Audit Report
Audit Report No. Tianheng Audit No. (2026) 00941
To all shareholders of Happy Blue Ocean Film and Television Culture Group Co., Ltd.:
1. Audit Opinion
We have audited the financial statements of Happy Blue Ocean Film and Television Culture Group Co., Ltd. (hereinafter referred to as "Happy Blue Ocean Company"), including the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, consolidated and parent company statements of changes in equity, and related notes to the financial statements. We believe that the attached financial statements are prepared in accordance with the provisions of the Accounting Standards for Enterprises in all material respects and fairly reflect the financial position of Happy Blue Ocean Company as of December 31, 2025, as well as the operating results and cash flows for the year 2025.
2. Basis for Audit Opinion
We conducted our audit in accordance with the auditing standards for certified public accountants in China. The section "Responsibilities of Certified Public Accountants for the Audit of Financial Statements" in the audit report further elaborates our responsibilities under these standards. In accordance with the Code of Ethics for Certified Public Accountants in China, we are independent of Happy Blue Ocean Company and have fulfilled our other ethical responsibilities. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year 2025. The responses to these matters are in the context of our audit of the financial statements as a whole and we do not express an opinion on these matters separately.
Key Audit Matters and Audit Procedures
- Revenue Recognition
In 2025, Happy Blue Ocean Company achieved operating revenue of 831.66 million yuan, an increase of 27.18% compared to the previous year, with significant revenue fluctuations. As a profit-oriented listed entity, revenue is a key indicator for evaluation, and there is a risk of revenue being overstated to meet public expectations or achieve other objectives. We consider the authenticity and accuracy of operating revenue to be one of the key audit matters for this period.
- (1) Understand the design of internal controls related to revenue recognition, evaluate the effectiveness of control design, and test whether controls are properly executed;
- (2) For different types of business and business models, understand Happy Blue Ocean Company's revenue recognition methods and basis and evaluate their compliance with relevant accounting standards;
- (3) For revenue from TV drama production and distribution, obtain relevant sales contracts, revenue-sharing agreements, and proof of receipt of broadcast materials to verify the authenticity and accuracy of the revenue recognized by the company during the period;
- (4) For revenue from theatrical distribution and cinema screenings, verify whether the statistical reports from the cinema companies are consistent with the box office data from the national special fund platform, and recheck the calculation of box office revenue;
- (5) For film screening revenue, obtain ticketing system data, perform analytical procedures, analyze ticket sales volume, price distribution, and fluctuations in box office revenue, and verify the accuracy of film screening revenue;
- (6) For other significant or unusual transactions, examine sales contracts, identify the performance obligations included in the contracts, obtain revenue recognition basis, and verify whether the timing and amount of revenue recognition are accurate;
- (7) For revenue transactions recorded before and after the balance sheet date, select samples, verify contracts and other supporting documents, and check whether revenue is recorded in the appropriate accounting period.