Kuke Music Holding Limited

Good morning and good evening, ladies and gentlemen. Welcome to KUKA Music Holding Limited Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's prepared remarks. Please note, today's event is being recorded. I will now turn the call over to the first speaker today, Ms. Jane Zhu, with Investor Relations Director of KUKA Music Holding Limited. Please go ahead, ma'am.

Thank you, operator. Hello, everyone. Welcome to our second quarter 2021 earnings call. On the call with me today are Mr. He Yu, founder, chairman, and CEO, Ms. Patricia Sun, president, and Mr. Tony Chen, CFO of KUKA Music. Mr. Yu and Ms. Sun will review our business operations first, and then Tony will discuss our financial details. Afterwards... we'll take questions from the audience. Before we start, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions for the Private Security Statistication Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results performance or achievements of the company to be materially different from the result performance or expectations implied by those forward-looking segments. All forward-looking segments are expressively qualified in their entirety by the cautionary segment, risk factors, and the health of the company's filing with the SEC. The company undertakes no duty to revise or update any forward-looking statements for selective events or circumstances after the date of this conference call. As a reminder, this conference call is being recorded. In addition, a live and archived webcast of this conference call will be available on KUKO Investor Relations' website at ir.kuko.com. You can check out our full earnings release on our IR website as well. It's now my pleasure to introduce Mr. He Yu, founder, chairman, and CEO of KUKA Music.

Thank you, Jin. Hello, everyone, and thank you all for joining us, and welcome to our second quarter earnings call. I'd like to start by sharing some thoughts on recent industry trends and our overall strategy. We believe that classical music is an art from in which classical works are preserved from various historical periods. These classical music works of art are mainly recorded and disseminated through sheet music. Its beauty is embedded in its elegant structure and formality, giving it much stronger lasting value. Classical music is the foundation of music learning. In addition, classical music as an art subject promotes strong logical thinking. Musical concepts of rhythm and harmony are closely tied to math, which shows why musical studies can be integrated with other subjects to enhance the learning foundation for students. Many scientists, including Albert Einstein, Stephen Hawking, Yuan Longping and Li Siguang, have studied foundational music knowledge. As the only listed company focusing on classical music, we leverage our ever-growing copyrighted music content library and technological innovation to improve the efficiency and the penetration rate for people to subscribe to and learn classical music. Recently, several government policies changed have been focused on enhancing art learning. The State Council of the PRC and the Ministry of Education have issued a series of important guidelines on development and the foundational arts learning as one of the key development areas for quality education in schools. According to the Ministry of Education's interpretation of the relevant guidance documents on arts learning issued by the State Council in October last year, schools of all levels will need to include music and arts lessons by 2022. At the same time, it is necessary for all schools to improve student evaluation in art learning and to add arts as an exam subject for junior and senior high schools. Many provinces, including Hunan, Jiangsu, Yunnan, and Henan, have already responded to this policy, stating that They will add music and arts in high school entrance examinations or expand related pilot projects. Going forward, we believe the Ministry of Education will guide local schools to continue improving resource allocation and increasing the coverage of art learning courses. Eventually, we believe that art learning will be included in the evaluation system of China's double first-class universities. Preschool children are the largest target group for arts learning instruction, and they are also at the best stage of development to absorb art learning. According to the Ministry of Education of the PRC, In 2020, there were 537,100 schools and 289 million students nationwide. Among them, 291,700 were kindergartens with roughly 48 million children enrolled, 18,800 were primary and secondary schools with 156 million students enrolled. As a leading classical music content provider in China, we support and follow national policy guidance to promote the development of a foundational music instruction. In addition, we continue to focus on classical music licensing, subscription, smart music content and system development to create a smart music ecosystem. We own the licensing rights for more than 900 record companies and labels in the world, including Nuxos. We have also developed the Kuki smart piano, digital music learning content, and an associated SaaS system. On July 23rd, we announced a strategic cooperation agreement with People's Music Publishing House. The two parties will work together to establish the People's Music and Naxos Global Platinum Record Program of China and a global resource core construction plan for the national aesthetic education, research music, encyclopedia interdisciplinary courses. Meanwhile, we will explore various cooperation opportunities with our music licensing resources. Notably, People's Music and Naxos Global Platinum Record Program of China is our first cooperative program with People's Music in China. The program selects orchestra, chamber, vocal, and national orchestra music from young Chinese composers and performers around the world to provide them with a broader platform to share their music via the record album format. Meanwhile, we will take our combined advantage to establish a high-quality editorial team to launch interdisciplinary courses that enhance music literacy. By enhancing art learning for teenagers, the courses will foster independent thinking and creativity while helping students boost their cultural literacy. As schools and students gradually come to understand the importance of music learning, we continue to actively explore music services based on students' needs, empowering them with technologies to improve both the student and the teacher experience, while improving the quality and the efficiency of the music lessons. We are confident That's our visionary business strategy, which focuses on music rather than the traditional academic subjects, and in-school learning rather than after-school lessons. Along with the support of the government's policies, we'll continue to feel our development going forward. Our director, Yu Long, one of the most influential conductors in Chinese classical music. One stated, China has become an indispensable part of the big family of classical music, and there is no better way of building connections than through cultural exchange. On July 27th, we announced the programs and theme for the 24th Beijing Music Festival 2021 marked the anniversary year since the passing of many great composers, including Igor Stravinsky, Camille Saint-Saëns, Astor Piazzolla, Gustav Mahler, and Dean Chandler, as such. The theme of the 24th BMF is masters and memorials. musicians will express their understanding of the theme through a set of 18 performances in 20 different shows across 16 days in October. We aim to provide a platform for young Chinese musicians to express their musical voices to the world. On July 28, we leveraged our industry resources and networks to develop a program for China's teenage musicians called the Qing Pei Talent Show. This program was to help Chinese teenagers enter the classical music field, discover more classical musical talents, and form a closed-loop industry chain. We invited many industry experts to join the Performing Arts Committee, including Chen Lei Ji, the famous guqin player, Wu Ying, the president of the Chinese Music Acceleration Piano Society, and a professor of the Central Consortium of Music. The program included seven different performances. categories including keyboard, orchestral music, and percussion. Musicians and artists ranging from kindergarten students to young adults, from art groups and universities were all welcome to join. This program provides as a great platform to present high quality artwork connect young people from all across the country through art, and promote the sound development of a quality Chinese art training. Next, I will pass it over to our president of Cook Music, Patricia, to provide more insights across our business segments. Thank you.