Financial Products - YH Entertainment Group reported a financial product with a principal amount of 72,000 thousand RMB and an annual return rate of 3.95%[2] - As of December 31, 2022, the unredeemed amount of the financial product was 72,595 thousand RMB, representing 5.5% of the total assets[2] - The financial product was fully redeemed in January 2023[3]

Financial Performance - Total revenue decreased from RMB 488.0 million for the six months ended June 30, 2022, to RMB 364.8 million for the six months ended June 30, 2023, representing a decline of 25.2%[12] - The company recorded a loss of RMB 175.9 million for the six months ended June 30, 2023, compared to a profit of RMB 92.7 million for the same period in 2022[12] - Revenue from artist management decreased by 26.6% from RMB 435.3 million in the first half of 2022 to RMB 319.4 million in the first half of 2023, accounting for 87.6% of total revenue[15] - Revenue from music IP production and operation fell by 26.7% from RMB 40.5 million in the first half of 2022 to RMB 29.6 million in the first half of 2023, representing 8.1% of total revenue[15] - Revenue from pan-entertainment business increased by 28.8% from RMB 12.2 million in the first half of 2022 to RMB 15.7 million in the first half of 2023, accounting for 4.3% of total revenue[15] - Gross profit for the six months ended June 30, 2023, was RMB 76.2 million, down from RMB 203.8 million for the same period in 2022, resulting in a gross margin of 20.9% compared to 41.8%[31] - The gross profit margin for artist management dropped to 19.9% for the six months ended June 30, 2023, from 41.5% for the same period in 2022[33] - Adjusted net profit for the six months ended June 30, 2023, was RMB 49.9 million, down from RMB 168.7 million in the same period of 2022, with an adjusted net profit margin of 13.7% compared to 34.6%[54] - The company reported a significant increase in operating income cash flow to RMB 61,453 thousand, compared to RMB 29,451 thousand in the previous year[145] Expenses and Costs - Sales and marketing expenses increased by 20.7% to RMB 16.8 million for the six months ended June 30, 2023, compared to RMB 13.9 million for the same period in 2022[35] - The group's daily and administrative expenses increased by 45.2% from RMB 44.2 million for the six months ended June 30, 2022, to RMB 64.2 million for the six months ended June 30, 2023, primarily due to increased equity-settled share-based payments to executives[36] - Total operating costs increased slightly to RMB 288,660 thousand from RMB 284,164 thousand year-on-year, indicating a rise of 1.8%[128] - Marketing expenses rose to RMB 16,820 thousand, up from RMB 13,937 thousand, representing a 20.5% increase[128] - Administrative expenses increased to RMB 64,176 thousand from RMB 44,231 thousand, marking a rise of 45.2%[128] Strategic Initiatives - The company plans to establish its own artist training center to enhance core artist cultivation capabilities[17] - The company aims to expand its training reserve of potential artists through a systematic training program[17] - A new artificial intelligence content creation company was established to focus on creating digital personas for artists, indicating a strategic move into AI-driven entertainment[11] - The company will continue to enhance the operational capabilities of its signed artists to increase their visibility and commercial value[17] - The company anticipates exploring more pan-entertainment business opportunities through the development of YH SPACE, a comprehensive performance and entertainment venue[11] - The company plans to further develop its music IP production and operation business to address the rapidly growing digital music market in China[21] - The company established an AIGC company to create digital personas for artists, aiming to enhance its pan-entertainment business and tap into the commercial potential of the AIGC market[22] - The company aims to expand its overseas market presence and enhance artist operations in South Korea and other global markets[26] Shareholder and Governance Information - The company does not recommend the payment of an interim dividend for the six months ending June 30, 2023[95] - As of June 30, 2023, the company’s chairman and CEO roles are held by the same individual, which the board believes ensures consistent leadership and effective strategic planning[88] - The company has adopted the corporate governance code and has complied with all applicable provisions since its listing[88] - The company’s major shareholders include Ms. Du Hua, holding approximately 43.17% of the company’s equity through controlled entities[100] - The company issued 120,060,000 shares at HKD 4.08, raising a net amount of approximately HKD 398.4 million after deducting underwriting commissions and related expenses[96] - As of June 30, 2023, the company has utilized HKD 36.6 million of the net proceeds, with HKD 361.8 million remaining[97] - 60% of the net proceeds (approximately HKD 239 million) is allocated for continuous investment in artist operations, including the acquisition and renovation of an artist training center in China[97] - The company plans to complete the acquisition and renovation of the training center by the end of 2023, with an allocated budget of approximately HKD 179.3 million[97] Financial Position and Assets - Total assets increased to RMB 1,758,252,000 as of June 30, 2023, up from RMB 1,322,271,000 at the end of 2022, reflecting a growth of approximately 33%[133] - Cash and cash equivalents rose to RMB 646,769,000 from RMB 528,660,000, indicating an increase of about 22%[133] - Total liabilities decreased significantly to RMB 512,883,000 from RMB 1,439,124,000, a reduction of approximately 64%[136] - The company's equity attributable to owners increased to RMB 1,241,596,000 as of June 30, 2023, compared to a deficit of RMB 121,126,000 at the end of 2022[133] - Inventory levels rose to RMB 2,487,000 from RMB 1,522,000, marking an increase of approximately 63%[133] - Trade receivables decreased to RMB 114,701,000 from RMB 129,940,000, a decline of about 12%[133] Risk Management - The group faced foreign exchange risk, with a potential impact of approximately RMB 243,000 on pre-tax profit if the USD appreciated/depreciated by 5% against the RMB[159] - The group's floating rate borrowings amounted to RMB 65,945,000 as of June 30, 2023, with a potential pre-tax profit impact of approximately RMB 330,000 if interest rates rise by 50 basis points[165] - The group does not use any derivatives to hedge its foreign exchange risk, which is primarily related to its operations in China[159] - The group’s overall risk management procedures focus on mitigating potential adverse impacts on financial performance due to market unpredictability[158] - The company continues to monitor credit risk and adjust provisions based on macroeconomic indicators and historical loss rates[186] Impairment and Provisions - The provision for impairment of trade receivables increased to RMB 23,099 thousand as of June 30, 2023, compared to RMB 22,814 thousand as of December 31, 2022[180] - The expected loss provision for trade receivables for the first half of 2023 was RMB 286 thousand, a decrease from RMB 5,205 thousand in the same period of 2022[180] - The total impairment loss provision for the first half of 2023 was RMB 99,000, compared to a reversal of RMB 458,000 in the same period of 2022, highlighting a shift in asset quality[196] - The impairment provision for other receivables and investments measured at amortized cost increased to RMB 848,000 from RMB 355,000 in the same period of 2022, reflecting a significant rise in credit risk[196]

Financial Performance - Total revenue decreased from RMB 487.97 million in the six months ended June 30, 2022, to RMB 364.82 million in the same period of 2023, representing a decline of 25.2%[2] - Gross profit fell from RMB 203.81 million to RMB 76.16 million, a decrease of 62.6%, with the gross margin dropping from 41.8% to 20.9%[2] - The company recorded a net loss of RMB 175.91 million for the six months ended June 30, 2023, compared to a profit of RMB 92.73 million in the same period of 2022[4] - Adjusted net profit (non-IFRS measure) decreased by 70.4% from RMB 168.69 million to RMB 49.89 million[2] - Revenue decreased by 25.2% from RMB 488.0 million for the six months ended June 30, 2022, to RMB 364.8 million for the six months ended June 30, 2023, primarily due to a decline in artist management income[14] - The operating profit for the first half of 2023 was RMB 1.793 million, a sharp decrease from RMB 153.002 million in the previous year[47] - The company reported a basic loss per share of RMB 0.22 for the first half of 2023, compared to earnings of RMB 0.20 in the same period last year[47] - The net profit attributable to the company's owners for the six months ended June 30, 2023, was a loss of RMB 175,413,000, compared to a profit of RMB 93,803,000 for the same period in 2022[65] - The diluted loss per share for the six months ended June 30, 2023, was RMB (0.22), compared to RMB 0.17 for the same period in 2022, reflecting the adjustments for convertible preferred shares[67] Revenue Breakdown - Revenue from artist management accounted for 87.6% of total revenue, amounting to RMB 319.44 million, down 26.6% year-on-year[7] - Revenue from music IP production and operation was RMB 29.64 million, representing 8.1% of total revenue, a decrease of 26.7%[7] - Revenue from artist management decreased by 26.6% from RMB 435.3 million for the six months ended June 30, 2022, to RMB 319.4 million for the six months ended June 30, 2023, primarily due to a decline in demand for services provided to contracted artists[9] - Revenue from music IP production and operation decreased by 26.7% from RMB 40.5 million for the six months ended June 30, 2022, to RMB 29.6 million for the six months ended June 30, 2023, mainly due to a reduction in sales of digital singles and albums[10] - Revenue from pan-entertainment business increased by 28.8% from RMB 12.2 million for the six months ended June 30, 2022, to RMB 15.7 million for the six months ended June 30, 2023, primarily due to increased income from concerts organized for contracted artists[11] Expenses and Costs - Sales and marketing expenses increased by 20.7% from RMB 13.9 million to RMB 16.8 million, primarily due to increased share-based payments to sales and marketing personnel[19] - Administrative expenses rose by 45.2% from RMB 44.2 million to RMB 64.2 million, mainly due to increased share-based payments to administrative staff[20] - The total operating costs, sales and marketing expenses, and general and administrative expenses amounted to RMB 369,656 thousand, an increase of 8.0% from RMB 342,332 thousand in the previous year[57] Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 1,758.252 million, an increase from RMB 1,322.271 million at the end of 2022[48] - The company's total liabilities decreased to RMB 512.883 million from RMB 1,439.124 million at the end of 2022, reflecting a significant reduction in debt[49] - Trade receivables decreased by 11.7% from RMB 129.9 million as of December 31, 2022, to RMB 114.7 million as of June 30, 2023, attributed to reduced demand for services provided to contracted artists[34] - Trade payables decreased by 11.0% from RMB 190.6 million as of December 31, 2022, to RMB 169.6 million as of June 30, 2023, primarily due to decreased income from artist management business[35] - Other payables and accrued expenses decreased by 14.5% from RMB 49.7 million as of December 31, 2022, to RMB 42.5 million as of June 30, 2023, mainly due to a reduction in listing-related payables[36] Strategic Initiatives - The company established an artificial intelligence content creation company to enhance its entertainment business and create digital personas for artists[3] - The company plans to develop a comprehensive entertainment platform, YH SPACE, to explore more opportunities in the entertainment market[3] - The company aims to leverage its brand influence and market resources to execute its comprehensive development strategy effectively[5] - The company continues to strengthen its leading position in the Chinese artist management market by identifying and training high-potential artists[8] - The company plans to build its own artist training center to enhance its core artist cultivation capabilities[9] - The company aims to further develop its music IP production and operation business to respond to the rapidly growing digital music market in China[10] - The company is actively expanding its global presence, promoting its contracted artists and music works on various overseas streaming platforms[12] - The company plans to seek business opportunities in Southeast Asia, Japan, and the United States while enhancing its artist management capabilities in South Korea[13] Governance and Compliance - The audit committee reviewed the unaudited consolidated financial statements for the six months ending June 30, 2023, confirming compliance with applicable accounting standards[76] - The company has adopted the corporate governance code as per the listing rules and continues to review its governance practices[74] - The company confirmed that all directors adhered to the standards of conduct regarding securities trading during the reporting period[75] Future Outlook - The company has provided a revenue guidance of RMB 1 billion for the next fiscal year, reflecting an expected growth of 25%[83] - New product launches are anticipated to contribute an additional RMB 200 million in revenue over the next six months[83] - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of 2024[83] - Research and development investments increased by 30% to RMB 50 million, focusing on innovative technologies[83] - The company is exploring potential acquisitions to enhance its product portfolio and market reach[83] - A new strategic partnership was announced, expected to drive synergies and increase operational efficiency[83] - The company plans to implement a new marketing strategy aimed at increasing brand awareness by 40% in the next year[83] - The board of directors remains committed to enhancing shareholder value through strategic initiatives and operational improvements[84]

Financial Performance - Total revenue decreased from RMB 1,290.4 million in 2021 to RMB 980.3 million in 2022, a decline of 24.0%[9] - Revenue from artist management was RMB 851.6 million, accounting for 86.9% of total revenue, down 27.5% from RMB 1,174.8 million in 2021[13] - Music IP production and operation revenue increased by 26.8% to RMB 98.6 million, representing 10.1% of total revenue[13] - Revenue decreased by 24.0% from RMB 1,290.4 million in the year ended December 31, 2021, to RMB 980.3 million in the year ended December 31, 2022, primarily due to a decline in artist management revenue[23] - Artist management revenue fell by 27.5% from RMB 1,174.8 million in 2021 to RMB 851.6 million in 2022, largely impacted by COVID-19[23] - Music IP production and operation revenue increased by 26.8% from RMB 77.7 million in 2021 to RMB 98.6 million in 2022, driven by higher sales of digital singles and albums[23] Profitability - The fair value gain from convertible preferred shares was RMB 1,582.0 million, significantly impacting the profit for the year, which rose to RMB 1,725.2 million[9] - Gross profit from artist management fell by 45.3% from RMB 540.6 million in 2021 to RMB 295.9 million in 2022, with a gross margin decline from 46.0% to 34.7%[16] - Gross profit decreased from RMB 602.0 million in 2021 to RMB 363.1 million in 2022, with a gross margin decline from 46.6% to 37.0%[27] - The net profit for 2022 increased to RMB 1,725.2 million, up from RMB 335.3 million in 2021, representing a significant growth of approximately 415%[44] - The adjusted net profit for 2022 was RMB 266.6 million, a decrease of 32.4% compared to RMB 394.6 million in 2021, with an adjusted net profit margin of 27.2%[46] Operational Highlights - The company had 68 signed artists and 58 trainees, with 18 trainees debuting as signed artists in 2022[9] - The number of commercial activities generating revenue was approximately 490 in 2022[15] - The trainee program received over 14,000 applications, with a selection rate of less than 0.1%[14] - The company successfully launched seven artist groups, including TEMPEST, NEVERLAND, and BOYHOOD in 2022[14] - The virtual artist business was expanded through the establishment of two companies in partnership with business associates[9] Cost Management - Total operating costs decreased by 10.4% from RMB 688.5 million in 2021 to RMB 617.2 million in 2022, mainly due to reduced revenue sharing and promotional costs[26] - Total sales and marketing expenses increased by 8.9% from RMB 34.5 million in 2021 to RMB 37.6 million in 2022[31] - Employee benefits expenses for sales and marketing decreased by 2.1% to RMB 22.2 million, while promotional expenses increased by 32.8% to RMB 8.3 million[31] - Total administrative expenses rose by 67.1% from RMB 71.5 million in 2021 to RMB 119.5 million in 2022[34] Assets and Liabilities - Trade receivables increased by 21.6% from RMB 106.8 million in 2021 to RMB 129.9 million in 2022, primarily due to increased receivables from artist management and entertainment services[48] - Prepayments surged from RMB 8.3 million in 2021 to RMB 44.6 million in 2022, mainly due to increased prepayments related to artist promotions[49] - Trade payables decreased by 10.7% from RMB 213.5 million in 2021 to RMB 190.6 million in 2022, attributed to reduced payables related to artist management revenue sharing[52] Corporate Governance - The board of directors consists of nine members, including three executive directors, three non-executive directors, and three independent non-executive directors[64] - The company has established a corporate governance framework to protect shareholder interests and maintain high standards of corporate governance practices[186] - The audit committee is composed of three independent non-executive directors, ensuring proper oversight of financial reporting and internal controls[200] - The board will continue to review and monitor its corporate governance practices to ensure compliance with the governance code[187] ESG Initiatives - The company has established an ESG governance framework, which includes a decision-making layer composed of the board of directors, an organizational layer led by senior management, and an execution layer involving relevant departments[78] - The ESG committee, led by the executive director and president, is responsible for promoting ESG initiatives and formulating additional environmental and social measures[79] - The company published its first ESG report, detailing its efforts and key performance indicators (KPIs) related to environmental, social, and governance (ESG) aspects[75] - The report covers the period from January 1 to December 31, 2022, and adheres to the guidelines set by the Hong Kong Stock Exchange[76] Employee Management - Total employee count is 200, with 129 female employees and 71 male employees[117] - Overall employee turnover rate is 34.00%, with a turnover rate of 31.01% for female employees and 39.44% for male employees[117] - Employee compensation is structured with a base salary, bonuses, and benefits, with adjustments made annually based on performance and market conditions[100] - The company has implemented a comprehensive employee benefits system, including statutory holidays and various types of leave[100] Market Position - The company ranks first among artist management companies in China with a market share of 1.9% based on artist management revenue in 2021[186] - The company is highly dependent on the reputation of contracted artists and public perception, which significantly impacts its financial performance[126] - The overall prosperity of the Chinese entertainment industry is crucial for the company's success, with economic downturns potentially affecting consumer spending[126] Future Plans - The company plans to leverage its market resources for stable growth in the coming year[10] - The company aims to expand its music IP library by acquiring high-quality music rights from copyright holders[18] - The company plans to seek business opportunities in Southeast Asia, Japan, and the United States to further expand its global presence[20]

Financial Performance - Total revenue decreased from RMB 1,290.4 million in 2021 to RMB 980.3 million in 2022, a decline of 24.0%[2] - Gross profit fell from RMB 601.9 million in 2021 to RMB 363.1 million in 2022, representing a decrease of 39.7%[2] - Operating profit dropped from RMB 505.1 million in 2021 to RMB 212.2 million in 2022, a decline of 58.0%[2] - Net profit for the year increased significantly from RMB 335.3 million in 2021 to RMB 1,725.2 million in 2022, an increase of 414.5%[2] - Adjusted net profit (non-IFRS) decreased from RMB 394.6 million in 2021 to RMB 266.6 million in 2022, a decline of 32.4%[2] Revenue Breakdown - Revenue from artist management accounted for 86.9% of total revenue in 2022, amounting to RMB 851.6 million, down 27.5% from 2021[7] - Revenue from music IP production and operation increased by 26.8% to RMB 98.6 million, representing 10.1% of total revenue in 2022[7] - Revenue from artist management decreased by 27.5% from RMB 1,174.8 million in 2021 to RMB 851.6 million in 2022 due to COVID-19 impacts[9] - Revenue from pan-entertainment business decreased by 20.7% from RMB 37.9 million in 2021 to RMB 30.1 million in 2022, primarily due to regulatory changes affecting idol training programs[13] Artist Management and Development - The company had 68 signed artists and 58 trainees as of December 31, 2022, with 18 trainees debuting as signed artists in 2022[3] - The company plans to establish its own artist training center to enhance core artist cultivation capabilities[10] - The company is expanding its virtual artist business through partnerships and has launched several virtual artist groups[13] Cost and Expenses - Operating costs decreased by 10.4% from RMB 688.5 million in 2021 to RMB 617.2 million in 2022, primarily due to a reduction in revenue share from artist management business[20] - Total sales and marketing expenses increased by 8.9% from RMB 34.5 million in 2021 to RMB 37.6 million in 2022[26] - Employee benefits accounted for 58.9% of total sales and marketing expenses in 2022, slightly down from 65.6% in 2021[26] - Share-based payments increased significantly by 115.2% from RMB 1.7 million in 2021 to RMB 3.7 million in 2022, reflecting the implementation of the share incentive plan[26] Financial Position - The company’s total assets decreased to RMB 1,322,271,000 as of December 31, 2022, down from RMB 1,678,897,000 in 2021[60] - The total liabilities increased to RMB 1,439,124,000 in 2022, compared to RMB 1,359,339,000 in the previous year[63] - Cash and cash equivalents were RMB 528.7 million as of December 31, 2022, compared to RMB 546.6 million as of December 31, 2021[49] Market Expansion and Future Plans - The company expects to achieve sustainable and stable growth through effective market resource utilization in the coming year[5] - The company is actively expanding its presence in the Asian market, promoting signed artists and brands across various overseas music streaming platforms[15] - The company aims to seek business opportunities in Southeast Asia, Japan, and the United States while continuing to build its team in South Korea[15] Shareholder Matters - The company completed a global offering of 120,060,000 shares at a price of HKD 4.08 per share on January 19, 2023[58] - The company plans to utilize the proceeds from the global offering to support its business expansion and new product development initiatives[58] - The annual general meeting is scheduled for June 16, 2023, to discuss shareholder matters[95]