehensive income, unless such treatment will result in or increase any accountingmismatch in profit or loss. Other gains or losses on such financial liabilities, including interest expenses andchanges in fair value not arising out of changes in the Company’s credit risk, are recognized in profit or loss forthe current period, except the financial liabilities belonging to any hedging relationship. Upon derecognition, theaggregate gains or losses previously recognized in other comprehensive income are transferred to retainedearnings.
2) Financial liabilities arising as a result of the transfer of financial assets not meeting the criteria forderecognition or continuing involvement in the financial assets transferred
Such financial liabilities are measured in accordance with the Accounting Standards for Business EnterprisesNo. 23——Transfer of Financial Assets.
3) Financial guarantee contracts not falling under items 1) and 2) above, and loan commitments not fallingunder item 1) above and below market interest rate
Such financial liabilities are subsequently measured at the higher of ① provision for impairment lossesdetermined according to the policy for impairment of financial instruments; and ② balance of the initiallyrecognized amount after deduction of the accumulated amortization determined in accordance with AccountingStandard for Business Enterprises No. 14 —Revenue.
4) Financial liabilities at amortized cost
Such financial liabilities are measured at amortized cost using the effective interest method. Gains or losseson financial liabilities at amortized cost that do not belong to any hedging relationship are recognized in profit orloss for the current period upon derecognition or amortization using the effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
① the contractual right to receive cash flows from the financial assets has expired; or
② the financial assets have been transferred and such transfer meets the criteria for derecognition of financialassets as set forth in the Accounting Standards for Business Enterprises No. 23 -- Transfer of Financial Assets.
2) A financial liability (or part thereof) is derecognized when all or part of the outstanding obligationsthereon have been discharged.
3. Determination and measurement of financial assets transferred
When a financial asset of the Company is transferred, if substantially all the risks and rewards incidental tothe ownership of the financial asset have been transferred, the financial asset is derecognized, and the rights andobligations incurred or retained in such transfer are separately recognized as assets or liabilities (as the case maybe). If the Company retains substantially all the risks and rewards of ownership of a financial asset, the Company
shall not derecognize the financial asset. If the Company neither transferred nor retained a substantial portion ofall risks and rewards incidental to the ownership of the financial asset, then: (1) if the Company does not retaincontrol over the financial asset, the financial asset is derecognized, and the rights and obligations incurred orretained in such transfer are separately recognized as assets or liabilities (as the case may be); and (2) if theCompany retains control over the financial asset, the financial asset continues to be recognized to the extent of theCompany’s continuing involvement in the financial asset transferred, and a corresponding liability is recognized.
If an entire transfer of a financial asset meets the criteria for derecognition, the difference between (1) thecarrying amount of the financial asset transferred at the date of derecognition; and (2) the sum of the considerationreceived from the transfer and the portion of the cumulative amount of changes in fair value directly recorded asother comprehensive income originally that corresponds to the part derecognized (where the financial assettransferred is an investment in debt instruments at fair value through other comprehensive income) is recognizedin profit or loss for the current period. If part of a financial asset is transferred and the part transferred entirelymeets the criteria for derecognition, the total carrying amount of the financial asset immediately prior to thetransfer is allocated between the part derecognized and the part not derecognized in proportion to their relative fairvalue at the date of transfer, and the difference between (1) the carrying amount of the part derecognized and (2)the sum of the consideration received from the transfer of the part derecognized and the portion of the cumulativeamount of changes in fair value directly recorded as other comprehensive income originally that corresponds tothe part derecognized (where the financial asset transferred is an investment in debt instruments at fair valuethrough other comprehensive income) is recognized in profit or loss for the current period.
4. Determination of fair value of financial assets and financial liabilities
The Company adopts the valuation techniques applicable to the current situations and with sufficient dataavailable and support of other information to determine the fair value of financial assets and financial liabilities.The Company classifies the inputs used by the valuation techniques in the following levels and uses them in turn:
(1) Level 1 inputs: quoted market price (unadjusted) in an active market for an identical asset or liabilityavailable at the date of measurement;
(2) Level 2 inputs: inputs other than inputs included within Level 1 that are observable directly or indirectly.This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical orsimilar assets or liabilities in inactive markets, observable inputs other than quoted prices (such as interest rate andyield curves observable during regular intervals of quotation), and inputs validated by the market;
(3) Level 3 inputs: inputs that are unobservable. This category includes interest rate or stock volatility thatcannot be directly observed or validated by observable market data, future cash flows from retirement obligationincurred in business combinations, and financial forecasts made using own data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
The Company determines the impairment and assesses provision for impairment losses of financial assets atamortized cost, investments in debt instruments at fair value through other comprehensive income, leasereceivable, loan commitments other than financial liabilities designated at fair value through profit or loss, andfinancial guarantee contracts other than financial liabilities designated at fair value through profit or loss andfinancial liabilities arising as a result of the transfer of financial assets not meeting the criteria for derecognition orcontinuing involvement in the financial assets transferred, on the basis of expected credit losses.
Expected credit loss is the weighted average of credit losses on financial instruments taking into account thepossibility of default. Credit loss is the present value of the difference between all contractual cash flowsreceivable under the contract and estimated future cash flows discounted at the original effective interest rate, i.e.,the present value of all cash shortage, wherein the Company’s purchased or originated financial assets that have
become credit impaired are discounted at their credit-adjusted effective interest rate.With respect to purchased or originated financial assets that have become credit impaired, at the balancesheet date, the Company recognizes a loss allowance equal to the cumulative amount of changes in lifetimeexpected credit losses since initial recognition.With respect to accounts receivable and contract assets that arise from the transactions regulated under theAccounting Standard for Business Enterprises No. 14 —Revenue and do not contain any significant financingcomponent or are recognized by the Company without taking into consideration the significant financingcomponents under the contracts with a term of less than one year, the Company uses the simple measurementmethod and recognizes a loss allowance equal to the lifetime expected credit losses.
With respect to financial assets not using the measurement methods stated above, at each balance sheet date,the Company assesses whether the credit risk has increased significantly since initial recognition, and recognizes aloss allowance equal to the lifetime expected credit losses if the credit risk has increased significantly since initialrecognition, or to the expected credit losses within the next 12 months if the credit risk has not increasedsignificantly since initial recognition.The Company uses reasonable and supportable information, including forward-looking information, andcompares the possibility of default at the balance sheet date with the possibility of default upon initial recognition,to determine whether the credit risk of the financial instruments has increased significantly since initialrecognition.
At the balance sheet date, if the Company determines that a financial instrument has low credit risk, theCompany assumes that its credit risk has not increased significantly since initial recognition.
The Company assesses expected credit risk and measures expected credit losses of financial instrumentsindividually or collectively. When assessing the financial instruments collectively, the Company includes thefinancial instruments in different groups according to their common risk characteristics.
At each balance sheet date, the Company re-assesses the expected credit losses, with the amount of increasein or reversal of loss allowance recognized in profit or loss for the current period as impairment losses or gains.With respect to a financial asset at amortized cost, its carrying amount recorded in the balance sheet is written offagainst the loss allowance. With respect to an investment in debt instruments at fair value through othercomprehensive income, the Company recognizes the loss allowance in other comprehensive income, withoutreducing its carrying amount.
(2) Financial instruments for which expected credit risk is assessed and expected credit losses are measuredcollectively
| Description | Basis for grouping | Method for measuring expected credit losses |
| Other receivables - group of receivables from affiliates controlled by the same actual controller | Nature of receivables | Calculate the expected credit losses according to the default risk exposure and rate of expected credit loss within the next 12 months or over the life by reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions. |
| Other receivables - group of deposit and security receivable | ||
| Other receivables - grouping by age | Aging |
(3) Accounts receivable and contract assets for which expected credit losses are measured collectively
1) Specific grouping and method for measuring expected credit losses
| Description | Basis for grouping | Method for measuring expected credit losses |
| Notes receivable - banker’s acceptance | Type of bills | Calculate the expected credit losses |
| bills | according to the default risk exposure and rate of lifetime expected credit loss by reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions. | |
| Notes receivable - commercial acceptance bills receivable | ||
| Accounts receivables - group of receivables from affiliates controlled by the same actual controller | Group of receivables from affiliates controlled by the same actual controller | |
| Accounts receivable - grouping by age | Aging | Prepare a comparison table of the age of accounts receivable and rate of lifetime expected credit loss, and calculate the expected credit losses by reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions. |
| Other current assets - loans and advances | Loans and advances | Calculate the expected credit losses according to the default risk exposure and rate of lifetime expected credit loss by reference to historic credit loss experience, and taking into account the current situations and prediction of future economic conditions. |
| Contract assets - Group of operator business | Operator business | Calculate the expected losses according to the default risk exposure and rate of lifetime expected loss by reference to historic loss experience, and taking into account the current situations and prediction of future economic conditions. |
2) Accounts receivable - comparison table of the age of accounts receivable and rate of lifetime expectedcredit loss
| Aging | Accounts receivable Rate of expected credit loss (%) |
| Group I: New media platform operation (Happy Sunshine) | |
| Within 1 year (inclusive, same below) | 5.00 |
| More than 1 year but not exceeding 2 years | 10.00 |
| More than 2 years but not exceeding 3 years | 30.00 |
| More than 3 years but not exceeding 4 years | 50.00 |
| More than 4 years but not exceeding 5 years | 100.00 |
| More than 5 years | 100.00 |
| Group II: New media interactive entertainment production and operation, medial retails and others (companies other than Happy Sunshine) |
| Within 1 year (inclusive, same below) | 1.00 |
| More than 1 year but not exceeding 2 years | 5.00 |
| More than 2 years but not exceeding 3 years | 10.00 |
| More than 3 years but not exceeding 4 years | 30.00 |
| More than 4 years but not exceeding 5 years | 50.00 |
| More than 5 years | 100.00 |
6. Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not offset.However, a financial asset and a financial liability shall be offset, and the net amount presented in the balancesheet when both of the following conditions are satisfied: (1) the Company has a legal right to set off therecognized amounts and the legal right is currently enforceable; and (2) the Company intends either to settle on anet basis, or to realize the financial asset and settle the financial liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the Company do notoffset the transferred financial asset and the associated liability.
11. Inventories
The Company shall comply with the disclosure requirements set forth in ChiNext Guide on Industrial Information Disclosure No. 6 --Internet Video Business Conducted by Listed Companies.
1. Classification of inventories
Inventories include finished goods or merchandise held by the Company for sale in the ordinary course ofbusiness, or work in progress in the process of production for such sale, or materials or supplies to be consumed inthe production process or in the rendering of services.
2. Pricing methods of inventories transferred out
When transferring out inventories, the Company determines the actual cost of automobile, film and televisiondrama and consignment goods using the specific-identification method and of the remaining goods using theweighted average method.
3. Determination basis of net realizable value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value, and theprovision for decline in value of inventories is determined on an item-by-item basis. For inventories available forsales, in the ordinary production and operation process, their realizable net value is determined at the estimatedselling price of these inventories less the estimated costs necessary to make the sale and relevant taxes; for theinventories that need to be processed, in the ordinary production and operation process, their realizable net valueis determined at the estimated selling price of finished products less the estimated costs of completion and theestimated costs necessary to make the sale and relevant taxes. At the balance sheet date, where a part of aninventory is subject to the contract price agreement and other parts of the same inventory has no such agreement,their realizable net value is determined separately, and by comparing them with their corresponding cost, theamount made for or reversal of the provision for decline in value of inventories is determined separately.
4. Inventory systems for inventories
A perpetual inventory system is adopted, among which the Company uses verification of copyright and otherright documents as the inventory system for file and television dramas.
5. Amortization of low-value consumables and packing materials
(1) Low-value consumables
The low-value consumables are amortized using immediate write-off method.
(2) Packing materials
The packing materials are amortized using immediate write-off method.
12. Contract assets
The Company presents the contract assets or liabilities in the balance sheet based on the relationship between performanceobligations and customer payments. The Company lists the contract assets and liabilities under the same contract as net amount afteroffset.The Company presents its owned right to unconditionally (that is, only depending on the passage of time) receive considerationfrom customers as the accounts receivable, and the right to receive the consideration for which the goods that have been transferredto customers (that is, depending on factors other than the passage of time) as the contract assets.
13. Contract costs
Assets related to contract costs include contract acquisition costs and contract performance costs.
If the incremental cost incurred by the Company to obtain a contract is expected to be recovered, it isrecognized as an asset as the cost of obtaining a contract. If the amortization period of the cost of obtaining acontract does not exceed one year, such cost is directly included in the profit or loss for the current period.
The cost incurred by the Company to perform a contract is not governed by the standards on inventories,fixed assets or intangible assets, and if meeting the following criteria, is recognized as an asset as the contractperformance cost:
1. such cost is directly related to an existing or expected contract, including expenses for direct labor, directmaterials and manufacturing (or similar expenses), costs to be clearly borne by the customer and other costsincurred only due to the contract;
2. Such cost increases the Company’s future resources for fulfilling its performance obligations; and
3. Such cost is expected to be recovered.
The Company amortizes the asset related to the contract cost on the same basis as the recognition of therevenue of the goods or services related to the asset, and includes it in the profit or cost for the current period.
If the carrying amount of the asset related to the contract cost is higher than the remaining considerationexpected to be obtained due to the transfer of the goods or services related to the asset less the estimated cost, thenthe Company makes a provision for impairment of the excess and recognizes it as an impairment loss for the asset.If the impairment factors for prior periods have changed afterwards so that the remaining consideration expectedto be obtained due to the transfer of the goods or services related to the asset less the estimated cost is higher thanthe carrying amount of the asset, then the Company reverses a provisions for impairment originally made andinclude it in the profit or loss for the current period, provided that the carrying amount after reverse shall notexceed the carrying amount the asset would have reached on the date of reversal had the provision for impairmentbeen not made.
14. Long-term equity investments
1. Judgment criteria of joint control and significant influence
Joint control is the agreed sharing of control over an arrangement, and the relevant activities of sucharrangement must be decided upon the unanimous consent of the parties sharing control. Significant influence isthe power of the investing enterprise to participate in the financial and operating policy decisions of an investee,but is not control or joint control with other parties over the establishment of those policies.
2. Determination of investment cost
(1) In case of an equity investment acquired through a business combination involving entities under
common control, if the acquirer pays consideration for the business combination by cash, transfer ofnon-monetary assets, assumption of liabilities or issuance of equity securities, the initial investment cost of thelong-term equity investment is the Company’s share of the carrying amount of the owners’ equity of the acquireein the consolidated financial statements of the ultimate controller at the date of combination. The differencebetween the initial investment cost of the long-term equity investment and the carrying amount of theconsideration paid for the combination or the total par value of the shares issued (as applicable) is treated as anadjustment to the capital reserve. In case the capital reserve is not sufficient to absorb the difference, theremaining balance is adjusted against the retained earnings.In case of a long-term equity investment acquired through a business combination involving entities undercommon control and through multiple transactions by steps, the Company judges whether they constitute a“package deal” or not. If they belong to a “package deal”, the Company accounts for all transactions as onetransaction to acquire control. If such transactions do not constitute a “package deal”, the initial investment cost isthe Company’s post-combination share of the carrying amount of the owners’ equity of the acquiree in theconsolidated financial statements of the ultimate controller at the date of combination; The difference between theinitial investment cost of the long-term equity investment at the date of combination and the sum of the carryingamount of long-term equity investment before the combination and the carrying amount of the consideration paidfor acquisition of the additional shares at the date of combination is adjusted against the capital reserve. In casethe capital reserve is not sufficient to absorb the difference, the remaining balance is adjusted against the retainedearnings.
(2) In case of an equity investment acquired through a business combination not involving enterprises undercommon control, the initial investment cost is the fair value of the carrying amount of the consideration paid forthe combination at the date of acquisition.With respect to a long-term equity investment acquired through a business combination not involvingenterprises under common control that is achieved through multiple transactions by steps, the accountingtreatment thereof in the separate financial statements is different from that in the consolidated financial statementsas stated below:
1) In the separate financial statements, the initial investment cost for which the Company changes to the costmethod is the sum of the carrying amount of the long-term equity investment originally held and the newinvestment cost.
2) In the consolidated financial statements, the Company judges whether the transactions constitute a“package deal” or not. If they belong to a “package deal”, the Company accounts for all transactions as onetransaction to acquire control. If such transactions do not constitute a “package deal”, the Company re-measuresthe fair value of the equity held in the acquiree prior to the date of acquisition, and records the difference betweenthe fair value and the carrying amount as investment income for the current period; if the equity held in theacquiree prior to the date of acquisition involves other comprehensive income under equity method, such othercomprehensive income is transferred to the income of the period in which the date of acquisition falls, except forother comprehensive income arising from re-measurement by the investee of changes in net liabilities or net assetsof defined benefit plans.
(3) In case of an equity investment not acquired through business combination, the initial investment cost isthe purchase price actually paid if it is acquired by cash, or the fair value of the equity securities issued if it isacquired through issuance of equity securities, or is determined in accordance with the Accounting Standards forBusiness Enterprises No. 12——Debt Restructuring if it is acquired through debt restructuring, or in accordancewith the Accounting Standards for Business Enterprises No. 7——Exchange of Non-monetary Assets if it isacquired through exchange of non-monetary assets.
3. Subsequent measurement and recognition of profit of loss
Long-term equity investments in investees are measured using the cost method. Long-term equityinvestments in associates and joint ventures are measured using the equity method.
4. Disposal of investment in a subsidiary through multiple transactions by steps until loss of control over thesubsidiary
(1) Separate financial statements
The difference between the carrying amount of the equity disposed of and the proceeds of disposal actuallyreceived is recognized in profit or loss for the current period. If the remaining equity empowers the Company toexercise significant influence or joint control over the investees, the remaining equity is accounted for using theequity method; if the remaining equity does not empower the Company to exercise control, joint control orsignificant influence over the investees, the remaining equity is accounted for in accordance with the AccountingStandards for Business Enterprises No. 22——Recognition and Measurement of Financial Instruments.
(2) Consolidated financial statements
1) Disposal of investment in a subsidiary through multiple transactions by steps until loss of control over thesubsidiary which do not constitute a “package deal”
Prior to the loss of control, the difference between the proceeds from disposal and the share owned by theCompany in the net assets of the subsidiary in relation to the long-term equity investment disposed of that iscalculated continuously from the date of acquisition or combination is adjusted against the capital reserve (capitalpremium). In case the capital premium is not sufficient to absorb the difference, the remaining balance is adjustedagainst the retained earnings.
When losing control over an original subsidiary, the remaining equity is re-measured at its fair value at thedate of loss of control. The sum of the consideration received from the disposal of the equity and the fair value ofthe remaining equity, net of the share owned by the Company in the net assets of the subsidiary in relation to thelong-term equity investment disposed of as calculated continuously from the date of acquisition or combinationaccording to the previous shareholding ratio, is recognized in the investment income for the period in which thecontrol is lost, and the goodwill is reduced accordingly. Other comprehensive income relating to the equityinvestment in the original subsidiary should be transferred to the investment income for the period in which thecontrol is lost.
2) Disposal of investment in a subsidiary through multiple transactions by steps until loss of control over thesubsidiary which constitute a “package deal”
The Company accounts for such transactions as one transaction to dispose of and lose its control over thesubsidiary, however, the difference between the proceeds from each disposal before loss of control and the shareowned by the Company in the net assets of the subsidiary in relation to the investment disposed of is recognized inother comprehensive income in the consolidated financial statements, which is wholly transferred to the profit orloss in the period in which the control is lost.
15. Fixed assets
(1) Criteria for recognition
Fixed assets are tangible assets held for production of goods, rendering of service, lease or operation andmanagement with a useful life of more than one accounting year. A fixed asset is recognized if the economicbenefits relating to it are very likely to flow to the Company and its cost can be reliably measured.
(2) Depreciation
| Category | Method of depreciation | Estimated useful life (years) | Residual value rate | Annual depreciation rate |
| Buildings | Straight line method | 30 | 4 | 3.2 |
| Mechanical equipment | Straight line method | 3-8 | 0-5 | 11.88-33.33 |
| Transportation equipment | Straight line method | 5-8 | 0-5 | 11.88-20 |
| Electronic equipment, devices and furniture | Straight line method | 3-10 | 0-5 | 9.50-33.33 |
With respect to artworks whose estimated useful life is uncertain, the Company does not assess theirdepreciation but performs an impairment test on them every year.
16. Construction in progress
1. A construction in progress is recognized if the economic benefits relating to it are very likely to flow to theCompany and its cost can be reliably measured. A construction in progress is measured at the actual cost incurredfor bringing the asset to working condition for its intended use.
2. The construction in progress shall be transferred to fixed assets at its actual construction cost whenmeeting working conditions for its intended use. If a project under construction have not undergone final accountsfor completion when the project meets the working condition for its intended use, the project is transferred tofixed assets at the estimated value, and after final accounts for completion are handled, the original valueprovisionally estimated is adjusted at the actual cost, but no adjustment is made to originally provideddepreciation.
17. Borrowing costs
1. Recognition of capitalization of borrowing costs
Borrowing costs incurred by the Company that are directly attributable to the acquisition, construction orproduction of a qualifying asset are capitalized as part of the cost of the relevant asset. The amounts of otherborrowing costs incurred are expensed when incurred and included in profit or loss for the current period.
2. Period of capitalization of borrowing costs
(1) A borrowing cost is capitalized when all of the following conditions are satisfied: 1) the expenditures onthe asset have already been incurred; 2) the borrowing cost has already been incurred; and 3) the acquisition,construction or production activities necessary to prepare the asset for its intended use or sale have alreadycommenced.
(2) Capitalization of borrowing costs is suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period ofmore than 3 months. The borrowing costs incurred during these periods are recognized as an expense for thecurrent period until the acquisition, construction or production is resumed.
(3) When the qualifying asset being acquired, constructed or produced has become ready for its intended useor sale, the capitalization ceases.
3. Rate and amount of capitalization of borrowing costs
If funds are borrowed under a specific-purpose borrowing for the acquisition, construction or production of aqualifying asset, the amount of interest to be capitalized shall be the actual interest expense incurred on thatborrowing for the period (including amortized discount or premium determined using the effective interest method)less any bank interest earned from depositing the borrowed funds before being used on the asset or any investmentincome on the temporary investment of those funds. If funds are borrowed under general-purpose borrowings andare utilized for the acquisition, construction or production of a qualifying asset, the Company shall determine theamount of interest to be capitalized on such borrowings by multiplying a capitalization rate of the utilizedgeneral-purpose borrowings by the weighted average of the excess amounts of cumulative expenditures on theasset over and above the amounts of specific-purpose borrowings.
18. Intangible assets
(1) Pricing methods, useful lives and impairment tests
The Company shall comply with the disclosure requirements set forth in ChiNext Guide on Industrial Information Disclosure No. 6 --Internet Video Business Conducted by Listed Companies.
1. Intangible assets include file and television copyrights, land use rights, software, trademark rights andcopyrights, which are initially measured at cost.
2. Service life and amortization method
(1) Amortization and carryforwards of file and television copyrights
When a film and television copyright is recognized as an intangible asset, that copyright is amortized in thelight of the following principles during the copyright benefit period: in case of the permanent copyright with thebenefit period being determined to be 5 years and the film and television drama copyright with the benefit periodbeing determined to be not less than 3 years (inclusive), they are amortized on a 5:3:2 basis (that is, 50% of theintangible asset value is amortized evenly in the first 12 months, 30% in the second 12 months and the remaining20% is amortized in a straight line during the remaining benefit period); in case of the copyrights with the benefitperiod of more than 2 years (inclusive) but less than 3 years, they are amortized on a 5:5 basis (that is, 50% isamortized in the first 12 months and the remaining 50% is amortized in a straight line during the remainingbenefit period); and in case of the copyrights with the benefit period of not more than 2 years, they are amortizedon a monthly basis during the benefit period.
When the file and television copyright is used for distribution, the right to use and income right, etc. sharedjointly or enjoyed respectively by the Company and its counterparty after distribution should be transferred as thebook cost of the intangible assets at the lower of the income amount and the book amortized value of intangibleassets from the date on which they satisfied the recognition criteria of revenue. If the amortized value aftertransfer is still greater than zero, they continue to be amortized using the original amortization during theamortization period.
(2) Amortization of other intangible assets other than film and television copyright.
The depreciable amount of an intangible asset with a finite useful life is allocated on a systematic andrational basis over its useful life in the pattern in which the asset’s economic benefits are expected to be realized.If that pattern cannot be determined reliably, the straight-line method shall be used. The specific life is shown asfollows:
| Item | Amortization period (years) |
| Land use rights | 49 |
| Software | 3-10 |
| Trademarks and domain names | Authorized use period |
| Patent license fee | 10 |
| Program adaptation license | 3 |
| Game copyright | Period granted by the contract |
(2) Accounting policy on internal research and development expenditures
The Company engages in the research and development of system software. Expenditures on research anddevelopment projects are classified into expenditures at research phase and expenditures at development phaseaccording to the nature of expenditures and depending on whether it is significantly uncertain that the researchand development activities will result in intangible assets. Expenditures at research phase are expenditures at thephase of planned investigation, evaluation and selection for purpose of software research, which are recognized inprofit or loss for the period in which they are incurred. Expenditures at the phase of design and testing for purposeof final application of the software are recorded as expenditures at development phase, which are capitalized priorto the final application of the software when all of the following conditions are satisfied: (1) the development ofthe software has been sufficiently validated by the technical team; (2) the management has approved the budgetfor the development of the software; (3) the system functions and performance of the software to be developedcan satisfy the requirements of economic activities; (4) the technical and financial resources available aresufficient to meet the requirements of the development activities and subsequent use of the software; and (5) theexpenditures attributable to the development of the software can be reliably measured.
19. Impairment of long-term assets
With respect to long-term equity investments, fixed assets, construction in progress, intangible assets with afinite useful life and other long-term assets, if there’s an indication of impairment at the balance sheet date, theCompany assesses their recoverable amount. Goodwill arising in a business combination and an intangible assetwith an indefinite useful life are tested for impairment annually, irrespective of whether there is any indicationthat the asset may be impaired. For the purpose of impairment testing, goodwill is considered together with therelated asset groups or sets of asset groups.
If the recoverable amount of the long-term asset above is lower than its carrying amount, the difference ismeasured as impairment loss of the asset and recognized in profit or loss for the current period.
20. Long-term prepaid expenses
Long-term deferred expenses are expensed that have already been incurred but should be amortized over aperiod of more than one year (excluding one year). Long-term deferred expenses are stated as the amount actuallyincurred and are amortized evenly by stages within the benefit period or specified period. If an item of long-termdeferred expenses will not benefit the subsequent periods, the amortized value of the item that has not yet beenamortized is wholly transferred to profit or loss for the current period.
21. Contract liabilities
The Company presents the contract assets or liabilities in the balance sheet based on the relationship between performanceobligations and customer payments. The Company lists the contract assets and liabilities under the same contract as net amount after
offset.
The Company presents its obligation to transfer goods to customers for the consideration received or receivable from customersas the contract liabilities.
22. Employee benefits
(1) Accounting treatment of short-term employee benefits
The Company recognizes the short-term benefits actually incurred during the accounting period when theemployees provide services for the Company as liabilities, and include same as part of the cost of related assets orin profit or loss for the current period.
(2) Accounting treatment of post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
The Company recognizes the amount contributable calculated based on the defined contribution plan duringthe accounting period when the employees provide services for the Company as liabilities, and include same inprofit or loss for the current period or as part of the cost of related assets.
(2) The accounting treatment of a defined benefit plan generally involves the following steps:
1) According to the projected unit credit method, use the unbiased and consistent actuarial assumptions toestimate demographic variables and financial variables, measure the obligation arising from the defined benefitplan and determine the period to which the relevant obligation belongs. Meanwhile, discount the obligationarising from the defined benefit plan, in order to determine the present value of the benefit plan obligation and thecurrent service cost;
2) If the defined benefit plan has assets, the deficit or surplus resulting after reducing the present value of thedefined benefit plan obligation by the fair value of the defined benefit plan is recognized as a net liability or assetof the defined benefit plan. If the defined benefit plan has a surplus, the net assets of the defined benefit plan aremeasured at the lower of surplus in the defined benefit plan and asset ceiling;
3) At the end of the reporting period, the cost of employee benefits arising from the defined benefit plan isrecorded as service cost, net interest on the net liabilities or net assets of the defined benefit plan, and changesarising from re-measurement of the net liabilities or net assets of the defined benefit plan, wherein the service costand the net interest on the net liabilities or net assets of the defined benefit plan are included in profit or loss forthe current period or the cost of related assets, and the changes arising from re-measurement of the net liabilitiesor net assets of the defined benefit plan are included in other comprehensive income, which will not be convertedback to profit or loss in subsequent periods, but may be transferred within the scope of equity.
(3) Accounting treatment of termination benefits
The Company recognizes the employment compensation liabilities generated by termination benefits andrecords them into the profit or loss for the current period at the earlier of the following dates:
(1) when the Company cannot unilaterally withdraw the termination, benefits provided as a result of the laborrelationship termination plan or layoff proposal; or
(2) when the Company recognizes the costs or expenses related to the restructuring of the terminationbenefits payment.
(4) Accounting treatment of other long-term employee benefits
Other long-term employee benefits are accounted for in accordance with the provisions applicable to definedcontribution plans if they are qualified as defined contribution plans, otherwise, are accounted for in accordancewith the provisions applicable to defined benefit plans. In order to simplify the accounting treatment, the total netamount of the cost of employee benefits arising from the defined benefit plans that is recorded as service cost, netinterest on the net liabilities or net assets of the defined benefit plan, changes arising from re-measurement of thenet liabilities or net assets of the defined benefit plan and other components is included in profit or loss for thecurrent period or the cost of related assets.
23. Provisions
1. An obligation arising from any external guarantee, litigations, product quality warranty, onerous contractor other contingencies is recognized as a provision if it is a present obligation assumed by the Company, and it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, andthe amount of the obligation can be reliably measured.
2. Provisions are initially measured according to the best estimates of the expenditures required to settle therelated present obligations. The carrying amount of provisions is reviewed at the balance sheet date.
24. Revenue
The accounting policies adopted for the recognition and measurement of revenue
1. Revenue recognition
At the inception of the contract, the Company evaluates the contract, identifies each single performanceobligation contained therein and determine whether each single performance obligation is performed over time orat a point in time.
When meeting one of the following criteria, it belongs to the obligation performed over time, otherwise itconstitutes the obligation performed at a point in time: (1) the customer obtains and consumes the economicbenefits generated by the Company’s performance when the Company performs the contract; (2) the customer cancontrol the products under construction in the process of the Company’s performance; (3) the products producedin the process of the Company’s performance have irreplaceable uses, and the Company has the right to collectpayment for the cumulative performance that has been completed up to date throughout the term of the contract.
For the obligation performed over time, the Company recognizes the revenue based on the performanceprogress over time. When the performance progress cannot be reasonably determined, and the costs incurred areexpected to be recoverable, revenue is recognized to the extent of costs incurred until the performance progresscan be reasonably determined. For the obligation performed at a point in time, the revenue is recognized at thetime point when the customer obtains the control of the related goods and services. When judging whether thecustomer has obtained the control of goods, the Company considers the followings signs: (1) the Company has thecurrent right to receive payment for such goods, that is, the customer has the current obligation to make paymentfor such goods; (2) the Company has transferred the legal ownership of such goods to the customer, that is, thecustomer has the legal ownership of such goods; (3) the Company has transferred such goods to the customerphysically, that is, the customer has taken possession of such goods physically; (4) the Company has transferredmajor risks and rewards of such goods to the customer, that is, the customer has obtained major risks and rewardsof such goods; (5) the customer has accepted such goods; and (6) other signs that the customer has obtained
control of such goods.
2. Revenue measurement
(1) The Company measures revenue based on the transaction price allocated to each single performanceobligation. The transaction price is the amount of consideration to which the Company is entitled arising from thetransfer of goods or services to the customer, excluding the amount collected on behalf of a third party andexpected to be returned to the customer.
(2) If there is variable consideration in the contract, the Company determines the best estimate of the variableconsideration based on the expected value or the most likely amount. However, variable consideration is includedin the transaction price if, and to the extent that, it is highly probable that its inclusion will not result in asignificant revenue reversal of accumulatively recognized revenue in the future when the uncertainty has beensubsequently resolved.
(3) If there is a major financing component in the contract, the Company determines the transaction pricebased on the presumed amount payable in cash when the customer obtains the control of goods or services. Thedifference between that transaction price and the contract consideration is amortized over the period of thecontract using the effective interest method. If at the inception of the contract, the Company expects that thecustomer’s acquisition of control of goods or services is not more than one year from the customer’s paymenttherefor, the major financing component in the contract will not be considered.
(4) If the contract has two or multiple performance obligations, the Company allocates the transaction priceto each single performance obligation in the contract by reference to relative standalone selling prices of goodspromised thereby.
3. Recognition of revenue
(1) Revenue recognized at a point in time
The Company’s sales of TV shopping products, film and television dramas and other goods belong to theobligation performed at a point in time. The revenue is recognized when goods made for domestic market meetthe following criteria: the Company has delivered the products to the customer pursuant to the contract and thecustomer has accepted such products, the payment for products has been received or the receipt of payment hasbeen obtained and it is probable that the associated economic benefits will flow to the Company, the legalownership of the products has been transferred, and the major risks and rewards of the products has beentransferred to the customer. The revenue is recognized when goods made for foreign market meet the followingcriteria: the Company has declared the products pursuant to the contract and obtained the bill of lading, thepayment for products has been received or the receipt of payment has been obtained and it is probable that theassociated economic benefits will flow to the Company, the legal ownership of the products has been transferred,and the major risks and rewards of the products has been transferred.
(2) Revenue recognized according to the progress of contract performance
The Company provides membership, artist, operator and financial services, etc. The customer obtains andconsumes the economic benefits generated by the Company’s performance when the Company performs thecontract, so the customer can control the goods or services under construction in the process of the Company’sperformance, the services or goods provided in the process of the Company’s performance have irreplaceable uses,and the Company has the right to collect payment for the cumulative performance that has been completed up todate throughout the term of the contract. The Company regards it as a performance obligation over time andrecognizes revenue according to the performance progress, unless the performance progress cannot be reasonablydetermined. The Company determines the progress of performance obligation using the output method/inputmethod. When the performance progress cannot be reasonably determined, and the costs incurred by the Companyare expected to be recoverable, revenue is recognized to the extent of costs incurred until the performance
progress can be reasonably determined.The Company’s specific principles for the recognition and measurement of revenues earned in the followingsectors and lines of business are as follows:
(1) Revenue from sale of goods through TV channels, network channels, outbound channels, online to offlinechannels and other channelsThe goods sold by the Company are mainly delivered by logistics companies to the buyers or picked by thebuyers themselves. The Company recognizes the revenue from sale of goods when the goods have been deliveredby logistics companies to the buyers and signed for by the buyers and the period for return of goods has expired.If the customer is a group, sales revenue is recognized when the group has received the goods and signed thereceipt of the goods.If credits are offered to the customers upon sale of goods, the Company allocates the amount received orreceivable from the sale of goods between the revenue from the sale of goods and the value of the credits, andrecognizes the amount received or receivable from the sale of goods net of the value of the credits as revenue, andthe value of the credits as other current liabilities.When the credits are exchanged by the customers, the portion of other current liabilities originally recognizedin connection with the credits exchanged is recognized as revenue, wherein, the amount of revenue recognized isdetermined according to the proportion of the amount of the credits exchanged to the total estimated amount of thecredits exchangeable.
(2) Revenue from advertising service
Revenue from advertising service is recognized after the advertisements have been delivered or according tothe settlement amount during the process of service when all of the following conditions are satisfied: (i) theamount of revenue can be measured reliably; (ii) it is probable that the economic benefits associated therewithwill flow to the Company; and (iii) the costs incurred or to be incurred for the delivery of advertisements can bemeasured reliably.
(3) Revenue from member service
Service revenue is recognized during the valid period of membership on a daily basis according to the top-upamount paid by the members.
(4) Royalty revenue
Royalty revenue includes copyright licensing revenue and revenue from joint copyright investment.
1) Copyright licensing revenue is recognized when the license has been granted to the counterparty and thelicense fee has been received or the right to receive the license fee has been obtained under the relevant copyrightlicense contract.
2) Revenue from joint copyright investment
① Investment in films, TV plays and programs in which the Company does not hold copyright
Applicable business: The Company participates in the production of a film or TV play in the capacity of aco-investor under the relevant investment agreement which explicitly provides that the return on investmentreceivable by the Company shall be a fixed income or a risk investment income wherein the Company does nothold copyright as other investors. Income from such businesses is recognized as investment income.
② Investment in films, TV plays and programs in which the Company holds joint copyright
Applicable business: The Company participates in the production of a film or TV play in the capacity of aco-investor under the relevant investment agreement which explicitly provides that the Company shall participatein the income distribution or loss sharing of the project in the capacity of a co-investor and holds copyright thereinjointly with other investors in such proportion as agreed. Revenue from distribution of a TV play is recognizedwhen the production of the TV play has been completed, the film and TV authority has examined the TV play and
issued a TV Play Release Permit, the copies, tapes and other media of the TV play have been delivered to thebuyers and it is probable that the economic benefits associated therewith will flow to the Company. Revenue fromdistribution of a film is recognized when the production of the film has been completed, the film and TV authorityhas examined the film play and issued a Film Play Release Permit, the film has been screened in theaters and thesettlement statement has been received from the relevant theater chains. Revenue from distribution of a program isrecognized when the production of the program has been completed, the copies, tapes and other media of theprogram have been delivered to the buyers and it is probable that the economic benefits associated therewith willflow to the Company.Such revenue is recognized in two different ways:
If the Company is responsible for distribution, when the criteria for recognition of revenue is met, theCompany recognizes the distribution income as agreed as operating revenue and records the share of incomepayable to the production partners as deductions from revenue. If another party is responsible for distribution,when the Company receives the income settlement statement as agreed, the Company recognizes the incomereceivable as “operating revenue”.
3) Recognition of cost
If the Company is responsible for the production of and accounting for a film or TV play, the cost actuallyincurred is recorded as “inventories - production cost”. When the production fee advanced by the investors underthe contract is received, such amount is initially recorded as “contract liabilities”, and when the production hasbeen completed and the film or TV play is ready for release, such amount is offset against the inventory cost offilm and TV plays. If another party is responsible for the production of and accounting for the film or TV play,the production fee paid by the Company to the production partner under the contract is initially recorded as“advances to suppliers”, the travel expenses incurred by the Company directly in connection with the project isrecorded as “inventories - production cost”, and when the production has been completed and the film or TV playis ready for release, such amount is transferred to inventory cost. After receiving the cost or expense settlementvouchers or statements issued by the producer and audited or confirmed by the co-investors, the assets originallyrecorded are adjusted according to the actual settlement amount, by transferring the Company’s share of the costof the film or TV play investment project from “advances from clients” to “inventories - production cost”. Afterobtaining copyright in the film or TV play under the contract, the actual cost of the film or TV play is whollytransferred to “inventories - goods on hand”, and the revenue earned is offset against the cost using the percentageof completion method. Under the percentage of completion method, from the date the film or TV play is granted arelease permit (i.e. the date of satisfaction of the criteria for recognition of revenue), during the period of costtransfer, the Company uses the cost transfer rate (the proportion of total cost of the film or TV play to the totalplanned revenue) to calculate and determine the cost of sales to be transferred in the current period and theinventories to be recognized at the end of the period.
(5) Revenue from operator service
Revenue from operator service is recognized according to the relevant business settlement statements orthird-party or technical background business data provided according to the relevant cooperation agreement.
The Company recognizes the revenue according to the settlement data provided by the operator andconfirmed by the Company and the operator prior to the balance sheet date, or if the settlement data is notobtained from the operator prior to the balance sheet date, according to the data collected by the billing platformand other data and information available to the extent that the revenue can be measured reliably, and adjusts thesame upon actual settlement.
(6) Revenue from sale of hardware
Revenue from sale of hardware is recognized on a monthly basis according to the quantity of intelligent
terminal products actually sold in the given month and their selling prices.
(7) Recognition of revenue from artist agent service
1) Artist performance service
The service period is relatively short. In this service, the Company mainly helps the artists give commercialperformance or concerts, and recognizes the revenue after a contracted artist has fulfilled his or her contractualobligations.
2) Artist shooting service
Shooting service includes participation by the artists in the shooting of films and TV plays and recording ofprograms. The service period is about three months generally. The Company recognizes the revenue after acontracted artist has fulfilled his or her contractual obligations.
3) Artist endorsement service
The term of an artist’s endorsement is about 1-2 years generally. During the term of endorsement, the artistneeds to be featured in video commercials, record theme songs, and participate in public relations and otheractivities. The revenue is recognized according to the specific contract terms. If the contract provides that after theperformance of the obligations by the artist, the service fee already received by the Company will not be refundedexcept for force majeure, and the service fee may be wholly recognized as revenue. If the contract provides that,in addition to indicating the force majeure, the artist needs to give exclusive endorsement or maintain his or hergood image, the revenue is recognized in installments during the term of endorsement.
(8) Derivative revenue from films, TV plays and program
Derivative revenue from films, TV plays and program is recognized after the showing thereof, at such timeas provided in the relevant contract.
(9) Revenue from games
The Company’s revenue from games mainly includes revenue from game copyright, game distributionservice and self-developed games, which are recognized as follows:
1) Revenue from game copyright includes royalty revenue and minimum guarantee revenue. The royaltiesreceived by the Company are recorded as contract liabilities upon receipt, and included in the operating revenuefor the current period using the straight line method during the term of agreement. The minimum guaranteesreceived are recognized as revenue when all the risks and rewards have been transferred in accordance with theschedule of payment and division of revenues as provided in the relevant contract or agreement.
2) Game distribution service is a mode of operation in which the Company obtains a license to operate anonline game and then enters into cooperation with Mango TV, 360 Game Center or other third-party channelplatforms to jointly operate the game; the players of the game need to be registered as users of the third-partychannel, top up their accounts in the top-up system of the third-party platform to obtain virtual cash, and use suchvirtual cash to purchase virtual props. In the mode of joint operation by a third party, each third-party platform isresponsible for the operation, promotion, charging service and management of billing system of its channel, andthe Company recognizes its share of revenue as the operating revenue as calculated according to the cooperationagreement concluded with the third-party platform and confirmed by the Company and the third-party platform.
3) Self-developed games include online games and standalone games. In the mode of self-operation of anonline game, the Company distributes and operates the game through its own or third-party channels, and is solelyresponsible for the operation, promotion and maintenance of the game; the players of the game are directlyregistered with such channels and then log in to the game, top up their accounts to obtain virtual cash, and usesuch virtual cash to purchase virtual props; after the game props purchased by the players have been used up, theCompany recognizes the amount actually paid and consumed by the players as the operating revenue. Standalonegames are available for downloading by the players in the form of a mobile standalone game package. When a
player purchases props of the game, the embedded program generates a billing instruction; the telecom carrier orservice provider sends a billing code by text message, and then the carrier confirms the deduction of the relevanttelephone charge to complete the process of billing and payment. The deduction and payment of the informationcharge for the mobile standalone game is irrevocable. After the deduction of such charge by the carrier, the risksand rewards are transferred to the users. The Company’s standalone games are distributed jointly with thirdparties. After the users have downloaded and installed the games, the Company is not responsible for themanagement of the games or otherwise restricts the use of the games by the users, that is, the Company does nothave control over such games. In such mode, the Company recognizes its share of revenue as the operatingrevenue as calculated according to the cooperation agreement concluded with the relevant third-party platform andconfirmed by the Company and the third-party platform.
(10) Revenue from H5 interaction
Revenue from H5 interaction mainly comes from H5 interactive advertisements placed by clients in thetelevision programs of Hunan Satellite TV, and is recognized after the showing of the relevant programs on TV.
(11) Revenue from wireless value-added service
According to the wireless value-added service contract concluded by the Company and the relevant client, ifthe contract specifies the total contract price, the contract price is allocated according to the schedule of paymentduring the term of license specified therein if the contract price will be paid in installments, or wholly recognizedas revenue after the delivery of service if the contract price will be paid in one lump sum. If the contract does notspecify the total contract price, the revenue is recognized according to the settlement statements provided by theclient.
Difference in the accounting policy for revenue recognition arising from adoption of different modes of operation for the same kindof businessNone
25. Government grants
1. Government grants are recognized if (1) the Company meets the conditions attaching to the governmentgrants; and (ii) the Company will receive the government grants. If a government grant is in the form of a transferof a monetary asset, the item is measured at the amount received or receivable. If a government grant is in theform of a transfer of a non-monetary asset, the item is measured at fair value. If fair value is not reliablydeterminable, the item is measured at a nominal amount.
2. Determination and accounting treatment of government grants related to assets
Government grants related to assets are government grants which are offered for purchasing, constructing orotherwise acquiring long-term assets as provided by the applicable government documents, or in the absence ofsuch express provision in the applicable government documents, government grants whose primary condition isthat the Company should purchase, construct or otherwise acquire long-term assets. The government grantsrelated to assets are offset against the carrying amount of the related assets or recognized as deferred income.Government grants related to assets recognized as deferred income are included in profit or loss over the servicelife of the relevant assets on a reasonable and systemic basis. Government grants measured at nominal amount aredirectly recognized in profit or loss for the current period. In case of sale, transfer, retirement or damage of therelevant assets before the end of intended service life, the balance of the unallocated deferred income istransferred to profit or loss for the period in which the assets are disposed of.
3. Determination and accounting treatment of government grants related to income
Government grants related to income are government grants other than those related to assets. Governmentgrants related to both assets and income in which it is difficult to make a distinction between the portion related toassets and the portion related to income are wholly classified as government grants related to income. Governmentgrants related to income as compensation for expenses or losses to be incurred in subsequent periods arerecognized as deferred income and in the period for recognizing the relevant costs, expenses or losses, included inprofit or loss for the current period or offset against the relevant costs. Government grants related to income ascompensation for expenses or losses already incurred are directly included in profit or loss for the current periodor offset against the relevant costs.
4. Government grants related to day-to-day operations of the Company are recognized in other income oroffset against the relevant costs and expenses depending on the nature of economic business. Government grantsnot related to day-to-day operations of the Company are recognized in non-operating revenues or expenses.
5. Accounting treatment of policy preferential loans and interest subsidies
(1) If the finance department allocates the interest discount funds to the lending bank, and then the lendingbank offers a loan to the Company at the policy-based preferential interest rate, the Company recognizes the loanamount actually received as the recorded amount of the loan, and calculates the borrowing costs according to theloan principal and such policy-based preferential interest rate.
(2) If the finance department directly allocates the interest discount funds to the Company, the Companyoffsets the corresponding interest subsidy against the related borrowing costs.
26. Deferred tax assets / deferred tax liabilities
1. The difference between the tax base of an asset or liability and its carrying amount (or in case of an itemnot recognized as asset or liability whose tax base can be determined according to the applicable tax law), thedifference between its tax base and carrying amount is recognized as a deferred tax asset or deferred tax liabilityaccording to the tax rate applicable to the period in which the asset or liability is expected to be recovered orsettled.
2. Deferred income tax assets are recognized to the extent of the amount of income tax payable that will beavailable in future periods against which deductible temporary differences are deductible. At the balance sheetdate, deferred tax assets not recognized in prior periods are recognized if there’s conclusive evidence that it isprobable that sufficient taxable income will be available in future periods against which the deductible temporarydifferences are deductible.
3. At the balance sheet date, the carrying amount of a deferred tax asset is reviewed. The Company reducesthe carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profitswill be available in future periods to allow the benefit of the deferred tax asset to be utilized. Any such reductionin amount is reversed to the extent that it becomes probable that sufficient taxable profits will be available.
4. Current and deferred tax of the Company is recognized as income or an expense and included in profit orloss for the current period, except to the extent that the tax arises from: (1) business combination; or (2) atransaction or event which is recognized directly in owner’s equity.
27. Lease
(1) Accounting Treatment for operating lease
If the Company is a lessee, the rents paid by the Company are included in the costs of the relevant assets orin profit or loss for the current period over the whole lease term on a straight line basis. The initial direct cost
incurred by the Company is directly recognized in profit or loss for the current period. Contingent rents arecharged to profit or loss in the period in which they are actually incurred.If the Company is a lessor, the rents received by the Company are recognized in profit or loss for the currentperiod over the whole lease term on a straight line basis. The initial direct cost incurred by the Company isdirectly recognized in profit or loss for the current period. However, if such initial direct cost is of a large amount,the initial direct cost is capitalized and recognized in profit or loss by installments. Contingent rents are charged toprofit or loss in the period in which they are actually incurred.
28. Other significant accounting policies and accounting estimates
Customer credit policyThe accounting for customer credits requires an estimate of the fair value and the time and possibility of useof credits. Valuation and recording of customer credits require judgment and estimation. If the result ofre-estimation is different from the current estimation, such difference will affect the carrying amount of othercurrent liabilities for the period in which the estimation is changed.
29. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □N/A
| Changes in accounting policies and associated reasons | Approval procedure | Remark |
| Changes in accounting policies caused by changes in Accounting Standards for Business Enterprises | Approved by the Company at the 29th conference of the 3rd board of directors held on April 23, 2020. | New Revenue Standards |
1. The Company implements the Accounting Standard for Business Enterprises No. 14—Revenue revised bythe Ministry of Finance (“New Revenue Standard”) from January 1, 2020. In accordance with the relevantregulations on the transition of old and new standards, the information for the comparable period is not adjusted,and the cumulative effects arising from the implementation of new standards on the first implementation date isretrospectively adjusted to the amount of retained earnings and other related items in the financial statements atthe beginning of the reporting period.The main impacts of the new standards on the Company’s financial statements on January 1, 2020 arepresented as follows:
| Item | Balance sheet | ||
| December 31, 2019 | Adjusted effects arising from the implementation of New Revenue Standards | January 1, 2020 | |
| Accounts receivable | 2,997,010,508.82 | -572,868,754.73 | 2,424,141,754.09 |
| Contract Assets | 572,868,754.73 | 572,868,754.73 | |
| Receipts in advance | 1,192,477,979.60 | -1,192,477,979.60 |
| Contract liabilities | 1,417,590,477.58 | 1,417,590,477.58 | |
| Other current liabilities | 78,695,861.52 | 37,041,392.57 | 115,737,254.09 |
| Deferred income | 308,425,484.68 | -262,153,890.55 | 46,271,594.13 |
2. The Company implements the Interpretation No. 13 of the Accounting Standards for Business Enterprisesissued by the Ministry of Finance in 2019 from January 1, 2020, and changes in the accounting policy areaccounted for using prospective application.
(2) Changes in significant accounting estimates
□ Applicable √ N/A
(3) Description of adjustments in opening balances of line items in financial statements of the year due tofirst implementation of new financial instrument standards, new income standard and new lease standardsince 2020ApplicableDid the line items of the opening assets and liabilities require adjustment?
√ Yes □ No
Consolidated balance sheet
In RMB
| Item | December 31, 2019 | January 01, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and bank balances | 5,064,224,581.46 | 5,064,224,581.46 | |
| Balances with clearing agencies | |||
| Placements with banks and other financial institutions | |||
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | 95,456,357.50 | 95,456,357.50 | |
| Accounts receivable | 2,997,010,508.82 | 2,424,141,754.09 | -572,868,754.73 |
| Receivable financing | |||
| Prepayments | 1,127,734,126.28 | 1,127,734,126.28 | |
| Premiums receivable | |||
| Amounts receivable under reinsurance contracts | |||
| Reinsurer’s share of insurance contract reserves |
| Other receivables | 35,946,262.96 | 35,946,262.96 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 1,916,375,338.89 | 1,916,375,338.89 | |
| Contract assets | 572,868,754.73 | 572,868,754.73 | |
| Held-for-sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 491,278,913.90 | 491,278,913.90 | |
| Total current assets | 11,728,026,089.81 | 11,728,026,089.81 | |
| Non-current Assets: | |||
| Loans and advances | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 210,436,179.18 | 210,436,179.18 | |
| Other investments in equity instruments | |||
| Other non-current financial assets | 6,946,466.60 | 6,946,466.60 | |
| Investment properties | |||
| Fixed assets | 180,606,150.34 | 180,606,150.34 | |
| Construction in progress | |||
| Bearer biological assets | |||
| Oil and gas assets | |||
| Right of use assets | |||
| Intangible assets | 4,851,078,019.24 | 4,851,078,019.24 | |
| Development expenditure | 38,338,883.84 | 38,338,883.84 | |
| Goodwill |
| Long-term prepaid expenses | 61,646,861.37 | 61,646,861.37 | |
| Deferred income tax assets | |||
| Other non-current Assets | 1,127,499.30 | 1,127,499.30 | |
| Total non-current assets | 5,350,180,059.87 | 5,350,180,059.87 | |
| Total assets | 17,078,206,149.68 | 17,078,206,149.68 | |
| Current liabilities: | |||
| Short-term borrowings | 349,816,947.83 | 349,816,947.83 | |
| Loans from the central bank | |||
| Taking from banks and other financial institutions | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 325,880,463.11 | 325,880,463.11 | |
| Accounts payable | 5,048,443,928.94 | 5,048,443,928.94 | |
| Receipts in advance | 1,192,477,979.60 | -1,192,477,979.60 | |
| Contract liabilities | 1,417,590,477.58 | 1,417,590,477.58 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and deposits from banks and other financial institutions | |||
| Funds from securities trading agency | |||
| Funds from underwriting securities agency | |||
| Employee benefits payable | 589,359,251.74 | 589,359,251.74 | |
| Taxes payable | 137,563,508.65 | 137,563,508.65 | |
| Other payables | 202,952,467.24 | 202,952,467.24 | |
| Including: Interest payable |
| Dividends payable | |||
| Fees and commissions payable | |||
| Amounts payable under reinsurance contracts | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one years | 10,400,000.00 | 10,400,000.00 | |
| Other current liabilities | 78,695,861.52 | 115,737,254.09 | 37,041,392.57 |
| Total current liabilities | 7,935,590,408.63 | 8,197,744,299.18 | 262,153,890.55 |
| Non-current liabilities: | |||
| Insurance contract reserves | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | 14,232,872.30 | 14,232,872.30 | |
| Deferred income | 308,425,484.68 | 46,271,594.13 | -262,153,890.55 |
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total Non-current Liabilities | 322,658,356.98 | 60,504,466.43 | -262,153,890.55 |
| Total liabilities | 8,258,248,765.61 | 8,258,248,765.61 | |
| Owner’s equity: | |||
| Share capital | 1,780,377,511.00 | 1,780,377,511.00 | |
| Other equity instruments | |||
| Including: Preferred shares |
| Perpetual bonds | |||
| Capital reserve | 4,838,937,706.35 | 4,838,937,706.35 | |
| Less: Treasury shares | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 84,782,321.71 | 84,782,321.71 | |
| General risk reserve | |||
| Undistributed profit | 2,079,761,680.01 | 2,079,761,680.01 | |
| Total owners’ equity attributable to equity holders of the parent company | 8,783,859,219.07 | 8,783,859,219.07 | |
| Minority interests | 36,098,165.00 | 36,098,165.00 | |
| Total owners’ equity | 8,819,957,384.07 | 8,819,957,384.07 | |
| Total liabilities and owners’ Equity | 17,078,206,149.68 | 17,078,206,149.68 |
Descriptions of adjustmentsBalance sheet of the Company
In RMB
| Item | December 31, 2019 | January 01, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and bank balances | 359,847,797.79 | 359,847,797.79 | |
| Held-for-trading financial assets | |||
| Derivative financial assets | |||
| Notes receivable | |||
| Accounts receivable | |||
| Receivable financing | |||
| Prepayments | 88,060.80 | 88,060.80 | |
| Other receivables | 260,036,746.64 | 260,036,746.64 | |
| Including: Interest receivable | |||
| Dividends receivable |
| Inventories | |||
| Contract assets | |||
| Held-for-sale assets | |||
| Non-current assets due within one year | |||
| Other current assets | 2,275,609.21 | 2,275,609.21 | |
| Total current assets | 622,248,214.44 | 622,248,214.44 | |
| Non-current Assets: | |||
| Debt investments | |||
| Other debt investments | |||
| Long-term receivables | |||
| Long-term equity investments | 7,970,398,191.17 | 7,970,398,191.17 | |
| Other investments in equity instruments | |||
| Other non-current financial assets | |||
| Investment properties | |||
| Fixed assets | 343,638.91 | 343,638.91 | |
| Construction in progress | |||
| Bearer biological assets | |||
| Oil and gas assets | |||
| Right of use assets | |||
| Intangible assets | 776,485.36 | 776,485.36 | |
| Development expenditure | |||
| Goodwill | |||
| Long-term prepaid expenses | 6,052,764.08 | 6,052,764.08 | |
| Deferred income tax assets | |||
| Other non-current Assets | |||
| Total non-current assets | 7,977,571,079.52 | 7,977,571,079.52 | |
| Total assets | 8,599,819,293.96 | 8,599,819,293.96 | |
| Current liabilities: |
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Accounts payable | |||
| Receipts in advance | |||
| Contract liabilities | |||
| Employee benefits payable | 19,164,650.75 | 19,164,650.75 | |
| Taxes payable | 316,522.46 | 316,522.46 | |
| Other payables | 8,093,306.17 | 8,093,306.17 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Held-for-sale liabilities | |||
| Non-current liabilities due within one years | |||
| Other current liabilities | |||
| Total current liabilities | 27,574,479.38 | 27,574,479.38 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | 172,268.06 | 172,268.06 | |
| Deferred income tax |
| liabilities | |||
| Other non-current liabilities | |||
| Total Non-current Liabilities | 172,268.06 | 172,268.06 | |
| Total liabilities | 27,746,747.44 | 27,746,747.44 | |
| Owner’s equity: | |||
| Share capital | 1,780,377,511.00 | 1,780,377,511.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserve | 6,179,334,010.36 | 6,179,334,010.36 | |
| Less: Treasury shares | |||
| Other comprehensive income | |||
| Special reserve | |||
| Surplus reserve | 84,782,321.71 | 84,782,321.71 | |
| Undistributed profit | 527,578,703.45 | 527,578,703.45 | |
| Total owners’ equity | 8,572,072,546.52 | 8,572,072,546.52 | |
| Total liabilities and owners’ Equity | 8,599,819,293.96 | 8,599,819,293.96 |
Descriptions of adjustments
(4) Descriptions of retrospective adjustments in comparative data in prior periods due to the firstimplementation of new revenue standards or new lease standard from 2020
□Applicable √N/A
VI. TAXES
1. Major categories of taxes and tax rates
| Category of tax | Taxation basis | Tax rate |
| VAT | VAT payable is the output tax based on the sales of goods and taxable labor income calculated pursuant to the tax law, net of the input tax that is allowed to be deducted in the current period | 13%, 9%, 5%, 6%, 3% |
| Consumption tax | Taxable sales turnover (volume) | 5% |
| City maintenance and construction tax | Actually paid turnover tax | 7%, 5% |
| Enterprise income tax | Taxable income | Tax exemption, 8.25%, 12.5%, 15%, 16.5%, 25% |
| Property tax | If it is levied on an ad valorem basis, the tax is calculated as 1.2% of the remaining value after being deducted 20% of the original value of the property; if it is levied subject to rent, the tax is calculated as 12% of the rental income. | 1.2%, 12% |
| Education surcharges | Actually paid turnover tax | 3% |
| Local education surcharges | Actually paid turnover tax | 2% |
| Development fee for cultural undertakings | Taxable service income subject to tax laws | Tax exemption |
Disclosure of taxpayers with different rates of enterprise income tax:
| Taxpayer | Rate of enterprise income tax |
| Bio Products Laboratory Holdings Limited | Tax exemption |
| Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. | Tax exemption |
| Horgos Happy Sunshine Media Co., Ltd. | Tax exemption |
| Mango Studios Co., Ltd. | Tax exemption |
| Hunan Mango Entertainment Co., Ltd. | Tax exemption |
| Hunan Happy Mangofun Technology Co., Ltd. | Tax exemption |
| Hunan Tianyu Film and Television Production Co. Ltd. | Tax exemption |
| Shanghai Mangofun Technology Co., Ltd. | 12.5% |
| Hunan Happy Money Microfinance Co., Ltd. | 12.5% |
| Happigo Cloud Providers Trading (Hong Kong) Co., Limited | 8.25%, 16.5%[note] |
| Dameiren Global Trading Co., Limited | 8.25%, 16.5%[note] |
| Mgtv.com (Hong Kong) Media Company Limited | 8.25%, 16.5%[note] |
| Other taxpayers excluding above ones | 25% |
2. Tax incentives
1. The Company’s subsidiaries, including Happy Sunshine, Mango Studios, Mango Entertainment, HunanHappy Mangofun Technology Co., Ltd., Hunan Tianyu Film and Television Production Co. Ltd. and Happigo Co.,Ltd. are enterprises transformed from cultural public institutions with for-profit operations. In accordance with theNotice of Continuing Implementing Several Tax Policies for the Transformation of Cultural Public Institutionswith For-Profit Operations into Enterprises During the Cultural System Reform jointly issued by the Ministry ofFinance, the State Taxation Administration, and the Publicity Department of the CPC Central Committee (Cai
Shui (2019) No. 16) on February 2019, cultural enterprises transformed are qualified to be exempt from enterpriseincome tax within five years from January 1, 2019.
2. The Company’s sub-subsidiary, Horgos Happy Sunshine Media Co., Ltd., is an enterprise within the scopedefined in the Notice of the Ministry of Finance, the State Administration of Taxation, the National Developmentand Reform Commission, and the Ministry of Industry and Information Technology on Publishing the Catalogueof Enterprise Income Tax Incentives for Industries Particularly Encouraged by Poverty Areas of Xinjiang forDevelopment (Trial) (Cai Shui (2011) No. 60). In accordance with the requirements in the Notice on EnterpriseIncome Tax Incentive Policies for Enterprises in Two Special Economic Development Zones Including Kashgarand Horgos Economic Development Zones in Xinjiang (Cai Shui (2011) No. 112), enterprises in such scope can beexempted from enterprise income tax within five years consecutively, starting from the first year in whichmanufacturing or business operational revenue is earned in the period from January 1, 2010 to December 31, 2020.Horgos Happy Sunshine Media Co., Ltd. is exempted from enterprise income tax within five years from 2018 as itearned its first manufacturing or business operational revenue in 2018.
3. The Company’s subsidiary, Mangofun, has been evaluated as a software enterprise in accordance with therequirements in Several Policies on Further Encouraging the Development of the Software and Integrated CircuitIndustries (Guo Fa (2011) No. 4) and the Evaluation Standard for Software Enterprises, and received the newcertificate numbered in Hu RQ-2017-0370 with a valid term of 1 year on July 30, 2019 after passing the annualverification. In accordance with the Notice of the Ministry of Finance, the State Administration of Taxation onEnterprise Income Tax Policies for Further Encouraging the Development of Software and Integrated CircuitIndustries (Cai Shui (2012) No. 27), Mangofun’s tax incentive period should commence from 2017, the first yearof earning profits, which means Mangofun can be exempted from enterprise income tax from the first year to thesecond year, and is eligible for a reduction half (i.e. 25%) from the third year to the fifth year until the taxincentive period expires.
4. The Company’s subsidiary, Hunan Happy Money Microfinance Co., Ltd., was recognized as a softwareenterprise by Huanan Software Industry Association on August 5, 2020, and obtained a Software EnterpriseCertificate (Xiang RQ-2020-0050). The Company paid the enterprise income tax at the reduced tax rate of 12.5%in 2020.
5. In accordance with the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform(Announcement No. 39 by the Ministry of Finance, the State Taxation Administration and the GeneralAdministration of Customs in 2019), VAT taxpayers in production and life service industry are allowed to creditthe amount of input tax deductible in the current period plus 10% thereof against the amount of taxes payablefrom April 1, 2019 to December 31, 2021.
6. In accordance with the Notice of the Ministry of Finance on Relevant Policies on Adjusting CertainGovernment-Managed Funds (Cai Shui [2019] No. 46), from July 1, 2019 to December 31, 2024, developmentfees for cultural undertakings attributable to the Central Treasury shall be reduced at 50% of the taxable incomepaid by the taxpayer. In accordance with the Notice of Huanan Provincial Department of Finance on RelevantPolicies on Adjusting Development Fees for Cultural Undertakings (Xiang Cai Zong (2019) No.11), from July 1,2019 to December 31, 2024, local enterprises and institutions and individuals can pay the development fees forcultural undertakings in a reduction of 50%.
7. In accordance with the Announcement on Taxation Support Policies for Film and Other Industries(Announce No. 25 issued by the Ministry of Finance and the State Administration of Taxation in 2020), theCompany is exempted from cultural undertaking construction fees from January 1, 2020 to December 31, 2020.
3. Others
[Note] The Company’s subsidiaries, Happigo Cloud Providers Trading (Hong Kong) Co., Limited, DameirenGlobal Trading Co., Limited, Mamma Mia Global Trading Co., Limited, and Mgtv.com (Hong Kong) MediaCompany Limited, are all enterprises incorporated in Hong Kong. From April 1, 2018, their enterprise incometaxes are paid in two level, namely, at a rate of 8.25% for the profits equal to or below HKD 2 million, and at arate of 16.5% for the remaining profits over HKD 2 million.VII. NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
In: RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 86,976.40 | 104,219.13 |
| Bank deposits | 5,317,984,735.78 | 5,024,849,713.74 |
| Other monetary funds: | 18,248,074.52 | 39,270,648.59 |
| Total | 5,336,319,786.70 | 5,064,224,581.46 |
| Total amount of funds restricted in use due to mortgage, pledge or freezing, etc. | 21,856,302.69 | 23,149,082.30 |
Other descriptions:
In the closing balance of bank balances, the amount of RMB1,000.00 using as POS deposits and the amount ofRMB21,625,225.00 frozen due to litigation are restricted to use.
In the closing balance of other monetary funds, the amount of RMB230,077.69 using as third-party deposits are restricted to use.
2. Notes receivable
(1) Presentation of notes receivable by category
In: RMB
| Item | Closing balance | Opening balance |
| Bank acceptances | 95,456,357.50 | |
| Total | 95,456,357.50 |
In: RMB
| Category | Closing balance | Opening balance | ||||||||
| Gross carrying amount | Provisions for doubtful debts | Carrying amount | Gross carrying amount | Provisions for bad debts | Carrying amount | |||||
| Amount | Proportio | Amount | Proportio | Amount | Proportio | Amount | Proportio | |||
| n (%) | n (%) | n (%) | n (%) | |||||||
| Notes receivable for which the provision for bad debts are made individually | 95,456,357.50 | 100.00% | 95,456,357.50 | |||||||
| Including: | ||||||||||
| Bank acceptances | 95,456,357.50 | 100.00% | 95,456,357.50 | |||||||
| Including: | ||||||||||
| Total | 95,456,357.50 | 100.00% | 95,456,357.50 |
Provisions for bad debts made individually:
In: RMB
| Name | Closing balance | |||
| Gross carrying amount | Provisions for bad debts | Proportion (%) | Reason for provisions | |
Provisions for bad debts made by group:
In: RMB
| Name | Closing balance | ||
| Gross carrying amount | Provisions for bad debts | Proportion (%) | |
Descriptions of basis for determining the group:
If a provision for bad debts is made for notes receivable in accordance with the general model of expected credit losses (hereinafterreferred to as “ECL”), please disclose relevant information on provisions for bad debts with reference to the disclosure method ofother receivables.
□ Applicable √ N/A
(2) Notes receivable of the Company that have been endorsed or discounted and are not yet due as of thebalance sheet date at the end of the period
In: RMB
| Item | Balance derecognized at the end of the period | Balance not derecognized at the end of the period |
| Total | 0.00 | 0.00 |
3. Accounts receivable
(1) Disclosure of accounts receivable by category
In: RMB
| Category | Closing balance | Opening balance | ||||||||
| Gross carrying amount | Provisions for bad debts | Carrying amount | Gross carrying amount | Provisions for bad debts | Carrying amount | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Accounts receivable for which the provision for bad debts are made individually | 70,540,338.97 | 2.26% | 49,824,633.16 | 70.63% | 20,715,705.81 | 39,878,131.10 | 1.58% | 26,084,596.10 | 65.41% | 13,793,535.00 |
| Including: | ||||||||||
| Accounts receivable for which the provision for bad debts are made by group | 3,053,563,568.97 | 97.74% | 97,582,601.83 | 3.20% | 2,955,980,967.14 | 2,483,359,692.94 | 98.42% | 73,011,473.85 | 2.94% | 2,410,348,219.09 |
| Including: | ||||||||||
| Total | 3,124,103,907.94 | 100.00% | 147,407,234.99 | 4.72% | 2,976,696,672.95 | 2,523,237,824.04 | 100.00% | 99,096,069.95 | 3.93% | 2,424,141,754.09 |
Provisions for bad debts made individually:
In: RMB
| Name | Closing balance | |||
| Gross carrying amount | Provisions for bad debts | Proportion (%) | Reason for provisions | |
| The First | 17,205,050.00 | 5,161,515.00 | 30.00% | Likely to be non-recoverable |
| The Second | 13,800,000.00 | 7,821,226.41 | 56.68% | Likely to be non-recoverable |
| The Third | 9,701,037.77 | 9,701,037.77 | 100.00% | Expected to be non-recoverable |
| The Fourth | 5,832,200.00 | 5,832,200.00 | 100.00% | Expected to be non-recoverable |
| The Fifth | 5,419,890.00 | 5,419,890.00 | 100.00% | Expected to be non-recoverable |
| The Sixth | 3,880,651.10 | 3,880,651.10 | 100.00% | Expected to be non-recoverable |
| The Seventh | 3,000,000.00 | 830,187.68 | 27.67% | Likely to be non-recoverable |
| The Eighth | 3,000,000.00 | 2,830,188.68 | 94.34% | Likely to be non-recoverable |
| The Ninth | 2,500,000.00 | 2,146,226.42 | 85.85% | Likely to be non-recoverable |
| The Tenth | 1,676,100.00 | 1,676,100.00 | 100.00% | Expected to be non-recoverable |
| Other | 4,525,410.10 | 4,525,410.10 | 100.00% | Expected to be non-recoverable |
| Total | 70,540,338.97 | 49,824,633.16 | -- | -- |
Provisions for bad debts made individually:
In: RMB
| Name | Closing balance | |||
| Gross carrying amount | Provisions for bad debts | Proportion (%) | Reason for provisions | |
Provisions for bad debts made by group:
In: RMB
| Name | Closing balance | ||
| Carrying amount | Provisions for bad debts | Proportion (%) | |
| Aging group | 2,182,153,749.12 | 97,582,601.83 | 4.47% |
| Group of receivables from related parties controlled by the same de facto controller | 871,409,819.85 | ||
| Total | 3,053,563,568.97 | 97,582,601.83 | -- |
Description of basis for determining the group:
Provisions for bad debts made by group:
In: RMB
| Name | Closing balance | ||
| Carrying amount | Provisions for bad debts | Proportion (%) | |
| Within 1 year (including) | 1,506,542,196.23 | 48,513,510.47 | 3.22% |
| More than 1 year but not exceeding 2 years | 619,437,957.15 | 39,614,172.99 | 6.40% |
| More than 2 years but not exceeding 3 years | 51,088,622.86 | 5,699,607.53 | 11.16% |
| More than 3 years but not | 1,811,809.75 | 696,092.24 | 38.42% |
| exceeding 4 years | |||
| More than 4 years but not exceeding 5 years | 1,641,771.91 | 1,427,827.38 | 86.97% |
| More than 5 years | 1,631,391.22 | 1,631,391.22 | 100.00% |
| Total | 2,182,153,749.12 | 97,582,601.83 | -- |
Description of basis for determining the group:
Provisions for bad debts made by group:
In: RMB
| Name | Closing balance | ||
| Carrying amount | Provisions for bad debts | Proportion (%) | |
Description of basis for determining the group:
If a provision for bad debts is made for accounts receivable in accordance with the general model of expected credit losses, pleasedisclose relevant information on provisions for bad debts with reference to the disclosure method of other receivables.
□ Applicable √ N/A
Disclosure by aging
In: RMB
| Aging | Carrying amount |
| Within 1 year (including) | 2,382,081,553.85 |
| More than 1 year but not exceeding 2 years | 663,676,910.15 |
| More than 2 years but not exceeding 3 years | 55,911,327.16 |
| More than 3 years | 22,434,116.78 |
| More than 3 years but not exceeding 4 years | 2,568,413.55 |
| More than 4 years but not exceeding 5 years | 1,641,771.91 |
| More than 5 years | 18,223,931.32 |
| Total | 3,124,103,907.94 |
(2) Provisions, recovery or reversal of bad debts for the current period
Provisions for bad debts made for the current period
In: RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Provision for bad | 26,084,596.10 | 24,490,037.06 | 750,000.00 | 49,824,633.16 | ||
| debts made individually | ||||||
| Provision for bad debts made by group | 73,011,473.85 | 25,343,290.31 | 772,162.33 | 97,582,601.83 | ||
| Total | 99,096,069.95 | 49,833,327.37 | 750,000.00 | 772,162.33 | 147,407,234.99 |
Significant recovery or reversal of bad debt provision for the current period:
In: RMB
| Name | Amount of recovery or reversal | Method of recovery |
(3) Notes receivable actually written off for the current period
In: RMB
| Item | Write-off amount |
| Loan | 772,162.33 |
Information of significant accounts receivable that are written off:
In: RMB
| Name | Nature of accounts receivable | Write-off amount | Reason for write-off | Write-off procedures performed | If the payments is generated from the related party transactions |
Description of write-off of accountants receivable:
(4) Top five closing balances of accounts receivable categorized by debtor
In: RMB
| Entities | Closing balance of accounts receivable | % of total closing balance of accounts receivable | Closing balance of provisions for bad debts |
| The First | 290,175,195.53 | 9.29% | |
| The Second | 249,955,809.88 | 8.00% | 2,947,503.92 |
| The Third | 214,923,447.92 | 6.88% | |
| The Fourth | 164,336,587.00 | 5.26% | |
| The Fifth | 156,250,000.00 | 5.00% | 7,812,500.00 |
| Total | 1,075,641,040.33 | 34.43% |
4. Receivable financing
In: RMB
| Item | Closing balance | Opening balance |
| Notes receivable | 164,410,000.00 | |
| Total | 164,410,000.00 |
Increase or decrease of receivable financing for the current period and changes in its fair value
□ Applicable √ N/A
If a provision for impairment is made for receivable financing in accordance with the general model of expected credit losses, pleasedisclose relevant information on the provisions for impairment with reference to the disclosure method of other receivables.
□ Applicable √ N/A
Other descriptions:
At the end of the period, the Company has no notes receivable that have been endorsed or discounted and arenot yet due as of the balance sheet date
5. Prepayments
(1) Presentation of prepayments by aging
In: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 1,056,611,336.10 | 75.56% | 704,974,422.77 | 62.51% |
| More than 1 year but not exceeding 2 years | 141,828,262.96 | 10.14% | 132,081,812.20 | 11.71% |
| More than 2 years but not exceeding 3 years | 95,580,817.91 | 6.84% | 195,519,392.56 | 17.34% |
| More than 3 years | 104,329,736.75 | 7.46% | 95,158,498.75 | 8.44% |
| Total | 1,398,350,153.72 | -- | 1,127,734,126.28 | -- |
Reasons for overdue settlement of prepayments with significant amounts and aged more than 1 year:
| Entity | Gross carrying amount | Reasons for unsettlement |
| The First | 86,556,603.68 | Prepayments for copyrights pending broadcasting |
| The Second | 57,816,250.00 | Undelivered goods |
| The Third | 54,235,437.00 | Prepayments for copyrights pending broadcasting |
| The Fourth | 49,999,516.00 | Undelivered goods |
| The Fifth | 45,283,019.04 | Prepayments for copyrights pending broadcasting |
| The Sixth | 42,915,750.00 | Undelivered goods |
| Sub-total | 336,806,575.72 |
(2) Top five closing balances of prepayments categorized by receivers
| Entity | Gross carrying amount | Proportion to total prepayments (%) |
| The First | 224,056,603.68 | 14.67 |
| The Second | 128,399,815.62 | 8.41 |
| The Third | 93,597,918.79 | 6.13 |
| The Fourth | 83,005,169.06 | 5.44 |
| The Fifth | 70,754,717.25 | 4.63 |
| Sub-total | 599,814,224.40 | 39.28 |
Other descriptions:
The bad-debt provision made and reversed in the current period was RMB52,414,642.28 andRMB30,997,600.00 respectively, without actual write-off of bed-debt provision for prepayments.
6. Other receivables
In: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 51,168,090.47 | 35,946,262.96 |
| Total | 51,168,090.47 | 35,946,262.96 |
(1) Other receivables
1) Category of other receivables by nature
In: RMB
| Nature | Gross carrying amount at the end of the period | Gross carrying amount at the beginning of the period |
| Security deposit | 17,122,521.77 | 18,036,931.78 |
| Amount due to or from related parties | 3,928,869.69 | 3,640,174.50 |
| Suspense payments receivable | 3,787,622.67 | 2,911,186.43 |
| Petty cash | 8,384,709.56 | 9,084,428.85 |
| Receivables and payables | 22,452,844.09 | 5,508,622.75 |
| Total | 55,676,567.78 | 39,181,344.31 |
2) Provisions for bad debts
In: RMB
| Provisions for bad debts | Stage I | Stage II | Stage III | Total |
| Future 12-month ECL | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2020 | 410,810.45 | 139,608.94 | 2,684,661.96 | 3,235,081.35 |
| Balance as at January 1, 2020 transferred to | —— | —— | —— | —— |
| -- Stage II | -45,262.91 | 45,262.91 | ||
| -- Stage III | -83,439.55 | 83,439.55 | ||
| Provision | 466,220.39 | 44,728.99 | 762,446.58 | 1,273,395.96 |
| Balance as at December 31, 2020 | 831,767.93 | 146,161.29 | 3,530,548.09 | 4,508,477.31 |
Changes in gross carrying amount whose loss allowance changed significantly in the current period
□ Applicable √ N/A
Disclosure by aging
In: RMB
| Aging | Carrying amount |
| Within 1 year (including) | 34,177,378.24 |
| More than 1 year but not exceeding 2 years | 7,990,859.07 |
| More than 2 years but not exceeding 3 years | 3,624,448.03 |
| More than 3 years | 9,883,882.44 |
| More than 3 years but not exceeding 4 years | 693,986.96 |
| More than 4 years but not exceeding 5 years | 4,312,397.25 |
| More than 5 years | 4,877,498.23 |
| Total | 55,676,567.78 |
3) Provisions, recovery or reversal of bad debts for the period
Provisions for bad debts made for the current period
In: RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Provision for bad debts made individually | 1,661,929.89 | 99,412.94 | 1,761,342.83 | |||
| Provision for bad debts made by group | 1,573,151.46 | 1,173,983.02 | 2,747,134.48 | |||
| Total | 3,235,081.35 | 1,273,395.96 | 4,508,477.31 | |||
Significant recovery or reversal of provisions for bad debts for the current period:
In: RMB
| Entity | Amount of recovery or reversal | Method of recovery |
4) Top five closing balances of other receivables categorized by debtor
In: RMB
| Entity | Nature | Closing balance | Aging | % of total closing balance of other receivables | Closing balance of provisions for bad debts |
| The First | Receivables and Payables | 8,400,000.00 | Within 1 year | 15.09% | 84,000.00 |
| The Second | Amount due to or from related parties | 2,629,764.69 | More than 4 years but not exceeding 5 years, more than 5 years | 4.72% | 1,564,882.35 |
| The Third | Receivables and Payables | 2,006,200.00 | Within 1 year | 3.60% | 100,310.00 |
| The Fourth | Security deposit | 2,000,000.00 | More than 1 year but not exceeding 2 years | 3.59% | |
| The Fifth | Security deposit | 1,321,183.96 | Within 1 year, more than 2 years but not exceeding 3 years, more than 3 years but not exceeding 4 years, more than 5 years | 2.38% |
| Total | -- | 16,357,148.65 | -- | 29.38% | 1,749,192.35 |
7. Inventories
Did the Company need to comply with the disclosure requirements on the real estate industry?No
（1）Categories of inventories
In: RMB
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provision for decline in value of inventories or for impairment of contract performance costs | Carrying amount | Gross carrying amount | Provision for decline in value of inventories or for impairment of contract performance costs | Carrying amount | |
| Raw materials | 110,321,511.87 | 110,321,511.87 | 119,569,809.53 | 119,569,809.53 | ||
| Work-in-progress | 1,048,703,826.21 | 76,390,171.65 | 972,313,654.56 | 1,393,906,522.76 | 74,642,083.76 | 1,319,264,439.00 |
| Goods on hand | 571,736,351.42 | 754,367.83 | 570,981,983.59 | 468,194,587.57 | 4,406,332.80 | 463,788,254.77 |
| Goods upon delivery | 5,911,092.71 | 5,911,092.71 | 12,502,049.88 | 12,502,049.88 | ||
| Other reusable materials | 796,365.36 | 796,365.36 | 1,250,785.71 | 1,250,785.71 | ||
| Total | 1,737,469,147.57 | 77,144,539.48 | 1,660,324,608.09 | 1,995,423,755.45 | 79,048,416.56 | 1,916,375,338.89 |
(2) Provision for decline in value of inventories and for impairment of contract performance costs
In: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Provision | Others | Recovery or reversal | Others | |||
| Work-in-progress | 74,642,083.76 | 1,748,087.89 | 76,390,171.65 | |||
| Goods on hand | 4,406,332.80 | 423,571.89 | 4,075,536.86 | 754,367.83 | ||
| Total | 79,048,416.56 | 2,171,659.78 | 4,075,536.86 | 77,144,539.48 | ||
As to the Company’s products directly used for sale, the net realizable value was recognized by: theestimated selling price of the inventory minus the estimated selling expenses and relevant taxes. Externalsales have been realized with respect to the reversal of provision for decline in value of inventories in the currentperiod.The Company’s provision for decline in value of work-in-progress was made mainly because The Herstory,
a TV drama, was unable to be released after a release license was obtained therefor on November 28, 2016 due torestrictions in broadcasting. Accordingly, the provision for decline in value was fully made.
8. Contract assets
In: RMB
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provisions for impairment | Carrying amount | Gross carrying amount | Provisions for impairment | Carrying amount | |
| Operator business | 860,346,222.69 | 42,894,826.13 | 817,451,396.56 | 602,550,398.49 | 29,681,643.76 | 572,868,754.73 |
| Total | 860,346,222.69 | 42,894,826.13 | 817,451,396.56 | 602,550,398.49 | 29,681,643.76 | 572,868,754.73 |
Significant changes in the carrying amount of contract assets for the current period and reasons therefor:
In: RMB
| Item | Changes | Reason for changes |
If a provision for bad debts is made for contract assets in accordance with the general model of expected credit losses, please discloserelevant information on provisions for bad debts with reference to the disclosure method of other receivables.
□ Applicable √ N/A
Information of the provisions for impairment made for contract assets for the period
In: RMB
| Item | Provisions for the period | Reversal for the period | Removal/write-off for the period | Reason |
| Operator business | 13,213,182.37 | Made by group | ||
| Total | 13,213,182.37 | -- |
Other descriptions:
The difference between the opening balance of the current year and the closing balance of the previous year (as at December 31,2019) represents the adjustment made in accordance with the new revenue standard.
9. Other current assets
In: RMB
| Item | Closing balance | Opening balance |
| Prepayments for internet access cooperation | 19,816,194.13 | 45,657,300.81 |
| Input VAT to be deducted | 87,304,605.69 | 33,725,081.91 |
| Prepaid taxes and levies | 2,425,615.08 | 6,115,482.85 |
| Issued loans-credit loans [Note] | 6,034,159.32 | 1,803,532.21 |
| Issued loans-mortgage loans [Note] | 399,965,532.81 | 395,395,091.01 |
| Others | 4,541,557.17 | 8,582,425.11 |
| Total | 520,087,664.20 | 491,278,913.90 |
Other descriptions:
[Note] For issued loan group, the provision for impairment of loan losses amounted to RMB2,230,274.05 for the current period.
10. Long-term equity investments
In: RMB
| Investee | Opening balance (carrying amount) | Increase or decrease for the period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | |||||||
| Additional investment | Decreased investment | Investment profit or loss under equity method | Adjustment in other comprehensive income | Other equity changes | Declared cash dividends or profits | Provisions for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | 20,621,726.36 | 2,261,243.15 | 22,882,969.51 | ||||||||
| Malanshan Culture Creative Investment Co., Ltd. | 189,814,452.82 | 189,295,820.20 | -518,632.62 | ||||||||
| Sub-total | 210,436,179.18 | 189,295,820.20 | 1,742,610.53 | 22,882,969.51 | |||||||
| Total | 210,436,179.18 | 189,295,820.20 | 1,742,610.53 | 22,882,969.51 | |||||||
Other descriptions
11. Other non-current financial assets
In: RMB
| Item | Closing balance | Opening balance |
| Classified as financial assets at fair value through profit or loss | 6,946,466.60 | |
| Total | 6,946,466.60 |
Other descriptions:
12. Fixed assets
In: RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 186,924,296.25 | 180,606,150.34 |
| Total | 186,924,296.25 | 180,606,150.34 |
(1) Fixed assets
In: RMB
| Item | Buildings | Machinery and equipment | Electronic equipment, appliances and furniture | Transportation equipment | Others | Total |
| I. Original carrying amount | ||||||
| 1.Opening balance | 58,268,091.66 | 268,694,025.62 | 238,194,727.92 | 22,103,860.11 | 11,000,000.00 | 598,260,705.31 |
| 2. Increase | 22,655,301.67 | 28,238,262.44 | 1,039,000.00 | 51,932,564.11 | ||
| (1)Purchase | 22,655,301.67 | 28,238,262.44 | 1,039,000.00 | 51,932,564.11 | ||
| (2)Transfer from construction in progress | ||||||
| (3)Increase due to business combination | ||||||
| 3. Decrease | 1,970,034.18 | 2,570,730.51 | 4,800,226.76 | 9,340,991.45 | ||
| (1) Disposal or retirement | 1,970,034.18 | 2,570,730.51 | 4,800,226.76 | 9,340,991.45 |
| 4. Closing balance | 58,268,091.66 | 289,379,293.11 | 263,862,259.85 | 18,342,633.35 | 11,000,000.00 | 640,852,277.97 |
| II. Accumulated depreciation | ||||||
| 1. Opening balance | 8,781,163.86 | 224,166,288.74 | 169,592,587.55 | 14,709,777.66 | 417,249,817.81 | |
| 2. Increase | 1,908,705.38 | 18,796,528.77 | 22,435,787.87 | 1,688,194.06 | 44,829,216.08 | |
| (1) Provision | 1,908,705.38 | 18,796,528.77 | 22,435,787.87 | 1,688,194.06 | 44,829,216.08 | |
| 3. Decrease | 1,886,063.67 | 2,067,512.87 | 4,595,576.45 | 8,549,152.99 | ||
| (1) Disposal or retirement | 1,886,063.67 | 2,067,512.87 | 4,595,576.45 | 8,549,152.99 | ||
| 4. Closing balance | 10,689,869.24 | 241,076,753.84 | 189,960,862.55 | 11,802,395.27 | 453,529,880.90 | |
| III. Provision for impairment | ||||||
| 1. Opening balance | 392,428.73 | 12,308.43 | 404,737.16 | |||
| 2. Increase | ||||||
| (1) Provision | ||||||
| 3. Decrease | 1,340.46 | 5,295.88 | 6,636.34 | |||
| (1)Disposal or retirement | 1,340.46 | 5,295.88 | 6,636.34 | |||
| 4. Closing balance | 391,088.27 | 7,012.55 | 398,100.82 | |||
| VI. Book value | ||||||
| 1. Closing balance | 47,578,222.42 | 47,911,451.00 | 73,894,384.75 | 6,540,238.08 | 11,000,000.00 | 186,924,296.25 |
| 2. Opening balance | 49,486,927.80 | 44,135,308.15 | 68,589,831.94 | 7,394,082.45 | 11,000,000.00 | 180,606,150.34 |
13. Intangible assets
(1) Intangible assets
In: RMB
| Item | Land use right | Patent | Non-patent technology | Film and television play copyright | Software | Trademarks and domain names | Patent licensing fees and program adaptation rights | Game copyright | Total |
| I. Original carrying amount: | |||||||||
| 1. Opening balance | 33,157,507.40 | 12,128,370,818.55 | 161,081,841.49 | 2,884,994.29 | 29,245,283.01 | 5,934,212.57 | 12,360,674,657.31 | ||
| 2. Increase | 5,354,703,210.18 | 40,852,398.75 | 283,018.87 | 11,415,094.34 | 2,661,202.72 | 5,409,914,924.86 | |||
| (1) Purchase | 5,354,703,210.18 | 24,880,173.56 | 283,018.87 | 11,415,094.34 | 2,661,202.72 | 5,393,942,699.67 | |||
| (2) Internal research and development | 15,972,225.19 | 15,972,225.19 | |||||||
| (3) Increase due to business combinations | |||||||||
| 3. Decrease | 534,855,398.24 | 1,405,910.68 | 536,261,308.92 | ||||||
| (1) Disposal | 534,855,398.24 | 1,405,910.68 | 536,261,308.92 | ||||||
| 4. Closing | 33,157,507.40 | 16,948,218,630.49 | 201,934,240.24 | 3,168,013.16 | 40,660,377.35 | 7,189,504.61 | 17,234,328,273.25 |
| balance | |||||||||
| II. Accumulated amortization | |||||||||
| 1. Opening balance | 5,808,202.78 | 7,414,542,921.65 | 68,223,301.71 | 2,736,213.15 | 14,002,683.09 | 4,283,315.69 | 7,509,596,638.07 | ||
| 2. Increase | 676,683.82 | 4,337,288,992.15 | 19,075,540.92 | 235,960.75 | 5,593,921.16 | 2,495,853.38 | 4,365,366,952.18 | ||
| (1) Provisions | 676,683.82 | 4,337,288,992.15 | 19,075,540.92 | 235,960.75 | 5,593,921.16 | 2,495,853.38 | 4,365,366,952.18 | ||
| 3. Decrease | 534,855,398.24 | 234,318.44 | 535,089,716.68 | ||||||
| (1) Disposal | 534,855,398.24 | 234,318.44 | 535,089,716.68 | ||||||
| 4. Closing balance | 6,484,886.60 | 11,216,976,515.56 | 87,298,842.63 | 2,972,173.90 | 19,596,604.25 | 6,544,850.63 | 11,339,873,873.57 | ||
| III. Provisions for impairment | |||||||||
| 1. Opening balance | |||||||||
| 2. Increase | |||||||||
| (1) Provisions | |||||||||
| 3. Decrease | |||||||||
| (1) Disposal | |||||||||
| 4. Closing balance | |||||||||
| IV. Book value | |||||||||
| 1. Closing balance | 26,672,620.80 | 5,731,242,114.93 | 114,635,397.61 | 195,839.26 | 21,063,773.10 | 644,653.98 | 5,894,454,399.68 | ||
| 2. Opening balance | 27,349,304.62 | 4,713,827,896.90 | 92,858,539.78 | 148,781.14 | 15,242,599.92 | 1,650,896.88 | 4,851,078,019.24 |
Proportion of intangible assets generated from the Company’s internal research and development to the balance of intangible assets atthe end of the period: 0.13%.
14. Development expenditure
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | ||||
| In-house development expenditure | Others | Recognized intangible assets | Transfer to profit or loss for the period | |||||
| Mangoli system | 12,899,556.92 | 3,072,668.27 | 15,972,225.19 | |||||
| Cloud platform construction project | 25,439,326.92 | 125,750,660.43 | 151,189,987.35 | |||||
| Smart credit system | 6,074,244.50 | 6,074,244.50 | ||||||
| Total | 38,338,883.84 | 134,897,573.20 | 15,972,225.19 | 157,264,231.85 | ||||
Other descriptions
1) The Mangoli System is a project developed by Hunan Happy Money Microfinance Co., Ltd. It is intended to solve problemssuch as underlying data security, system compatibility, and iterative expansion., and to improve the financial technology ability, sothat the system can support businesses more significantly.
The Mangoli System began its market research in October 2018, and was established in December 2018. As it has been eligiblefor capitalization and recognition in the development expenses since January 2019, the expenses related to the project that are eligiblefor capitalization are included in the development expenses, and the expenses incurred in the previous research phase are directlyrecognized in the current profit and loss.
2) Mongo TV Cloud Storage and Multi-screen Broadcast Platform Construction Project (“Cloud Platform Construction
Project”) is a supporting project funded by Happy Sunshine financing funds. This project, which is intended to provide enhancedplatform technology support for enterprise content production and dissemination to improve users’ experience and satisfaction,reduce platform operating costs and enhance platform data security and reliability, is an inevitable choice for the strategicdevelopment of enterprises in the fierce competition.The Cloud Platform Construction Project was planned in 2017 and implemented upon approval of the board meeting of HappySunshine on July 30, 2019. From September 1, 2019, the expenses related to the project that are eligible for capitalization areincluded in the development expenses, and the expenses incurred in the previous research phase are directly recognized in the currentprofit or loss.
3) The Smart Credit System aims to create diversified credit products, quickly adapt to different customer groups in the market,and realize smart monitoring and customer management after loan. From May 2020, the expenses related to the project that areeligible for capitalization are included in the development expenses, and the expenses in the previous research stage are directlyrecognized in the current profit or loss.
15. Long-term prepaid expenses
In: RMB
| Item | Opening balance | Increase | Amortization | Other decrease | Closing balance |
| Projects of rebuilding and decoration for rented buildings | 61,646,861.37 | 41,387,062.61 | 25,691,871.99 | 77,342,051.99 | |
| Total | 61,646,861.37 | 41,387,062.61 | 25,691,871.99 | 77,342,051.99 |
Other descriptions
16. Deferred income tax assets/deferred income tax liabilities
(1) Details of unrecognized deferred tax assets
In: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 19,411,205.95 | 9,364,947.85 |
| Deductible losses | 106,310,201.58 | 80,994,642.11 |
| Total | 125,721,407.53 | 90,359,589.96 |
(2) Deductible losses, for which no deferred income tax assets are recognized, will expire in the followingyear
In: RMB
| Year | Closing balance | Opening balance | Note |
| 2021 | 390,483.62 | 1,923,827.66 |
| 2022 | 18,240,181.33 | 24,850,507.66 | |
| 2023 | 34,021,526.74 | 34,021,526.74 | |
| 2024 | 3,629,802.99 | 20,198,780.05 | |
| 2025 | 50,028,206.90 | ||
| Total | 106,310,201.58 | 80,994,642.11 | -- |
Other descriptions:
17. Other non-current assets:
In: RMB
| Item | Closing balance | Opening balance | ||||
| Gross carrying amount | Provisions for impairment | Carrying amount | Gross carrying amount | Provisions for impairment | Carrying amount | |
| Prepayments for equipment | 2,023,481.01 | 2,023,481.01 | 1,127,499.30 | 1,127,499.30 | ||
| Total | 2,023,481.01 | 2,023,481.01 | 1,127,499.30 | 1,127,499.30 | ||
Other descriptions:
18. Short-term borrowings
(1) Category of short-term borrowings
In: RMB
| Item | Closing balance | Opening balance |
| Credit borrowings | 39,731,500.00 | 349,352,600.00 |
| Credit borrowings - interest | 57,610.68 | 464,347.83 |
| Total | 39,789,110.68 | 349,816,947.83 |
Descriptions of categorization of short-term borrowings:
19. Notes payable
In: RMB
| Category | Closing balance | Opening balance |
| Commercial acceptances | 221,862,982.11 | 42,502,468.46 |
| Bank acceptances | 490,429,053.64 | 283,377,994.65 |
| Total | 712,292,035.75 | 325,880,463.11 |
The total of notes payable due but not yet paid for the period is RMB0.00.
20. Accounts payable
(1) Accounts payable
In: RMB
| Item | Closing balance | Opening balance |
| Purchase payment | 5,217,087,330.62 | 5,048,443,928.94 |
| Total | 5,217,087,330.62 | 5,048,443,928.94 |
(2) Significant accounts payable aged not less than one year
In: RMB
| Item | Closing balance | Reason for failure to be repaid or carried forward |
| The First | 159,000,000.00 | Not yet due for settlement |
| The Second | 108,800,000.00 | Not yet due for settlement |
| The Third | 100,828,305.14 | Not yet due for settlement |
| The Fourth | 50,395,471.69 | Not yet due for settlement |
| The Fifth | 41,254,117.83 | Not yet due for settlement |
| The Sixth | 43,716,981.13 | Not yet due for settlement |
| The Seventh | 40,080,000.00 | Not yet due for settlement |
| Total | 544,074,875.79 | -- |
Other descriptions:
21. Contract liabilities
In: RMB
| Item | Closing balance | Opening balance |
| Loan | 663,307,479.05 | 661,047,311.39 |
| Investments in film and television play co-production | 146,186,845.74 | 509,228,175.11 |
| Membership service | 520,980,698.31 | 247,314,991.08 |
| Total | 1,330,475,023.10 | 1,417,590,477.58 |
Significant changes in the carrying amount during the Reporting Period and reasons therefor:
In: RMB
| Item | Changes | Reason for changes |
22. Employee benefits payable
(1) Employee benefits payable
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| I. Short-term remuneration | 588,179,880.34 | 1,537,987,554.31 | 1,269,710,835.76 | 856,456,598.89 |
| II. Post-employment benefits-defined contribution plan | 643,815.52 | 5,029,951.47 | 5,607,986.15 | 65,780.84 |
| III. Termination benefits | 535,555.88 | 10,847,634.33 | 11,192,742.10 | 190,448.11 |
| Total | 589,359,251.74 | 1,553,865,140.11 | 1,286,511,564.01 | 856,712,827.84 |
(2) Short-term remuneration
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Wages or salaries, bonuses, allowances and subsidies | 586,902,865.99 | 1,465,776,621.36 | 1,197,601,119.27 | 855,078,368.08 |
| 2. Staff welfare | 21,834,085.95 | 21,834,085.95 | ||
| 3. Social security contributions | 373,917.63 | 18,161,113.40 | 18,215,659.12 | 319,371.91 |
| Including: Medical insurance | 329,348.26 | 15,702,153.43 | 15,721,473.35 | 310,028.34 |
| Work injury | 12,559.86 | 136,174.53 | 146,443.20 | 2,291.19 |
| Maternity insurance | 32,009.51 | 385,543.17 | 410,500.30 | 7,052.38 |
| Other commercial insurance | 1,937,242.27 | 1,937,242.27 | ||
| 4. Housing funds | 250,246.00 | 28,565,216.52 | 28,490,787.29 | 324,675.23 |
| 5. Union running costs and employee education cost | 102,072.57 | 3,650,517.08 | 3,018,405.98 | 734,183.67 |
| Other short-term remuneration | 550,778.15 | 550,778.15 | ||
| Total | 588,179,880.34 | 1,537,987,554.31 | 1,269,710,835.76 | 856,456,598.89 |
(3) Defined benefit plan
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Basic pensions | 615,832.84 | 4,849,475.73 | 5,402,303.94 | 63,004.63 |
| 2. Unemployment insurance | 27,982.68 | 180,475.74 | 205,682.21 | 2,776.21 |
| Total | 643,815.52 | 5,029,951.47 | 5,607,986.15 | 65,780.84 |
Other descriptions:
23. Taxes payable
In: RMB
| Item | Closing balance | Opening balance |
| VAT | 17,317,973.41 | 31,925,708.15 |
| Enterprise income tax | 4,183,186.13 | 1,020,008.15 |
| Personal income tax | 17,925,339.96 | 11,616,474.32 |
| City maintenance and construction tax | 422,228.46 | 611,160.04 |
| Stamp duty | 2,395,805.75 | 2,556,733.85 |
| Educational surcharges | 315,577.50 | 533,271.72 |
| Development Fees for Cultural Undertakings | 88,789,083.88 | 89,141,920.66 |
| Other taxes | 178,690.86 | 158,231.76 |
| Total | 131,527,885.95 | 137,563,508.65 |
Other descriptions:
24. Other payables
In: RMB
| Item | Closing balance | Opening balance |
| Other payables | 160,651,194.91 | 202,952,467.24 |
| Total | 160,651,194.91 | 202,952,467.24 |
(1) Other payables
1) Other payables by nature
In: RMB
| Item | Closing balance | Opening balance |
| Receivables and payables | 131,046,966.11 | 171,975,402.58 |
| Security deposit | 29,604,228.80 | 30,977,064.66 |
| Total | 160,651,194.91 | 202,952,467.24 |
2) Other significant payables aged not less than one year
In: RMB
| Item | Closing balance | Reason for failure to be repaid or carried forward |
| The First | 3,784,547.60 | Not yet due for settlement |
| Total | 3,784,547.60 | -- |
Other descriptions
25. Non-current liabilities due within one years
In: RMB
| Item | Closing balance | Opening balance |
| Long-term employee benefits payable due within 1 year | 10,400,000.00 | |
| Total | 10,400,000.00 |
Other information:
26. Other current liabilities
In: RMB
| Item | Closing balance | Opening balance |
| Logistics and distribution expenses | 1,909,886.62 | 3,391,046.30 |
| Output tax to be transferred | 106,261,801.24 | 45,541,221.04 |
| Internet access cooperation | 24,923,744.58 | 52,969,657.49 |
| Others | 5,603,393.15 | 13,835,329.26 |
| Total | 138,698,825.59 | 115,737,254.09 |
Changes in short-term bonds payable:
In: RMB
| Name of bond | Par value | Issue date | Term of bond | Issue amount | Opening balance | Issue for the period | Interest accrued based on | Amortization of premiums | Repayment for the period | Closing balance |
| par value | or discounts |
Other descriptions:
The difference between the opening balance of the current year and the closing balance of the previous year (as at December 31,2019) can be referred to the descriptions in Note V 29, Changes in significant accounting policies and accounting estimates.
27. Provisions
In: RMB
| Item | Closing balance | Opening balance | Reason |
| Pending litigation | 8,305,486.15 | 14,092,872.30 | Estimated compensation for pending litigation |
| Provision for infringement compensation | 140,000.00 | Estimated compensation | |
| Total | 8,305,486.15 | 14,232,872.30 | -- |
Other descriptions, including important assumptions and estimation explanations related to significant estimated liabilities:
28. Deferred income
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Reason |
| Government grants | 46,271,594.13 | 29,383,962.27 | 26,716,720.71 | 48,938,835.69 | Government grants related to assets and income |
| Total | 46,271,594.13 | 29,383,962.27 | 26,716,720.71 | 48,938,835.69 | -- |
Projects involving government grants
In: RMB
| Liabilities | Opening balance | Additional government grants | Amount recognized in non-operating income | Amount recognized in other income | Amount offset against costs and expenses | Other changes | Closing balance | Related to assets/income |
| Happigo Supply Chain Urban Co-Distribution System Project | 2,583,002.83 | 100,000.00 | 2,483,002.83 | Related to assets | ||||
| Special | 1,015,787.96 | 40,229.22 | 975,558.74 | Related to |
| funds for the development of the modern logistics | assets | |||||||
| The second batch of special guidance funds of Hunan Province to cultivate and develop strategic emerging industries | 199,999.96 | 199,999.96 | Related to assets | |||||
| Special funds for "Cloud Multi-screen" service platform | 1,380,000.00 | 1,380,000.00 | Related to assets | |||||
| The second batch of special funds for modern services development - Mango TV mobile client | 140,000.00 | 60,000.00 | 80,000.00 | Related to assets | ||||
| Mobile internet industry development special fund | 4,680,677.20 | 2,064,638.24 | 2,616,038.96 | Related to assets | ||||
| Special funds for the development of the cultural industry | 19,200,233.36 | 7,750,000.00 | 8,456,954.89 | 18,493,278.47 | Related to assets |
| Guidance funds for provincial-level cultural industry development | 1,133,333.44 | 399,999.96 | 733,333.48 | Related to assets | ||||
| Special funds for the development of modern services | 180,000.00 | 60,000.00 | 120,000.00 | Related to assets | ||||
| Special funds for Mongo TV Cloud Platform (ERU) project | 6,000,000.00 | 6,000,000.00 | Related to assets | |||||
| Silk Road Film and Television Bridge Project of the State Administration of Radio, Film and Television | 1,132,075.48 | 566,037.74 | 566,037.74 | Related to assets | ||||
| Network audio-visual program quality creation and distribution project | 258,000.00 | 72,000.00 | 186,000.00 | Related to assets | ||||
| “Youth Mango Festival” project | 8,000,000.00 | 666,666.67 | 7,333,333.33 | Related to assets | ||||
| Others | 714,907.67 | 483,962.27 | 237,951.13 | 960,918.81 | Related to assets | |||
| Key project | 622,641.51 | 622,641.51 | Related to |
| of "going global" by the State Administration of Radio, Film and Television | income | |||||||
| Guidance fund subsidies for cultural business of Hunan Province | 1,525,333.33 | 284,000.00 | 1,241,333.33 | Related to income | ||||
| Central cultural industry development special funds | 5,000,000.00 | 5,000,000.00 | Related to income | |||||
| Malanshan cultural and creative subsidy | 333,333.33 | 333,333.33 | Related to income | |||||
| Intellectual property subsidy funds | 172,268.06 | 172,268.06 | Related to income | |||||
| The second batch of special funds for the development of modern service industry in Hunan Province | 8,000,000.00 | 8,000,000.00 | Related to income | |||||
| Mango TV high-tech interactive video creation | 150,000.00 | 150,000.00 | Related to income |
| platform project | ||||||||
| Mango TV international convergence media communication project | 4,000,000.00 | 4,000,000.00 | Related to income | |||||
| Mango TV smart home page push project | 1,000,000.00 | 1,000,000.00 | Related to income | |||||
| Total | 46,271,594.13 | 29,383,962.27 | 26,716,720.71 | 48,938,835.69 |
Other descriptions:
29. Share capital
In: RMB
| Opening balance | Changes (+ or -) | Closing balance | |||||
| New shares issued | Bonus shares | Conversion of equity reserve into share capital | Others | Sub-total | |||
| Total shares | 1,780,377,511.00 | 1,780,377,511.00 | |||||
Other information:
30. Capital reserve
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Capital premium (Share capital premium) | 4,832,673,268.51 | 4,832,673,268.51 | ||
| Other capital reserve | 6,264,437.84 | 6,264,437.84 | ||
| Total | 4,838,937,706.35 | 4,838,937,706.35 |
Other descriptions, including changes and reasons therefor:
31. Other comprehensive income
In: RMB
| Items | Opening balance | Amount for the current period | Closing balance | |||||
| Amount before income tax for the current period | Less: Amount included in other comprehensive income for the prior periods and transferred to the profit or loss for the current period | Less: Amount included in other comprehensive income for the prior periods and transferred to the retained earnings for the current period | Less: Income tax expenses | Attributable to the parent company after tax | Attributable to minority interests after tax | |||
| II. Other comprehensive income to be reclassified into profit or loss | -2,759.37 | -2,759.37 | -2,759.37 | |||||
| Translation differences of financial statements denominated in foreign currencies | -2,759.37 | -2,759.37 | -2,759.37 | |||||
| Total of other comprehensive income | -2,759.37 | -2,759.37 | -2,759.37 | |||||
Other descriptions, including adjustment of the effective part of the cash flow hedge gains and losses transferred to initiallyrecognized amount of hedged items:
32. Surplus reserve
In: RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserve | 84,782,321.71 | 2,357,238.43 | 87,139,560.14 | |
| Total | 84,782,321.71 | 2,357,238.43 | 87,139,560.14 |
Descriptions of surplus reserve, including changes for the current period and reasons therefor:
In the current period, the surplus reserve is appropriated according to 10% of the net profit of the parent company.
33. Undistributed profit
In: RMB
| Items | Current period | Prior period |
| Retained profits at the end of prior period before adjustment | 2,079,761,680.01 | 923,476,426.28 |
| Retained profits at the beginning of the period after adjustment | 2,079,761,680.01 | 923,476,426.28 |
| Add: Net profit attributable to owners of the Company for the period | 1,982,159,476.82 | 1,156,285,253.73 |
| Less: Appropriation to statutory surplus reserve | 2,357,238.43 | |
| Distribution to owners (or shareholders) | 178,037,751.10 | |
| Retained profits at the end of the period | 3,881,526,167.30 | 2,079,761,680.01 |
Details of adjustments to retained profits at the beginning of the period:
1) Retained profits at the beginning of the period were affected by RMB0.00 due to the retrospective adjustment under theAccounting Standards for Business Enterprises and related new regulations.
2) Retained profits at the beginning of the period were affected by RMB0.00 due to changes in accounting policies.
3) Retained profits at the beginning of the period were affected by RMB0.00 due to the correction of significant accounting errors.
4) Retained profits at the beginning of the period were affected by RMB0.00 due to changes in the scope of consolidation resultingfrom business combination involving enterprises under common control.
5) Retained profits at the beginning of the period were affected by RMB0.00 in total due to other adjustments.
34. Operating income and operating costs
In: RMB
| Item | Amount for the current period | Amount for the prior period | ||
| Revenue | Cost | Revenue | Cost | |
| Principal operating activities | 13,991,615,817.08 | 9,224,019,161.88 | 12,283,968,853.93 | 8,181,187,347.79 |
| Other operating activities | 13,919,138.28 | 6,269,482.56 | 216,695,378.12 | 103,553,601.63 |
| Total | 14,005,534,955.36 | 9,230,288,644.44 | 12,500,664,232.05 | 8,284,740,949.42 |
Whether the lower of the net profit after non-recurring gain or loss is negative
□ Yes √ No
Information on Revenue:
In: RMB
| Category of Contract | Segment 1 | Segment 2 | Total | |
| Commodity type | 13,992,232,833.33 | 13,992,232,833.33 | ||
| Including: | ||||
| New media platform operation | 9,060,568,867.27 | 9,060,568,867.27 | ||
| New media interactive entertainment content | 2,764,980,756.83 | 2,764,980,756.83 |
| production and operation | ||||
| Media retail | 2,104,532,724.46 | 2,104,532,724.46 | ||
| Others | 62,150,484.77 | 62,150,484.77 | ||
| By region | 13,992,232,833.33 | 13,992,232,833.33 | ||
| Including: | ||||
| Within Hunan | 4,500,604,312.69 | 4,500,604,312.69 | ||
| Outside Hunan | 9,491,628,520.64 | 9,491,628,520.64 | ||
| Including: | ||||
| Including: | ||||
| By the time of commodity transfer | 13,992,232,833.33 | 13,992,232,833.33 | ||
| Including: | ||||
| Goods (transferred at a certain time point) | 8,835,348,876.25 | 8,835,348,876.25 | ||
| Services (rendered within a certain time period) | 5,156,883,957.08 | 5,156,883,957.08 | ||
| Including: | ||||
| Including: |
Information regarding performance obligations:
NoneInformation regarding the transaction price allocated to the remaining performance obligations:
The revenue corresponding to the performance obligations for which the contract has been signed but has not yet been performed orfully performed at the end of this Reporting Period is RMB1,330,475,023.10, among which RMB is expected to berecognized as the revenue in , RMB is expected to be recognized as the revenue in , and RMB isexpected to be recognized as the revenue in .Other descriptionsThe revenue-related statement does not include the revenue from leasing in the amount of RMB13,302,122.03.
35. Taxes and levies
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Consumption tax | 280,585.49 | 167,486.70 |
| City construction and maintenance tax | 10,756,920.01 | 5,900,635.15 |
| Education surcharges | 7,721,309.79 | 4,437,184.38 |
| Property tax | 648,464.10 | 651,832.90 |
| Land use tax | 294,816.00 | 294,816.00 |
| Vehicle and vessel tax | 30,730.00 | 24,970.00 |
| Stamp duty | 2,190,238.78 | 2,706,383.81 |
| Development fees for cultural undertakings | 82,219,302.29 | |
| Others | 54,686.31 | 28,120.33 |
| Total | 21,977,750.48 | 96,430,731.56 |
Other descriptions:
36. Selling expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee’s benefits and labor costs | 649,713,450.73 | 594,022,500.47 |
| Depreciation and amortization | 11,258,434.02 | 10,708,960.80 |
| Advertising costs | 1,275,774,161.48 | 1,175,246,290.72 |
| Payments for internet access cooperation | 104,333,924.97 | 200,426,442.86 |
| Settlement costs of logistics and service charges for payment collection (Note) | 6,646,826.33 | 53,935,525.49 |
| Business travel expenses | 24,555,943.68 | 25,541,037.00 |
| Program production costs | 4,706,447.54 | 9,730,185.87 |
| Channel sales and operations development expenses | 49,839,615.85 | 35,871,112.32 |
| Others | 37,586,465.27 | 35,202,099.92 |
| Total | 2,164,415,269.87 | 2,140,684,155.45 |
Other descriptions:
Note: As adjusted according to the new revenue standard, the transportation expenses for the period is presented in the mainoperating costs.
37. General and administrative expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee’s benefits and labor costs | 428,389,317.79 | 391,323,328.42 |
| Depreciation and amortization | 45,517,534.33 | 58,628,415.09 |
| Legal costs | 12,643,454.90 | 13,302,853.01 |
| Office and administrative service | 90,263,227.76 | 95,274,367.16 |
| Agency fees | 8,368,627.11 | 11,738,465.41 |
| Business entertainment expenses | 2,567,649.76 | 2,740,267.03 |
| Others | 41,450,911.08 | 37,130,743.80 |
| Total | 629,200,722.73 | 610,138,439.92 |
Other descriptions:
38. Research and development expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Employee’s benefits and labor costs | 78,237,277.89 | 128,112,151.81 |
| Depreciation and amortization | 12,030,086.93 | 21,407,106.17 |
| Technical service fees | 88,241,580.19 | 81,582,077.08 |
| Others | 5,876,003.71 | 8,197,996.80 |
| Total | 184,384,948.72 | 239,299,331.86 |
Other descriptions:
39. Financial expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Interest expenses | 13,770,536.66 | 15,981,713.90 |
| Less: Interest income | 116,608,027.78 | 65,976,045.63 |
| Finance discount | 238,406.56 | |
| Service charge | 16,999,003.73 | 13,022,001.64 |
| Exchange profit or loss | -542,960.12 | 395,763.36 |
| Total | -86,619,854.07 | -36,576,566.73 |
Other descriptions:
40. Other income
In: RMB
| Source of other income | Amount for the current period | Amount for the prior period |
| Government grants related to assets | 20,304,477.81 | 12,748,320.76 |
| Government grants related to income | 29,158,039.45 | 44,851,235.43 |
| Refund of service fees of withholding personal income tax | 6,044,849.19 | 1,123,274.02 |
| Additional VAT deduction | 97,244,205.84 | |
| Total | 152,751,572.29 | 58,722,830.21 |
41. Investment income
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Income from long-term equity investments under equity method | 1,742,610.53 | -5,105,446.79 |
| Income from disposal of long-term equity investments | 70,437,276.18 | |
| Income from investments in film and television play without copyrights | 4,706,280.41 | 4,227,644.04 |
| Income from wealth management products | 3,906,349.28 | 7,344,704.18 |
| Total | 80,792,516.40 | 6,466,901.43 |
Other descriptions:
42. Income from changes in fair values
In: RMB
| Source of income from changes in fair values | Amount for the current period | Amount for the prior period |
| Other non-current financial assets(Financial assets at fair value through profit or loss) | -1,370,986.18 | |
| Total | -1,370,986.18 |
Other descriptions:
43. Impairment losses of credit
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Bad debt losses of other receivables | -1,273,395.96 | 31,334.30 |
| Bad debt losses of accounts receivable | -49,083,327.37 | -50,020,218.33 |
| Other current assets-losses of impairment on issued loans | -2,230,274.05 | -1,253,943.11 |
| Total | -52,586,997.38 | -51,242,827.14 |
Other descriptions:
44. Impairment losses of assets
In: RMB
| Items | Amount for the current period | Amount for the prior period |
| I. Bad debt losses | -21,417,042.28 | 1,371,927.60 |
| II. Losses from decline in value of inventories and impairment of contract performance costs | -2,171,659.78 | -1,996,052.09 |
| XII. Impairment losses of contractual assets | -13,213,182.37 | |
| Total | -36,801,884.43 | -624,124.49 |
Other descriptions:
45. Income from disposal of assets
In: RMB
| Source of income from disposal of assets | Amount for the current period | Amount for the prior period |
| Income from disposal of fixed assets | 354,684.48 | -168,797.67 |
46. Non-operating income
In: RMB
| Item | Amount for the current period | Amount for the prior period | Amount included in the non-recurring profit or loss for the current period |
| Payment unable to be made | 3,249,641.40 | 3,249,641.40 | |
| Gains from damage and retirement of non-current assets | 51,169.81 | ||
| Income from safeguarding legal rights | 21,772,303.69 | 24,730,857.50 | 21,772,303.69 |
| Others | 1,864,339.26 | 1,061,063.97 | 1,864,339.26 |
| Total | 26,886,284.35 | 25,843,091.28 | 26,886,284.35 |
Government grants included in profit and loss for the current period
In: RMB
| Project | Issuer | Reason | Nature | Did the grants affect earnings or losses for the current year? | Special grants? | Amount for the current period | Amount for the current period | Related to assets/income |
Other descriptions:
47. Non-operating expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period | Amount included in the non-recurring profit or loss for the current period |
| Losses from debt restructuring | 2,576,237.35 | 1,004,295.80 | 2,576,237.35 |
| Losses from damage and retirement of non-current assets | 736,201.04 | 135,510.79 | 736,201.04 |
| Compensation expenditures | 26,032,164.94 | 21,447,884.24 | 26,032,164.94 |
| Losses from outbreak | 15,627,676.21 | 15,627,676.21 | |
| Others | 1,563,601.45 | 3,451,527.88 | 1,563,601.45 |
| Total | 46,535,880.99 | 26,039,218.71 | 46,535,880.99 |
Other descriptions:
48. Income tax expenses
(1) Table of income tax expenses
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Current income tax expenses | 7,411,218.58 | 16,092,665.26 |
| Deferred income tax expenses | 3,938,878.58 | |
| Total | 7,411,218.58 | 20,031,543.84 |
(2) Reconciliation of income tax expenses to the accounting profit
In: RMB
| Item | Amount for the current period |
| Total profit | 1,986,747,767.91 |
| Income tax expense calculated based on statutory/applicable tax rate | 496,686,941.98 |
| Effect of different tax rates of subsidiaries operating in other jurisdictions | -494,232,528.50 |
| Effect of adjustment on income tax for the period | -1,708,718.01 |
| Effect of non-taxable income | -565,310.79 |
| Effect of non-deductible cost, expense and loss | 1,874,964.40 |
| Effect of utilizing deductible loss not recognized for deferred tax | -6,077,279.62 |
| assets for prior period | |
| Effect of deductible temporary difference or deductible loss not recognized for deferred tax assets for the current period | 12,236,955.68 |
| Additional deduction of R&D expenses | -803,806.56 |
| Income tax expense | 7,411,218.58 |
Other descriptions
49. Other comprehensive income
See the accompanying Note 31. Other comprehensive income.
50. Items in the cash flow statement
(1) Other cash receipts relating to operating activities
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Other business income | 14,754,286.58 | 192,630,932.33 |
| Government grants | 72,405,901.23 | 42,494,918.97 |
| Interest income | 116,608,027.78 | 65,976,045.63 |
| Note deposits and legal affairs deposits | 10,422,873.28 | |
| Income from safeguarding legal rights | 21,772,303.69 | 24,730,857.50 |
| Receivables and payables and others | 28,128,702.93 | 35,197,705.87 |
| Total | 253,669,222.21 | 371,453,333.58 |
Descriptions of other cash receipts relating to operating activities:
(2) Other cash payments relating to operating activities
In: RMB
| Items | Amount for the current period | Amount for the prior period |
| Payments of various expenses | 1,721,402,373.87 | 1,806,621,786.03 |
| Other business expenditures | 6,645,651.51 | 82,336,163.55 |
| Bank service fees | 16,999,003.73 | 13,022,001.64 |
| Others | 42,190,406.87 | 40,067,901.04 |
| Total | 1,787,237,435.98 | 1,942,047,852.26 |
Descriptions of other cash payments relating to operating activities:
(3) Other cash receipts relating to investing activities
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Recovery of bank wealth management products | 622,500,000.00 | 840,100,000.00 |
| Income from wealth management products | 3,906,349.28 | 7,344,704.18 |
| Income from investments in copyrights where the investor have no copyrights | 945,045.86 | |
| Received investments in film and television plays | 10,390,721.60 | |
| Total | 626,406,349.28 | 858,780,471.64 |
Descriptions of other cash receipts relating to investing activities:
(4) Other cash payments relating to investing activities
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Wealth management products | 622,500,000.00 | 657,600,000.00 |
| Total | 622,500,000.00 | 657,600,000.00 |
Descriptions of other cash payments relating to investing activities:
(5) Other cash payments relating to financing activities
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Supporting financing expenses and expenditures | 657,257.37 | |
| Total | 657,257.37 |
Descriptions of other cash payments relating to financing activities:
51. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
In: RMB
| Supplementary information | Amount for the current period | Amount for prior period |
| 1. Reconciliation of net profit to cash flow from operating activities: | -- | -- |
| Net profit | 1,979,336,549.33 | 1,157,502,515.46 |
| Add: Provisions for impairment losses of assets | 89,388,881.81 | 51,866,951.63 |
| Depreciation of fixed assets, depletion of oil and gas assets, depreciation of bearer biological assets | 44,829,216.08 | 60,969,750.12 |
| Depreciation of use right assets | ||
| Amortization of intangible assets | 4,365,366,952.18 | 3,684,525,176.86 |
| Amortization of long-term prepaid expenses | 25,691,871.99 | 25,123,027.11 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (gains are indicated by “－") | -354,684.48 | 168,797.67 |
| Losses on retirement of fixed assets (gains are indicated by "－") | 736,201.04 | 84,340.98 |
| Losses on changes in fair values (gains are indicated by "－") | 1,370,986.18 | |
| Financial expenses (gains are indicated by "－") | 13,546,992.93 | 16,377,477.26 |
| Investment losses (gains are indicated by "－") | -80,792,516.40 | -6,466,901.43 |
| Decrease in deferred tax assets (increase is indicated by "－") | 3,938,878.58 | |
| Increase in deferred tax liabilities (decrease is indicated by "－") | ||
| Decrease in inventories (increase is indicated by "－") | 253,879,071.02 | 296,441,004.11 |
| Decrease in receivables from operating activities (increase is indicated by "－") | -1,256,748,283.48 | -1,048,364,434.32 |
| Increase in payables from operating activities (decrease is indicated by "－") | 500,793,311.24 | 1,692,076,134.46 |
| Others | -5,354,703,210.18 | -5,642,746,993.49 |
| Net cash flow from operating activities | 580,970,353.08 | 292,866,711.18 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | -- | -- |
| Conversion of debts into capital | ||
| Convertible corporate bonds due within one years | ||
| Fixed assets leased in under financing leases | ||
| 3. Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 5,314,463,484.01 | 5,041,075,499.16 |
| Less: Opening balance of cash | 5,041,075,499.16 | 2,514,587,154.25 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 273,387,984.85 | 2,526,488,344.91 |
(2) Composition of cash and cash equivalents
In: RMB
| Item | Closing balance | Opening balance |
| I. Cash | 5,314,463,484.01 | 5,041,075,499.16 |
| Including: Cash on hand | 86,976.40 | 104,219.13 |
| Bank deposit that can be paid at any time | 5,296,358,510.78 | 5,003,669,597.21 |
| Other monetary funds that can be paid at any time | 18,017,996.83 | 37,301,682.82 |
| III. Closing balance of cash and cash equivalents | 5,314,463,484.01 | 5,041,075,499.16 |
Other descriptions:
52. Assets with restrictions in ownership or use right
In: RMB
| Items | Gross carrying amount at the end of the period | Reason for restriction |
| Cash and bank balances | 21,856,302.69 | Frozen amounts due to litigation, POS deposits and third-party platform account deposits |
| Total | 21,856,302.69 | -- |
Other descriptions:
53. Foreign currency item
(1) Foreign currency item
In: RMB
| Item | Closing balance of foreign currency | Exchange Rate | Translated balance in RMB at the end of the period |
| Cash and bank balances | -- | -- | 4,057,722.10 |
| Including: USD | 621,882.65 | 6.5249 | 4,057,722.10 |
| EUR | |||
| HKD | |||
| Accounts receivable | -- | -- | 251,861.14 |
| Including: USD | 38,600.00 | 6.5249 | 251,861.14 |
| EUR | |||
| HKD | |||
| Long-term borrowings | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
Other descriptions:
(2) Descriptions of overseas operating entities, including disclosure of the main overseas business locations,functional currency and the basis for selection of important overseas operating entities, and the reasons forchanges in functional currency (if any).
□ Applicable √ N/A
54. Government grants
(1) Basic information of government grants
In: RMB
| Category | Amount | Line item | Amount included in profit or loss for the current period |
| Happigo Supply Chain Urban Co-Distribution System Project | 100,000.00 | Other income | 100,000.00 |
| Special funds for the development of the modern logistics | 40,229.22 | Other income | 40,229.22 |
| The second batch of special guidance funds of Hunan Province to cultivate and develop strategic emerging industries | 199,999.96 | Other income | 199,999.96 |
| Special funds for "Cloud Multi-screen" service platform | 1,380,000.00 | Other income | 1,380,000.00 |
| The second batch of special funds for modern services development - Mango TV mobile client | 60,000.00 | Other income | 60,000.00 |
| Mobile internet industry development special fund | 2,064,638.24 | Other income | 2,064,638.24 |
| Special funds for the development of the cultural industry | 8,456,954.89 | Other income | 8,456,954.89 |
| Guidance funds for provincial-level cultural industry development | 399,999.96 | Other income | 399,999.96 |
| Special funds for the development of modern services | 60,000.00 | Other income | 60,000.00 |
| Special funds for Mongo TV Cloud Platform (ERU) project | 6,000,000.00 | Other income | 6,000,000.00 |
| Silk Road Film and Television Bridge Project of the State Administration of Radio, Film and Television | 566,037.74 | Other income | 566,037.74 |
| Network audio-visual program quality creation and distribution project | 72,000.00 | Other income | 72,000.00 |
| 2020 “Youth Mango Festival” Project | 666,666.67 | Other income | 666,666.67 |
| Others | 237,951.13 | Other income | 237,951.13 |
| Key project of "going global" by the State Administration of Radio, Film and Television | 622,641.51 | Other income | 622,641.51 |
| Guidance fund subsidies for cultural business of Hunan Province | 284,000.00 | Other income | 284,000.00 |
| Central cultural industry development special funds | 5,000,000.00 | Other income | 5,000,000.00 |
| Malanshan cultural and creative subsidy | 333,333.33 | Other income | 333,333.33 |
| Intellectual property subsidy funds | 172,268.06 | Other income | 172,268.06 |
| R&D awards for enterprises, universities and research institutes | 4,079,000.00 | Other income | 4,079,000.00 |
| Special fund award for movie and television culture development | 2,942,576.00 | Other income | 2,942,576.00 |
| Enterprise development award on “case-by-case” basis for “four types of large-scale enterprises” | 2,337,000.00 | Other income | 2,337,000.00 |
| Activity bonus for Malanshan Cup international algorithm competition | 1,990,000.00 | Other income | 1,990,000.00 |
| Subsidy for job stabilization | 1,916,448.22 | Other income | 1,916,448.22 |
| The “five one” project award for the City of the Family by the Publicity Department of the CPC | 900,000.00 | Other income | 900,000.00 |
| Subsidy funds for modern service enterprises newly introduced in Xiaoshan District | 698,100.00 | Other income | 698,100.00 |
| Financial support for development of e-commerce industry | 660,000.00 | Other income | 660,000.00 |
| Financial support funds | 576,000.00 | Other income | 576,000.00 |
| Special fund for risk compensation to micro-loan companies | 570,000.00 | Other income | 570,000.00 |
| Awards for key cultural export enterprises and projects | 500,000.00 | Other income | 500,000.00 |
| New media conference project | 500,000.00 | Other income | 500,000.00 |
| support fund | |||
| The sixth quality bonus by Hunan Provincial Governor | 500,000.00 | Other income | 500,000.00 |
| The fifth network original audio visual program competition award | 396,226.42 | Other income | 396,226.42 |
| Bonus for top 100 internet companies in China | 370,000.00 | Other income | 370,000.00 |
| Housing subsidy during the outbreak of COVID-19 | 355,748.54 | Other income | 355,748.54 |
| Special fund for cultural industry development | 300,000.00 | Other income | 300,000.00 |
| Subsidy for development of boutique member system in Mango automobile mall | 250,000.00 | Other income | 250,000.00 |
| Incentive funds for leading e-commerce enterprises | 200,000.00 | Other income | 200,000.00 |
| Intellectual Property Protection Award | 200,000.00 | Other income | 200,000.00 |
| Awards for assessment on leading enterprises in modern service industry | 200,000.00 | Other income | 200,000.00 |
| Subsidy funds for cultural enterprises to deal with the outbreak | 200,000.00 | Other income | 200,000.00 |
| Others | 2,104,697.37 | Other income | 2,104,697.37 |
| Loan interest subsidy related to Malanshan Cultural and Creative Park | 238,406.56 | Financial expense | 238,406.56 |
| Be Steeled in Repeated Struggles | 11,037,735.85 | Inventory offset | |
| A LAND SO RICH IN BUAUTY | 9,000,000.00 | Inventory offset |
VIII. CHANGES IN SCOPE OF CONSOLIDATION
1. Changes in scope of consolidation due to other reasons
Descriptions of changes in scope of consolidation caused by other reasons (such as establishment of a new subsidiary and liquidationof a subsidiary, etc.) and their relevant information:
1. Increase in the scope of combination
In: RMB0’000
| Company name | Method of obtaining equity | Timepoint of obtaining equity | Capital contribution | Proportion of contribution |
| Happy Sunshine Hongmang Education Technology Co., Ltd. | Establishment | June 16, 2020 | 1,000.00 | 100.00% |
| Xiaomang Electronic Commerce Co., Ltd. | Establishment | September 11, 2020 | 5,000.00 | 100.00% |
2. Decrease in the scope of combination
In: RMB
| Company name | Method of disposing equity | Timepoint of disposing equity | Net profit from the beginning of the period to the date of disposal |
| Doug (Shanghai) Investment Management Limited Liability Company | Deregistration | June 16, 2020 | 21,727.98 |
| Ningbo Free Trade Zone Happigo International Trade Co., Ltd. | Deregistration | March 25, 2020 | -1,974,065.52 |
| Damei Fashion (Shanghai) Culture Media Co., Ltd. | Deregistration | July 23, 2020 | -316,944.01 |
IX. INTERESTS IN OTHER ENTITIES
1. Interests in subsidiaries
(1) Composition of enterprise group
| Name of subsidiary | Main business place | Registered address | Business nature | Shareholding percentage | Method of acquisition | |
| Direct | Indirect | |||||
| Shanghai Happigo Enterprise Development Co., Ltd. | Shanghai | Shanghai | Commerce | 100.00% | Establishment | |
| Shanghai Happivision Advertising Communication Co., Ltd. | Shanghai | Shanghai | Commerce | 100.00% | Establishment | |
| Happigo (Beijing) New Media Technology Co., Ltd. | Beijing | Beijing | Commerce | 100.00% | Establishment | |
| Doug Cloud Business (Hunan) Trade Limited Liability Company | Changsha | Changsha | Commerce | 100.00% | Establishment | |
| Mango Life (Hunan) E-commerce Limited Liability Company | Changsha | Changsha | Commerce | 100.00% | Establishment | |
| Happigo (Hunan) Supply Chain Management Co., Ltd. | Changsha | Changsha | Storage | 100.00% | Business combination not involving enterprises under common control | |
| Shanghai Meimi Trade Co., Ltd. | Shanghai | Shanghai | Commerce | 100.00% | Establishment | |
| Dameiren Global Trading Co., Limited | Shanghai | Hong Kong | Commerce | 100.00% | Establishment | |
| Hunan Mango Auto Automobile Sales Co., Ltd. | Changsha | Changsha | Commerce | 51.00% | Establishment | |
| Happigo Co., Ltd. | Changsha | Changsha | Commerce | 100.00% | Establishment | |
| Hunan Happy Money Microfinance Co., Ltd. | Changsha | Changsha | Finance | 100.00% | Establishment | |
| Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. | Changsha | Changsha | Video | 100.00% | Business combination involving enterprises under common control |
| Hunan Mango Entertainment Co., Ltd | Changsha | Changsha | Film & Television | 100.00% | Business combination involving enterprises under common control | |
| Mango Studios Co., Ltd. | Changsha | Changsha | Film & Television | 100.00% | Business combination involving enterprises under common control | |
| Shanghai Mangofun Technology Co., Ltd. | Shanghai | Shanghai | Game | 100.00% | Business combination involving enterprises under common control | |
| Shanghai EE-Media Co., Ltd. | Shanghai | Shanghai | Film & Television | 100.00% | Business combination involving enterprises under common control | |
| Zhejiang Dongyang Tianyu Film and Television Culture Co. Ltd. | Zhejiang | Zhejiang | Film & Television | 100.00% | Business combination involving enterprises under common control | |
| Hunan Tianyu Film and Television Production Co. Ltd. | Changsha | Changsha | Film & Television | 100.00% | Business combination involving enterprises under common control | |
| Beijing Super Vocal Culture Co. Ltd. | Beijing | Beijing | Music | 100.00% | Business combination involving enterprises under common control | |
| Beijing Happy Mango Culture Media Co., Ltd. | Beijing | Beijing | Culture media | 100.00% | Business combination involving enterprises under common control | |
| Horgos Happy Sunshine Media | Horgos | Horgos | Culture media | 100.00% | Business combination |
| Co., Ltd. | involving enterprises under common control | |||||
| Hunan Happy Mangofun Technology Co., Ltd. | Changsha | Changsha | Game | 100.00% | Business combination involving enterprises under common control | |
| Hangzhou Hemei Interactive Entertainment Technology Co., Ltd. | Hangzhou | Hangzhou | Commerce | 54.00% | Establishment | |
| Hunan Happy Star Light Interactive Entertainment Media Co., Ltd. | Haikou | Haikou | Commerce | 100.00% | Establishment | |
| Happy Sunshine Hongmang Education Technology Co., Ltd. | Changsha | Changsha | Commerce | 100.00% | Establishment | |
| Xiaomang Electronic Commerce Co., Ltd. | Changsha | Changsha | Commerce | 100.00% | Establishment | |
| Mgtv.com (Hong Kong) Media Company Limited | Hong Kong | Hong Kong | Commerce | 100.00% | Establishment |
Descriptions of the difference between the shareholding percentage and the proportion of voting rights in a subsidiary:
Basis for holding half of the voting rights or below but still controlling the investee, and holding over half of the voting right buthaving no control over the investee:
Basis for controls over significant structured entities included in consolidation scope:
Basis for determining the Company as the agent or the principal:
Other descriptions:
(2) Significant non-wholly subsidiaries
In: RMB
| Name of subsidiary | Shareholding percentage by minority shareholders | Profit or loss attributable to minority interests for | Dividends declared for distribution to minority | Closing balance of minority interests |
| the current period | shareholders for the current period | |||
| Hunan Mango Auto Automobile Sales Co., Ltd. | 49.00% | 501,154.15 | 30,315,205.14 |
Descriptions of the difference between the shareholding percentage of minority shareholders and their proportion of voting rights in asubsidiary:
Other descriptions:
(3) Key financial information of significant non-wholly subsidiaries
In: RMB
| Name of subsidiary | Closing balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Hunan Mango Auto Automobile Sales Co., Ltd. | 95,213,439.53 | 13,358,862.09 | 108,572,301.62 | 46,704,536.01 | 46,704,536.01 | 48,911,515.19 | 17,876,051.30 | 66,787,566.49 | 5,942,564.46 | 5,942,564.46 | ||
In: RMB
| Name of subsidiary | Amount for the current period | Amount for the prior period | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Hunan Mango Auto Automobile Sales Co., Ltd. | 735,524,869.05 | 1,022,763.58 | 1,022,763.58 | -39,939,680.60 | 318,492,977.00 | -918,080.86 | -918,080.86 | -13,467,087.68 |
Other descriptions:
2. Interests in joint ventures or associates
(1) Summary of financial information of insignificant joint ventures and associates
In: RMB
| Closing balance / Amount for the current period | Opening balance / Amount for the prior period | |
| Joint ventures | -- | -- |
| Total of the following items calculated based on the shareholding percentage | -- | -- |
| Associates: | -- | -- |
| Total carrying amount of investment | 22,882,969.51 | 210,436,179.18 |
| Total of the following items calculated based on the shareholding percentage | -- | -- |
| --Net profit | 1,742,610.53 | -5,105,446.79 |
| --Other comprehensive income | 1,742,610.53 | -5,105,446.79 |
| --Total comprehensive income | 1,742,610.53 | -5,105,446.79 |
Other descriptions
Note: In this period, the Company transferred 40% of the equity in Malanshan Culture Creative Investment Co.,Ltd. to Mango Media Co., Ltd. at a price of RMB259.6792 million.
(2) Excessive loss of joint venture or associates
In: RMB
| Name of associates or joint ventures | Accumulated loss not recognized in the prior period | Loss not recognized in the current period (net profit shared in the current period) | Closing accumulated loss not recognized in the current period |
| Tianjin Sunshine Meichuang Technology Co., Ltd. | -2,164,726.96 | -98,191.97 | -2,262,918.93 |
Other descriptions:
X. RISKS RELATED TO FINANCIAL INSTRUMENTSThe Company's risk management objectives are to achieve a proper balance between risks and yield, minimize the adverseimpacts of risks on the Company's operation performance, and maximize the benefits of the shareholders and other stakeholders.Based on these risk management objectives, the Company's basic risk management strategy is to identify and analyze its exposure tovarious risks, establish an appropriate maximum tolerance to risk, implement risk management, and monitor regularly and effectivelythese exposures to ensure the risks are monitored at a certain level.
The Company is exposed to various risks associated with financial instruments in its daily routines, primarily including creditrisk, liquidity risk and market risk. The management has reviewed and approved policies to manage these risks, summarized asbelow.(I) Credit riskCredit risk refers to the risk that a party of the financial instrument will default on its obligations resulting in financial loss to thecounterparty.
1. Management of credit risk
(1) Evaluation of credit
The Company assesses at each balance sheet date whether the credit risk of the underlying financial instruments has increasedsignificantly since initial recognition. In determining whether the credit risk has increased significantly since initial recognition, theCompany considers reasonable and supportable information that is available without undue cost or effort, including quantitative andqualitative analysis based on historical data, ranking of external credit risks and forward-looking information. The Companycompares the risk of a default occurring on a financial instrument as at the balance sheet date with the risk of a default occurring onthe financial instrument as at the date of initial recognition based on individual financial instrument or a group of financialinstruments with similar credit risk characteristic, to determine the change of the risk of a default occurring on a financial instrumentover the expected life.
The Company considers the credit risk of financial instruments has increased significantly when one or more of the followingquantitative and qualitative criteria are met:
1) The quantitative criterion primarily refers to a certain percentage of increase in the probability of default over the remaininglife of the financial instruments as of the balance sheet date when comparing with that at initial recognition of the financialinstruments;
2) The qualitative criteria includes, inter alia, adverse material changes in business or financial conditions that are expected tocause a significant decrease in the debtor's ability to meet its debt obligations, and an actual or expected significant adverse change inthe technological, market, economic, or legal environment of the debtor that results in a significant decrease in the debtor’s ability tomeet its debt obligations;
(2) Definition of defaulted or credit-impaired assets
A financial asset is defined as defaulted when the financial instrument meets one or more conditions stated as below, and thecriteria of defining defaulted asset is consistent with the that of defining credit-impaired asset:
1) significant financial difficulty of the debtor;
2) a breach of contract terms with binding force by the debtor;
3) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty, has granted to thedebtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit loss (“ECL”)
Key parameters to measure ECL include the probability of default, loss given default and the exposure at default. The Companyestablished models of the probability of default, loss given default and the exposure at default on the basis of qualitative analysis onhistorical statistical data (such as counterparty ranking, guarantee methods, collateral category, and repayment way) andforward-looking information.
3. Details of reconciliation of the opening balance and the closing balance of provision for impairment of financial instrumentscan be referred to in Note VII(I)3, 6 and 8 of the financial statements hereof.
4. Credit risk exposure and credit risk concentration
The Company's credit risk is primarily from cash and bank balances and receivables. In order to control the risks associated withaforementioned items, the Company has taken the following measures.
(1) cash and bank balances
The credit risk of the Company is limited because the Company has deposited bank deposits and other monetary funds in bankswith high credit ratings.
(2) Receivables
The Company continually evaluates the creditworthiness of its customers with deals on credit, and selects to deal with approvedand creditworthy customers subject to the results of the credit assessment with monitoring the balance of its receivables, so as toensure that the Company is not exposed to significant risk of bad debt.
No collaterals are required since the Company only deals with third parties that are approved and creditworthy. The
concentrated credit risks are managed by customers. As of December 31, 2020, the Company is exposed to certain concentration ofcredit risks, as the Company’s accounts receivable from top 5 customers have accounted for 34.43% of the total balance of accountsreceivable (December 31, 2019: 33.31%). The Company held no collaterals or other credit ranking measures for the balance ofaccounts receivable.The maximum exposure to the Company is the carrying amount of each financial asset in the balance sheet.(II) Liquidity riskLiquidity risk refer to the risk that the Company is in shortage of funds in performing obligations that are settled by deliveringcash or another financial asset.In order to control this risk, the Company balances the continuity and flexibility of financing by using various financingmeasures such as notes settlement and bank loans comprehensively and adopting both long-term and short-term financing methodsto optimize the financing structure. The Company has received credit facilities from a number of commercial banks to satisfy itsworking capital requirements and capital expenditures.
Financial liabilities classified by remaining maturity
| Item | Closing balance | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| Short-term borrowings | 39,789,110.68 | 41,159,399.06 | 41,159,399.06 | ||
| Notes payable | 712,292,035.75 | 712,292,035.75 | 712,292,035.75 | ||
| Accounts payable | 5,217,087,330.62 | 5,217,087,330.62 | 5,217,087,330.62 | ||
| Other payables | 160,651,194.91 | 160,651,194.91 | 160,651,194.91 | ||
| Sub-total | 6,129,819,671.96 | 6,131,189,960.34 | 6,131,189,960.34 |
(Continued to above table)
| Item | Balance at the end of last year | ||||
| Carrying amount | Undiscounted contract amount | Within 1 year | 1-3 years | Over 3 years | |
| Short-term borrowings | 349,816,947.83 | 357,795,920.01 | 357,795,920.01 | ||
| Notes payable | 325,880,463.11 | 325,880,463.11 | 325,880,463.11 | ||
| Accounts payable | 5,048,443,928.94 | 5,048,443,928.94 | 5,048,443,928.94 | ||
| Other payables | 202,952,467.24 | 202,952,467.24 | 202,952,467.24 | ||
| Sub-total | 5,927,093,807.12 | 5,935,072,779.30 | 5,935,072,779.30 |
(III) Market riskMarket risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket prices. Market risk mainly includes interest rate risk and currency risk.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket interest rates. Since the Company's borrowings are at fixed interest rates, fluctuations in interest rates of borrowings will nothave a material impact on the Company's total profits or shareholders' equity.
2. Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inforeign exchange rates. The Company's exposure to the currency risk is primarily associated with the Company’s monetary assetsand liabilities dominated in foreign currencies. If the monetary assets and liabilities dominated in foreign currencies are imbalancedin a short time, the Company will purchase and sell foreign currencies at the market exchange rate to keep the net risk exposureacceptable. Since the Company mainly operates in Mainland China with its principal activities denominated in RMB, the Company'sexposure to the currency risk due to changes in market is not material.
The closing balance of the Company’s monetary assets and liabilities dominated in foreign currencies can be referred to in NoteVII53. Foreign currency item of the financial statements hereof for details.XI. DISCLOSURE OF FAIR VALUE
1. Closing balance of the fair value of assets and liabilities measured at fair value
In: RMB
| Items | Closing balance of fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | -- | -- | -- | -- |
| Receivables financing | 164,410,000.00 | 164,410,000.00 | ||
| Total assets continuously measured at fair value | 164,410,000.00 | 164,410,000.00 | ||
| II. Non-continuous fair value measurement | -- | -- | -- | -- |
2. Valuation techniques and qualitative and quantitative information of key parameters adopted forcontinuous and non-continuous level 3 fair value measurement items
The Company’s receivables financing refers to the bank acceptances accepted by commercial banks withhigher credit rating, without quotation in the active market. The cost thereof represents the best estimate of fairvalue.
XII. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
1. Parent company of the Company
| Name of the parent company | Registered address | Business nature | Registered capital | Proportion of the Company's ownership interest held by the parent company (%) | Proportion of the Company's voting right held by the parent company(%) |
| Mango Media Co., Ltd. | PRC | Planning, production and operation of | 2,050,000,000.00 | 58.94% | 58.94% |
Descriptions of the Company’s parent company
Mango Media Co., Ltd., which holds 58.94% of the shares in the Company, was established on July 10, 2007 with a registeredcapital of RMB2,050,000,000 and registered address and principal place of business in Golden Eagle Studio Culture City in KaifuDistrict, Changsha City. Hunan Broadcasting System holds 100% shares in Mango Media Co., Ltd. Mango Media Co., Ltd. is mainlyengaged in planning, production and operation of radio and television programs; investment in culture, sports, entertainment, media,science and technology, internet and other industries with self-owned funds (not allowed to engage in activities under nationalfinancial supervision and financial credit businesses such as deposit absorption, fund raising and collection, entrusted loan, billissuance, loan issuance, etc.); advertising planning, production and operation; and multimedia technology development andmanagement.The ultimate controlling party of the Company is Hunan Broadcasting System .Other descriptions:
2. Subsidiaries of the Company
For details of the subsidiaries of the Company, see Note IX. Interests in Other Entities.
3. Associates and joint ventures of the Company
For details of the significant joint ventures or associates of the Company, see the accompanying notes.The details of other joint ventures or associates having related party transactions and balances with the Company in the current periodor prior periods are presented as follows:
radio and televisionprograms; assetmanagement andinvestment subject tolaws and regulations;advertising planning,production andoperation;Name of joint venture or associate
| Name of joint venture or associate | Relationship with the Company |
| Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | Associates |
| Tianjin Sunshine Meichuang Technology Co., Ltd. | Associates |
Other descriptions
4. Other related parties of the Company
| Name of other related parties | Relationship between other related parties and the Company |
| Hunan Radio and Television Advertising Corporation | Controlled by the same de facto controller |
| Hunan Broadcasting System Satellite TV Channel | Controlled by the same de facto controller |
| Hunan Golden Eagle Animation Media Co., Ltd. (former name: | Controlled by the same de facto controller |
| Hunan Golden Eagle Cartoon Co., Ltd.) | |
| Hunan EE Advertising Co., Ltd. | Controlled by the same de facto controller |
| Yunhong Communication Technology (Guangzhou) Co., Ltd. [Note 1] | Controlled by the same de facto controller |
| Hunan Radio, Film and Television Group Co., Ltd. | Controlled by the same de facto controller |
| Subsidiaries of Hunan Broadcasting System [Note 2] | Controlled by the same de facto controller |
| Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. [Note 3] | Controlled by the same de facto controller |
| Subsidiaries of Mango Media Co., Ltd. [Note 4] | Controlled by the same de facto controller |
| Hunan Fukun Culture Media Investment Center (LP) | Joint-stock company of Mango Media |
| MIGU Culture Technology Co., Ltd. [Note 5] | Company materially affected by the key officers |
Other descriptions[Note 1] Yunhong Communication Technology (Guangzhou) Co., Ltd. Comprises Beijing Yunhong Wanhao Advertising Co.,Ltd. and Shanghai Yunhong Advertising Co., Ltd..[Note 2] The subsidiaries of Hunan Broadcasting System comprise Beijing Happywoods Culture Communication Co., Ltd.,Hunan Innovation Entertainment Media Co., Ltd., Hunan TV Drama Media Co., Ltd. 、Hunan Broadcasting and Television LogisticsManagement Service Co., Ltd., Hunan Broadcasting System Channel (excluding Satellite TV Channel), Hunan Broadcasting SystemBroadcast Media Center, Hunan Broadcasting System Logistics Support Center, Hunan Broadcasting System International MediaCo., Ltd., Hunan International Convention and Exhibition Center, Hunan Happy Avant Garde Media Co., Ltd. and LetianEntertainment (Hunan) Co., Ltd..
[Note 3] The subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. comprise TIK Films, Hunan Jinyingcheng RealEstate Co., Ltd., Hunan CATV Network Group Co., Ltd., Hunan Saint Tropez Investment Co., Ltd., Shenzhen 9zhitx TechnologyCo., Ltd. and Changsha Colorful World Co., Ltd..
[Note 4] The subsidiaries of Mango Media Co., Ltd. comprise Beijing Jinshiyatang Film & Television Culture CommunicationCo., Ltd. and Hunan Mango Vision Technology Co., Ltd..[Note 5] MIGU Culture Technology Co., Ltd. comprises MIGU Video Technology Co., Ltd., MIGU Cartoon Co., Ltd., MIGUDigital Media Co., Ltd., MIGU Music Co., Ltd. and MIGU Interactive Entertainment Co., Ltd..
5. Related party transactions
(1) Sales and purchase of goods, rendering and receipt of services
Table of purchase of goods/ receipt of services
In: RMB
| Related parties | Details of related party transactions | Amount for the current period | Transaction quota approved | If exceeding the approved transaction amount | Amount for the prior period |
| Yunhong Communication Technology (Guangzhou) Co., | Advertising agency | 210,676,667.48 | 260,500,000.00 | No | 209,215,545.43 |
| Ltd. | |||||
| Hunan Radio and Television Advertising Corporation | Advertising, publicity and promotion | 40,592,476.33 | 42,800,000.00 | No | 1,456,603.77 |
| Hunan Broadcasting System | Value added share of operators, brand license and program usage fee | 11,407,659.58 | 12,120,000.00 | No | 474,672,200.51 |
| Subsidiaries of Hunan Broadcasting System | Publicity and promotion, artist agency, program production, venue exhibition and supporting services | 33,420,832.91 | 29,340,000.00 | Yes | 41,707,546.09 |
| Hunan Broadcasting System Satellite TV Channel | Publicity and promotion, artist agency, accepting services | 36,848,537.20 | 43,450,000.00 | No | 36,560,704.01 |
| Hunan Golden Eagle Animation Media Co., Ltd. | Artist agency, publicity and promotion | 10,642,027.79 | 20,000,000.00 | No | 7,783,371.36 |
| Mango Media Co., Ltd. | Advertising agency and purchase of goods | 183,877,073.47 | 71,090,000.00 | Yes | 70,252,090.47 |
| Meichuang Technology Co., Ltd. | Purchase of goods | 4,000,000.00 | No | 3,423,354.19 | |
| Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | Purchase of goods | 949,171.49 | 3,950,000.00 | No | 1,741,999.26 |
| MIGU Culture Technology Co., Ltd. | Purchase of bandwidth, copyrights and goods | 62,298,481.29 | 70,120,000.00 | No | 16,540,342.07 |
| Hunan Radio, Film and Television Group Co., Ltd. | Purchase of copyrights, operator sharing, | 662,114,253.82 | 628,550,000.00 | Yes |
| publicity and promotion | |||||
| Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | Operator sharing, board and lodging expenses, purchase of goods and site expenses | 20,277,039.13 | 3,800,000.00 | Yes | 3,611,104.17 |
| Subsidiaries of Mango Media Co., Ltd. | Technical cost | 188,679.25 | 8,000,000.00 | No |
Table of sales of goods/ rendering of services
In: RMB
| Related parties | Details of related party transactions | Amount for the current period | Amount for the prior period |
| Yunhong Communication Technology (Guangzhou) Co., Ltd. | Advertising | 771,483,736.91 | 741,360,400.00 |
| Hunan Radio, Film and Television Group Co., Ltd. | Advertising and release income | 801,900,648.11 | 2,358,490.57 |
| Hunan Radio and Television Advertising Corporation | HS interaction and advertising | 19,735,849.06 | |
| Hunan Broadcasting System | Advertising and release income | 354,592.45 | 981,143,773.58 |
| Hunan Broadcasting System Satellite TV Channel | Release income and rendering of services | 418,531,355.04 | 379,794,709.37 |
| Subsidiaries of Hunan Broadcasting System | Advertising and artist income | 40,437,722.81 | 135,295.21 |
| Hunan Golden Eagle Animation Media Co., Ltd. | Artist income | 867,924.52 | 3,594,301.88 |
| Mango Media Co., Ltd. | Advertising | 556,465,901.91 | 344,703,783.89 |
| Mango Media Co., Ltd. | Release income | 445,650,943.20 | 578,254,700.00 |
| Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | Sales of goods | 308,159.28 | 566,194.21 |
| Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | Operator income | 2,514,681.44 | 5,471,698.11 |
| MIGU Culture Technology Co., | Operator income and | 826,176,362.97 | 510,790,103.89 |
| Ltd. | advertising |
Descriptions of related party transactions with respect to the sales and purchase of goods, rendering and receipt of services
(2) Related leases
The Company as the lessor
In: RMB
| Name of lessee | Category of leased assets | Lease income recognized in the current period | Lease income recognized in the prior period |
| Subsidiaries of Mango Media Co., Ltd. | Leasing and property management | 2,005,015.86 | |
| Subsidiaries of Hunan Broadcasting System | Leasing and property management | 5,229,537.88 | 5,462,134.32 |
| Hunan Golden Eagle Animation Media Co., Ltd. | Leasing and property management | 1,019,573.80 |
The Company as the lessee:
In: RMB
| Name of lessor | Category of leased assets | Lease fees recognized in the current period | Lease fees recognized in the prior period |
| Subsidiaries of Hunan Broadcasting System | Leasing and property management | 23,335,476.32 | 14,657,277.07 |
| Hunan TV & Broadcast Subsidiaries of Intermediary Co., Ltd. | Leasing and property management | 13,260,280.74 | 10,913,921.27 |
| Subsidiaries of Mango Media Co., Ltd. | Automobile rental | 188,586.82 | 392,000.00 |
Descriptions of leases with related parties
(3) Compensation for key management
In: RMB
| Item | Amount for the current period | Amount for the prior period |
| Compensation for key management personnel | 37,175,900.00 | 27,328,700.00 |
(4) Other related party transactions
The 40% equity of Malanshan Cultural and Creative Investment Co., Ltd. held by the Company wastransferred to Mango Media Co., Ltd. in consideration of RMB259.6792 million, the industrial and commercial
change registration procedures for which were completed on April 16, 2020.
6. Receivables from and payables to related parties
(1) Accounts receivable
In: RMB
| Item | Related parties | Closing balance | Opening balance | ||
| Gross carrying amount | Provisions for bad debts | Gross carrying amount | Provisions for bad debts | ||
| Receivable financing | |||||
| Receivable financing | Hunan Broadcasting System Satellite TV Channel | 57,000,000.00 | |||
| Receivable financing | MIGU Culture Technology Co., Ltd. | 107,410,000.00 | |||
| Notes receivable | Hunan Broadcasting System Satellite TV Channel | 95,456,357.50 | |||
| Accounts receivable | Hunan Radio and Television Advertising Corporation | 3,420,000.00 | |||
| Accounts receivable | Hunan Broadcasting System | 244,000.00 | 127,438,327.00 | ||
| Accounts receivable | Hunan Broadcasting System Satellite TV Channel | 214,923,447.92 | 146,560,000.00 | ||
| Accounts receivable | Hunan Radio, Film and Television Group Co., Ltd. | 164,336,587.00 | 2,500,000.00 | 25,000.00 | |
| Accounts receivable | Hunan EE Advertising Co., Ltd. | 290,175,195.53 | 41,294,538.32 | ||
| Accounts receivable | Mango Media Co., Ltd. | 122,610,000.00 | 20,500,000.00 | ||
| Accounts receivable | Meichuang Technology Co., Ltd. | 766,557.10 | 766,557.10 | 766,557.10 | 71,405.67 |
| Accounts receivable | Yunhong Communication Technology | 72,753,709.93 | 47,659,781.04 | 2,382,989.05 | |
| (Guangzhou) Co., Ltd. | |||||
| Accounts receivable | MIGU Culture Technology Co., Ltd. | 61,576,467.21 | 3,078,823.36 | 101,563,719.81 | 5,078,185.99 |
| Accounts receivable | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 2,876,840.38 | |||
| Accounts receivable | Subsidiaries of Hunan Broadcasting System | 3,490,039.09 | 1,090,000.00 | ||
| Contract asset | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 2,449,700.00 | 8,800,000.00 | 590,000.00 | |
| Contract asset | MIGU Culture Technology Co., Ltd. | 462,914,088.43 | 23,145,704.42 | 252,143,480.97 | 12,607,174.06 |
| Prepayments | Yunhong Communication Technology (Guangzhou) Co., Ltd. | 164,717.00 | |||
| Prepayments | Hunan Radio and Television Advertising Corporation | 111,344.33 | |||
| Prepayments | Hunan EE Advertising Co., Ltd. | 257,835.67 | |||
| Prepayments | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 64,443.96 | 40,820.20 | ||
| Prepayments | Subsidiaries of Hunan Broadcasting System | 397,107.70 | 236,399.19 | ||
| Prepayments | Meichuang Technology Co., Ltd. | 6,014,723.96 | 6,014,723.96 | 6,014,723.96 | 428,072.40 |
| Prepayments | Hunan Golden Eagle | 304,789.54 | 824,175.81 |
| Animation Media Co., Ltd. | |||||
| Other receivables | Subsidiaries of Hunan Broadcasting System | 1,000,105.00 | 500,105.00 | ||
| Other receivables | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 1,119,357.00 | 1,161,620.80 | ||
| Other receivables | Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | 2,629,764.69 | 1,564,882.35 | 3,000,000.00 | 1,000,000.00 |
| Other receivables | Hunan Radio, Film and Television Group Co., Ltd. | 300,000.00 | |||
| Other receivables | Subsidiaries of Mango Media Co., Ltd. | 241,069.50 | |||
| Other current assets | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 1,531,056.96 | 1,940,764.58 |
(2) Accounts payable
In: RMB
| Item | Related parties | Gross carrying amount at the end of the period | Gross carrying amount at the beginning of the period |
| Accounts payable | Yunhong Communication Technology (Guangzhou) Co., Ltd. | 199,545,392.54 | 152,095,293.45 |
| Accounts payable | Hunan Broadcasting System | 20,281,809.33 | 157,092,020.64 |
| Accounts payable | Hunan Broadcasting System Satellite TV Channel | 3,380,943.40 | 4,622,628.53 |
| Accounts payable | Hunan Radio and Television Advertising Corporation | 11,320,754.73 |
| Accounts payable | Hunan Radio, Film and Television Group Co., Ltd. | 37,086,109.61 | |
| Accounts payable | Hunan EE Advertising Co., Ltd. | 176,823,442.87 | 41,762,467.87 |
| Accounts payable | Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | 134,309.23 | 185,956.40 |
| Accounts payable | Hunan Fukun Culture Media Investment Center (LP) | 179,055.14 | |
| Accounts payable | Meichuang Technology Co., Ltd. | 25,350.00 | 25,350.00 |
| Accounts payable | MIGU Culture Technology Co., Ltd. | 35,517,829.89 | 17,963,977.49 |
| Accounts payable | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 17,725,248.79 | 404,627.42 |
| Accounts payable | Subsidiaries of Hunan Broadcasting System | 1,845,211.14 | 11,813,636.47 |
| Accounts payable | Subsidiaries of Mango Media Co., Ltd. | 132,075.48 | |
| Contract liabilities | Yunhong Communication Technology (Guangzhou) Co., Ltd. | 855,240.83 | 110,717.09 |
| Contract liabilities | Hunan Broadcasting System | 1,886,792.45 | 1,698,142.45 |
| Contract liabilities | Hunan Broadcasting System Satellite TV Channel | 117,594,339.62 | 42,924.53 |
| Contract liabilities | Hunan EE Advertising Co., Ltd. | 1,725,283.01 | 247,660.23 |
| Contract liabilities | MIGU Culture Technology Co., Ltd. | 22,022.40 | 1,962,264.10 |
| Contract liabilities | Subsidiaries of Hunan Broadcasting System | 349,943.95 | 331,222.25 |
| Contract liabilities | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 1,573,712.60 | 377,358.49 |
| Other payables | Hunan EE Advertising Co., Ltd. | 250,000.00 | |
| Other payables | Hunan TV & Broadcast Subsidiaries of Intermediary Co., Ltd. | 1,596,991.85 | 559,752.67 |
| Other payables | Hunan Broadcasting System | 104,245.28 |
| Other payables | Mango Media Co., Ltd. | 3,784,547.60 | 3,796,820.30 |
| Other payables | Shanghai Mama Mia Mutual Entertainment Network Technology Co., Ltd. | 207,397.81 | |
| Other payables | Subsidiaries of Hunan Broadcasting System | 5,788,122.23 | 2,114,564.76 |
| Other current liabilities | Subsidiaries of Hunan TV & Broadcast Intermediary Co., Ltd. | 1,273,669.54 |
XIII. COMMITMENTS AND CONTINGENCIES
1. Significant commitment
Significant commitments as of the balance sheet date
As of the balance sheet date, the Company and its subsidiaries have had the following commitments in respect ofnon-cancellable operating leases:
In: RMB0’000
1. Operating lease commitment
| Minimum lease payments under non-cancellable operating leases: | Closing balance | Opening balance |
| 1st year subsequent to the balance sheet date | 6,059.73 | 4,804.20 |
| 2nd year subsequent to the balance sheet date | 4,918.39 | 3,655.84 |
| 3rd year subsequent to the balance sheet date | 3,474.67 | 2,562.88 |
| Subsequent periods | 11,111.92 | 8,597.38 |
| Total | 25,564.71 | 19,620.30 |
Operating lease expenses are the expenses spent by the Company and its subsidiaries to rent office, program production spaceand storage facilities.
2. Commitment to payments for internet access cooperation
| Payments for internet access cooperation | Closing balance | Opening balance |
| 1st year subsequent to the balance sheet date | 3,198.95 | 6,710.50 |
| 2nd year subsequent to the balance sheet date | 4.86 | 410.40 |
| 3rd year subsequent to the balance sheet date | 410.00 | |
| Subsequent periods | 3,203.81 | 7,530.90 |
Payments for internet access cooperation are charges for use that should be paid by the Company in each relevant agreementperiod subject to agreements concluded by the Company and each local TV station with cooperation.
3. Copyright purchase commitment
| Copyright purchase agreements | Closing balance | Opening balance |
| 1st year subsequent to the balance sheet date | 54,571.00 | 54,571.00 |
| 2nd year subsequent to the balance sheet date | 54,571.00 | |
| 3rd year subsequent to the balance sheet date | 54,571.00 |
| Subsequent periods | 109,142.00 |
| Total | 272,855.00 | 54,571.00 |
Copyright purchase agreements are concluded by and between Happy Sunshine and Golden Eagle Broadcasting System Co., Ltd.for considerations that should be paid by the Company to purchase copyrights in each relevant agreement period.
2. Contingencies
Significant contingencies as of the balance sheet date
1. In July 2019, Jiangsu Baozi Film and Television Media Co., Ltd. (“Jiangsu Baozi”) filed a lawsuit againstHappy Sunshine, Zhejiang Hengrui Film and Television Media Co., Ltd. and the Company, requesting to order: toconfirm Happy Sunshine and Zhejiang Hengrui infringe upon Jiangsu Baozi’s rights to publish, release andcommunicate through information network the film i.e. HE Likes Me First; a statement of apology to be publishedfor three consecutive days; Happy Sunshine and Zhejiang Hengrui to compensate Jiangsu Baozi for the economicloss of RMB5.2926 million, and the Company to be jointly and severally liable therefor to the extent payable byHappy Sunshine.The first instance judgment of the case was made by Changsha Municipal Intermediate People’s Court,whereby it is adjudicated that Happy Sunshine shall compensate Jiangsu Baozi for the economic loss ofRMB450,000, and Zhejiang Hengrui shall bear joint and several liability for RMB400,000 of the saidcompensation. The Company has appealed to Hunan Provincial Higher People’s Court against Jiangsu Baozirequesting to dismiss the latter’s claim. At present, the second instance proceedings are pending. It is expectedthat the case will not have a material adverse effect on the financial situation of the Company.
2. In August 2019, Lead Capital Management Co., Ltd. (“Lead Capital”) filed a lawsuit against HappySunshine with Changsha Municipal Intermediate People’s Court, requesting to order Happy Sunshine to make therelevant payments together with the liquidated damages in the amount of about RMB20.4611 million on behalf ofBeijing Guolong Film Investment Co., Ltd. (“Guolong”) to Lead Capital, and meanwhile applying to the court forproperty preservation, as a result of which a sum of RMB21 million in Happy Sunshine’s account opened with theBusiness Department of China Zheshang Bank Changsha Branch was frozen.
At present, the second instance of the case is pending before Hunan Provincial Higher People’s Court whohas ruled to suspend the trial. The key to the case lies in the outcome of a separate case filed by Happy Sunshineconcerning termination of contract with Guolong. If the contract is held to be terminated, Happy Sunshine will notbe required to pay the subsequent copyright licensing fee, and accordingly will have no need to pay to LeadCapital on behalf of Guolong.
3. In September 2020, Century Great Dragon Film & TV Co., Ltd. (“Century Great Dragon”) filed a lawsuitagainst Happy Sunshine with Changsha Municipal Intermediate People’s Court, requesting to order HappySunshine to make on behalf of Guolong the relevant payments together with the liquidated damages in the amountof about RMB29.0624 million to Century Great Dragon.
At present, the first instance of the case is pending before Changsha Municipal Intermediate People’s Courtwho has ruled to suspend the trial. The key to the case lies in the outcome of a separate case filed by HappySunshine concerning termination of contract with Guolong. If the contract is held to be terminated, HappySunshine will not be required to pay the subsequent copyright licensing fee, and accordingly will have no need topay to Lead Capital on behalf of Guolong.
4. Chongqing Daisheng Cultural Entertainment Media Co., Ltd. (“Chongqing Daisheng”) filed a lawsuitagainst Happy Sunshine and Entertainment Channel of Hunan Broadcasting System with the People’s Court of
Chongqing Pilot Free Trade Zone, claiming that the two defendants, without permission, had the music work i.e.Opponent sang by guests in the variety show Sisters Who Brave Winds and Waves, and requesting to order HappySunshine and Entertainment Channel to pay a total of RMB4.058 million comprising the indemnity for losses ofRMB4.0 million, the attorneys’ fees of RMB50,000 and the notarization fees of RMB8,000.The music work involved was initially sung by the guest New Rap New Star in the program Listen Up.Under the agreement on the contestant, it is New Rap New Star who shall be responsible for solving the disputeover copyright. New Rap New Star has appointed an attorney to handle this case at their expense, who hasinstituted proceedings for confirming the song copyright against Chongqing Daisheng. It is expected that this casewill have no material adverse effect on the financial situation of the Company.
XIV. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
1. Distribution of profits
In: RMB
| Profits or dividends proposed to be distributed | 231,449,076.43 |
| Declared profits or dividends that has been deliberated and approved | 231,449,076.43 |
XV. OTHER SIGNIFICANT EVENTS
1. Segment information
(1) Determination basis and accounting policies of reporting segments
Happy Sunshine, the subsidiary of the Company, is engaged in two segments, new media platform operation and new mediainteractive entertainment content production and operation, and cannot separate its assets and liabilities by industrial segments, hencethe Company’s assets and liabilities are not presented by industrial segments.
(2) Financial information of reporting segments
In: RMB
| Item | New media platform operation | New media interactive entertainment content production and operation | Media retail business | Others | Inter-segment offset | Total |
| Income from principal operating activities | 9,060,568,867.27 | 2,764,980,756.83 | 2,104,532,724.46 | 61,533,468.52 | 13,991,615,817.08 | |
| Cost of principal operating activities | 5,373,904,985.43 | 2,146,888,764.52 | 1,676,380,697.52 | 26,844,714.41 | 9,224,019,161.88 |
XVI. NOTES TO MAIN ITEMS IN THE FINANCIAL STATEMENTS OF THE COMPANY
1. Other receivables
In: RMB
| Item | Closing balance | Opening balance |
| Other receivables | 260,068,347.20 | 260,036,746.64 |
| Total | 260,068,347.20 | 260,036,746.64 |
(1) Other receivables
1) Category of other receivables by nature
In: RMB
| Nature | Gross carrying amount at the end of the period | Gross carrying amount at the beginning of the period |
| Petty cash | 69,759.37 | 25,673.88 |
| Receivables and payables | 11,443.94 | |
| Amount due to or from related parties within the scope of consolidation | 260,000,000.00 | 260,000,000.00 |
| Total | 260,069,759.37 | 260,037,117.82 |
2) Provisions for bad debts
In: RMB
| Provisions for bad debts | Stage I | Stage II | Stage III | Total |
| Future 12-month ECL | Lifetime ECL (without credit impairment) | Lifetime ECL (with credit impairment) | ||
| Balance as at January 1, 2020 | 371.18 | 371.18 | ||
| Balance as at January 1, 2020 transferred to | —— | —— | —— | —— |
| -- Stage II | -178.64 | 178.64 | ||
| Provisions | 326.41 | 714.58 | 1,040.99 | |
| Balance as at December 31, 2020 | 518.95 | 893.22 | 1,412.17 |
Changes in gross carrying amount whose loss allowance changed significantly in the current period
□ Applicable √ N/A
Disclosure by aging
In: RMB
| Aging | Carrying amount |
| Within 1 year (including) | 51,895.04 |
| More than 1 year but not exceeding 2 years | 260,017,864.33 |
| Total | 260,069,759.37 |
3) Provisions, recovery or reversal of bad debts for the period
Provisions for bad debts made for the current period
In: RMB
| Category | Opening balance | Changes for the current period | Closing balance | |||
| Provision | Recovery or reversal | Write-off | Others | |||
| Other receivables for which the bad debt provision are made by groups classified according to credit risk characteristics | 371.18 | 1,040.99 | 1,412.17 | |||
| Total | 371.18 | 1,040.99 | 1,412.17 | |||
Significant recovery or reversal of provisions for bad debts for the current period:
In: RMB
| Entity | Amount of recovery or reversal | Method of recovery |
4) Top five closing balances of other receivables categorized by debtor
In: RMB
| Entity | Nature | Closing balance | Aging | Proportion of total closing balance of other receivables | Closing balance of provisions for bad debts |
| Hunan Mango Entertainment Co., Ltd. | Amount due to or from subsidiaries | 130,000,000.00 | 1-2 years | 49.99% | |
| Hunan Happy Money Microfinance Co., Ltd. | Amount due to or from subsidiaries | 130,000,000.00 | 1-2 years | 49.99% | |
| Total | -- | 260,000,000.00 | -- | 99.98% |
2. Long-term equity investments
In: RMB
| Items | Closing balance | Opening balance | ||||
| Gross carrying amount | Provisions for impairment | Carrying amount | Gross carrying amount | Provisions for impairment | Carrying amount | |
| Investments in subsidiaries | 7,780,583,738.35 | 7,780,583,738.35 | 7,780,583,738.35 | 7,780,583,738.35 | ||
| Investments in associates and joint ventures | 189,814,452.82 | 189,814,452.82 | ||||
| Total | 7,780,583,738.35 | 7,780,583,738.35 | 7,970,398,191.17 | 7,970,398,191.17 | ||
(1) Investments in subsidiaries
In: RMB
| Investees | Opening balance (carrying amount) | Increase or decrease for the period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | |||
| Additional investment | Decreased investment | Provisions for impairment | Others | ||||
| Hunan Happy Money Microfinance Co., Ltd. | 300,000,000.00 | 300,000,000.00 | |||||
| Hunan Happy Sunshine Interactive Entertainment Media Co., Ltd. | 5,658,165,333.48 | 5,658,165,333.48 | |||||
| Hunan Mango Entertainment Co., Ltd. | 145,185,235.62 | 145,185,235.62 | |||||
| Mango Studios Co., Ltd. | 211,030,100.57 | 211,030,100.57 | |||||
| Shanghai Mangofun Technology Co., Ltd. | 334,876,836.75 | 334,876,836.75 | |||||
| Shanghai EE-Media Co., Ltd. | 535,281,326.72 | 535,281,326.72 | |||||
| Happigo Co., Ltd. | 596,044,905.21 | 596,044,905.21 | |||||
| Total | 7,780,583,738.35 | 7,780,583,738.35 |
(2) Investments in associates and joint ventures
In: RMB
| Investors | Opening balance (carrying amount) | Increase or decrease for the period | Closing balance (carrying amount) | Closing balance of provisions for bad debts | |||||||
| Additional investment | Decreased investment | Investment profit or loss under equity method | Adjustment in other comprehensive income | Other equity changes | Declared cash dividends or profits | Provisions for impairments | Others | ||||
| I. Joint ventures | |||||||||||
| II. Associates | |||||||||||
| Malanshan Culture Creative Investment Co., Ltd. | 189,814,452.82 | 189,295,820.20 | -518,632.62 | ||||||||
| Sub-total | 189,814,452.82 | 189,295,820.20 | -518,632.62 | ||||||||
| Total | 189,814,452.82 | 189,295,820.20 | -518,632.62 | ||||||||
3. Investment income
In: RMB
| Items | Amount for the current period | Amount for the prior period |
| Income from long-term equity investments under equity method | -518,632.62 | -7,121,117.50 |
| Income from disposal of long-term equity investments | 70,383,379.80 | |
| Income from investments in wealth management products | 2,559,846.51 | |
| Total | 69,864,747.18 | -4,561,270.99 |
XVII. SUPPLEMENTARY INFORMATION
1. Breakdown of non-recurring profit or loss for the current period
√ Applicable □N/A
| Item | Amount | Description |
| Profit or loss on disposal of non-current assets | 70,055,759.62 | Mainly due to income from equity disposal |
| Government grants recognized in profit or loss (other than grants which are closely related to the Company's business and are either in fixed amounts or determined under quantitative methods in accordance with the national standard) | 49,700,923.82 | |
| Profit or loss on entrusted investments or assets management | 3,906,349.28 | |
| Reversal of provision for accounts receivable and contract assets that are tested for impairment losses individually | 31,747,600.00 | |
| Other non-operating income or expenses other than the above | -18,913,395.60 | |
| Less: effects of income tax | 1,209.77 | |
| Effects attributable to minority interests | 539,732.26 | |
| Total | 135,956,295.09 | -- |
It is required to specify the reason for defining items as non-recurring profit or loss items according to Information Disclosureand Presentation Rules for Companies Making Public Offering of Securities No. 1－Non-recurring Profit or Loss, and reasons fordefining non-recurring profit or loss items illustrated in Information Disclosure and Presentation Rules for Companies MakingPublic Offering of Securities No. 1－Non-recurring Profit or Loss as recurring profit or loss items.
□ Applicable √ N/A
2. Return on net assets and earnings per share
| Profit during the Reporting Period | Weighted average return on net assets (%) | Earnings per share: | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to ordinary shareholders of the Company | 20.46% | 1.11 | 1.11 |
| Net profit after deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | 19.06% | 1.04 | 1.04 |
Section XIII List of Documents Available for Inspection
1. Financial statements with seals and signatures of legal representative, the chief financial officer and the head of accountingdepartment (the person in charge of accounting).
2. The original auditor’s report with seals of the accounting firm and seals and signatures of the certified public accountants.
3. All original documents and announcements of the Company publicly disclosed in the websites designated by the CSRC within theReporting Period.
4. Other relevant materials.