Behind the announcement of the music resume trading

Netease Technology News July 21, the music as announced yesterday evening announcement, announced the morning of July 21 (Monday) morning to resume trading, the resumption of trading; the same time, the music is also disclosed in the announcement the following aspects Information:

1, LeTV acknowledges the existence of non-standard set-top box products will be rectified with the license side. "As the TV set-top box cooperation in music does involve violations, the company is taking the initiative with CCTV to jointly rectify the violations of the cooperation of the Internet set-top boxes, music store has stopped the sale of Internet set-top boxes, both the rectification program has been completed and is reported regulatory In the process of the department, the company will strive to complete the rectification as soon as possible and resume the sales of set-top boxes as soon as possible. "

2, set-top box business is currently in music as a small proportion of revenue.

According to the marketing data disclosed by Lotte, "the total sales volume of set-top boxes (including orders) as of June 30, 2014 since listing was approximately 1.75 million units. The cumulative sales of confirmed revenue were approximately 1.63 million units, corresponding to approximately HK $ 42,991 million , Of which sales volume (including orders) for the first six months of 2014 was approximately 1.25 million units. Sales of confirmed revenue were approximately 1.13 million units, corresponding to an amount of approximately RMB271,650,000. The sales volume (including orders) for 2012, 2013, 2014, The contribution of gross profit in June was 3.18% and - 1.09% respectively, and the expected impact range was 6.42% and 7.10% respectively.

On SuperTV, "the accumulated sales volume (including orders) as of June 30, 2014 since listing was approximately 900,000 units. The cumulative sales of confirmed revenue was approximately 720,000 units, corresponding to an amount of approximately RMB20,378.88 million, Among them, the sales volume (including orders) for the first six months of 2014 was about 700,000 units. The sales volume of confirmed revenue was approximately 570,000 units, corresponding to an amount of approximately RMB1,148.272 million. The gross profit (from January to June 2014) As the Company's various business costs are shared, the net contribution contribution of the business can not be calculated separately. The contribution ratios are 0.31% and -3.67% -4.05% respectively.

According to this calculation, the sales revenue of the super-TV is close to 5 times that of the set-top box; LeTV believes that "the rectification will only temporarily suspend the company's set-top box business and will resume rapidly after the rectification is completed, so far it will not cause much to the company's set- Impact; the company's super-TV and music as the ecological business model will not be affected. "

3, Jiayue Ting abroad is working, not rumors XX.

The main work of Mr. Jia Yunting, who is going abroad in the near future, is to implement and implement the music overseas strategy including the establishment of overseas subsidiaries, the establishment of overseas teams, the introduction of senior core talents, business negotiations with relevant partners and potential partners.

The following is the music as the full text of the announcement:

LeTV Network Information Technology (Beijing) Co., Ltd. on the exchange of investors and related matters of communication and the resumption announcement

The Company and all members of the Board of Directors guarantee that the information disclosed is true, accurate and complete and contains no false records, misleading statements or material omissions.

Recently, some media reports on LeTV Information Technology (Beijing) Co., Ltd. (hereinafter referred to as "LeTV" or "the Company") were sent by the Shenzhen Stock Exchange to the Company (GEM Inquiry Letter [2014] No. 112), the Company made a written reply in respect of the background, reasons, progress, policy implications, risks involved, stock exchange, information disclosure and contents of the overseas work of the chairman of the inquiry. The company has issued a clarification announcement on the evening of July 18, 2014 (Announcement No .: 2014-079).

In order to further communicate with investors and protect the rights and interests of investors, the Company decided to hold an investor exchange meeting on July 18. In order to ensure fair information, to avoid changes in stock prices, the company applied for a temporary suspension of stock since the market opened on July 18.

The Company held an investor exchange meeting on the 17th floor of the Great Wall Xintai Building on July 18, 2014 from 13: 00-14: 30 to explain recent media reports. Chairman of the Board Jia Yuanting and Vice Chairman Liu Philip, Director Deng Wei, Deputy General Manager Yuan Bin, Deputy General Manager Lei Zhenjian, Secretary of the Board Zhang Te, General Manager of Government Affairs Liu Miao, Overseas Affairs Manager General Manager Mo Cuitian and other directors and executives, , Video connection, etc. to attend the meeting, answered questions about investors.

Now the company with the Shenzhen Stock Exchange inquiry content and investor exchanges to communicate the situation, the related issues described below:

First, on this matter background, occurrence, development, information disclosure

The background of radio and television supervision lies in "being a forerunner and leading oneself", putting forth a heavy fight over the issue of network content and eliminating what is inconsistent with Circular 181. This round of regulation is mainly for set-top boxes.

Circular 181 was promulgated two years ago. The reason why the market is regulated more frequently recently is mainly because there is a certain deviation in the regulation and control of the market participants nowadays. Outstanding achievements are as follows:

1, cottage set-top boxes;

2, infringement and piracy and harmful information,

3, Internet STB sales methods and regional discrepancies;

4, Internet set-top box manufacturers and licensees do not match the mode of cooperation.

Therefore, the music network's understanding is that the General Administration's norms are for the deviation of the market and policy level, a set-top box chaos governance. Music as there is a non-standard set-top box products on the issue, this time with the license side to rectify. The purpose of the General Administration is to allow the current private box providers to carry out comprehensive rectification and reform and carry out standardized services in the future.

On July 17, the company found some media reports of misconduct against the company and actively communicated with higher-level regulatory authorities to learn more about what happened and especially the accuracy of related issues. On the afternoon of July 17, After obtaining the accurate information, the company issued the clarification announcement after the close of trading on July 17, 2014, clarifying the relevant issues and the Company believes that the disclosure of the information in this issue is timely and adequate.

In addition, our company has not received any institutional investor's research in the past 30 days. The daily investor relations phone or email as well as the interactive platform of Shenzhen Stock Exchange normally accept open communication from all investors without any advance notice Or selectively disclose information to institutions and other investors that do not meet the information disclosure requirements.

Second, on the impact of matters

According to the company to communicate directly to the regulatory authorities, music in the Internet set-top box cooperation is indeed involved in the violation, the company is currently taking the initiative with CCTV co-operation of the Internet set-top box there is a violation of the rectification, music store has stopped Internet set-top box sales, the rectification The plan has been completed, and is being submitted to the regulatory authorities in the process, the company will strive to complete the rectification as soon as possible, set-top box sales resume as soon as possible.

During the rectification period, except for CCTV, other licensees suspended cooperation with LeTV until the rectification was completed and the other licensees continued to cooperate normally with LeTV.

As of 30 June 2014, the total number of sales (including orders) of LeTV set-top boxes as of 30 June 2014 was approximately 1.75 million sets. The cumulative sales of confirmed set-top boxes were approximately 1.63 million units, representing an amount of approximately HK $ 42,991 million, of which 1-6 The sales volume (including orders) for the month was approximately 1.25 million units. The sales volume of confirmed revenue was approximately 1.13 million units, corresponding to an amount of approximately RMB271,650,000. The gross profit of the Company for January to June of 2012, 2013 and 2014 (due to the Company's The contribution of various business costs can not be calculated separately for the business contribution to the net profit) were 3.18%, - 1.09%, the expected impact range of 6.42% to 7.10%. Therefore, the Company considers the direct quantification of the performance of the set-top box business to have less impact and controllable.

The notice rectification is also only to suspend the company's set-top box business until the rectification is completed will be quickly restored, the current view will not have a greater impact on the company's set-top box business; the company's super-TV and Le TV eco-business model will not have influences.

The accumulated sales volume (including orders) of Super TV as of June 30, 2014 since its listing was approximately 900,000 units. The cumulative sales of confirmed TV stations was approximately 720,000 units, corresponding to an amount of approximately RMB2,207,880,000, of which, In June, sales volume (including orders) was about 700,000 units. The sales volume of confirmed revenue was approximately 570,000 units, corresponding to an amount of approximately RMB1,148.272 million. As of January to June 2014, gross profit (due to various items of the Company Share of business costs, and can not separately calculate the contribution of the business to the net profit) are respectively 0.31% and -3.67% -4.05% of the expected impact range. In early 2014, the Company made timely adjustments to its marketing strategy to further enhance its brand name, resulting in a decline in its initial gross profit. However, with the rapid growth of sales volume, the Company's revenue has been significantly improved.

The company's super-TV is currently not affected, in the normal sales, the company expects the future of super-TV business will not face significant policy risks.

At the policy level, the Company believes that there is some overreaction in the capital markets and the regulatory policies of SARFT will also benefit LeTV in the long run, although it will have a certain impact in the short term. The Company believes that the current regulatory policies are positive for the Company in the long run. The purpose of the supervision of the SAIC is to expect the industry to develop in a healthy and orderly manner. Therefore, it is a long-term good for companies that have a large amount of genuine reserves and reasonable rectifications.

Third, on the music as a whole ecology and music strategy

This policy will not change the four-tier structure of "platform + content + terminal + application" currently formed by the Company, and the company's business model has not changed.

The company believes that it has made major breakthroughs in its business including e-commerce, advertising, big data, cloud video and content platforms. LeTV advertising revenue increased year by year; the terminal level, the rapid development of Internet TV, but the box is relatively less input; LeTV is also in the other terminal areas of business integration is also being carried out at the same time, the company also made some progress in the software application level. In the future, the Company will continue to expand its ecosystem structure at the business level to continuously increase the geographical radiation scope and user base of LeTV. Therefore, the Company believes that the basic elements of the music business model has not been hit. After the promulgation of this policy, it has not reduced the competitive advantage of the elements in LeTV ecology.

Although regulatory authorities have stopped issuing licenses for Internet TV broadcasts, they encourage qualified agencies to actively apply for Internet TV content service licenses. Based on this, in order to completely solve the license issue, the Company will actively apply for licenses for Internet TV content jointly with relevant entities in the broadcasting and television system under the guidance of the policy of the regulatory departments of radio and television. The regulatory authorities' policy release will not change the music business model in the long run and will benefit the long-term development of the company with a large amount of genuine content.

After this supervision, first, LeTV will maintain closer ties with the regulatory authorities and actively cooperate with the regulatory authorities in implementing the Lexico Eco Advantage under more lawful and compliant conditions. Second, some fine adjustments will be made to some product forms, but the profitability of LeTV will not be changed. The premium content content model of LeTV will continue to promote the advertising model. LeTV will keep innovating at the request of regulatory authorities and integrate with regulatory authorities to enhance the competitiveness of LeTV.

Fourth, on the company's overseas layout

Currently, LeTV is actively expanding its business globally. Currently, the company's overseas business is mainly divided into two parts. One part is the overall reproduction and landing of LeTV's overseas business overseas. The second is to integrate overseas technology, overseas content resources and overseas talents to promote the enhancement of the competitiveness of LeTV in China. Overseas strategy lies in the company's original vertical integration of regional expansion, enhance the influence of music Watch. This year, LeTV's promotion of overseas strategy is relatively quick. The company has hired Mr. Mo Cuitian to take charge of overseas plans. In the near future, the company will promote the implementation of more overseas projects.

In particular, Chairman Jia Yuanting's recent overseas work mainly involved the implementation and implementation of LeTV's overseas strategy, including the establishment of subsidiaries, the establishment of overseas teams, the introduction of senior core talents, business negotiations with relevant partners and potential partners Other matters.

Fifth, on the "party building channel" formally launched

The "Party Building Channel" co-founded by the CPC Central Committee's Proponent's Party Network and the Company formally launched on Super TV on July 18, The main contents of the channel include: Red classic film and television drama with the theme of Communists; monument of eternal beauty - the historical figure of the party; small story of party members; live video of hundred communists' readings of hundred Communists; and " On "," poetry flying party flag Gone with the Wind "," Do not forget the national shame Dream China "essay activities. Party network and the company will continue to cooperate in depth, have introduced a new series of video programs.

"Party Building Channel" on the line, the company has become an important propaganda front of an important symbol. The "Party Building Channel" is a large-screen television with some audio and video or even movie shows. It is the first nationally-owned carousel video desktop set up by the Internet companies to disseminate the party's voice and close the party-masses relationship Promote the work of the party and show the image of the party and set up a brand new platform for new media communication. The company's funds, technology, personnel, etc. to ensure the smooth implementation of the cooperation.

At present, the implementation of this cooperation will not have a material impact on the performance of the company. Please investors rational investment, attention to investment risk.

Sixth, the resumption of trading arrangements

According to << Shenzhen Stock Exchange GEM Listing Rules >> and other relevant provisions, the application to the Shenzhen Stock Exchange, the company shares on the morning of July 21, 2014 (Monday morning) resumption of trading, resume trading.

Special announcement.

Music Watch Information Technology (Beijing) Co., Ltd.

Board of Directors

two