October 2, 2022

HONG KONG, Aug. 15, 2022 /PRNewswire/ — China Literature Limited (“China Literature”Or “the Company”Stock code: 0772). The best online library and intellectual properties (“IP”) incubation platform in ChinaToday, the unaudited results for the six-month ended were announced by June 30, 2022.

Highlights of the Results(1)

  • Total revenues RMB4,087.2 Million (USD609.0 million), compared with RMB4,342.1 MillionsIn the first half 2021.
  • Non-IFRS basis(2)Basis, which is intended to increase core earnings by excluding certain non-cash and/or one-time items
    –  Operating profit increased 8.2% year-over-year to RMB693.8 million (USD103.4 Million). Operating margin increased from 14.8% to 17.00%.
    –  Profit attributable to equity holders of the Company increased 0.2% year-over-year to RMB666.0 million (USD99.2 Million). Its margin increased from 15.3% – 16.3%
    –  Basic earnings per share were RMB0.66. Earnings per share were diluted RMB0.65.
  • On an IFRS basis:
    –  Operating profit was RMB251.2 million (USD37.4 Million), compared with RMB1,284.0 MillionsIn the first half 2021. The main reason for the difference in year-over-year was a gain in RMB1,076.8 millionrelated to the sale, in the first quarter 2021, of our stakes in a joint venture.  
    –  Profit attributable to equity holders of the Company was RMB228.5 Million (USD34.1 Million), compared with RMB1,082.7 millionIn the first half 2021.
    –  Basic earnings per share were RMB0.23. Earnings per share were diluted RMB0.22.

(1) All figures in USD are calculated using USD1 to RMB6.7114.
(2) Non-IFRS adjustments don’t include share-based compensation or M&A-related impacts such as net losses/(gains), amortization and income tax effects.
(3) Some numbers in this press release were subjected to rounding adjustments. The sums in this press release may not reflect the arithmetic sums of the breakdown items.

Mr. Edward ChengChina Literature Chief executive officer, said: “During the first half of 2022, the overall macro environment presented many challenges and put pressure on our industry. The volatility of the market forced us to adopt a more forward-thinking and flexible approach, and to explore a healthier and more sustainable growth trajectory. We took initiatives to optimize costs and improve efficiency, and sharpened our focus on key business and long-term objectives. Our operational efficiency improved significantly as a result. Non-IFRS operating profit increased by 8.2% year-over-year to RMB693.8 millions, and non IFRS operating margin rose from 14.8% a decade ago to 17.0% during the first half 2022.

At the same time, we released compelling visual content including drama series A Lifelong Journey (人世间), Life is A Long Quiet River (心居), The Wind Blows from Longxi (风起陇西) and Master of My Own (请叫我总监), the film Too Cool to Kill (这个杀手不太冷静), as well as a number of exciting animated series. Our long-term strategy of IP adaptation to visual formats supported by the constant release of blockbusters and high-quality content was reflected in our extensive resources for transforming literary material into video. We also increased our copyright protections and anti-piracy efforts as part of improving our content ecosystem. This was widely recognized by our writers.

We believe that the cultural sector is in ChinaIt has tremendous potential. The industry’s long-term prospects and general trend have not been affected by the short-term challenges. Our long-term strategy is unchanged. We will continue to put our efforts into the development, incubation and operation good stories that can live forever.

Financial Review(3)

Revenues were RMB4,087.2 Million (USD609.0 Million), compared with RMB4,342.1 millionsIn the first half of 2021.

Online businesses generated significant revenue RMB2,307.0 millions (USD343.7 Million), compared with RMB2,540.0 MillionIn the first half 2021. This category is further broken down as follows: i. Online business revenues from Company’s self-owned platforms products were RMB1,763.1 Million (USD262.7 Million), compared with RMB1,880.7 Million in the prior corresponding period, mainly as a result of a reduction in spending on marketing for user acquisition for our online business as we took initiatives to optimize costs and improve operational efficiency during the first half of 2022; ii) online business revenues from our self-operated channels on Tencent products broadly stabilized at RMB347.5 million (USD51.8 Million), compared with RMB353.5 millionsIn the previous corresponding period, iii), and online business revenues via third-party platforms were RMB196.5 Million (USD29.3 million), compared with RMB305.8 million in the prior corresponding period, mainly as we suspended collaboration with certain third-party distribution partners during the first half of 2022.

Revenues from IP operations and others were RMB1,780.2 millions (USD265.2 million), compared with RMB1,802.2 Million in the prior corresponding period, among which i) revenues from IP operations were broadly stable at RMB1,731.3 millions (USD258.0 Million), compared with RMB1,740.1 MillionIn the first half of 2021, ii) revenues “others”The category, which consists mainly in physical book sales, saw a 21.2% decline year over year. RMB48.9 million (USD7.3 Million) in the first half of 2022.

Revenues cost decreased 5.5% year-over-year to RMB1,940.9 Millions (USD289.2 Millions), as a result of i) a decrease in amortization of intangible assets of content copyrights due to the high base effect in the prior corresponding period, ii) a reduction in platform distribution costs for our online businesses, and iii) lower content costs. Partly offset the decline in revenues was an increase in production costs for television, film and animated series.

Gross profit To decrease 6.2% over the past year RMB2,146.3 Million (USD319.8 million). Gross margin was 52.5% compared to 52.7% during previous periods.

Interest income increased 13.6% year-over-year to RMB68.9 million (USD10.3 Million), reflecting higher interest income from bank deposits.

Other losses, net were RMB235.4 million (USD35.1 Million), compared with net other gains of RMB901.1 MillionThe previous corresponding period. The year-over-year difference was due to a gain in RMB1,076.8 millionrelated to the sale our equity interest in Lazy Audio during 2021’s first half. Fair value losses were the main cause of other losses in quarter one of 2022. RMB372.9 Million (USD55.6 Million) resulting from the decreased valuations of our investee companies, partially offset by a fair value gain of RMB112.2 Million (USD16.7 Million) due to a change in the fair value of consideration liabilities related to the acquisition of New Classics Media.

Marketing and selling expenses decreased 17.6% year-over-year to RMB1,110.5 million (USD165.5 MillionAs part of cost control measures, efficiency improvement initiatives, and cost control measures in the first half of 2022, we reduced advertising and promotion costs for our online business. The decrease in advertising and promotion expenses was partially offset by higher marketing costs to promote drama series and films. The ratio of marketing and selling expenses to revenues dropped from 31.0% to 2020 to 27.2% in 2022.

General and administrative costs decreased 12.2% year-over-year to RMB557.5 Millions (USD83.1 million), primarily due to a decrease in research and development expenses. As a percentage of revenue, general and administrative expenses decreased to 13.6% in 2020 from 14.6% in 2020.

Provision for impairment losses in financial assets reflected a provision for doubtful receivables. In the first half of 2022, the provision for doubtful receivables became effective. RMB60.5 Million (USD9.0 Million) on a net basis, mainly related to TV series and film projects.

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Operating profit was RMB251.2 Million (USD37.4 millions), compared with RMB1,284.0 MillionIn the previous corresponding period. Non-IFRS operating profitTo increase 8.2% year-overyear RMB693.8 Million (USD103.4 Million), reflecting our successful efforts to control operational costs.

Income tax expense was RMB108.2 millions (USD16.1 Million), compared with RMB284.4 MillionFor the same period as last year.

Profit attributable by equity holders of the company Was RMB228.5 million (USD34.1 Million), compared with RMB1,082.7 MillionIn the previous corresponding period. Non-IFRS profit attributable to equity holders of the CompanyIncreased 0.2% year over year RMB666.0 Million (USD99.2 millions).

Key Operation Information

  • Average MAUs on self-owned platform platforms and self-operated channels rose 13.8% year-overyear, from 232.7 millions to 264.7 million in 2022’s first half. Further breakdown of MAUs: i. MAUs in our self-owned platform product increased 4.5% year over year from 114.6 to 119.8million, mainly due to our strengths in high quality content; ii. The MAUs in our self operated channels on the other hand increased by 4%. TencentProducts increased 22.7% from 118.1 to 144.9 million year-over-year, mainly due the growth in users who accessed our free content.
  • The average MPUs for our self-owned platform products decreased 12.9% year-overyear from 9.3million to 8.1million in the first half 2022. This was mainly due to more casual users being attracted to our free-to read content in the second half 2021. The average MPUs were stable compared to 8.1million in the second quarter of 2021.
  • Our pay-to-read business’s monthly ARPU increased 6.6% from a year ago. RMB36.4To RMB38.8In the first half 2022, this was due to improvements in content operations and community features. These improvements drove the demand for paying users to access high-quality content in the first half of 2022.
  • Average DAUs for our free business were 14 millions June 2022Compared with 13 million in June 2021.

Other Key Information

  • EBITDA declined 4.2% year over year RMB626.9 millionsTo RMB600.6 million (USD89.5 Million) in the first half of 2022. Adjusted EBITDA rose 5.1% year-overyear RMB708.9 millionsTo RMB745.1 million (USD111.0 million) in the first half of 2022.
  • As of June 30, 2022, the Company’s net cash positionWas RMB6,555.7 millions (USD976.8 Million).
  • Free cash flow*Was RMB548.7 millions (USD81.7 Million), compared to RMB278.9 MillionIn the first half 2021.
  • New Classics Media has recorded on a separate basis RMB966.7 million (USD144.0 million) in revenues and RMB208.5 millions (USD31.1 Million) in profit attributable to equity holders of the company in the first half of 2022.

* Free cash flow: operating cash flow deducts payments for lease liabilities and payments for capital expenditures.

Business Highlights

IP Creation

As we mentioned, our quality IP content begins in the online literature business. We focused on the fundamentals of our online business, which is our core pay-to read business. We also continued to build our online literature IP ecosystem. The visibility, quality, and number of IP on our online literature platform increased in the first half 2022.

On the supply side, we added approximately 300,000. writers to our online literature platform and 600,000. novels. The word count has increased to 16 billion Chinese characters. Incubation and operations were also improved to help us develop high-quality content in certain categories. At the start of the year, for example, we identified the growing potential of science fiction themes through internal analysis. We organized two science fiction writing contests, and a series, which incubated approximately 20,000 science-fiction works. Many other well-known writers have also started to write science fiction. In the first half of the year, 12 Platinum and Phenomenal Writers joined our platform to create science fiction novels. Science fiction is now the fastest-growing genre on our platform.

This year marks 20 years since the founding of Qidian.com. We have launched a new brand proposition and upgraded Qidian’s brand. “every good book is a new starting point”And a brand mission of “good books never end” which are consistent with the Company’s mission. Quality will be our core. We will encourage content diversification and incubation to create a healthy environment for writers.

We improved the quality and quantity our literary IPs. However, we also implemented cost control and proactive reduced sales and marketing expenses. Our focus shifted from maximizing short-term revenue growth to optimizing our operational efficiency and cost structure. We had to give up some revenue during the current period but we believe these measures will provide a solid foundation for long-term growth.

To protect the rights and interests writers, we increased our efforts against piracy issues. We used encryption watermarks, artificial intelligence, piracy detection, risk controls, and bans to enhance our copyright protection. We also continued to pursue IP infringement cases and litigate against piracy websites. Our strong efforts to protect IP and copyright have been acknowledged by writers. This has helped to win their trust and is an important component of the ongoing improvement in our content ecosystem.

Visualization of IP

Our current focus is IP visualization. We achieved amazing results in the first half 2022. We achieved remarkable results in the first half of 2022 with continuous release of high-quality content. This reflects the strong capabilities of China Literature to re-create literary stories in visual formats. It also supports our strategy for IP visualization.

  • We launched many new works in the first half year in the live-action TV and film segment.
    –  The drama series, A Lifelong Journey (人世间). This blockbuster series was adapted from the Mao Dun Literature Prize winning novel by Liang Xiaosheng. It set an 8-year-old record for prime time ratings on CCTV-1, topped all charts across internet and gained both popularity and reputation.
    –  The drama series, Life is A Long Quiet River (心居). The viewership of this family drama series ranked first among local TV prime time drama series ratings nationwide in the first half of this year, and ranked second in the popularity ranking of iQIYI in the first half of this year, right after A Lifelong Journey (人世间).
    –  The drama series, The Wind Blows from Longxi (风起陇西). This drama series was adapted from Ma Boyong’s novel. It featured an innovative exploration of the theme ancient spycraft and received an 8.1 score on the Douban platform.
    –  The drama series, Master of My Own (请叫我总监). This romantic drama series was ranked first on local TV prime-time drama series ratings and first on the Youku list of top drama series during its broadcast period.
    –  The film, Too Cool To Kill (这个杀手不太冷静). The film grossed a total of RMB2.6 billion, ranked second in the 2022 Spring Festival Box Office.

At the same time, we continued to work on serial development of IP drama series, such as Joy of Life (庆余年), My Heroic Husband (赘婿), and Dafeng Guardian (大奉打更人). We believe that the launch of these works will bring China Literature’s IP brand appeal to a higher level.

  • In the animation segment, we launched new seasons of Stellar Transformations (星辰变) and Martial Universe (武动乾坤). At present, the series Stellar Transformations (星辰变) and Martial Universe (武动乾坤) have had 4 billion and 3 billion video views respectively, and ranked No.1 in terms of the average video views per episode among newly released animations on TencentVideo at the launch of their first half-year. Guduo data has shown that these are the 20 most watched domestic animation works. Tencent Video in the first half of 2022, 11 were adapted from China Literature’s IP.
  • We continued to increase production capacity, accelerate IP visualization, incubate top IP, and continue to improve the comics segment. Our joint project with TencentThe progress of comics that will adapt 300 online literary works into comics is impressive. Over 170 comics have been adapted and launched on the website. TencentComics platform. Some titles have been blockbusters like Dafeng Guardian (大奉打更人), The First Sequence (第一序列) and Start with a Mountain (开局一座山).
  • We strengthened our relationships with quality game production studios in the games segment. In the first half of this year, popular IPs such as Battle Through the Heavens (斗破苍穹) and The Naming of Night (夜的命名术) were licensed to game developers for adaptation. These adapted games are expected to be released within the next few years.
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Commercialization of IP

In the first half, 2022, we built a strong foundation for our business. We were able to reduce the conversion time between IP and offline products, increase the number and types of IP and product types, as well as achieving breakthroughs with theme, product style, and design. We focused on the opportunities in consumer goods and fashion toys, as well as offline retail. We worked with both upstream and downstream industry partners to achieve our initial success. We licensed one edition of toys sculptures featuring the theme character. “Medusa” from Battle Through the Heavens (斗破苍穹), which sold out immediately after the pre-sale launch with a GMV of RMB5,000,000. In future, we will develop derivatives adapted from more IP content, such as Joy of Life (庆余年), Lord of the Mysteries (诡秘之主), The King’s Avatar (全职高手) and Candle in the Tomb (鬼吹灯), and offer joint promotion for the launch of drama series, film, animation, comics, games and other content.

Overseas Business

We continue to promote cultural exchange and expand international presence. As of June 30, 2022WebNovel, our online foreign language reading brand, offered approximately 2,600 works in Chinese translations and approximately 420,000 original content creations.

Social Responsibility

China Literature considers its social responsibilities and promotes good reading habits through social activities in support of the national campaign for “reading for all”. During the pandemic, we donated millions of membership cards for people in pandemic-affected regions. Shanghai, ShenzhenSuzhou, which allowed them to freely read a wide range of works. On World Book and Copyright Day this year, we collaborated with the National Library of China, Shanghai Library, People’s Literature Publishing House, Posts & Telecom Press and hundreds of other publishing units to promote nationwide reading. Launch of the Qidian Reading App “Nationwide Reading Month”Campaign with 217 high-quality, paid books available for free for the first time.

Outlook

Online literature has shown value and potential that goes beyond printed books. These possibilities will only be realized if we work hard enough. China Literature started with online literature. Since then, it has expanded to other media formats such as film, animation, comics, games, and offline merchandise. Diverse works that are adapted from our original IP meet the cultural, literary, and entertainment needs of people. They also increase the bandwidth of the original story and create a mutually-reinforcing cycle. China’sThe IP industry is still in its infancy and will require continued investment in IP development and creative talent. We hope to build on our IP resources to connect with industry partners and create IP that spans every value chain. This will allow us to tell good stories that will live for ever.

Literature Limited: About China

China Literature aims to create a rich and immersive intellectual property.“IP”) universe for the Mandarin-speaking world. It incubates original IPs via its online literature platform. These IPs can then be adapted on a variety digital entertainment mediums such as comics, animations, film, TV series, webseries, and games. The virtual world created by these digital offerings become an inseparable part of a user’s daily life. China Literature promotes IPs through QQ Reading, Qidian, and New Classics Media. These are China Literature’s top online literature platforms. China. China Literature collaborates TencentIts shareholder and strategic partner, as also other third-party partnerships, to distribute and create IP content and increase its IP’s value. Many of the Company’s online literature works have been successfully adapted into animation, TV series, web series, film and games, including Joy of Life, Candle in the Tomb, Soul Land, The King’s Avatar and My Heroic Husband. China Literature’s rich and extensive content library as well as its unparalleled capability and resources to adapt IP into various entertainment formats is a significant competitive advantage that lies at the core of its business model. For more information, please visit http://ir.yuewen.com/.

Contact

For investors/analysts:
Maggie Zhou
Tel: +8621 6187 0500 ext. 80605
Email: [email protected]

For media:
Vivian Wang
Tel: +852 2232 3978
Email: [email protected]

Non-IFRS Financial Measures

Non-IFRS financial measurements have been added to the Company’s consolidated financial statements prepared in accordance with IFRS. These include non-IFRS operating profits, nonIFRS operating margins, nonIFRS profit for the period and nonIFRSProfit attributable Equity Holders. These unaudited non-IFRS financial measures should be considered in addition to, and not as a substitute for, measures of the Company’s financial performance prepared in accordance with IFRS. These non-IFRS financial measurements may be different from other companies’ terms. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Company’s material associates based on available published financials of the relevant material associates, or estimates made by the Company’s management based on available information, certain expectations, assumptions and premises.

Our management believes that the presentation of these non-IFRS financial measures, when shown in conjunction with the corresponding IFRS measures, provides useful information to investors and management regarding the financial and business trends relating to the Company’s financial condition and results of operations. Our management also believes that the non-IFRS financial measures are useful in evaluating the Company’s operating performances. The Company may add or subtract items from time to time when reviewing its financial results.

Forward-Looking Statements

Forward-looking statements in this press release relate to the industry outlook, forecast business plans, and growth strategies of Company. These forward-looking statements are based upon information currently available to Company and are made on the basis of the outlook at time of this press release. These forward-looking statements are based upon certain expectations, assumptions, and premises. Some of these expectations, assumptions, and premises are subject to change. These forward-looking statement may prove to have errors and not be realized in the future. A number of uncertainties and risks are behind forward-looking statements. Additional information about these risks and uncertainties can be found in our other public disclosure documents, which are available on our corporate website.

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CHINA LITERATURE

CONSOLIDATED INCOME STATEMENT








Six months ended June 30,



2022


2021



(RMB in millions, unless otherwise specified)

Revenues





Online business(1)

2,307.0


2,540.0


Intellectual property operations and other(2)

1,780.2


1,802.2



4,087.2


4,342.1

Cost of revenues

(1,940.9)


(2,054.1)

Gross profit

2,146.3


2,288.1


Gross margin

52.5 %


52.7 %

Interest income

68.9


60.6

Other (losses/gains), net

(235.4)


901.1

Selling and marketing expenses

(1,110.5)


(1,348.2)

General and administrative costs

(557.5)


(635.1)

Net (provisional)/reversal impairment losses
     financial assets

(60.5)


17.5

Operation profit

251.2


1,284.0


Operating margin

6.1 %


29.6 %

Finance costs

(31.6)


(34.6)

Part of the net profit of associates or joint ventures

120.8


115.9

Profit before income taxes

340.4


1,365.4

Income tax expense

(108.2)


(284.4)

Profit for the period

232.3


1,081.0


Net margin

5.7 %


24.9 %

Profit attributableTo





Stockholders of the Company

228.5


1,082.7


Non-controlling interests

3.7


(1.8)



232.3


1,081.0

Earnings per share




(in RMB/share)




– Basic earnings per share

0.23


1.08

– Diluted earnings per share

0.22


1.07


Notes:

(1) Online business revenues mainly reflect online paid reading, online advertisement and distribution of third-party games on our platform.

(2) Revenues from intellectual properties operations and other primarily reflect the revenues from production and distribution TV, web and animated series as well as films, licensing, and licensing
    of copyrights, operation of self-operated online games and sales of physical books.

CHINA LITERATURE

CONSOLIDATED STATEMENT ABOUT COMPREHENSIVE INCOME



Six months ended June 30,



2022


2021



(RMB in millions)




Profit for the period

232.3


1,081.0

Other comprehensive income/(loss):




Item that could be reclassified to profit or
Loss





Part of any other comprehensive loss of associates
     and joint ventures

(0.5)


(2.4)


Deviations in currency translation

46.1


(40.6)






This item cannot be reclassifiedTo profit, loss





Net (loss)/gain based on a change in the fair value of financial
     asset at fair value through other
     comprehensive income

(6.6)


5.9


Deviations in currency translation

71.8


(2.2)



110.9


(39.2)

Total income for the period

343.1


1,041.8

 

Total comprehensive income attributable to:





Stockholders of the Company

339.4


1,044.1


Non-controlling interests

3.7


(2.3)



343.1


1,041.8

CHINA LITERATURE

INFORMATION FOR SEGMENTS








Six months ended June 30,



2022


2021



(RMB in Million, excluding percentages)

Revenues





Online business

2,307.0


2,540.0


Intellectual property operations and other

1,780.2


1,802.2


Total revenues

4,087.2


4,342.1






Revenues





Online business

(1,146.7)


(1,336.0)


Intellectual property operations and other

(794.1)


(718.1)


Total cost of revenues

(1,940.9)


(2,054.1)






Gross profit


Online business

1,160.3


1,203.9


Intellectual property operations and other

986.1


1,084.1


Total gross profit

2,146.3


2,288.1






Gross margin





Online business

50.3 %


47.4 %


Intellectual property operations and other

55.4 %


60.2 %


Gross margin

52.5 %


52.7 %

CHINA LITERATURE

CONSOLIDATE STATEMENT OF FINANCIAL POSITION








As of



June 30, 2022


December 31, 2021



(RMB in millions)

ASSETS




Non-current assets





Property, equipment and plant

67.3


45.1


Right-of use assets

227.2


281.5


Intangible assets

7,437.0


7,455.5


Investments in joint ventures and associates

1,055.7


932.3


Financial assets at fair market value through profit and loss

953.5


1,310.0


Financial asset at fair price through other
     comprehensive income

8.3


14.1


Deferred income taxes assets

244.7


271.8


Prepayments, deposits, and other assets

234.5


256.7



10,228.1


10,567.0

Current assets





Inventories

738.3


653.8


Film rights and TV series

944.4


1,090.9


Financial assets at fair market value through profit and loss

4.5



Trade and notes

2,541.3


2,747.2


Prepayments, deposits, and other assets

1,168.1


1,032.0


Term deposits

2,414.9


2,678.0


Cash and cash equivalents

4,735.7


4,528.4



12,547.2


12,730.3

Total assets

22,775.3


23,297.3






EQUITY




Capital and reserves attributable The equity
     holders of the Company





Share capital

0.6


0.6


Shares held for RSU scheme

(17.5)


(17.5)


Share premium

16,403.0


16,412.7


Other reserves

1,680.1


1,455.1


Accumulated losses

(436.0)


(664.6)



17,630.3


17,186.5

Non-controlling interests

0.5


0.5

TotalEquity

17,630.8


17,187.0





As of



June 30, 2022


December 31, 2021



(RMB in million)

LIABILITIES




Non-current liabilities





Borrowings


382.5


Lease liabilities

164.1


201.9


Long-term payables

6.5


9.1


Deferred income tax liabilities

144.0


149.3


Deferred revenue

27.7


28.8


Financial liabilities at fair value through profit or loss

488.0


827.2



830.3


1,598.8

Current liabilities





Borrowings

594.9


792.8


Lease liabilities

83.8


72.6


Trade payables

1,188.9


1,127.4


Other payables and accruals

1,152.8


1,185.8


Deferred revenue

679.0


669.8


Current income tax liabilities

160.8


338.6


Financial liabilities at fair value through profit or loss

454.1


324.7



4,314.3


4,511.5

Total liabilities

5,144.5


6,110.3

Total equity and liabilities

22,775.3


23,297.3

CHINA LITERATURE

RECONCILIATION OF OPERATING PROFIT TO EBITDA AND ADJUSTED EBITDA



Six months ended June 30


2022


2021


(RMB in millions)

Reconciliation of operating profit to EBITDA and
     adjusted EBITDA:




Operating profit

251.2


1,284.0

Adjustments:




Interest income

(68.9)


(60.6)

Other losses/(gains), net

235.4


(901.1)

Depreciation of property, plant and equipment

9.6


9.5

Depreciation of right-of-use assets

49.9


32.4

Amortization of intangible assets

123.3


262.7

EBITDA

600.6


626.9

Adjustments:




Share-based compensation

116.7


53.7

Expenditure related to acquisition

27.8


28.3

Adjusted EBITDA

745.1


708.9

CHINA LITERATURE

RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS



Six months ended June 30, 2022


Adjustments


As
reported

Share-based
compensation

Net losses from investments
and acquisition(1)

Amortization of
intangible assets(2)

Tax effects

Non-IFRS


(RMB in millions, unless otherwise specified)

Operating profit

251.2

116.7

305.9

20.1

693.8

Profit for the period

232.3

116.7

305.9

20.1

(5.2)

669.7

Profit attributable to equity
holders of
the Company

228.5

116.7

305.9

20.1

(5.2)

666.0

EPS (RMB per share)







  – basic

0.23





0.66

  – diluted

0.22





0.65

Operating margin

6.1 %





17.0 %

Margin net

5.7 %





16.4 %










Six months ended June 30 2021


Adjustments


As
reported

Share-based
compensation

Net (gains) from investments
andAcquisition(1)

Amortization
Intangible assets(2)

Tax effects

Non-IFRS


(RMB in million, unless specified)

Operating profit

1,284.0

53.7

(716.7)

20.5

641.5

Profit for the Period

1,081.0

53.7

(716.7)

20.5

224.8

663.2

Equity-related profit
Holders of
The Company

1,082.7

53.7

(716.7)

20.5

224.8

665.0

EPS (RMB/share)







  – Basic

1.08





0.66

  – Diluted

1.07





0.66

Operating margin

29.6 %





14.8 %

Net margin

24.9 %





15.3 %


Notes:

(1) Includes the disposal Loss/(Gains) and The fair value changes arising from our investee companies, The fair value changes of consideration liabilities
     related to theAcquisition of New Classics Media and the Compensation costs for certain employees and former owners of New Classics Media.

(2) This amortization represents amortization of Intangible assets, TV series and film rights that result from acquisitions.

SOURCE China Literature

Source: China Literature Announces 2022 Interim Results

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