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2019 20 2019 20 ANNUAL REPORT 2 0 1 9 20 2019/20年度報告 1 ANNUAL REPORT CONTENTS PAGE Corporate Information 2 Chairman’s Statement 3 Management Discussion and Analysis 6 Biographical Information of Directors and Senior Management 15 Directors’ Report 18 Corporate Governance Report 70 Environmental, Social and Governance Report 96 Independent Auditor’s Report 119 Consolidated Statement of Profit or Loss 130 Consolidated Statement of Comprehensive Income 131 Consolidated Balance Sheet 132 Consolidated Statement of Changes in Equity 134 Consolidated Statement of Cash Flows 136 Notes to the Consolidated Financial Statements 138 Financial Summary 246 2019/20年度報告 2 ANNUAL REPORT CORPORATE INFORMATION BOARD OF DIRECTORS PRINCIPAL BANKERS Executive Directors China CITIC Bank International Limited Mr. Fan Luyuan (Chairman & Chief Executive Officer) China Merchants Bank Co., Ltd. Mr. Meng Jun Bank of Communications Co., Ltd. Mr. Li Jie The Hongkong and Shanghai Banking Corporation Limited Non-Executive Director Citibank (China) Co., Ltd. Mr. Xu Hong East West Bank JPMorgan Chase Bank, N.A. Independent Non-Executive Directors Ms. Song Lixin REGISTERED OFFICE Mr. Tong Xiaomeng Clarendon House, 2 Church Street Mr. Johnny Chen Hamilton HM 11, Bermuda EXECUTIVE COMMITTEE HEAD OFFICE AND PRINCIPAL PLACE Mr. Fan Luyuan (Committee Chairman) OF BUSINESS IN HONG KONG Mr. Meng Jun 26/F, Tower One, Times Square, 1 Matheson Street Mr. Li Jie Causeway Bay, Hong Kong Telephone : (852) 2215 5428 AUDIT COMMITTEE Facsimile : (852) 2215 5200 Mr. Johnny Chen (Committee Chairman) Ms. Song Lixin BEIJING OFFICE Mr. Tong Xiaomeng Block B, Wangjing, Ali Center, Building 4, Zone 4, Wangjing East Park, REMUNERATION COMMITTEE Chaoyang District, Beijing, China Mr. Tong Xiaomeng (Committee Chairman) Postal Code : 100020 Mr. Fan Luyuan Telephone : (86) 10 5885 1881 Ms. Song Lixin Facsimile : (86) 10 5697 2838 NOMINATION COMMITTEE PRINCIPAL SHARE REGISTRAR AND Mr. Fan Luyuan (Committee Chairman) TRANSFER OFFICE Mr. Tong Xiaomeng MUFG Fund Services (Bermuda) Limited Mr. Johnny Chen 4th Floor North Cedar House, 41 Cedar Avenue, Hamilton HM 12, COMPANY SECRETARY Bermuda Mr. Ng Lok Ming, William HONG KONG BRANCH SHARE REGISTRAR SOLICITOR AND TRANSFER OFFICE Mayer Brown Tricor Secretaries Limited Level 54, Hopewell Centre AUDITOR 183 Queen’s Road East, Hong Kong PricewaterhouseCoopers Certified Public Accountants and Registered PIE SINGAPORE SHARE TRANSFER AGENT Auditor Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place, #32-01 Singapore Land Tower WEBSITE Singapore 048623 www.alibabapictures.com STOCK CODE Stock Code on The Stock Exchange of Hong Kong Limited: 1060 Stock Code on the Singapore Exchange Securities Trading Limited: S91 2019/20年度報告 3 ANNUAL REPORT CHAIRMAN’S STATEMENT Dear Shareholders, The time has come for Alibaba Pictures Group Limited (the “Company” or “Alibaba Pictures”, together with its subsidiaries, the “Group”) to celebrate its sixth anniversary. During the past year, as Alibaba Pictures adopted the dual-drive core strategy featuring “quality content and new infrastructure” to create “influential contents with positive values”, it dedicated itself to unifying upstream and downstream operations, as well as online and offline channels throughout the industry chain with its strengths in relevant data and ecosystems. By releasing the potential of each link and redefining the film industry, we managed to inspire greater overall growths for the market and recorded satisfactory performance. Although hammered by the COVID-19 epidemic in the beginning of 2020, the Group will still adhere to its mission and vision to press ahead while helping the industry fight against and recover from the epidemic. “To make it easy to do business anywhere” is not just an enduring mission for Alibaba Group Holding Limited (“AGH”) and its subsidiaries (collectively, “Alibaba Group”), it is also the mission and vision that they share with the Group. Driven by this conviction, we have built a business model for operations throughout the entire industry chain, covering content production, promotion and distribution, and commercialization of IPs, as well as financial service for entertainments. We are now engaged in three major business segments, namely internet-based promotion and distribution, content production and integrated development. In terms of the construction of new infrastructure, each of Tao Piao Piao (the Group’s online ticketing platform) and Yunzhi (the Group’s open platform of digital operation and management targeting cinemas) managed to further strengthen its position as one of the market leaders. Beacon and Alifish enabled us to offer more services with new infrastructures. In the past year, we made great leaps forward with Beacon, which provides services to film producers, and Alifish, which was designed for non-box-office operations in the film industry. In terms of internet-based promotion and distribution, Beacon achieved remarkable performance benefited from our plans in new infrastructures two years ago. As a robust driver for content promotion and distribution, Beacon has provided services to three-fourths of film producers in the film industry so far and contributed to the success of content promotion and distribution. Currently, the non-box-office operations in the film and television industry in the PRC remains a blue ocean market. Leveraging on infrastructure construction, innovative business model and higher efficiency, we believe that we will be able to create a pan film and entertainment market that is worth over RMB100 billion and diversify our income instead of a single revenue stream from box office. In terms of our integrated development business, Alifish, as an infrastructure for non-box-office business, developed rapidly in the past year and achieved triple-digit growth in revenue for two consecutive financial years. The sub-licensing business of Alifish contributed to a growth of 60% year-over-year in average revenue per IP, which demonstrates its unparalleled ability in integrating IPs and the supply chain effectively. Meanwhile, it also helped increase GMV under Tmall fashion trend categories by approximately 50% year-over-year. 2019/20年度報告 4 ANNUAL REPORT CHAIRMAN’S STATEMENT In terms of content production, the Group achieved outstanding performance in the first nine months, except during the Chinese New Year holiday. Alibaba Pictures participated in 12 of the Top 20 domestic movies and recorded a box office of nearly RMB15 billion from the movies it presented and distributed, which accounted for 61% of that of the Top 20 domestic movies. In addition, Alibaba Pictures recorded higher profit margin in content investment than the average of the industry. It also actively participated in the content production of movies such as My People, My Country (我和我的祖國), The Captain (中國機長), The Bravest (烈火英雄), Better Days (少年的你), Sheep Without A Shepherd (誤殺) and Adoring (寵愛), which recorded satisfying box office and were highly complimented by the public. This demonstrated the Group’s precise judgment in respect of content production. Apart from the accomplishments in presentation and distribution of domestic movies, Alibaba Pictures also served as an online marketing platform for high-quality foreign movies. It successively distributed the Academy Award-winning films or Oscar Nominations such as Capernaum (何以為家), Free Solo (徒手攀岩) and The Legend of 1900 (海上鋼琴師). It nurtured dark horses in terms of box office one by one with the movie selection approach featuring low budget and high reputation. In terms of drama series production, the Group produced popular drama series including Love Better Than Immortality (天雷一部之春花秋月), which were well received by audiences as they have outstanding themes and production. “Continuous track development” strategy is important for the growth of Alibaba Group. Alibaba Group is a company driven by strategies and its business develops in an echelon formation, so that new operations can replace the shrinking one with reaction force from other operations and develop like the continuous track moving. Alibaba Pictures has also achieved preliminary results with the continuous track development strategy. Benefited from the visionary Beacon business rolled out two years ago, we recorded excellent performance in the film content business in the past year. The strategy adopted in the film content business will also propel the online movie and variety show operations to be explored by us. Content production is crucial for the development of the entertainment industry. In view of the Group’s outstanding performance in content business, we integrated and cooperated with Damai under the M&E Matrix in the beginning of 2020, in joint efforts to achieve an integration of products, promotion and distribution and contents, and to facilitate the construction of a platform that provides service to consumers in respect of entertainments such as movie and show. Since 2019, the overall film and entertainment industry in the PRC has faced slowdown in macro economy, decline in performance and complicated challenges in profit growth. The outbreak of the COVID-19 epidemic in early 2020 brought significant impact on the film industry. Against this backdrop, the Group has been adhering to the principle of “To make it easy to do film shooting anywhere”, and shouldering its social responsibilities by taking various measure to offer timely support to the industry in such a challenging environment. Amid this hard time, the Group will cooperate