☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered | ||
American Depositary Shares, each representing one Class A ordinary share, par value US$0.001 per share* |
KUKE |
New York Stock Exchange |
* |
Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares. |
Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer |
☒ | |||||
Emerging growth company | ☒ |
U.S. GAAP ☐ |
International Financial Reporting Standards as issued |
Other ☐ | ||||||
by the International Accounting Standards Board |
☒ |
3 |
||||||
ITEM 1 |
5 |
|||||
ITEM 2 |
5 |
|||||
ITEM 3 |
5 |
|||||
ITEM 4 |
60 |
|||||
ITEM 4A |
85 |
|||||
ITEM 5 |
85 |
|||||
ITEM 6 |
100 |
|||||
ITEM 7 |
109 |
|||||
ITEM 8 |
110 |
|||||
ITEM 9 |
111 |
|||||
ITEM 10 |
111 |
|||||
ITEM 11 |
125 |
|||||
ITEM 12 |
125 |
|||||
ITEM 13 |
126 |
|||||
ITEM 14 |
127 |
|||||
ITEM 15 |
127 |
|||||
ITEM 16A |
128 |
|||||
ITEM 16B |
129 |
|||||
ITEM 16C |
129 |
|||||
ITEM 16D |
129 |
|||||
ITEM 16E |
129 |
|||||
ITEM 16F |
130 |
|||||
ITEM 16G |
130 |
|||||
ITEM 16H |
130 |
|||||
ITEM 16I |
130 |
|||||
ITEM 17 |
131 |
|||||
ITEM 18 |
131 |
|||||
ITEM 19 |
131 |
|||||
134 |
• | “Kuke Music,” “we,” “us,” “our company” and “our” refer to Kuke Music Holding Limited, a Cayman Islands company and its wholly-owned subsidiaries and consolidated variable interest entities; |
• | “ADSs” refer to our American depositary shares, each of which represents one Class A ordinary share; |
• | “Acquisition” refers to our acquisition of Rosenkavalier Limited on February 29, 2020; |
• | “Beijing Kuke Music” refers to Beijing Kuke Music Co., Ltd., one of our VIEs; |
• | “Beijing Lecheng” refers to Beijing Lecheng Future Culture Communications Co., Ltd., one of our WFOEs; |
• | “BMF Culture” refers to Beijing Music Festival Culture Communications Co., Ltd., one of our VIEs; |
• | “BMF” refers to Beijing Lecheng Future Culture Communications Co., Ltd., its holding companies and Beijing Music Festival Culture Communications Co., Ltd.; |
• | “CAGR” refers to compound annual growth rate; |
• | “classical music” refers to art music that is produced and rooted in the traditions of western culture and ethnic culture; the characteristics of classical music that distinguish itself from popular music include (i) the complexity of the creation process, (ii) sophisticated use of instrumental musical forms and vocal forms and (iii) having high aesthetic and appreciation value; for purposes of this annual report, references to “classical music” include traditional classical music, jazz, world music and other non-pop music forms; |
• | “COVID-19” refers to a highly contagious novel virus that was declared a global pandemic by the World Health Organization on March 11, 2020; |
• | “China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Taiwan and the special administrative regions of Hong Kong and Macau; |
• | “Kuke International” refers to Kuke Future International Technology (Beijing) Co., Ltd., one of our WFOEs; |
• | “HNTE” refers to high and new technology enterprises; |
• | “Naxos” refers to Naxos Global Distribution Limited, Naxos Rights International Limited and their affiliates and subsidiaries; |
• | “Naxos China” refers to Naxos (Beijing) Culture & Communication Co., Ltd., a non-wholly-owned subsidiary of our company; |
• | “Naxos International” refers to Naxos International (Far East) Limited; |
• | “NFT” refers to non-fungible token; |
• | “ordinary shares” or “shares” refers to our Class A ordinary shares and Class B ordinary shares, par value US$0.001 per share; |
• | “our VIEs” refers to our variable interest entities, including Beijing Kuke Music and BMF Culture; |
• | “our WFOEs” refers to our wholly-owned subsidiaries in the PRC, including Kuke International and Beijing Lecheng; |
• | “RMB” or “Renminbi” refers to the legal currency of China; |
• | “SAFE” refers to the PRC State Administration of Foreign Exchange; |
• | “student interest training market,” “student art education market,” “student music education market,” “student musical instrument training market,” and “student piano education market” refer to markets for students aged between 3 and 18, as measured by the total amount of tuition paid; and |
• | “US$,” “U.S. dollars,” “$” and “dollars” refer to the legal currency of the United States. |
• | our goals and strategies; |
• | our expectations regarding the demand for and market acceptance of our music licensing and subscription services, smart music learning solutions, and live classical music events; |
• | our expectations regarding our relationships with licensors and suppliers; |
• | our future business development, financial condition and results of operations; |
• | expected changes in our revenues, costs or expenditures; |
• | the growth of and changes in our industries; |
• | our competitive landscape; |
• | government policies and regulations relating to our industries; and |
• | general economic and business conditions in the PRC and globally. |
ITEM 1 |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2 |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3 |
KEY INFORMATION |
Tax calculation |
||||||||
Hypothetical pre-tax earnings(2) |
100.00 | |||||||
Tax on earnings at statutory rate of 25%(3) |
(25.00 | ) | ||||||
|
|
|||||||
Net earnings available for distribution |
75.00 | |||||||
Withholding tax at standard rate of 10%(4) |
(7.50 | ) | ||||||
|
|
|||||||
Net distribution to Parent/Shareholders |
67.50 | |||||||
|
|
(1) | For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China. |
(2) | Under the terms of VIE agreements, Kuke International and Beijing Lecheng may charge our VIEs for services provided to VIEs. These service fees shall be recognized as expenses of our VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income tax purposes, our PRC subsidiaries and VIEs file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by our VIEs and as income by our PRC subsidiaries and are tax neutral. |
(3) | Beijing Kuke, one of our VIEs, qualifies for a 15% preferential income tax rate and certain other preferential tax benefits available to “high and new technology enterprises,” or HNTE in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. |
(4) | The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE, to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied. |
• | Kuke Music is a Cayman Islands holding company primarily operating in China through its WFOEs and contractual arrangements with its VIEs. Investors in the ADSs thus are not purchasing, and may never directly hold, equity interests in our VIEs. There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to such agreements that establish the VIE structure for the majority of our and our VIE’s operations in China, including potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements with our VIEs and, consequently, significantly affect the financial condition and results of operations of Kuke Muisc. If the PRC government finds such agreements non-compliant with relevant PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in our VIEs or forfeit our rights under the contractual arrangements; |
• | The PRC government has significant authority to exert influence on the China operations of an offshore holding company, such as us. Therefore, investors in the ADSs and the business of us and our VIEs face potential uncertainty from the PRC government’s policy. Changes in China’s economic, political or social conditions, or government policies could materially and adversely affect our and our VIE’s business, financial condition, and results of operations; |
• | We and our VIEs are subject to extensive and evolving legal development, non-compliance with which, or changes in which, may materially and adversely affect our and our VIEs’ business and prospects, and may result in a material change in our and our VIEs’ operations and/or the value of our ADSs or could significantly limit or completely hinder our and our VIEs’ ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless; |
• | It is unclear whether we and our VIEs will be subject to the oversight of the Cyberspace Administration of China and how such oversight may impact us. Our and our VIEs’ business could be interrupted or we and our VIEs could be subject to liabilities which may materially and adversely affect the results of our and our VIEs’ operation and the value of your investment; |
• | The PRC government’s oversight over our and our VIEs’ business operations could result in a material adverse change in our and our VIEs’ operations and the value of our ADSs; |
• | Although we believe we are not required to obtain any approvals of any PRC authorities for a future offering of our securities to foreign investors, including the CSRC and the CAC, under current PRC laws and regulations, the PRC regulators or a court may take a contrary position. In addition, applicable laws, regulations or interpretations may change and we thus may be required to obtain such approvals in the future; |
• | Uncertainties in the PRC legal system and the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us, significantly limit or completely hinder our ability to offer or continue to offer our ADSs, cause significant disruption to our and our VIEs’ business operations, and severely damage our and our VIEs’ reputation, which would materially and adversely affect our and our VIEs’ financial condition and results of operations and cause our ADSs to significantly decline in value or become worthless. In addition, rules and regulations in China can change quickly with little advance notice, therefore, our assertions and beliefs of the risks imposed by the Chinese legal and regulatory system cannot be certain; |
• | We rely on contractual arrangements with our VIEs and shareholders of our VIEs for a significant portion of our business operations, which may not be as effective as direct ownership in providing operational control, and these contractual arrangements have not been tested in a court of law; and |
• | Any failure by our VIEs or shareholders of our VIEs to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business. |
For the year ended December 31, 2021 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Revenue |
— | 7,317 | 288,789 | (209 | ) | 295,897 | ||||||||||||||
(Loss)/profit for the year and total comprehensive (loss)/income for the year |
(79,858 | ) | (5,773 | ) | 25,794 | 220 | (59,617 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2020 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Revenue |
— | 11,425 | 152,164 | (708 | ) | 162,881 | ||||||||||||||
(Loss)/profit for the year and total comprehensive (loss)/income for the year |
(43,007 | ) | 5,158 | 24,474 | (1,839 | ) | (15,214 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2019 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Revenue |
— | 12,676 | 133,378 | — | 146,054 | |||||||||||||||
(Loss)/profit for the year and total comprehensive (loss)/income for the year |
(2,186 | ) | (334 | ) | 59,282 | — | 56,762 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
As of December 31, 2021 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Cash and cash equivalents | 38,823 | 11,321 | 8,901 | — | 59,045 | |||||||||||||||
Trade receivables | — | 743 | 110,361 | — | 111,104 | |||||||||||||||
Prepayments, other receivables and other assets | 545 | 67 | 33,489 | — | 34,101 | |||||||||||||||
Net investments in subleases | — | — | 355 | — | 355 | |||||||||||||||
Due from related parties | — | — | 306 | — | 306 | |||||||||||||||
Due from shareholders | — | — | 100 | — | 100 | |||||||||||||||
Inventories | — | — | 7,307 | — | 7,307 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current assets |
39,368 |
12,131 |
160,819 |
— |
212,318 |
|||||||||||||||
Property, plant and equipment | — | 159 | 60,284 | — | 60,443 | |||||||||||||||
Intangible assets (1) |
— | 4 | 492,737 | (441 | ) | 492,300 | ||||||||||||||
Right-of-use assets | — | — | 3,060 | — | 3,060 | |||||||||||||||
Goodwill | — | — | 237,225 | — | 237,225 | |||||||||||||||
Investment in subsidiaries (2) |
284,000 | — | — | (284,000 | ) | — | ||||||||||||||
Prepayments, other receivables and other assets (3) |
— | 37,178 | 95,217 | (37,178 | ) | 95,217 | ||||||||||||||
Deferred tax assets | — | 2 | 7,734 | — | 7,736 | |||||||||||||||
Equity investment at FVTPL | — | — | 1,000 | — | 1,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current assets |
284,000 |
37,343 |
897,257 |
(321,619 |
) |
896,981 |
||||||||||||||
Due from intercompanies (4) |
343,416 |
290,468 |
1,594 |
(635,478 |
) |
— |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
666,784 |
339,942 |
1,059,670 |
(957,097 |
) |
1,109,299 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Trade payables | — | 5,468 | 25,046 | — | 30,514 | |||||||||||||||
Other payables and accruals | 1,850 | 2,757 | 53,571 | — | 58,178 | |||||||||||||||
Contract liabilities | — | 939 | 22,567 | — | 23,506 | |||||||||||||||
Due to a shareholder | — | — | 325 | — | 325 | |||||||||||||||
Interest-bearing loans and borrowings | — | — | 41,493 | — | 41,493 | |||||||||||||||
Lease liabilities | — | — | 2,486 | — | 2,486 | |||||||||||||||
Income tax payable | — | 481 | 2,035 | — | 2,516 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current liabilities |
1,850 |
9,645 |
147,523 |
— |
159,018 |
|||||||||||||||
Contract liabilities | — | — | 366 | — | 366 | |||||||||||||||
Interest-bearing loans and borrowings | — | — | 6,046 | — | 6,046 | |||||||||||||||
Lease liabilities | — | — | 793 | — | 793 | |||||||||||||||
Deferred tax liabilities | — | — | 1,417 | — | 1,417 | |||||||||||||||
Other payable (3) |
— | — | 36,000 | (36,000 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current liabilities |
— |
— |
44,622 |
(36,000 |
) |
8,622 |
||||||||||||||
Due to intercompanies (4) |
607 |
330,488 |
304,383 |
(635,478 |
) |
— |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
2,457 |
340,133 |
496,528 |
(671,478 |
) |
167,640 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net asssets/(liabilities) |
664,327 |
(191 |
) |
563,142 |
(285,619 |
) |
941,659 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Cash and cash equivalents | 1,716 | 16,173 | 7,830 | — | 25,719 | |||||||||||||||
Trade receivables | — | 5,329 | 176,393 | — | 181,722 | |||||||||||||||
Prepayments, other receivables and other assets |
7,621 | 21 | 20,881 | — | 28,523 | |||||||||||||||
Net investments in subleases |
— | — | 211 | — | 211 | |||||||||||||||
Due from related parties |
358 | — | 1,405 | — | 1,763 | |||||||||||||||
Due from shareholders |
— | — | 100 | — | 100 | |||||||||||||||
Inventories | — | — | 950 | — | 950 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current assets |
9,695 |
21,523 |
207,770 |
— |
238,988 |
|||||||||||||||
Property, plant and equipment |
— | 186 | 17,949 | — | 18,135 | |||||||||||||||
Intangible assets (1) |
— | 8 | 263,754 | (661 | ) | 263,101 | ||||||||||||||
Right-of-use assets |
— | — | 14,918 | — | 14,918 | |||||||||||||||
Goodwill |
— | — | 237,225 | — | 237,225 | |||||||||||||||
Investment in subsidiaries (2) |
284,000 | — | — | (284,000 | ) | — | ||||||||||||||
Prepayments, other receivables and other assets (3) |
— | 37,178 | 95,376 | (37,178 | ) | 95,376 | ||||||||||||||
Net investments in subleases |
— | — | 202 | — | 202 | |||||||||||||||
Deferred tax assets |
— | — | 8,917 | — | 8,917 | |||||||||||||||
Investment in a joint venture | — | — | 491 | — | 491 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current assets |
284,000 |
37,372 |
638,832 |
(321,839 |
) |
638,365 |
||||||||||||||
Due from intercompanies (4) |
127,363 |
75,030 |
1,200 |
(203,593 |
) |
— |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
421,058 |
133,925 |
847,802 |
(525,432 |
) |
877,353 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Trade payables | — | 7,068 | 20,242 | — | 27,310 | |||||||||||||||
Other payables and accruals |
9,196 | 3,613 | 54,312 | — | 67,121 | |||||||||||||||
Contract liabilities |
— | 226 | 24,088 | — | 24,314 | |||||||||||||||
Due to a shareholder |
— | — | 325 | — | 325 | |||||||||||||||
Interest-bearing loans and borrowings |
— | — | 60,000 | — | 60,000 | |||||||||||||||
Lease liabilities |
— | — | 7,660 | — | 7,660 | |||||||||||||||
Income tax payable |
— | 732 | 9,681 | — | 10,413 | |||||||||||||||
Due to related parties |
7,177 | — | — | — | 7,177 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current liabilities |
16,373 |
11,639 |
176,308 |
— |
204,320 |
|||||||||||||||
Contract liabilities |
— | 11 | 576 | — | 587 | |||||||||||||||
Lease liabilities |
— | — | 9,830 | — | 9,830 | |||||||||||||||
Deferred tax liabilities |
— | — | 1,447 | — | 1,447 | |||||||||||||||
Other payable (3) |
— | — | 36,000 | (36,000 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current liabilities |
— |
11 |
47,853 |
(36,000 |
) |
11,864 |
||||||||||||||
Due to intercompanies (4) |
607 |
116,693 |
86,293 |
(203,593 |
) |
— |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
16,980 |
128,343 |
310,454 |
(239,593 |
) |
216,184 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net asssets/(liabilities) |
404,078 |
5,582 |
537,348 |
(285,839 |
) |
661,169 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
As of December 31, 2019 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Cash and cash equivalents |
|
14 |
|
|
10,973 |
|
|
12,023 |
|
|
— |
|
|
23,010 |
| |||||
Trade receivables |
|
— |
|
|
6,841 |
|
|
174,284 |
|
|
— |
|
|
181,125 |
| |||||
Prepayments, other receivables and other assets |
|
— |
|
|
607 |
|
|
14,342 |
|
|
— |
|
|
14,949 |
| |||||
Net investments in subleases |
|
— |
|
|
— |
|
|
1,245 |
|
|
— |
|
|
1,245 |
| |||||
Due from related parties |
|
— |
|
|
370 |
|
|
— |
|
|
— |
|
|
370 |
| |||||
Due from shareholders |
|
105 |
|
|
— |
|
|
— |
|
|
— |
|
|
105 |
| |||||
Inventories |
|
— |
|
|
— |
|
|
1,807 |
|
|
— |
|
|
1,807 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current assets |
|
119 |
|
|
18,791 |
|
|
203,701 |
|
|
— |
|
|
222,611 |
| |||||
Property, plant and equipment |
|
— |
|
|
273 |
|
|
3,846 |
|
|
— |
|
|
4,119 |
| |||||
Intangible assets |
|
— |
|
|
15 |
|
|
168,490 |
|
|
— |
|
|
168,505 |
| |||||
Right-of-use assets |
|
— |
|
|
— |
|
|
10,728 |
|
|
— |
|
|
10,728 |
| |||||
Prepayments, other receivables and other assets (3) |
|
— |
|
|
36,816 |
|
|
59,026 |
|
|
(4,300 |
) |
|
91,542 |
| |||||
Net investments in subleases |
|
— |
|
|
— |
|
|
2,325 |
|
|
— |
|
|
2,325 |
| |||||
Deferred tax assets |
|
— |
|
|
— |
|
|
3,796 |
|
|
— |
|
|
3,796 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current assets |
|
— |
|
|
37,104 |
|
|
248,211 |
|
|
(4,300 |
) |
|
281,015 |
| |||||
Due from intercompanies (4) |
|
58,583 |
|
|
11,561 |
|
|
572 |
|
|
(70,716 |
) |
|
— |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
|
58,702 |
|
|
67,456 |
|
|
452,484 |
|
|
(75,016 |
) |
|
503,626 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Trade payables |
|
— |
|
|
7,428 |
|
|
27,269 |
|
|
— |
|
|
34,697 |
| |||||
Other payables and accruals |
|
4,832 |
|
|
3,163 |
|
|
50,685 |
|
|
— |
|
|
58,680 |
| |||||
Contract liabilities |
|
— |
|
|
227 |
|
|
15,822 |
|
|
— |
|
|
16,049 |
| |||||
Interest-bearing loans and borrowings |
|
— |
|
|
— |
|
|
55,000 |
|
|
— |
|
|
55,000 |
| |||||
Lease liabilities |
|
— |
|
|
— |
|
|
5,217 |
|
|
— |
|
|
5,217 |
| |||||
Income tax payable |
|
— |
|
|
237 |
|
|
9,553 |
|
|
— |
|
|
9,790 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total current liabilities |
|
4,832 |
|
|
11,055 |
|
|
163,546 |
|
|
— |
|
|
179,433 |
| |||||
Contract liabilities |
|
— |
|
|
— |
|
|
436 |
|
|
— |
|
|
436 |
| |||||
Lease liabilities |
|
— |
|
|
— |
|
|
9,496 |
|
|
— |
|
|
9,496 |
| |||||
Other payable (3) |
|
— |
|
|
— |
|
|
36,000 |
|
|
(4,300 |
) |
|
31,700 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-current liabilities |
|
— |
|
|
— |
|
|
45,932 |
|
|
(4,300 |
) |
|
41,632 |
| |||||
Due to intercompanies (4) |
|
607 |
|
|
55,977 |
|
|
14,132 |
|
|
(70,716 |
) |
|
— |
| |||||
Total liabilities |
|
5,439 |
|
|
67,032 |
|
|
223,610 |
|
|
(75,016 |
) |
|
221,065 |
| |||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net asssets/(liabilities) |
|
53,263 |
|
|
424 |
|
|
228,874 |
|
|
— |
|
|
282,561 |
| |||||
|
|
|
|
|
|
|
|
|
|
(1) | It represents the elimination of the trade among our Company, other subsidiaries, VIEs and their subsidiaries. |
(2) | It represents the elimination of the investment in other subsidiaries, VIEs and their subsidiaries. |
(3) | Loans between non-related companies. |
(4) | It represents the elimination of intercompany balances among our Company, other subsidiaries, VIEs and their subsidiaries. |
For the year ended December 31, 2021 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Net cash flows from/(used in) operating activities |
|
(247,400 |
) |
|
(4,816 |
) |
|
316,686 |
|
|
220 |
|
|
64,690 |
| |||||
Net cash flows from/(used in) investing activities |
|
— |
|
|
(36 |
) |
|
(290,949 |
) |
|
(220 |
) |
|
(291,205 |
) | |||||
Net cash flows from/(used in) financing activities |
|
284,507 |
|
|
— |
|
|
(24,666 |
) |
|
— |
|
|
259,841 |
|
For the year ended December 31, 2020 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Net cash flows from/(used in) operating activities |
|
(95,986 |
) |
|
4,814 |
|
|
118,120 |
|
|
(661 |
) |
|
26,287 |
| |||||
Net cash flows from/(used in) investing activities |
|
— |
|
|
386 |
|
|
(122,384 |
) |
|
(661 |
) |
|
(121,337 |
) | |||||
Net cash flows from/(used in) financing activities |
|
97,688 |
|
|
— |
|
|
71 |
|
|
— |
|
|
97,759 |
|
For the year ended December 31, 2019 |
||||||||||||||||||||
Our Company |
Other Subsidiaries |
Our VIEs and VIEs’ Subsidiaries |
Eliminating adjustments |
Consolidated total |
||||||||||||||||
(RMB in thousands) |
||||||||||||||||||||
Net cash flows from/(used in) operating activities |
(5,043 | ) | (39,803 | ) | 62,234 | — | 17,388 | |||||||||||||
Net cash flows from/(used in) investing activities |
— | 36,749 | (74,057 | ) | — | (37,308 | ) | |||||||||||||
Net cash flows from/(used in) financing activities |
— | (10 | ) | 11,812 | — | 11,802 |
A |
[Reserved] |
B |
Capitalization and Indebtedness |
C |
Reasons for the Offer and Use of Proceeds |
D |
Risk Factors |
• | attracting and retaining customers with high-quality services that cater to their evolving needs and preferences; |
• | growing our content library while controlling content costs; |
• | increasing our brand awareness; |
• | maintaining and upgrading our technology systems in a cost-effective manner; |
• | attracting, training and retaining a growing workforce to support our operations; |
• | implementing a variety of new and upgraded internal systems and procedures as our business continues to grow; and |
• | adapting to changing regulatory and economic environments. |
• | high acquisition and financing costs; |
• | potential ongoing financial obligations and unforeseen or hidden liabilities; |
• | failure to achieve our intended objectives or benefits; |
• | uncertainty of entering into markets in which we have limited or no experience and in which our competitors have stronger market positions; |
• | costs and difficulties associated with integrating acquired businesses and assets with our own; |
• | potentially significant goodwill impairment charges; |
• | amortization expenses of other intangible assets; |
• | potential claims or litigation regarding our board of directors’ exercise of its duty of care and other duties required under applicable laws; and |
• | diversion of our resources and management attention. |
• | our market position and competitiveness in the industries in which we operate; |
• | our future profitability, overall financial condition, operating results and cash flows; |
• | the general market conditions for financing activities; and |
• | the macro-economic and other conditions in China and elsewhere. |
• | limits in our ability to penetrate international markets; |
• | complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; |
• | multiple conflicting and changing laws and regulations, such as privacy regulations, tax laws, economic sanctions and embargoes, employment laws and regulatory requirements, and other governmental approvals, permits and licenses; |
• | additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment; |
• | difficulties in staffing and managing foreign operations; |
• | increased travel, infrastructure and legal and compliance costs associated with multiple international locations; |
• | increased exposure to foreign currency exchange rate risk; |
• | longer payment cycles for sales in some foreign countries and potential difficulties in enforcing contracts and collecting trade receivables; and |
• | general economic conditions in the countries in which we may operate. |
• | revoking the business license and/or operating license of such entities; |
• | placing restrictions on our operations or our right to collect revenues; |
• | imposing fines, confiscating the income from our WFOEs or VIEs, or imposing other requirements with which we or our VIEs may not be able to comply; |
• | requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements and deregistering equity pledges made by the shareholders of our VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs; |
• | restricting or prohibiting our use of the proceeds of our initial public offering to finance our business and operations in China; or |
• | taking other regulatory or enforcement actions that could be harmful to our business. |
• | variations in our revenues, earnings and cash flow; |
• | our or our competitors’ announcements of new investments, acquisitions, strategic partnerships or joint ventures; |
• | our or our competitors’ announcements of new services and expansions; |
• | changes in financial estimates by securities analysts; |
• | failure on our part to realize monetization opportunities as expected; |
• | additions or departures of key personnel; |
• | release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; |
• | detrimental negative publicity about us, our management or our competitors; |
• | regulatory developments; and |
• | actual or potential litigation or regulatory investigations. |
• | the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
• | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
ITEM 4 |
INFORMATION ON THE COMPANY |
A |
History and Development of the Company |
B |
Business Overview |
(1) | The remaining 49% equity interest in Naxos China is held by Naxos International, which is ultimately controlled by independent third parties. |
(2) | He Yu, Xingping Zuo, Jianmin Jin and Kunshan Maidun Culture Industry Investment Enterprise (Limited Partnership) each holds 35.5%, 25.9%, 9.0% and 8.9% equity interests in Beijing Kuke Music, respectively. The remaining 20.7% equity interests in Beijing Kuke Music are held by other beneficial owners of our company. |
(3) | Lung Yu, He Yu, Ningbo Huaqiang Ruizhe Investment Partnership (Limited Partnership), Tianjin Shengxin Enterprise Management Consulting Partnership (Limited Partnership) and Suzhou Fengqiao Jichu Chuangye Investment Partnership (Limited Partnership) and Zheng Tu each holds 38.5%, 23.1%, 15.4%, 15.4%, 6.2% and 1.4% equity interests in BMF Culture, respectively. |
• | the ownership structures of our VIEs in the PRC and our WFOEs, are not in violation of applicable PRC laws and regulations currently in effect; and |
• | the contractual arrangements among our WFOEs, our VIEs and their shareholders governed by PRC law are currently valid and binding in accordance with applicable PRC laws and regulations currently in effect and do not result in any violation of the applicable PRC laws or regulations currently in effect. |
D |
Facilities |
ITEM 4A |
UNRESOLVED STAFF COMMENTS |
ITEM 5 |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A |
Operating Results |
• | the overall economic growth in China; |
• | the growth of the classical music licensing and subscription market, smart music learning market and live classical music events market in China; |
• | governmental policies and the regulatory environment for industries in which we operate; and |
• | disease, global or localized health pandemic or epidemic or a similar public health threat, or the fear of such an event. |
For the Years Ended December 31, | ||||||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Licensing and subscription |
81,901 | 56.1 | % | 76,583 | 47.0 | % | 100,454 | 15,764 | 33.9 | % | ||||||||||||||||||
Smart music learning |
64,153 | 43.9 | % | 58,784 | 36.1 | % | 118,061 | 18,526 | 39.9 | % | ||||||||||||||||||
Live classical music events |
— | — | 27,514 | 16.9 | % | 77,382 | 12,143 | 26.2 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
146,054 |
100.0 |
% |
162,881 |
100.0 |
% |
295,897 |
46,433 |
100.0 |
% |
For the Years Ended December 31, |
||||||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Licensing and subscription |
(20,330 | ) | 62.9 | % | (8,725 | ) | 19.7 | % | (18,195 | ) | (2,855 | ) | 14.4 | % | ||||||||||||||
Smart music learning |
(12,013 | ) | 37.1 | % | (17,319 | ) | 39.1 | % | (43,548 | ) | (6,834 | ) | 34.6 | % | ||||||||||||||
Live classical music events |
— | — | % | (18,237 | ) | 41.2 | % | (64,283 | ) | (10,087 | ) | 51.0 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
(32,343 |
) |
100.0 |
% |
(44,281 |
) |
100.0 |
% |
(126,026 |
) |
(19,776 |
) |
100.0 |
% |
For the Years Ended December 31, |
||||||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Selling and distribution expenses |
(18,252 | ) | 37.5 | % | (25,808 | ) | 20.5 | % | (73,263 | ) | (11,497 | ) | 32.0 | % | ||||||||||||||
Administrative expenses |
(27,312 | ) | 56.1 | % | (65,018 | ) | 51.6 | % | (132,237 | ) | (20,751 | ) | 57.7 | % | ||||||||||||||
Impairment losses on financial assets, Net |
(3,088 | ) | 6.3 | % | (35,240 | ) | 27.9 | % | (20,653 | ) | (3,241 | ) | 9.0 | % | ||||||||||||||
Other operating expenses |
(42 | ) | 0.1 | % | (18 | ) | — | (2,904 | ) | (456 | ) | 1.3 | % | |||||||||||||||
Total |
(48,694 |
) |
100.0 |
% |
(126,084 |
) |
100.0 |
% |
(229,057 |
) |
(35,945 |
) |
100.0 |
% |
For the Years Ended December 31 |
||||||||||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||||||||||
Kuke Music |
BMF |
Pro Forma(1) |
Kuke Music |
Kuke Music |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Revenue |
146,054 | 61,160 | 206,865 | 162,881 | 295,897 | 46,433 | ||||||||||||||||||
Cost of sales |
(32,343 | ) | (37,856 | ) | (69,850 | ) | (44,281 | ) | (126,026 | ) | (19,776 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Gross profit |
113,711 |
23,304 |
137,015 |
118,600 |
169,871 |
26,657 |
||||||||||||||||||
Other income, net |
3,830 | 219 | 4,049 | 4,385 | 8,700 | 1,365 | ||||||||||||||||||
Selling and distribution expenses |
(18,252 | ) | (1,661 | ) | (19,913 | ) | (25,808 | ) | (73,263 | ) | (11,497 | ) | ||||||||||||
Administrative Expenses |
(27,312 | ) | (5,804 | ) | (32,796 | ) | (65,018 | ) | (132,237 | ) | (20,751 | ) | ||||||||||||
Impairment losses on financial assets, net |
(3,088 | ) | (213 | ) | (3,301 | ) | (35,240 | ) | (20,653 | ) | (3,241 | ) | ||||||||||||
Other operating expenses |
(42 | ) | — | (42 | ) | (18 | ) | (2,904 | ) | (456 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating profit/(loss) |
68,847 |
15,845 |
85,012 |
(3,099 |
) |
(50,486 |
) |
(7,923 |
) | |||||||||||||||
Share of loss of a joint venture |
— |
— |
— |
(9 | ) | (491 | ) | (77 | ) | |||||||||||||||
Finance costs |
(3,242 | ) | (90 | ) | (3,247 | ) | (10,105 | ) | (7,684 | ) | (1206 | ) | ||||||||||||
Finance income |
258 | 921 | 1,094 | 1,621 | 79 | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/profit before tax |
65,863 |
16,676 |
82,859 |
(11,592 |
) |
(58,582 |
) |
(9,194 |
) | |||||||||||||||
Income tax expense |
(9,101 | ) | (4,194 | ) | (13,343 | ) | (3,622 | ) | (1,035 | ) | (163 |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(Loss)/profit for the year and total comprehensive (loss)/income for the year |
56,762 |
12,482 |
69,516 |
(15,214 |
) |
(59,617 |
) |
(9,357 |
) |
(1) | The combined statement of profit or loss and other comprehensive income for 2019 is adjusted on an unaudited pro forma basis to present the combined historical results of operations of us and BMF as if the Acquisition had occurred on January 1, 2019. The unaudited pro forma financial information includes the following adjustments related to the Acquisition: (i) the elimination of services revenue and cost of sales for services provided by Kuke Music to BMF, (ii) the elimination of sub-leasing arrangements between the Company and BMF, and (iii) the elimination of non-recurring transaction costs incurred during the year or period that are directly related to the Acquisition and the related income tax effects. |
(1) | that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations; and |
(2) | that no tax to be levied on profits, income, gains or appreciate or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of our shares debentures or other obligations; or (ii) by way of the withholding in whole or in part of any relevant payment as defined in the Tax Concession Act. |
B |
Liquidity and Capital Resources |
For the Years Ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Summary Consolidated Statement of Cash Flows: |
||||||||||||||||
Net cash flows from operating activities |
17,388 | 26,287 | 64,690 | 10,151 | ||||||||||||
Net cash flows (used in) investing activities |
(37,308 | ) | (121,337 | ) | (291,205 | ) | (45,696 | ) | ||||||||
Net cash flows from financing activities |
11,802 | 97,759 | 259,841 | 40,774 | ||||||||||||
Net increase/(decrease) in cash and cash equivalents |
(8,118 | ) | 2,709 | 33,326 | 5,229 | |||||||||||
Cash and cash equivalents at the beginning of the year/period |
31,128 | 23,010 | 25,719 | 4,036 | ||||||||||||
Cash and cash equivalents at the end of the year/period |
23,010 | 25,719 | 59,045 | 9,265 |
Payment Due by December 31, 2021 |
||||||||||||||||
On Demand |
Less than 1 year |
More than 1 year |
Total |
|||||||||||||
(RMB in thousands) |
||||||||||||||||
Interest-bearing loans and borrowings |
10,000 |
34,804 |
6,205 |
51,009 |
||||||||||||
Lease liabilities |
— |
2,571 |
811 |
3,382 |
||||||||||||
Trade payables |
— |
30,514 |
— |
30,514 |
||||||||||||
Due to a shareholder |
325 | — | — | 325 | ||||||||||||
Other payables and accruals |
— |
20,381 |
— |
20,381 |
C |
Research and Development |
D |
Trend Information |
E |
Critical Accounting Estimates |
— | Budgeted cash flows — the basis used to determine the budgeted cash flows is based on management’s expectation of the business development. These projections are consistent with the Company’s operating budget and strategic plan. Cash flows for the five years subsequent to the date of the quantitative goodwill impairment test were utilized in the determination of the recoverable amount of each CGU. |
— | Discount rate — the discount rate used is before tax and reflects specific risks relating to the relevant unit. The discount rate is used to discount each CGU’s estimated future cash flows. The discount rate is calculated based on the proportionate weighting of the cost of debt and equity and capital asset pricing model. The discount rate used for the two CGUs ranged from 19.7% to 21.7 as of December 31, 2021. A sensitivity analysis of the discount rate was performed on both CGUs as of December 31, 2021. For the CGU of “Subscription, licensing and smart education business”, an increase in the discount rate of one percentage point would not result in the carrying value exceeding its recoverable amount. For the CGU of “Music events and performances business”, an increase in the discount rate of one percentage point would result in an impairment of RMB4.0 million. |
ITEM 6 |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name |
Age |
Position/Title | ||
He Yu | 48 | Chief Executive Officer and Chairman of the Board | ||
Lung Yu | 57 | Director | ||
Yu Chen | 48 | Director | ||
Xingping Zuo | 56 | Director | ||
Peixian Tan | 39 | Director | ||
Bin Yu | 51 | Independent Director | ||
Dong Lan | 67 | Independent Director | ||
Li Sun | 45 | President | ||
Hoi Tung Chan | 50 | Chief Financial Officer |
B |
Compensation of Directors and Executive Officers |
Name |
Class A Ordinary Shares Underlying Options |
Exercise Price (US$/ Share) |
Date of Grant |
Date of Expiration |
||||||||||||
He Yu |
175,285 | 0.01 | October 30, 2020 | October 30, 2030 | ||||||||||||
Lung Yu |
175,285 | 0.01 | October 30, 2020 | October 30, 2030 | ||||||||||||
Peixian Tan |
133,217 | 0.01 | October 30, 2020 | October 30, 2030 | ||||||||||||
All directors and executive officers as a group |
483,787 | 0.01 | October 30, 2020 | October 30, 2030 |
C |
Board Practices |
• | selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by our independent registered public accounting firm; |
• | reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K; |
• | discussing the annual audited financial statements with management and our independent registered public accounting firm; |
• | periodically reviewing and reassessing the adequacy of our audit committee charter; |
• | meeting periodically with the management, our internal auditor and our independent registered public accounting firm; |
• | reporting regularly to the full board of directors; |
• | reviewing the adequacy and effectiveness of our accounting and integral control policies and procedures and any steps taken to monitor and control major financial risk exposure; and |
• | handling such other matters that are specifically delegated to our audit committee by our board of directors from time to time. |
• | reviewing and approving, or recommending to the board for its approval, the compensation for our Chief Executive Officer and other executive officers; |
• | reviewing the total compensation package for our employees and recommending any proposed changes to our management; |
• | reviewing and recommending to the board with respect to the compensation of our directors; |
• | reviewing annually and administering all long-term incentive compensation or equity plans; |
• | selecting and receiving advice from compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and |
• | reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. |
• | identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy; |
• | reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; |
• | advising the board periodically with respect to significant developments in the law and practice of corporate governance, as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and |
• | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
• | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
• | declaring dividends and distributions; |
• | appointing officers and determining the term of office of officers; |
• | exercising the borrowing powers of our company and mortgaging the property of our company; and |
• | approving the transfer of shares of our company, including the registering of such shares in our share register. |
As of December 31, 2021 |
||||||||
Number |
% of Total |
|||||||
Operations |
49 | 28.3 | % | |||||
Sales and marketing |
25 | 14.5 | % | |||||
Research and development |
64 | 37.0 | % | |||||
Management and administration |
35 | 20.2 | % | |||||
Total |
173 | 100.0 | % |
• | each of our directors and executive officers; and |
• | each person known to us to own beneficially 5% or more of our ordinary shares. |
Ordinary Shares Beneficially Owned |
||||||||||||||||
Class A ordinary shares |
Class B ordinary shares |
% of Beneficial Ownership* |
% of Aggregate Voting Power*** |
|||||||||||||
Directors and Executive Officers |
||||||||||||||||
He Yu(1) |
— | 5,914,297 | 20.0 | % | 56.8 | % | ||||||||||
Lung Yu(2) |
— | 2,366,801 | 8.0 | % | 22.7 | % | ||||||||||
Yu Chen |
— | — | — | — | ||||||||||||
Xingping Zuo(3) |
4,201,335 | — | 14.2 | % | 4.0 | % | ||||||||||
Peixian Tan(4) |
* | — | * | * | ||||||||||||
Li Sun |
— | — | — | — | ||||||||||||
Hoi Tung Chan |
— | — | — | — | ||||||||||||
All Directors and Executive Officers as a Group |
4,201,335 | 8,281,098 | 42.2 | % | 83.5 | % | ||||||||||
Principal Shareholders: |
||||||||||||||||
Lebon Holding Limited(5) |
— | 4,793,620 | 16.2 | % | 46.0 | % | ||||||||||
Musence Limited(6) |
4,201,335 | — | 14.2 | % | 4.0 | % | ||||||||||
Jianmin Jin(7) |
3,299,442 | — | 11.2 | % | 3.2 | % | ||||||||||
Supertonic Limited(8) |
— | 1,867,801 | 6.3 | % | 17.9 | % | ||||||||||
Eichent Limited(9) |
1,643,511 | — | 5.6 | % | 1.6 | % | ||||||||||
Million Profit International Holdings Limited(10) |
1,499,423 | — | 5.1 | % | 1.4 | % | ||||||||||
China Cultural and Entertainment Fund L.P(11) |
1,359,651 | — | 4.6 | % | 1.3 | % |
* | Less than 1%. |
** | For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) the total number of ordinary shares outstanding as of the date of this annual report and (ii) the number of ordinary shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after the date of this annual report. |
*** | For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class B ordinary shares is entitled to ten votes per share and each holder of our Class A ordinary shares is entitled to one vote per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one |
† | Except as indicated otherwise below, the business address of our directors and executive officers is Building 96, 4 San Jian Fang South Block, Chaoyang District, Beijing, 100024, People’s Republic of China. |
(1) | Represents 4,793,620 Class B ordinary shares held by Lebon Holding Limited, a British Virgin Islands company wholly owned by Mr. He Yu, and 1,120,677 Class B ordinary shares held by FutureMuse Limited, a British Virgin Islands company wholly owned by Mr. He Yu. The registered address of Lebon Holding Limited and FutureMuse Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(2) | Represents 499,000 Class B ordinary shares directly held by Mr. Lung Yu and 1,867,801 Class B ordinary shares held by Supertonic Limited, a British Virgin Islands company wholly owned by Mr. Lung Yu. The registered address of Supertonic Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(3) | Represents 4,201,335 Class A ordinary shares held by Musence Limited, a British Virgin Islands company wholly owned by Mr. Xingping Zuo. The registered address of Musence Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(4) | Represents 98,548 Class A ordinary shares held by NBAMF HOLDING LIMITED, a British Virgin Islands company wholly owned by Mr. Peixian Tan. The registered address of NBAMF HOLDING LIMITED is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(5) | Represents 4,793,620 Class B ordinary shares held by Lebon Holding Limited, a British Virgin Islands company wholly owned by Mr. He Yu. The registered address of Lebon Holding Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(6) | Represents 4,201,335 Class A ordinary shares held by Musence Limited, a British Virgin Islands company wholly owned by Mr. Xingping Zuo. The registered address of Musence Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(7) | Represents 2,282,428 Class A ordinary shares held by Huaqiang Capital Limited, a British Virgin Islands company wholly owned by Mr. Jianmin Jin, 747,118 Class A ordinary shares held by Huayin Culture Limited, a British Virgin Islands company wholly owned by Mr. Jianmin Jin, and 269,896 Class A ordinary shares held by Million Profit International Holdings Limited through Rich International Development Limited, a Hong Kong company wholly owned by Mr. Jianmin Jin. The registered address of Huaqiang Capital Limited, Huayin Culture Limited and Rich International Development Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. The registered address of Rich International Development Limited is 14/F, Chun Wo Commercial Centre, 25 Wing Wo Street, Central, Hong Kong. |
(8) | Represents 1,867,801 Class B ordinary shares held by Supertonic Limited, a British Virgin Islands company wholly owned by Mr. Lung Yu. The registered address of Supertonic Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(9) | Represents 1,643,511 Class A ordinary shares held by Eichent Limited, a British Virgin Islands company wholly owned by Mr. Liping Qiu. The registered address of Eichent Limited is P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(10) | Represents 1,499,423 Class A ordinary shares held by Million Profit International Holdings Limited, a Hong Kong company controlled by Mr. Huiming Jin. The registered address of Million Profit International Holdings Limited is Unit 1702B, 17/F, Fortress Tower, 250 King’s Road, North Point Hong Kong. |
(11) | Represents 1,359,651 Class A ordinary shares held by China Cultural and Entertainment Fund L.P, a Cayman Islands exempted limited partnership controlled by Syzygy Partner (Cayman) Limited. The registered address of China Cultural and Entertainment Fund L.P is c/o Campbells Corporate Services Limited, Floor 4, Willow House, Cricket Square, Grand Cayman KY1-9010, Cayman Islands. |
ITEM 7 |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
ITEM 8 |
FINANCIAL INFORMATION |
ITEM 9 |
THE OFFER AND LISTING |
ITEM 10 |
ADDITIONAL INFORMATION |
• | the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
• | the instrument of transfer is in respect of only one class of ordinary shares; |
• | the instrument of transfer is properly stamped, if required; |
• | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
• | a fee of such maximum sum as the New York Stock Exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
• | the designation of the series; |
• | the number of shares of the series; |
• | the dividend rights, dividend rates, conversion rights and voting rights; and |
• | the rights and terms of redemption and liquidation preferences. |
• | authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and |
• | limit the ability of shareholders to requisition and convene general meetings of shareholders. |
• | does not have to file an annual return of its shareholders with the Registrar of Companies; |
• | is not required to open its register of members for inspection; |
• | does not have to hold an annual general meeting; |
• | may issue negotiable or bearer shares or shares with no par value; |
• | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
• | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
• | may register as a limited duration company; and |
• | may register as a segregated portfolio company. |
(1) | that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations; and |
(2) | that no tax to be levied on profits, income, gains or appreciate or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of our shares debentures or other obligations; or (ii) by way of the withholding in whole or in part of any relevant payment as defined in the Tax Concession Act. |
• | Banks and certain other financial institutions; |
• | insurance companies; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | brokers or dealers in stocks and securities, or currencies; |
• | persons that use or are required to use a mark-to-market |
• | certain former citizens or residents of the United States subject to Section 877 of the Code; |
• | entities subject to the United States anti-inversion rules; |
• | tax-exempt organizations and entities; |
• | persons whose functional currency is other than the United States dollar; |
• | persons holding ADSs or ordinary shares as part of a straddle, hedging, conversion or integrated transaction; |
• | persons that actually or constructively own ADSs or ordinary shares representing 10% or more of our total voting power or value; |
• | persons who acquired ADSs or ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation; |
• | partnerships or other pass-through entities, or persons holding ADSs or ordinary shares through such entities; |
• | persons required to accelerate the recognition of any item of gross income with respect to our ADSs or ordinary shares as a result of such income being recognized on an applicable financial statement; or |
• | persons that held, directly, indirectly or by attribution, ADSs or ordinary shares or other ownership interests in us prior to our initial public offering that closed on January 14, 2021. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more United States persons (as defined under the Code) have the authority to control all of its substantial decisions or (ii) in the case of a trust that was treated as a domestic trust under the law in effect before 1997, a valid election is in place under applicable Treasury regulations to treat such trust as a domestic trust. |
• | at least 75% of our gross income for such year is passive income; or |
• | at least 50% of the value of our assets (generally determined based on a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. |
• | the excess distribution or recognized gain will be allocated ratably over your holding period for the ADSs or Class A ordinary shares; |
• | the amount of the excess distribution or recognized gain allocated to the taxable year of distribution or gain, and to any taxable years in your holding period prior to the first taxable year in which we were treated as a PFIC, will be treated as ordinary income; and |
• | the amount of the excess distribution or recognized gain allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the resulting tax will be subject to the interest charge generally applicable to underpayments of tax. |
F |
Dividends and Paying Agents |
G |
Statement by Experts |
H |
Documents on Display |
I |
Subsidiary Information |
ITEM 11 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12 |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Service |
Fees | |
• To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) |
Up to US$0.05 per ADS issued | |
• Cancellation of ADSs, including the case of termination of the deposit agreement |
Up to US$0.05 per ADS canceled | |
• Distribution of cash dividends |
Up to US$0.05 per ADS held | |
• Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements |
Up to US$0.05 per ADS held | |
• Distribution of ADSs pursuant to exercise of rights |
Up to US$0.05 per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to US$0.05 per ADS held | |
• Depositary services |
Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
ITEM 13 |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14 |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15 |
CONTROLS AND PROCEDURES |
ITEM 16A |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B |
CODE OF ETHICS |
ITEM 16C |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
For the Years Ended December 31, |
||||||||
2020 |
2021 |
|||||||
Audit fees(1) |
RMB 9,135,000 | RMB 5,447,000 |
(1) | “Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the annual audit of our consolidated financial statements. |
ITEM 16D |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Period (1) |
Total Number of ADSs Purchased |
Average Price Paid for ADS (2) |
Total Number of ADSs Purchased as Part of Publicly Announced Plans or Programs |
Approximate Dollar Value of ADSs that May Yet Be Purchased Under the Program (1) |
||||||||||||
June 28, 2021 through June 30, 2021 |
— | — | — | 1,000,000 | ||||||||||||
July 2021 |
— | — | — | 1,000,000 | ||||||||||||
August 2021 |
— | — | — | 1,000,000 | ||||||||||||
September 2021 |
6,735 | $5.96 | 6,735 | 959,800 | ||||||||||||
October 2021 |
1,075 | $6.05 | 7,810 | 953,300 | ||||||||||||
November 2021 |
9,155 | $4.30 | 16,965 | 913,900 | ||||||||||||
December 2021 |
32,644 | $3.47 | 49,609 | 800,700 |
(1) | On June 28, 2021, we announced a share repurchase plan (the “Share Repurchase Plan”) approved by our board of directors, under which we may repurchase up to US$1 million of worth of our outstanding ADSs through December 31, 2021. Under the share repurchase program, we may repurchase our ADSs from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. |
(2) | The average price per ADS is calculated using the execution price for each repurchase excluding commissions paid to brokers. |
ITEM 16F |
CHANGE IN REGISTRANT ’ S CERTIFYING ACCOUNTANT |
ITEM 16G |
CORPORATE GOVERNANCE |
ITEM 16H |
MINE SAFETY DISCLOSURE |
ITEM 16I |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
ITEM 17 |
FINANCIAL STATEMENTS |
ITEM 18 |
FINANCIAL STATEMENTS |
ITEM 19 |
EXHIBITS |
101.INS* | Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |
Kuke Music Holding Limited | ||||||
By: | /s/ HE YU | |||||
Name: | HE YU | |||||
Date: May 2, 2022 | Title: | Chairman of the Board of Directors and Chief Executive Officer |
Page | ||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 - F-78 |
Years ended December 31, |
||||||||||||||||
Notes |
2021 |
2020 |
2019 |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||
Revenue |
4 | 295,897 | 162,881 | 146,054 | ||||||||||||
Cost of sales |
(126,026 | ) | (44,281 | ) | (32,343 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
169,871 |
118,600 |
113,711 |
|||||||||||||
Other income, net |
9.1.1 | 8,700 | 4,385 | 3,830 | ||||||||||||
Selling and distribution expenses |
(73,263 | ) | (25,808 | ) | (18,252 | ) | ||||||||||
Administrative expenses |
(132,237 | ) | (65,018 | ) | (27,312 | ) | ||||||||||
Impairment losses on financial assets, net |
(20,653 | ) | (35,240 | ) | (3,088 | ) | ||||||||||
Other operating expenses |
9.1.2 | (2,904 | ) | (18 | ) | (42 | ) | |||||||||
|
|
|
|
|
|
|||||||||||
Operating (loss)/profit |
(50,486 |
) |
(3,099 |
) |
68,847 |
|||||||||||
Share of loss of a joint venture |
(491 | ) | (9 | ) | — | |||||||||||
Finance costs |
9.2 | (7,684 | ) | (10,105 | ) | (3,242 | ) | |||||||||
Finance income |
9.3 | 79 | 1,621 | 258 | ||||||||||||
|
|
|
|
|
|
|||||||||||
(Loss)/profit before tax |
(58,582 |
) |
(11,592 |
) |
65,863 |
|||||||||||
Income tax expense |
10 | (1,035 | ) | (3,622 | ) | (9,101 | ) | |||||||||
|
|
|
|
|
|
|||||||||||
(Loss)/profit for the year and total comprehensive (loss)/income for the year |
(59,617 |
) |
(15,214 |
) |
56,762 |
|||||||||||
|
|
|
|
|
|
|||||||||||
Attributable to: |
||||||||||||||||
Equity holders of the parent |
(59,570 | ) | (16,423 | ) | 56,106 | |||||||||||
Non-controlling interests |
(47 | ) | 1,209 | 656 | ||||||||||||
|
|
|
|
|
|
|||||||||||
(59,617 |
) |
(15,214 |
) |
56,762 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)/EARNINGS PER SHARE FOR CLASS A AND CLASS B ORDINARY SHARES ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT |
11 |
|||||||||||||||
Basic |
RMB(2.03) |
RMB(0.70 |
) |
RMB3.08 |
||||||||||||
|
|
|
|
|
|
|||||||||||
Diluted |
RMB(2.03) |
RMB(0.70 |
) |
RMB3.08 |
||||||||||||
|
|
|
|
|
|
|||||||||||
(LOSS)/EARNINGS PER ADS (1 ADS equals 1 Class A ordinary share) |
|
|
|
|||||||||||||
Basic |
RMB(2.03) |
RMB(0.70) |
RMB3.08 |
|||||||||||||
|
|
|
|
|
|
|||||||||||
Diluted |
RMB(2.03) |
RMB(0.70) |
RMB3.08 |
|||||||||||||
|
|
|
|
|
|
Attributable to equity holders of the parent |
||||||||||||||||||||||||||||
Issued capital |
Treasury shares |
Capital reserve |
Retained earnings |
Total |
Non- controlling interests |
Total equity |
||||||||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||||||||||
At January 1, 2019 |
118 |
— | 161,454 |
61,001 |
222,573 |
3,236 |
225,809 |
|||||||||||||||||||||
Profit and total comprehensive income for the year |
— | — | — | 56,106 | 56,106 | 656 | 56,762 | |||||||||||||||||||||
Acquisition of non-controlling interests |
— | — | 23 | — | 23 | (33 | ) | (10 | ) | |||||||||||||||||||
At December 31, 2019 and at January 1, 2020 |
118 |
— | 161,477 |
117,107 |
278,702 |
3,859 |
282,561 |
|||||||||||||||||||||
Loss and total comprehensive loss for the year |
— | — | — | (16,423 | ) | (16,423 | ) | 1,209 | (15,214 | ) | ||||||||||||||||||
Issuance of ordinary shares (Note 20) |
11 | — | 90,395 | — | 90,406 | — | 90,406 | |||||||||||||||||||||
Issuance of ordinary shares for the acquisition of a subsidiary (Note 20) |
33 | — | 283,967 | — | 284,000 | — | 284,000 | |||||||||||||||||||||
Equity-settled share-based payments (Note 29) |
— | — | 19,416 | — | 19,416 | — | 19,416 | |||||||||||||||||||||
At December 31, 2020 and at January 1, 2021 |
162 |
— |
555,255 |
100,684 |
656,101 |
5,068 |
661,169 |
|||||||||||||||||||||
Loss and total comprehensive loss for the year |
— | — | (59,570 | ) | (59,570 | ) | (47 | ) | (59,617 | ) | ||||||||||||||||||
Issuance of ordinary shares, net of issuance costs (Note 20) |
32 | — | 287,416 | — | 287,448 | — | 287,448 | |||||||||||||||||||||
Share repurchased (Note 20) |
— | (1,274 | ) | — | — | (1,274 | ) | — | (1,274 | ) | ||||||||||||||||||
Equity-settled share-based payments (Note 29) |
— | — | 53,933 | — | 53,933 | — | 53,933 | |||||||||||||||||||||
At December 31, 2021 |
194 |
(1,274 |
) |
896,604 |
41,114 |
936,638 |
5,021 |
941,659 |
||||||||||||||||||||
Years ended December 31, |
||||||||||||||
Notes |
2021 |
2020 |
2019 |
|||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||
Cash flows from operating activities |
||||||||||||||
(Loss)/profit before tax |
(58,582 | ) | (11,592 | ) | 65,863 | |||||||||
Adjustments for: |
||||||||||||||
Finance costs |
9.2 | 7,684 | 10,105 | 3,242 | ||||||||||
Finance income |
9.3 | (79 | ) | (1,621 | ) | (258 | ) | |||||||
Depreciation of property, plant and equipment |
9.4 | 10,709 | 2,257 | 1,251 | ||||||||||
Depreciation of right-of-use |
9.4 | 4,139 | 4,480 | 1,618 | ||||||||||
Amortisation of intangible assets |
9.4 | 8,422 | 5,366 | 3,762 | ||||||||||
Loss on disposal of property, plant and equipment |
1,112 | 4 | 41 | |||||||||||
Covid-19-related |
24 | — | (778 | ) | — | |||||||||
Recognition of equity-settled share-based payment expenses |
29 | 53,933 | 19,416 | — | ||||||||||
Share of loss of a joint venture |
491 | 9 | — | |||||||||||
Impairment of an amount due from a related party |
2,000 | — | — | |||||||||||
Impairment of trade receivables, net |
18,653 | 34,983 | 2,282 | |||||||||||
Impairment of other receivables, net |
— | 257 | 806 | |||||||||||
|
|
|
|
|
|
|||||||||
48,482 | 62,886 | 78,607 | ||||||||||||
Working capital adjustments: |
||||||||||||||
Decrease/(increase) in inventories |
(6,357 | ) | 859 | (116 | ) | |||||||||
Decrease/(increase) in trade receivables |
51,965 | (25,909 | ) | (67,359 | ) | |||||||||
Increase in prepayments, other receivables and other assets |
(17,312 | ) | (6,050 | ) | (40,973 | ) | ||||||||
Decrease/(increase) in amounts due from related parties |
357 | (663 | ) | (370 | ) | |||||||||
(Decrease)/increase in trade payables |
3,204 | (7,655 | ) | 11,742 | ||||||||||
(Decrease)/increase in other payables and accruals |
(6,838 | ) | 2,011 | 42,364 | ||||||||||
(Decrease)/increase in contract liabilities |
(1,029 | ) | 8,416 | 1,047 | ||||||||||
|
|
|
|
|
|
|||||||||
Cash generated from operations |
72,472 | 33,895 | 24,942 | |||||||||||
Income tax paid |
(7,782 | ) | (7,608 | ) | (7,554 | ) | ||||||||
|
|
|
|
|
|
|||||||||
Net cash flows from operating activities |
64,690 |
26,287 |
17,388 |
|||||||||||
|
|
|
|
|
|
|||||||||
Cash flows from investing activities |
||||||||||||||
Interest received |
63 | 45 | 258 | |||||||||||
Investment in a joint venture |
— | (500 | ) | — | ||||||||||
Investment in an unlisted equity investment at fair value through profit or loss |
(1,000 | ) | — | — | ||||||||||
Acquisition of a subsidiary |
8 | — | 1,073 | — | ||||||||||
Purchase of intangible assets |
(20,333 | ) | (10,145 | ) | (19,119 | ) | ||||||||
Purchase of property, plant and equipment |
(16,382 | ) | (948 | ) | (3,511 | ) | ||||||||
Advance to a related party |
(900 | ) | (18,498 | ) | — | |||||||||
Repayment of advance to a related party |
— | 17,398 | — | |||||||||||
Repayment from a loan receivable |
3,000 | 6,000 | — | |||||||||||
I ncrease in deposits paid for property, plant and equipment |
(41,560 | ) | (9,899 | ) | (9,956 | ) | ||||||||
I ncrease in deposits paid for intangible assets |
(214,464 | ) | (106,082 | ) | (42,434 | ) | ||||||||
Proceeds from disposal of items of property, plant and equipment |
298 | — | 3 | |||||||||||
Receipt of the principal portion of net investments in subleases |
73 | 219 | 521 | |||||||||||
Decrease in a pledged deposit |
— | — | 36,930 | |||||||||||
|
|
|
|
|
|
|||||||||
Net cash flows used in investing activities |
(291,205 |
) |
(121,337 |
) |
(37,308 |
) | ||||||||
|
|
|
|
|
|
|||||||||
Cash flows from financing activities |
||||||||||||||
Acquisition of non-controlling interests |
— | — | (10 | ) | ||||||||||
Proceeds from issuance of ordinary shares, net of issuance costs |
292,958 | 90,406 | — | |||||||||||
Repurchase of shares |
(1,274 | ) | — | — | ||||||||||
Proceeds from bank borrowings |
10,000 | 10,000 | 5,000 | |||||||||||
Repayment of bank borrowings |
(10,000 | ) | (5,000 | ) | (39,700 | ) | ||||||||
Proceeds from other borrowings |
23,000 | — | 50,000 | |||||||||||
Repayment of other borrowings |
(35,461 | ) | — | — | ||||||||||
Advance from a related party |
— | 7,177 | — | |||||||||||
Repayment of amount due to a related party |
(7,177 | ) | — | — | ||||||||||
Repayment from shareholders |
— | 105 | — | |||||||||||
Payment of the principal portion of lease liabilities |
(2,566 | ) | (2,162 | ) | (1,996 | ) | ||||||||
Interest paid |
(9,639 | ) | (2,767 | ) | (1,492 | ) | ||||||||
|
|
|
|
|
|
|||||||||
Net cash flows from financing activities |
259,841 |
97,759 |
11,802 |
|||||||||||
|
|
|
|
|
|
|||||||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
33,326 | 2,709 | (8,118 | ) | ||||||||||
Cash and cash equivalents at beginning of year |
25,719 | 23,010 | 31,128 | |||||||||||
|
|
|
|
|
|
|||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR |
59,045 |
25,719 |
23,010 |
|||||||||||
|
|
|
|
|
|
Percentage of ownership/interest/ voting rights |
||||||||||||||
Name |
Place and date of incorporation/ establishment |
Directly |
Indirectly |
Issued and fully paid ordinary share capital/ registered capital |
Principal activities | |||||||||
Rococo Holding Limited (“Rococo”) |
British Virgin Islands (“BVI”), limited liability company September 21, 2017 |
100 | % | — | United States Dollar (“US$”) 1 |
Investment holding | ||||||||
Rosenkavalier Limited (“Rosenkavalier”) |
BVI, limited liability company October 2, 2019 |
100 | % | — | US$100 | Investment holding | ||||||||
Gauguin Limited (“Gauguin”) |
Hong Kong, limited liability company October 6, 2017 |
— | 100 | % | Hong Kong Dollar (“HK$”) 60,000,000 |
Investment holding | ||||||||
Degas Limited (“Degas”) |
Hong Kong, limited liability company November 1, 2019 |
— | 100 | % | HK$60,000,000 | Investment holding | ||||||||
Kuke Future International Technology (Beijing) Co., Ltd.* (“Kuke International”) |
PRC, limited liability company December 14, 2017 |
— | 100 | % | US$10,000,000 | Investment holding | ||||||||
Beijing Lecheng Future Culture Media Co., Ltd.* (“Beijing Lecheng”) |
PRC, limited liability company November 28, 2019 |
— | 100 | % | US$10,000,000 | Investment holding | ||||||||
Beijing Kuke Music Co. Ltd.* (formerly known as Beijing Cathay Orient Information Technology Company Limited) (“Beijing Kuke Music”) |
PRC, June 7, 2000, limited liability company, changed to joint stock limited liability company on February 16, 2016 |
— | 100 | % | RMB16,213,275 | Distribution of commercial copyrights and provision of music education solutions | ||||||||
Beijing Naxos Cultural Communication Co. Ltd.* (“Naxos China”) |
PRC, limited liability company January 25, 2016 | — | 51 | % | RMB2,000,000 | Distribution of commercial copyrights | ||||||||
Beijing Music Festival Culture Communication Co., Ltd.* (“BMF Culture”) |
PRC, limited liability company August 26, 2003 |
— | 100 | % | RMB19,500,000 | Distribution of commercial copyrights, sale of musical instruments and provision of services related to music events and performances |
Percentage of ownership/interest/ voting rights |
||||||||||||||
Name |
Place and date of incorporation/ establishment |
Directly |
Indirectly |
Issued and fully paid ordinary share capital/ registered capital |
Principal activities | |||||||||
Beijing Kuke Music Education Technology Co., Ltd.* (“Music Education”) | PRC, limited liability company April 14, 2021 |
— | 100 | % | RMB10,000,000 | Investment holding | ||||||||
Shanghai Kuke Fangyue Education Technology Center LLP* (“Kuke Fangyue”) | PRC, limited partnership June 24, 2021 |
— | 60 | % | — | Dormant | ||||||||
Shanghai Kuke Xingkong Cultural Media Center LLP* (“Kuke Xingkong”) | PRC, limited partnership June 25, 2021 |
— | 90 | % | — | Dormant | ||||||||
Shanghai Kuke Linhui Education Technology Center LLP* (“Kuke Linhui”) | PRC, limited partnership July 6, 2021 |
— | 90 | % | — | Dormant | ||||||||
Fuzhou Kuke Education Technology Co., Ltd.* (“Fuzhou Kuke”) |
PRC, limited liability company August 17, 2021 |
— | 80 | % | RMB200,000 | Dormant | ||||||||
Tianjin Kuke Xingkong Education Consulting., Ltd. * (“Tianjin Kuke”) |
PRC, limited liability company August 2, 2021 |
— | 96 | % | RMB200,000 | Dormant | ||||||||
Shijiazhuang Kuke Linhui Education Technology Co., (“Shijiazhuang Kuke”) |
PRC, limited liability company July 22, 2021 |
— | 96 | % | RMB400,000 | Dormant |
* |
The English names of these companies represent the best efforts made by the directors of the Company to translate their Chinese names as these companies do not have official English names. |
|
• | Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) |
• | Exposure, or rights, to variable returns from its involvement with the investee |
• | The ability to use its power over the investee to affect its returns |
• | The contractual arrangement(s) with the other vote holders of the investee |
• | Rights arising from other contractual arrangements |
• | The Group’s voting rights and potential voting rights |
a) |
Business combinations and goodwill |
a) |
Business combinations and goodwill (continued) |
b) |
Investment in a joint venture |
b) |
Investment in a joint venture (continued) |
c) |
Current versus non-current classification |
• | Expected to be realised or intended to be sold or consumed in the normal operating cycle |
• | Held primarily for the purpose of trading |
• | Expected to be realised within twelve months after the reporting period |
• | Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period |
• | It is expected to be settled in the normal operating cycle |
• | It is held primarily for the purpose of trading |
c) |
Current versus non-current classification (continued) |
• | It is due to be settled within twelve months after the reporting period |
• | There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period |
d) |
Revenue from contracts with customers |
d) |
Revenue from contracts with customers (continued) |
d) |
Revenue from contracts with customers (continued) |
d) |
Revenue from contracts with customers (continued) |
e) |
Government grants |
f) |
Taxes |
• | When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss |
• | In respect of taxable temporary differences associated with investments in subsidiaries and a joint venture, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future |
• | When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss |
• | In respect of deductible temporary differences associated with investments in subsidiaries and a joint venture, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. |
f) |
Taxes (continued) |
• | When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable. |
• | When receivables and payables are stated with the amount of sales tax included, the net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. |
g) |
Foreign currencies |
g) |
Foreign currencies (continued) |
i) |
Transactions and balances |
ii) |
Group companies |
h) |
Property, plant and equipment |
h) |
Property, plant and equipment (continued) |
• Leasehold improvements |
Over the lease terms | |
• Music education equipment |
5 years | |
• Furniture and fixtures |
3 to 4 years | |
• Office equipment |
3 to 5 years |
i) |
Leases |
i) |
Right-of-use |
i) |
Leases (continued) |
ii) |
Lease liabilities |
iii) |
Short-term leases and leases of low-value assets |
j) |
Borrowing costs |
k) |
Intangible assets |
• | The technical feasibility of completing the intangible asset so that the asset will be available for use or sale |
• | Its intention to complete and its ability and intention to use or sell the asset |
• | How the asset will generate future economic benefits |
• | The availability of resources to complete the asset |
• | The ability to measure reliably the expenditure during development |
k) |
Intangible assets (continued) |
l) |
Financial instruments—initial recognition and subsequent measurement |
i) |
Financial assets |
l) |
Financial instruments—initial recognition and subsequent measurement (continued) |
i) |
Financial assets (continued) |
• | Financial assets at amortised cost (debt instruments) |
• | Financial assets at fair value through profit or loss |
• | The rights to receive cash flows from the asset have expired |
• | The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset |
l) |
Financial instruments—initial recognition and subsequent measurement (continued) |
i) |
Financial assets (continued) |
l) |
Financial instruments—initial recognition and subsequent measurement (continued) |
i) |
Financial assets (continued) |
• Disclosures of significant accounting judgements, estimates and assumptions |
Note 3 | |
• Trade receivables |
Note 16 | |
• Prepayments, other receivables and other assets |
Note 17 | |
• Related party disclosures |
Note 26 |
l) |
Financial instruments—initial recognition and subsequent measurement (continued) |
i) |
Financial assets (continued) |
ii) |
Financial liabilities |
• | Financial liabilities at amortised cost (loans and borrowings) |
l) |
Financial instruments—initial recognition and subsequent measurement (continued) |
iii) |
Offsetting of financial instruments |
m) |
Inventories |
n) |
Impairment of non-financial assets |
• Disclosures for significant accounting judgements, estimates and assumptions |
Note 3 |
|||
• Property, plant and equipment |
Note 12 |
|||
• Intangible assets |
Note 13 |
|||
• Goodwill |
Note 14 |
n) |
Impairment of non-financial assets (continued) |
o) |
Cash and cash equivalents |
p) |
Provisions |
p) |
Provisions (continued) |
q) |
Pensions and other post-employment benefits |
r) |
Share-based payments |
r) |
Share-based payments (continued) |
s) |
Related parties |
(a) | the party is a person or a close member of that person’s family and that person |
(i) | has control or joint control over the Group; |
(ii) | has significant influence over the Group; or |
(iii) | is a member of the key management personnel of the Group or of a parent of the Group; |
(b) | the party is an entity where any of the following conditions applies: |
(i) | the entity and the Group are members of the same group; |
(ii) | one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity); |
(iii) | the entity and the Group are joint ventures of the same third party; |
s) |
Related parties (continued) |
(iv) | one entity is a joint venture of a third entity and the other entity is an associate of the third entity; |
(v) | the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group; |
(vi) | the entity is controlled or jointly controlled by a person identified in (a); |
(vii) | a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and |
(viii) | the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group. |
t) |
Fair value measurement |
• | In the principal market for the asset or liability |
• | In the absence of a principal market, in the most advantageous market for the asset or liability |
• | Level 1—Quoted (unadjusted) market prices in active markets for identical assets or liabilities |
• | Level 2—Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable |
• | Level 3—Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable |
t) |
Fair value measurement (continued) |
u) |
Share capital |
v) |
Treasury shares |
• | A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest |
• | Permit changes required by the IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued |
• | Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component |
• Capital management |
Note 6 | |||
• Financial instruments risk management objectives and policies |
Note 18.4 | |||
• Sensitivity analysis disclosures |
Note 18.4 |
• | The Group is not primarily responsible for fulfilling the promise to provide database services; |
• | The Group has no discretion in establishing the pricing for such database services; |
• | The Group’s consideration is in the form of a commission |
• | Determining criteria for a significant increase in credit risk; |
• | Identifying economic indicators for forward-looking measurements; and |
• | Estimating future cash flows. |
Subscription and licensing |
Smart music learning |
Music events and performances |
Total |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
Year ended December 31, 2021 |
||||||||||||||||
Revenue from contracts with customers |
100,454 | 118,061 | 77,382 | 295,897 | ||||||||||||
Cost of sales |
(18,195 | ) | (43,548 | ) | (64,283 | ) | (126,026 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
82,259 |
74,513 |
13,099 |
169,871 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Year ended December 31, 2020 |
||||||||||||||||
Revenue from contracts with customers |
76,583 | 58,784 | 27,514 | 162,881 | ||||||||||||
Cost of sales |
(8,725 | ) | (17,319 | ) | (18,237 | ) | (44,281 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
67,858 |
41,465 |
9,277 |
118,600 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Year ended December 31, 2019 |
||||||||||||||||
Revenue from contracts with customers |
81,901 | 64,153 | — | 146,054 | ||||||||||||
Cost of sales |
(20,330 | ) | (12,013 | ) | — | (32,343 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
61,571 |
52,140 |
— |
113,711 |
||||||||||||
|
|
|
|
|
|
|
|
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Geographical markets |
||||||||||||
Southern China |
160,354 | 82,481 | 55,597 | |||||||||
Northern China |
135,543 | 80,400 | 90,457 | |||||||||
Total revenue from contracts with customers |
295,897 |
162,881 |
146,054 |
|||||||||
Timing of revenue recognition |
||||||||||||
Revenue recognised at a point in time |
218,885 | 119,998 | 126,646 | |||||||||
Revenue recognised over time |
77,012 | 42,883 | 19,408 | |||||||||
Total revenue from contracts with customers |
295,897 |
162,881 |
146,054 |
|||||||||
2021 |
2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Amounts expected to be recognised as revenue: |
||||||||
Within 1 year |
1,778 | 1,215 | ||||||
After 1 year |
1,163 | 499 | ||||||
2,941 | 1,714 | |||||||
(a) | Subscription, licensing and smart music learning business engages in the distribution of commercial copyrights and provision of music education solutions. |
(b) |
Music events and performances business engages in the provision of services related to music festival events and music performances and sale of musical instruments. Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable operating segment’s profit/(loss), which is a measure of adjusted profit/(loss) before tax. The adjusted profit/(loss) before tax is measured consistently with the Group’s profit/(loss) before tax except that foreign exchange differences, net, finance income, non-lease-related finance costs, as well as head office and corporate income/expenses are excluded from such measurement . |
Subscription, licensing and smart music learning business For the years ended December 31, |
Music events and performances business For the years ended December 31, |
Total For the years ended December 31, |
||||||||||||||||||||||||||||||||||
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
||||||||||||||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||||||||||||||||
Segment revenue: |
||||||||||||||||||||||||||||||||||||
Sales to external customers |
218,515 | 135,367 | 146,054 | 77,382 | 27,514 | — | 295,897 | 162,881 | 146,054 | |||||||||||||||||||||||||||
Segment results: |
||||||||||||||||||||||||||||||||||||
The Group |
27,749 | 25,936 | 70,418 | 1,426 | 2,244 | — | 29,175 | 28,180 | 70,418 | |||||||||||||||||||||||||||
Share of loss of a joint venture ^ |
— | — | — | (491 | ) | (9 | ) | — | (491 | ) | (9 | ) | — | |||||||||||||||||||||||
27,749 | 25,936 | 70,418 | 935 | 2,235 | — | 28,684 | 28,171 | 70,418 | ||||||||||||||||||||||||||||
Reconciliation: |
||||||||||||||||||||||||||||||||||||
Finance income |
79 | 1,621 | 258 | |||||||||||||||||||||||||||||||||
Foreign exchange differences, net |
(1,032 | ) | 361 | 1,173 | ||||||||||||||||||||||||||||||||
Other unallocated gains |
— | 8 | — | |||||||||||||||||||||||||||||||||
Corporate and other unallocated expenses |
(79,711 | ) | (34,209 | ) | (3,357 | ) | ||||||||||||||||||||||||||||||
Non-lease related finance costs |
(6,602 | ) | (7,544 | ) | (2,629 | ) | ||||||||||||||||||||||||||||||
(Loss)/profit before tax |
(58,582 |
) |
(11,592 |
) |
65,863 |
|||||||||||||||||||||||||||||||
Other segment information |
||||||||||||||||||||||||||||||||||||
Depreciation of property, plant and equipment |
10,385 | 2,001 | 1,251 | 324 | 256 | — | 10,709 | 2,257 | 1,251 | |||||||||||||||||||||||||||
Depreciation of right-of-use assets |
3,143 | 3,383 | 1,618 | 996 | 1,097 | — | 4,139 | 4,480 | 1,618 | |||||||||||||||||||||||||||
Amortisation of intangible assets |
8,422 | 5,366 | 3,762 | — | — | — | 8,422 | 5,366 | 3,762 | |||||||||||||||||||||||||||
Impairment losses on financial assets, net |
18,498 | 34,177 | 3,088 | 2,155 | 1,063 | — | 20,653 | 35,240 | 3,088 | |||||||||||||||||||||||||||
^ |
The Group has discontinued recognition of its share of loss of a joint venture and the unrecognised share of loss was RMB997,000 (2020: Nil; 2019: Nil) for the year ended December 31, 2021 and cumulatively RMB997,000 (December 31, 2020: Nil) as at December 31, 2021. The joint venture has been subsequently dissolved on February 18, 2022. |
Subscription, licensing and smart music learning business |
Music events and performances business |
Total |
||||||||||||||||||||||
As at December 31, |
As at December 31, |
As at December 31, |
||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||||||||
(Restated) |
(Restated) |
(Restated) |
||||||||||||||||||||||
Segment assets |
797,424 | 595,503 | 251,987 | 246,773 | 1,049,411 | 842,276 | ||||||||||||||||||
Reconciliation: |
||||||||||||||||||||||||
Corporate and other unallocated assets |
59,888 | 35,077 | ||||||||||||||||||||||
1,109,299 |
877,353 |
|||||||||||||||||||||||
Segment liabilities |
102,110 | 126,604 | 12,680 | 1,854 | 114,790 | 128,458 | ||||||||||||||||||
Reconciliation: |
||||||||||||||||||||||||
Corporate and other unallocated liabilities |
52,850 | 87,726 | ||||||||||||||||||||||
167,640 |
216,184 |
|||||||||||||||||||||||
Other segment information |
||||||||||||||||||||||||
Investment in a joint venture |
— | — | — | 491 | — | 491 | ||||||||||||||||||
Capital expenditure* |
295,473 | 158,755 | — | 769 | 295,473 | 159,524 | ||||||||||||||||||
* | Capital expenditure consists of additions of property, plant and equipment, intangible assets, right-of-use and deposits paid for purchase of non-current assets, including assets from the acquisition of a subsidiary. |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Customer 1 |
60,226 | 22,146 | N/A | * | ||||||||
Customer 2 |
46,358 | 18,868 | N/A | * |
* | The corresponding revenue from these customers is not disclosed as it individually did not contribute 10% or more to the Group’s revenue for that year. |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Interest-bearing loans and borrowings (Note 23) |
47,539 | 60,000 | ||||||
Lease liabilities (Note 24) |
3,279 | 17,490 | ||||||
Trade payables (Note 21) |
30,514 | 27,310 | ||||||
Other payables and accruals (Note 25) |
58,178 | 67,121 | ||||||
Amount due to a related party (Note 26) |
— | 7,177 | ||||||
Amount due to a shareholder (Note 26) |
325 | 325 | ||||||
Cash and cash equivalents (Note 19) |
(59,045 | ) | (25,719 | ) | ||||
Net debt |
80,790 |
153,704 |
||||||
Equity attributable to equity holders of the parent |
936,638 | 656,101 | ||||||
Total equity attributable to equity holders of the parent and net debt |
1,017,428 |
809,805 |
||||||
Gearing ratio |
8 | % | 19 | % |
% equity interest |
||||||||||||||||
Name |
Principal activities |
Place of incorporation/registration |
December 31, 2021 |
December 31, 2020 |
||||||||||||
Rococo |
Investment holding | BVI | 100 | % | 100 | % | ||||||||||
Rosenkavalier |
Investment holding | BVI | 100 | % | 100 | % | ||||||||||
Gauguin |
Investment holding | Hong Kong | 100 | % | 100 | % | ||||||||||
Degas |
Investment holding | Hong Kong | 100 | % | 100 | % | ||||||||||
Kuke International |
Investment holding | PRC | 100 | % | 100 | % | ||||||||||
Beijing Lecheng |
Investment holding | PRC | 100 | % | 100 | % | ||||||||||
Naxos China |
|
copyrights |
l |
PRC | 51 | % | 51 | % | ||||||||
Music Education |
Investment holding | PRC | 100 | % | — | |||||||||||
Kuke Fangyue |
Dormant | PRC | 60 | % | — | |||||||||||
Kuke Xingkong |
Dormant | PRC | 90 | % | — | |||||||||||
Kuke Linhui |
Dormant | PRC | 90 | % | — | |||||||||||
Fuzhou Kuke |
Dormant | PRC | 80 | % | — | |||||||||||
Tianjin Kuke |
Dormant | PRC | 96 | % | — | |||||||||||
Shijiazhuang Kuke |
Dormant | PRC | 96 | % | — | |||||||||||
VIEs of the Group include: |
||||||||||||||||
% beneficial interest |
||||||||||||||||
Name |
Principal activities |
Place of registration |
December 31, 2021 |
December 31, 2020 |
||||||||||||
Beijing Kuke Music |
|
copyrights and provision of music education solutions |
l |
PRC | 100 | % | 100 | % | ||||||||
BMF Culture |
|
copyrights, sale of musical instruments and provision of services related to music events and performances |
l |
PRC | 100 | % | 100 | % |
(1) | Powers of attorney |
(2) | Exclusive call option agreement |
(3) | Exclusive service agreements |
(4) |
Share pledge contract |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Government grants* |
3,963 | 1,218 | 1,054 | |||||||||
Covid-19-related rent concessions from a lessor (Note 24) |
— | 778 | — | |||||||||
Foreign exchange differences, net |
(1,032 | ) | 361 | 1,173 | ||||||||
Additional deduction of VAT |
502 | 1,864 | 684 | |||||||||
Bad debt recovery |
5,201 | — | 200 | |||||||||
Others |
66 | 164 | 719 | |||||||||
|
|
|
|
|
|
|||||||
Total other income, net |
8,700 |
4,385 |
3,830 |
|||||||||
|
|
|
|
|
|
* |
Various government grants were received with the aim to subsidise the Beijing Music Festival held and award the Group due to the US listing for the year ended December 31, 2021. There are no unfulfilled conditions or contingencies relating to these grants. |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Interest on loans and borrowings |
6,602 | 7,544 | 2,629 | |||||||||
Interest on lease liabilities |
1,082 | 2,561 | 613 | |||||||||
|
|
|
|
|
|
|||||||
Total finance costs |
7,684 |
10,105 |
3,242 |
|||||||||
|
|
|
|
|
|
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Bank interest income |
34 | 45 | 155 | |||||||||
Interest income on loans receivable |
— | 1,527 | — | |||||||||
Interest income on net investments in subleases |
45 | 49 | 103 | |||||||||
|
|
|
|
|
|
|||||||
Total finance income |
79 |
1,621 |
258 |
|||||||||
|
|
|
|
|
|
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Included in cost of sales: |
||||||||||||
Depreciation of property, plant and equipment |
9,709 | 1,448 | 233 | |||||||||
Depreciation of right-of-use |
696 | 1,955 | 66 | |||||||||
Amortisation of intangible assets |
8,271 | 5,326 | 3,720 | |||||||||
Costs of inventories recognised as an expense |
18,782 | 11,489 | 12,465 | |||||||||
Included in selling expenses: |
||||||||||||
Depreciation of right-of-use |
821 | 516 | 489 | |||||||||
Included in administrative expenses: |
||||||||||||
Depreciation of property, plant and equipment |
1,000 | 809 | 1,018 | |||||||||
Depreciation of right-of-use |
2,622 | 2,009 | 1,063 | |||||||||
Amortisation of intangible assets |
151 | 40 | 42 |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Wages and salaries |
41,473 | 29,798 | 19,245 | |||||||||
Equity-settled share-based payment expenses |
53,933 | 19,416 | — | |||||||||
Pension scheme contributions |
3,485 | 129 | 3,053 |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Current income tax: |
||||||||||||
Current income tax charge |
1,783 | 10,143 | 9,174 | |||||||||
Overprovision in prior years |
(1,899 | ) | (1,912 | ) | — | |||||||
Deferred tax |
1,151 | (4,609 | ) | (73 | ) | |||||||
|
|
|
|
|
|
|||||||
Income tax expense reported in profit or loss |
1,035 |
3,622 |
9,101 |
|||||||||
|
|
|
|
|
|
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Accounting (loss)/profit before tax |
(58,582 | ) | (11,592 | ) | 65,863 | |||||||
At China’s statutory income tax rate |
(14,645 | ) | (2,898 | ) | 16,466 | |||||||
Effect of lower tax rate (Note) |
16,922 | 8,691 | (6,460 | ) | ||||||||
Loss attributable to a joint venture |
123 | 2 | — | |||||||||
Non-deductible expenses for tax purposes |
824 | 1,718 | 31 | |||||||||
Super deductions |
(2,406 | ) | (2,086 | ) | (1,028 | ) | ||||||
Adjustments in respect of current tax of previous periods |
(1,899 | ) | (1,912 | ) | — | |||||||
Unrecognised tax losses |
2,116 | 107 | 92 | |||||||||
At the effective income tax rate of -2% (2020: -31%; 2019: 14%) |
1,035 |
3,622 |
9,101 |
|||||||||
Income tax expense reported in profit or loss |
1,035 |
3,622 |
9,101 |
|||||||||
Note: |
The amount represented (i) a reduced enterprise income tax rate of 15% and certain other preferential tax benefits available to a qualified HNTE under PRC tax laws and regulations entitled by Beijing Kuke Music and (ii) the effects of different tax rates in relation to other jurisdictions. |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Deferred tax assets |
7,736 | 8,917 | ||||||
Deferred tax liabilities |
(1,417 | ) | (1,447 | ) | ||||
Net deferred tax |
6,319 |
7,470 |
||||||
January 1, 2020 |
Acquisition from business combinations |
Credited/ (charged) to profit or loss |
December 31, 2020 |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
Leases |
8 | 77 | 10 | 95 | ||||||||||||
Expected credit losses on debt financial assets |
2,386 | 55 | 3,941 | 6,382 | ||||||||||||
Trade payables, accrual and provisions |
1,402 | — | 1,038 | 2,440 | ||||||||||||
Tax losses |
— | 405 | (405 | ) | — | |||||||||||
Fair value adjustment arising from business combinations |
— | (1,472 | ) | 25 | (1,447 | ) | ||||||||||
Total |
3,796 |
(935 |
) |
4,609 |
7,470 |
|||||||||||
January 1, 2021 |
Acquisition from business combinations |
Credited/ (charged) to profit or loss |
December 31, 2021 |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
Leases |
95 | — | 61 | 156 | ||||||||||||
Expected credit losses on debt financial assets |
6,382 | — | (1,314 | ) | 5,068 | |||||||||||
Trade payables, accrual and provisions |
2,440 | — | 72 | 2,512 | ||||||||||||
Fair value adjustment arising from business combinations |
(1,447 | ) | — | 30 | (1,417 | ) | ||||||||||
Total |
7,470 |
— |
(1,151 |
) |
6,319 |
|||||||||||
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
(Loss)/profit attributable to ordinary equity holders of the parent for basic and diluted (loss)/earnings per share calculations |
||||||||||||
– Class A ordinary shares |
(42,792 |
) |
(10,642 |
) |
30,593 |
|||||||
– Class B ordinary shares |
(16,778 |
) |
(5,781 |
) |
25,513 |
|||||||
2021 |
2020 |
2019 |
||||||||||
Weighted average number of ordinary shares in issue during the year for basic and diluted (loss)/earnings per share calculations |
||||||||||||
– Class A ordinary shares |
21,121,241 |
15,244,686 |
9,929,929 |
|||||||||
– Class B ordinary shares |
8,281,098 |
8,281,098 |
8,281,098 |
|||||||||
Leasehold improvements |
Music education equipment |
Furniture and fixtures |
Office equipment |
Total |
||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||||
Cost |
||||||||||||||||||||
At January 1, 2020 |
3,638 | 2,793 | 232 | 685 | 7,348 | |||||||||||||||
Acquisition from business combinations (Note 8) |
498 | — | 103 | 168 | 769 | |||||||||||||||
Additions |
— | 15,440 | — | 68 | 15,508 | |||||||||||||||
Disposals |
— | (7 | ) | — | (42 | ) | (49 | ) | ||||||||||||
At December 31, 2020 |
4,136 |
18,226 |
335 |
879 |
23,576 |
|||||||||||||||
Additions |
425 | 53,830 | 6 | 166 | 54,427 | |||||||||||||||
Disposals |
— | (1,859 | ) | — | (15 | ) | (1,874 | ) | ||||||||||||
At December 31, 2021 |
4,561 |
70,197 |
341 |
1,030 |
76,129 |
|||||||||||||||
Accumulated depreciation |
||||||||||||||||||||
At January 1, 2020 |
(2,227 |
) |
(294 |
) |
(114 |
) |
(594 |
) |
(3,229 |
) | ||||||||||
Depreciation charge for the year |
(631 | ) | (1,464 | ) | (65 | ) | (97 | ) | (2,257 | ) | ||||||||||
Disposals |
— | 6 | — | 39 | 45 | |||||||||||||||
At December 31, 2020 |
(2,858 |
) |
(1,752 |
) |
(179 |
) |
(652 |
) |
(5,441 |
) | ||||||||||
Depreciation charge for the year |
(804 | ) | (9,710 | ) | (72 | ) | (123 | ) | (10,709 | ) | ||||||||||
Disposals |
— | 462 | — | 2 | 464 | |||||||||||||||
At December 31, 2021 |
(3,662 |
) |
(11,000 |
) |
(251 |
) |
(773 |
) |
(15,686 |
) | ||||||||||
Net carrying amount |
||||||||||||||||||||
At December 31, 2021 |
899 | 59,197 | 90 | 257 | 60,443 | |||||||||||||||
At December 31, 2020 |
1,278 | 16,474 | 156 | 227 | 18,135 | |||||||||||||||
Software |
Copyrights |
Total |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Cost |
||||||||||||
At January 1, 2020 |
391 | 176,901 | 177,292 | |||||||||
Acquisition from business combinations (Note 8) |
— | 26,000 | 26,000 | |||||||||
Additions - acquired separately |
— | 73,962 | 73,962 | |||||||||
At December 31, 2020 |
391 | 276,863 | 277,254 | |||||||||
Additions - acquired separately |
64 | 237,557 | 237,621 | |||||||||
At December 31, 2021 |
455 | 514,420 | 514,875 | |||||||||
Accumulated amortisation |
||||||||||||
At January 1, 2020 |
(339 | ) | (8,448 | ) | (8,787 | ) | ||||||
Charge for the year |
(40 | ) | (5,326 | ) | (5,366 | ) | ||||||
At December 31, 2020 |
(379 | ) | (13,774 | ) | (14,153 | ) | ||||||
Charge for the year |
(30 | ) | (8,392 | ) | (8,422 | ) | ||||||
At December 31, 2021 |
(409 | ) | (22,166 | ) | (22,575 | ) | ||||||
Net carrying amount |
||||||||||||
At December 31, 2021 |
46 | 492,254 | 492,300 | |||||||||
At December 31, 2020 |
12 | 263,089 | 263,101 | |||||||||
Subscription, licensing and smart music learning business |
Music events and performances business |
Total |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Cost and net carrying amount at January 1, 2020 |
— | — | — | |||||||||
Acquisition from business combinations (Note 8) |
1,610 | 235,615 | 237,225 | |||||||||
Cost and net carrying amount at December 31, 2020, January 1, 2021, and December 31, 2021 |
1,610 | 235,615 | 237,225 | |||||||||
• | Subscription, licensing and smart music learning business; and |
• | Music events and performances business |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Finished goods |
7,307 | 950 | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Trade receivables |
||||||||
Receivables from third-party customers |
116,776 | 192,540 | ||||||
Allowance for ECLs |
(5,672 | ) | (10,818 | ) | ||||
Total trade receivables |
111,104 |
181,722 |
||||||
2021 |
2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
At the beginning of the year |
(10,818 | ) | (3,346 | ) | ||||
Impairment losses, net |
(18,653 | ) | (34,983 | ) | ||||
Amount written off as uncollectible |
23,799 | 27,511 | ||||||
At the end of the year |
(5,672 |
) |
(10,818 |
) | ||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Non-current |
||||||||
Prepayments |
213 | — | ||||||
Deposits |
94,858 | 95,328 | ||||||
Other receivables |
146 | 48 | ||||||
Total |
95,217 |
95,376 |
||||||
Current |
||||||||
Prepayments |
29,368 | 22,146 | ||||||
Deposits |
244 | 89 | ||||||
Loan receivable |
— | 3,000 | ||||||
Other receivables |
4,489 | 3,288 | ||||||
Total |
34,101 |
28,523 |
||||||
2021 |
2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
At the beginning of the year |
— | (806 | ) | |||||
Impairment losses, net |
— | * |
(257 | ) | ||||
Amount written off as uncollectible |
— | 1,063 | ||||||
At the end of the year |
— |
* |
— |
* | ||||
* |
Less than RMB 1,000 |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Financial assets at FVTPL |
||||||||
Non-current |
||||||||
Equity investment at FVTPL |
1,000 | — | ||||||
Total non-current financial assets at FVTPL |
1,000 | — | ||||||
Total financial assets at FVTPL |
1,000 |
— |
||||||
Financial assets at amortised cost |
||||||||
Current |
||||||||
Trade receivables (Note 16) |
111,104 | 181,722 | ||||||
Financial assets included in prepayments, other receivables and other assets |
4,733 | 6,377 | ||||||
Net investments in subleases |
355 | 211 | ||||||
Amounts due from related parties |
306 | 1,763 | ||||||
Amounts due from shareholders |
100 | 100 | ||||||
Cash and cash equivalents |
59,045 | 25,719 | ||||||
Total current financial assets at amortised cost |
175,643 |
215,892 |
||||||
Non-current |
||||||||
Financial assets included in prepayments, other receivables and other assets |
3,010 | 148 | ||||||
Net investments in subleases |
— | 202 | ||||||
Total non-current financial assets at amortised cost |
3,010 |
350 |
||||||
Total financial assets at amortised cost |
178,653 |
216,242 |
||||||
Total financial assets |
179,653 |
216,242 |
||||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Current |
||||||||
Trade payables |
30,514 | 27,310 | ||||||
Financial liabilities included in other payables and accruals |
20,381 | 29,485 | ||||||
Amount due to a related party |
— | 7,177 | ||||||
Amount due to a shareholder |
325 | 325 | ||||||
Interest-bearing loans and borrowings |
41,493 | 60,000 | ||||||
Lease liabilities |
2,486 | 7,660 | ||||||
95,199 |
131,957 |
|||||||
Non-current |
||||||||
Interest-bearing loans and borrowings |
6,046 | — | ||||||
Lease liabilities |
793 | 9,830 | ||||||
6,839 |
9,830 |
|||||||
Total |
102,038 |
141,787 |
||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
Financial asset for which fair value is disclosed: |
||||||||||||||||
An unlisted investment measured at fair value through profit or loss |
— |
1,000 |
— |
1,000 |
||||||||||||
For the year ended December 31, 2021 |
Change in exchange rate |
Effect on loss before tax |
||||||
RMB’000 |
||||||||
US$ |
+5 | % | 1,606 | |||||
-5 | % | (1,606 | ) | |||||
HK$ |
+5 | % | — | |||||
-5 | % | — |
For the year ended December 31, 2020 |
Change in exchange rate |
Effect on loss before tax |
||||||
RMB’000 |
||||||||
US$ |
+5 | % | (608 | ) | ||||
–5 | % | 608 | ||||||
HK$ |
+5 | % | — | |||||
–5 | % | — |
For the year ended December 31, 2019 |
Change in exchange rate |
Effect on profit before tax |
||||||
RMB’000 |
||||||||
US$ |
+5 | % | ( 1,302 |
) | ||||
–5 | % | 1,302 | ||||||
HK$ |
+5 | % | 1,672 | |||||
–5 | % | (1,672 | ) |
12-month expected credit losses |
Lifetime expected credit losses |
|||||||||||||||||||
Stage 1 |
Stage 2 |
Stage 3 |
Simplified approach |
Total |
||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||||
Trade receivables |
— | — | — | 116,776 | 116,776 | |||||||||||||||
Financial assets included in prepayments, other receivables and other assets |
||||||||||||||||||||
—Normal* |
7,743 | — | — | — | 7,743 | |||||||||||||||
Net investments in subleases—Normal* |
355 | — | — | — | 355 | |||||||||||||||
Amounts due from related parties—Doubtful* |
306 | — | 2,000 | — | 2,306 | |||||||||||||||
Amounts due from shareholders—Normal* |
100 | — | — | — | 100 | |||||||||||||||
Cash and cash equivalents |
||||||||||||||||||||
—not yet past due |
59,045 | — | — | — | 59,045 | |||||||||||||||
67,549 |
— |
2,000 |
116,776 |
186,325 |
||||||||||||||||
12-month expected credit losses |
Lifetime expected credit losses |
|||||||||||||||||||
Stage 1 |
Stage 2 |
Stage 3 |
Simplified approach |
Total |
||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||||
Trade receivables |
— | — | — | 192,540 | 192,540 | |||||||||||||||
Financial assets included in prepayments, other receivables and other assets |
||||||||||||||||||||
—Normal* |
6,525 | — | — | — | 6,525 | |||||||||||||||
Net investments in subleases—Normal* |
413 | — | — | — | 413 | |||||||||||||||
Amounts due from related parties—Normal* |
1,763 | — | — | — | 1,763 | |||||||||||||||
Amounts due from shareholders—Normal* |
100 | — | — | — | 100 | |||||||||||||||
Cash and cash equivalents |
||||||||||||||||||||
—not yet past due |
25,719 | — | — | — | 25,719 | |||||||||||||||
34,520 |
— |
— |
192,540 |
227,060 |
||||||||||||||||
* | The credit quality of the financial assets included in prepayments, other receivables and other assets, net investments in subleases, and amounts due from related parties and shareholders is considered to be “normal” when they are not past due and there is no information indicating that the financial assets had a significant increase in credit risk since initial recognition. Otherwise , the credit quality of the financial assets is considered to be “doubtful”. |
Days past due |
||||||||||||||||||||
Current |
1 - 90 days |
91 - 180 Days |
Over 181 days |
Total |
||||||||||||||||
December 31, 2021 |
||||||||||||||||||||
Expected credit loss rate |
2.80 | % | 3.30 | % | 7.66 | % | 16.47 | % | 4.86 | % | ||||||||||
Gross carrying amount (RMB’000) |
65,102 | 22,232 | 19,686 | 9,756 | 116,776 | |||||||||||||||
Expected credit loss (RMB’000) |
1,824 | 733 | 1,508 | 1,607 | 5,672 | |||||||||||||||
Days past due |
||||||||||||||||||||
Current |
1 - 90 days |
91 - 180 Days |
Over 181 days |
Total |
||||||||||||||||
December 31, 2020 |
||||||||||||||||||||
Expected credit loss rate |
2.39 | % | 3.42 | % | 6.39 | % | 16.36 | % | 5.62 | % | ||||||||||
Gross carrying amount (RMB’000) |
95,140 | 30,351 | 34,680 | 32,369 | 192,540 | |||||||||||||||
Expected credit loss (RMB’000) |
2,270 | 1,039 | 2,215 | 5,294 | 10,818 |
On demand |
Less than 1 year |
Over 1 year |
Total |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
As at December 31, 2021 |
||||||||||||||||
Interest-bearing loans and borrowings |
10,000 |
34,804 | 6,205 | 51,009 | ||||||||||||
Lease liabilities |
— | 2,571 | 811 | 3,382 | ||||||||||||
Trade payables |
— | 30,514 | — | 30,514 | ||||||||||||
Due to a shareholder |
325 | — | — | 325 | ||||||||||||
Other payables and accruals |
— | 20,381 | — | 20,381 | ||||||||||||
As at December 31, 2020 |
||||||||||||||||
Interest-bearing loans and borrowings |
10,000 | 54,306 | — | 64,306 | ||||||||||||
Lease liabilities |
— | 8,263 | 13,515 | 21,778 | ||||||||||||
Trade payables |
— | 27,310 | — | 27,310 | ||||||||||||
Due to a shareholder |
325 | — | — | 325 | ||||||||||||
Due to a related party |
— | 7,177 | — | 7,177 | ||||||||||||
Other payables and accruals |
— | 29,485 | — | 29,485 |
Interest- bearing loans and borrowings |
Lease liabilities |
Due to a shareholder |
Due to a related party |
|||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||
As at January 1, 2019 |
39,700 | 2,161 | — | — | ||||||||||||
Changes from financing activities |
15,300 | (2,560 | ) | — | — | |||||||||||
Additions |
— | 14,499 | — | — | ||||||||||||
Accretion of interest |
— | 613 | — | — | ||||||||||||
As at December 31, 2019 and January 1, 2020 |
55,000 | 14,713 | — | — | ||||||||||||
Changes from financing activities |
5,000 | (4,688 | ) | — | 7,177 | |||||||||||
Changes from operating activities |
— | (778 | ) | — | — | |||||||||||
Acquisition of a subsidiary |
— | — | 325 | — | ||||||||||||
Additions |
— | 5,682 | — | — | ||||||||||||
Accretion of interest |
— | 2,561 | — | — | ||||||||||||
As at December 31, 2020 and January 1, 2021 |
60,000 | 17,490 | 325 | 7,177 | ||||||||||||
Changes from financing activities |
(12,461 | ) | (3,648 | ) | — | (7,177 | ) | |||||||||
Lease termination |
— | (14,379 | ) | — | — | |||||||||||
Additions |
— | 2,734 | — | — | ||||||||||||
Accretion of interest |
— | 1,082 | — | — | ||||||||||||
As at December 31, 2021 |
47,539 | 3,279 | 325 | — | ||||||||||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Cash and cash equivalents |
59,045 | 25,719 | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Trade payables |
30,514 |
27,310 |
||||||
• | Trade payables are non-interest-bearing |
• | For explanations on the Group’s liquidity risk management processes, refer to Note 18.4. |
December 31, 2021 |
December 31, 2020 |
January 1, 2020 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Deferred revenue |
||||||||||||
Subscriptions and licensing |
12,050 |
13,827 |
13,294 |
|||||||||
Smart music learning |
11,784 |
11,074 |
3,191 |
|||||||||
Music events and performances |
38 |
— |
— |
|||||||||
Total contract liabilities |
23,872 |
24,901 |
16,485 |
|||||||||
Current |
23,506 |
24,314 |
16,049 |
|||||||||
Non-current |
366 |
587 |
436 |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Amounts of revenue recognised in the respective reporting period that was included in the contract liabilities at the beginning of the respective reporting period |
20,821 |
13,874 |
12,395 |
|||||||||
Effective interest rate |
Maturity |
December 31, 2021 |
December 31, 2020 |
|||||||||||
% |
RMB’000 |
RMB’000 |
||||||||||||
Current: |
||||||||||||||
Unsecured RMB10 million bank loan |
|
4.25 (2020: 4.25) |
|
On demand (2020: On demand) |
10,000 |
10,000 | ||||||||
Unsecured RMB20 million other borrowings (2020: Unsecured RMB50 million other borrowings) |
|
12 (2020: 12) |
|
December 31, 2022 (2020: September 19, 2021) |
20,000 | 50,000 | ||||||||
Unsecured RMB23 million other borrowings |
6.85 | December 31, 2022 | 11,493 | — | ||||||||||
41,493 |
60,000 |
|||||||||||||
Non-current: |
||||||||||||||
Unsecured RMB23 million other borrowings |
6.85 | April 20, 2023 | 6,046 | — | ||||||||||
47,539 |
60,000 |
|||||||||||||
Building |
Music education equipment |
Total |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
At January 1, 2020 |
2,569 | 8,159 | 10,728 | |||||||||
Additions |
1,286 | 4,396 | 5,682 | |||||||||
Acquisition from business combinations (Note 8) |
2,988 | — | 2,988 | |||||||||
Depreciation charge |
(2,525 | ) | (1,955 | ) | (4,480 | ) | ||||||
At December 31, 2020 |
4,318 |
10,600 |
14,918 |
|||||||||
Additions |
2,259 | 475 | 2,734 | |||||||||
Depreciation charge |
(3,443 | ) | (696 | ) | (4,139 | ) | ||||||
Lease termination |
(74 | ) | (10,379 | ) | (10,453 | ) | ||||||
As December 31, 2021 |
3,060 |
— |
3,060 |
|||||||||
2021 |
2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
At January 1 |
17,490 | 14,713 | ||||||
Additions |
2,734 | 5,682 | ||||||
Accretion of interest |
1,082 | 2,561 | ||||||
Covid-19-related rent concessions from a lessor |
— | (778 | ) | |||||
Lease termination |
(14,379 | ) | — | |||||
Payments |
(3,648 | ) | (4,688 | ) | ||||
At December 31 |
3,279 | 17,490 | ||||||
Current |
2,486 |
7,660 |
||||||
Non-current |
793 |
9,830 |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Depreciation expense of right-of-use |
4,139 | 4,480 | 1,618 | |||||||||
Interest expense on lease liabilities |
1,082 | 2,561 | 613 | |||||||||
Covid-19-related |
— | (778 | ) | — | ||||||||
Expense relating to short term leases and leases of low-value assets included in administrative expenses |
1,604 | 775 | 112 | |||||||||
Total amount recognised in profit or loss |
6,825 |
7,038 |
2,343 |
|||||||||
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Total cash outflow for leases |
5,252 | 5,463 | 2,672 |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Amounts receivable: |
||||||||
Within one year |
357 | 219 | ||||||
After one year but within two years |
— | 219 | ||||||
After two years but within five years |
— | — | ||||||
Total future undiscounted minimum rentals receivable |
357 | 438 | ||||||
Unearned finance income |
(2 | ) | (25 | ) | ||||
Net investments in subleases |
355 | 413 | ||||||
Current |
355 |
211 |
||||||
Non-current |
— |
202 |
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Accruals |
10,372 | 11,018 | ||||||
Other payables |
39,057 | 46,210 | ||||||
Payable to database suppliers |
3,000 | 2,189 | ||||||
Interest payables |
5,749 | 7,704 | ||||||
Total other payables and accruals |
58,178 | 67,121 | ||||||
Current |
58,178 |
67,121 |
||||||
Non-current |
— |
— |
Interest income on net investments in subleases |
Revenue from a related party |
Acquisition of a subsidiary |
Copyright expenses |
|||||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
RMB’000 |
|||||||||||||||||
Shareholder of the Company |
2021 |
— |
— |
— |
— |
|||||||||||||||
2020 |
— |
— |
174,944 |
— |
||||||||||||||||
2019 |
— |
— |
— |
— |
||||||||||||||||
BMF Culture* |
2021 |
— |
— |
— |
— |
|||||||||||||||
2020 |
23 |
— |
— |
— |
||||||||||||||||
2019 |
85 |
349 |
— |
— |
||||||||||||||||
Naxos ^ |
2021 |
— |
— |
— |
7,743 |
|||||||||||||||
2020 |
— |
— |
— |
— |
||||||||||||||||
2019 |
— |
— |
— |
— |
* |
A director of the Company is the controlling shareholder of Rosenkavalier, the parent company of BMF Culture. BMF Culture became a subsidiary of the Group since February 29, 2020. Further details are disclosed in note 8 to the consolidated financial statements. |
^ |
Naxos refers to Naxos Global Distribution Limited, Naxos Rights International Limited and their affiliates and subsidiaries, of which a director of the Company is the controlling shareholder. |
Net investments in subleases |
Due from related parties /shareholders |
Due to a related party/ a shareholder |
||||||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||||||
Shigoo Limited # |
2021 |
— |
306 |
— |
||||||||||||
2020 |
— |
663 |
7,177 |
|||||||||||||
Shanghai Xuanshi Culture Communication Co., Ltd. ^ |
2021 |
— |
— |
— |
||||||||||||
2020 |
— |
1,100 |
— |
|||||||||||||
Shareholders of the Company |
2021 |
— |
100 |
325 |
||||||||||||
2020 |
— |
100 |
325 |
# |
A director of the Company is the controlling shareholder of Shigoo Limited. The amount due from Shigoo Limited was unsecured, interest-free and repayable on demand, while the amount due to Shigoo Limited was unsecured, interest-free and repayable within one year. |
^ |
A joint venture of the Group. The amount due from the joint venture was unsecured, interest-free and repayable within one year. The carrying amount of RMB2,000,000 was fully impaired during the year ended December 31, 2021. |
2021 |
2020 |
2019 |
||||||||||
RMB’000 |
RMB’000 |
RMB’000 |
||||||||||
Short term employee benefits |
7,833 | 7,875 | 1,241 | |||||||||
Equity-settled share-based payment expenses |
30,650 | 14,269 | — | |||||||||
Post employment benefits |
518 | 356 | 369 | |||||||||
Total compensation paid to key management personnel |
39,001 | 22,500 | 1,610 | |||||||||
(a) | During the year ended December 31, 2020, the Group acquired a 100% equity interest in Rosenkavalier by issuing 4,856,273 ordinary shares of the Company, which had a total value of RMB284,000,000 (Note 8). |
(b) |
During the year ended December 31, 2020, the Group and two independent third parties entered into an agreement to offset the non-current loan receivable against a non-current loan payable of RMB36,000,000. As a result, both the non-current loan receivable and non-current loan payable were derecognised through a non-cash transaction. |
(c) | During the year ended December 31, 2021, the Group had non-cash additions to right-of-use |
(d) | During the year ended December 31, 2021, the Group entered into finance lease arrangements in respect of property, plant and equipment with a total capital value at the inception of the leases of RMB475,000 (2020: RMB4,396,000) (Note 24). |
Amendments to IFRS 3 |
Reference to the Conceptual Framework 1 | |
Amendments to IFRS 10 and IAS 28 (2011) |
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 3 | |
IFRS 17 |
Insurance Contracts 2 | |
Amendments to IFRS 17 |
Insurance Contracts 2,4 | |
Amendment to IFRS 17 |
Initial Application of IFRS 17 and IFRS 9 – Comparative Information 2 | |
Amendments to IAS 1 |
Classification of Liabilities as Current or Non-current 2 | |
Amendments to IAS 1 and IFRS Practice Statement 2 |
Disclosure of Accounting Policies 2 | |
Amendments to IAS 8 |
Definition of Accounting Estimates 2 | |
Amendments to IAS 12 |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction 2 | |
Amendments to IAS 16 |
Property, Plant and Equipment: Proceeds before Intended Use 1 | |
Amendments to IAS 37 |
Onerous Contracts - Cost of Fulfilling a Contract 1 | |
Annual Improvements to IFRSs 2018-2020 |
Amendments to IFRS 1, IFRS 9, Illustrative Examples accompanying IFRS 16, and IAS 41 1 |
1. |
Effective for annual periods beginning on or after 1 January 2022 |
2. |
Effective for annual periods beginning on or after 1 January 2023 |
3. |
No mandatory effective date yet determined but available for adoption |
4. |
As a consequence of the amendments to IFRS 17 issued in October 2020, the effective date of IFRS 17 was deferred to 1 January 2023, and IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before 1 January 2023. |
Vesting period of the relevant percentage of the options |
Cap of options exercisable | |
After 6 months since the Listing Date | 1% of the total shares | |
After 12 months since the Listing Date | 2% of the total shares | |
After 18 months since the Listing Date | 2.5% of the total shares | |
After 24 months since the Listing Date | 3% of the total shares |
(a) | The fair value of equity-settled share options granted during the year ended December 31, 2020, was estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted. |
Assumptions |
Inputs |
|||
Dividend yield (%) |
0 | % | ||
Expected volatility (%) (note) |
49 | % | ||
Risk-free interest rate (%) |
0.36 | % | ||
Suboptimal factor |
2.5 | |||
Forfeiture rate |
0 | % | ||
Option life (years) |
4.78 | |||
Share price (US$ per share) |
8.67 |
Note: |
Expected volatility is determined by reference to a peer group of publicly traded companies. No other feature of the options granted was incorporated into the measurement of fair value. |
(b) | The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year: |
2021 WAEP US$ |
2021 Number of options |
2020 WAEP US$ |
2020 Number of options |
|||||||||||||
At January 1 |
8.46 | 887,002 | 8.46 | 887,002 | ||||||||||||
Granted during the year |
— | — | — | — | ||||||||||||
Forfeited during the year |
— | — | — | — | ||||||||||||
Exercised during the year |
— | — | — | — | ||||||||||||
Expired during the year |
— | — | — | — | ||||||||||||
At December 31 |
8.46 | 887,002 | 8.46 | 887,002 | ||||||||||||
(c) | The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows: |
2021 |
2020 |
|||||||||||
Exercise period |
Number of options |
Number of options |
Exercise price US$ |
|||||||||
July 12, 2021 – January 12, 2025 |
295,667 | 295,667 | 8.46 | |||||||||
January 12, 2022 – January 12, 2025 |
295,667 | 295,667 | 8.46 | |||||||||
July 12, 2022 – January 12, 2025 |
147,834 | 147,834 | 8.46 | |||||||||
January 12, 2023 – January 12, 2025 |
147,834 | 147,834 | 8.46 | |||||||||
887,002 | 887,002 | |||||||||||
(a) | The fair value of equity-settled share options and restricted shares granted during the year ended December 31, 2020, was estimated as at the date of grant using a binomial model, taking into account the terms and conditions upon which the options were granted. |
Assumptions |
Inputs |
|||
Dividend yield (%) |
0 | % | ||
Expected volatility (%) (note) |
50 | % | ||
Risk-free interest rate (%) |
0.88 | % | ||
Suboptimal factor |
1.0 - 2.5 |
|||
Forfeiture rate |
0 | % | ||
Option life (years) |
10 | |||
Share price (US$ per share) |
9.03 |
Note: |
Expected volatility is determined by reference to a peer group of publicly traded companies. No other feature of the options granted was incorporated into the measurement of fair value. |
(b) | The following share options and restricted shares were outstanding under the 2020 ESOP Plan during the year: |
2021 WAEP US$ |
2021 Number of options |
2021 Number of restricted shares |
2020 WAEP US$ |
2020 Number of options |
2020 Number of restricted shares |
|||||||||||||||||||
At January 1, 2021 |
0.01 | 1,125,334 | 101,666 | 0.01 | 1,125,334 | 101,666 | ||||||||||||||||||
Granted during the year |
— | — | — | — | — | — | ||||||||||||||||||
Forfeited during the year |
— | — | — | — | — | — | ||||||||||||||||||
Exercised during the year |
— | — | — | — | — | — | ||||||||||||||||||
Expired during the year |
— | — | — | — | — | — | ||||||||||||||||||
At December 31, 2021 |
0.01 | 1,125,334 | 101,666 | 0.01 | 1,125,334 | 101,666 | ||||||||||||||||||
(c) |
The exercise prices and exercise periods of the share options and restricted shares outstanding as at the end of the reporting period are as follows: |
Exercise period |
2021 Number of options |
2021 Number of restricted shares |
2020 Number of options |
2020 Number of restricted shares |
Exercise price US$ |
|||||||||||||||
October 1, 2021 – October 30, 2030 |
562,666 | 50,832 | 562,666 | 50,832 | 0.01 | |||||||||||||||
October 1, 2022 – October 30, 2030 |
337,600 | 30,500 | 337,600 | 30,500 | 0.01 | |||||||||||||||
October 1, 2023 – October 30, 2030 |
112,534 | 10,167 | 112,534 | 10,167 | 0.01 | |||||||||||||||
October 1, 2024 – October 30, 2030 |
112,534 | 10,167 | 112,534 | 10,167 | 0.01 | |||||||||||||||
1,125,334 | 101,666 | 1,125,334 | 101,666 | |||||||||||||||||
December 31, 2021 |
December 31, 2020 |
|||||||
RMB’000 |
RMB’000 |
|||||||
Intangible assets |
5,000 | 25,025 | ||||||
Smart musical instruments |
6,091 | 1,028 | ||||||
11,091 |
26,053 |
|||||||
Exhibit 2.4
Description of Rights of Each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (the Exchange Act)
American Depositary Shares (ADSs), each representing one Class A ordinary share of Kuke Music Holding Limited.(we, our, our company, or us) are listed on the New York Stock Exchange and the shares are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of Class A ordinary shares and (ii) the holders of ADSs. Class A ordinary shares underlying the ADSs are held by Deutsche Bank Trust Company Americas, as depositary, and holders of ADSs will not be treated as holders of the Class A ordinary shares.
Description of Class A Ordinary Shares
The following is a summary of material provisions of our currently effective second amended and restated memorandum and articles of association (the Memorandum and Articles of Association), as well as the Companies Act (As Revised ) of the Cayman Islands (the Companies Act) insofar as they relate to the material terms of our ordinary shares. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire Memorandum and Articles of Association, which has been filed with the SEC as an exhibit to our Registration Statement on Form F-1 (File No. 333-251461).
Type and Class of Securities (Item 9.A.5 of Form 20-F)
Each Class A ordinary share has US$0.001 par value. The number of Class A ordinary shares that have been issued as of the last day of the financial year ended December 31, 2021 is provided on the cover of the annual report on Form 20-F filed on May 2, 2022 (the 2021 Form 20-F). Our Class A ordinary shares may be held in either certificated or uncertificated form.
Preemptive Rights (Item 9.A.3 of Form 20-F)
Our shareholders do not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
We have a dual-class voting structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share shall entitle the holder thereof to one vote on all matters subject to a poll vote at general meetings of our company, and each Class B ordinary share shall entitle the holder thereof to ten votes on all matters subject to a poll vote at general meetings of our company. Due to the super voting power of Class B ordinary share holder, the voting power of the Class A ordinary shares may be materially limited.
Rights of Other Types of Securities (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of Class A Ordinary Shares (Item 10.B.3 of Form 20-F)
Classes of Ordinary Shares
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. Our ordinary shares are issued in registered form and are issued when registered in our register of members. We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.
Conversion
Each Class B ordinary share is convertible into an equal number of Class A ordinary shares at any time at the option of the holder thereof. The right to convert shall be exercisable by the holder of the Class B Ordinary Share delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.
Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity that is not an affiliate of the holder, such Class B ordinary shares are automatically and immediately converted into an equal number of Class A ordinary shares.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Our Memorandum and Articles of Association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits that our board of directors determines is no longer needed. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.
Voting Rights
Each Class A Ordinary Share shall entitle the holder thereof to one vote on all matters subject to a poll vote at general meetings of the Company, and each Class B Ordinary Share shall entitle the holder thereof to ten votes on all matters subject to a poll vote at general meetings of the Company. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law, or otherwise agreed in the Memorandum and Articles of Association. Voting at any shareholders meeting is by show of hands unless a poll is demanded, and on a poll every shareholder shall have one vote for every Class A Ordinary Share and ten votes for every Class B Ordinary Share of which he is the holder. A poll may be demanded by the chairman of such meeting or any shareholder present in person or proxy.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding shares at a meeting, or with a written resolution signed by all members entitled to vote. A special resolution will be required for important matters such as a change of name or making changes to our Memorandum and Articles of Association. Our shareholders may, among other things, divide or combine their shares by ordinary resolution.
Transfer of Ordinary Shares
Subject to the restrictions set out in our Memorandum and Articles of Association, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in writing, which shall be executed by or on behalf of the transferor and, if the directors so require, signed by the transferee.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share that is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
| the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
| the instrument of transfer is in respect of only one class of ordinary shares; |
| the instrument of transfer is properly stamped, if required; |
| in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
| a fee of such maximum sum as the New York Stock Exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the New York Stock Exchange, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine; provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our board may determine.
Liquidation
On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.
Calls on Shares and Forfeiture of Shares.
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 clear days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner as may be determined by our board of directors. Our Company may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors. Under the Companies Act, the redemption or repurchase of any share may be paid out of our companys profits, share premium account or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase. Any amount of premium payable on the purchase over the par value of the shares to be repurchased must be paid out of profits or the share premium account. Subject to our Memorandum and Articles of Association and the Companies Act, our company may also repurchase shares out of capital, if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.
Requirements to Change the Rights of Holders of Class A Ordinary Shares (Item 10.B.4 of Form 20-F)
Variations of Rights of Shares
If at any time, our share capital is divided into different classes of shares, the rights attached to any class of shares (subject to any rights or restrictions for the time being attached to any class) shall only be materially adversely varied with the consent in writing of all the holders of the issued shares or with the sanction of a special resolution passed by a majority of not less than two-thirds of the votes cast at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by the creation, allotment or issue of further shares ranking pari passu with or subsequent to such existing class of shares or the redemption or purchase of any shares of any class by our company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights, including, without limitation, the creation of shares with enhanced or weighted voting rights.
Limitations on the Rights to Own Class A Ordinary Shares (Item 10.B.6 of Form 20-F)
There are no limitations under the laws of the Cayman Islands or under the Memorandum and Articles of Association that limit the right of non-resident or foreign owners to hold or vote Class A ordinary shares.
Provisions Affecting Any Change of Control (Item B.7 of Form 20-F)
Anti-Takeover Provisions. Some provisions of our Memorandum and Articles of Association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:
| authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and |
| limit the ability of shareholders to requisition and convene general meetings of shareholders. |
However, under Cayman Islands law, our directors may exercise the rights and powers granted to them under our Memorandum and Articles of Association only for a proper purpose and for what they believe in good faith to be in the best interests of our company.
Ownership Threshold (Item B.8 of Form 20-F)
There are no provisions under Cayman Islands law applicable to the Company, or under the Memorandum and Articles of Association, that require the Company to disclose shareholder ownership above any particular ownership threshold.
Differences Between the Law of Different Jurisdictions (Item B.9 of Form 20-F)
The Companies Act is modeled after that of England but does not follow recent English statutory enactments and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) merger means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a consolidation means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent companys articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation that is effected in compliance with these statutory procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose, a company is a parent of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| the statutory provisions as to the required majority vote have been met; |
| the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the squeeze out of a dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands, but this is unlikely to succeed in the case of an offer that has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders Suits. In principle, we will normally be the proper plaintiff, and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected (and have had occasion) to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) that permit a minority shareholder to commence a class action against, or derivative actions in the name of, our company to challenge:
| an act that is ultra vires or illegal and is therefore incapable of ratification by the shareholders; |
| an act that constitutes a fraud against the minority where the wrongdoers are themselves in control of the company; and |
| an act that requires a resolution with a qualified (or special) majority (i.e., more than a simple majority) that has not been obtained. |
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a companys memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Memorandum and Articles of Association provide that we shall indemnify our directors and officers, and their personal representatives, against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons, other than by reason of such persons dishonesty, willful default or fraud, in or about the conduct of our companys business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including, without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our Memorandum and Articles of Association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company: a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Our Memorandum and Articles of Association provide that shareholders may not approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided that it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Companies Act provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a companys articles of association. Our Memorandum and Articles of Association allow our shareholders holding shares that carry in aggregate not less than one-third of all votes attaching to the outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders meeting, Memorandum and Articles of Association do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, we are not obliged by law to call shareholders annual general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporations certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholders voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our Memorandum and Articles of Association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles of Association, subject to certain restrictions as contained therein, directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision. In addition, a directors office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; or (v) is removed from office pursuant to any other provisions of our Memorandum and Articles of Association.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an interested shareholder for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the targets outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction that resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding Up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law, a company may be wound up either by an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances, including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles of Association, if our share capital is divided into more than one class of shares, the rights attached to any such class may only be materially adversely varied with the consent in writing of all the holders of the issued shares of that class or with the sanction of a resolution passed by a majority of not less than two-thirds of the votes cast at a separate meeting of the holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporations governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under Cayman Islands law, our Memorandum and Articles of Association may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.
Changes in Capital (Item 10.B.10 of Form 20-F)
Our shareholders may from time to time by ordinary resolution:
| increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
| consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; |
| sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; or |
| cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled. |
Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permitted by law.
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Not applicable.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
Deutsche Bank Trust Company Americas, as depositary, will register and deliver the ADSs. Each ADS represents ownership of one Class A ordinary share, deposited with Deutsche Bank AG, Hong Kong Branch, as custodian for the depositary. Each ADS also represents ownership of any other securities, cash or other property which may be held by the depositary. The depositarys corporate trust office at which the ADSs will be administered is located at 60 Wall Street, New York, NY 10005, USA. The principal executive office of the depositary is located at 60 Wall Street, New York, NY 10005, USA.
You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.
Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.
As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Cayman Islands law governs shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay or distribute to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent.
Cash. The depositary will convert or cause to be converted any cash dividend or other cash distribution we pay on the ordinary shares or any net proceeds from the sale of any ordinary shares, rights, securities or other entitlements under the terms of the deposit agreement into U.S. dollars if it can do so on a practicable basis, and can transfer the U.S. dollars to the United States and will distribute promptly the amount thus received. If the depositary shall determine in its judgment that such conversions or transfers are not practical or lawful or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold or cause the custodian to hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid, and such funds will be held for the respective accounts of the ADS holders. It will not invest the foreign currency, and it will not be liable for any interest for the respective accounts of the ADS holders.
Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary, that must be paid will be deducted. See Taxation. It will distribute only whole U.S. dollars and cents and will round down fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.
Shares. For any ordinary shares we distribute as a dividend or free distribution, either (1) the depositary will distribute additional ADSs representing such ordinary shares or (2) existing ADSs as of the applicable record date will represent rights and interests in the additional ordinary shares distributed, to the extent reasonably practicable and permissible under law, in either case, net of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary will only distribute whole ADSs. It will try to sell ordinary shares, which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may sell a portion of the distributed ordinary shares sufficient to pay its fees and expenses, and any taxes and governmental charges, in connection with that distribution.
Elective Distributions in Cash or Shares. If we offer holders of our ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice as described in the deposit agreement of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must timely first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practicable to make such elective distribution available to you. In such case, the depositary shall, on the basis of the same determination as is made in respect of the ordinary shares for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing ordinary shares in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of ordinary shares.
Rights to Purchase Additional Shares. If we offer holders of our ordinary shares any rights to subscribe for additional shares, the depositary shall having received timely notice as described in the deposit agreement of such distribution by us, consult with us, and we must determine whether it is lawful and reasonably practicable to make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal or reasonably practicable to make the rights available but that it is lawful and reasonably practicable to sell the rights, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper distribute the net proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.
If the depositary makes rights available to you, it will establish procedures to distribute such rights and enable you to exercise the rights upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The Depositary shall not be obliged to make available to you a method to exercise such rights to subscribe for ordinary shares (rather than ADSs).
U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.
There can be no assurance that you will be given the opportunity to exercise rights on the same terms and conditions as the holders of ordinary shares or be able to exercise such rights.
Other Distributions. Subject to receipt of timely notice, as described in the deposit agreement, from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will distribute to you anything else we distribute on deposited securities by any means it may deem practicable, upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. If any of the conditions above are not met, the depositary will endeavor to sell, or cause to be sold, what we distributed and distribute the net proceeds in the same way as it does with cash; or, if it is unable to sell such property, the depositary may dispose of such property in any way it deems reasonably practicable under the circumstances for nominal or no consideration, such that you may have no rights to or arising from such property.
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if we and/or the depositary determines that it is illegal or not practicable for us or the depositary to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.
Except for ordinary shares deposited by us in connection with this offering, no shares will be accepted for deposit during a period of 180 days after the date of this prospectus. The 180 day lock-up period is subject to adjustment under certain circumstances as described in the section entitled Shares Eligible for Future Sale-Lock-up Agreements.
How can ADS holders cancel an ADS
You may turn in your ADSs at the depositarys corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the ordinary shares and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, to the extent permitted by law.
How do ADS holders interchange between certificated ADSs and uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.
Voting Rights
How do you vote?
You may instruct the depositary to vote the ordinary shares or other deposited securities underlying your ADSs at any meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our Memorandum and Articles of Association, and the provisions of or governing the deposited securities. Otherwise, you could exercise your right to vote directly if you withdraw the ordinary shares. However, you may not know about the meeting sufficiently enough in advance to withdraw the ordinary shares.
If we ask for your instructions and upon timely notice from us by regular ordinary mail delivery, or by electronic transmission, as described in the deposit agreement, the depositary will notify you of the upcoming meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our Memorandum and Articles of Association, and the provisions of or governing the deposited securities, and arrange to deliver our voting materials to you. The materials will include or reproduce (a) such notice of meeting or solicitation of consents or proxies; (b) a statement that the ADS holders at the close of business on the ADS record date will be entitled, subject to any applicable law, the provisions of our Memorandum and Articles of Association, and the provisions of or governing the deposited securities, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the ordinary shares or other deposited securities represented by such holders ADSs; and (c) a brief statement as to the manner in which such instructions may be given to the depositary or deemed given in accordance with the second to last sentence of this paragraph if no instruction is received by the depositary to give a discretionary proxy to a person designated by us. Voting instructions may be given only in respect of a number of ADSs representing an integral number of ordinary shares or other deposited securities. For instructions to be valid, the depositary must receive them in writing on or before the date specified. The depositary will try, as far as practical, subject to applicable law and the provisions of our Memorandum and Articles of Association, to vote or to have its agents vote the ordinary shares or other deposited securities (in person or by proxy) as you instruct. The depositary will only vote or attempt to vote as you instruct. If we timely requested the depositary to solicit your instructions but no instructions are received by the depositary from an owner with respect to any of the deposited securities represented by the ADSs of that owner on or before the date established by the depositary for such purpose, the depositary shall deem that owner to have instructed the depositary to give a discretionary proxy to a person designated by us with respect to such deposited securities, and the depositary shall give a discretionary proxy to a person designated by us to vote such deposited securities. However, no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter if we inform the depositary we do not wish such proxy given, substantial opposition exists or the matter materially and adversely affects the rights of holders of the ordinary shares.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, there can be no assurance that ADS holders and beneficial owners generally, or any holder or beneficial owner in particular, will be given the opportunity to vote or cause the custodian to vote on the same terms and conditions as the holders of our ordinary shares.
The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if the ordinary shares underlying your ADSs are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will give the depositary notice of any such meeting and details concerning the matters to be voted at least 30 business days in advance of the meeting date.
Compliance with Regulations
Information Requests
Each ADS holder and beneficial owner shall (a) provide such information as we or the depositary may request pursuant to law, including, without limitation, relevant Cayman Islands law, any applicable law of the United States of America, our Memorandum and Articles of Association, any resolutions of our Board of Directors adopted pursuant to such memorandum and articles of association, the requirements of any markets or exchanges upon which the ordinary shares, ADSs or ADRs are listed or traded, or to any requirements of any electronic book-entry system by which the ADSs or ADRs may be transferred, regarding the capacity in which they own or owned ADRs, the identity of any other persons then or previously interested in such ADRs and the nature of such interest, and any other applicable matters, and (b) be bound by and subject to applicable provisions of the laws of the Cayman Islands, our Memorandum and Articles of Association, and the requirements of any markets or exchanges upon which the ADSs, ADRs or ordinary shares are listed or traded, or pursuant to any requirements of any electronic book-entry system by which the ADSs, ADRs or ordinary shares may be transferred, to the same extent as if such ADS holder or beneficial owner held ordinary shares directly, in each case irrespective of whether or not they are ADS holders or beneficial owners at the time such request is made.
Disclosure of Interests
Each ADS holder and beneficial owner shall comply with our requests pursuant to Cayman Islands law, the rules and requirements of the New York Stock Exchange and any other stock exchange on which the ordinary shares are, or will be, registered, traded or listed or our Memorandum and Articles of Association, which requests are made to provide information, inter alia, as to the capacity in which such ADS holder or beneficial owner owns ADS and regarding the identity of any other person interested in such ADS and the nature of such interest and various other matters, whether or not they are ADS holders or beneficial owners at the time of such requests.
Fees and Expenses
As an ADS holder, you will be required to pay the following service fees to the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs):
Service | Fees | |
To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) |
Up to US$0.05 per ADS issued | |
Cancellation of ADSs, including the case of termination of the deposit agreement |
Up to US$0.05 per ADS canceled | |
Distribution of cash dividends |
Up to US$0.05 per ADS held | |
Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements |
Up to US$0.05 per ADS held | |
Distribution of ADSs pursuant to exercise of rights |
Up to US$0.05 per ADS held | |
Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to US$0.05 per ADS held | |
Depositary services |
Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
As an ADS holder, you will also be responsible for paying certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs), such as:
| Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares). |
| Expenses incurred for converting foreign currency into U.S. dollars. |
| Expenses for cable, telex and fax transmissions and for delivery of securities. |
| Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when ordinary shares are deposited or withdrawn from deposit). |
| Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. |
| Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to ordinary shares, deposited securities, ADSs and ADRs. |
| Any applicable fees and penalties thereon. |
The depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.
The depositary fees payable for cash distributions are generally deducted from the cash being distributed or by selling a portion of distributable property to pay the fees. In the case of distributions other than cash (i.e., share dividends, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients ADSs in DTC accounts in turn charge their clients accounts the amount of the fees paid to the depositary banks.
In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.
The depositary may make payments to us or reimburse us for certain costs and expenses, by making available a portion of the ADS fees collected in respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary bank agree from time to time.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable, or which become payable, on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register or transfer your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any refund of taxes, reduced rate of withholding at source or other tax benefit obtained for you. Your obligations under this paragraph shall survive any transfer of ADRs, any surrender of ADRs and withdrawal of deposited securities or the termination of the deposit agreement.
Reclassifications, Recapitalizations and Mergers
If we: | Then: | |
Change the nominal or par value of our ordinary shares | The cash, shares or other securities received by the depositary will become deposited securities. | |
Reclassify, split up or consolidate any of the deposited securities | Each ADS will automatically represent its equal share of the new deposited securities. | |
Distribute securities on the ordinary shares that are not distributed to you, or Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action |
The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. If any new laws are adopted which would require the deposit agreement to be amended in order to comply therewith, we and the depositary may amend the deposit agreement in accordance with such laws and such amendment may become effective before notice thereof is given to ADS holders.
How may the deposit agreement be terminated?
The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 90 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign, or if we have removed the depositary, and in either case we have not appointed a new depositary within 90 days. In either such case, the depositary must notify you at least 30 days before termination.
After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property and deliver ordinary shares and other deposited securities upon the cancellation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after the date of termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. After such sale, the depositarys only obligations will be to account for the money and other cash. After termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary thereunder.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the Company, the ADRs and the deposit agreement.
The depositary will maintain facilities in the Borough of Manhattan, The City of New York to record and process the issuance, cancellation, combination, split-up and transfer of ADRs.
These facilities may be closed at any time or from time to time when such action is deemed necessary or advisable by the depositary in connection with the performance of its duties under the deposit agreement or at our reasonable written request.
Limitations on Obligations and Liability
Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary and the custodian. It also limits our liability and the liability of the depositary. The depositary and the custodian:
| re only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct; |
| are not liable if any of us or our respective controlling persons or agents are prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement and any ADR, by reason of any provision of any present or future law or regulation of the United States or any state thereof, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of our Memorandum and Articles of Association or any provision of or governing any deposited securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, revolutions, rebellions, explosions and computer failure); |
| are not liable by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our Memorandum and Articles of Association or provisions of or governing deposited securities; |
| are not liable for any action or inaction of the depositary, the custodian or us or their or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, any person presenting ordinary shares for deposit or any other person believed by it in good faith to be competent to give such advice or information; |
| are not liable for any special, consequential, indirect or punitive damages for any breach of the terms of the deposit agreement, or otherwise; |
| may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party; |
| disclaim any liability for any action or inaction or inaction of any of us or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information; and |
| disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADS. |
The depositary and any of its agents also disclaim any liability for (i) any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, (ii) the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, (iii) any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities or the credit-worthiness of any third party, (iv) any tax consequences that may result from ownership of ADSs, ordinary shares or deposited securities, or (v) any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without gross negligence or willful misconduct while it acted as depositary.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Jurisdiction and Arbitration
The laws of the State of New York govern the deposit agreement and the ADSs and we have agreed with the depositary that the federal or state courts in the City of New York shall have exclusive jurisdiction to hear and determine any dispute arising from or in connection with the deposit agreement, including claims arising under the Securities Act and the Exchange Act, and that the depositary will have the right to refer any claim or dispute arising from the relationship created by the deposit agreement to arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Purchasers of ADSs in secondary transactions will be subject to the arbitration provision to the same extent as purchasers of the ADSs offered in this offering. The arbitration provisions of the deposit agreement do not preclude you from pursuing claims under the Securities Act or the Exchange Act in federal or state courts.
Jury Trial Waiver
The deposit agreement provides that each party to the deposit agreement (including each ADS holder, beneficial owner and holder of interests in the ADRs, whether such ownership interests were acquired in this offering or in secondary transactions) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any lawsuit or proceeding against the depositary or our company arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable law.
Requirements for Depositary Actions
Before the depositary will issue, deliver or register a transfer of an ADS, split-up, subdivide or combine ADSs, make a distribution on an ADS, or permit withdrawal of ordinary shares, the depositary may require:
| payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any ordinary shares or other deposited securities and payment of the applicable fees, expenses and charges of the depositary; |
| satisfactory proof of the identity and genuineness of any signature or any other matters contemplated in the deposit agreement; and |
| compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal or delivery of deposited securities and (B) such reasonable regulations and procedures as the depositary may establish, from time to time, consistent with the deposit agreement and applicable laws, including presentation of transfer documents. |
The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we determine that it is necessary or advisable to do so.
Your Right to Receive the Shares Underlying your ADSs
You have the right to cancel your ADSs and withdraw the underlying ordinary shares at any time except:
| when temporary delays arise because (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of ordinary shares is blocked to permit voting at a shareholders meeting; or (3) we are paying a dividend on our ordinary shares; |
| when you owe money to pay fees, taxes and similar charges; |
| when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities. |
| upon the occurrence of other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time); or |
| for any other reason if the depositary or we determine, in good faith, that it is necessary or advisable to prohibit withdrawals. |
The depositary shall not knowingly accept for deposit under the deposit agreement any ordinary shares or other deposited securities required to be registered under the provisions of the Securities Act, unless a registration statement is in effect as to such ordinary shares.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.
Exhibit 8.1
List of Significant Subsidiaries and Variable Interest Entities of Kuke Music Holding Limited
Significant Subsidiaries |
Place of Incorporation | |
Rococo Holding Limited | British Virgin Islands | |
Rosenkavalier Limited | British Virgin Islands | |
Gauguin Limited | Hong Kong | |
Degas Limited | Hong Kong | |
Kuke Future International Technology (Beijing) Co., Ltd., | Peoples Republic of China | |
Beijing Lecheng Future Culture Communications Co., Ltd. | Peoples Republic of China | |
Beijing Kuke Music Education Technology Co., Ltd. | Peoples Republic of China |
Variable Interest Entities |
Place of Incorporation | |
Beijing Kuke Music Co., Ltd. | Peoples Republic of China | |
Beijing Music Festival Culture Communications Co., Ltd., | Peoples Republic of China |
Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, He Yu, certify that:
1. | I have reviewed this annual report on Form 20-F of Kuke Music Holding Limited (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: May 2, 2022
By: | /s/ He Yu | |
Name: He Yu | ||
Title: Principal Executive Officer |
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Hoi Tung Chan, certify that:
1. | I have reviewed this annual report on Form 20-F of Kuke Music Holding Limited (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: May 2, 2022
By: | /s/ Hoi Tung Chan | |
Name: Hoi Tung Chan | ||
Title: Principal Financial Officer |
Exhibit 13.1
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Kuke Music Holding Limited (the Company) on Form 20-F for the year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, He Yu, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 2, 2022
By: |
/s/ He Yu | |
Name: He Yu | ||
Title: Principal Executive Officer |
Exhibit 13.2
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Kuke Music Holding Limited (the Company) on Form 20-F for the year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Hoi Tung Chan, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 2, 2022
By: | /s/ Hoi Tung Chan | |
Name: Hoi Tung Chan | ||
Title: Principal Financial Officer |
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-256982) pertaining to the 2020 Share Incentive Plan of Kuke Music Holding Limited of our report dated May 2, 2022, with respect to the consolidated financial statements of Kuke Music Holding Limited included in this Annual Report (Form 20-F) for the year ended December 31, 2021.
/s/ Ernst & Young
Hong Kong, the Peoples Republic of China
May 2, 2022
1
Exhibit 15.2
中国北京建国门外大街 1 号国贸写字楼 2 座 12-14 层 100004
12-14th Floor, China World Office 2, No. 1 Jianguomenwai Avenue, Beijing 100004, China
电话 Tel: +86 10 6563 7181 传真 Fax: +86 10 6569 3838
电邮 Email: beijing@tongshang.com 网址 Web: www.tongshang.com
May 2, 2022
Kuke Music Holding Limited
4th Floor Harbour Place
103 South Church Street
P.O. Box 10240
Grand Cayman KY1-1002
Cayman Islands
as the Company
Dear Sirs,
We consent to the references to our firm under the heading Item 3. Key Information D. Risk Factors Risks Related to Our Corporate Structure, Item 4. Information on the Company C. Organizational Structure and Item 10. Additional Information E. Taxation in the Companys Annual report on Form 20-F for the year ended December 31, 2021 (the Annual Report), which is filed with the Securities and Exchange Commission (the SEC) on May 2, 2022. We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours faithfully,
/s/ Commerce & Finance Law Offices
Commerce & Finance Law Offices
Exhibit 15.3
May 2, 2022
Matter No.: 835763
Doc Ref: 108033136
The Directors
Kuke Music Holding Limited
Building 96
4 San Jian Fang South Block
Chaoyang District
Beijing, 100084
Peoples Republic of China
Dear Sirs,
Re: Kuke Music Holding Limited (the Company)
We refer to the annual report of the Company for the fiscal year ended 31 December 2021 on Form 20-F filed pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934 on or about May 2, 2022 (the Form 20-F).
We consent to the filing of this letter as an exhibit to the annual report of the Company on Form 20-F with the U.S. Securities Exchange Commission (the Commission) and to the inclusion therein of the reference to our name under the heading Item 10. Additional Information E. Taxation Cayman Islands Taxation in the annual report in the form and context in which they appear.
In giving such consent, we do not hereby admit that we are experts within the meaning of Section 11 of the U.S. Securities Act, 1933 or that we are in the category of persons whose consent is required under Section 7 of the Securities Act, 1933 or the Rules and Regulations of the Commission promulgated thereunder.
Yours faithfully,
/s/ Conyers Dill & Pearman
Conyers Dill & Pearman