Financial Performance - Alibaba Pictures reported revenue of RMB 3.652 billion for the fiscal year ending March 31, 2022, an increase of RMB 793 million, representing a year-on-year growth of 27.7%[11]. - The company achieved a net profit of RMB 154 million, marking its first profit after losses in previous periods[11]. - Adjusted EBITA recorded a profit of RMB 143 million, reflecting a year-on-year increase of 21.2%[11]. - For the fiscal year ending March 31, 2022, the company reported revenue of approximately RMB 3.65 billion, a significant increase of about RMB 793 million compared to RMB 2.86 billion in the previous year, representing a growth of approximately 27.6%[16]. - The company achieved a net profit of approximately RMB 154 million, a turnaround from a net loss of RMB 117 million in the previous year, marking a significant improvement[16]. - The adjusted EBITA for the reporting period was approximately RMB 1.43 billion, reflecting a 21% increase from RMB 1.18 billion in the previous year[17]. - Operating profit turned from a loss of approximately RMB 108 million to a profit of approximately RMB 279 million; adjusted EBITA profit increased by 21% to approximately RMB 143 million[29]. - Net profit attributable to the company narrowed from a loss of approximately RMB 96 million to a profit of approximately RMB 170 million[29]. Box Office and Film Production - Alibaba Pictures participated in the production and distribution of 44 films, contributing over RMB 26 billion in box office revenue, accounting for 71% of the domestic film box office[11]. - The total national box office reached approximately RMB 42.9 billion, an increase of about RMB 6.7 billion year-on-year, recovering to 73% of pre-pandemic levels[19]. - The content segment generated revenue of approximately RMB 1.95 billion, a 37% increase from RMB 1.42 billion in the previous year[21]. - The company continues to emphasize high-quality content production, with several films achieving top box office rankings in the domestic market[11]. Technology and Digital Initiatives - The digital management platform "YunZhi" was introduced to improve operational efficiency and reduce costs for cinemas[12]. - The technology segment recorded revenue of approximately RMB 1.26 billion, an increase of about RMB 137 million from RMB 1.13 billion in the previous year[18]. - The technology segment recorded revenue of approximately RMB 1.264 billion for the fiscal year 2021/22, representing a 12% increase from approximately RMB 1.127 billion in the previous year[23]. - The digital production business, Yunshang, supported over 100 film crews during the reporting period, with more than 60% being external users[23]. - The digital platform "Lighthouse" expanded its coverage to include performances, dramas, and online movies, becoming a comprehensive data platform for the entertainment industry[23]. IP Development and Commercialization - Alibaba Pictures is focusing on IP development and commercialization, creating a complete vertical industry chain from IP content to service platforms and sales channels[12]. - The IP derivative and commercialization segment saw revenue of approximately RMB 440 million, a 43% increase from RMB 307 million in the previous year[18]. - The number of newly signed IPs increased by 120%, enhancing the visibility of IPs in the market[24]. - The Tmall platform's toy category GMV grew by 57% year-on-year, indicating strong performance in the IP commercialization space[26]. - The company launched the潮玩 brand "KOITAKE," with a flagship store on Tmall, expanding the company's IP derivative products[12]. Strategic Focus and Future Plans - The company plans to continue its strategic focus on content and technology integration, aiming for diversified business development and greater value creation for shareholders[16]. - The company aims to enhance operational efficiency by providing entrusted operation services to Damai, exploring the potential of live entertainment[12]. - The company plans to provide entrusted operation services to enhance operational efficiency and explore the potential of live entertainment in the fiscal year 2022/23[23]. - The company is committed to producing high-quality content that resonates with audiences, with several new series and films set to be released soon[19]. Financial Management and Governance - The company held cash and cash equivalents of approximately RMB 3.56 billion as of March 31, 2022, with no long-term borrowings and a net cash position[34]. - The company has a conservative investment strategy, holding investments in 15 joint ventures and associates valued at approximately RMB 1.723 billion[33]. - The current executive team includes experienced leaders from Alibaba Group, enhancing the company's strategic direction and financial management capabilities[41][42]. - The board includes independent directors with extensive experience in finance and media, contributing to strong governance practices[43][44]. - The company reported a total distributable reserve of approximately RMB 736 million as of March 31, 2022, down from RMB 756 million as of March 31, 2021[49]. Shareholder and Equity Information - The company’s total issued ordinary shares as of March 31, 2022, amounted to 26,975,740,156 shares[54]. - The total equity held by executive directors as of March 31, 2022, includes 15,645,000 shares for the chairman and CEO, representing approximately 0.06% of the total issued share capital[54]. - The company did not recommend the payment of dividends for the fiscal year ending March 31, 2022, consistent with the previous year[49]. - The company has a maximum limit of 30% for the total number of shares that can be issued due to unexercised options under the 2021 share option plan[74]. Related Party Transactions - The company has entered into multiple transactions with related parties, including Alibaba Group and its subsidiaries, which constitute non-exempt continuing connected transactions[113]. - The independent auditor confirmed that all ongoing related party transactions were conducted under fair and reasonable terms, in compliance with the company's pricing policy[152]. - The group has adhered to the disclosure requirements under the Hong Kong Listing Rules regarding related party transactions[152]. Environmental and Social Responsibility - The company is committed to environmentally friendly business practices, aiming to reduce material waste and energy consumption[111]. - The company has taken active measures to promote energy conservation among employees[111]. Risks and Compliance - The company faced various risks and uncertainties, detailed in the corporate governance report, which includes risk management and internal controls[50]. - The group faces risks related to the enforceability of the contractual arrangements under Chinese law, which could significantly impact its business[177].

Financial Performance - Alibaba Pictures Group achieved revenue of RMB 2.859 billion for the fiscal year 2020/21, remaining stable compared to the previous fiscal year[11]. - The company reported an adjusted EBITA profit of RMB 118 million, a turnaround from a loss of RMB 661 million in the previous fiscal year[11]. - In the fiscal year 2020/21, the company reported revenue of RMB 2.859 billion, which is nearly flat compared to RMB 2.875 billion in the previous year, demonstrating resilience amid a challenging environment[15]. - The operating loss significantly narrowed from RMB 981.25 million in the previous year to RMB 107.53 million in the reporting period, a decrease of RMB 873 million[16]. - Adjusted EBITA turned profitable for the first time, recording a profit of RMB 118.14 million compared to a loss of RMB 660.89 million in the previous year[16]. - The total revenue for the reporting period was RMB 28.59 billion, remaining stable compared to the previous year[18]. - The content segment generated revenue of RMB 14.25 billion, an increase of 37% from RMB 10.37 billion in the previous period[18]. - The technology segment reported revenue of RMB 11.27 billion, a decrease of 30% from RMB 16.18 billion in the previous period due to pandemic-related restrictions[18]. - The IP derivatives and commercialization segment achieved revenue of RMB 3.07 billion, a growth of 39% from RMB 2.2 billion in the previous period[18]. - The company recorded revenue of RMB 2.859 billion for the reporting period, remaining flat year-on-year[33]. - Adjusted EBITA turned from a loss of RMB 661 million to a profit of RMB 118 million, marking a significant turnaround[33]. - The net loss attributable to the company narrowed from RMB 1.151 billion to RMB 96 million, a reduction of RMB 1.055 billion year-on-year[33]. Content Production and Distribution - The company participated in the production and distribution of over 20 films, with 6 films from the "Jincheng Hezhi Plan" accounting for 68% of the national box office[11]. - The company aims to expand its content production capabilities into genres such as variety shows and offline entertainment content[11]. - The company is committed to becoming a leading provider of quality content across the entire entertainment industry[11]. - The company aims to expand its content offerings to become a leading provider in the entire entertainment industry[20]. - The company has a diverse lineup of upcoming series, with significant viewership on platforms like Douyin, indicating strong audience engagement[22]. - The company participated in the production and distribution of 25 films, contributing over RMB 24.7 billion in box office revenue, accounting for 68% of total box office[21]. - The company secured 10 of the top 3 films during key holiday periods, contributing RMB 21.3 billion, which represents 92% of the box office for those periods[21]. User Engagement and Digital Platforms - User engagement on the Taopiaopiao platform increased, with the number of users consuming content after viewing promotions rising by 20% compared to the previous fiscal year[12]. - The cloud intelligence product, Yunzhih, maintained the highest number of ticketing cinemas in the industry during the fiscal year 2020/21[12]. - The ticketing platform, Tao Piao Piao, saw a 20% increase in user consumption after enhancing its promotional capabilities during the post-pandemic recovery[25]. - The digital intelligence platform, including products like "Lighthouse" and "Tao Xiu Guang Ying," covered over 500 million users and contributed to 97% of the box office for partnered films during the reporting period[25]. Business Strategy and Growth - The company is focused on building a digital ecosystem in the entertainment industry, covering both B2B and B2C users[11]. - The company’s strategic focus on "quality content + new infrastructure" has been a key driver of its operational results[11]. - The company is committed to diversifying its business segments while leveraging its unique advantages in "content + technology" to drive growth[15]. - The company expressed confidence in its future development, emphasizing continued innovation and collaboration within the broader entertainment industry[15]. - The company aims to enhance its IP matrix to increase the commercial value of products through innovative design and resource integration[14]. - The company launched a new brand "Jinli Naqu" focusing on trendy toys, leveraging its strengths in content IP and marketing[14]. Financial Health and Investments - The company held cash and cash equivalents of approximately RMB 3.917 billion as of March 31, 2021[37]. - The company has a net cash position with a capital-to-equity ratio of zero, indicating no net debt[37]. - The company plans to continue investing in quality content and new infrastructure to drive business upgrades and enhance customer value[30]. - The company has maintained its corporate governance practices, with a focus on accountability and risk management[50]. - The company is committed to environmentally friendly business practices, aiming to reduce material waste and energy consumption, which also brings economic benefits[103]. Corporate Governance and Compliance - The board of directors includes independent non-executive directors, ensuring governance and oversight[52]. - The company is actively involved in risk management and has outlined key risks and uncertainties in its governance report[50]. - The company has complied with applicable laws, rules, and regulations in all material respects during the fiscal year ending March 31, 2021[102]. - The company has established and maintained appropriate insurance to protect against potential legal actions targeting its directors and management[101]. - The company aims to enhance corporate governance and maintain high levels of transparency and accountability[192]. Shareholder and Equity Information - The total number of ordinary shares issued by Alibaba Group Holdings Limited (AGH) as of March 31, 2021, is 21,699,031,448 shares[22]. - The company has a total of 26,834,946,210 ordinary shares issued as of March 31, 2021[54]. - Major shareholders include Ali CV, holding 50.26% of the issued share capital, and other entities under its control[181]. - The company did not recommend the payment of dividends for the fiscal year ending March 31, 2021, consistent with the previous year[50]. Employee and Management Information - As of March 31, 2021, the group employed 1,163 employees, an increase from 1,134 employees as of March 31, 2020[40]. - Employee benefits expenses totaled RMB 595 million during the reporting period[40]. - The board consists of seven members, including three executive directors, one non-executive director, and three independent non-executive directors[193]. - All executive directors attended 100% of board meetings and shareholder meetings[196]. Related Party Transactions - The company engaged in several transactions with related parties, including Alibaba Group Holding Limited, which holds approximately 50.26% of the company's issued share capital[105]. - The group’s independent auditor confirmed that all related party transactions were conducted on fair and reasonable terms[144]. - The group has adhered to the guidelines set forth by the Hong Kong Stock Exchange regarding related party transactions[144]. Risk Factors and Regulatory Compliance - The company faces regulatory risks related to the structure agreements, which may not comply with applicable Chinese laws and regulations, potentially leading to significant adverse effects on business operations[175]. - The company will closely monitor developments in foreign investment regulations and assess their potential impact on new contractual arrangements and related business operations[178].

Company Information [Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides basic company information, including board and committee members, principal banks, registered office, main business locations in Hong Kong and Beijing, share registrars, and stock codes on the Hong Kong and Singapore exchanges - This section provides basic company information, including board and committee members, principal banks, registered office, main business locations in Hong Kong and Beijing, share registrars, and stock codes on the Hong Kong and Singapore exchanges[4](index=4&type=chunk) Chairman's Statement [Chairman's Statement](index=4&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%E6%9B%B8) The company adheres to a dual-driven strategy of "quality content + new infrastructure," aiming to integrate the industry chain and create market growth, while also supporting industry recovery despite the impact of the COVID-19 pandemic - The company adheres to a dual-driven strategy of "quality content + new infrastructure," committed to integrating the industry chain upstream and downstream to create market growth, and will assist in industry recovery despite the impact of the COVID-19 pandemic in early 2020[5](index=5&type=chunk) - During the reporting period (the first 9 months excluding the Spring Festival holiday), the company excelled in content production, deeply participating in **12 out of the Top 20 domestic films**, with a combined box office of nearly **RMB 15 billion**, accounting for **61%** of the total, and successfully distributed several "small-budget + high-reputation" overseas films[7](index=7&type=chunk) - The Ali Fish business within the integrated development segment achieved rapid growth, with revenue maintaining a triple-digit increase for two consecutive fiscal years, average revenue per IP increasing by **60% year-on-year**, and driving a year-on-year GMV growth of approximately **50%** in the Tmall trendy play category[5](index=5&type=chunk) - Looking ahead, the company's core strategies include: upgrading new infrastructure (Lighthouse, Ali Fish); expanding into all categories of entertainment content (online films, variety shows); and collaborating with Alibaba Culture & Entertainment's Damai business to build a digital lifestyle platform[8](index=8&type=chunk) Management Discussion and Analysis [Performance Overview](index=7&type=section&id=%E6%A6%82%E8%A6%BD) During the reporting period, affected by the macroeconomic slowdown and the COVID-19 pandemic, the company's revenue decreased by **5%** year-on-year to **RMB 2.875 billion**, with operating loss and net loss significantly expanding due to large impairment provisions for receivables and investment projects 2019/20 Fiscal Year Key Financial Indicators | Indicator | FY2020 (RMB thousand) | FY2019 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Revenue** | 2,874,694 | 3,033,844 | -5% | | **Operating Loss** | (981,252) | (496,996) | +97% | | **Net Loss Attributable to Owners of the Company** | (1,150,570) | (253,570) | +353% | | **Adjusted EBITA Loss** | (721,589) | (598,718) | +21% | Revenue and Performance by Business Segment | Business Segment | FY2020 Revenue (RMB thousand) | FY2019 Revenue (RMB thousand) | FY2020 Performance (RMB thousand) | FY2019 Performance (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | **Internet Promotion and Distribution** | 2,204,077 | 2,463,642 | 449,672 | 387,761 | | **Content Production** | 428,960 | 458,875 | (1,661) | (221,083) | | **Integrated Development** | 241,657 | 111,327 | 136,495 | 67,337 | | **Total** | 2,874,694 | 3,033,844 | 584,506 | 234,015 | [Impact of COVID-19](index=8&type=section&id=%E7%96%AB%E6%83%85%E5%BD%B1%E9%9F%BF) The COVID-19 pandemic severely impacted the film and television industry, leading to significant declines in the company's ticketing, promotion, and production revenues, and necessitated nearly **RMB 800 million** in impairment provisions for receivables and investments due to partner difficulties - The pandemic caused nearly **RMB 30 billion** in box office losses, halted filming for TV series and variety shows, and resulted in significant losses for the company's ticketing and promotion businesses[12](index=12&type=chunk)[13](index=13&type=chunk) - Due to operational and capital chain risks faced by partners, the company made impairment provisions of nearly **RMB 800 million**[13](index=13&type=chunk) - The company actively fulfilled its social responsibilities, advancing nearly **RMB 50 million** in Spring Festival holiday ticket payments for cinemas and waiving service fees for newly opened cinemas[13](index=13&type=chunk) [Internet Promotion and Distribution](index=9&type=section&id=%E4%BA%92%E8%81%AF%E7%B6%B2%E5%AE%A3%E5%82%B3%E7%99%BC%E8%A1%8C) This segment, the company's primary revenue source, saw revenue decline by **11%** to **RMB 2.204 billion** year-on-year, yet content promotion and co-investment revenue grew **10%** to **RMB 1.061 billion** despite ticketing and system service declines, with segment performance improving **16%** to **RMB 450 million** due to enhanced operating efficiency - The "Lighthouse" one-stop promotion and distribution platform developed rapidly, serving **twice the number of film projects** during the reporting period compared to previous periods, cumulatively serving **three-quarters of domestic film producers**, with co-produced films generating over **RMB 60 billion** in box office revenue[15](index=15&type=chunk) - The company maintained its strategy of focusing on premium content, participating in **12 out of the Top 20 domestic films** during the reporting period, with a combined box office of nearly **RMB 15 billion** from produced and distributed films, accounting for **61%** of the Top 20 domestic film box office[15](index=15&type=chunk) Internet Promotion and Distribution Business Segment Revenue and Gross Profit | Business | FY2020 Revenue (RMB thousand) | FY2019 Revenue (RMB thousand) | FY2020 Gross Profit (RMB thousand) | FY2019 Gross Profit (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | **Ticketing Services** | 807,633 | 1,048,946 | 669,675 | 863,339 | | **Cloud Intelligence System Provider Services** | 270,158 | 333,738 | 270,004 | 331,777 | | **Content Investment and Distribution Services** | 1,060,644 | 961,478 | 424,279 | 620,988 | | **Other** | 65,642 | 119,480 | 58,332 | 103,805 | | **Total** | 2,204,077 | 2,463,642 | 1,422,290 | 1,919,909 | [Content Production](index=11&type=section&id=%E5%85%A7%E5%AE%B9%E8%A3%BD%E4%BD%9C) During the reporting period, the content production segment's revenue slightly decreased to **RMB 429 million** year-on-year, but its performance significantly improved, with losses narrowing by **99%** from **RMB 221 million** to **RMB 1.67 million**, nearly achieving breakeven Content Production Business Financial Performance | Indicator | FY2020 (RMB thousand) | FY2019 (RMB thousand) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Segment Revenue** | 429,000 | 459,000 | -6.5% | | **Segment Performance** | (1,670) | (221,000) | +99% | - **11 drama series projects** commenced filming during the reporting period, ensuring sufficient project reserves for the 2020/21 fiscal year[19](index=19&type=chunk) [Integrated Development](index=12&type=section&id=%E7%B6%9C%E5%90%88%E9%96%8B%E7%99%BC) The integrated development business, a new infrastructure segment, achieved rapid growth during the reporting period, with revenue increasing by **117%** year-on-year to **RMB 242 million** and operating profit growing by **103%** to **RMB 136 million**, marking its second consecutive fiscal year of high growth - For Ali Fish's IP licensing business, the average revenue from monetized IPs reached **RMB 2.21 million**, a year-on-year increase of over **60%**, significantly improving IP monetization efficiency[20](index=20&type=chunk) - The GMV of the Tmall trendy play category operated by Ali Fish increased by approximately **50%** year-on-year, with nearly **400 new merchants** joining the platform[21](index=21&type=chunk) - The crowdfunding platform "Zaodian Xinhuo" saw its DAU increase by nearly **24 times**, completing **6 crowdfunding projects** each exceeding **RMB 10 million**[23](index=23&type=chunk) - The Yunshang Production Management System for film and TV series production has been officially launched and used by over **100 production crews**[23](index=23&type=chunk) [Outlook](index=13&type=section&id=%E5%89%8D%E6%99%AF) The company will pursue three core strategies: upgrading new infrastructure by expanding Lighthouse's reach and maintaining Ali Fish's high growth; expanding into all categories of entertainment content, including online films and variety shows, and upgrading Taopiaopiao into a comprehensive decision-making platform for cinema and online films; and collaborating with Alibaba Culture & Entertainment's Damai business to build an entertainment platform for movie-watching and live performances - The company initiated business collaboration with Damai in early 2020 to enhance its local life services segment[24](index=24&type=chunk) - Future core strategies include: upgrading infrastructure, expanding into all content categories, and collaborating with Damai business[24](index=24&type=chunk) [Financial Review](index=14&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) This fiscal year, the company's revenue decreased by **5%** to **RMB 2.875 billion**, and adjusted EBITA loss expanded by **21%** to **RMB 722 million**, with net loss attributable to owners expanding to **RMB 1.151 billion** due to the pandemic and significant impairment provisions, resulting in a loss per share of **4.35 cents** [Revenue and Profit](index=14&type=section&id=%E6%9C%9F%E5%85%A7%E6%94%B6%E5%85%A5%E5%92%8C%E5%88%A9%E6%BD%A4) During the reporting period, revenue decreased by **5%** year-on-year to **RMB 2.875 billion**, and net loss attributable to owners of the company expanded by **353%** from **RMB 254 million** to **RMB 1.151 billion**, with basic and diluted loss per share increasing from **1.00 cent** to **4.35 cents** Key Profit Indicators | Indicator | FY2020 | FY2019 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Revenue (RMB)** | 2.875 billion | 3.034 billion | -5% | | **Net Loss Attributable to Owners (RMB)** | 1.151 billion | 0.254 billion | +353% | | **Loss Per Share (RMB cents)** | 4.35 | 1.00 | +335% | [Expense Analysis](index=14&type=section&id=%E9%8A%B7%E5%94%AE%E3%80%81%E5%B8%82%E5%A0%B4%E5%92%8C%E7%AE%A1%E7%90%86%E8%B2%BB%E7%94%A8) Sales and marketing expenses decreased by **36%** year-on-year to **RMB 1.017 billion**, primarily due to improved operating efficiency, while administrative expenses increased from **RMB 897 million** to **RMB 1.044 billion**, mainly due to impairment provisions for goodwill and property, plant, and equipment, and increased employee benefits - Sales and marketing expenses significantly decreased by **36%** year-on-year, reflecting improved operating efficiency[28](index=28&type=chunk) - The increase in administrative expenses was primarily due to impairment provisions for goodwill and fixed assets[28](index=28&type=chunk) [Principal Investments](index=14&type=section&id=%E4%B8%BB%E8%A6%81%E6%8A%95%E8%B3%87) As of the end of the reporting period, the company held **14 investments** in associates and joint ventures with a total carrying value of approximately **RMB 2.205 billion**, and **12 investments** in unlisted companies with a total carrying value of approximately **RMB 861 million**, with a significant investment being a **7.72%** associate investment in Bona Film Group with a carrying value of **RMB 997 million** - During the reporting period, investments in associates and joint ventures recorded total losses and impairments of **RMB 287 million**[30](index=30&type=chunk) - The long-term equity investment in Bona Film Group had a carrying value of **RMB 997 million**, accounting for approximately **6.3%** of total assets[30](index=30&type=chunk) [Financial Resources and Liquidity](index=15&type=section&id=%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E5%8F%8A%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91) As of the end of the reporting period, the company held approximately **RMB 4.184 billion** in cash, cash equivalents, and bank deposits, along with approximately **RMB 251 million** in wealth management product investments, maintaining a net cash position and a zero capital gearing ratio, indicating a robust financial condition - Held approximately **RMB 4.184 billion** in cash, cash equivalents, and bank deposits[33](index=33&type=chunk) - The capital gearing ratio (net borrowings/total equity) was **zero**, indicating a robust capital structure[33](index=33&type=chunk) Biographies of Directors and Senior Management [Biographies of Directors and Senior Management](index=15&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4%E5%B1%A5%E6%AD%B7%E8%B3%87%E6%96%99) This chapter provides detailed personal biographies, professional backgrounds, and other company appointments for the company's executive directors, non-executive directors, independent non-executive directors, and company secretary - This section details the personal biographies, professional backgrounds, and other company appointments of the company's executive directors, non-executive directors, independent non-executive directors, and company secretary[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) Directors' Report [Share Incentive Schemes](index=24&type=section&id=%E8%82%A1%E4%BB%BD%E6%BF%80%E5%8B%B5%E8%A8%88%E5%8A%83) This section details the company's two main share incentive tools: the "2012 Share Option Scheme" and the "Share Award Scheme," disclosing their purpose, eligibility, term, administration, grant limits, and changes during the reporting period, with **231 million** unexercised share options and **291 million** unexercised awarded shares outstanding at period-end 2012 Share Option Scheme Movements (As of March 31, 2020) | Status | Number of Share Options | | :--- | :--- | | **Unexercised at Beginning of Period** | 144,505,000 | | **Granted During the Year** | 106,492,500 | | **Exercised During the Year** | (4,000,000) | | **Lapsed During the Year** | (15,800,000) | | **Unexercised at End of Period** | 231,197,500 | Share Award Scheme Movements (As of March 31, 2020) | Status | Number of Awarded Shares | | :--- | :--- | | **Unexercised at Beginning of Period** | 186,843,100 | | **Granted During the Year** | 194,592,700 | | **Vested During the Year** | (57,125,150) | | **Lapsed During the Year** | (33,145,850) | | **Unexercised at End of Period** | 291,164,800 | [Connected Transactions](index=36&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) This section details significant transactions with connected persons during the reporting period, primarily the controlling shareholder Alibaba Group and its subsidiaries and affiliates, covering a wide range of activities from film/series rights sales and acquisitions to technology, marketing, and IP derivative collaborations, all confirmed to have followed necessary approval procedures and complied with listing rules - The company entered into agreements with Youku Technology for the transfer or exclusive procurement of information network dissemination rights for several film and television works, such as "Floating City on the Sea," "Green Book," "Hello Prosecutor," "Capernaum," and "Love Better Than Immortality"[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - The company signed multiple continuing connected transaction agreements with Alibaba Group, covering technical services, shared services, marketing services, operational services, payment services, advertising services, and IP derivative collaborations to support daily business operations[117](index=117&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[131](index=131&type=chunk) - The company entered into a film and television work cooperation framework agreement with Youku Technology, with an annual cap of **RMB 600 million**, covering copyright transfer/licensing and business development services[136](index=136&type=chunk) - The company entered into a copyright purchase framework agreement with Youku Technology for purchasing copyrights of literary, film, and television works, with an annual cap of **RMB 35 million** for FY2020[139](index=139&type=chunk) [Contractual Arrangements (VIE Structure)](index=55&type=section&id=%E5%90%88%E7%B4%84%E5%AE%89%E6%8E%92) Due to Chinese legal restrictions on foreign investment in film production and distribution, the Group controls domestic operating companies (Zhonglian Jinghua, Beijing Ali Tao, Shanghai Taopiaopiao) and their subsidiaries through contractual arrangements (VIE structure) to conduct related businesses and consolidate their financial results, with this section detailing the necessity, key agreements, risks, and financial contributions of these VIEs - The VIE structure aims to circumvent Chinese legal restrictions on foreign investment in film production, distribution, broadcasting, television program production, and cinema operations[146](index=146&type=chunk) - Key agreements include exclusive consulting and service agreements, loan agreements, equity pledge agreements, powers of attorney, and exclusive call option agreements, ensuring the Group's effective control over operating companies and access to their economic benefits[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[164](index=164&type=chunk) Financial Contribution of VIE Structure Entities to the Group (FY2020) | Operating Company | Revenue (RMB thousand) | % of Group Total Revenue | Assets (RMB thousand) | % of Group Total Assets | | :--- | :--- | :--- | :--- | :--- | | **Zhonglian Jinghua** | 711,771 | 25% | 1,921,525 | 12% | | **Beijing Ali Tao** | 838,641 | 29% | 4,733,688 | 30% | | **Shanghai Taopiaopiao** | 106,555 | 4% | 176,659 | 1% | | **Total** | **1,656,967** | **58%** | **6,831,872** | **43%** | [Interests of Major Shareholders](index=68&type=section&id=%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1%E4%B9%8B%E6%AC%8A%E7%9B%8A) This section discloses major shareholders holding **5%** or more of the company's shares, with Alibaba Group, through its wholly-owned subsidiary Ali CV Investment Holding Limited, holding **50.29%** of the company's shares as the controlling shareholder at the end of the reporting period Major Shareholder Holdings (As of March 31, 2020) | Shareholder Name | Nature of Interest | Number of Shares Held | Approximate % of Issued Share Capital | | :--- | :--- | :--- | :--- | | **Ali CV / AIL / AGH** | Beneficial Owner / Interest in Controlled Corporation | 13,488,058,846 | 50.29% | | **Bian Ximing / Yang Minghua** | Beneficial Owner | 1,865,160,000 | 6.95% | [Use of Proceeds from Share Issuance](index=69&type=section&id=%E7%99%BC%E8%A1%8C%E8%82%A1%E6%9C%AC%E8%AD%89%E5%88%B8%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E4%B9%8B%E7%94%A8%E9%80%94) This section outlines the use of proceeds from two past equity financings: the **HKD 12.1 billion** from the 2015 placement was fully utilized during the reporting period, while approximately **RMB 907 million** of the **HKD 1.248 billion** from the 2019 subscription remained unutilized as of the reporting period end, expected to be used as planned for content investment, customer expansion, M&A, and general corporate purposes - The net proceeds of **HKD 12.1 billion** from the 2015 placement were fully utilized as of March 31, 2020[172](index=172&type=chunk) - The net proceeds of approximately **HKD 1.248 billion** from the 2019 subscription had an unutilized balance of approximately **RMB 907 million** as of March 31, 2020, expected to be fully utilized within four years[173](index=173&type=chunk) Corporate Governance Report [Board of Directors](index=72&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83) The Board of Directors comprises seven directors, including three executive, one non-executive, and three independent non-executive directors, meeting listing rule requirements, and held **11 meetings** during the reporting period to discuss strategy, financial performance, and significant transactions, with a board diversity policy in place - The company explained the arrangement of the Chairman and CEO being the same person (Mr. Fan Luyuan), believing it aids strategy formulation and execution, and that the board's composition ensures a balance of power and authority[180](index=180&type=chunk) Board Meeting Attendance (FY2020) | Director Name | Position | Attendance/Meetings Held | | :--- | :--- | :--- | | **Mr. Fan Luyuan** | Chairman and CEO | 10/11 | | **Mr. Meng Jun** | Executive Director | 11/11 | | **Mr. Xu Hong** | Non-Executive Director | 2/2 | | **Ms. Song Lixin** | Independent Non-Executive Director | 11/11 | | **Mr. Tong Xiaomeng** | Independent Non-Executive Director | 7/11 | | **Mr. Chen Zhihong** | Independent Non-Executive Director | 11/11 | [Board Committees](index=80&type=section&id=%E8%91%A3%E4%BA%8B%E5%A7%94%E5%93%A1%E6%9C%83) The Board has four committees: Remuneration, Audit, Nomination, and Executive, with this section detailing their composition, primary functions, and work during the reporting period, including reviewing remuneration policies, overseeing financial reporting and internal controls, nominating directors, and managing daily operations - **Remuneration Committee**: Composed of one executive director and two independent non-executive directors, it reviewed the remuneration policies and benefits for directors and senior management during the year[202](index=202&type=chunk)[205](index=205&type=chunk) - **Audit Committee**: Composed of three independent non-executive directors, it reviewed annual and interim financial reports, the effectiveness of internal control systems, and recommended the re-appointment of auditors during the year[207](index=207&type=chunk)[209](index=209&type=chunk) - **Nomination Committee**: Composed of one executive director and two independent non-executive directors, it reviewed the board structure and diversity policy, and assessed and nominated director candidates during the year[210](index=210&type=chunk)[212](index=212&type=chunk) - **Executive Committee**: Composed of three executive directors, responsible for handling and monitoring daily management matters[213](index=213&type=chunk) [Accountability and Audit](index=86&type=section&id=%E5%95%8F%E8%B2%AC%E5%8F%8A%E6%A0%B8%E6%95%B8) This section outlines the company's framework and practices for financial reporting, risk management, and internal control, with the Board overseeing the effectiveness of risk management and internal control systems through a three-lines-of-defense structure, identifying regulatory, industry, exchange rate, and talent management as key risks for the fiscal year, and concluding that the systems were adequate and effective - The company established a three-lines-of-defense risk management framework: the first line being business operations teams, the second line being risk management functions (finance, legal, internal control), and the third line being the internal audit team[222](index=222&type=chunk)[223](index=223&type=chunk) Key Risks and Mitigation Measures | Key Risk | Risk Description | Risk Mitigation Measures | | :--- | :--- | :--- | | **Regulatory Risk** | Strict regulation in internet and film/TV industries, content censorship, and cybersecurity laws pose constraints | Timely understanding of regulatory developments, strict selection of topics, enhanced pre-launch self-inspection for products | | **Industry Risk** | Intense competition in content production and promotion, uncertainty in project selection and investment returns | Ecosystem layout across the industry chain, use of big data for decision-making, creation of differentiated services | | **Exchange Rate Risk** | Holding foreign currency funds and international project investments, exposed to exchange rate fluctuations | Maintain communication with banks, regularly analyze risk exposure, maintain a multi-currency portfolio | | **Talent Management Risk** | Industry highly dependent on talent, loss of key talent may impact business sustainability | Provide comprehensive training, promotion mechanisms, and long-term incentive plans, strengthen corporate culture | Environmental, Social and Governance Report [Environment](index=99&type=section&id=%E7%92%B0%E5%A2%83) Due to the nature of its business, the company has no significant material environmental impact, promoting resource efficiency and green office practices through electronic systems, double-sided printing, and sensor faucets, and as its main offices moved into Alibaba Group's campus, individual resource consumption data is not separately trackable - The company's operations do not involve factory production, resulting in no significant emissions of exhaust gas, wastewater, or hazardous waste; non-hazardous waste generated from offices is handled by the campus property management in compliance with regulations[245](index=245&type=chunk) - The company implements various energy-saving measures, such as encouraging video conferencing over business travel, turning off lights when leaving, and waste sorting, to create a low-carbon and environmentally friendly office environment[246](index=246&type=chunk)[247](index=247&type=chunk) [Society](index=103&type=section&id=%E7%A4%BE%E6%9C%83) On the social front, the company strictly adheres to labor laws, safeguards employee rights, provides a healthy and safe work environment, and offers diverse training and development opportunities, while maintaining stringent supply chain management and product responsibility systems to ensure content compliance and user information security, upholding high standards of business ethics with anti-corruption mechanisms, and actively engaging in community welfare, particularly in supporting industry partners during the pandemic Employee Composition (As of March 31, 2020) | Category | Quantity/Ratio | | :--- | :--- | | **Total Employees** | 1,134 | | **Gender Ratio (Male/Female)** | 65% / 35% | | **Age Structure (Under 30)** | 41% | | **Age Structure (31-40)** | 52% | | **Age Structure (Over 41)** | 7% | - The company strictly adheres to labor standards, prohibiting child labor and forced labor, and ensures employee age compliance through identity verification[261](index=261&type=chunk) - Regarding product responsibility, the company strictly complies with content review regulations, ensures works are free from infringement risks, and protects user privacy by strengthening data security measures[265](index=265&type=chunk)[266](index=266&type=chunk) - The company has a dedicated anti-corruption team and reporting channels, and requires employees to pass an annual anti-corruption examination[268](index=268&type=chunk)[270](index=270&type=chunk) - During the pandemic, the company quickly responded to assist audiences with ticket refunds and established a platform to help cinemas procure epidemic prevention supplies and manage unsold merchandise, supporting the industry through difficult times[272](index=272&type=chunk) Independent Auditor's Report [Independent Auditor's Report](index=119&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) PricewaterhouseCoopers (PwC), the auditor, issued an unqualified opinion on the company's consolidated financial statements as of March 31, 2020, affirming that the financial statements present a true and fair view of the Group's financial position and performance - The report identified four Key Audit Matters: - Goodwill impairment assessment - Impairment assessment of film and television rights - Impairment assessment of investments accounted for using the equity method - Assessment of expected credit losses on trade receivables[278](index=278&type=chunk) Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=131&type=section&id=%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E8%A1%A8) During the reporting period, the company recorded revenue of **RMB 2.875 billion**, a **5%** year-on-year decrease, with the annual loss expanding from **RMB 296 million** to **RMB 1.166 billion** due to increased cost of sales and services, administrative expenses, and impairment losses on financial assets, resulting in a loss attributable to owners of **RMB 1.151 billion** Consolidated Statement of Profit or Loss Summary | Item (RMB thousand) | FY2020 | FY2019 | | :--- | :--- | :--- | | **Revenue** | 2,874,694 | 3,033,844 | | **Gross Profit** | 1,566,744 | 1,766,163 | | **Operating Loss** | (981,252) | (496,996) | | **Loss Before Income Tax** | (1,136,616) | (280,887) | | **Loss for the Year** | (1,165,816) | (295,950) | | **Loss Attributable to Owners of the Company** | (1,150,570) | (253,570) | [Consolidated Statement of Financial Position](index=133&type=section&id=%E7%B6%9C%E5%90%88%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E8%A1%A8) As of the end of the reporting period, the company's total assets were **RMB 15.848 billion**, a decrease from **RMB 16.618 billion** at the previous fiscal year-end, primarily due to changes in fair value of financial assets and reduced investments, with total liabilities at **RMB 1.871 billion** and total equity at **RMB 13.976 billion**, and goodwill, investments accounted for using the equity method, film rights, and cash being major asset components Consolidated Statement of Financial Position Summary | Item (RMB thousand) | March 31, 2020 | March 31, 2019 | | :--- | :--- | :--- | | **Non-current Assets** | 8,156,317 | 9,081,048 | | **Current Assets** | 7,691,562 | 7,536,735 | | **Total Assets** | 15,847,879 | 16,617,783 | | **Total Liabilities** | 1,871,409 | 1,665,588 | | **Total Equity** | 13,976,470 | 14,952,195 | [Consolidated Statement of Cash Flows](index=137&type=section&id=%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) During the reporting period, net cash outflow from operating activities was **RMB 776 million**, while investing activities generated a net cash inflow of **RMB 1.665 billion**, primarily from the repayment of **RMB 1 billion** in convertible bond principal, and financing activities resulted in a net cash outflow of **RMB 420 million**, leading to a net increase in cash and cash equivalents of **RMB 469 million** to **RMB 4.005 billion** at year-end Consolidated Statement of Cash Flows Summary | Item (RMB thousand) | FY2020 | FY2019 | | :--- | :--- | :--- | | **Net Cash Outflow from Operating Activities** | (776,148) | (1,376,845) | | **Net Cash Inflow from Investing Activities** | 1,665,491 | 1,089,984 | | **Net Cash (Outflow)/Inflow from Financing Activities** | (420,175) | 1,765,305 | | **Net Increase in Cash and Cash Equivalents** | 469,168 | 1,478,444 | | **Cash and Cash Equivalents at End of Year** | 4,004,528 | 3,341,470 | Notes to the Consolidated Financial Statements [Note 5: Revenue and Segment Information](index=184&type=section&id=%E9%99%84%E8%A8%BB5%EF%BC%9A%E6%94%B6%E5%85%A5%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) This note provides detailed revenue and performance information by business segment, categorizing the Group into three segments: Internet Promotion and Distribution, Content Production, and Integrated Development, with Internet Promotion and Distribution being the largest revenue source at **77%** of total revenue, Content Production significantly narrowing its loss, and Integrated Development achieving high growth in both revenue and profit Segment Performance (FY2020) | Segment | Revenue (RMB thousand) | Performance (RMB thousand) | | :--- | :--- | :--- | | **Internet Promotion and Distribution** | 2,204,077 | 449,672 | | **Content Production** | 428,960 | (1,661) | | **Integrated Development** | 241,657 | 136,495 | | **Total** | **2,874,694** | **584,506** | [Note 15: Goodwill and Intangible Assets](index=201&type=section&id=%E9%99%84%E8%A8%BB15%EF%BC%9A%E5%95%86%E8%AD%BD%E5%92%8C%E7%84%A1%E5%BD%A2%E8%B3%87%E7%94%A2) As of the end of the reporting period, the company's net carrying value of goodwill was **RMB 3.551 billion**, primarily allocated to the Internet Promotion and Distribution segment, with an impairment loss of **RMB 34.93 million** recognized for this segment after annual impairment testing, and intangible assets mainly comprising film and television program production and distribution licenses, ticketing system operation licenses, and customer relationships Allocation of Goodwill and Intangible Assets with Indefinite Useful Lives (Year-End Balance, RMB thousand) | Segment | FY2020 | FY2019 | | :--- | :--- | :--- | | **Internet Promotion and Distribution (Goodwill)** | 3,141,396 | 3,176,327 | | **Content Production (Goodwill)** | 159,813 | 159,813 | | **Integrated Development (Goodwill)** | 249,907 | 249,907 | | **Content Production (Intangible Assets)** | 7,808 | 7,808 | | **Total** | **3,558,924** | **3,593,855** | - An impairment loss of **RMB 34.931 million** for goodwill was recognized during the reporting period based on impairment tests[467](index=467&type=chunk) [Note 31: Related Party Transactions](index=230&type=section&id=%E9%99%84%E8%A8%BB31%EF%BC%9A%E9%97%9C%E8%81%AF%E6%96%B9%E4%BA%A4%E6%98%93) This note details the transaction amounts and period-end balances with related parties, primarily the ultimate parent company Alibaba Group and its subsidiaries and affiliates, with significant transactions including sales of film rights, provision of services, and procurement of services with AGH subsidiaries, and detailed disclosures for period-end receivables and payables to related parties Major Related Party Transactions (FY2020, RMB thousand) | Transaction Type | Amount | | :--- | :--- | | **Sale of Film and Television Rights to AGH Subsidiaries** | 177,523 | | **Provision of Services to AGH Subsidiaries** | 130,789 | | **Purchase of Services from AGH Subsidiaries** | 99,271 | | **Purchase of Services from AGH Associates** | 52,864 | Major Related Party Balances (As of March 31, 2020, RMB thousand) | Balance Type | Amount | | :--- | :--- | | **Amounts Due from AGH Subsidiaries (Trade Receivables)** | 263,904 | | **Amounts Due from Associates (Trade Receivables)** | 272,248 | | **Amounts Due to AGH Subsidiaries (Other Payables)** | 102,388 | Financial Summary [Financial Summary](index=246&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section provides a five-year financial summary, including key metrics such as revenue, profit/loss attributable to owners, total assets, total liabilities, and equity attributable to owners, offering a concise overview of the company's financial performance and position over the past five fiscal years Five-Year Financial Summary | Item (RMB thousand) | FY2016 | FY2017 | FY2018 (15 months) | FY2019 | FY2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 263,717 | 904,582 | 3,302,783 | 3,033,844 | 2,874,694 | | **Profit/(Loss) Attributable to Owners of the Company** | 466,040 | (958,576) | (1,658,647) | (253,570) | (1,150,570) | | **Total Assets** | 18,975,861 | 19,563,062 | 14,982,583 | 16,617,783 | 15,847,879 | | **Total Liabilities** | (2,782,281) | (2,431,130) | (885,684) | (1,665,558) | (1,871,409) | | **Equity Attributable to Owners of the Company** | 16,195,811 | 16,918,023 | 13,976,697 | 14,856,443 | 13,898,376 |

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