37 Interactive Entertainment Network
Technology Group Co., Ltd.
2023 Annual Report (Summary)
April 2024
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of 37 Interactive Entertainment Network Technology Group
Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the truthfulness, accuracy
and completeness of the contents of this Report, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Xu Zhigao, the Company’s legal representative, and Ye Wei, the Company’s Chief Financial
Officer & Board Secretary, hereby guarantee that the financial statements carried in this Report
are truthful, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report.
Any plans and other forward-looking statements in this Report shall not be deemed as
promises to investors. Investors and other stakeholders shall be fully aware of the risk and
understand the difference between plans, forecasts and promises. Most of these forward-
looking contents can be found in “XI Prospects” of “Part III Management Discussion and Analysis”
herein.
The Company is subject to the disclosure requirements for listed companies engaged in
software and IT services.
The Board has approved a final dividend plan as follows: based on the total issued share
capital (exclusive of shares in the Company’s account for repurchased shares) on the date of
record, a cash dividend of RMB 3.70 (tax inclusive) per 10 shares is planned to be distributed to
all the shareholders of the Company, with no bonus issue from either profit or capital reserves.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Table of Contents
Part I Important Notes, Table of Contents and Definitions ...........................................................................................2
Part II Corporate Information and Key Financial Information .......................................................................................4
Part III Management Discussion and Analysis ..............................................................................................................8
Part IV Corporate Governance ................................................................................................................................... 32
Part V Environmental and Social Responsibility ......................................................................................................... 50
Part VI Share Changes and Shareholder Information ................................................................................................. 54
Part VII Financial Statements .....................................................................................................................................62
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name 37 Interactive Entertainment Stock code 002555
Place of listing Shenzhen Stock Exchange
Company name in Chinese 三七互娱网络科技集团股份有限公司
Abbr. 三七互娱
Company name in English (if
37 INTERACTIVE ENTERTAINMENT NETWORK TECHNOLOGY GROUP CO.,LTD.
any)
Legal representative Xu Zhigao
Registered address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province
Zip code 241000
For business development purposes, the registered address of the Company has changed from
“11/F, Creative Advertising Complex, Wuhu Advertising Industrial Park, Middle Beijing Road, Jiujiang
Change of registered address
District, Wuhu City, Anhui Province” to “Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88
Ruixiang Road, Wuhu City, Anhui Province” on 31 March 2022.
Office address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province
Zip code 241000
Company website https://www.37wan.net/
Email address ir@37.com
II Contact Information
Board Secretary Securities Affairs Representative
Name Ye Wei Wang Sijie
Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza,
Office address
88 Ruixiang Road, Wuhu City, Anhui Province 88 Ruixiang Road, Wuhu City, Anhui Province
Tel. 0553-7653737 0553-7653737
Fax 0553-7653737 0553-7653737
Email address ir@37.com ir@37.com
III Media for Information Disclosure and Place where this Report Is Lodged
Stock exchange website where this Report is China Securities Journal, Shanghai Securities News, Securities Times, and
disclosed Securities Daily
Media and website where this Report is disclosed http://www.cninfo.com.cn
Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road,
Place where this Report is lodged
Wuhu City, Anhui Province
IV Change to Company Registered Information
Unified social credit code 91340200713927789U
Changes to the principal activities of the Company since going public (if any) No changes in the Reporting Period
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Every change of controlling shareholder since incorporation (if any) No changes in the Reporting Period
V Other Information
The independent auditor hired by the Company:
Name Huaxing Certified Public Accountants LLP
7-9/F, Tower B, Zhongshan Building, 152 Hudong Road, Gulou District, Fuzhou City, Fujian
Office address
Province
Accountants writing signatures Zhang Fengbo and Gao Yunjun
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
Applicable □ Not applicable
Name Office address Representative Period of supervision
24/F, 318 South Zhongshan From 10 March 2021 until the
Orient Securities Investment
Road, Huangpu District, Wang Bin and Wang Dehui proceeds of the private
Banking Co., Ltd.
Shanghai placement are used up
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
Yes □ No
Reasons for the retrospective restatement:
Change to the accounting policies
2023-over-2022
2022 2021
2023 change (%)
Before Restated Restated Before Restated
16,546,871,737. 16,406,034,152. 16,406,034,152. 16,216,498,23 16,216,498,239.
Operating revenue (RMB) 0.86%
85 65 65 9.02 02
Net profit attributable to
2,658,570,193.4 2,954,376,856.5 2,954,377,452.3 2,875,575,877. 2,875,575,877.6
the Listed Company’s -10.01%
4 3 8 62 2
shareholders (RMB)
Net profit attributable to
the Listed Company’s
2,497,299,725.7 2,883,121,625.9 2,883,122,221.7 2,626,749,135. 2,626,749,135.3
shareholders after -13.38%
9 0 5 34 4
deducting non-recurring
profits and losses (RMB)
Net cash flows from
3,147,037,336.4 3,557,168,897.2 3,557,168,897.2 3,658,748,941. 3,658,748,941.0
operating activities -11.53%
6 6 6 03 3
(RMB)
Basic earnings per share
1.20 1.34 1.34 -10.45% 1.31 1.31
(RMB/share)
Diluted earnings per
1.20 1.34 1.34 -10.45% 1.31 1.31
share (RMB/share)
Weighted average return
20.83% 25.41% 25.41% -4.58% 30.24% 30.24%
on equity (%)
Change of 31
31 December
31 December 2022 December 2023 over 31 December 2021
2023
31 December 2022 (%)
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Before Restated Restated Before Restated
19,134,551,079. 17,094,617,736. 17,095,183,320. 14,437,181,24 14,437,181,242.
Total assets (RMB) 11.93%
36 46 91 2.76 76
Equity attributable to the
12,706,945,475. 12,183,346,432. 12,184,007,604. 10,773,716,31 10,773,716,314.
Listed Company’s 4.29%
87 51 82 4.49 49
shareholders (RMB)
Reasons for the change to the accounting policies and the correction of accounting errors:
The Ministry of Finance issued Interpretation No. 16 for the Accounting Standards for Business Enterprises (C.K. [2022] No. 31)
on 30 November 2022, which stipulates the “accounting treatments for deferred income taxes associated with assets and liabilities
arising from a single transaction to which the initial recognition exemption does not apply”. For a single transaction that is not a
business combination and does not affect either accounting profit or taxable income (or deductible losses) at the time the
transaction occurs, and where the initial recognition of assets and liabilities results in taxable temporary differences and deductible
temporary differences in equal amounts (including lease transactions where the lessee initially recognises a lease liability on the
commencement date of the lease term and records it in the right-of-use assets, and transactions where a provision is recognised
and recorded in the cost of the relevant assets because of the existence of a disposal obligation for a fixed asset, etc., hereinafter
referred to as a “single transaction to which this Interpretation applies”), the provisions pertaining to exemption from the initial
recognition of deferred income tax liabilities and assets as stipulated in Articles 11.2 and 13 of Accounting Standard No. 18 for
Business Enterprises - Income Tax shall not apply. An enterprise shall recognise the corresponding deferred income tax liabilities
and deferred income tax assets at the time of the transaction in accordance with the relevant provisions of Accounting Standard No.
18 for Business Enterprises - Income Tax and other relevant regulations for taxable temporary differences and deductible
temporary differences arising from the initial recognition of assets and liabilities in respect of the transaction.
The Company has implemented the said accounting policy since 1 January 2023, and has adjusted the cumulative effect to the
opening retained earnings and other related financial statement items. For details of the adjusted items and amounts, please refer
to “35. Changes to Significant Accounting Policies and Accounting Estimates” under Item V of Part X herein.
VII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 3,764,728,286.75 3,995,845,600.54 4,282,389,285.62 4,503,908,564.94
Net profit attributable to the Listed
774,563,286.72 451,498,048.35 966,242,525.44 466,266,332.93
Company’s shareholders
Net profit attributable to the Listed
Company’s shareholders after
670,414,241.63 445,076,877.11 962,355,135.09 419,453,471.96
deducting non-recurring profits
and losses
Net cash flows from operating
1,311,265,301.83 1,008,691,874.58 337,531,636.81 489,548,523.24
activities
VIII Non-recurring Profits and Losses
Applicable □ Not applicable
Unit: RMB
Items 2023 2022 2021 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment 2,836,160.40 2,302,146.59 7,111,889.34
allowance write-offs)
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Government grants recognised in profit
or loss (exclusive of those that are closely
Mainly due to
related to the Company's normal
government grants
business operations and given in
59,144,627.86 44,774,565.68 78,301,526.84 other than the
accordance with defined criteria and in
rebates of value-
compliance with government policies,
added tax
and have a continuing impact on the
Company's profit or loss)
Gain or loss on fair-value changes in
financial assets and liabilities held by a
non-financial enterprise, as well as on
disposal of financial assets and liabilities 113,869,356.66 40,786,428.45 184,512,740.33
(exclusive of the effective portion of
hedges that is related to the Company's
normal business operations)
Reversed portions of impairment
allowances for receivables which are 4,029,906.92 5,829,134.16
tested individually for impairment
Non-operating income and expenses
7,082,898.99 -7,376,565.55 -12,236,018.48
other than the above
Less: Income tax effects 25,007,516.39 16,473,069.34 14,068,349.49
Non-controlling interests effects
-3,344,940.13 -3,211,817.88 624,180.42
(net of tax)
Total 161,270,467.65 71,255,230.63 248,826,742.28 --
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
1. The domestic market gradually picked up, while overseas markets saw further expansion
According to the 2023 China's Game Industry Report issued by the Game Publishing Committee of the China Audio-video
and Digital Publishing Association (CADPA), in 2023, the domestic game market recorded RMB302.964 billion in sales revenue,
marking a year-over-year (YoY) increase of 13.95% and surpassing RMB300 billion for the first time. The total number of users
reached 668 million, with a YoY increase of 0.61%, hitting a new record high.
Specifically, mini-games reached a new milestone in development. Their total number skyrocketed in 2023, with multiple
standing out. This helped the Company tap into previously unexplored user bases in the existing application scenarios.
Characterised by easy accessibility, mini-games proved instrumental in attracting target players with precision. Their features,
such as fragmented gameplay and portability, offered players a more lightweight gaming option, meeting players' demands for
light and fragmented entertainment. This opened up new growth opportunities in the game industry.
As to the overseas market, China's self-developed games achieved USD16.366 billion in sales revenue in 2023, marking the
fourth consecutive year with a scale exceeding RMB100 billion. However, a YoY decline of 5.65% was observed in the statistics,
reflecting increasing challenges and operating costs for overseas expansion. The US, Japan and South Korea remained the major
overseas markets for China's mobile games, accounting for 32.51%, 18.87% and 8.18%, respectively. Among the top 100 self-
developed mobile games in terms of overseas revenue, strategy games accounted for 40.31%, while role-playing games (RPGs)
constituted 15.97%. Shooting and casual games represented 10.03% and 5.11%, respectively. Strategy games (SLGs) have been
the main driver of overseas revenue in the recent three years, with the combined revenue of the top three games climbing from
63.87% last year to 66.31% this year, while the revenue share of shooting games declined. Casual games experienced notable
growth in revenue share.
2. Industry regulations prioritised sustainability, aiming to advance the promotion of Chinese culture
To enhance the guiding role of online games in disseminating positive values and uplifting content and drive the healthy and
orderly development of the game industry, the National Press and Publication Administration (NPPA), in the second half of 2023,
determined to initiate the Select Online Game Publishing Project. By selecting a range of online games that embody correct
values and cultural depth and combine education and entertainment, this initiative was aimed at making positive energy the
main tone of the development of online games. The unswerving pursuit of boutique, premium, and healthy products in the
industry has led to a constant stream of exceptional works, substantially contributing to the preservation and promotion of
traditional Chinese culture.
In response to national policies, the Company has earnestly implemented management requirements and delved into the
essence of traditional culture in game R&D and operational strategies. We have sought to integrate cultural significance into
player experiences and apply innovative technologies, thereby empowering both cultural and industrial values. For example, the
Company incorporated Peking opera facial makeup, Cantonese culture, and the ancient Maritime Silk Road into its globally
published game The Road to Be Shopkeeper (叫我大掌柜), helping overseas players gain a deeper understanding of Chinese
culture. Furthermore, we have launched an innovative model that combines the virtual character "CongMei" and real-world
cultural tourism scenarios to facilitate the promotion of urban cultural tourism. The ultimate goal is to advance the digital
promotion and preservation of traditional culture in the new era. The Company focuses on youth-oriented expression,
continuously excavating historical and cultural resources, hoping to showcase the beauty of Chinese traditional culture in an
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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integrated way through "Games+".
3. Active efforts were made to implement protective and anti-addiction measures for minors
The State Council, in the second half of 2023, released the Regulation on the Protection of Minors in Cyberspace. This
regulation has provided specific guidelines for the game industry to refine and implement protection for minors, advance minors'
web literacy, enforce stricter regulations on online content, strengthen the protection of the personal information of minors, and
curb Internet addiction among minors.
In terms of protection for minors, apart from implementing the real-name authentication system and anti-addiction
requirements required by competent authorities, the Company has strengthened protection for minors by consistently improving
and upgrading its protection system for minors. We have always advanced various tasks in a proactive and positive manner to
ensure minors are well-protected in cyberspace. The Company has rolled out an upgraded version of the "real-name registration
and anti-addiction system for minors" for our proprietary platforms. Additionally, we have optimised the logo and wording of the
"age-appropriate prompt". Meanwhile, the Company has refined and upgraded our "Parent Monitoring Platform", optimised our
customer service procedures, and aided guardians in queries and verification, all aimed at creating a clean and healthy
cyberspace for minors. Furthermore, during the Reporting Period, the Company participated in drafting association standards
such as the Guidelines on Account Names of Internet Users, the Basic Requirements for Game Distribution and Promotion, and
the Guidelines on the Implementation of Social Responsibilities of Online Game Enterprises, furthering the collective effort
towards a community of shared responsibility.
4. The role of technologies in the industry became increasingly prominent, heightening the effects of cross-sector
empowerment
Technological innovation contributes to the boom of the game industry, and industry advancements inject fresh impetus
into innovative technological breakthroughs. Empowering each other, they jointly propel constant technological innovation and
breakthroughs and guide the industry to new heights.
The Company adheres to technology-driven innovation, closely follows the latest trends in scientific and technological
innovation, actively embraces cutting-edge technologies like generative AI, and explores the potential for deep integration of AI
and other emerging technologies with the Company's business, continuously improving creative efficiency. At the same time,
focusing on promoting the cross-industry integration of game technologies, the Company launched a series of popular science
games with rich themes covering medicine, traditional Chinese medicine, aerospace, intangible cultural heritage, and more to
maximise the positive social impact of games by leveraging the unique interactivity and vividness of games. Furthermore, the
Company also ventures into the fields of computing power, optical displays, XR integrated devices, entertainment content,
semiconductors and materials, space computing engines, artificial intelligence, new-type sensor and the AIGC gaming and social
platform, among other entertainment technology domains. By strategically embracing "hard technology" investments and
integrating ecological resources, the Company seizes opportunities for business innovation brought by cutting-edge technology,
thereby further propelling the high-quality development of its corporate ecosystem.
Amidst this industry trend, the Company has remained focused on its core business and deepened its "integration of R&D and
operation" strategy. We have continued to enhance our capability of producing quality games, solidify our core competitive edge in
overseas expansion, and explore possibilities of integrating technology into our business by leveraging resources both within and
outside the technology domain. With steady strides, we have advanced high-quality and sustainable business development,
dedicated to offering the public a wealth of premium cultural content.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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II Principal Operations of the Company in the Reporting Period
The Company specializes in the development and publishing of games for global players, with the excellent game development
brand “Three Seven Games”, as well as professional game publishing brands “37Mobile”, “37GAMES” and “37Online”. The
Company precisely grasped the industry development trends, made continuous improvements in operation, and remained a top
performer in the industry, while adhering to the "boutiqueization, diversification and globalization" strategy.
37 Interactive Entertainment
Three Seven Games 37Mobile 37GAMES 37Online
(game development) (publishing of mobile (overseas publishing) (publishing of mobile &
games) browser games)
1. Breakthroughs in diverse game genres bolstered the Company's capability of long-term operation
During the Reporting Period, multiple games of the Company, including The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对
决), Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜), Fan Ren Xiu Xian Zhuan: Ren Jie Pian (凡人修仙传：人界篇),
Song of the Castle in the Sky (云上城之歌), Underground Kingdom (小小蚁国), Xun Dao Da Qian (寻道大千), and Ling Hun Xu
Zhang (灵魂序章), exhibited outstanding performance, maintaining a notable presence in the market.
In response to industry trends, the Company has consistently adhered to the "diversification" strategy, understanding the
demands of diverse user bases and continuously expanding its user base. By tapping into new markets and nurturing new growth
drivers, we have continuously pushed back the boundaries of our game genres. In addition to delving into the existing four
primary genres: Massive multiplayer online role playing games (MMORPGs), SLGs, card games, and simulation games, we have
developed games where RPG, casual, and puzzle elements are incorporated. These diverse and lightweight games have
diversified player experiences.
On one hand, the Company's R&D team avoids staying within comfort zones and actively expands into various categories,
developing products with a global perspective. The Company carefully worked out details regarding gameplay design, art quality,
music effects, etc., and continued to invest in product iteration, user experience and other aspects, formed professional layouts
in MMORPGs, SLGs and light games, remaining "Dedicated to Making Premium Games". On the other hand, based on our self-
developed brands, the Company has deepened our cooperation with external R&D teams through investments to bolster our
self-development capabilities. This approach has allowed us to accumulate abundant external R&D reserves, which is conducive
to our diversified arrangements for product supply.
During the Reporting Period, the most anticipated MMORPG mobile game, Fan Ren Xiu Xian Zhuan: Ren Jie Pian (凡人修仙
传：人界篇), distributed by the Company as the agent, became a big hit among MMO players. This success can be attributed to
the game's respect for and full reconstruction of the original storyline, its creative and engaging gameplay, and diverse artistic
expressions. Meanwhile, we adopted an innovative marketing approach combined with top-tier celebrity endorsements for Ba Ye
(霸业), one of our self-developed strategy mobile games on the theme of the Three Kingdoms. With a constant stream of
creative materials, this game exhibited robust performance after being launched, helping the Company stabilise the structure of
its SLG portfolio.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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The Road to Be Shopkeeper (叫我大掌柜), a Chinese-style simulation mobile game rolled out by the Company in 2020, has
successfully converted new players through an engaging and nostalgic marketing approach and intellectual property (IP)
collaborations. By creating a long-term ecosystem with a focus on user interactions, this game has consistently sparked a boom
and achieved long-term operation. During the Reporting Period, this game still performed robustly in gross billing, solidifying the
Company's expertise in the long-term operation of simulation games.
The 3D realistic ant-themed strategy mobile game, Underground Kingdom (小小蚁国), has earned continuous player favour
since its launch in 2022. Its success is attributed to its unique theme and gameplay and its launch on both mini-game platforms
and applications. It has maintained a trend towards robust long-term operation.
The Chinese-style fun cultivation game Xun Dao Da Qian (寻道大千) has secured constant breakthroughs in user pool, and
achieved long-term operation through brand empowerment and social interaction. This game helps the Company garner leading
experience in the mini-game domain and lay a solid foundation for future products. Additionally, the self-developed game based
on the Soul Land IP, Ling Hun Xu Zhang (灵魂序章), has displayed robust potential since its launch, further reinforcing the
Company's competitive edge in the mini-game industry.
The Company consistently adheres to long-term operation, providing players with meticulous and comprehensive long-term
services. It deeply integrates the highlights of its intellectual property (IP) to continuously innovate in terms of reflow methods
and activities, consistently prolonging the product life cycle and igniting product vitality. Games that have been launched for
years, such as The Road to Be Shopkeeper (叫我大掌柜), The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), and Song of the
Castle in the Sky (云上城之歌), have maintained enduring popularity.
During the Reporting Period, 8 products operated by the Company globally each recorded monthly average gross billing
exceeding RMB100 million. In terms of the monthly gross billing achieved by mobile games the Company launched globally, the
highest amount surpassed RMB 2.3 billion.
2. Effective global market expansion contributed to the promotion of excellent Chinese culture
According to the 2023 China's Game Industry Report, the actual sales revenue of China's self-developed games in overseas
markets was USD16.366 billion, down 5.65% YoY. The main reasons are that the consumption willingness and capacity of users in
major overseas markets have been adversely affected by economic downturn, and the market competition has become
increasingly fierce, leading to higher overseas market marketing costs. This has increased hurdles for overseas expansion.
Against this backdrop, the Company, drawing upon its years of experience in overseas expansion, has continuously explored
its overseas markets in line with the "tailored games" strategy. We have consolidated our strengths in sectors such as MMORPGs,
SLGs, card games, and simulation games, and opened up opportunities in the casual game market, thereby boosting the steady
growth of our overseas business. According to Sensor Tower's rankings, the Company secured a spot among the top three
Chinese mobile game publishers in terms of overseas revenue in 2023, firmly establishing itself as a frontrunner among Chinese
game developers expanding into overseas markets.
Overseas Revenue of 37 Interactive Entertainment between 2017 and 2023
(RMB'00,000,000) 59.94 58.07
47.77
21.43
9.20 9.27 10.49
2017 2018 2019 2020 2021 2022 2023
During the Reporting Period, the Company achieved overseas operating revenue of RMB 5,807 million. In the global market,
it has established a product portfolio anchored in MMORPG, SLG, card games, and simulation games. Multiple benchmark
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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products for overseas expansion such as Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜), M, Song of the
Castle in the Sky (云上城之歌), The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), and Ant Legion have shown steady
performance.
The Company has deeply integrated the gameplay themes and promotional materials of its products with excellent
traditional Chinese culture. This approach creates a communication method that resonates with diverse regional, national, and
audience groups, promoting the global expression of Chinese stories.
Puzzles & Survival, a phenomenal product launched overseas by the Company, integrates "Match-3 gameplay + SLG". It
demonstrates the continuous efforts made by the Company to explore the in-depth integration of creative elements and games.
For example, the Company rolled out the "Kung Fu version" that revolves around traditional Chinese martial arts to immerse
players in the charm of Chinese kung fu. This strategy has helped the Company continuously acquire more active users and
prolong the product's life cycle. It has become a benchmark for long-term operation within the Company. Puzzles & Survival
made innovative breakthroughs in the fusion of game genres and the integration of game themes and regional cultures. In April
2023, the game once again set a new record in monthly billing. From its launch in 2020 to February 2024, Puzzles & Survival has
recorded over RMB10 billion in the cumulative total of gross billing.
The Road to Be Shopkeeper (叫我大掌柜) adopted a localised publishing strategy in various regions worldwide. The
Company collaborated with official cultural institutions in Guangzhou to promote Cantonese culture, authentically representing
the prosperity of the ancient Maritime Silk Road. The game integrates gameplay such as treasure salvage and restoration to
combine education and entertainment. By incorporating elements of traditional Chinese culture such as the lion dance,
traditional festivals, Dunhuang Caves, and Peking Opera, players vividly experience the charm of ancient Chinese trade and
culture, allowing overseas users to immerse themselves in the beauty of Chinese culture and achieving a historic breakthrough
for historical simulation games in the European and American regions.
The Company has also implemented a strategy of "lightening hardcore games and intensifying light games" to create
differentiated competitive edges. For example, M focuses on highlighting the core enjoyment through "simplification", thus
establishing a distinctive edge in the gaming experience. This approach has enabled the game to stand out in the fiercely
competitive MMORPG mobile game market in South Korea, contributing to sustained and robust gross billing. Furthermore, plans
are underway for its subsequent launch in Vietnam and Japan. Song of the Castle in the Sky (云上城之歌), an MMORPG mobile
game focusing on adventures in different worlds, has emerged as the highest-grossing overseas game in the South Korean market
in 2022. By offering a unique gaming experience coupled with its combined marketing and operational strategy of branding +
sales effects, it has achieved remarkable success in the Japanese and South Korean markets, solidifying its position as the flagship
product in the Company's overseas MMORPG segment. The Company has also continuously optimised its strategies for product
content iteration and accumulated experience in long-term operation to consolidate its competitive edge in the overseas
MMORPG market.
The Company has made ongoing attempts to promote casual incremental games overseas. For example, the casual
incremental mobile game Xiao Yao Wen Dao (小妖问道) has garnered exceptional market performance after its launch in regions
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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including China's Hong Kong, Macao and Taiwan, Japan, South Korea, Southeast Asia, Europe and the US. This success can be
attributed to its meticulously customised promotions in localities and thematic packaging. It has laid a solid foundation for the
Company's expansion into overseas markets of casual incremental games.
3. Arrangements for both self-developed and agency games enriched the portfolio of products in the pipeline
The Company focuses on its core gaming business, continuously expanding the boundaries of self-development capabilities,
and delving into core genre tracks, accumulating a variety of refined self-developed mobile games. Furthermore, the Company
consistently prioritises high-quality content as its strategic direction. Through multi-dimensional approaches such as investment
empowerment and business support, the Company has carried out in-depth collaborations with reputable game developers such
as EyuGame and Yanqu Network. These collaborations involve agency and customisation to enrich the Company's supply of high-
quality products and deepen the diversification of its product portfolio.
The Company has amassed a pipeline of over 40 premium self-developed or agency mobile games, covering various genres
such as MMORPGs, SLGs, card games, simulation games, as well as incremental RPGs, casual and puzzle games. These products
will be rolled out in global markets.
Certain key games in the pipeline are presented below:
Self-developed games: Code Soul MMO (代号斗罗 MMO), a Chinese comic oriental fantasy MMORPG; Code MLK (代号
MLK), a Japanese Chibi-style MMORPG; Code Xiu Xian SLG (代号休闲 SLG), a Chibi-style SLG integrating war elements; Code
Zheng Qi SLG (代号正奇 SLG), a realistic Three Kingdoms SLG; Code Battle Song M (代号战歌 M), a Western magic MMORPG;
Code DQ (代号 DQ), a cartoon-style incremental RPG on a Japanese fantasy theme; Code M1 (代号 M1), a casual game with
European and American cartoon elements; Code TD (代号 TD), a tower defence game set in a fantasy world.
Agency games: Shi Guang Za Huo Dian (时光杂货店), a modern-themed simulation game; Zhui Xu (赘婿), a traditional
Chinese ink painting-themed simulation game; Shi Guang Da Bao Zha (时光大爆炸), a picture book-style simulation game on a
Chinese cultural theme; Yes Your Highness, a simulation game set in the medieval era; Code Shang Tu (代号商途), a simulation
game focusing on temporal travel and business competition; Zhu Shen Huang Hun: Zheng Fu (诸神黄昏：征服), a Western magic
MMORPG; Heroes of the Three Kingdoms: Hong Hu Ba Ye (三国群英传：鸿鹄霸业) and Battle of Chibi 2 (赤壁之战 2), two SLGs
based on the Three Kingdoms; Mecha Domination, an SLG game featuring giant monsters; Primal Conquest: Dino Era, a cartoon-
style SLG on the theme of dinosaurs; Abyss Survivor, a magical, cartoon-style SLG; Lost Star Ring (失落星环), an interstellar card
game; Code Xiu Xian (代号休闲), a modern resort leisure game; Match Cozy 3D, a modern cartoon-style casual puzzle game;
Code Dreamland (代号梦境), a realistic urban female-oriented game set in modern times.
Several of the Company's key products have been officially licenced in China and are progressing towards launch. We hope
to deliver diverse gaming experiences to players.
4. Artificial intelligence (AI) empowerment bolstered the Company's R&D and operations, improved its quality and efficiency,
and optimised experiences
With the rapid advancement of technology, AI has brought limitless possibilities and profound impacts to the game industry.
Embracing the application of AI in the game industry, the Company has adopted a "Three-step AI" strategy.
First, pioneering arrangements for AI applications have been made to progressively incorporate AI into various business
processes. Second, leveraging accumulated experience, the Company has striven to achieve tool- and module-based
development, thereby establishing a more automated and intelligent pipeline of game industrialisation. Third, the Company has
explored more possibilities of enriching gameplay through AI.
In 2018, the Company made ongoing efforts to explore the application of industrialised AI in gaming. By deeply integrating
cutting-edge technologies such as AI and big data into its business, the Company effectively empowered various processes,
ranging from product proposal, content generation, publishing and operation to asset accumulation. This has allowed the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
13
Company to enhance efficiency and accumulate a wealth of data and technological advantages over the years.
Since then, we have bolstered the tool-based and module-based development of our capabilities in alignment with our
business procedures, integrating discriminant AI and generative AI into each process of our business. This has culminated in the
development of a digitalised and intelligent product portfolio that runs through our entire R&D and operational procedures. This
portfolio covers nine platforms, including "Zeus", "Athena", "Poseidon", "Ares", and "Cupid" on the R&D end and "Turing",
"Quantum", "Destiny", and "Yi Lan" on the ends of promotion and operations. Additionally, our self-developed internal AI Agent
platform enables autonomous decision-making regarding the upgrading of each digitalised and intelligent product and enhances
the efficiency of collaborative offices, improving the industrialisation of the game R&D and operation pipeline and the overall
operational efficiency of the Company. At present, our generative AI technology has been well-applied in sectors such as 2D
drawings, intelligent customer service, localisation and translation, copywriting, and collaborative offices, leading to significant
improvements in human efficiency.
For example, our art design platform "Turing" has substantially facilitated the collaborative management of art processes on
the creativity end, art asset preservation and retrieval, and the intelligent generation of 2D images, significantly boosting asset
reuse efficiency and design-production synergy. By carrying out consistent training of its proprietary art assets garnered over the
years, the Company has experienced substantial efficiency improvements in 2D art-related tasks through AI empowerment, with
a combined monthly output of over 280,000 AI-generated 2D drawings across R&D and publishing business lines. In the concept
design process for characters, the Company has implemented a new process of AI-generated 2D drawings, resulting in an average
saving of 60% to 80% in working hours.
In terms of R&D, the Company has utilised its intelligent R&D platform "Cupid" to conduct a variety of technological studies
and applications, including AI balance testing, the translation of art materials, AI imitation learning, game Q&A assistant, natural
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
14
language processing (NLP) public opinion analysis, and data trend forecasting. Moreover, AI algorithms have been employed to
capture high-precision and high-performance motions, addressing the pain points such as high costs and overly long periods
typically identified with specialised traditional motion capture equipment. This has enhanced both R&D efficiency and quality.
Many of our self-developed products such as The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) and Ba Ye (霸业) have
benefited from the AI-assisted stat balance testing function, resulting in improved player experiences and prolonged game life
cycles.
AI technology has been deeply integrated into each business type of the Company, notably enhancing the operational
efficiency of each process. Furthermore, as to the exploration of AI's potential for enriching gameplay, the Company is
wholeheartedly embracing the AI trend, continually delving into novel gameplay mechanics and experiences internally. This
includes exploring methods to recommend and generate images, elements, and gameplay preferred by players using AI-
generated content (AIGC). The ultimate goal is to lower the barriers to content creation, encourage player engagement in
creation, and tap into the possibility of creating non-linear gaming procedures and experiences.
Benefiting from our pioneering strides in the exploration of AI applications, we have remained open-minded about
transformations in industry technologies and ecosystems. Marching forwards steadily and surely, we have insisted on a
progressive layout of AI applications and continuously iterated and optimised innovative tools in better alignment with the
Company's business development requirements. Furthermore, taking into consideration the requirements of each business
process, we have been exploring the in-depth integration of advanced technologies and business.
In addition, while conducting self-exploration and internal incubation, the Company strives to open up AI opportunities
through technology investments. Focusing on large models and application layers, the Company has directly or indirectly invested
in Zhipu AI, as well as leading tech firms, including DeepLang AI, and aiXcoder. As to spatial computing and game social platforms,
companies in which the Company has invested, such as DeepMirror Technology and YAHAHA, have embraced AIGC tools to
empower their primary business. In integrated devices, investments in enterprises such as Rayneo, INMO, and Ximmerse were
aimed at facilitating their transformation into premier AI platforms, capable of hosting diverse AI content and functions. The
Company remains focused on hard & core technology, continuously monitoring hardware and technological advancements to
empower innovative and sustainable business growth through investments, thereby forging new competitive edges in the
industry.
(III) The Company’s principal operations and business models
The Company is principally engaged in the development, publishing, and operation of online games (mostly mobile and
browser games). The business models of the Company’s online games mainly include independent operation and third-party joint
operation.
Under the independent operation mode, the Company obtains the licenses of games through independent R&D or being an
operator of other games, and publishes and operates these products through its own or third-party channels. The Company is fully
responsible for the operation, promotion and maintenance of the games; providing unified management services for online
promotion, online customer service and top-up payment; and updating games along with game developers based on the real-time
feedback of users and games.
Under the third-party joint operation mode, the Company cooperates with one or more game operators or game application
platforms to jointly operate games. And the aforesaid parties are responsible for the management of their own channels, including
operation, promotion, the recharge and charge system, while the Company provides technical support services along with game
developers.
(IV) The Company’s presence on the market and primary growth drivers
Focusing on cultural and creative businesses based on the development, publishing, and operation of online games, the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
15
Company is an excellent comprehensive entertainment provider in China’s A-stock market. It is one of the top 20 global public
game companies, key cultural export companies of China, civilized institutions in Guangdong Province, and Top 30 Cultural
Enterprises of Guangzhou, and MSCI ESG A-rated Companies, among others. With “bringing joy to the world” as its mission, the
Company is dedicated to becoming an excellent and sustainable entertainment provider.
During the Reporting Period, the Company steadily advanced with the development strategy of “boutiqueization,
diversification and globalization”, adhered to the strategy of "dual engines at home and abroad", as well as continuously promoted
high-quality and sustainable development.
III Core Competitiveness Analysis
1. Forging ahead with determination, the team has seized market opportunities swiftly
The Company has been deeply engaged in the cultural and creative industry for many years. Its core management team is
deeply involved in the front line of business, working hard together with all the employees. Always upholding the spirit of
marathon-like perseverance, the Company has been forging ahead with breakthroughs, as well as pursuing better financial
results and faster growth while maintaining sound operation. Over the years, the Company has demonstrated keen market
insight, seizing emerging opportunities in the industry through a robust team of skilled professionals and scientific management
mechanisms. Anticipating the "shift from web games to mobile games" in its early stages, the Company spearheaded overseas
market penetration over a decade ago. Presently, we remain aligned with the trend towards mini-games. Navigating numerous
industry transitions, we have achieved sustained growth. Throughout the development, the Company has consistently
emphasised talent cultivation and team building. The Company has built a high-calibre talent pool. Through a scientific talent
promotion mechanism, remuneration management system, and performance incentive scheme, the Company inspires employee
motivation and creativity. With "bringing joy to the world" as its mission, the Company is advancing towards the vision of
"becoming an excellent and sustainable entertainment provider".
2. Strengths in the integration of R&D and operation have been consolidated, enriching the product
portfolio
The Company has continuously advanced its strategy of "integration of R&D and operation", deepened its diversified
product portfolio, and established a robust and efficient multidimensional product supply system. First, the Company has
consistently pushed back the boundaries of its self-development capabilities, delved into core product categories, and adopted a
global perspective to create a central supply layer with self-developed products at the core. Second, through investment
empowerment and business support, the Company has fostered deeper partnerships with numerous high-quality developers
both domestically and internationally, continuously accumulating deeply customised premium products. Third, by collaborating
with long-term and stable developers, the Company has further refined its product offerings. Under this supply system, the
Company has built a robust product supply chain, continuously enriched the portfolio of high-quality products and drove steady
business growth.
With the “integration of R&D and operation” model, the Company can fully combine its strengths in product R&D and
operation. This, on the one hand, facilitates a deeper understanding of the market and user demands by the R&D team, thereby
increasing the success rate of products under development. On the other, through close collaboration between R&D and
operations teams, the Company can optimise the updates and promotions of already launched products, thus effectively
achieving long-term operation and prolonging product life cycles.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
16
3. Publishing capabilities have been continuously iterated to facilitate long-term operation from a
global perspective
Over the years, the Company's publishing team has successfully launched numerous quality games across diverse genres and
themes in global markets. During this journey, we have kept abreast of the latest market trends, and accordingly, innovated our
marketing strategies. By employing various creative marketing strategies, such as collaboration with renowned IP, celebrity
endorsements, and immersive storytelling, we have established a long-term ecosystem revolving around user interactions, thus
fortifying robust publishing barriers and facilitating the long-term operation of multiple products. Moreover, the Company has
placed significant emphasis on the impact of AI technology and automated production tools on the Company's business.
Leveraging a wealth of data accumulated over the years, the Company has continually iterated our self-developed intelligent ad
and operational platforms to boost promotional efficiency and effectiveness. The Company has made comprehensive
arrangements for digitalised and intelligent products on the publishing end. This has bolstered the Company's capabilities of
intelligent and sophisticated operations, allowing the Company to effectively manage marketing expenses, amplify publishing
effectiveness, and prolong product life cycles.
IV Analysis of Principal Operations
1. Overview
See “II Principal Operations of the Company in the Reporting Period” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2023 2022
As % of operating As % of operating Change (%)
Amount Amount
revenue (%) revenue (%)
Total operating
16,546,871,737.85 100% 16,406,034,152.65 100% 0.86%
revenue
By operating division
Online games 16,546,871,737.85 100.00% 16,406,034,152.65 100.00% 0.86%
By product category
Mobile games 15,898,475,091.13 96.09% 15,631,909,881.38 95.28% 1.71%
Browser games 497,165,026.29 3.00% 599,189,194.88 3.65% -17.03%
Others 151,231,620.43 0.91% 174,935,076.39 1.07% -13.55%
By operating segment
Domestic 10,739,497,361.46 64.90% 10,412,051,866.74 63.46% 3.14%
Overseas 5,807,374,376.39 35.10% 5,993,982,285.91 36.54% -3.11%
By marketing model
Independent operation 14,691,612,109.38 88.79% 14,213,891,135.04 86.64% 3.36%
Joint operation and
1,855,259,628.47 11.21% 2,192,143,017.61 13.36% -15.37%
others
Unit: RMB
2023 2022
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
3,764,728, 3,995,845, 4,282,389, 4,503,908, 4,089,237, 4,003,000, 3,585,841, 4,727,954,
Operating revenue
286.75 600.54 285.62 564.94 792.70 891.70 376.32 091.93
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
17
Net profit attributable
774,563,28 451,498,04 966,242,52 466,266,33 759,344,27 935,428,14 561,705,33 697,899,69
to the Listed Company’s
shareholders 6.72 8.35 5.44 2.93 4.35 7.13 8.71 2.19
Reasons for business seasonality (or periodicity) and risk of fluctuations:
There is no significant seasonality or periodicity in the operations of the Company.
(2) Operating Division, Product Category, Operating Segment and Marketing Model Contributing over 10%
of Operating Revenue or Operating Profit
Applicable □ Not applicable
Unit: RMB
Gross YoY change in YoY change YoY change in
Operating revenue Cost of sales profit operating in cost of gross profit
margin revenue (%) sales (%) margin (%)
By operating division
Online games 16,546,871,737.85 3,391,580,579.32 79.50% 0.86% 11.25% -1.92%
By product category
Mobile games 15,898,475,091.13 3,221,697,799.51 79.74% 1.71% 12.87% -2.00%
Browser games 497,165,026.29 149,033,406.59 70.02% -17.03% -15.55% -0.53%
Others 151,231,620.43 20,849,373.22 86.21% -13.55% 17.65% -3.66%
By operating segment
Domestic 10,739,497,361.46 1,789,104,263.23 83.34% 3.14% 4.55% -0.23%
Overseas 5,807,374,376.39 1,602,476,316.09 72.41% -3.11% 19.83% -5.28%
Core business data restated according to the changed methods of measurement that occurred in the Reporting Period:
□Applicable Not applicable
(3) Breakdown of Cost of Sales
By operating division
Unit: RMB
2023 2022
Operating
Items As % of cost As % of cost of Change (%)
division Amount Amount
of sales sales
Royalties 3,046,472,983.28 89.82% 2,761,332,426.03 90.58% 10.33%
Cost of servers 210,656,293.98 6.21% 192,141,722.90 6.30% 9.64%
Amortization of
Online games 106,404,582.53 3.14% 65,480,367.38 2.15% 62.50%
copyright money
Other costs 28,046,719.53 0.83% 29,585,123.55 0.97% -5.20%
Total 3,391,580,579.32 100.00% 3,048,539,639.86 100.00% 11.25%
Note:
Other costs are mainly labor costs and technical service charges.
Breakdown of the cost of sales for the principal operations:
Unit: RMB
Breakdown of 2023 2022
Change (%)
cost Amount As % of cost of sales Amount As % of cost of sales
Royalties 3,046,472,983.28 89.82% 2,761,332,426.03 90.58% 10.33%
Cost of servers 210,656,293.98 6.21% 192,141,722.90 6.30% 9.64%
Amortization of 106,404,582.53 3.14% 65,480,367.38 2.15% 62.50%
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
18
copyright money
Other costs 28,046,719.53 0.83% 29,585,123.55 0.97% -5.20%
Total 3,391,580,579.32 100.00% 3,048,539,639.86 100.00% 11.25%
(4) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
Yes □ No
For details, see Note IX Changes in the Scope of Consolidated Financial Statements in Part X.
(5) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 7,041,778,587.57
Total sales to top five customers as a % of total sales of the Reporting Period (%) 42.55%
Total sales to related parties among top five customers as a % of total sales of the
0.00%
Reporting Period (%)
Top five customers:
Sales revenue contributed for the As a % of total sales revenue
No. Customer
Reporting Period (RMB) (%)
1 Customer A 2,447,320,251.65 14.79%
2 Customer B 2,387,617,269.50 14.43%
3 Customer C 1,538,658,532.93 9.30%
4 Customer D 510,353,285.92 3.08%
5 Customer E 157,829,247.57 0.95%
Total -- 7,041,778,587.57 42.55%
Other information about major customers:
□ Applicable Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 2,348,118,098.40
Total purchases from top five suppliers as a % of total purchases of the Reporting Period (%) 69.24%
Total purchases from related parties among top five suppliers as a % of total purchases of the
0.00%
Reporting Period (%)
Top five suppliers:
Purchase in the Reporting
No. Supplier As a % of total purchases (%)
Period (RMB)
1 Supplier A 1,090,931,371.53 32.17%
2 Supplier B 520,539,074.78 15.35%
3 Supplier C 378,970,902.89 11.17%
4 Supplier D 254,739,925.68 7.51%
5 Supplier E 102,936,823.52 3.04%
Total -- 2,348,118,098.40 69.24%
Other information about major suppliers:
□ Applicable Not applicable
3. Expenses
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
19
2023 2022 Change (%) Main reason for change
Distribution and selling
9,090,808,791.22 8,732,600,168.08 4.10%
expenses
General and administrative
592,119,581.61 526,013,657.81 12.57%
expenses
Interest income from deposits
Financial expenses -221,476,247.52 -74,038,437.25 -199.14% increased during the Reporting
Period as compared to last year.
In the second half of 2022, the
Company optimised its product
Research and development development structure, reducing
713,563,181.73 904,696,560.53 -21.13%
expenses R&D investments in some non-
strategic categories and increasing
R&D investments in strategic ones.
4. R&D Investments
Applicable □ Not applicable
Expected impact on the
Major R&D project Purpose Progress Specific objectives
Company
To become a benchmark To further enhance the R&D
To enrich the product
game product with capacity, strengthen the
Code Battle Song M matrix and improve Under
Western magic realism capability to develop quality
(代号战歌 M) product development
and next-generation games, and enrich the
competitiveness
quality diversified product portfolio
To further enhance the R&D
To enrich the product
To become a high-quality capacity, strengthen the
Code MLK (代号 matrix and improve Under
MMO game in Japanese capability to develop quality
MLK) product development
Chibi style. games, and enrich the
competitiveness
diversified product portfolio
To further enhance the R&D
To enrich the product
To become a high-quality capacity, strengthen the
Code Zheng Qi SLG matrix and improve Under
SLG game in a realistic capability to develop quality
(代号正奇 SLG) product development
Three Kingdoms style. games, and enrich the
competitiveness
diversified product portfolio
To further enhance the R&D
To enrich the product
To become a high-quality capacity, strengthen the
Code Xiu Xian SLG matrix and improve Under
SLG game featuring Chibi- capability to develop quality
(代号休闲 SLG) product development
style war elements. games, and enrich the
competitiveness
diversified product portfolio
To further enhance the R&D
To enrich the product To become a high-quality
capacity, strengthen the
matrix and improve Under casual game in European
Code M1 (代号 M1) capability to develop quality
product development and American cartoon
games, and enrich the
competitiveness style.
diversified product portfolio
To further enhance the R&D
To enrich the product To become a high-quality
capacity, strengthen the
Code Soul MMO (代 matrix and improve Under MMO game in the style of
capability to develop quality
号斗罗 MMO) product development Chinese comic oriental
games, and enrich the
competitiveness fantasy.
diversified product portfolio
To further enhance the R&D
To enrich the product To become a high-quality
capacity, strengthen the
matrix and improve Under incremental game in
Code DQ (代号 DQ) capability to develop quality
product development Japanese fantasy cartoon
games, and enrich the
competitiveness style.
diversified product portfolio
To further enhance the R&D
To enrich the product To become a high-quality
capacity, strengthen the
matrix and improve Under tower defence game
Code TD (代号 TD) capability to develop quality
product development featuring fantasy
games, and enrich the
competitiveness elements.
diversified product portfolio
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
20
Details about R&D personnel:
2023 2022 Change (%)
Number of R&D personnel 1,471 1,654 -11.06%
R&D personnel as % of total
42.67% 46.57% -3.90%
employees
Educational background of R&D personnel
Bachelor’s degree 1,108 1,221 -9.25%
Master’s degree 71 83 -14.46%
Junior college and below 292 350 -16.57%
Age structure of R&D personnel
Below 30 831 1,071 -22.41%
30~40 625 572 9.27%
Over 40 15 11 36.36%
Details about R&D investments:
2023 2022 Change (%)
R&D investments (RMB) 713,563,181.73 904,696,560.53 -21.13%
R&D investments as % of operating revenue 4.31% 5.51% -1.20%
Capitalized R&D investments (RMB) 0.00 0.00 0.00%
Capitalized R&D investments as % of total R&D
0.00% 0.00% 0.00%
investments
5. Cash Flows
Unit: RMB
Items 2023 2022 Change (%)
Sub-total of cash inflows from
17,171,716,871.55 17,126,009,759.70 0.27%
operating activities
Sub-total of cash outflows
14,024,679,535.09 13,568,840,862.44 3.36%
used in operating activities
Net cash flows from
3,147,037,336.46 3,557,168,897.26 -11.53%
operating activities
Sub-total of cash inflows from
13,847,650,873.38 10,742,510,933.45 28.91%
investing activities
Sub-total of cash outflows
15,293,575,099.80 14,072,934,577.10 8.67%
used in investing activities
Net cash flows from investing
-1,445,924,226.42 -3,330,423,643.65 56.58%
activities
Sub-total of cash inflows from
3,267,000,000.00 1,847,151,400.00 76.87%
financing activities
Sub-total of cash outflows
5,553,398,865.79 3,431,725,758.42 61.83%
used in financing activities
Net cash flows from financing
-2,286,398,865.79 -1,584,574,358.42 -44.29%
activities
Net increase in cash and cash
-574,990,372.12 -1,297,921,636.44 55.70%
equivalents
Explanation of why any of the data above varies significantly on a year-over-year basis:
Applicable □ Not applicable
1. Net cash flows from investing activities increased 56.58% YoY, primarily driven by the increased net cash inflows from the
Company’s purchase and redemption of wealth management instruments and time deposits in the Reporting Period.
2. Net cash flows from financing activities decreased 44.29% YoY, primarily driven by the combined effects of the increased
dividend payout, and the use of repurchased shares for employee incentives in the Reporting Period.
Explanation of why the net cash flows from operating activities varied significantly from the net profit of the Reporting Period:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
21
Applicable □ Not applicable
The net cash flows from operating activities varied from the net profit of the Reporting Period primarily because items of asset
impairment allowances, asset depreciation and amortization, deferred income tax expense, gain on changes in fair value,
investment income, etc. did not affect cash flows from operating activities but did affect net profit, and there were movements in
trade receivables and payables. For further information, see “55. Supplementary information for the cash flow statement” in Note
VII of Part X.
V Analysis of Non-principal Operations
Applicable □ Not applicable
Unit: RMB
As % of profit before
Amount Reason/source Recurrent or not
income tax expenses
Mainly due to gains on investments from
disposal of equity investments, dividends
Investment
7,525,623.19 0.25% during the period of holding equity No
income
investments, and wealth management
products
Gain/loss on Mainly due to changes in fair value of
changes in fair 103,982,672.05 3.41% equity investments and wealth No
value management products
Impairment losses on
long-term equity
Impairment loss Mainly due to impairment losses on long- investments are not
-125,473,870.50 -4.12%
on assets term equity investments and credit risks recurrent, while
impairment losses on
credit risks are recurrent
Non-operating Mainly due to the write-off of inactive
20,123,970.73 0.66% No
income payables and compensation income
Non-operating
13,041,071.75 0.43% Mainly due to expenditure on donations No
expenses
Mainly due to refund of VAT, over-
Refund of VAT is
deductions of input VAT, refund of
recurrent while other
Other income 110,038,707.84 3.61% handling fee for personal income tax, and
government grants are
other government grants that are related not.
to normal business operations
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
22
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2023 1 January 2023 Change in
Reason for any significant change
Amount As % of total assets Amount As % of total assets percentage (%)
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the
beginning balance mainly due to net cash
flows from operating activities. For further
Monetary funds 6,176,992,875.55 32.28% 5,129,481,882.65 30.01% 2.27% information, see “II 5. Consolidated Cash
Flow Statement”, “54. Cash flow statement
items” and “55. Supplementary
information for the cash flow statement”
under Note VII, in “Part X Financial
Statements”.
Accounts receivable 1,479,267,695.67 7.73% 1,433,563,842.43 8.39% -0.66% No significant change
Long-term equity
520,735,613.55 2.72% 621,794,374.74 3.64% -0.92% No significant change
investments
Fixed assets 823,508,284.60 4.30% 850,030,034.92 4.97% -0.67% No significant change
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the
Construction in progress 534,491,192.20 2.79% 242,508,087.97 1.42% 1.37% beginning balance mainly due to the
investments in the Guangzhou
Headquarters Building construction
project during the Reporting Period.
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was lower than the
Right-of-use assets 16,622,471.20 0.09% 31,967,946.49 0.19% -0.10% beginning balance mainly due to the
depreciation provisions and the
termination of certain lease contracts
during the Reporting Period.
Short-term loans 1,554,577,083.34 8.12% 901,046,888.89 5.27% 2.85% Mainly due to the increased note
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
23
financings and bank loans during the
Reporting Period
Contract liabilities 280,023,602.87 1.46% 259,519,734.14 1.52% -0.06% No significant change
Long-term loans 306,000,000.00 1.60% 323,000,000.00 1.89% -0.29% No significant change
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was lower than the
Lease liabilities 3,944,589.05 0.02% 16,786,536.53 0.10% -0.08% beginning balance mainly due to the
decreased lease payables as a result of
rental payments made during the
Reporting Period.
Mainly because the Company recovered
mature bank’s wealth management
Trading financial assets 2,024,681,502.03 10.58% 2,792,984,819.12 16.34% -5.76%
instruments and structured deposits
during the Reporting Period
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the
Prepayments 1,143,237,497.90 5.97% 855,193,135.12 5.00% 0.97% beginning balance mainly due to the
increased prepayments for Internet traffic
charges as a result of new game launches
during the Reporting Period.
Intangible assets 1,040,204,870.96 5.44% 1,059,676,921.41 6.20% -0.76% No significant change
No significant change occurred to this item
as a percentage of total assets, while the
ending balance was lower than the
Goodwill 1,578,065,048.53 8.25% 1,589,065,048.53 9.30% -1.05%
beginning balance mainly due to goodwill
impairment provisions made during the
Reporting Period.
Mainly due to the increased balance of
over-one-year deposits purchased to
Other non-current assets 2,280,577,680.43 11.92% 1,024,113,999.86 5.99% 5.93%
increase return on capital, and the
purchase of additional land
Accounts payable 1,825,714,480.74 9.54% 1,648,560,259.52 9.64% -0.10% No significant change
Mainly due to the increased bank
Notes payable 1,087,000,000.00 5.68% 555,000,000.00 3.25% 2.43% acceptance bills paid to suppliers during
the Reporting Period.
Indicate whether overseas assets account for a higher percentage of total assets.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
24
Applicable □ Not applicable
Material
Management Control measures to Return As % of the
Asset Source Asset value (RMB) Location impairment risk or
model protect asset safety generated (RMB) Company’s equity
not
A sound business
Investments in Hong Kong in supervision mechanism
Other equity
overseas 418,382,339.31 China, Canada, and a sound risk control 58,803,256.67 3.29% No
assets
companies etc. mechanism have been
put in place
A sound business
Income from Hong Kong in supervision mechanism
Monetary funds investments and 1,494,843,060.13 China, the US, and a sound risk control 11.76% No
operations etc. mechanism have been
put in place
2. Assets and Liabilities at Fair Value
Applicable □ Not applicable
Unit: RMB
Gain/loss on fair- Impairment
Cumulative fair-
value changes in allowance made Purchased in the Sold in the
Item Beginning amount value changes Other changes Ending amount
the Reporting in the Reporting Reporting Period Reporting Period
through equity
Period Period
Financial assets
1. Trading financial assets
(exclusive of derivative 2,792,984,819.12 112,238,705.37 7,650,510,435.98 8,532,575,914.07 1,523,455.63 2,024,681,502.03
financial assets)
2. Other equity investments 269,990,212.51 -240,478,042.75 714,360.74 247,132,794.34
3. Other non-current
685,698,473.75 -8,183,428.72 170,956,341.77 24,171,912.50 1,361,213.10 825,660,687.40
financial assets
Subtotal of financial assets 3,748,673,505.38 104,055,276.65 -240,478,042.75 7,821,466,777.75 8,556,747,826.57 3,599,029.47 3,097,474,983.77
Total of the above 3,748,673,505.38 104,055,276.65 -240,478,042.75 7,821,466,777.75 8,556,747,826.57 3,599,029.47 3,097,474,983.77
Financial liabilities -84,380.59 -72,604.60 -85,096.02 -2,422.24 -74,311.41
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
25
Contents of other changes:
Other changes were incurred by exchange rate fluctuations, etc.
3. Restricted Asset Rights as at the End of the Reporting Period
Item Ending carrying amount (RMB) Reason for restriction
Monetary funds 40,880,261.11 Money frozen by bank and security deposits
Monetary funds 1,388,919,536.10 Principals and interest of term deposits with a maturity within one year as pledges
Non-current assets due within one year 112,347,024.36 Principals and interest of term deposits with a maturity of over one year (due in 2023) as pledges
Other non-current assets 951,809,927.98 Principals and interest of term deposits with a maturity of over one year as pledges
Fixed assets-buildings and constructions 657,116,164.90 As collateral for bank loan to the Company
Total 3,151,072,914.45
VII Principal Subsidiaries and Joint Stock Companies
Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:
Unit: RMB
Relationship with
Name Principal activity Registered capital Total assets Net assets Operating revenue Operating profit Net profit
the Company
Anhui 37 Jiyu
Development of
Network
Subsidiary mobile and 6,250,000.00 2,302,031,506.86 1,623,408,561.03 1,651,453,817.81 956,486,033.70 906,528,263.47
Technology Co.,
browser games
Ltd.
37 Interactive
Entertainment Publishing and
(Shanghai) Subsidiary operation of 10,000,000.00 14,688,462,786.75 5,014,409,770.06 16,561,550,611.68 2,199,358,148.44 1,846,249,982.54
Technology Co., mobile games
Ltd.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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VIII Prospects
(I) Industry landscape and trends
After years of development, the current game industry is in a period of historical change from high -speed growth to
high-quality development.
On the one hand, China's innovation capacity of developing original game products is generally enhanced. Types of
game products will be expanded towards multiple directions. High-quality works focus on long-term development. The
implementation of the Select Online Game Publishing Project has further propelled the game industry towards quality games.
The introduction of the Regulation on the Protection of Minors in Cyberspace has provided clearer guidelines for enhancing
and implementing measures to safeguard minors by the game industry, marking a shift towards regular protection for minors.
Concurrently, breakthroughs in key technologies such as AI have presented the industry with fresh opportunities, not only
leading to breakthroughs in game technologies but also offering new ways to demonstrate the fulfilment of social benefits
and corporate responsibilities through "Games+" cross-sector empowerment.
On the other hand, the pace of China's game industry going overseas has accelerated, and game enterprises continue to
take the global publishing strategy, opening up diversified development paths with refined operation and localized
marketing. The number of countries and regions playing China's games has soared, and the international competitiveness
has been strengthened day by day. Games going overseas has become an important way to boost the "going global" of
Chinese culture, and the international influence of Chinese culture and Chinese elements has been continuously improved.
In this sense, the game industry is making remarkable contributions to the inheritance and promotion of the traditional
Chinese culture and the telling of China's stories to the rest of the world.
(II) Development strategy and business plan of the Company
Based on the current industry pattern and development trend, the Company will continue to steadily take the
development strategy of "boutiqueization, diversification, and globalization", continuously improve the operation quality,
and practice the socialist core values. With "bringing joy to the world" as its mission, the Company is dedicated to becoming
an excellent and sustainable entertainment enterprise, which will continue to provide high-quality and healthy
entertainment products for the public.
1. Effectively enhance self-development capacity and expand the diversified product matrix
In the future, the Company will continue to scale up R&D, pay attention to the cultivation of R&D talents, deepen the
core advantages of "boutiqueization", and give full play to the strategic advantages of "integration of R&D and operation”.
With an inheritable and iterative R&D system, it will build a pipeline for the development of next-generation games,
empower product development with innovative technologies, and enhance industrialization of research findings. Also, it will
break through the ceiling of self-research ability, and carry out diversified layout on the product supply side through rich
self-research and external R&D reserves to bring more high-quality games to players.
2. Expand the advantages of overseas business and help spread Chinese culture
Since 2012, the Company has begun to lay emphasis on overseas markets. With the accumulation of many years of
experience of overseas business, the Company has achieved remarkable results in the globalization of its business. In the
future, the Company will strengthen its pace of "Going Global", give further pl ay to the first mover advantage in the
overseas market, accelerate overseas business development, and continuously integrate Chinese excellent traditional
culture in game themes, content gameplay and promotion materials. Deeply integrating high -quality games with Chinese
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traditional culture, the Company will continue to arouse foreign players' interest in experiencing and exploring Chinese
culture from the game, and launch more excellent works with Chinese characteristics, reflecting Chinese spirit and
containing Chinese wisdom.
3. Continuously ignite talent vitality to erect a strong talent fortress
Talent stands as the core driver of enterprise progress. The Company is committed to igniting talent vitality and
identifying organisational prospects, establishing a unique talent development paradigm, and consistently building the
Company's talent fortress. Through multidimensional measures such as safeguarding employee rights, ensuring
comprehensive welfare and healthcare benefits, fostering diversity, equalit y, and inclusivity, and incentivising employee
growth, the Company has supported the retention and sustainable development of innovative talent. Introducing diverse
initiatives, including core sequence and pivotal role recognition, capability enhancement, promotion incentives, and talent
development challenge initiatives, the Company has actively propelled the transition of the talent structure's focus towards
individuals in core roles or exhibiting great potential, offering talent wider ways to growth and diverse organisational
opportunities. This ongoing endeavour is aimed at propelling the trend towards young talent and elites and establishing a
healthy and reasonable talent pool. In the future, the Company will continually optimise its talent cultivation system and
development model to adeptly navigate market challenges and facilitate business growth, thus driving the growth of both
the Company and its employees.
4. Explore the frontier of science and technology in a forward-looking way and focus on the leading business forms in
the industry
The Company will remain dedicated to its dual identity as both a technology -driven Internet enterprise and a social
entertainment service provider. Grounded in an ecosystem of high-quality content, the Company will strive to enhance the
national fundamental innovation capabilities and accumulate cutting-edge technologies. The ultimate goal is to support
talent development using innovation and utilise technology for the betterment of society.
The Company has continuously refined the layout of entertainment technology ecosystem and actively embraced
industrial transformations brought about by the rapid advancement of technologies such as AI. Through independent
incubation and external investments, the Company has explored the in-depth integration of AIGC technology with business
and seized opportunities presented by technological innovation. In combination with its business requirements, the
Company has consistently iterated and optimised its self-developed digitalised and intelligent products and developed AI
tools tailored to its game business procedures, thereby empowering its own business. Furthermore, we have relentlessly
explored AI's potential for optimising game content and user experiences. In the future, the Compan y will continue to
conduct external exploration and internal breakthrough based on the existing principal business, core R&D capability and
industrial ecological layout, focusing on the integration of emerging technologies and industries, and will capitali se on
opportunities arising from industrial transformation.
5. Earnestly shoulder its own responsibilities and achieve long-term, healthy and sustainable development
The Company always adheres to the unity of economic and social benefits. The Company abide s by the bottom line of
compliance, establishes an all-round content audit mechanism, actively responds to and strictly implements the relevant
policies, requirements and rules and regulations of the industry, and continuously takes actions in the directio n of juvenile
protection, information security, user personal privacy protection, ecological governance of network information content,
cultural inheritance and dissemination. At the same time, the Company continues to increase investment in scientific and
technological innovation, rural revitalization, rural assistance, industry-university-research training, functional game
development, employee development plan and other directions, so as to firmly shoulder its social responsibilities. Going
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forward, the Company will continue to stick to its content baseline, further give play to its advantages, serve society with its
professional ability, practice corporate social responsibilities, and share the development achievements with society to the
greatest extent.
(III) Possible Risks and Countermeasures
1. Changes in industry policies, risks of violation and countermeasures
In recent years, the authority in charge has attached great importance to the development of game industry, made a
series of major decisions and arrangements and issued a series of policies and regulations to guide the industry to develop
in a standardized and healthy way. For example, clear new standards and requirements have been put forward for
protection of minors and anti-addiction of online games. Further strict management measures have been taken to promote
standardized management of game industry. At the same time, information security and protection of users' privacy have
drawn much attention from the society. In the long term, the regulation of the online game industry is becoming more and
more standardized, which is conducive to the healthy development of the industry. The enterprises with standardized
operation will benefit from it. However, in the future, if the Company fails to mak e corresponding adjustments timely in
accordance with changes in industry policies or has a deviation in understanding management regulations in its operation,
there may be a risk that the Company will be punished by relevant departments or the works will not go online as planned,
which will have a significant negative impact on the Company's business development and brand image. In this regard, the
Company will strictly abide by various industry policies, rules and regulations, actively implement relevant requirements for
industry development, establish an internal sound quality management and control mechanism, strengthen industry policy
risk management capability, and fully reduce and avoid the business risks caused by changes in industry policies.
2. Market competition risks and countermeasures
The online game industry is facing increasingly fierce competition as it gradually matures. At the same time, online
game users are maturing with higher quality demand for game products. The industry is char acteristic of fast product
transition, limited product life cycle and volatile player preferences, among others. Intense market competition will
challenge the Company’s development in terms of products and market channels.
In response, the Company will continue to implement the strategy of "boutiqueization, diversification and
globalization". On the one hand, it will strengthen its core competitiveness of its own business, pay continuous attention to
self-research investment, carry out R&D and innovation in product creativity, gameplay, theme, art and technology, and
keep up with industry technology development trend; at the same time, it will maintain close cooperation with excellent
developers to guarantee the supply of quality products, and continue to expand game categories through independently -
developed and agency games to deepen the competitive edge of "integration of R&D and operation". Meanwhile, the
Company will speed up the pace of exporting, give full play to the edges of it in overseas markets, face diversified operations
of overseas markets, deepen the cultivation of key markets, and broaden the categories of games and increase market share.
In addition, the Company will dig deeper into operational data, and timely adjust operational and R&D strategies, to meet
the core demands of users, further play the role of new ideas of digital marketing operation, deepen the business strategy of
multi-channel marketing and long-term service, and continuously enhance core competitiveness in the market.
Facing the current industrial competition pattern, the top-performing enterprise has obvious edges in technology R&D
ability, channel operation ability, product promotion ability, user scale and market share. The Company will co ntinue to
consolidate and cement its competitive edges, actively respond to changes in the industry, reduce market competition risks
and seize market opportunities.
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3. Risks of core personnel turnover and countermeasures
A stable and high-quality talent team is an important guarantee for the Company to maintain its core competitive
advantage. If the Company fails to effectively build a core talent team, give reasonable incentives and manages the core
personnel, the employees’ enthusiasm and creativity will be affected, which will have an adverse impact on the Company’s
core competitiveness.
In response, much attention has been attached to cultivation and acquisition of professional talents. The Company
creatively builds a platform-based talent management mechanism, according to which excellent game producers are
rewarded with project bonus, and given discretion of research and project concept creation. In order to attract and retain
outstanding management talents and business elites, the Company has vigorously reformed the project mechanism,
shortened the review cycle and established diversified objectives, so as to stimulate the innovative vitality of employees. I n
terms of employee performance management, the Company has set up diversified KPIs based on emp loyees' contribution
and ability, as well as reasonable team objectives and innovative incentive activities to encourage employees’ creativity, so
as to increase the attractiveness to core staffs and R&D personnel.
In addition, the Company cares about the long-term development of employees. The Company has established “37
Interactive Entertainment Learning and Development Center” to provide sufficient training and learning opportunities for
employees and help them grow rapidly. The Company actively carried out training for newcomers and professional abilities
such as "Marathon Leadership Training Camp", "Huangpu New Army", "X+ Plan" and "37TALK", promoted talent upgrading
to meet the needs of business upgrading, paid attention to internal sharing, establish ed a team of internal professional
lecturers among employees, spread culture of sharing, built a talent echelon and upgraded talent development system.
Centering on the cultural concept of "health, happiness and sustainability", the Company upgraded colorf ul welfare
system, strengthened humanistic care and promoted retention of talents. The colorful welfare system encompasses
interest-free loan, love fund, commercial insurance and employee health management. In addition, seasonal activities on
holidays, annual physical examination, singles' fellowship, "Family Day", "Boss Face-to-Face", "37 Battle Talk", "Carnival",
“Healthy 37ers” and other thematic activities were regularly held. Inter-departments' team building promoted the
connection between employees and their friends, relatives and colleagues. In addition, the Company has established
recreational clubs for employees, covering “Super Runners”, e-sports, table games, dancing, badminton, footfall and yoga,
created cultural atmosphere that meets the characteristics of the younger generation, strengthened employees' sense of
belonging, balanced employees' work and life, and took care of employees' physical and mental health in various forms.
4. Technology iteration and innovation risk and countermeasures
The game industry has seen rapid technology iteration and faster changes in cutting -edge technologies, and demand for
new types of products has emerged among young users. Against this backdrop, if a game company fails to grasp the industry
development trend in a forward-looking manner and promptly innovate its technology and products, its R&D and application
of key technologies will be outdated, resulting in the risk of products falling behind the market.
In response, the Company continued to focus on changes in the industry's cutting-edge technologies. First, it closely
followed industry changes and probed into cutting-edge technologies through investment layout to maintain sensitive to
leading technologies. Second, it intensified the incubation of internal tec hnologies, valued investment in self-developed
games, improved self-development system, established an effective R&D system framework, and introduced diversified
incentives to encourage employees to explore new technologies. By taking these actions, the Co mpany has reserved
technologies and products for the industry development trend.
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5. Risk associated with being investigated by the China Securities Regulatory Commission with no clear conclusion yet
On 27 June 2023, the Company, Mr. Li Weiwei (the actual controller and Chairman of the Board of the Company), and
Mr. Zeng Kaitian (the Vice Chairman of the Board of the Company) received the "Notification of the China Securities
Regulatory Commission on Case Filing" (CSRC Case No. 03720230061, No. 03720230062, No. 03720230063) from the said
commission (hereinafter referred to as the "CSRC") respectively. For suspected information disclosure violations, according
to the Securities Law of the People's Republic of China, the Law of the People's Republic of China o n Administrative
Penalties and other applicable laws and regulations, the CSRC decided to file a case against the Company, Li Weiwei and
Zeng Kaitian.
During the period of investigation, the Company will actively cooperate with the CSRC’s investigation and fulfil its
information disclosure obligations in strict accordance with applicable laws, regulations and regulatory requirements.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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Part IV Corporate Governance
I Corporate Governance Overview
The Company has been improving its corporate governance structure in strict accordance with the Company Law, the
Securities Law, the Stock Listing Rules of the Shenzhen Stock Exchange, Guideline No. 1 of the Shenzhen Stock Exchange for
Self-regulation of Listed Companies—Operation Standards for Main Board Listed Companies and other applicable laws and
regulations, as well as the Company’s Articles of Association. It has established a sound and strict system for functioning o f
the general meeting of shareholders, the Board of Directors and the Supervisory Committ ee. Meanwhile, the Company has
also put in place sound internal management and control systems to further improve its corporate governance. In the
Reporting Period, the Company carried out operations and discloses information in compliance with standards, the decision-
making procedures for operation and management were compliant and effective, and its actual situation of corporate
governance met the relevant requirements of the normative documents on the governance of listed companies issued by
the China Securities Regulatory Commission.
(I) Shareholders and general meeting of shareholders
The Company convenes and holds general meetings of shareholders in strict accordance with the Company Law, the
Securities Law, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Company’s Articles of Association,
the Rules of Procedure for General Meetings of Shareholders and other relevant laws and regulations, and engages lawyers
to attend as witnesses, to ensure that all shareholders, especially minority shareholders, enjoy equal status and fully
exercise their rights.
(II) The controlling shareholder and the Company
The Company has an independent business system and is able to operate on its own. The Company and its controlling
shareholder are independent of each other in terms of business, personnel, assets, organization and finance. The Board of
Directors, the Supervisory Committee and the internal management bodies of the Company operate independently
according to the rules of procedure and the Company's systems. The controlling shareholder of the Company strictly
regulates his behaviors, and, through the general meetings of shareholders, exercises his rights as an investor. He has not
directly or indirectly intervened the Company's decisions or operating activities without holding a general meeting of
shareholders. The controlling shareholder does not have any occupation of the Company's funds, nor does Company
provides any guarantee for the controlling shareholder or any of his related parties.
(III) Directors and the Board of Directors
The Company elects directors in strict accordance with the applicable laws and regulations, as well as the Company’s
Articles of Association. At the end of the Reporting Period, there were nine members in the Comp any’s Board of Directors,
including four independent directors. The number of members of and composition of the Company's Board of Directors
complies with relevant requirements of laws and regulations. All directors of the Company do their jobs earnestly a ccording
to the laws, regulations, Guideline No. 1 of the Shenzhen Stock Exchange for Self -regulation of Listed Companies—Operation
Standards for Main Board Listed Companies, the Articles of Association, the Company's Rules of Procedure for the Board of
Directors, the Independent Director System, etc., attend meetings of the Board of Directors and the general meeting of
shareholders on time, actively participate in training, study relevant laws and regulations, and earnestly perform their duti es
as directors honestly, diligently and conscientiously. The independent directors of the Company have maintained full
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32
independence in their work, actively participated in the meetings of the Board of Directors, carefully deliberated on
proposals, and expressed independent opinions on the relevant matters, so as to effectively safeguard the interests of the
Company and its minority shareholders. Under the Board of Directors, there are four special committees, i.e. the Audit
Committee, the Compensation and Appraisal Committee, the Nomination Committee and the Strategy Committee, which
play an important role in promoting the standardized operation and sound and sustainable development of the Company.
(IV) Supervisors and the Supervisory Committee
The Company elects supervisors in strict accordance with the relevant provisions of the laws, regulations, the
Company’s Articles of Association, the Rules of Procedure for General Meetings of Shareholders, the Rules of Procedure for
the Supervisory Committee, etc. At the end of the Reporting Period, the Supervisory Committee consisted of three
supervisors, including two employee supervisors elected by the Employees' Congress of the Company. The number of
members of and composition of the Company's Supervisory Committee complies wit h the requirements of laws, regulations
and the Company’s Articles of Association. In accordance with the requirements of laws, regulations, the Rules of Procedure
for the Supervisory Committee, etc., to protect the interests of shareholders, all superviso rs of the Company earnestly
perform their duties, supervises the financial affairs of the Company as well as the legality and compliance of the
performance of duties by directors and senior managers of the Company, and safeguards the legitimate rights and interests
of the Company and its shareholders loyally and diligently.
(V) Information disclosure and transparency
The Company fulfills its information disclosure obligations in strict accordance with relevant laws and regulations as
well as the Measures for the Management of Information Disclosure by Listed Companies. The Company can disclose
information in a truthful, accurate, complete and timely manner without false records, misleading statements or material
omissions. Meanwhile, it has designated China Securities Journal, Shanghai Securities News, Securities Times, Securities
Daily and www.cninfo.com.cn as the newspapers and website for its information disclosure, thus ensuring that all investors
have equal access to corporate information, enhancing the transparency of the Company and effectively protecting the right
to know of minority investors.
(VI) Stakeholders
While maintaining its steady development and maximizing shareholders' interests, the Company actively concerns itself
with the welfare, undertakings for the public good and other issues of the region where it is located, attaches importance to
social responsibilities, fully respects and safeguards the lawful interests of employees, creditors and other sta keholders, and
strengthens communication and cooperation with all parties to promote its sustainable and sound development with them.
(VII) The Company and investors
In accordance with the provisions of the Investor Relations Management System, the Company has strengthened
investor relations management, and expressly specified the Board Secretary as the person in charge of investor relations
management, who organizes and implements the daily management of investor relations. During the Reporting Period, the
Company strengthened its communication with investors through the online briefing on its annual report, answering
investors’ phone calls, online interactions, on-site surveys and other means.
(VIII) Internal audit system
The Company has put in place an internal audit system, set up an Internal Audit Department and employed full-time
auditors, who audit and supervise the quality of economic operations, economic benefits, internal control system and
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implementation, use of expenses and assets of the Company and its subsidiaries under the leadership of the Audit
Committee of the Board of Directors.
(IX) Protection of legitimate rights and interests of shareholders
The Company protects the rights of shareholders in accordance with law, attaches importance to rea sonable
investment returns for shareholders, and expressly prescribes the profit allocation policies in the Company's Articles of
Association, especially the cash dividend policies. Thus, its profit distribution policies have been continuous and stable, w ith
the long-term interests of the Company, the overall interests of all shareholders and the sustainable development of the
Company taken into account.
Indicate whether the actual situation of corporate governance significantly deviates from the laws, administrative
regulations and regulations issued by the China Securities Regulatory Commission on listed company governance.
□ Yes No
No such cases.
II Independence of the Company from the Controlling Shareholder and Actual Controller in
Terms of Assets, Personnel, Finance, Structure and Business
The Company and its controlling shareholder are independent of each other in terms of business, personnel, assets,
organization and finance. It has an independent and complete business system and is able to ope rate on its own.
1. Independence of business
The Company is an enterprise legal person engaged in production and operation independently, owns independent and
complete R&D, purchasing and sales systems, an independent and complete business system and the ability to operate
independently in the market. It does not reply on its shareholders or any other related party, and there is no horizontal
competition between the Company and its controlling shareholder, who has not directly or indirectly intervened in t he
operations of Company.
2. Independence of personnel
The Company's senior management, including its General Manager, Deputy General Manager, Board Secretary and
Chief Financial Officer, and its core technical personnel all work at the Company on a full-time basis and receive
remunerations. They do not hold any administrative position at or receive salary from the corporate shareholders; the
directors, supervisors and senior management of the Company are all selected in strict accordance with the rel evant
provisions of the Company Law and the Company's Articles of Association. The controlling shareholder has not made
decisions on appointment and removal by bypassing the general meetings of shareholders, the Board of Directors and the
Supervisory Committee of the Company. The employees of the Company are independent of its corporate shareholders and
related parties, and the Company implements independent labor, personnel and salary management systems.
3. Independence of assets
The ownership of assets of the Company, its controlling shareholder and major shareholders is clear, and its controlling
shareholder and major shareholders have not illegally occupied or used the Company's funds, assets or other resources. The
Company independently owns all of its land use rights, real estate, machinery and equipment, trademarks, patents,
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
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proprietary technologies and other assets, and does not rely on the assets of shareholders for production and operation.
The Company has full right to control and dispose of all of its assets.
4. Independence of structure
The Company has established and improved the general meetings of shareholders, the Board of Directors, the
Supervisory Committee, the management team headed by the General Manager and some other bodies, as well as the
corresponding rules for the general meetings of shareholders, the Board of Directors and the Supervisory Committee and
the Work Rules for the General Manager, thus creating a sound corporate governance structure; each functional department
operates independently according to the prescribed responsibilities; there is no superior-subordinate relationship between
the functional departments of the Company and its corporate shareholders or their functional departments, and no
corporate shareholder has intervened in the establishment or operation of the Company's organizational structure.
5. Independence of finance
The Company has an independent financial department, an independent accounting system and an independent
financial management system, and independently makes financial decisions; the Company has opened bank accounts
independently and does not share bank accounts with its corporate shareholders. The Company files taxes and performs tax
payment obligations independently in accordance with the law. None of its corporate shareholders and other related parties
have illegally occupied or used the Company's monetary funds or other assets; the Company signs external contracts
independently.
III Annual and Extraordinary General Meetings of Shareholders Convened during the
Reporting Period
1. General Meetings of Shareholders Convened during the Reporting Period
Investor Date of the Date of Resolutions of the
Meeting Type
participation ratio meeting disclosure meeting
Announcement on
Resolutions of the
2022 Annual General
The 2022 Annual Annual General
Meeting of
General Meeting Meeting of 50.25% 23 May 2023 24 May 2023
Shareholders
of Shareholders Shareholders
(Announcement No.
2023-032), disclosed
on www.cninfo.com.cn
Announcement on
Resolutions of the First
The First
Extraordinary Extraordinary General
Extraordinary
General 18 September 19 September Meeting of
General Meeting 44.97%
Meeting of 2023 2023 Shareholders of 2023
of Shareholders
Shareholders (Announcement No.
of 2023
2023-057), disclosed
on www.cninfo.com.cn
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
35
IV Directors, Supervisors and Senior Management
1. General Information
Beginning Increase in Decrease in Other Ending
Incumbent/ Start of End of Reasons for share
Name Gender Age Office title shareholdin the period the period increase/dec shareholding
Former tenure tenure changes
g (share) (share) (share) rease (share) (share)
20 January 23 March Volunteered increase
Li Weiwei Male 46 Chairman of the Board Incumbent 322,113,019 1,115,300 323,228,319
2015 2025 in shareholding
Zeng Vice Chairman of the 23 March
Male 48 Incumbent 5 July 2019 245,344,374 245,344,374
Kaitian Board 2025
Vice Chairman of the 16 September 23 March
Hu Yuhang Male 47 Incumbent 201,597,684 201,597,684
Board 2020 2025
23 March
Xu Zhigao Male 45 General Manger Incumbent 23 May 2023 36,453,903 36,453,903
2025
Director and Deputy 20 January 23 March
Yang Jun Male 44 Incumbent 2,100,000 2,100,000
General Manager 2015 2025
Director and Deputy 24 March 23 March
Liu Jun Male 43 Incumbent 5,296,801 5,296,801
General Manager 2022 2025
24 December 23 March
Li Yang Male 55 Independent Director Incumbent
2019 2025
24 December 23 March
Ye Xin Male 48 Independent Director Incumbent
2019 2025
24 March 23 March
Lu Rui Male 48 Independent Director Incumbent
2022 2025
24 March 23 March
Tao Feng Male 43 Independent Director Incumbent
2022 2025
Chairman of the 27 December 23 March
He Yang Male 42 Incumbent
Supervisory Committee 2018 2025
27 November 23 March
Cheng Lin Female 41 Supervisor Incumbent
2015 2025
Liu 20 January 23 March
Female 46 Supervisor Incumbent
Fengyong 2015 2025
Zhu Deputy General 21 January 23 March
Male 41 Incumbent
Huaimin Manager 2019 2025
Chief Financial Officer 12 October 23 March
Ye Wei Male 40 Incumbent
and Board Secretary 2016 2025
Total -- -- -- -- -- -- 812,905,781 1,115,300 0 0 814,021,081 --
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
36
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
37
Indicate whether any director, supervisor or senior management resigned before the expiry of their tenures during the
Reporting Period.
□ Yes No
Changes of directors, supervisors and senior management:
Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Xu Zhigao General Manger Appointed 23 May 2023 Job arrangements
Li Weiwei General Manger Resigned 23 May 2023 Job arrangements
2. Biographical Information
Professional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors
and senior management:
Mr. Li Weiwei was born in 1977. Mr. Li is a member of the CPC and has no right of permanent residence in a foreign
country. He has received an EMBA degree from Cheung Kong Graduate School of Business and a Doctor of Business
Administration degree from Singapore Management University. From August 20 00, he worked for Shenzhen Zhuanjia
Network Technology Co., Ltd., then Shenzhen Quanzhi Information Technology Co., Ltd. and then Guangzhou Haiyan
Network Technology Co., Ltd. From October 2011 to 18 March 2015, he served as Executive Director and General Manager
of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. On 20 January 2015, he became Vice Chairman of the Third
Board of Directors of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. On 24 August 2015, he was
also appointed General Manager of the Company. On 21 January 2019, he became Chairman of the Boarder of Directors and
General Manager of the Company. Mr. Li is currently Chairman of the sixth Board of Directors of 37 Interactive
Entertainment Network Technology Group Co., Ltd.
Mr. Zeng Kaitian, Han nationality, was born in 1975. Mr. Zeng is of Chinese nationality and has no right of permanent
residence in a foreign country. He received an EMBA degree from China Europe International Business School. He is a co -
founder of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. In October 2011, he became Director of 37
Interactive Entertainment (Shanghai) Technology Co., Ltd., overseeing the overseas publishing of the company's online game
business. On 5 July 2019, he became Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr.
Zeng is currently Vice Chairman of the sixth Board of Directors of 37 Interactive Entertainment Network Technology Group
Co., Ltd.
Mr. Hu Yuhang, Han nationality, was born in 1976. He graduated from Lanzhou University and received an EMBA degree
from Cheung Kong Graduate School of Business. He has no right of permanent residence in a foreign country. Mr. Hu
became President of 37 Interactive Entertainment in October 2013 in charge of the strategic planning and day-to-day
management of 37 Games, an R&D brand of 37 Interactive Entertainment. He is a seasoned expert in game R&D
management and has rich experience in game R&D and project management. On 16 September 2020 , he became Director of
Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd.. Mr. Hu is currently Vice Chairman of the sixth
Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Xu Zhigao was born in 1978. Mr. Xu is a member of the CPC, with a bachelor’s degree from Sun Yat -Sen University,
and has no right of permanent residence in a foreign country. With more than a decade of experience in Mobile Internet, Mr.
Xu Zhigao successively founded several Internet enterprises, and entered the industry of mobile games in 2012; in 2014, he
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
38
joined 37 Interactive Entertainment, holding the post of the President of the branch company Guangzhou 37 Network
Technology Co., Ltd., and taking charge of establishing the mobile-game-publishing team of the Company and developing its
mobile-game-publishing business, and now, he assumes the post of the President of 37Mobile; since 23 May 2023, he has
assumed the office of the General Manager of 37 Interactive Entertainment Netwo rk Technology Group Co., Ltd.
Mr. Yang Jun, born in 1979, is a member of the CPC and has no right of permanent residence in a foreign country. He
has received a master's degree in corporate management and is working on a Doctor of Business Administration p rogram at
the Cheung Kong Graduate School of Business .He is a Chinese certified public accountant. From June 2006 to April 2012,
he worked for Deloitte Touche Tohmatsu (special general partner) as the Manager of the Audit Department. From April 2012
to present, he served as CFO of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. On 20 January 2015, he
became Director and Deputy General Manager of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd.
He is currently Director of the sixth Board of Directors and Deputy General Manager of 37 Interactive Entertainment
Network Technology Group Co., Ltd.
Mr. Liu Jun was born in 1980, with Chinese nationality, and has no right of permanent residence in a foreign country. At
present, Mr. Liu Jun holds the offices of a Vice President of the 37 Interactive Entertainment Group, and a Senior Vice
President of 37Mobile, in charge of overseas cooperation business; since 24 March 2022, he has assumed the posts of a
Director and a Deputy General Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.; now, he is a
Director of the Sixth Board of Directors and a Deputy General Manager of 37 Interactive Entertainment Network Technology
Group Co., Ltd.
Mr. Li Yang, Han nationality, was born in 1968. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received an LL.B. from Zhongnan University of Economics and Law and an LL.M. and a J.D. from Peking
University and completed a postdoctoral research program in laws at Wuhan University. He is a certified Independent
Director. Since December 2020, he has been serving as Professor and Doctorate Supervisor of the Civil, Commercial and
Economic Law School of China University of Political Science and L aw, with concurrent roles as Vice Chairman of the
Intellectual Property Law Association of China Law Society, Guest Consultant (the Fifth Session) of the Supreme People’s
Court, and Hearing Officer of The Supreme People’s Procuratorate, among other roles. On 24 December 2019, he became
Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Li is currently
Independent Director of the sixth Board of Directors of 37 Interactive Entertainment Network Technology Group Co ., Ltd.
Mr. Ye Xin, Han nationality, was born in 1975. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received a bachelor's degree in accounting from Xi'an Jiaotong University, a Master of Management
degree from Xi'an University of Technology and an EMBA degree from Guanghua School of Management, Peking University
and Cheung Kong Graduate School of Business. He is a certified Independent Director. From 1995 to 2003, he worked at the
Civil Aviation Administration of China. From 2003 to 2005, he served as Deputy General Manager of Tsinghua Unisplendour
Venture Investment Co., Ltd. From 2005 to 2015, he served as Director, Deputy General Manager, Board Secretary and
General Manager of Shenzhen Coship Electronics Co., Ltd.. From 2016 to present, he was General Manager of Tianshi Fund
Management (Shenzhen) Co., Ltd. And since 12 July 2021, he has been acting as Executive Director of Huili Resources. On 24
December 2019, he became Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co.,
Ltd. Mr. Ye is currently Independent Director of the sixth Board of Directors of 37 Interactive Entertainment Network
Technology Group Co., Ltd.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
39
Mr. Lu Rui, Han nationality, was born in 1975, with Chinese nationality, and has no right of permanent residence in a
foreign country. In 2006, he graduated from Accounting Department, Sun Yat -Sen University where he obtained the Doctor’s
degree in Management Science, and he has become a leading accounting talent na tionwide. At present, he is a Professor
and a Doctoral Supervisor in the Accounting Department, School of Business, Sun Yat -sen University. From July 1996 to
August 2003, he served successively as a Teaching Assistant and a Lecturer in the Department of Fi nance and Accounting,
Guangzhou Finance and Trade Management Cadre Institute; from July 2006 to December 2008, he worked as a Lecturer at
Lingnan (University) College, Sun Yat-sen University; from January 2009 to June 2016, he was an Associate Professor at
Lingnan (University) College, Sun Yat-sen University; from July 2016 to December 2021, he became a Professor and a
Doctoral Supervisor at Lingnan (University) College, Sun Yat-sen University; since January 2022, he has served as a Professor
and a Doctoral Supervisor at School of Business, Sun Yat-sen University. From April 2010 to July 2018, he was an
Independent Director of Guangzhou GCI Science & Technology Co. Ltd.; from July 2011 to January 2017, he was an
Independent Director of Guangzhou Haozhi Industrial Co., Ltd.; from January 2015 to May 2019, he was an Independent
Director of Xilong Scientific Co., Ltd; from December 2015 to October 2021, he was an Independent Director of Foshan
Electrical and Lighting Co., Ltd.; from April 2015 to December 2018, he was an Independent Director of Guangzhou Huayuan
Landscape Architecture Co., Ltd.; from April 2016 to March 2019, he was an Independent Director of Youmi Technology Co.,
Ltd.; from January 2017 to March 2021, he concurrently held the posts of a Director and the General Manager of Sun Yat-sen
University Zijing Education Co., Ltd., Guangzhou; from August 2019 to October 2021, he was an Independent Director of
Huabang Construction and Investment Group Co., Ltd.; from September 2019 to September 2022, he was an Independent
Director of Shenzhen Kingsino Technology Co., ltd.; from May 2017 to May 2023, he was an Independent Director of
Guangzhou Goaland Energy Conservation Tech Co., Ltd.; Since April 2019, he has been an Independent Director of Bank of
Guangzhou Co., Ltd.; Since May 2020, he has been an Independent Director of PSBC Consumer Finance Co., Ltd.; Since
November 2021, he has been an Independent Director of Guangzhou Resource Environmental Protection Technology Co.,
ltd.; Since 24 March 2022, he has served as an Independent Director of 37 Interactive Entertainment Network Technology
Group Co., Ltd.; at present, he assumes the post of an Independent Director of the Sixth Board of Directors of 37 Interactive
Entertainment Network Technology Group Co., Ltd.
Mr. Tao Feng, Han nationality, was born in 1980, with Chinese nationality, and has no right of permanent residence in a
foreign country. He received the Doctor’s degree in Industrial Economics from Jinan University, and has obtained the
Independent Director Qualification Certificate. From March 2013 to April 2014, he was engaged in the scientific research in
the direction of Industrial Economics at University of California, Irvine in the United States; since July 2009, he has
successively held posts, such as Deputy Director of Institute of Industrial Economics, at Jinan University, and at present, he
assumes the posts of the Director of Institute of Industrial Economics, Jinan University, a Deputy Director of “the Belt and
Road Initiative” and the Guangdong-Hong Kong-Macao Greater Bay Area Research Institute, the Chief Expert of JNU’s Urban
High-Quality Development Research Think Tank, and a Doctoral Supervisor. Since 2020, he has held a concurrent post of a
Vice President of the China Society of Industrial Economics; from February 2021 to June 2023, he was an Independent
Director of Guangxi Bossco Environmental Protection Technology Co., Ltd.; Since 24 March 2022, he has served as an
Independent Director of 37 Interactive Entertainment Network Technology G roup Co., Ltd.; at present, he assumes the post
of an Independent Director of the Sixth Board of Directors of 37 Interactive Entertainment Network Technology Group Co.,
Ltd.
Mr. He Yang, Han nationality, was born in 1981. He is of Chinese nationality, is a member of the CPC and has no right of
permanent residence in a foreign country. He received an MBA degree from University of Electronic Science and Technology
of China. From June 2012 to July 2014, he was Deputy General Manager of Chengdu 37Wan Network Te chnology Co., Ltd.. In
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
40
July 2014, he became Director and General Manager of Jiangsu Aurora Network Technology Co., Ltd. In December 2018, he
became Employee Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. In January 2019, he became Chairman of the Supervisory Committee of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd. Mr. He is currently Chairman of the sixth Supervisory Committee of 37
Interactive Entertainment Network Technology Group Co., Ltd.
Ms. Cheng Lin, Han nationality, was born in 1982. She is of Chinese nationality and has no right of permanent residence
in a foreign country. She is working on an EMBA program at Lingnan College, Sun Yat -sen University. From 2011 to 2016, she
was Director of Public Affairs of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. She is currently Shareholder
Supervisor of the sixth Supervisory Committee of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Ms. Liu Fengyong, Han nationality, was born in 1977. She is of Chinese nationality, a member of the CPC, and a
bachelor’s degree holder. And she has no right of permanent residence in a foreign country. From July 2000 to September
2005, she worked for Guangzhou Pearl River Piano Group Co., Ltd. as a Legal Specialist. From November 2005 to August
2012, she was Legal Director of Guangzhou Rockmobile Network Co., Ltd. In August 2012, she became Legal Manager of 37
Interactive Entertainment (Shanghai) Technology Co., Ltd. In January 2015, she became Employee Supervisor of the Third
Supervisory Committee of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. And in January 2017, she
became Employee Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. She is currently Employee Supervisor of the sixth Supervisory Committee of 37 Interactive
Entertainment Network Technology Group Co., Ltd.
Mr. Zhu Huaimin, Han nationality, was born in 1982. He is of Chinese nationality and has no right of permanent
residence in a foreign country. He holds an EMBA degree of China Europe International Business School. From July 2004 to
July 2008, he worked for Beijing Sina Internet Information Service Co., Ltd. From August 2008 to December 2009, he was
Technical Manager of Molihe Network Technology (Beijing) Co., Ltd. In October 2011, he joined 37 Interactive Entertainment
(Shanghai) Technology Co., Ltd., serving as Vice President of Technology. On 21 Janu ary 2019, he became Deputy General
Manager of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Zhu is currently Deputy General
Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Ye Wei was born in 1983. He is a member of the CPC and has no right of permanent residence in a foreign country.
He has received a bachelor's degree, is a Certified Public Accountant in China, and is a Shenzhen Stock Exchange certified
Board Secretary. From August 2006 to July 2013, he was Audit Manager of Ernst & Young Guangzhou Office. From July 2013
to March 2015, he was Chief Financial Officer of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. On 30 March
2015, he became Chief Financial Officer of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. On 6
January 2017, he became Chief Financial Officer and Secretary to the Fourth Board of Directors of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd. Mr. Ye is currently Chief Financi al Officer and Secretary to the sixth
Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Offices held concurrently in shareholding entities:
□ Applicable Not applicable
Offices held concurrently in other entities:
Applicable □ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
41
Office held in the End of Paid by the
Name Other entity Start of tenure
entity tenure entity or not
the Civil, Commercial and
Professor and
Economic Law School of China
Li Yang Doctorate 1 December 2020 Yes
University of Political Science
Supervisor
and Law
Tianshi Fund Management
Ye Xin General Manager 20 January 2016 Yes
(Shenzhen) Co., Ltd.
Professor and
The School of Business of Sun
Lu Rui Doctorate 1 January 2022 Yes
Yat-Sen University
Supervisor
The Institute of Industrial Dean and
Tao Feng Economics of the Jinan Doctorate 1 January 2020 Yes
University Supervisor
Li Yang: Since December 2020, he has been serving as Professor and Doctorate Supervisor of the Civil,
Commercial and Economic Law School of China University of Political Science and Law.
Ye Xin: From 2016 to present, he was General Manager of Tianshi Fund Management (Shenzhen) Co., Ltd.
Other And since July 2021, he has been acting as Executive Director of Huili Resource s.
information Lu Rui: Since January 2022, he has been serving as Professor and Doctorate Supervisor at The School of
Business of Sun Yat-Sen University.
Tao Feng: Since January 2020, he has been serving as Dean and Doctorate Supervisor at The Institute of
Industrial Economics of the Jinan University.
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and
senior management as well as those who resigned in the Reporting Period:
□ Applicable Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
(1) Procedure for determining the remunerations of directors, supervisors and senior management: The Remuneration
and Performance Assessment Committee of the Company's Board of Directors formulates the policy and plan for
compensating the Company's directors, supervisors and senior management. The remunerations of directors and
supervisors are reviewed and approved by the General Meeting of Shareholders. The remunerations of senior management
are reviewed and approved by the Board of Directors. The Human Resources and Finance Departments of the Company
support the Remuneration and Performance Assessment Committee to implement the remuneration plan for the Company's
directors, supervisors and senior management.
(2) Criteria for determining the remunerations of directors, supervisors and senior management: The remunerations of
directors and supervisors are determined based on the operational performance of the Company and the current market
conditions. The remunerations of senior management are determined according to the Company's relevant regulations,
taking into account the overall remuneration of the gaming industry and the remuneration of comparable companies with a
similar business size, as well as the responsibilities and contributions of the senior management in the Company.
(3) Payment of remunerations of directors, supervisors and senior management: The remunerations of independent
directors are paid semiannually to their personal accounts as scheduled. The remunerations of other directors, superv isors
and senior management are determined based on the results of their performance assessment and are paid monthly or as
scheduled in the remuneration payment system.
Remuneration of directors, supervisors and senior management for the Reporting Period
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
42
Unit: RMB'0,000
Total before-tax Paid by any
Incumbent/
Name Gender Age Office title remuneration from related party
Former
the Company or not
Li Weiwei Male 46 Chairman of the Board Incumbent 852.85 No
Vice Chairman of the
Zeng Kaitian Male 48 Incumbent 895.72 No
Board
Vice Chairman of the
Hu Yuhang Male 47 Incumbent 979.62 No
Board
Director and Deputy
Yang Jun Male 44 Incumbent 895.33 No
General Manager
Director and Deputy
Liu Jun Male 43 Incumbent 873.59 No
General Manager
Li Yang Male 55 Independent Director Incumbent 21 No
Ye Xin Male 48 Independent Director Incumbent 21 No
Lu Rui Male 48 Independent Director Incumbent 21 No
Tao Feng Male 43 Independent Director Incumbent 21 No
Chairman of the
He Yang Male 42 Supervisory Incumbent 226.37 No
Committee
Cheng Lin Female 41 Supervisor Incumbent 287.18 No
Liu Fengyong Female 46 Supervisor Incumbent 74.53 No
Xu Zhigao Male 45 General Manager Incumbent 940.73 No
Deputy General
Zhu Huaimin Male 41 Incumbent 316.63 No
Manager
Chief Financial Officer
Ye Wei Male 40 Incumbent 455.84 No
and Board Secretary
Total -- -- -- -- 6,882.39 --
Other information:
Applicable □ Not applicable
In terms of the remuneration of its relevant directors and senior management in 2023, the Company has
comprehensively considered its actual situation, the overall remuneration level of the game industry and that of the
comparable companies with equivalent business volume as the Company, as well as the responsibility assumed by the
relevant personnel for the Company and the contribution made by them to it. Compared with the market average, the
remuneration of the Company’s principal directors and senior management is reasonable, because the remuneration can
basically reflect the efforts and contribution given by the principal senior management to the Company’s development, and
the Company has performed the procedures for the examination and approval of the high remuneration of both the
directors and the supervisors. Therefore, there are no circumstances w here the interests of the Company’s shareholders are
damaged.
V Duty Performance by Directors during the Reporting Period
1. Board Meetings Convened during the Reporting Period
Meeting Date of the meeting Date of disclosure Resolutions of the meeting
Announcement on Resolutions of the
The Seventh Meeting of the Seventh Meeting of the Sixth Board of
3 March 2023 4 March 2023
Sixth Board of Directors Directors (Announcement No. 2023-009),
disclosed on www.cninfo.com.cn
Announcement on Resolutions of the Eighth
The Eighth Meeting of the Meeting of the Sixth Board of Directors
27 April 2023 28 April 2023
Sixth Board of Directors (Announcement No. 2023-013), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the Ninth
The Ninth Meeting of the
28 April 2023 29 April 2023 Meeting of the Sixth Board of Directors
Sixth Board of Directors
(Announcement No. 2023-027), disclosed
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
43
on www.cninfo.com.cn
Announcement on Resolutions of the 10th
The 10th Meeting of the Meeting of the Sixth Board of Directors
23 May 2023 24 May 2023
Sixth Board of Directors (Announcement No. 2023-033), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the 11th
The 11th Meeting of the Meeting of the Sixth Board of Directors
3 July 2023 4 July 2023
Sixth Board of Directors (Announcement No. 2023-039), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the 12th
The 12th Meeting of the Meeting of the Sixth Board of Directors
15 August 2023 16 August 2023
Sixth Board of Directors (Announcement No. 2023-044), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the 13th
The13th Meeting of the Meeting of the Sixth Board of Directors
30 August 2023 31 August 2023
Sixth Board of Directors (Announcement No. 2023-047), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the 14th
The 14th Meeting of the Meeting of the Sixth Board of Directors
30 October 2023 31 October 2023
Sixth Board of Directors (Announcement No. 2023-061), disclosed
on www.cninfo.com.cn
Announcement on Resolutions of the 15th
The 15th Meeting of the Meeting of the Sixth Board of Directors
26 December 2023 28 December 2023
Sixth Board of Directors (Announcement No. 2023-070), disclosed
on www.cninfo.com.cn
2. Attendance of Directors at Board Meetings and General Meetings of Shareholders
Attendance of directors at board meetings and general meetings of shareholders
The director
Board
Total number of Board Board failed to
Board meetings General
board meetings meetings meetings attend two
meetings attended by meetings of
Director the director was attended the director consecutive
attended way of shareholder
supposed to through a failed to board
on site telecommu s attended
attend proxy attend meetings or
nication
not
Li Weiwei 9 9 0 0 0 No 2
Zeng Kaitian 9 9 0 0 0 No 2
Hu Yuhang 9 9 0 0 0 No 2
Yang Jun 9 9 0 0 0 No 2
Liu Jun 9 9 0 0 0 No 2
Li Yang 9 1 8 0 0 No 2
Ye Xin 9 1 8 0 0 No 2
Lu Rui 9 0 9 0 0 No 1
Tao Feng 9 1 8 0 0 No 1
Explanation of why any director failed to attend two consecutive board meetings:
3. Objections Raised by Directors on Matters of the Company
Indicate whether any directors raised any objections on any matter of the Company.
□ Yes No
No such cases in the Reporting Period.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
44
4. Other Information about Duty Performance by Directors
Indicate whether any recommendations from directors were adopted by the Company.
Yes □ No
Explanation on adoption/rejection of recommendations of directors:
During the Reporting Period, all directors of the Company actively performed their duties in accordance with the
Company Law, the Securities Law and other laws and regulations, as well as the Articles of Association of the Company and
other regulations and requirements. They put forward relevant proposals on important operational matters of the Company
in the light of the actual situation of the Company. The Company listened carefully to the suggestions of the directors to
ensure that the decision-making was scientific, timely and efficient, and that the interests of the listed Company and the
shareholders were effectively safeguarded.
VI Duty Performance by the Supervisory Committee
Indicate whether the Supervisory Committee identified any risk to the Company during its supervision in the Reporting
Period.
□ Yes No
The Supervisory Committee raised no objections with respect to matters of the Company.
VII Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the parent at the
2
period-end
Number of in-service employees of principal subsidiaries at
3,445
the period-end
Total number of in-service employees at the period-end 3,447
Total number of paid employees in the Reporting Period 3,447
Number of retirees to whom the parent or its major
0
subsidiaries need to pay retirement pensions
Functions
Function Employees
Marketing 1,073
Technical 323
Financial 111
Administrative 49
R&D 1,148
Teaching 181
Operation 251
Others 311
Total 3,447
Educational backgrounds
Educational background Employees
Master’s degree and above 257
Bachelor’s degree 2,399
Junior college and below 791
Total 3,447
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
45
2. Employee Remuneration Policy
The Company strictly observes the Labor Law of the People's Republic of China and other relevant laws and regulations,
including rules, regulations and normative documents issued by the various ministries and commissions of the State Council,
and has implemented an employment contract system. The Company protects the rights and interests of employees by
strictly implementing China's employment system, labor protection system, social security system and medical security
system and paying premiums of pension insurance, medical insurance, unemployment insurance, work injury insurance and
maternity insurance and making contributions to the Housing Provident Fund for employees.
The Company provides employees with generous welfare benefits, such as supplementary commercial insurance,
interest-free housing loans, solid breakfast, meal allowances, physical checks, extra holidays, employee clubs, and gifts for
holidays.
The total amount of employee remunerations of the Reporting Period is RMB 1,599 million, accounting for 11.60% of
the total costs (including cost of sales, distribution and selling expenses, general and administrative expenses and R&D
expenses). The profitability of the Company has a low sensitivity to the variation in the total amount of employee
remunerations. At the end of the Reporting Period, the Company's core technical staff accounts for 21.85% of the total
number of employees, and their remunerations account for 26.85% of the total amount of employee remunerations.
3. Training Plans
The Company conducts staff training focusing on improving employee’s quality and working skills, promoting their
occupational development, and attracting, developing and retaining talents to support the Company’s business
development and human resources appreciation. In addition, the training program is committed to building a unified
corporate culture, values and code of conduct to strengthen cohesion. Guided by the Company’s sustainable development
strategy, the program also introduced advanced management concepts, and facilitated internal management progress,
which was a booster for cadre training and strategy implementation.
In 2023, centering on the organisational objectives of “retention of core talents” and “accumulation of organisati onal
experience”, 37 Interactive Entertainment Learning and Development Centre (the “Centre”) started with four aspects,
namely boosting leadership, deepening professional competence, consolidating core general ability, and establishing
systems and improving efficiency synergistically. Focusing on core talent empowerment, the Centre carried out such training
as Leading Leap Plan, Integration Plan, “Super Assistance” mentor and lecturer training, AIGC series of livestreaming courses ,
37TALK professional sharing, core general ability empowerment, and training of regularly and on-campus recruited new
hires. Based on business requirements, the Centre customised training solutions to help solve practical business problems.
4. Labor Outsourcing
Applicable □ Not applicable
Total hours of labor outsourced 840,597.26
Total payment for labor outsourcing (RMB) 47,097,830.46
VIII Profit Distribution (in the Form of Cash and/or Stock)
The profit distribution policy, especially the formulation, implementation and amendments to the cash dividend policy, in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
46
Reporting Period:
Applicable □ Not applicable
The Company actively strengthens the awareness of returning to shareholders, promotes the concept of returning to
shareholders and value creation, and shares the growth of the Company with shareholders. During the Reporting Period, the
Company put forward the 2022 final dividend plan and the 2023 interim dividend plan on the premise of ensuring the
normal operation and development of the Company, taking into account the reasonable investor returns and the sustainable
development of the Company. The dividend plans of the Company are all in compliance with the Articles of Association of
the Company.
The Company’s 2022 final dividend plan was approved at the Eighth Meeting of the Sixth Board of Directors and the
2022 Annual General Meeting of Shareholders. According to the plan, with a fixed dividend payout ratio, based on the total
issued share capital (exclusive of shares in the Company’s account for repurchased shares) on the date of record, a cash
dividend of RMB4.50 (tax inclusive) per 10 shares was planned to be distributed to all the shareholders of the Company, with
the remaining undistributed profit carried forward to the next year; and there would be no bonus issue from either profit or
capital reserves.
The Company’s 2023 interim dividend plan was approved at the 13th Meeting of the Sixth Board of Directors and the
First Extraordinary General Meeting of Shareholders of 2023. According to the plan, with a fixed dividend payout ratio, based
on the total issued share capital (exclusive of shares in the Company’s account for repurchased shares) on the date of record ,
a cash dividend of RMB4.50 (tax inclusive) per 10 shares was planned to be distributed to all the shareholders of the
Company; and there would be no bonus issue from either profit or capital reserves.
The above-mentioned dividend plans were carried out on 2 June 2023 and 28 September 2023, representing a total
dividend payout of RMB1.988 billion (tax inclusive) in cash.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association
Yes
and resolution of general meeting of shareholders
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties
Yes
and played their due role
If the Company has no dividend plan, it should disclose the
specific reasons and the next steps it intends to take to N/A
enhance investor returns
Non-controlling shareholders are able to fully express their
opinion and desire and their legal rights and interests are Yes
fully protected
In case of adjusting or changing the cash dividend policy,
the conditions and procedures involved are in compliance N/A
with applicable regulations and transparent
Indicate whether the Company fails to put forward a cash dividend proposal despite the facts that the Company has m ade
profits in the Reporting Period and the profits of the Company as the parent distributable are positive.
□ Applicable Not applicable
Final dividend plan:
Applicable □ Not applicable
Bonus issue from profit (share/10 shares) 0
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
47
Cash dividend/10 shares (RMB) (tax inclusive) 3.70
Share base (share) 2,217,864,281
Cash dividends (RMB) (tax inclusive) 820,609,783.97
Cash dividends in other forms (such as share repurchase) (RMB) 217,418,706.23
Total cash dividends (including those in other forms) (RMB) 1,038,028,490.20
Distributable profit (RMB) 4,846,565,105.07
Total cash dividends (including those in other forms) as % of total
100%
profit to be distributed
Applicable cash dividend policy
If it is difficult to identify the development stage of the Company but it has a significant capital expenditure arrangement,
when making profit distribution, cash dividends shall account for no less than 20% in the profit distribution.
Details of the cash and/or stock dividend plan
Upon approval by the Board of Directors, the Company’s 2023 final dividend plan is as follows: With a fixed dividend
payout ratio, based on the total issued share capital (exclusive of shares in the Company’s account for rep urchased shares)
on the date of record, a cash dividend of RMB 3.70 (tax inclusive) per 10 shares is planned to be distributed to all the
shareholders of the Company, with the remaining undistributed profit carried forward to the next year; and there will be
no bonus issue from either profit or capital reserves. The above dividend plan is consistent with the Company’s
performance growth, and also in line with relevant provisions of the Company Law, the Articles of Association, etc. The
independent directors of the Company have expressed consent as their independent opinion on the above dividend plan.
IX Establishment and Implementation of Internal Control System during the Reporting
Period
1. Internal Control Establishment and Implementation
During the Reporting Period, in strict accordance with the requirements of the CSRC, the Shenzhen Stock Exchange, and
such laws and regulations as the Company Law and the Company’s Articles of Association, the Company established a strict
internal control management system. Based on this, in combination with industry characteristics and actual business
operation, the Company continuously improved and refined its internal control system, and intensified internal audit
supervision. Meanwhile, the Company continuously intensified the internal control awareness and responsibility of the
Board of Directors and key positions, fully recognised the significance of complete internal control system in improving
business management, enhancing risk prevention and control, and helping enterprises to achieve high-quality development,
and strengthened the awareness of operation in compliance. By doing so, the Company has ensured that its internal control
system has been effectively executed, practically boosted its level of standardis ed operation, promoted its healthy and
sustainable development, and protected the interests of the Company and all of its shareholders.
2. Material Internal Control Weaknesses Identified during the Reporting Period
□ Yes No
XI Subsidiary Management during the Reporting Period
Subsidiary Management plan Progress Problems Solutions Solution progress Subsequent plan
Guangzhou Runyi In strict accordance with the
Network Technology Rules for the Management of
Co., Ltd. and other Majority-owned Subsidiaries,
subsidiaries newly the Company strengthened Completed N/A N/A N/A N/A
included in the guidance and compliance
consolidated with respect to the
financial statements subsidiaries newly included
of the Reporting in the consolidated financial
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
48
Period, see Note IX statements. Under the
Changes to the authorization of the
Consolidation Scope Company, the subsidiaries
in Part X. carried out activities and
operated independently.
XI Internal Control Assessment Report or Internal Control Audit Report
1. Internal Control Assessment Report
Date of full disclosure of the internal
20 April 2024
control assessment report
Index of full disclosure of the internal
http://www.cninfo.com.cn
control assessment report
Ratio of the total assets of the
organizations included in the
100.00%
assessment to the Company's
consolidated total assets
Ratio of the revenue of the
organizations included in the
100.00%
assessment to the Company's
consolidated revenue
Deficiency identification criteria
Category Financial report Non-financial report
The identification of deficiencies in
Signs of material deficiencies in financial
non-financial reports is mainly based
report include: (1) Failure of control
on the degree of impact of the
environment. (2) Misconduct of directors,
deficiencies on the effectiveness of
supervisors or senior managers. (3) Major
business procedures and the
mistakes in current financial report which
possibility of their occurrence. If the
fail to be identified by the Company's
possibility of the deficiency is
internal control. (4) The supervision of the
relatively low, it will reduce the work
Audit Committee and audit department
efficiency or effectiveness, increase
on the Company’s financial report and on
the uncertainty of the effectiveness,
the internal control over internal report is
or make the work result deviate from
ineffective. Signs of significant
the expected goal, the deficiency is a
deficiencies in financial report include: (1)
general deficiency. If the possibility of
Failure to choose and apply accounting
the deficiency is relatively high, it will
policies according to widely accepted
Qualitative criteria significantly reduce the work
accounting standards. (2) Failure to
efficiency or effectiveness,
establish anti-fraud procedures and
significantly increase the uncertainty
control management. (3) Lack of
of the effectiveness, or make the work
corresponding control mechanism for
result significantly deviate from the
accounting treatment of unconventional
expected goal, the deficiency is a
or special transactions or lack of
significant deficiency. If the possibility
corresponding compensatory control. (4)
of the deficiency is relatively high, it
One or more deficiencies in the control of
will severely reduce the work
the period-end financial reporting process
efficiency or effectiveness, severely
and failure to reasonably ensure true and
increase the uncertainty of the
complete financial reports. General
effectiveness, or make the work result
deficiencies refer to the control
severely deviate from the expected
deficiencies other than material and
goal, the deficiency is a general
significant deficiencies mentioned above.
deficiency.
The Company views 5% of the total profit The Company views 5% of direct loss
as the indicator of overall importance of of the Company’s net assets as the
Quantitative criteria its income statement, and views 5% of net indicator of importance of non-
assets as the indicator of overall financial report. When the direct loss
importance of its balance sheet. When a is larger than or equal to 5% of the net
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
49
potential misstatement is larger than or assets, it is considered as a material
equal to 5% of the total profit in the deficiency. If the direct loss is lower
income statement, or a potential than 5% but larger than or equal to 3%
misstatement is larger than or equal to of the net assets, it is considered as a
5% of net assets in the balance sheet, it is significant deficiency. If the direct loss
considered as a material deficiency. If a is lower than 3% of the net assets, it is
potential misstatement is lower than 5% considered as a general deficiency.
but larger than or equal to 3% of the total
profit in the income statement, or a
potential misstatement is lower than 5%
but larger than or equal to 3% of the net
assets in the balance sheet, it is
considered as a significant deficiency. If a
potential misstatement is lower than 3%
of the total profit in the income
statement, or a potential misstatement is
lower than 3% of the net assets in the
balance sheet, it is considered as a
general deficiency.
Number of material deficiencies in
0
financial reports
Number of material deficiencies in non-
0
financial reports
Number of significant deficiencies in
0
financial reports
Number of significant deficiencies in
0
non-financial reports
2. Internal Control Audit Report
Applicable □ Not applicable
Opinion paragraph
Huaxing Certified Public Accountants LLP is of the opinion that 37 Interactive Entertainment Network Technology Group
Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as of 31 December 2023,
based on the Basic Rules on Enterprise Internal Control and other applicable regulations.
Report disclosed or not Disclosed
Disclosure date 20 April 2024
Index to the disclosed report http://www.cninfo.com.cn
Type of opinion Unmodified unqualified opinion
Material defects in internal control not related to financial
No
reporting
Indicate whether any modified opinion is expressed in the Internal Control Audit Report.
□ Yes No
Indicate whether the Internal Control Audit Report is consistent with the internal control self-assessment report issued by
the Company’s Board of Directors.
Yes □ No
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
50
Part V Environmental and Social Responsibility
I Material Environmental Issues
Indicate whether the Company or any of its subsidiaries falls into major pollutant -discharge entities published by
environmental protection authorities.
□ Yes No
Administrative punishments received during the Reporting Period due to environmental issues :
Name of the
Reason for Impact on the
Company or Regulation violated Punishment Rectification
punishment Company
subsidiary
N/A N/A N/A N/A N/A N/A
Other environmental information in relation to major pollutant-discharge entities:
N/A
Actions taken during the Reporting Period to reduce carbon emissions and the results:
Applicable □ Not applicable
Incorporating “sustainable development” into its corporate vision, 37 Interactive Entertainment has established its
objective of achieving carbon neutrality within its scope of business operations by 2025, continuously optimised its carbon
neutrality path, and implemented high-quality carbon emission management, so as to advance the zero-carbon
transformation of the enterprise, boost the development of its green productive forces, and jointly respond to climate
change.
In terms of green operations management, the Company proactively carries out the analysis of climate risks and
opportunities, optimises the energy efficiency of administrative operations management, advances the green construction
of the Guangzhou Headquarters building, and joins hands with the value chain partner Alibaba Cloud to explore how to
boost green decision making through cloud-service carbon bills. The Company continuously monitors and discloses the
carbon emissions throughout the full life cycle of the enterprise. In 2023, its direct emissions (Scope 1) were 162.59 tons,
and its indirect emissions from energy (Scope 2) were 704.98 tons. The two items were the carbon emissions within the
Company’s operation boundary, down 37.30% YoY.
In terms of green market trading, the Company continuously explores green electricity certificate trading and carbon
sink trading. In 2023, the Company domestically purchased 6,600 MWh of wind electricity and photovoltaic green electricity
through the certificates, with the green electricity usage accounting for 81% of the annual total, thus supporting the
development of China’s renewable energy industry. To participate in forestry carbon sink trading, the Company purchased
200 tons of carbon credits through the project of converting logged to protected forests in Inner Mongolia, and boosted the
development of the under-forestry economy and sustainable ecology of the Great Khingan Region. The Company also plans
to explore the direct use of green electricity in the Guangzhou Headquarters building in 2024, so as to further reduce carbon
emissions caused by electricity usage.
In terms of the initiatives for green transformation, the Company carried out the environmental protection month of
“Act Now to Shape a Zero-Carbon Future”, and led employees to the establishment of green lifestyles; participated in
industry communication, and shared the Company’s practical experience in carbon neutrality; also participated in action for
global climate change, such as the “Race to Zero” initiative, the Science Based Targets initiative (SBTi), the temperature -
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
51
limiting target of Business Ambition for 1.5℃, and the “Playing for the Planet” Alliance initiated by the United Nations
Environment Programme, thus strengthening international cooperation.
On the occasion of World Environment Day 2023, the Company issued the first Climate Risk Management Progress
Report. Prepared in line with the internationally recognised climate risk management frameworks, this report offered a
systematic disclosure of the Company’s environmental information, including the Company’s performance and
achievements in governance, strategy, risk management, and performance indicators. It demonstrated our ongoing efforts
to strengthen the transparency of environmental information.
Due to our exceptional performance in carbon neutrality practices, we improved our rating from D (disclosure rating) in
2021 to B- (management rating) in the CDP Scores for Climate Change 2023 released by CDP. This achievement positioned us
ahead of the industry average. Furthermore, our sustainable development case has been included in the Harvard Business
School Case Selections, underscoring our leadership and exemplary role in the industry.
Reasons for the non-disclosure of other environmental information:
The Company is not a major pollutant-discharge entity published by environmental protection authorities. During the
Reporting Period, the Company received no punishments due to violation of environmental protection laws and regulations.
II Corporate Social Responsibility (CSR)
37 Interactive Entertainment is dedicated to fulfilling its corporate social responsibility, persevering in high -quality
socially responsible practices to contribute to the co-creation of social value and a better life for everyone.
1. Deepening industry-research cooperation in the collaborative cultivation of talent
The Company has been deepening resource sharing and complementary cooperation with renowned domestic
universities such as Sun Yat-sen University, Xi’an Jiaotong University, South China University of Technology, and Sichuan
University, aiming to build a sustainable collaborative talent cultivation system. We have organised diverse activities such as
practical sessions for professional skills, campus meetings on the theme of “The Fun with Games”, and corporate training
camps to foster the pre-employment cultivation of young talent and provide them with broader employment opportunities.
We have also helped cultivate innovation and sustainable development capabilities amon g young talent through
competitions such as innovation challenges. Specifically, the inaugural “Innovation+” micro -innovation competition for
college and university students focused on nurturing talent with great potential. It encouraged students to unleas h their
creativity in small game development and game publishing. This allowed students to practice technical skills and develop
diverse perspectives during creation. The event attracted over 1,000 students from prestigious domestic and international
universities to participate. Furthermore, the “2023 Sustainable Development Innovation Challenge for College and
University Students” drew students’ attention to topics such as cultural preservation and promotion, rural revitalisation,
rural aesthetic education, carbon neutrality, marine ecosystem conservation and volunteer services. Through digital
creations, young talent contributed their ingenuity to the cause of building a sustainable future.
2. Contributing to building a better society
37 Interactive Entertainment has always been concerned about social development and actively responded to major
social events. During the Reporting Period, the Company donated RMB 1 million to support earthquake relief and post -
disaster reconstruction in Jishishan Bonan-Dongxiang-Salar Autonomous County of Gansu Province.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
52
Under the leadership of the Party Committee of 37 Interactive Entertainment, we mobilised employees from various
business units to participate in volunteer services spanning 55 sessions. In the process, a vari ety of activities were organised,
including blood donations, providing care for children with special needs and their families, visiting sick children and
residents in need in communities, supporting youth in enhancing their digital literacy, and assisting in the operation of
community charity supermarkets, aiming to spread warmth throughout society.
As a pioneer in social responsibility fulfilment in the industry, we have been actively engaged in cultivating innovative
talent, safeguarding a safe cyberspace, regulating corporate governance, and promoting the establishment of a responsible
ecosystem. Collaborating with stakeholders, we aspire to build a community of shared responsibility. For specific initiatives
regarding the aforementioned topics, please refer to the relevant sections of the Environmental, Social and Governance
Report 2023.
III Efforts in Poverty Alleviation and Rural Revitalization
For details, please refer to the "Practices of Strategic Philanthropy" section of the Environmental, Social and
Governance Report 2023.
1. Supporting the high-quality educational development of high schools in counties
In 2014, 37 Interactive Entertainment initiated the establishment of the Guangdong Youxin Charity Foundation, which
would focus on “supporting rural educational revitalisation and promoting the cultivation of outstanding talent”. We have
been concerned about the high-quality and balanced development of high school education in counties, providing support
to rural young talent through scholarships, grants, knowledge enrichment, and technology literacy enhancement
programmes.
During the Reporting Period, the Company, through the Guangdong Youxin Foundation, launched programmes such as
the “Youxin Peers” high school education assistance programme, the high school enrolment guarantee programme for
ethnic minority girls, the “Vocational Wisdom Calling” career programme, the “Embrace Exploration” Guangzhou Summer
Camp, and the free reading programme. The ultimate goal was to empower the diversified devel opment of rural young
talent.
To further support rural young talent in developing core competencies required in the future and bolster their
technological innovation capabilities, we have encouraged our employee volunteers to conduct specialised sharing se ssions
for high school students, thereby inspiring them to explore how technology can enrich their lives. Furthermore, certain
recipients of our financial aid have been invited to partake in aerospace -related programme-based learning journeys.
Through field exploration and study at the aerospace science popularisation base and the co -creation of games aimed at
disseminating aerospace knowledge, students are allowed to apply the scientific theories and knowledge they have acquired.
By the end of 2023, our rural educational revitalisation efforts had reached 5,072 high school students across 49
counties in 11 provinces/autonomous regions, including Anhui, Sichuan, Gansu, Guizhou, and Jiangxi. Among these students,
2,598 were receiving our aid during the Reporting Period. Certain sponsored students who took the 2023 National College
Entrance Examination performed impressively, securing spots in Double First -Class-recognised universities such as Nanjing
University, Sun Yat-sen University, and Wuhan University.
With years of dedication to the field of rural education, 37 Interactive Entertainment’s “Youxin Peers” County -Level
High School Scholarship Programme for underdeveloped areas was selected as a “Brand Programme” in the 2022 National
Charity Federation Role Models Campaign.
2. Driving the improvement of quality and efficiency of industry assistance
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
53
In 2023, 37 Interactive Entertainment actively leveraged its corporate influence to engage in rural industry assistance,
contributing to the “Project of Promoting the High-quality Development of Villages, Towns, and Counties”. Guided by
government authorities, 37 Interactive Entertainment reached an agreement of intent with Huangjin Town, Fengshun
County, Meizhou City, on special assistance. Leveraging our expertis e in creative expression, we formulated a special
assistance plan focusing on “Huangjin Ginger Candy”, an agricultural product recognised as an intangible cultural heritage in
the local ginger specialty industry. We also designed creative gift boxes showca sing traditional cultural elements for
Huangjin Ginger Candy and launched a special cultural promotional video titled “Sweet ‘Ginger’ Love”, showcasing the phase
achievements of rural revitalisation and targeted assistance efforts and expanding the distrib ution channels for Huangjin
Ginger Candy.
Additionally, we have enhanced the value of rural specialty products by infusing them with cultural significance.
Specifically, collaborating with a professional rural cooperative in Wuhu, Anhui Province, we introd uced the “Anhui Tea
Culture” non-profit gift box, incorporating the artistic style of the national intangible cultural heritage “Wuhu Iron Picture”
into its design. Additionally, we showcased the craftsmanship of Huangshan Maofeng tea leaves through hand -drawn comics
in festive gift boxes.
During the Reporting Period, 37 Interactive Entertainment spent RMB 1.0364 million to support the development of
characteristic industries such as tea and ginger in Anhui, Guizhou, Guangdong, and other regions.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
54
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as dividend Shares as dividend
New
Number Percentage (%) converted from converted from Other Subtotal Number Percentage (%)
issues
profit capital reserves
1. Restricted shares 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%
1.1 Shares held by
the government
1.2 Shares held by
state-owned
corporations
1.3 Shares held by
other domestic 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%
investors
Including: Shares
held by domestic
corporations
Shares held
by domestic natural 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%
persons
1.4 Shares held by
overseas investors
Including: Shares
held by overseas
corporations
Shares
held by overseas
natural persons
2. Un-restricted shares 1,635,525,373 73.74% -28,176,902 -28,176,902 1,607,348,471 72.47%
2.1 RMB-denominated
1,635,525,373 73.74% -28,176,902 -28,176,902 1,607,348,471 72.47%
common shares
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
55
2.2 Domestically
listed foreign shares
2.3 Overseas listed
foreign shares
2.4 Others
3. Total shares 2,217,864,281 100.00% 0 0 2,217,864,281 100.00%
Reasons for share changes:
Applicable □ Not applicable
During the Reporting Period, the shares held by the newly appointed general manager in the Company were locked up according t o applicable laws, regulations and regulatory
documents.
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s common shareholders and other financial
indicators of the prior year and the prior accounting period, respectively:
Applicable □ Not applicable
During the Reporting Period, the Company implemented share repurchases with its securities account for repurchased shares by the way of centralized bidding. For details of
the repurchases, see the announcements on repurchase progress. As per the Accounting Standards for Business Enterprises, the aforesaid repurchased shares were excluded in the
calculation of basic earnings per share.
2. Changes in Restricted Shares
Applicable □ Not applicable
Unit: share
Shares with restriction Increase in restricted
Beginning restricted Ending restricted Reason for
Name of shareholder lifted in the Reporting shares in the Reporting Lifting date
shares shares restriction
Period Period
Li Weiwei 241,584,764 836,475 0 242,421,239 Subject to regulations in
Zeng Kaitian 184,008,280 0 0 184,008,280 respect of changes in
Locked-up shares
Hu Yuhang 151,198,263 0 0 151,198,263 shareholdings of directors,
of senior
Xu Zhigao 0 27,340,427 0 27,340,427 supervisors and senior
management
Yang Jun 1,575,000 0 0 1,575,000 management in the Company
Liu Jun 3,972,601 0 0 3,972,601 Law, etc.
Total 582,338,908 28,176,902 0 610,515,810 -- --
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
56
III Shareholders and Actual Controller
1. Shareholders and Their Holdings as at the Period-End
Unit: share
Number of
Number of
common
preferred Number of preferred shareholders
shareholders at
Number of common shareholders with with resumed voting rights at the
134,005 the month-end 157,927 0 0
shareholders resumed voting month-end prior to the disclosure of
prior to the
rights (if any) (see this Report (if any) (see note 8)
disclosure of this
note 8)
Report
5% or greater shareholders or the top 10 shareholders (exclusive of shares lent in refinancing)
Increase/decrease Pledged, marked or frozen status
Nature of Shareholding Restricted Un-restricted
Name of shareholder Shares held in the Reporting
shareholder percentage shares held shares held Status Shares
Period
Domestic natural
Li Weiwei 14.57% 323,228,319 1,115,300 242,421,239 80,807,080
person
Domestic natural
Zeng Kaitian 11.06% 245,344,374 0 184,008,280 61,336,094
person
Hong Kong Securities Overseas
10.98% 243,610,204 81,199,478 0 243,610,204
Clearing Company Ltd. corporation
Domestic natural
Hu Yuhang 9.09% 201,597,684 0 151,198,263 50,399,421 Pledged 19,650,000
person
Domestic natural
Xu Zhigao 1.64% 36,453,903 0 27,340,427 9,113,476
person
Domestic natural
Wu Weihong 1.59% 35,253,178 -36,314,684 0 35,253,178
person
China Minsheng Banking
Corp., Ltd.－China
Securities Cartoon Games Other 1.12% 24,870,003 20,628,403 0 24,870,003
Trading Open-ended Index
Securities Investment Fund
Industrial and Commercial A new top 200
Bank of China Limited－ shareholder during
Dongfanghong Ruixi Three- Other 1.02% 22,633,000 the Reporting 0 22,633,000
year Fixed Term Open- Period, with the
ended Dynamic Asset increase in its
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
57
Allocation Mixed Securities shareholding
Investment Fund unknown
Domestic natural
Wu Weidong 1.00% 22,091,357 -38,505,200 0 22,091,357
person
Shanghai Dongyonghong
Domestic non-
Business Management
state-owned 0.90% 20,000,000 20,000,000 0 20,000,000
Partnership (Limited
corporation
Partnership)
Strategic investor or general corporation
becoming a top-10 shareholder in a rights issue N/A
(if any) (see note 3)
1. Among the top 10 shareholders of the Company, Wu Weihong, Wu Weidong and Shanghai Dongyonghong Business Management
Related or acting-in-concert parties among the Partnership (Limited Partnership) are shareholders acting in concert.
shareholders above 2. The Company is not aware of whether there is, among the other top 10 shareholders, any related parties or acting-in-concert parties as
defined in the Measures on the Administration of Acquisition of Listed Companies.
Explain if any of the shareholders above was
involved in entrusting/being entrusted with N/A
voting rights or waiving voting rights
Special account for share repurchases (if any)
N/A
among the top 10 shareholders (see note 10)
Top 10 un-restricted shareholders
Shares by class
Name of shareholder Un-restricted shares held
Class Shares
RMB-denominated common
Hong Kong Securities Clearing Company Ltd. 243,610,204 243,610,204
shares
RMB-denominated common
Li Weiwei 80,807,080 80,807,080
shares
RMB-denominated common
Zeng Kaitian 61,336,094 61,336,094
shares
RMB-denominated common
Hu Yuhang 50,399,421 50,399,421
shares
RMB-denominated common
Wu Weihong 35,253,178 35,253,178
shares
China Minsheng Banking Corp., Ltd.－China
RMB-denominated common
Securities Cartoon Games Trading Open-ended 24,870,003 24,870,003
shares
Index Securities Investment Fund
Industrial and Commercial Bank of China Limited
－Dongfanghong Ruixi Three-year Fixed Term RMB-denominated common
22,633,000 22,633,000
Open-ended Dynamic Asset Allocation Mixed shares
Securities Investment Fund
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
58
RMB-denominated common
Wu Weidong 22,091,357 22,091,357
shares
Shanghai Dongyonghong Business Management RMB-denominated common
20,000,000 20,000,000
Partnership (Limited Partnership) shares
Industrial Bank Co., Ltd.－Xingquan Trend RMB-denominated common
16,549,583 16,549,583
Investment Mixed Securities Investment Fund shares
Related or acting-in-concert parties among the 1. Among the top 10 shareholders of the Company, Wu Weihong, Wu Weidong and Shanghai Dongyonghong Business Management
top 10 un-restricted shareholders, as well as Partnership (Limited Partnership) are shareholders acting in concert.
between the top 10 un-restricted shareholders 2. The Company is not aware of whether there is, among the other top 10 shareholders, any related parties or acting-in-concert parties as
and the top 10 shareholders defined in the Measures on the Administration of Acquisition of Listed Companies.
Related or acting-in-concert parties among the
top 10 un-restricted shareholders, as well as As of the end of the Reporting Period, shareholder China Minsheng Banking Corp., Ltd.－China Securities Cartoon Games Trading Open-
between the top 10 un-restricted shareholders ended Index Securities Investment Fund held 5,167,400 shares that were lent in refinancing.
and the top 10 shareholders
Top 10 shareholders involved in refinancing shares lending:
Applicable □ Not applicable
Unit: Share
Top 10 shareholders involved in refinancing shares lending
Shares in the common account and Shares lent in refinancing and not Shares in the common account and Shares lent in refinancing and not yet
credit account at the period-begin yet returned at the period-begin credit account at the period-end returned at the period-end
Full name of shareholder
As % of total As % of total As % of total As % of total
Total shares Total shares Total shares Total shares
share capital share capital share capital share capital
China Minsheng Banking
Corp., Ltd.－China
Securities Cartoon Games 4,241,600 0.19% 230,000 0.01% 24,870,003 1.12% 5,167,400 0.23%
Trading Open-ended Index
Securities Investment Fund
Changes in top 10 shareholders compared with the prior period:
Applicable □ Not applicable
Unit: Share
Changes in top 10 shareholders compared with the end of the prior period
Newly added to or exiting Shares in the common account and credit account plus
Shares lent in refinancing and not yet
Full name of shareholder from top 10 shareholders in shares lent in refinancing and not yet returned at the
returned at the period-end
the Reporting Period period-end
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
59
Total shares As % of total share capital Total shares As % of total share capital
As this shareholder was no As this shareholder was no
China Construction Bank Corporation－ longer among the top 200 longer among the top 200
Lombarda China Senior Care Industry Exiting 0 0.00% shareholders at the end of shareholders at the end of
Mixed Securities Investment Fund the Reporting Period, its the Reporting Period, its
shareholding is unknown. shareholding is unknown.
Industrial Bank Co., Ltd.－Fullgoal
Xingyuan Selected 12-month-holding Exiting 0 0.00% 6,579,572 0.30%
Mixed Securities Investment Fund
37 Interactive Entertainment Network
Technology Group Co., Ltd.-The Fourth Exiting 0 0.00% 16,301,534 0.74%
Employee Stock Ownership Plan
China Minsheng Banking Corp., Ltd.－
China Securities Cartoon Games Trading
Newly added 5,167,400 0.23% 30,037,403 1.35%
Open-ended Index Securities Investment
Fund
Industrial and Commercial Bank of China
Limited－Dongfanghong Ruixi Three-
year Fixed Term Open-ended Dynamic Newly added 0 0.00% 22,633,000 1.02%
Asset Allocation Mixed Securities
Investment Fund
Shanghai Dongyonghong Business
Management Partnership (Limited Newly added 0 0.00% 20,000,000 0.90%
Partnership)
Indicate whether any of the top 10 common shareholders or the top 10 un-restricted common shareholders of the Company conducted any promissory repo during the Reporting
Period.
□ Yes No
No such cases in the Reporting Period.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
60
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a natural person
Type of the controlling shareholder: natural person
Name of the controlling shareholder Nationality Residency in other countries or regions or not
Li Weiwei Chinese Not
Main occupation and position Chairman of the Board
Interests held in other domestically and overseas
None
listed companies in the Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic natural person
Type of the actual controller: natural person
Name of the actual Relationship with the actual Residency in other
Nationality
controller controller countries or regions or not
Li Weiwei Actual controller himself Chinese Not
Main occupation and
Chairman of the Board
position
Controlling interests in
other domestically and
None
overseas listed companies
in the past 10 years
Change of the actual controller in the Reporting Period:
□ Applicable Not applicable
No such cases in the Reporting Period.
Ownership and control relationship between the actual controller and the Company:
Li Weiwei
14.57%
37 Interactive Entertainment Network Technology Group Co.,
Ltd.
Indicate whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
61
6. Restrictions on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Undertaking Makers
Applicable □ Not applicable
Mr. Li Weiwei, the controlling shareholder and actual controller of the Company, increased his shareholding in the
Company by 1,115,300 shares by way of centralised bidding through the trading system of the Shenzhen Stock Exchange on
28 December 2023. Mr. Li has undertaken to strictly comply with the relevant provisions of the China Securities Regulatory
Commission and the Shenzhen Stock Exchange in respect of relevant laws, regulations and regulatory documents, refrain
from insider trading, trading in shares during sensitive periods and short-term trading, and not to voluntarily reduce his
holdings of the Company's shares within six months from the date of completion of the increase in holdings.
IV Share Repurchases during the Reporting Period
Progress on share repurchases:
Applicable □ Not applicable
Shares
Date of the Amount to Number of repurchased as %
Number of Intended Purpose of
repurchase As % of total be used for shares of total target
shares to be repurchase repurchased
plan’s share capital repurchase repurchase shares (if any)
repurchased period shares
disclosure (RMB’0,000) d under equity
incentive plan
For
Within 12
subsequent
months
employee
following
11 stock
30,000- the Board’s
November 26,086,956 1.18% ownership 12,539,547
60,000 approval of
2022 plans or
the
other equity
repurchase
incentive
plan
plans
Within 12
months
following
the approval All to be
28 of the retired to
10,000-
December 5,899,705 0.27% repurchase reduce the 0
20,000 plan by a
2023 registered
general capital
meeting of
shareholder
s
Note: The Proposal on the Plan to Repurchase Shares by Way of Centralized Bidding was approved at the 15 th Meeting of the
Sixth Board of Directors on 26 December 2023 and the First Extraordinary General Meeting of Shareholders of 2024 on 12
January 2024. According to the Announcement on Progress on the Share Repurchase disclosed by the Company on 2 April
2024, as of 31 March 2024, a cumulative number of 5,626,600 shares had been repurchased, accounting for 0.25% of the
Company’s existing total share capital.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
62
Part VII Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unqualified opinion with emphasis paragraph
Name of the independent auditor Huaxing Certified Public Accountants LLP
Name of the certified public accountants Zhang Fengbo and Gao Yunjun
Independent Auditor’s Report
To all the shareholders of 37 Interactive Entertainment Network Technology Group Co., Ltd.:
I Opinion
We have audited the financial statements of 37 Interactive Entertainment Network Technology Group Co., Ltd.
(hereinafter referred to as the “Company”), which comprise the consolidated and the Company’s balance sheets as at 31
December 2023, the consolidated and the Company’s income statements, the consolidated and the Company’s cash flow
statements, and the consolidated and the Company’s statements of changes in shareholders’ equity for the year then ended,
as well as the notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and the
Company’s financial positions as at 31 December 2023, and the consolidated and the Company’s operating results and cash
flows for the year then ended, in conformity with China’s Accounting Standards for Business Enterprises (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for
Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the said Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III Emphasis Matter
Users of the financial statements are kindly reminded to pay attention to Note XVI (VII) “Other Significant Transactions
and Events with Influence on Investors’ Decision-making” to the financial statements: For suspected information disclosure
violations, On 27 June 2023, the Company, Mr Li Weiwei (the actual controller and Chairman of the Board of the Company),
and Mr Zeng Kaitian (the Vice Chairman of the Board of the Company) received the Notification of the China Securities
Regulatory Commission on Case Filing (CSRC Case No. 03720230061, No. 0 3720230062, No. 03720230063) from the said
commission (hereinafter referred to as the “CSRC”), respectively. As of the date of the auditor’s report issuance, the CSRC’s
investigation is ongoing, and no definitive conclusions or decisions have been reached regarding the aforementioned matter
under investigation. The content of this paragraph does not affect the issued audit opinion.
IV 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 of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue recognition
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
63
1. Description
As described in Notes III - XXIX Revenue and V - XXXVIII Operating Revenue and Cost of Sales," the Company is mainly
engaged in the R&D and (independent and joint) operation of online games. The operation of online games de pends highly
on internal control and IT system, leading to inherent risk in revenue recognition, so we highlighted the revenue recognition
of online games as a key audit matter.
2. Audit response
(1) The Company investigated and tested revenue-related internal controls and assessed the appropriateness of the key
control points of internal control and the effectiveness of the operation of internal controls.
(2) The Company performed IT audit. The consistency between the background recharge amount and consum ption
amount of substantial self-developed games and the financial information was tested. The exactness of the consumption
amount of ingots at period end was verified. Game operation data such as average number of online users, number of paying
uses and average consumption amount per user were checked for their consistency with revenue data.
(3) The Company checked the accuracy of revenue accounting and estimate. To align the accounting process with the
time cycle of reconciliation or settlement and follow the accrual basis of accounting, the Company makes revenue estimates
based on the recharge amount and the agreed revenue distribution scheme or the actual consumption amount at month end
and adjusts the revenue estimates according to the actually settled revenues; thus, the accuracy of revenue estimates
directly influences the accuracy of revenue recognition. The accuracy of revenue estimates was assessed by sampling major
games and checking the estimated monthly or annual revenues of these sampled games a gainst the settled revenues in
terms of the average discrepancy between the estimated and settled revenues.
(4) The Company checked the collection of accounts receivable from sales. Third-party collections/payments or bank
deposit receipts were checked, focusing on the consistency between the original documents and book records in terms of
the recipient and amount of payment.
(5) The Company performed follow-up test. A follow up test was conducted on accounts receivable to check whether
they were collected in time and whether there were chargebacks to customers. Period-end estimated revenues were
checked against revenues settled after the Reporting Period for assessing the existence of major discrepancies between the
estimated and actually settled revenues.
(II) Internet traffic fee charges
1. Description
As described in Note V. (XXXX) Distribution and Selling Expenses, the Internet traffic fee charges in the 2023
consolidated financial statements amount to RMB 8,466 million. Because Internet traffic fee charges amount to a substantial
amount and there is inherent risk in terms of their exactness and accuracy, we highlighted the exactness and accuracy of
Internet traffic charges as a key audit matter.
2. Audit response
The major audit procedures performed to address the exactness and accuracy of Internet traffic fee charges include:
(1) We investigated and tested Internet traffic fee charges-related internal controls and assessed the effectiveness of the
design and operation of relevant internal controls;
(2) We performed an analytical review to comparatively analyze the proportion of and variation in the monthly Internet
traffic fee charges and assess the appropriateness of the variation;
(3) We performed a detail test on Internet traffic charges by checking the supporting documents of large vouchers, such
as contracts, invoices, bills of payment and statements of accounts, and reviewing the accuracy of such charges;
(4) We performed external confirmations by checking the amounts of transactions and the balanc e of the accounts
payable/receivable between the Company and its major suppliers and verifying the exactness and completeness of
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
64
distribution and selling expenses through letters of confirmation;
(5) We performed a cut-off test on the Internet traffic fee charges recognized before and after the date of balance sheet,
focusing on whether there are major inter-period adjustments.
V Other Information
The Company’s management is responsible for the other information. The other information comprises all of the
information included in the Company’s 2023 Annual Report other than the financial statements and our auditor’s report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
VI Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as
a going concern, disclosing going concern-related matters (if applicable), and using the going concern basis of accounting
unless the management either intends to liquidate the Company or to cease operations, or have no realistic alternative but
to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VII Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appr opriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overr ide
of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing opinion on the effectiveness of internal con trol.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
65
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of acc ounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exi sts, we are
required by CAS to draw users’ attention in our auditor’s report to the related disclosures in the financial statements or, i f
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up t o the
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and
performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any noteworthy deficiencies in internal control that we identify during o ur
audit.
We also provide those charged with governance with a statement that we have comp lied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by 37 Interactive Entertainment Network Technology Group Co., Ltd.
31 December 2023
Unit: RMB
Item 31 December 2023 1 January 2023
Current assets:
Monetary funds 6,176,992,875.55 5,129,481,882.65
Transaction settlement funds
Loans to other banks
Trading financial assets 2,024,681,502.03 2,792,984,819.12
Derivative financial assets
Notes receivable
Accounts receivable 1,479,267,695.67 1,433,563,842.43
Accounts receivable financing
Prepayments 1,143,237,497.90 855,193,135.12
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
66
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other receivables 46,247,241.46 87,419,373.81
Including: Interest receivable
Dividends receivable 10,000,000.00 0.00
Redemptory monetary capital for sale
Inventories
Contract assets
Assets held for sale
Non-current assets due within one year 164,307,298.27 225,739,517.70
Other current assets 88,085,256.86 62,124,622.63
Total current assets 11,122,819,367.74 10,586,507,193.46
Non-current assets:
Loans and advances to customers
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 520,735,613.55 621,794,374.74
Other equity investments 247,132,794.34 269,990,212.51
Other non-current financial assets 825,660,687.40 685,698,473.75
Investment properties
Fixed assets 823,508,284.60 850,030,034.92
Construction in progress 534,491,192.20 242,508,087.97
Productive living assets
Oil and gas assets
Right-of-use assets 16,622,471.20 31,967,946.49
Intangible assets 1,040,204,870.96 1,059,676,921.41
Development expenditure
Goodwill 1,578,065,048.53 1,589,065,048.53
Long-term deferred expenses 90,785,937.93 99,473,412.05
Deferred income tax assets 53,947,130.48 34,357,615.22
Other non-current assets 2,280,577,680.43 1,024,113,999.86
Total non-current assets 8,011,731,711.62 6,508,676,127.45
Total assets 19,134,551,079.36 17,095,183,320.91
Current liabilities:
Short-term loans 1,554,577,083.34 901,046,888.89
Loans from the central bank
Loans from other banks
Trading financial liabilities 74,311.41 84,380.59
Derivative financial liabilities
Notes payable 1,087,000,000.00 555,000,000.00
Accounts payable 1,825,714,480.74 1,648,560,259.52
Advances from customers
Contract liabilities 280,023,602.87 259,519,734.14
Financial assets sold under repurchase
agreements
Customer deposits and interbank deposits
Payables for acting trading of securities
Payables for underwriting of securities
Employee benefits payable 408,786,174.15 374,469,366.73
Taxes payable 280,471,436.39 294,163,918.06
Other payables 201,521,074.52 210,926,206.25
Including: Interest payable
Dividends payable
Handling charges and commissions payable
Reinsurance payables
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
67
Liabilities held for sale
Non-current liabilities due within one year 212,167,632.34 45,909,085.65
Other current liabilities 55,277,993.63 51,763,224.36
Total current liabilities 5,905,613,789.39 4,341,443,064.19
Non-current liabilities:
Insurance contract reserve
Long-term loans 306,000,000.00 323,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 3,944,589.05 16,786,536.53
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income
Deferred income tax liabilities 106,630,292.58 101,348,616.16
Other non-current liabilities
Total non-current liabilities 416,574,881.63 441,135,152.69
Total liabilities 6,322,188,671.02 4,782,578,216.88
Shareholders' equity:
Share capital 2,217,864,281.00 2,217,864,281.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 2,823,040,832.04 2,776,585,669.95
Less: Treasury shares 300,524,656.78 83,105,950.55
Other comprehensive income -129,511,563.25 -153,044,746.45
Special reserves
Surplus reserves 666,869,940.33 666,869,940.33
General risk reserves
Retained earnings 7,429,206,642.53 6,758,838,410.54
Total equity attributable to shareholders of the
12,706,945,475.87 12,184,007,604.82
Company
Non-controlling interests 105,416,932.47 128,597,499.21
Total shareholders' equity 12,812,362,408.34 12,312,605,104.03
Total liabilities and shareholders’ equity 19,134,551,079.36 17,095,183,320.91
Legal representative: Xu Zhigao Chief Financial Officer:
Ye Wei
Board Secretary: Ye Wei
2. Balance Sheet of the Company
Unit: RMB
Item 31 December 2023 1 January 2023
Current assets:
Monetary funds 802,609,416.49 808,790,749.20
Trading financial assets 800,986,301.37 802,418,630.14
Derivative financial assets
Notes receivable
Accounts receivable
Accounts receivable financing
Prepayments 66,418.86
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
68
Other receivables 3,679,202,452.33 3,829,192,595.78
Including: Interest receivable
Dividends receivable
Inventories
Contract assets
Assets held for sale
Non-current assets due within one year
Other current assets 7,068,190.52 5,937,414.70
Total current assets 5,289,932,779.57 5,446,339,389.82
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 9,659,679,501.59 9,614,010,297.65
Other equity investments
Other non-current financial assets 76,589,599.00 76,589,599.00
Investment properties
Fixed assets
Construction in progress
Productive living assets
Oil and gas assets
Right-of-use assets 4,605,089.46 6,730,515.43
Intangible assets
Development expenditure
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets 9,740,874,190.05 9,697,330,412.08
Total assets 15,030,806,969.62 15,143,669,801.90
Current liabilities:
Short-term loans 200,155,833.34
Trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable
Advances from customers
Contract liabilities
Employee benefits payable 30,200.00 922,157.55
Taxes payable 11,281,109.24 9,115,058.72
Other payables 28,901,705.53 40,786,313.26
Including: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year 200,318,482.28 30,122,770.55
Other current liabilities
Total current liabilities 440,687,330.39 80,946,300.08
Non-current liabilities:
Long-term loans 306,000,000.00 323,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 2,552,367.43 4,983,409.97
Long-term payables
Long-term employee benefits payable
Provisions
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
69
Deferred income
Deferred income tax liabilities 142,444.51 803,191.39
Other non-current liabilities
Total non-current liabilities 308,694,811.94 328,786,601.36
Total liabilities 749,382,142.33 409,732,901.44
Shareholders' equity:
Share capital 2,217,864,281.00 2,217,864,281.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 6,468,587,957.50 6,421,769,953.60
Less: Treasury shares 300,524,656.78 83,105,950.55
Other comprehensive income -60,000,000.00 -60,000,000.00
Special reserves
Surplus reserves 1,108,932,140.50 1,108,932,140.50
Retained earnings 4,846,565,105.07 5,128,476,475.91
Total shareholders' equity 14,281,424,827.29 14,733,936,900.46
Total liabilities and shareholders’ equity 15,030,806,969.62 15,143,669,801.90
3. Consolidated Income Statement
Unit: RMB
Item 2023 2022
1. Total operating revenue 16,546,871,737.85 16,406,034,152.65
Including: Operating revenue 16,546,871,737.85 16,406,034,152.65
Interest income
Premium income
Handling charge and commission
income
2. Total operating costs and expenses 13,603,488,187.84 13,169,671,748.81
Including: Cost of sales 3,391,580,579.32 3,048,539,639.86
Interest expense
Handling charge and commission
expenses
Surrenders
Net claims paid
Net amount provided as policy
reserve
Expenditure on policy dividends
Reinsurance premium expenses
Taxes and surcharges 36,892,301.48 31,860,159.78
Distribution and selling expenses 9,090,808,791.22 8,732,600,168.08
General and administrative
592,119,581.61 526,013,657.81
expenses
Research and development
713,563,181.73 904,696,560.53
expenses
Financial expenses -221,476,247.52 -74,038,437.25
Including: Interest expense 65,589,638.61 46,685,488.68
Interest income 306,044,467.16 146,860,105.25
Add: Other income 110,038,707.84 133,197,530.89
Investment income (“-” for loss) 7,525,623.19 75,647,461.76
Including: Share of profits and losses
-17,776,565.55 -59,373,741.59
of joint ventures and associates
Gain on derecognition of
financial assets measured at amortised cost (“-”
for loss)
Gain on exchange (“-” for loss)
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
70
Net gain on exposure hedges (“-” for
loss)
Gain on changes in fair value (“-” for
103,982,672.05 -39,816,230.89
loss)
Impairment loss on credit (“-” for loss) -13,743,024.22 -8,381,295.23
Impairment loss on assets (“-” for loss) -111,730,846.28 -90,420,714.53
Gain on disposal of assets (“-” for loss) 1,431,156.84 2,302,146.59
3. Operating profit (“-” for loss) 3,040,887,839.43 3,308,891,302.43
Add: Non-operating income 20,123,970.73 11,149,873.50
Less: Non-operating expenses 13,041,071.75 18,526,439.05
4. Profit before income tax expenses (“-” for loss) 3,047,970,738.41 3,301,514,736.88
Less: Income tax expenses 414,443,596.24 391,772,296.96
5. Net profit (“-” for net loss) 2,633,527,142.17 2,909,742,439.92
5.1 Classified by continuity of operations
5.1.1 Net profit from continuing operations
2,633,527,142.17 2,909,742,439.92
(“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 Classified by ownership of the equity
5.2.1 Net profit attributable to shareholders
2,658,570,193.44 2,954,377,452.38
of the Company
5.2.2 Net profit attributable to non-
-25,043,051.27 -44,635,012.46
controlling interests
6. Other comprehensive income, net of tax 23,533,183.20 31,198,584.93
Other comprehensive income attributable to
23,533,183.20 31,198,584.93
shareholders of the Company, net of tax
6.1 Other comprehensive income that will
-23,571,778.91 -75,133,385.17
not be reclassified subsequently to profit or loss
6.1.1 Changes caused by
remeasurement of defined benefit pension
schemes
6.1.2 Share of the other
comprehensive income of the investee
accounted for using equity method that will not
be reclassified subsequently to profit or loss
6.1.3 Changes in fair value of other
-23,571,778.91 -75,133,385.17
equity investments
6.1.4 Changes in the fair value of the
company's own credit risk
6.1.5 Others
6.2 Other comprehensive income that will
47,104,962.11 106,331,970.10
be reclassified subsequently to profit or loss
6.2.1 Share of the other
comprehensive income of the investee
524,693.70
accounted for using equity method that will be
reclassified subsequently to profit or loss
6.2.2 Changes in fair value of other
equity investments
6.2.3 Other comprehensive income
arising from the reclassification of financial
assets
6.2.4 Allowance for credit
impairments in other debt investments
6.2.5 Cash flow hedge reserve
6.2.6 Exchange differences on
translation of foreign currency financial 47,104,962.11 105,807,276.40
statements
6.2.7 Others
Other comprehensive income attributable to
non-controlling interests, net of tax
7. Total comprehensive income 2,657,060,325.37 2,940,941,024.85
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
71
Total comprehensive income attributable to
2,682,103,376.64 2,985,576,037.31
shareholders of the Company
Total comprehensive income attributable to
-25,043,051.27 -44,635,012.46
non-controlling interests
8. Earnings per share:
8.1 Basic earnings per share 1.20 1.34
8.2 Diluted earnings per share 1.20 1.34
Where business combinations under common control occurred in the current period, the net profit achieved by the
acquirees before the combinations was RMB 0.00 with the amount for the same period of last year being RMB 0.00.
Legal representative: Xu Zhigao Chief Financial Officer:
Ye Wei
Board Secretary: Ye Wei
4. Income Statement of the Company
Unit: RMB
Item 2023 2022
1. Operating revenue 9,433.96 0.00
Less: Cost of sales 0.00 0.00
Taxes and surcharges 50,349.85 359,344.65
Distribution and selling expenses
General and administrative expenses 19,286,684.94 12,473,738.25
Research and development expenses
Financial expenses 1,373,974.08 -14,096,585.25
Including: Interest expense 23,604,095.16 13,877,655.65
Interest income 23,391,950.84 28,940,424.67
Add: Other income 6,938,175.62 3,014,074.12
Investments income (“-” for loss) 1,704,272,876.72 5,319,803,261.37
Including: Share of profits and losses
of joint ventures and associates
Gain on derecognition of
financial assets measured at amortised cost (“-”
for loss)
Net gain on exposure hedges (“-” for
loss)
Gain on changes in fair value (“-” for
18,294,520.55 12,333,374.40
loss)
Impairment loss on credit (“-” for loss)
Impairment loss on assets (“-” for loss)
Gain on disposal of assets (“-” for loss)
2. Operating profit (“-” for loss) 1,708,803,997.98 5,336,414,212.24
Add: Non-operating income 1,478.73 2.59
Less: Non-operating expenses 70,214.21 31,234.89
3. Profit before income tax expenses (“-” for loss) 1,708,735,262.50 5,336,382,979.94
Less: Income tax expenses 2,444,671.89 5,827,837.11
4. Net profit (“-” for net loss) 1,706,290,590.61 5,330,555,142.83
4.1 Net profit from continuing operations (“-
1,706,290,590.61 5,330,555,142.83
” for net loss)
4.2 Net profit from discontinued operations
(“-” for net loss)
5. Other comprehensive income, net of tax
5.1 Other comprehensive income that will
not be reclassified subsequently to profit or loss
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
72
5.1.1 Changes caused by
remeasurement of defined benefit pension
schemes
5.1.2 Share of the other
comprehensive income of the investee
accounted for using equity method that will not
be reclassified subsequently to profit or loss
5.1.3 Changes in fair value of other
equity investments
5.1.4 Changes in the fair value of the
company's own credit risk
5.1.5 Others
5.2 Other comprehensive income that will
be reclassified subsequently to profit or loss
5.2.1 Share of the other
comprehensive income of the investee
accounted for using equity method that will be
reclassified subsequently to profit or loss
5.2.2 Changes in fair value of other
equity investments
5.2.3 Other comprehensive income
arising from the reclassification of financial
assets
5.2.4 Allowance for credit
impairments in other debt investments
5.2.5 Cash flow hedge reserve
5.2.6 Exchange differences on
translation of foreign currency financial
statements
5.2.7 Others
6. Total comprehensive income 1,706,290,590.61 5,330,555,142.83
7. Earnings per share:
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2023 2022
1. Cash flows from operating activities:
Cash received from the sales of goods or
16,904,176,555.70 16,885,987,333.81
rendering services
Net increase in customer deposits and
interbank deposits
Net increase in loans from the central bank
Net increase in loans from other financial
institutions
Premiums received on original insurance
contracts
Net proceeds from reinsurance
Net increase in deposits and investments of
policy holders
Interest, handling charges and commissions
received
Net increase in loans from other banks
Net increase in proceeds from repurchase
transactions
Net proceeds from acting trading of
securities
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
73
Refunds of taxes and levies 2,434,967.58 26,604,668.69
Cash received relating to other operating
265,105,348.27 213,417,757.20
activities
Sub-total of cash inflows from operating
17,171,716,871.55 17,126,009,759.70
activities
Cash paid for purchases of goods and
3,413,825,692.72 2,869,139,576.62
services
Net increase in loans and advances to
customers
Net increase in deposits in the central bank
and other banks and financial institutions
Payments for claims on original insurance
contracts
Net increase in loans to other banks
Interest, handling charges and commissions
paid
Policy dividends paid
Cash paid to and on behalf of employees 1,564,676,531.31 1,669,997,016.50
Payments of taxes and levies 645,283,417.51 479,137,620.16
Cash paid relating to other operating
8,400,893,893.55 8,550,566,649.16
activities
Sub-total of cash outflows used in operating
14,024,679,535.09 13,568,840,862.44
activities
Net cash flows from operating activities 3,147,037,336.46 3,557,168,897.26
2. Cash flows from investing activities:
Cash received from disposal of investments 150,435,928.42 193,845,697.24
Cash received from investment income 172,415,699.41 143,313,003.86
Cash received from disposal of fixed assets,
3,105,437.71 3,238,847.63
intangible assets and other long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received relating to other investing
13,521,693,807.84 10,402,113,384.72
activities
Sub-total of cash inflows from investing activities 13,847,650,873.38 10,742,510,933.45
Cash paid for acquisition of fixed assets,
1,311,950,763.69 319,970,836.68
intangible assets and other long-term assets
Cash paid to acquire investments 237,738,371.40 274,845,766.52
Net increase in pledged loans granted
Net cash paid for the acquisition of
59,324.28 136,258.81
subsidiaries and other business units
Cash paid relating to other investing
13,743,826,640.43 13,477,981,715.09
activities
Sub-total of cash outflows used in investing
15,293,575,099.80 14,072,934,577.10
activities
Net cash flows from/used in investing activities -1,445,924,226.42 -3,330,423,643.65
3. Cash flows from financing activities:
Cash received from capital contributions 620,000.00 93,310,000.00
Including: Cash received from capital
contributions by non-controlling interests of 620,000.00 93,310,000.00
subsidiaries
Cash received from borrowings 2,911,380,000.00 1,640,448,000.00
Cash received relating to other financing
355,000,000.00 113,393,400.00
activities
Sub-total of cash inflows from financing activities 3,267,000,000.00 1,847,151,400.00
Cash repayments of borrowings 2,104,998,000.00 859,003,000.00
Cash paid for interest and dividends 2,052,191,844.69 1,634,202,543.31
Including: Dividends paid by subsidiaries to
405,402.09
non-controlling interests
Cash paid relating to other financing
1,396,209,021.10 938,520,215.11
activities
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
74
Sub-total of cash outflows used in financing
5,553,398,865.79 3,431,725,758.42
activities
Net cash flows from/used in financing activities -2,286,398,865.79 -1,584,574,358.42
4. Effect of foreign exchange rate changes on
10,295,383.63 59,907,468.37
cash and cash equivalents
5. Net increase/decrease in cash and cash
-574,990,372.12 -1,297,921,636.44
equivalents
Add: Cash and cash equivalents at beginning
3,320,472,098.94 4,618,393,735.38
of the period
6. Cash and cash equivalents at end of the period 2,745,481,726.82 3,320,472,098.94
6. Cash Flow Statement of the Company
Unit: RMB
Item 2023 2022
1. Cash flows from operating activities:
Cash received from the sales of goods or
10,000.00
rendering services
Refunds of taxes and levies
Cash received relating to other operating
2,866,152,757.49 3,146,560,844.15
activities
Sub-total of cash inflows from operating
2,866,162,757.49 3,146,560,844.15
activities
Cash paid for purchases of goods and
services
Cash paid to and on behalf of employees 1,939,875.23 5,196,912.26
Payments of taxes and levies 4,280,167.75 4,903,666.87
Cash paid relating to other operating
2,710,211,734.70 6,890,189,374.35
activities
Sub-total of cash outflows used in operating
2,716,431,777.68 6,900,289,953.48
activities
Net cash flows from/used in operating activities 149,730,979.81 -3,753,729,109.33
2. Cash flows from investing activities:
Cash received from disposal of investments
Cash received from investment income 1,737,876,392.74 5,340,237,466.85
Cash received from disposal of fixed assets,
intangible assets and other long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received relating to other investing
4,580,000,000.00 4,220,000,000.00
activities
Sub-total of cash inflows from investing activities 6,317,876,392.74 9,560,237,466.85
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets
Cash paid to acquire investments 15,000,000.00 20,000,000.00
Net cash paid for the acquisition of
subsidiaries and other business units
Cash paid relating to other investing
4,280,000,000.00 4,870,000,000.00
activities
Sub-total of cash outflows used in investing
4,295,000,000.00 4,890,000,000.00
activities
Net cash flows from/used in investing activities 2,022,876,392.74 4,670,237,466.85
3. Cash flows from financing activities:
Cash received from capital contributions
Cash received from borrowings 690,000,000.00 640,000,000.00
Cash received relating to other financing
activities
Sub-total of cash inflows from financing activities 690,000,000.00 640,000,000.00
Cash repayments of borrowings 337,000,000.00 659,500,000.00
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
75
Cash paid for interest and dividends 2,011,301,921.19 1,604,022,872.37
Cash paid relating to other financing
220,234,866.23 85,922,110.55
activities
Sub-total of cash outflows used in financing
2,568,536,787.42 2,349,444,982.92
activities
Net cash flows from/used in financing activities -1,878,536,787.42 -1,709,444,982.92
4. Effect of foreign exchange rate changes on
cash and cash equivalents
5. Net increase/decrease in cash and cash
294,070,585.13 -792,936,625.40
equivalents
Add: Cash and cash equivalents at beginning
205,561,434.13 998,498,059.53
of the period
6. Cash and cash equivalents at end of the period 499,632,019.26 205,561,434.13
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
76
7. Consolidated Statement of Changes in Shareholders’ Equity
2023
Unit: RMB
2023
Equity attributable to shareholders of the Company
Other equity
Less: Spec Gener Non- Total
Item instruments Other
Share Capital Treasur ial Surplus al risk Retained Oth controlling shareholders'
Preferr Perpe comprehensive Sub-total
capital Oth reserves y rese reserves reserv earnings ers interests equity
ed tual income
ers shares rves es
shares bonds
83,105
1. Balance as at the 2,217,864,2 2,776,585,6 - 666,869, 6,758,838, 12,184,007,6 128,597,4 12,312,605,10
,950.5
end of prior year 81.00 69.95 153,044,746.45 940.33 410.54 04.82 99.21 4.03
5
Add:
Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Others
83,105
2. Balance as at 2,217,864,2 2,776,585,6 - 666,869, 6,758,838, 12,184,007,6 128,597,4 12,312,605,10
,950.5
beginning of year 81.00 69.95 153,044,746.45 940.33 410.54 04.82 99.21 4.03
5
3. Increase/
217,41 -
decrease in the 46,455,162. 670,368,2 522,937,871. 499,757,304.3
8,706. 23,533,183.20 23,180,56
period (“-” for 09 31.99 05 1
decrease) 23 6.74
3.1 Total -
2,658,570, 2,682,103,37 2,657,060,325
comprehensive 23,533,183.20 25,043,05
income 193.44 6.64 .37
1.27
3.2 Capital
217,41 - -
contribution and 46,690,199. 1,847,283.
8,706. 170,728,506. 168,881,222.3
withdrawal by 89 95
shareholders 23 34 9
3.2.1 Common 1,719,479. 1,719,479.94
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
77
shares contribution 94
and withdrawal by
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based
payments included 46,690,199. 46,690,199.8 127,804.0
46,818,003.90
in shareholders’ 89 9 1
equity
217,41 - -
3.2.4 Others 8,706. 217,418,706. 217,418,706.2
23 23 3
- - -
3.3 Profit
1,988,201, 1,988,201,96 1,988,201,961
distribution
961.45 1.45 .45
3.3.1 Appropriation
to surplus reserves
3.3.2 Appropriation
to general risk
reserves
- - -
3.3.3 Distribution to
1,988,201, 1,988,201,96 1,988,201,961
shareholders
961.45 1.45 .45
3.3.4 Others
3.4 Internal
transfers within
shareholders’ equity
3.4.1 Capital
reserves transferred
into capital (or
share capital)
3.4.2 Surplus
reserves transferred
into capital (or
share capital)
3.4.3 Surplus
reserves for making
up losses
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
78
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in the
period
3.5.2 Used in the
period
3.6 Others -235,037.80 -235,037.80 15,200.58 -219,837.22
300,52
4. Balance as at the 2,217,864,2 2,823,040,8 - 666,869, 7,429,206, 12,706,945,4 105,416,9 12,812,362,40
4,656.
end of the period 81.00 32.04 129,511,563.25 940.33 642.53 75.87 32.47 8.34
78
2022
Unit: RMB
2022
Equity attributable to shareholders of the Company
Other equity
Less: Spec Gener Non- Total
Item instruments Other
Share Capital Treasu ial Surplus al risk Retained Oth controlling shareholders'
Preferr Perpe comprehensive Sub-total
capital Oth reserves ry reser reserves reserv earnings ers interests equity
ed tual income
ers shares ves es
shares bonds
299,99
1. Balance as at the 2,217,864,2 2,978,593, - 166,559, 5,894,941, 10,773,716,3 83,619,695 10,857,336,0
9,563.
end of prior year 81.00 891.37 184,243,331.38 856.09 180.68 14.49 .37 09.86
27
Add:
Adjustments for
660,576.46 660,576.46 5,684.56 666,261.02
changed accounting
policies
Adjustments for
corrections of
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
79
previous errors
Others
299,99
2. Balance as at 2,217,864,2 2,978,593, - 166,559, 5,895,601, 10,774,376,8 83,625,379 10,858,002,2
9,563.
beginning of year 81.00 891.37 184,243,331.38 856.09 757.14 90.95 .93 70.88
27
3. Increase/ -
-
decrease in the 216,89 500,310, 863,236,65 1,409,630,71 44,972,119 1,454,602,83
202,008,22 31,198,584.93
period (“-” for 3,612. 084.24 3.40 3.87 .28 3.15
decrease) 1.42
72
3.1 Total -
2,954,377, 2,985,576,03 2,940,941,02
comprehensive 31,198,584.93 44,635,012
income 452.38 7.31 4.85
.46
3.2 Capital -
-
contribution and 216,89 16,372,041.4 90,012,533 106,384,575.
200,521,57
withdrawal by 3,612. 3 .83 26
shareholders 1.29
72
3.2.1 Common
shares contribution 89,788,517 90,015,879.3
227,361.52 227,361.52
and withdrawal by .83 5
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based
payments included 99,250,630 99,250,630.4 99,474,646.4
224,016.00
in shareholders’ .46 6 6
equity
-
- - -
216,89
3.2.4 Others 299,999,56 83,105,950.5 83,105,950.5
3,612.
3.27 5 5
72
- - -
3.3 Profit 500,310, -
2,091,140, 1,590,830,71 1,591,236,11
distribution 084.24 405,402.09
798.98 4.74 6.83
-
3.3.1 Appropriation 500,310,
500,310,08
to surplus reserves 084.24
4.24
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
80
3.3.2 Appropriation
to general risk
reserves
- - -
3.3.3 Distribution to -
1,590,830, 1,590,830,71 1,591,236,11
shareholders 405,402.09
714.74 4.74 6.83
3.3.4 Others
3.4 Internal
transfers within
shareholders’ equity
3.4.1 Capital
reserves transferred
into capital (or
share capital)
3.4.2 Surplus
reserves transferred
into capital (or
share capital)
3.4.3 Surplus
reserves for making
up losses
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in the
period
3.5.2 Used in the
period
-
-
3.6 Others 1,486,650. -1,486,650.13
1,486,650.13
13
4. Balance as at the 2,217,864,2 2,776,585, 83,105 - 666,869, 6,758,838, 12,184,007,6 128,597,49 12,312,605,1
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
81
end of the period 81.00 669.95 ,950.5 153,044,746.45 940.33 410.54 04.82 9.21 04.03
5
8. Statement of Changes in Shareholders’ Equity of the Company
2023
Unit: RMB
2023
Item Other equity instruments Other Special Ot
Less: Treasury Retained Total shareholders'
Share capital Preferre Perpetua Oth Capital reserves comprehensive reserve Surplus reserves he
shares earnings equity
d shares l bonds ers income s rs
1. Balance as at the
2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
end of prior year
Add:
Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Others
2. Balance as at
2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
beginning of year
3. Increase/
decrease in the
46,818,003.90 217,418,706.23 -281,911,370.84 -452,512,073.17
period (“-” for
decrease)
3.1 Total
comprehensive 1,706,290,590.61 1,706,290,590.61
income
3.2 Capital
contribution and
46,818,003.90 217,418,706.23 -170,600,702.33
withdrawal by
shareholders
3.2.1 Common
shares contribution
and withdrawal by
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
82
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based
payments included
46,818,003.90 46,818,003.90
in shareholders’
equity
3.2.4 Others 217,418,706.23 -217,418,706.23
3.3 Profit -
-1,988,201,961.45
distribution 1,988,201,961.45
3.3.1 Appropriation
to surplus reserves
3.3.2 Distribution -
-1,988,201,961.45
to shareholders 1,988,201,961.45
3.3.3 Others
3.4 Internal
transfers within
shareholders’
equity
3.4.1 Capital
reserves
transferred into
capital (or share
capital)
3.4.2 Surplus
reserves
transferred into
capital (or share
capital)
3.4.3 Surplus
reserves for making
up losses
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
83
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Others
4. Balance as at the
2,217,864,281.00 6,468,587,957.50 300,524,656.78 -60,000,000.00 1,108,932,140.50 4,846,565,105.07 14,281,424,827.29
end of the period
2022
Unit: RMB
2022
Other equity instruments Other Special Ot
Item Less: Treasury Total shareholders'
Share capital Preferre Perpetua Oth Capital reserves comprehensive reserv Surplus reserves Retained earnings he
shares equity
d shares l bonds ers income es rs
1. Balance as at the
2,217,864,281.00 6,622,294,870.41 299,999,563.27 -60,000,000.00 608,622,056.26 1,888,900,038.53 10,977,681,682.93
end of prior year
Add:
Adjustments for
162,093.53 162,093.53
changed accounting
policies
Adjustments for
corrections of
previous errors
Others
2. Balance as at
2,217,864,281.00 6,622,294,870.41 299,999,563.27 -60,000,000.00 608,622,056.26 1,889,062,132.06 10,977,843,776.46
beginning of year
3. Increase/
decrease in the
-200,524,916.81 -216,893,612.72 500,310,084.24 3,239,414,343.85 3,756,093,124.00
period (“-” for
decrease)
3.1 Total
comprehensive 5,330,555,142.83 5,330,555,142.83
income
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
84
3.2 Capital
contribution and
-200,524,916.81 -216,893,612.72 16,368,695.91
withdrawal by
shareholders
3.2.1 Common
shares contribution
and withdrawal by
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based
payments included
99,474,646.46 99,474,646.46
in shareholders’
equity
3.2.4 Others -299,999,563.27 -216,893,612.72 -83,105,950.55
3.3 Profit
500,310,084.24 -2,091,140,798.98 -1,590,830,714.74
distribution
3.3.1 Appropriation
500,310,084.24 -500,310,084.24
to surplus reserves
3.3.2 Distribution
-1,590,830,714.74 -1,590,830,714.74
to shareholders
3.3.3 Others
3.4 Internal
transfers within
shareholders’
equity
3.4.1 Capital
reserves
transferred into
capital (or share
capital)
3.4.2 Surplus
reserves
transferred into
capital (or share
capital)
3.4.3 Surplus
reserves for making
up losses
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
85
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Others
4. Balance as at the
2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
end of the period
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
86
