POLY CULTURE GROUP CORPORATION CULTURE LIMITED POLY (A joint stock limited company incorporated in the People’s Republic of China with limited liability) Stock code: 3636 ANNUAL REPORT 2018 ANNUAL REPORT ANNUAL REPORT 2 018 www.polyculture.com.cn CONTENTS 2 Corporate Profile 3 Financial Highlight 4 Corporate Structure 5 Major Events in 2018 6 Chairman’s Statement 8 Management Discussion and Analysis 21 Report from the Board of Directors 51 Report from the Board of Supervisors 52 Corporate Governance Report 69 Profile of Directors, Supervisors and Senior Management 73 Environmental, Social and Governance Report 83 Independent Auditor’s Report 92 Consolidated Statement of Profit or Loss 93 Consolidated Statement of Profit or Loss and Other Comprehensive Income 94 Consolidated Statement of Financial Position 96 Consolidated Statement of Changes in Equity 98 Consolidated Cash Flow Statement 100 Notes to the Financial Statements 217 Definitions 001 POLY CULTURE GROUP CORPORATION LIMITED ANNUAL REPORT 2018 Corporate Profile REGISTERED NAME OF THE International Auditor COMPANY KPMG Poly Culture Group Corporation Limited Certified Public Accountants 8th Floor, Prince’s Building, 10 Chater Road, Central, Hong Kong REGISTERED OFFICE District A, 20/F, 1 North Street of Chaoyangmen, LEGAL ADVISORS Dongcheng District, Beijing, 100010, PRC as to Hong Kong law HEAD OFFICE IN THE PRC Clifford Chance 27th Floor, Jardine House, One Connaught Place, District A, 25/F, 1 North Street of Chaoyangmen, Central, Hong Kong Dongcheng District, Beijing, 100010, PRC as to PRC law PRINCIPAL PLACE OF BUSINESS IN HONG KONG Jia Yuan Law Offices F408, Ocean Plaza, No. 158, 31st Floor, Tower 2, Times Square, Fuxing Men Nei Ave, Xicheng District, 1 1 Matheson Street, Causeway Bay, Hong Kong Beijing, China AUTHORIZED REPRESENTATIVE PRINCIPAL BANKS Mr. Jiang Yingchun China CITIC Bank Corporation Limited District A, 25/F, 1 North Street of Chaoyangmen, (Fuhua Plaza Branch) Dongcheng District, Beijing, PRC No.8, North Street of Chaoyangmen, Dongcheng District, Beijing, PRC Ms. Mok Ming Wai 31st Floor, Tower 2, Times Square, Bank of Beijing (Beijing Aodong Branch) 1 1 Matheson Street, Causeway Bay, Hong Kong SDIC Trade Building, No.19 Hui Xin West Street, Chaoyang District, Beijing Ms. Leung Suet Lun3 31st Floor, Tower 2, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong1 H SHARE REGISTRAR Computershare Hong Kong Investor Service Limited JOINT COMPANY SECRETARIES Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Ms. Wang Wei Ms. Mok Ming Wai2 Ms. Leung Suet Lun3 STOCK CODE 03636 AUDITORS PRC Auditor INVESTOR ENQUIRIES Investors’ Service Line: +86 10 6408 2711 BDO China Shu Lun Pan Certified Public Accountants LLP Fax: +86 10 6408 2662 4F, No.61, East Nanjing Road, Huangpu District, Website: www.polyculture.com.cn Shanghai, China E-mail: [email protected] 1 The principal place of business of the Company in Hong Kong has been changed since May 31, 2018. 2 Ms. Mok Ming Wai resigned on September 19, 2018. 3 Ms. Leung Suet Lun was appointed on September 19, 2018. 002 POLY CULTURE GROUP CORPORATION LIMITED ANNUAL REPORT 2018 Financial Highlight 2018 2017 2016 2015 2014 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue 3,713,785 3,480,415 2,682,301 2,504,965 2,243,024 Profit from operations 429,842 484,331 483,846 388,899 486,636 Profit before taxation 507,605 537,574 550,111 450,306 544,087 Income tax (139,322) (133,652) (125,675) (117,740) (130,763) Profit for the year 368,283 403,922 424,436 332,566 413,324 Profit attributable to: Equity shareholders of the Company 241,992 256,171 310,607 237,790 251,519 Non-controlling interests 126,291 147,751 113,829 94,776 161,805 Earnings per share Basic and diluted earnings per share (RMB) 0.98 1.04 1.26 0.97 1.09 Total comprehensive income for the year 89,941 381,750 444,780 342,537 414,021 Total comprehensive income attributable to: Equity shareholders of the Company 257,496 244,049 323,531 242,211 251,902 Non-controlling interests 132,445 137,701 121,249 100,326 162,119 Total non-current assets 2,535,580 2,350,158 1,226,332 718,626 585,962 Total current assets 7,910,528 7,793,433 5,723,069 4,998,375 4,765,931 Total assets 10,446,108 10,143,591 6,949,401 5,717,001 5,351,893 Total current liabilities 4,310,307 5,009,380 2,280,499 1,585,904 1,461,678 Total non-current liabilities 1,133,940 342,714 215,041 92,274 19,215 Total liabilities 5,444,247 5,352,094 2,495,540 1,678,178 1,480,893 Net Asset 5,001,861 4,791,497 4,453,861 4,038,823 3,871,000 Total equity attributable to the equity shareholders of the Company 4,318,448 4,088,704 3,911,944 3,653,440 3,467,619 Non-controlling interests 683,413 702,793 541,917 385,383 403,381 TOTAL EQUITY 5,001,861 4,791,497 4,453,861 4,038,823 3,871,000 The financial information of the Group for the years ended December 31, 2014, 2015, 2016 and 2017 was extracted from 2014, 2015, 2016 and 2017 annual reports published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.polyculture.com.cn) on April 29, 2015, April 28, 2016, April 28, 2017 and April 27, 2018 respectively. The financial information of the Group for the year ended December 31, 2018 was set forth on pages 92 to 216 to this report, which was presented on the basis set forth in Note 2(b) to the audited consolidated financial statements. 003 POLY CULTURE GROUP CORPORATION LIMITED ANNUAL REPORT 2018 Corporate Structure The following chart sets out our corporate structure up to the Latest Practicable Date: 100% 100% Poly Group Guangdong Poly Assets Management Co., Ltd. 40% 100% 60% Shanghai Huayi Poly International Auction Co., Ltd. Hong Kong Poly Art Centre Co., Ltd. Poly Art Center North America Co., Ltd. 43.3% Public Shareholders Poly Southern 36.3% 100% Kangoo Overseas Ltd. 86.67% Beijing Poly Wanyuan 20.4% Company Cinema Co., Ltd. 51% (Shandong) Poly International Auction Co., Ltd. 100% 55% Kunming Poly Cinema Co., Ltd. Poly Auction Beijing 51% (Xiamen) Poly International Auction Co., Ltd. 100% Guangzhou Poly International 100% Cinema Co., Ltd. Poly Yiwu Art Development Co., Ltd. 30% 100% Wuxi Poly Cinema Co., Ltd. 38.5% 51% Poly Auction Hong Kong Poly Auction Macau Limited 100% Poly Boyi Culture Media (Beijing) Co., Ltd. 100% 62.05% Suzhou Poly Cinema Co., Ltd. Poly Auction Guangdong 100% Shanghai Poly Cinema Co., Ltd. 51% Guizhou Poly Culture Development Co., Ltd. 100% Shenzhen Poly International Cinema Co., Ltd. 100% 100% 51% Rizhao Poly Cinema Co., Ltd. Poly Art Centre Beijing Poly Contemporary Art Co., Ltd. 100% Hefei Poly Cinema Co., Ltd. 100% Shanghai Pudong Poly 80% 100% Poly Art Investment Winteam Culture & Art Holding Co., Ltd. Cinema Co., Ltd. 100% Shanghai Jiangchuan Poly Cinema Co., Ltd. 100% 100% Poly Film Guiyang Poly Cinema Co., Ltd. 100% Nanjing Poly Management Cinema Co., Ltd. 100% 100% 100% Poly Theatre Management Beijing Poly Performing Arts Co., Ltd. Chengdu Poly Cinema Co., Ltd. 100% Foshan Poly Cinema Co., Ltd. 100% 65% Shenzhen Poly Culture 100% Dongguan Poly Yulan Grand Theatre 40% Yixing Poly International Cinema Co., Ltd. Development Co.,Ltd. Management Co., Ltd. 100% 20% Hangzhou Poly Cinema Co., Ltd. 65% Shenzhen Poly Art Square 40% Dongguan Poly Culture Performing Group Co., Ltd. 100% Operations Management Co., Ltd. 51% Qingdao Grand Theatre Nanning Poly Cinema Co., Ltd. Management Co., Ltd. 100% 20% 100% Lishui Poly Grand Theatre Yangzhou Poly Cinema Co., Ltd. 40% Beijing Poly Music Art Management Co., Ltd. 100% Development Co., Ltd. 51% Ma’anshan Poly Grand Theatre Xuzhou Poly Cinema Co., Ltd. Management Co., Ltd. 60% 51% Beijing Poly Forbidden City Theatre Beijing Yongxing Poly Cinema Co., Ltd. 100% Management Co., Ltd. 100% Yangjiang Jiangcheng Poly Culture (Hong Kong) Co., Ltd. 100% Hohhot Poly Theatre Poly Cinema Co., Ltd. 100% Management Co., Ltd. Kunshan Poly Cinema Co., Ltd. 100% 51% Shanghai Oriental Art Center 100% Poly Culture (North America) Management Co., Ltd. Taiyuan Poly Cinema Co., Ltd. 100% Investment Co., Ltd. 100% Poly Advertisement Co., Ltd. Changsha Poly Cinema Co., Ltd. 51% Wuhan Qintai Grand Theatre 20% 100% Management Co., Ltd. Foshan XingX Entertainment Co., Ltd. Poly Art Center 51% Zhangjiagang Poly Grand Theatre North America Limited Management Co., Ltd. 100% Henan Poly Art Center 100% Management Co., Ltd. Shanghai Sijing Poly Cinema Co., Ltd. 60% Poly Ronghe Financial 100% Yichun Poly Grand Theatre Leasing Co., Ltd. Management Co., Ltd. 100% Yantai Poly Grand Theatre 100% Management Co., Ltd. Shenyang Poly Cinema Co., Ltd. 60% Wuxi Grand Theatre Poly Management Co., Ltd. 100% Huizhou Poly Culture and Arts Center 100% Management Co., Ltd. Shanghai Tangzhen Poly Cinema Co., Ltd. 100% Yingkou Bayuquan Poly Grand Theatre Management Co., Ltd. 100% 51% Changzhou Poly Grand Theatre Ningbo Poly Cinema Co., Ltd. Management Co., Ltd. 100% Ji’an Poly Grand Theatre Management Co., Ltd. 66.67% Chongqing Poly Theatre Management Co., Ltd. 51% Kunshan Poly Grand Theatre Management Co., Ltd. 51% Taizhou Poly Grand Theatre Management Co., Ltd. 100% Changshu Poly Grand Theatre Management Co., Ltd. 100% Wenzhou Poly Grand Theatre Management Co., Ltd. 51% Handan Poly Grand Theatre Management Co., Ltd. 100% Hefei Poly Grand Theatre Management Co., Ltd. 100% Dalian Poly Theatre Management Co., Ltd. 100% Poly (Beijing) Theatre Construction Engineering Consulting Co., Ltd.