Group 1 - The China International Chamber of Commerce Cultural and Tourism Industry Working Committee held its third committee re-election conference and general meeting in Beijing, with Poly Culture Group elected as the new chair unit [1] - The meeting reviewed and approved the work report of the second committee and the list of proposed new leadership positions, including chair, vice-chair, and standing committee units [1] - The Vice President of China Council for the Promotion of International Trade, Nie Wenhui, acknowledged the achievements of the committee and expressed hopes for its future role in policy implementation, industry innovation, enterprise development, international cooperation, and industry self-discipline [1] Group 2 - Wang Bo, Chairman of the Cultural and Tourism Committee and Chairman of Poly Culture Group, summarized the committee's work over the past three years and analyzed industry development trends for 2025 [2] - The committee aims to enhance its functions by promoting policy empowerment and market synergy, fostering industry ecosystem construction, and improving international communication capabilities to expand its global influence [2] - The first joint meeting of the China International Chamber of Commerce Industry Working Committees was held, focusing on the theme of "promoting industry integration and advancing work elevation" [2]

Financial Performance - The company reported a pre-tax loss of RMB 75,684,000 for the six months ended June 30, 2023, compared to a loss of RMB 170,983,000 for the same period in 2022, representing a 55.7% improvement [11]. - The company reported a consolidated loss before tax of RMB 65,437 thousand for the first half of 2023, a significant reduction from a loss of RMB 177,099 thousand in the same period of 2022 [58]. - The total comprehensive loss for the period was RMB 62,841,000, an improvement from a loss of RMB 163,169,000 in the same period last year [109]. - The net loss for the period was RMB 80,100 thousand, significantly reduced from RMB 187,575 thousand in the prior year, reflecting a 57.4% improvement [195]. - The company’s equity attributable to shareholders showed a loss of RMB 75,684 thousand, an improvement from a loss of RMB 170,983 thousand in the previous year [193]. Revenue and Growth - Total consolidated revenue for the six months ended June 30, 2023, reached RMB 1,576,926 thousand, up from RMB 924,271 thousand in the previous year, reflecting a growth of about 70% [58]. - Reported segment revenue for the six months ended June 30, 2023, was RMB 1,565,295 thousand, a significant increase from RMB 906,000 thousand in the same period of 2022, representing a growth of approximately 73% [58]. - Revenue from external customers in mainland China for the six months ended June 30, 2023, was RMB 1,539,405 thousand, representing a 79.5% increase from RMB 858,323 thousand in the same period of 2022 [76]. - Total revenue increased by 70.6% from RMB 924.3 million for the six months ended June 30, 2022, to RMB 1,576.9 million for the six months ended June 30, 2023, driven by economic recovery and increased theater and cinema consumption [125]. Expenses and Costs - Employee costs increased to RMB 507,619,000 in the first half of 2023, up 32.8% from RMB 382,621,000 in the same period of 2022 [2]. - Management expenses increased by 17.0% from RMB 228.4 million to RMB 267.3 million, attributed to rising employee costs and travel expenses [133]. - The company recognized a total tax expense of RMB 14,663,000 for the first half of 2023, compared to RMB 10,476,000 in the same period of 2022, reflecting a 40.0% increase [5]. Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 12,016,698 thousand, compared to RMB 11,940,917 thousand as of December 31, 2022, showing a slight increase [60]. - Total liabilities as of June 30, 2023, were RMB 8,776,636 thousand, compared to RMB 8,625,080 thousand at the end of 2022, indicating a rise in liabilities [60]. - The company’s total liabilities increased, with financial liabilities measured at amortized cost rising to RMB 2,128,962 thousand from RMB 1,862,896 thousand, an increase of 14.3% [42]. - The company’s net assets decreased to RMB 3,240,062,000 from RMB 3,315,837,000 at the end of 2022, indicating a need for strategic financial management [109]. Cash Flow and Financial Position - Cash and cash equivalents increased to RMB 1,212,213 thousand as of June 30, 2023, compared to RMB 1,129,670 thousand at the end of 2022, reflecting a growth of 7.3% [35]. - Operating cash inflow for the six months ended June 30, 2023, was RMB 351.7 million, compared to an outflow of RMB 286.0 million for the same period in 2022 [147]. - The company reported a decrease in financial income to RMB 17,231 thousand from RMB 42,236 thousand, reflecting changes in investment returns [193]. Borrowings and Debt - The company’s interest-bearing borrowings as of June 30, 2023, totaled RMB 5,073,374 thousand, a slight decrease from RMB 5,161,133 thousand as of December 31, 2022 [42]. - Current interest-bearing borrowings increased to RMB 4,482,374 thousand from RMB 4,027,133 thousand, reflecting a growth of 11.3% [48]. - Non-current interest-bearing borrowings decreased significantly from RMB 1,134,000 thousand to RMB 591,000 thousand, a reduction of 47.9% [48]. - The company’s debt-to-asset ratio increased from 72.2% on December 31, 2022, to 73.0% on June 30, 2023, primarily due to an increase in trade and other payables [154]. Operational Highlights - The company successfully managed 78 theaters, expanding its operational footprint in the performing arts sector [117]. - The number of members on the Poly Ticketing Platform increased to 13.6 million, enhancing the company's customer engagement and revenue potential [117]. - The total transaction value for Beijing Poly Auction's spring auction in 2023 was RMB 2.13 billion, with significant high-value items sold, including one item exceeding RMB 100 million [119]. Strategic Initiatives - The company plans to expand its theater management business and ensure the successful organization of key performances, including the original musical "The Phantom of the Opera: Love Never Dies" [166]. - The company aims to enhance its online auction business and explore new growth points in the art trading and auction sector during the second half of 2023 [166]. - The cinema investment management business will focus on increasing revenue from cinema operations while strictly controlling costs and addressing underperforming cinemas [167]. Compliance and Governance - The company has adopted a standard code of conduct for all directors and supervisors regarding securities trading, confirming compliance for the six months ended June 30, 2023 [171]. - The audit committee has reviewed and confirmed the interim results announcement for the six months ended June 30, 2023 [173]. - The company appointed three independent non-executive directors with appropriate professional qualifications, ensuring compliance with listing rules [172].

[Financial Highlights](index=2&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Consolidated Income Statement](index=2&type=section&id=Condensed%20Consolidated%20Income%20Statement) In H1 2023, the Group's total revenue surged 70.6% YoY, turning an operating loss into profit, with net loss narrowing 57.3% and EPS improving from RMB 0.69 to RMB 0.31 Key Financial Performance for H1 2023 | Metric | Six Months Ended June 30, 2023 (RMB Thousand) | Six Months Ended June 30, 2022 (RMB Thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,576,926 | 924,271 | +70.6% | | Gross Profit | 425,906 | 291,409 | +46.2% | | Operating Profit/(Loss) | 10,007 | (75,685) | Turned loss into profit | | Loss for the Period | (80,100) | (187,575) | -57.3% | | Loss Attributable to Equity Holders of the Company | (75,684) | (170,983) | -55.7% | | Basic and Diluted Loss Per Share (RMB) | (0.31) | (0.69) | -55.1% | [Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, the Group's total assets and liabilities slightly increased from year-end 2022, with the gearing ratio rising from 72.2% to 73.0%, and net current assets decreasing primarily due to a faster increase in current liabilities, notably payables for auction items Summary of Financial Position | Metric | As of June 30, 2023 (RMB Thousand) | As of December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 2,339,660 | 2,371,980 | -1.4% | | Current Assets | 9,677,038 | 9,568,937 | +1.1% | | **Total Assets** | **12,016,698** | **11,940,917** | **+0.6%** | | Current Liabilities | 7,522,946 | 6,798,723 | +10.7% | | Non-current Liabilities | 1,253,690 | 1,826,357 | -31.4% | | **Total Liabilities** | **8,776,636** | **8,625,080** | **+1.8%** | | **Net Assets** | **3,240,062** | **3,315,837** | **-2.3%** | - The gearing ratio increased from **72.2%** at year-end 2022 to **73.0%** as of June 30, 2023, primarily due to an increase in trade and other payables[140](index=140&type=chunk) [Management Discussion and Analysis](index=15&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=15&type=section&id=I.%20Segmented%20Business%20Performance) In H1 2023, the company capitalized on market recovery, achieving positive progress across all business segments, including strong growth in performance and theater management, stable art auction turnover with online expansion, successful co-production of popular films, and breakthroughs in art education's international collaborations - Performance and Theater Management: Operated **78** theaters and successfully served as the general operator for the national tour of the dance drama "Wing Chun"[94](index=94&type=chunk) - Art Business and Auction: Beijing Poly's 2023 Spring Auction achieved a total turnover of **RMB 2.13 billion**, and Poly Hong Kong's Spring Auction facilitated the highest-priced jade bangle in history[84](index=84&type=chunk) - Cinema Investment and Management: Operated **67** directly managed cinemas, with co-produced films like "The Wandering Earth 2" and "Born to Fly" receiving positive public reception[109](index=109&type=chunk) - Art Education: Partnered with Trinity Laban Conservatoire of Music and Dance in the UK to launch enrollment for a dance undergraduate preparatory program[109](index=109&type=chunk) [Financial Analysis](index=17&type=section&id=II.%20Performance%20Analysis%20and%20Discussion) Benefiting from economic recovery, the Group's total revenue increased by 70.6% YoY, with performance and theater management revenue growing over 100%, while gross profit increased 46.2% but gross margin declined to 27.0% due to business mix changes, and operating cash flow turned positive, indicating strong recovery Revenue by Business Segment (RMB Million) | Business Segment | H1 2023 | H1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Art Business and Auction | 262.9 | 249.2 | +5.5% | | Performance and Theater Management | 1,063.2 | 513.1 | >100% | | Cinema Investment and Management | 239.3 | 143.7 | +66.5% | - Gross profit increased from **RMB 291 million** in the prior period to **RMB 426 million**, a **46.2%** increase, but gross margin decreased from **31.5%** to **27.0%**[112](index=112&type=chunk) - Net cash inflow from operating activities was **RMB 352 million**, compared to a net cash outflow of **RMB 286 million** in the prior period, indicating a significant improvement in cash position[121](index=121&type=chunk) - Selling and distribution expenses and administrative expenses increased by **14.0%** and **17.0%** YoY respectively, primarily due to increased staff costs, travel, and legal advisory fees following economic recovery[115](index=115&type=chunk)[116](index=116&type=chunk) [Risk Factors](index=21&type=section&id=III.%20Risk%20Factors) Key risks include macroeconomic fluctuations impacting art market demand, loss of core management and professional talent, intense competition across all business segments including art auctions, theater management, and cinema operations, and currency fluctuations among RMB, EUR, and USD potentially increasing costs - Market Risk: Global and Chinese economic uncertainties may impact the performance of the art business and auction segment, as art demand is highly unpredictable and influenced by economic conditions and collector preferences[143](index=143&type=chunk)[128](index=128&type=chunk) - Personnel Turnover Risk: The company's success relies on art appraisal experts and excellent management talent in theaters and cinemas, and talent loss could adversely affect operations[144](index=144&type=chunk)[129](index=129&type=chunk) - Competition Risk: The company faces intense domestic and international market competition across its three major business segments: performance and theater management, art business and auction, and cinema investment and management[6](index=6&type=chunk)[154](index=154&type=chunk) - Interest Rate and Exchange Rate Fluctuation Risk: Expansion of overseas business may generate foreign currency income, and exchange rate fluctuations (especially among RMB, EUR, and USD) could increase costs and impact profitability[146](index=146&type=chunk)[7](index=7&type=chunk) [Future Outlook](index=23&type=section&id=IV.%20Future%20Outlook) For H2 2023, the company aims for high-quality development by stabilizing operations, strengthening strategies, and promoting reforms, including optimizing autumn art auctions and online platforms, ensuring key drama tours and original productions, strictly controlling cinema costs while expanding entertainment tech, and increasing art education enrollment and overseas study programs - Art Business and Auction: Focus on the autumn auction in H2 and accelerate the improvement of online auction business layout[157](index=157&type=chunk) - Performance and Theater Management: Steadily expand theater network scale, fully ensure key drama tours, and orderly advance original drama production[9](index=9&type=chunk) - Cinema Investment and Management: Intensify efforts to increase operating revenue, strictly control costs, and accelerate the expansion of Poly Entertainment Technology and video business scenarios[10](index=10&type=chunk) - Art Education: Expand student enrollment, accelerate overseas study business development, and effectively manage the Beihuang preparatory program for overseas art examinations[158](index=158&type=chunk) [Corporate Governance and Other Matters](index=25&type=section&id=Corporate%20Governance%20and%20Other%20Matters) [Privatization Process](index=25&type=section&id=Privatization) On June 27, 2023, the company signed a merger agreement with a wholly-owned subsidiary of its controlling shareholder for a proposed privatization via absorption merger, with H-share cancellation price at HKD 8.88 per share, subject to conditions and uncertainties regarding its implementation and completion - The offeror intends to privatize the company via an absorption merger, subject to conditions, with an H-share cancellation price of **HKD 8.88** per share in cash[147](index=147&type=chunk) - The completion of the merger is subject to several preconditions and may not necessarily become effective or be completed[159](index=159&type=chunk) [Dividend Policy](index=26&type=section&id=Interim%20Dividend) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2023[163](index=163&type=chunk) [Corporate Governance](index=26&type=section&id=Corporate%20Governance) During the reporting period, the company complied with all applicable code provisions of Appendix 14 to the Listing Rules, "Corporate Governance Code," and the Audit Committee reviewed and confirmed the interim results and financial statements for the period - The company complied with all applicable code provisions of the Corporate Governance Code during the reporting period[13](index=13&type=chunk) - The Audit Committee reviewed and confirmed the interim results announcement and unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023[25](index=25&type=chunk) [Post-Balance Sheet Events and Director Changes](index=25&type=section&id=Post-Balance%20Sheet%20Events) Aside from the disclosed privatization process, there were no other significant post-balance sheet events, and a change in one of the company's joint company secretaries became effective from July 5, 2023 - Ms. Wang Wei resigned as Joint Company Secretary, and Mr. Li Weiqiang was appointed, effective July 5, 2023[148](index=148&type=chunk) - Except for the disclosed matters, the company had no significant post-balance sheet events from June 30, 2023, to the date of this announcement[160](index=160&type=chunk)

Financial Performance - Total revenue for the year ended December 31, 2022, was RMB 2,617,044 thousand, a decrease of 17.4% from RMB 3,170,312 thousand in 2021[17]. - Gross profit for 2022 was RMB 885,350 thousand, down 12.7% from RMB 1,013,702 thousand in 2021, resulting in a gross margin of approximately 33.8%[17]. - The company reported a net loss of RMB 281,709 thousand for 2022, compared to a net loss of RMB 137,401 thousand in 2021, indicating a significant increase in losses[17]. - The group reported a total revenue of RMB 2,584,478 thousand for the year ended December 31, 2022, compared to RMB 3,155,775 thousand in 2021, representing a decrease of approximately 18.1%[57][58]. - The group recognized a loss before tax of RMB 260,553 thousand for the year ended December 31, 2022, compared to a loss of RMB 103,293 thousand in 2021, reflecting a significant increase in losses[61]. - The reported segment profit for 2022 was RMB 205.3 million, down from RMB 378.3 million in 2021[86]. - Total comprehensive income for the year was RMB (237.1) million, a decline from RMB (154.8) million in the previous year, reflecting a worsening financial position[121]. - Cash inflow from operating activities for the year ended December 31, 2022, was RMB 5.2 million, a significant decrease from RMB 753.9 million in 2021[127]. Revenue Breakdown - Revenue from performance and theater management was RMB 1,647,691 thousand, a decrease of 11.8% from RMB 1,867,419 thousand in the previous year[12]. - The revenue from the art business was RMB 573,915 thousand in 2022, down 11% from RMB 644,528 thousand in 2021[12]. - The revenue from the art business and auction decreased by 17.8% to RMB 661.8 million in 2022, while the performance of the theater management segment fell by 11.9% to RMB 1,658.8 million[106]. - Cinema investment management revenue fell to RMB 255,810 thousand, down 43.5% from RMB 452,827 thousand in 2021[12]. - The cinema investment management revenue saw a significant decline of 43.7%, dropping to RMB 263.9 million in 2022 from RMB 468.8 million in 2021[106]. Assets and Liabilities - The company’s total assets as of December 31, 2022, were RMB 6,798,723 thousand, a decrease from RMB 7,462,323 thousand in 2021[22]. - The group’s total assets amounted to RMB 11,744,204 thousand as of December 31, 2022, compared to RMB 12,000,000 thousand in 2021, indicating a slight decline in total assets[60]. - The group’s total liabilities were RMB 9,974,640 thousand as of December 31, 2022, compared to RMB 10,000,000 thousand in 2021, showing a marginal decrease in liabilities[60]. - The group’s total liabilities decreased to RMB 1,826,357,000 in 2022 from RMB 2,209,340,000 in 2021, reflecting improved financial management[117]. Cash and Financial Position - The company’s net cash and cash equivalents decreased to RMB 1,129,670,000 in 2022 from RMB 1,607,593,000 in 2021[116]. - Cash and cash equivalents decreased by 29.7% from RMB 1,607.6 million as of December 31, 2021, to RMB 1,129.7 million as of December 31, 2022[148]. - Financial income for 2022 was RMB 89,324 thousand, down from RMB 109,392 thousand in 2021, reflecting a decrease of about 18.4%[61]. - Financial costs increased to RMB 220,297 thousand in 2022 from RMB 228,944 thousand in 2021, reflecting a decrease of approximately 3%[61]. Operational Highlights - The company managed 76 theaters across 68 cities in China, completing 7,890 performances in 2022[76]. - The total auction transaction amount for the year was RMB 3.5 billion, with online auctions generating over RMB 200 million[76]. - The company experienced a total of 3,617 canceled performances and 2,267 postponed performances due to the severe impact of the pandemic in 2022[98]. - The direct-operated cinemas achieved a box office revenue of RMB 239 million, with per cinema and per screen box office performance exceeding industry averages[102]. Strategic Plans and Future Outlook - The company plans to continue focusing on its core businesses in art management, performance management, and cinema investment, while exploring new strategies for market expansion[11]. - The company aims to complete 10,000 performances in 2023 and produce 15 original theatrical productions[143]. - The company plans to explore new profit growth points through the integration of film and technology, focusing on high-quality content development[144]. - The company is actively pursuing digital strategies, including the establishment of a digital art trading platform and the exploration of digital performances and derivative developments[103]. - The company anticipates a recovery in cultural consumption and market confidence, driven by favorable policies and a focus on high-quality content creation[159]. Management and Governance - The audit committee has reviewed the annual performance for the year ended December 31, 2022[193]. - Changes in the board include the appointment of new independent non-executive directors and the resignation of the previous general manager[189][191]. - The company emphasizes the importance of attracting and retaining qualified talent to enhance management and improve brand recognition[182]. Challenges and Market Conditions - The external operating environment remains uncertain, affecting the art market and auction business, leading to decreased commission income during low market demand[181]. - The company is focusing on expanding its international customer base and increasing overseas procurement efforts to mitigate market demand fluctuations[181].

Financial Performance - For the first half of 2022, Poly Culture Group reported revenue of RMB 924.27 million, a decrease of 38.4% compared to RMB 1,503.17 million in the same period of 2021[4]. - The company experienced a net loss attributable to equity shareholders of RMB 170.98 million, compared to a profit of RMB 10.52 million in the first half of 2021[4]. - Total revenue decreased by 38.5% from RMB 1,503.2 million in the six months ended June 30, 2021, to RMB 924.3 million in the same period of 2022, primarily due to the COVID-19 pandemic[12]. - Gross profit fell by 39.7% from RMB 483.5 million to RMB 291.4 million, with a gross margin slightly decreasing from 32.2% to 31.5%[13]. - The net loss for the six months ended June 30, 2022, was RMB 187.6 million, compared to a profit of RMB 0.3 million in the same period of 2021[22]. - The company reported a total comprehensive loss of RMB 163,169 thousand for the six months ended June 30, 2022, compared to a loss of RMB 4,592 thousand in the same period of 2021[63]. - Basic and diluted loss per share for the six months ended June 30, 2022, was RMB (0.69), compared to earnings of RMB 0.04 per share in the prior year[62]. Assets and Liabilities - Total assets as of June 30, 2022, amounted to RMB 12.21 billion, down from RMB 13.30 billion as of June 30, 2021, reflecting a decrease of 8.2%[4]. - The total liabilities decreased to RMB 8.75 billion from RMB 9.67 billion year-on-year, indicating a reduction of 9.5%[4]. - The asset-liability ratio decreased from 72.7% as of December 31, 2021, to 71.7% as of June 30, 2022, primarily due to payments for auction items and bank loan repayments[33]. - Interest-bearing borrowings amounted to RMB 5,438.0 million as of June 30, 2022, with bank loans decreasing from RMB 2,900.9 million to RMB 2,523.1 million due to repayment[31]. - The company's total equity attributable to equity shareholders was RMB 3,113,190 thousand, a decline of 4.4% from RMB 3,257,328 thousand at the end of 2021[67]. Cash Flow - The company maintained a cash and cash equivalents balance of RMB 981.5 million as of June 30, 2022, a decrease of 38.9% from RMB 1,607.6 million at the end of 2021[24]. - Operating cash outflow for the six months ended June 30, 2022, was RMB 286.0 million, compared to a cash inflow of RMB 450.2 million in the same period of 2021[24]. - The company reported a net cash outflow from financing activities of RMB (362,901) thousand, contrasting with a net inflow of RMB 311,235 thousand in the same period last year[69]. Business Operations - The company managed to conduct 2,968 performances during the first half of 2022, significantly reduced due to pandemic restrictions[5]. - The spring auction in 2022 achieved a total transaction amount of RMB 1.754 billion, with 28 items sold for over RMB 10 million each[6]. - Poly Culture's Hong Kong auction celebrated its 10th anniversary with a total transaction amount of HKD 1 billion, with online bidding increasing by 350% compared to the previous spring auction[6]. - The company launched 22 new plays and live-streamed 19 performances on its "Poly Cloud Theatre," attracting over 750,000 viewers by June 30, 2022[7]. - The company is actively pursuing reforms and management improvements to enhance its brand image and social impact amid challenging market conditions[5]. Strategic Initiatives - The company plans to continue expanding its "Cinema+" model, utilizing idle spaces for various events to seek new growth points[8]. - The company aims to enhance its original production capabilities and accelerate the launch of new immersive performance projects and New Year stage plays[43]. - The company plans to enhance online and digital art auctions as new growth points, focusing on resource mobilization for auction item collection and promotion[42]. - The company intends to broaden online revenue channels and expand corporate clients by offering customized art courses[43]. Human Resources - The company is committed to attracting and retaining top talent to ensure high-level management across its business segments[39]. - Total employee costs increased to RMB 382,621,000 in 2022 from RMB 372,127,000 in 2021, representing a growth of approximately 2.0%[90]. Legal and Compliance - The company is not involved in any significant legal disputes or arbitrations during the six months ended June 30, 2022[59]. - The financial statements were prepared in accordance with International Financial Reporting Standards, and no significant impacts from accounting policy changes were noted for the current period[71]. COVID-19 Impact - The group has implemented various contingency measures in response to the COVID-19 pandemic, which has adversely affected its operations and financial condition[137]. - The group continues to monitor the impact of COVID-19 on its operations, with cultural consumption expected to take time to recover to pre-pandemic levels[137].

Financial Performance - Total revenue for 2021 was RMB 3,170,312 thousand, a significant increase compared to previous years[4] - The operating profit for 2021 was RMB 113,444 thousand, showing a recovery from the previous year's losses[4] - The net loss for the year was RMB 137,401 thousand, an improvement from a loss of RMB 315,841 thousand in 2020[4] - The total comprehensive loss for the year was RMB 154,815 thousand, compared to a loss of RMB 365,147 thousand in 2020[4] - Total revenue increased by 36.4% from RMB 2,323.8 million in the year ended December 31, 2020, to RMB 3,170.3 million in the year ended December 31, 2021, primarily due to the easing of COVID-19 pandemic impacts[17] - Gross profit rose by 34.8% from RMB 752.0 million in the year ended December 31, 2020, to RMB 1,013.7 million in the year ended December 31, 2021, with a slight decrease in gross margin from 32.4% to 32.0%[18] - The company recorded a loss of RMB 137.4 million for the year ended December 31, 2021, an improvement from a loss of RMB 315.8 million in the previous year, with a net profit margin increase from -13.6% to -4.3%[27] Assets and Liabilities - Total assets amounted to RMB 13,296,003 thousand, while total liabilities were RMB 9,671,663 thousand, resulting in a net asset value of RMB 3,624,340 thousand[4] - The company's equity attributable to shareholders was RMB 3,257,328 thousand, down from RMB 4,535,532 thousand in 2020[4] - Non-current assets totaled RMB 2,674,726 thousand, reflecting a decrease from previous years[4] - Current assets were reported at RMB 10,621,277 thousand, indicating stability in liquidity[4] - As of December 31, 2021, the company's interest-bearing borrowings amounted to RMB 5,585.1 million, a decrease from RMB 3,565.1 million on December 31, 2020, primarily due to the repayment of bank loans[35] - The asset-liability ratio increased from 67.3% on December 31, 2020, to 72.7% on December 31, 2021, mainly due to an increase in trade and other payables[38] Strategic Initiatives and Future Plans - The company plans to focus on market expansion and new product development in the upcoming year[4] - Future guidance indicates a cautious optimism for revenue growth as market conditions improve[4] - The company aims to enhance its theatrical offerings and cultural contributions through strategic partnerships and resource sharing[7] - The strategic initiatives are expected to drive future growth and enhance the company's market position in the cultural industry[7] - The company plans to enhance operational efficiency and explore new revenue channels while focusing on cost reduction and improving profitability in 2022[47] - The company aims to integrate traditional business with new technologies such as the Internet, big data, and the metaverse to drive transformation and upgrade[47] Auction and Cultural Activities - In June 2021, Poly Culture held the Beijing Poly 2021 Spring Auction, generating a total transaction amount exceeding RMB 4.459 billion, with five items sold for over RMB 100 million and 58 items for over RMB 10 million[7] - Poly Culture's auction results reflect a strong demand for high-value art pieces, indicating a robust market for cultural assets[7] - In 2021, Poly Culture achieved a total transaction amount of approximately RMB 11.1 billion in the art auction market, maintaining its leading position in China[12] - The Beijing Poly International Auction's spring auction generated a transaction amount of RMB 4.459 billion, while the autumn auction exceeded RMB 3.35 billion[12] Community Engagement and Social Responsibility - Poly Culture's efforts in community support during the pandemic highlight its commitment to social responsibility and cultural development[6] - The company made charitable donations totaling approximately RMB 1.51 million during the reporting period[84] Corporate Governance - The board of directors consists of nine members, including four executive directors, two non-executive directors, and three independent non-executive directors[143] - The board held a total of four meetings during the year ending December 31, 2021, with a 100% attendance rate from all current directors[145] - The supervisory board reviewed the financial information of the company and its subsidiaries, confirming compliance with accounting standards and regulations[140] - The company has established a good employee training system to promote career development and work-life balance[69] - The company has implemented internal controls to ensure compliance with relevant laws and regulations[78] Risk Management - The company has established a comprehensive risk management system to enhance risk management levels and effectively mitigate risks[174] - The risk management framework includes risk assessment, strategy formulation, response, monitoring, and emergency response to unexpected risk events[178] - The company conducts an annual comprehensive risk assessment to identify and prioritize significant risks for management[181] Employee and Management Structure - The company had a total of 7,905 employees as of December 31, 2021, with no significant changes in compensation policies[39] - The management team has a diverse background in finance, management, and archaeology, indicating a broad range of expertise[198][200] - The leadership team has a strong emphasis on cultural and historical expertise, which may influence the company's strategic direction in the arts and auction sectors[196][200] Financial Agreements and Transactions - The company issued a total of RMB 1,600 million in medium-term notes and short-term bonds in 2021, with varying interest rates from 3.10% to 4.57%[35] - The company completed the issuance of three phases of ultra-short-term financing bonds totaling RMB 200 million each, with interest rates of 3.30% and 3.31%, and a third phase of RMB 600 million at 3.10%, all intended for debt repayment and working capital[82] - The company has established a financing lease framework agreement to obtain lower financing lease rates compared to bank loans, improving cash flow and reducing financial pressure[124] Shareholder Communication - The company emphasizes the importance of maintaining effective communication with investors and enhancing information transparency[189] - The company has established effective channels for communication with shareholders, including announcements and financial data published on its website[192] - The company plans to engage with overseas investors through analyst meetings and roadshows[193]