Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. Summary of 2018 Semi-Annual Report 1 Contents I. Definitions ........................................................................................................................................ 3 II. Basic Information of the Company ................................................................................................. 3 III. Discussion and Analysis on Business Operation ........................................................................... 6 IV. Financial Statements .................................................................................................................... 15 2 I. Definitions Term Definition CSRC China Securities Regulatory Commission SZSE Shenzhen Stock Exchange Company/the Company/Listed Company/Sanqi Wuhu Shunrong Auto Parts Co., Ltd./Wuhu Shunrong Sanqi Interactive Interactive Entertainment Entertainment Network Technology Co., Ltd. Shanghai Sanqi Interactive Entertainment Sanqi Interactive Entertainment (Shanghai) Technology Co., Ltd. Company Law The Company Law of the People’s Republic of China Securities Law The Securities Law of the People’s Republic of China Articles of Association of Wuhu Shunrong Auto Parts Co., Ltd. / Articles Articles of Association of Association of Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. Auditor GP Certified Public Accountants (Special General Partnership) Yuan or 10,000 Yuan RMB yuan or RMB 10,000 yuan Reporting Period/this Reporting Period From January 1, 2018 to June 30, 2018 End of Reporting Period/End of this Reporting June 30, 2018 Period A game that is based on web technologies, uses standard protocols as the basic transmission form, and does not require any client software or Browser game requires a mini client based on browser kernel. Game users can directly play the game over the Internet using a web browser. A game that is downloaded over mobile network and runs on a mobile Mobile game phone or other mobile terminals. RPG Role-playing games ARPG Action role-playing game SLG Strategy games Net income attributable to shareholders of the listed company excluding performance compensation income/expenses and related goodwill impairment generated by business acquisitions, after tax income/loss Adjusted net income/ (loss) from disposal of equity investments and share-based compensation. The Company uses this non-GAAP measure as supplemental measure to review and assess its operating performance. II. Basic Information of the Company 1. Company Profile Stock Name Sanqi Interactive Entertainment Stock Code 002555 3 Place of Listing Shenzhen Stock Exchange Original Stock Name (if any) Contact Details Secretary to the Board of Directors Representative of Securities Affairs Name Ye Wei 11/F, Tower A1, Wanjiang Fortune Plaza, No. Business Address 88, Ruixiang Road, Jiujiang District, Wuhu City, Anhui Province Tel. 0553-7653737 Email ir@37.com Note: in case of any change to the stock name of the Company from the beginning of the reporting period to the disclosure date of the semi-annual report, the original stock name before the change shall also be disclosed. 2. Key Accounting Data and Financial Indicators Does the Company need to retroactively adjust or restate accounting data of previous years? □Yes □No Same Period of the Prior Year-On-Year Current Reporting Period Year Increase/Decrease Operating income (RMB) 3,302,496,146.77 3,079,428,904.50 7.24% Net income attributable to shareholders of 801,378,948.23 850,550,518.37 -5.78% the listed company (RMB) Net income attributable to shareholders of the listed company after deduction of 761,182,531.85 758,747,435.56 0.32% non-recurring profit and loss (RMB) Net cash flow from operating activities 977,236,017.96 1,096,847,309.63 -10.91% (RMB) Basic earnings per share (RMB/share) 0.37 0.41 -9.76% Diluted earnings per share (RMB/share) 0.37 0.41 -9.76% Weighted average yield of net assets 12.58% 17.18% -4.60% End of the Current Year-on-Year End of the Prior Year Reporting Period Increase/Decrease Total assets (RMB) 8,782,997,697.02 9,160,137,685.38 -4.12% Net assets attributable to shareholders of 5,961,804,254.78 7,016,770,210.85 -15.03% the listed company (RMB) The Company considers and uses one non-GAAP measure, adjusted net income/ (loss), as supplemental measure to review and assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with China Accounting Standards. The Company's adjusted net income is RMB 783,200,320.97 for the reporting period, which is defined as net income attributable to shareholders of the listed company of RMB 801,378,948.23 excluding after tax income/loss from disposal of equity investments of 4 RMB 18,178,627.26 (There is no performance compensation income/expenses or related goodwill impairment generated by business acquisitions, and share-based compensation during this reporting period). The adjusted net income for the same period last year is RMB 769,335,085.67. The adjusted net income for the reporting period increased by 1.80% compared to last year. 3. Number of Shareholders and Their Shareholding Details Note: Names of top 10 shareholders, numbers of their shares, and their rankings disclosed in the semi-annual report shall be based on the register of shareholders made available by the clearing company. In addition, shares held by China Securities Finance Corporation Limited in the Company, shares transferred to Central Huijin Investment Ltd., and shares held by various public offerings of funds and trader assets management programs will not be consolidated. Unit: share Total number of preferred Total number of common shareholders whose voting shareholders at the end of the 55,499 0 rights were resumed at the end reporting period of the reporting period (if any) Shareholding Status of Top 10 Shareholders Pledge or Seizure Name of the Capacity of Shareholding Number of Number of shares held with Status of shareholder shareholder ratio shares selling restrictions Quantity shares Domestic Li Weiwei 19.00% 403,658,052 302,743,539 Pledge 92,260,000 natural person Domestic Zeng Kaitian 17.38% 369,304,174 36,930,418 Pledge 57,900,000 natural person Domestic Wu Xushun 8.00% 170,037,782 0 natural person Domestic Wu Weihong 7.92% 168,204,662 126,153,496 Pledge 21,720,000 natural person Domestic Wu Weidong 7.04% 149,638,084 125,653,563 Pledge 27,800,000 natural person Domestic Hu Yuhang 3.00% 63,830,436 9,590,040 Pledge 10,310,000 natural person CUAM – Ningbo Bank – Zhuhai Rongxi Other 2.78% 59,031,876 59,031,876 Equity Investment Partnership (LP) No. 2 asset management Other 2.10% 44,604,486 44,604,486 plan of CUAM Fund – Ningbo 5 Bank – CUAM – Shunrong Sanqi private placement plan Private equity investment fund phase 1 of private placement of Shanghai PanXin Other 1.56% 33,057,850 33,057,850 Investment Management co., Ltd. – Shanghai Pan Feng Investment Center (L.P.) Ningbo Xinda Fengsheng Domestic Investment non-state-owne 1.53% 32,467,532 32,467,532 Pledge 32,467,500 Partnership d legal person (L.P.) 1. Among the top 10 shareholders of the company, Wu Xushun and Wu Weihong are father and Description of association daughter and Wu Xushun and Wu Weidong are father and son. Wu Xushun, Wu Weihong, and relationship or acting in concert Wu Weidong are persons acting in concert. 2. The company was unaware of other association of the said shareholders relationship among other top 10 shareholders or existence of persons acting in concert as provided in the Administrative Measures for Takeover of Listed Companies. Description of shareholders involved in securities margin Not applicable trading (if any) 4. Dividend payout proposal approved by the Board The Board has considered and approved the following dividend payout proposal for common shareholders for the reporting period: based on the Company’s total shares of 2,124,870,253, a cash dividend of RMB1.00 (tax inclusive) per 10 shares should be distributed to all the common shareholders, with no share dividend converted from capital reserves. III. Discussion and Analysis on Business Operation 1. Brief Introduction of Business Operation in the Reporting Period The company is mainly engaged in cultural and creative business activities and the manufacturing and sales of plastic fuel tanks for 6 automobiles. Within its cultural and creative business it includes the R&D, publishing and operation of mobile and browser games. Furthermore it has recently seen a large expansion into film, television, animation and comics, music, and VR. The company steadily pushed forward its IP-centered, “platformization and globalization” development strategy for its cultural and creative business in this reporting period, ranking the 23rd among China’s Top 100 internet companies in term of comprehensive strength and 1st among A-share listed game companies. In the reporting period, the company achieved an operating revenue of RMB 3.302 billion, up by 7.2% year on year; pre-tax profit was RMB 919 million, down by 9.6% year on year; net income attributable to shareholders of the listed company was RMB 801 million, down by 5.8% year on year; and net income attributable to shareholders of the listed company after deduction of non-recurring gains and losses was RMB 761 million, up by 0.32% year on year. The variation in the net income attributable to shareholders of the company mainly resulted from the company’s disposal of its equity in Shanghai Zheyuan Co., Ltd. and Shanghai Aurora Network Technology Co., Ltd. During the same period of the prior year, shareholders net income on investment was recognized to be RMB 167 million, while there is no significant equity disposal from January to June in 2018. The variation in net income attributable to shareholders of the company after deduction of non-recurring gains and losses mainly resulted from continuous growth of the mobile game business. 2. Brief Introduction of the Industry and Operation Environment 1) Changes in the economic situation of the industry and their impact on the Company According to China’s Game Industry Report of January to June 2018 jointly published by Game Publishing Working Committee of China Audio-Video and Digital Publishing Association and GNC, the actual sales revenue of China’s game market amounted to RMB 105 billion from January to June 2018, up by 5.2% year on year. The number of players during this period in China was 530 million, up by 4.0% year-on-year; the actual sales revenue of China’s mobile game market reached RMB 63.41 billion, 12.9% higher than the same period of the prior year. Mobile games remained the main driving force for the growth of the overall games market. In the reporting period, the gross billing of domestic mobile game business of the company amounted to RMB 3.34 billion, up by 55.3% year on year; mobile game business revenue saw a year-on-year increase of 39.1%, faster than industry averages. Based on the actual sales revenue of the mobile game market as disclosed in the China’s Game Industry Report of January to June 2018, which equates to RMB 63.41 billion, the mobile game business of the company occupied a market share of 5.3% in terms of gross billing. As of the date of this report, the company expects the gross billing of its domestic mobile game business to be from RMB 2.2 billion to RMB 2.7 billion in the third quarter, 36.2% to 67.2% higher than the prior quarter, owning a larger market share. The company intends to enhance its portfolio of high-quality product lines by increasing R&D investment and strengthening cooperation with developers, and to cooperate more closely with other channels and platforms. This is intended to further seize opportunities of growth and to expand both scale and market share in the industry. With regards to browser games, the company intends to maximize its core advantages in browser game operations and to further improve user experiences, retain existing users, and achieve steady operating revenue. 2) Changes in policy environment of the industry and their impact on the Company The General Office of CPC Central Committee and the General Office of the State Council printed and distributed the Outline of the National Plan for Cultural Development and Reform during the Period of the Thirteenth Five-Year Plan in May 2017, which sets forth the requirements for “optimizing the structure and layout of the culture industry and accelerating development of emerging industries including online audiovisual programs, mobile multimedia services, digital publishing, animation, comics and games, creative designs, and 3D movies and Image Maximum movies”, and supports development of the game industry. During the reporting period, the company actively reacted to any requirement changes in the industry and increased its input into 7 high-quality games with innovative gameplay. In the meantime, it protected its intellectual property rights and ensured business operation is in compliance with laws and regulations. 3. Products of the Company and Principal Operation Modes The Company is mainly engaged in cultural and creative business activities and the manufacturing and sales of plastic fuel tanks for automobiles. Within its cultural and creative business it includes the R&D, publishing and operation of mobile and browser games. Furthermore it has recently seen a large expansion into film, television, animation and comics, music, and VR. The company operates mobile games and browser games mainly through independent operations and joint operations with third parties. In terms of independent operations, the company obtains the right to game operations through independent R&D or license agreements. It publishes and operates the games through its own or third parties’ channels. The company takes full charge of game operations, promotions and maintenance. Furthermore it uniformly manages the launching and promotion of the games, customer services, top-up and payment collection, feedback collating from users and games, and constantly updates and upgrades the products together with developers. In joint operations with third parties, the company cooperates with one or more game company to jointly operate a game. Third-party game companies are responsible for the operations, promotion, top-up service, and recharge system of their own channels, while the company and the developer jointly provide technical support. There was no significant change in the main business, major products and operation modes, or main performance drivers of the Company in the reporting period. 4. Core Competitiveness of the Company The Company has been steadily pushing forward its IP-centered, “platformization and globalization” development strategy for its cultural and creative business and established the following core competitiveness: 1. Strong Team After years of operation in the cultural and creative industry, the company has built a core team of R&D elites, experienced publishers, and outstandin staff with leadership skills through an effective support system, implementing incentive mechanisms, creating inspiring environments, and holding recreational events. Its core team is solid with the prospective strategy layout ability, creative and vital skills, and executive power. Enterprising and perseverant, it will help the company to make constant outstanding achievements in the industry. 2. Expertise in publishing The company continued to play a vital role in the domestic mobile game publishing market in the reporting period. The Q1 2018 Quarterly Data Release and Research Report of China’s Interactive Entertainment Industry of iResearch showed that, the company ranked third among listed game enterprises in China’s mobile game market, following Tencent and Netease, in the first quarter of 2018; it continued to take a leading position in domestic browser game field; and it also maintained an advantageous position in overseas markets, including Hong Kong, Macao, Taiwan, Southeast Asia, Europe, and America. The company has accumulated rich experience in mobile and browser game publishing, which assured an edge over competitors. With respect to products, the company, due to an excellent performance and in-depth cooperation with a number of outstanding developers and companies by means of investment and shareholding, has accumulated an abundance of resources. The company applies a strict and quality assurance procedure to select and source high-quality products. The aim for long term operational 8 developments and are, constantly adjusting and optimizing products, to attract users with better content and ultimately achieving higher gross billing and revenue. In terms of users, the company focusess on traffic operation and has accumulated profound experience in promotion and publishing channels. It understands users of different channels, hence it can constantly and precisely introduce higher-quality games to target players. On the one hand, the company was able to anticipate the needs of users by reading data and carried out customized treatment for different users while cutting the customer acquisition cost; on the other hand, the company accumulated an abundance of experience in exploring overseas markets, which provides a head start for further expansion in the future. With respect to service, the company is dedicated to providing players with a detail-centered and comprehensive supporting service. The company operates a flawless player account system, customer service system, and runs an experienced customer service team, which, in combination with an abundant supply of products, offers players a wide option of games and one-stop service. Through this,, the company, guided by the “platform building” strategy, is capable of further improving gaming experiences, activities, and retention rates thus, increasing its revenue and advertising efficiency. The Company was awarded “2017 Top 10 Globalized Brands” and “2017 Top 10 Enterprises Making Prominent Contributions to the Game Industry” with its publishing strength over diversified competition at "China’s Game Awards" sponsored by xinhuanet.com under the guidance of the Office of Central Leading Group for Cyberspace Affairs and the Ministry of Public Security of the People’s Republic of China in the reporting period. 3. High-quality game R&D ability The company has independently developed and continues to do so a series of core technologies, such as advanced game engines and frameworks, which, provide support for an all round excellent performance for popular online games. The company guarantees to constantly launch high-quality games. Through proven core technologies and experience, the company can reduce costs and time for R&D without compromising product quality, and to timely launch competitive games to get a head start in the market. The big data analysis system independently developed by the company is capable of collecting, integrating, and analyzing a mass user consumption and behavior database. For product improvement, the system examines user preference, behavior patterns, consumption habits, etc., and provides critical insights for future product designs and general improvements. This allows the company to optimize procedures of product development. The company has also adopted a market-orientation approach which is focused on sustainable development with the help of its in-depth understanding of players’ demands in game operation business. The company balances the commercial and entertainment properties of a product and is able to launch independently-developed, highly-successful, and long life cycled products that are positively received by the market. As of the date of this report, the Company is developing two browser games, Xue Meng Rong Yao (血盟荣耀) and MU X (奇迹X(暂定名)), and ten mobile games, namely Swords of Archangels (大天 使之剑(客户端版)), Soul Land H5(斗罗大陆H5), Mobile Game S, Mobile Game X of Mir(手游项目X(传奇类)), Tu Long Po Xiao(屠龙破晓), Chao Neng Meng Qiu(超能萌球(暂定名)), Mobile Game T, Mobile Game E, Mobile Game F and H-Game. Based on its competitive advantages, the company is expected to launch long-cycled popular games that are comparable to Yong Heng Ji Yuan (永恒纪元), Chuan Qi Ba Ye (传奇霸业), and Swords of Archangels (大天使之剑). 4. Coordination of upstream and downstream business The business structure of the company, which integrates R&D and operation, helps fully utilize resources and develop popular products. In research and development of new products, inspiration comes from previous successful experiences. It utilizes its strong R&D strength, with constant product improvement, adjustment and optimization based on market demands, and further increases the success rate. The company closely cooperates with a number of excellent content providers and front-line game developers in the form of equity investment and strategic cooperation. The upstream business is able to constantly provide materials for the R&D business with respect to IP and original contents while meeting the diversified demands of the publishing products. Pragmatism and excellent performance enable the company to successfully establish close cooperation with numerous media and 9 publishing channels and enhance its bargaining power before channel providers. In this way, the company is able to get access to more high-quality channel resources at the same cost. 5. Discussion and Analysis on Business Operation January - June January - June Year-on-year Key performance indicators 2018 2017 variation Operating income (RMB 100,000,000) 33.02 30.79 7.2% Pre-tax profit (RMB 100,000,000) 9.19 10.17 -9.6% Net income attributable to shareholders of the company 8.01 8.51 -5.8% (RMB 100,000,000) Adjusted net income ((RMB 100,000,000) 7.83 7.69 1.8% Net cash flow from operating activities ((RMB 100,000,000) 9.77 10.97 -10.9% Basic earnings per share (RMB/share) 0.37 0.41 -9.8% Weighted average yield of net assets 12.71% 17.18% -4.47% The Company, steadily pushed forward its IP-centered, “platformization and globalization” development strategy for its cultural and creative business in this reporting period and maintained its leading position in domestic market in terms of comprehensive strength; the auto parts business however saw a slight decrease. The company achieved operating revenue of RMB 3.302 billion, 7.2% higher year on year in the reporting period. The growth of the mobile game publishing and R&D business was the main driving force for growth of overall income in the current period. The pre-tax profit and net income attributable to shareholders of the Company amounted to RMB 919 million and RMB 801 million, down by 9.6% and 5.8% year on year, respectively. The relative profit declined somewhat because of incomes from disposal of large equity investment in the same period of the prior year but none in the current period. The company adopted one non-GAAP measure, adjusted net income/(loss), as a supplementary indicator to measure its actual operation performance. The ajusted net income of the company was RMB 783 million in the current period, increasing by 1.8% year-on-year. The profit increase was mainly driven by the continuous growth of the mobile game business. (I) Cultural and creative business 1. Mobile game business Indicators January - June 2017 January - June 2018 Year-on-year variation Revenue from mobile games (RMB 100,000,000) 15.43 21.46 39.1% ARPG 11.08 15.49 39.8% Eastern magic games - 1.28 100.0% Western magic games - 4.38 100.0% Fantasy games 10.90 6.58 -39.6% Mystery games - 0.50 100.0% Exploration games - 1.73 100.0% Immortality games 0.01 0.96 9500.0% Other subjects 0.17 0.06 -64.7% 10 MOBA games 0.49 0.59 20.4% RPG 1.29 3.66 183.7% Card games - 0.12 100.0% SLG 1.33 1.04 -21.8% Others 1.24 0.56 -54.8% Both the revenue from mobile game business and input in R&D grew, and the mobile game business continued to take a leading position in domestic market and a number of overseas markets. In the reporting period, the operating revenue from the mobile game business and its gross profit reached RMB 2.146 billion and RMB 1.665 billion, 39.1% and 38.8% higher year on year, respectively. The Company mainly implemented the strategy of “ARPG + diversified categories” in mobile game R&D and publishing in 2018. A total of 25 mobile games of different categories are launched in the first half of 2018, further enriching the experience of the company in publishing different games. Revenue from ARPG mobile games increased by 39.8% and that from RPG mobile games 183.7% in the reporting period, marking a successful step. (1) Mobile game publishing Domestic market: the company continued to play a vital role in domestic mobile game publishing market. According to Q1 2018 Quarterly Data Release and Research Report of China’s Interactive Entertainment Industry of iResearch, the Company ranked third among listed game companies in China’s mobile game market in the first quarter of 2018, following Tencent and Netease. the Company, based on its capability of operating different games, adjusted its publishing strategy from simple “ARPG + SLG” to “diversification” in the reporting period. In the meantime, relying on its in-depth understanding of user demands, the company joined hands with developers to push forward product adjustment and optimization and launched attractive and high-quality games to the market through constant improvements. The company sought product operation and development in the long run. It continued to invest in long-cycled popular games such as Eternal Crusade and Swords of Archangels H5, which contribute a great deal to the gross billing and profit of the company. As of the date of this report, the company had obtained the exclusive right to operate a number of mobile games, including Bing Ren Da Zhan (兵人大战), Sword and Rebirth (剑与轮回), Jing Ling Qi Yue (精灵契约), SNK All Star (working title) (SNK全明星(暂定名)), Ling Jian Xian Shi (灵剑仙师), and rich reserves of independently-developed games such as Soul Land H5 (斗罗大陆H5). By the date of this report, the new ARPG games, including Tu Long Po Xiao(屠龙破 晓), released in July, has achieved significant results, and is expected to drive the growth of the company in the latter half of the year. As of July 2018, the company’s monthly gross billing of mobile games in domestic market has exceeded RMB 700 million, and it tends to grow further. Overseas markets: the company continued its advantages in overseas markets and further executed its global strategies. In the reporting period, the company constantly updated and iterated its flagship product, Yong Heng Ji Yuan(永恒纪元), which made contributions to the profit in Hong Kong, Macao, Taiwan, Southeast Asia, Europe, America, and Korea. At the end of the reporting period, the game was published in Japan, helping the company to explore the Japanese market. In the reporting period, Swords of Archangels H5(大天使之剑H5) rose to the top of bestselling games in merely two months after its launching in Taiwan. Clans of Intrigue(楚留香), an MMORPG launched on 5 July, achieved remarkable results in the Taiwan market. It ranked first among best-selling games in terms of downloads only three days after launching. As of the date of this report, popular and upcoming games operated by the company included the fighting card game KOF: Destiny(拳皇命运), love card game Half-the-World Journey(半 世界之旅), 2-D game Dengeki Bunko: Crossing Void(电击文库:零境交错), 2-D game Dream Link(梦境链接), RPG game Era of Chaos, Code M-RPG, SLG game Three Kingdoms(墨三国), MOBA game Stonecraft(石器争霸), SLG game Lords of Conquest, SLG game Primal Wars: Dino Age and, Kingdom and Beauty(江山美人). Upcoming games are expected to be launched in overseas markets in the latter half of the year, assisting in overseas expansion. In the reporting period, the company was awarded “2017 Top 10 Globalized Brands” at “China Game Awards”, and was selected to “2017 World Top 52 APP Publishers” by App Annie, a world-renowned data organization. 11 (2) Mobile games research and development The Company continued to increase its investment in R&D of its mobile games business. In research and development of mobile game products, the company is constantly active in design and innovation. It is dedicated to improving the product engine, performance and art quality, so as to meet the increasing demand of users for high-quality game experience. The company updated and iterated several long-cycled popular games that had been launched in the reporting period. For example, it attempted to recall the memories of veteran players and make the game more appealing through better images and sound effects in Chuan Qi Ba Ye (传奇霸业); it met the needs of players for “log-in and play” by integrating data from PC clients and mobile clients in Swords of Archangels H5 (大天使之剑H5); in Yong Heng Ji Yuan (永恒纪元), the company, adapted to the market environment by featuring precise traffic purchasing, improved player experience by innovative gameplay, in-game, enhanced its economic system and updated vivid graphics. In addition, the company launched five independently-developed games in the reporting period, including Fighter of the Destiny (择天记) and Swords of Archangels H5(大天使之剑H5) (for Hong Kong, Macao, and Taiwan). The company began to set foot on research and development of casual games and turn-based games in the reporting period. In the future, the target is to become a first-rate game developer capable of providing players with various game products, focusing on high-quality content and utilizing its own advantages in anticipating user needs. It will apply core technologies to further explore new genres, gameplay and to actively expand its product lines. As of the end of the reporting period, the company was developing ten mobile games, namely Swords of Archangels (大天使之剑 (客户端版)), Soul Land H5(斗罗大陆H5), Mobile Game S, Mobile Game X of Mir(手游项目X(传奇类)), Tu Long Po Xiao (屠龙破晓), Chao Neng Meng Qiu(超能萌球(暂定名)), Mobile Game T, Mobile Game E, Mobile Game F and H-Game. 2. Browser game business More than 20,000 new servers were opened in the first half of 2018 in the domestic market, topping the ranking list of operation platforms in term of server opening (source of data from 9k9k). It continued to play a leading role in the industry in terms of market share. In the reporting period, the operating revenue from the browser game business reached RMB 910 million, a slight drop year on year, which was mainly due to users’ shift to mobile clients and reduction in browser game products. User adhesiveness and platform influences were enhanced by improving the user’s game experience, while strengthening cooperation with domestic top browser game developers by investment and business cooperation. In the first half of 2018, the launch of The Rise of Taichi(太极崛起) and other excellent games further stabilized the operating revenue. The open beta test of the browser game Demon Seals(镇魔曲网页版) will be launched in the latter half of 2018 commenced in early July. The continuation of research and development of browser games will further allow adaptation to changing market needs. The open beta test of the independently-developed Xue Meng Rong Yao (血 盟荣耀) was released in early July. MU X, which is under development, and The Legendary Swordsman(笑傲江湖), the game to be operated by the company as an agent, are expected to be launched in the next half of the year. 3. Other cultural and creative business The company maintains its existing investments in films and television, music, animation, and VR. According to the future investment plan, there will be a key focus centering a strategy on quality content, investing in other fast-growing cultural and entertainment fields, utilizing operations, expanding into more fields, investing in companies in content realization and strategic coordination. In addition to film and television, animation, music, and VR, further investment will be in education, sports, social media, and preschool education, in order to build a brand that provides quality contents to users of all ages. By the date of the report business has been extended to tens of millions of young users through following investment: YHKT Entertainment, an original animation company; Junengwan, the first real comic platform in China; Wake, the first online yoga platform in China and domestic popular idol bands. In addition, there are plans to enlarge its user group to infants through business involvement in preschool education, so as to cover users of all ages. Through strategic coordination with invested companies and expansion in the future, 12 high-quality content and services can be provided to users of all age brackets and become a cultural and creative brand that accompanies the growth of the young generation of China. 4. IP strategy Combining its strength in game businesses and continuation of exploiting high-quality IP for development of competitive games, the the company acquired the IP rights of Astro Boy, Seal OL, and added the IP cooperative project Soul Land in the reporting period. IPs that were in the stage of development in the reporting period included MU (browser game MU X and mobile game Swords of Archangels), and Soul Land (mobile game Soul Land H5). In addition to direct purchasing high-quality IPs, the Company and Century Huatong entered into an agreement in the reporting period, according to which, the parties would strategically cooperate in game R&D and operation and IP-adapted resources. The Company will continue to build its cultural and creative strategy system, satisfy the diversified demands for users for entertainment, and exploit the value extension space of IP in film and television, game, animation and comic, music, and VR in depth on the basis of its excellent IP strategy. (II) Automobile parts business There was a decline in revenue and profit of the automobile parts business of the Company in the reporting period. 6. Revenue and Cost Analysis Unit: RMB Year-on-year Year-on-year Year-on-year Operating Operating cost Gross profit variation of variation of variation of gross revenue operating revenue operating cost profit Industries Online game 3,071,123,194.02 716,040,586.48 76.68% 10.58% -5.92% 4.09% industry Automobile parts 231,372,952.75 170,233,013.97 26.42% -23.42% -21.86% -1.47% industry Products Browser games 910,103,611.46 234,874,537.56 74.19% -24.95% -43.83% 8.67% Mobile games 2,145,744,221.56 481,166,048.93 77.58% 39.10% 40.29% -0.19% Others 15,275,361.00 0.00 100.00% -30.62% 0.00% 0.00% Automobile parts 231,372,952.75 170,233,013.97 26.42% -23.42% -21.86% -1.47% Regions Domestic 2,828,407,922.34 783,422,516.41 72.30% 8.64% -10.54% 5.94% Overseas 474,088,224.43 102,851,084.04 78.31% -0.41% -0.42% 0.00% Cost composition of main business Unit: RMB Cost composition Current Reporting Period Same Period of the Prior Year Year-on-year 13 Proportion in the Proportion in the variation Amount Amount operating cost operating cost Game commission 633,845,493.29 71.52% 680,490,259.80 69.51% 2.01% Cost of servers 43,827,578.58 4.95% 37,705,465.73 3.85% 1.09% Amortization of 22,131,700.53 2.50% 42,039,126.54 4.29% -1.80% royalty Production cost 503,238.47 0.06% 765,752.79 0.08% -0.02% Other costs 15,732,575.61 1.78% 114,933.11 0.01% 1.76% Direct materials 134,734,499.98 15.20% 180,478,949.01 18.44% -3.23% Direct labor cost 8,281,182.96 0.93% 8,535,911.02 0.87% 0.06% Manufacturing 27,217,331.03 3.07% 28,838,008.32 2.95% 0.13% expenses Total 886,273,600.45 100.00% 978,968,406.32 100.00% 0.00% 7. Risks of the Company and Countermeasures 1. Market competition risks and countermeasures The online game industry has developed a fierce industrial competition in products and market channels. With the development of entertainment and internet industries, online game users have increasingly higher standards for game products. A more intense market competition will put pressure on the developments for products and market channels. In response, harnessing experience and accumulation in research and development of successful products and abundant IP resources will be needed to move forward. Strategic cooperation with upstream producers will be implemented by means of investment and shareholding, so as to constantly produce more mobile and browser games and retain users with competitive games. In market channels, the company will maximize the first-mover advantages in overseas game markets, accelerate expansion of overseas businesses and increase the contributions of overseas markets to the operating revenue so as to constantly improve core competitive power in overseas markets. 2. Operation risks and countermeasures The online game industry is characterized by fast product update, limited life cycle and fast change of user preference. Game enterprises need to increase their investment in technology development and closely keep in pace with trend of the industrial technologies. If the game industry encounters a significant technological revolution, but game enterprises fail to catch up, their products will fail to meet the market demands. At the same time, information security and user privacy protection arouse great public concerns. If the Company leaks users’ information due to negligence, there will be a significant damage on the user experience and brand image. Consequently, its operation performance will be impaired. In response, increasing input in product research and development is needed and there will be a continuation and extension of development in upstream layouts by means of investment, shareholding, and merger and acquisition. Furthermore, the examination of operations data in depth, constantly updating and understanding the change in target users’ preference, and timely adjusting its operation strategy and research and development direction will be implemented so as to meet the core demands of users. A strict internal control system for information security management and user privacy protection has been set up to ensure the security of users information to the maximum extent. A series of internal control systems to define and classify security accidents and respond in time to possible data security problems have also been implemented. Information security audits take place once every six 14 months for systematic control of information security risks. In terms of privacy protection,the new Privacy Policy was established and provides in details the rules and standards for collection and use of users’ personal information and sets forth the reasonable and feasible security measures adopted for protection of users’ personal information. In this way the company will make sure with greatest efforts that all users’ personal information are protected at the highest level. The company will make sure it runs the business in compliance with applicable laws and regulations throughout the world, to safeguard users personal information. A response procedure to inform users of any possible security cost and what necessary actions need to be taken is also in place to ensure users can manage their own personal information. 3. Risks of core employee turnover and countermeasures As this is an online game enterprise without many fixed assets, a stable and high-quality game developer team is an important and necessary guarantee to maintain its technological edge. If the company fails to effectively maintain and constantly perfect the incentive mechanism for core employees under the change of environment, the employees' enthusiasm and creativity will be affected, even resulting in resignation of core employees. If the company fails to recruit and retain technological and operation talents required, its business operation, development, profitability will suffer. In response, much attention has been given to cultivation and acquisition of professional talents. It creatively builds a platform-based talent management mechanism, according to which excellent game producers are rewarded with high project bonus, while they are given discretion of research and creation. Agreements are entered with core employees, creating a favorable working environment, and developing a healthy corporate culture for employee loyalty. Further more, the company puts emphasis on employee training and enhancing their sense of belonging, especially for core employees and executives. In this way, they can feel that they are owners of the company and be more loyal to the company. IV. Financial Statements Numbers in the financial statements shall be denominated in Renminbi. 1. Consolidated balance sheet Prepared by: Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. Unit: RMB Item Closing balance Opening balance Current assets: Monetary capital 1,538,659,591.57 1,580,910,931.98 Notes receivable 46,200,000.00 55,340,000.00 Accounts receivables 942,845,341.12 884,909,012.77 Advance payments 295,733,066.09 283,516,789.29 Interest receivable 5,095.89 582,592.17 Dividends receivable 1,194,183.75 Other receivables 322,191,024.83 388,111,919.85 Inventory 71,471,268.40 101,828,085.31 Assets held for sale 337,765,050.83 75,066,714.34 Other current assets 192,520,546.20 592,189,323.99 15 Total current assets 3,748,585,168.68 3,962,455,369.70 Non-current assets: Available-for-sale financial assets 651,972,479.13 882,481,586.86 Long-term equity investment 397,333,972.65 376,972,832.08 Fixed assets 288,015,211.62 292,395,887.17 Construction in progress 72,389,566.29 50,672,878.42 Intangible assets 42,485,019.45 44,898,112.29 Development expenditure 5,719,543.20 4,070,272.43 Goodwill 2,540,312,996.76 2,540,312,996.76 Long-term deferred expenses 73,666,966.77 79,803,089.59 Deferred income tax assets 13,492,897.73 11,810,692.92 Other non-current assets 949,023,874.74 914,263,967.16 Total non-current assets 5,034,412,528.34 5,197,682,315.68 Total assets 8,782,997,697.02 9,160,137,685.38 Current liabilities: Short-term loans 649,000,000.00 372,054,500.00 Accounts payable 828,053,099.62 741,792,973.33 Payments received in advance 79,760,060.61 84,886,734.84 Payroll payable 87,340,794.43 113,480,021.50 Taxes payable 41,152,839.18 58,281,315.47 Interest payable 538,984.56 390,533.38 Dividends payable 212,487,025.30 Other payable 396,389,893.71 61,572,020.26 Non-current liabilities due within 28,849,024.11 28,117,893.57 one year Other current liabilities 60,837,165.93 57,738,251.19 Total current liabilities 2,384,408,887.45 1,518,314,243.54 Non-current liabilities: Long-term loans 296,165,631.48 310,775,272.06 Bonds payable 27,257,539.12 27,163,239.26 Deferred income 9,276,581.42 17,226,474.44 Total non-current liabilities 332,699,752.02 355,164,985.76 Total liabilities 2,717,108,639.47 1,873,479,229.30 Owner’s equity: 16 Share capital 2,124,870,253.00 2,148,110,844.00 Other equity instruments 1,947,846.62 1,947,846.62 Capital reserves 363,981,730.68 1,972,639,580.66 Other comprehensive incomes -37,047,030.32 -25,087,592.30 Surplus reserves 99,561,946.09 99,561,946.09 Undistributed profit 3,408,489,508.71 2,819,597,585.78 Total owner’s equity attributable to the 5,961,804,254.78 7,016,770,210.85 parent company Minority interests 104,084,802.77 269,888,245.23 Total owner's equity 6,065,889,057.55 7,286,658,456.08 Total liabilities and owner's equity 8,782,997,697.02 9,160,137,685.38 Legal representative: Li Weiwei Person in charge of accounting: Ye Wei Person in charge of the accounting department: Ye Wei 2. Balance sheet of the parent company Unit: RMB Item Closing balance Opening balance Current assets: Monetary capital 71,772,220.68 5,437,518.91 Dividends receivable 200,000,000.00 Other receivables 786,037,356.83 1,655,547,345.04 Assets held for sale 69,996,897.11 69,996,897.11 Other current assets 2,799,462.88 403,527,827.28 Total current assets 1,130,605,937.50 2,134,509,588.34 Non-current assets: Available-for-sale financial assets 60,000,000.00 60,000,000.00 Long-term equity investment 7,153,123,823.31 5,754,424,925.15 Deferred income tax assets 2,707,172.67 3,334,186.37 Other non-current assets 50,000,000.00 50,000,000.00 Total non-current assets 7,265,830,995.98 5,867,759,111.52 Total assets 8,396,436,933.48 8,002,268,699.86 Current liabilities: Short-term loans 649,000,000.00 369,000,000.00 Payroll payable 283,731.30 539,632.89 Taxes payable 17,271,522.21 17 Interest payable 538,984.56 390,533.38 Dividends payable 212,487,025.30 Other payable 909,771,145.77 565,086,466.06 Other current liabilities 1,266,932.04 936,428.02 Total current liabilities 1,773,347,818.97 953,224,582.56 Non-current liabilities: Total non-current liabilities Total liabilities 1,773,347,818.97 953,224,582.56 Owner’s equity: Share capital 2,124,870,253.00 2,148,110,844.00 Capital reserves 4,023,809,854.19 4,401,934,248.25 Surplus reserves 99,561,946.09 99,561,946.09 Undistributed profit 374,847,061.23 399,437,078.96 Total owner's equity 6,623,089,114.51 7,049,044,117.30 Total liabilities and owner's equity 8,396,436,933.48 8,002,268,699.86 3. Consolidated income statement Unit: RMB Item Accruals in the current period Accruals in the prior period I. Total operating revenue 3,302,496,146.77 3,079,428,904.50 Including: operating revenue 3,302,496,146.77 3,079,428,904.50 II. Total operating costs 2,447,475,704.34 2,305,547,913.50 Including: operating costs 886,273,600.84 978,968,406.32 Taxes and surcharges 15,844,704.11 11,835,813.83 Sales expense 1,143,478,494.94 894,395,258.33 Overheads 385,778,790.51 406,200,167.32 Financial expenses 13,958,433.93 14,277,887.24 Asset impairment loss 2,141,680.01 -129,619.54 Add: gains from changes in fair value (represented in “-” for loss) Investment income 23,747,705.64 209,368,987.93 (represented in "-" for loss) Including: investment income from associated enterprise and joint -4,090,378.50 -6,778,392.90 venture 18 Gains from asset disposal 4,411.96 -625,274.29 (represented in “-” for loss) Other incomes 42,885,206.03 33,482,273.74 III. Operating profit (represented in "-" 921,657,766.06 1,016,106,978.38 for loss) Add: Non-operating revenue 1,076,547.10 589,454.30 Less: Non-operating expenditures 3,487,862.12 125,417.98 IV. Pre-tax profit (represented in "-" for 919,246,451.04 1,016,571,014.70 total loss) Less: Income tax expense 36,437,882.35 64,889,299.38 V. Net income (represented in “-” for net 882,808,568.69 951,681,715.32 loss) (I) Net income of continued operations (represented in “-” for net 882,808,568.69 951,681,715.32 loss) Net income attributable to owners of 801,378,948.23 850,550,518.37 the parent company Minority interest income 81,429,620.46 101,131,196.95 VI. Other net comprehensive incomes -12,085,783.31 -26,957,663.51 after tax Other comprehensive incomes after tax attributable to owners of the parent -11,959,438.02 -27,310,344.67 company (II) Other comprehensive incomes that can be reclassified as profit or loss in -11,959,438.02 -27,310,344.67 the future 2. Profit and loss on changes in fair value of available-for-sale -16,780,009.82 -28,155,236.82 financial assets 5. Converted difference in 4,820,571.80 844,892.15 foreign currency statements 6. Others Other comprehensive incomes after tax -126,345.29 352,681.16 attributable to minority shareholders VII. Total comprehensive incomes 870,722,785.38 924,724,051.81 Total comprehensive income attributable to owners of the parent 789,419,510.21 823,240,173.70 company 19 Total comprehensive incomes 81,303,275.17 101,483,878.11 attributable to minority shareholders VIIII. Earnings per share: (1) Basic earnings per share 0.37 0.41 (2) Diluted earnings per share 0.37 0.41 In case of business combination under common control in the current period, the combined party realized a net income of RMB 0.00 yuan prior to the combination and it realized a net income of RMB 0.00 yuan in the prior period. Legal representative: Li Weiwei Person in charge of accounting: Ye Wei Person in charge of the accounting department: Ye Wei 4. Income statement of the parent company Unit: RMB Item Accruals in the current period Accruals in the prior period I. Operating revenue 0.00 751,646.53 Less: Operating cost 0.00 31,646.53 Taxes and surcharges 1,024,725.00 392,705.30 Sales expense 0.00 Overheads 6,601,859.21 9,362,828.12 Financial expenses 5,213,002.36 9,914,533.98 Asset impairment loss -2,508,054.79 -2,504,511.65 Add: gains from changes in fair 0.00 value (represented in “-” for loss) Investment income (represented 198,698,898.16 109,600,158.10 in "-" for loss) Including: investment income from associated enterprise and joint -1,301,101.84 -943,153.97 venture Gains from asset disposal 0.00 (represented in “-” for loss) Other incomes 50,943.38 II. Business profit (“-” for loss ) 188,418,309.76 93,154,602.35 Add: Non-operating revenue 0.00 Less: Non-operating expenditures 5,483.09 III. Pre-tax profit (represented in “-” for 188,412,826.67 93,154,602.35 total loss) Less: Income tax expense 515,819.10 18,085,464.76 20 IV. Net income (represented in “-” for 187,897,007.57 75,069,137.59 net loss) (I) Net income of continued operations (represented in “-” for net 187,897,007.57 75,069,137.59 loss) VI. Total comprehensive incomes 187,897,007.57 75,069,137.59 VII. Earnings per share: (1) Basic earnings per share (2) Diluted earnings per share 5. Consolidated cash flow statement Unit: RMB Item Accruals in the current period Accruals in the prior period I. Cash flows from operating activities: Cash received from the sales of 3,438,837,552.44 3,406,760,557.65 goods or rendering services Cash received from tax refunds 26,890,901.13 21,837,951.79 Other cash received relating to 23,960,147.51 25,950,170.88 operating activities Sub-total of cash inflow from operating 3,489,688,601.08 3,454,548,680.32 activities Cash paid for goods acquired and 764,126,180.75 1,048,871,934.37 services received Cash paid to and on behalf of 389,536,519.50 273,488,370.49 employees Taxes paid 148,413,335.07 137,575,252.88 Other cash paid relating to 1,210,376,547.80 897,765,812.95 operating activities Sub-total of cash outflow from 2,512,452,583.12 2,357,701,370.69 operating activities Net cash flows from operating activities 977,236,017.96 1,096,847,309.63 II. Cash flows from investing activities Cash received from withdrawal of 118,636,674.46 195,000,000.00 investment Cash received from return on 31,431,186.39 12,689,873.46 investment Net cash received from disposal of 2,174,729.81 1,890,880.34 21 fixed assets, intangible assets and other long-term assets Other cash received relating to 1,126,557,800.00 974,417,865.14 investing activities Sub-total of cash inflow from investing 1,278,800,390.66 1,183,998,618.94 activities Cash paid for purchase of fixed assets, intangible assets and other 131,912,260.35 575,626,006.32 long-term assets Cash paid for investment 92,335,901.04 221,908,800.00 Net cash paid for acquisition of -33,452,562.16 subsidiaries and other business entities Other cash paid relating to 1,126,557,800.00 1,100,000,000.00 investing activities Sub-total of cash outflow from 1,350,805,961.39 1,864,082,244.16 investing activities Net cash flows from investing activities -72,005,570.73 -680,083,625.22 III. Cash flows from financing activities: Cash received from absorbing 19,789,457.72 426,940,196.27 investment Including: cash received from subsidiary investment from minority 19,789,457.72 522,147.52 shareholders Cash received from borrowings 649,000,000.00 560,000,000.00 Cash received from issuing bond Other cash received relating to financing activities Sub-total of cash inflow from financing 668,789,457.72 986,940,196.27 activities Cash paid for repayment of debts 385,933,010.04 300,000,000.00 Cash paid for distribution of 109,256,651.46 347,375,745.62 dividends or profits or interest payment Including: dividend and profit paid 90,000,000.00 128,000,000.00 to minority shareholders by subsidiaries Other cash paid relating to 1,120,317,235.07 financing activities Sub-total of cash outflow from 1,615,506,896.57 647,375,745.62 22 financing activities Net cash flows from financing activities -946,717,438.85 339,564,450.65 IV. Effect of changes in foreign exchange rate on cash and cash -764,348.79 -4,625,651.40 equivalents V. Net increase in cash and cash -42,251,340.41 751,702,483.66 equivalents Add: Opening balance of cash and 1,580,910,931.98 819,213,006.12 cash equivalents VI. Closing balance of cash and cash 1,538,659,591.57 1,570,915,489.78 equivalents 6. Cash flow statement of the parent company Unit: RMB Item Accruals in the current period Accruals in the prior period I. Cash flows from operating activities: Cash received from the sales of 831,026.44 goods or rendering services Cash received from tax refunds 50,943.38 Other cash received relating to 1,717,002,285.35 494,120,800.82 operating activities Sub-total of cash inflow from operating 1,717,053,228.73 494,951,827.26 activities Cash paid for goods acquired and 31,646.53 services received Cash paid to and on behalf of 1,238,172.66 1,763,780.21 employees Taxes paid 18,667,911.67 717.40 Other cash paid relating to 835,785,281.58 740,983,034.61 operating activities Sub-total of cash outflow from 855,691,365.91 742,779,178.75 operating activities Net cash flows from operating activities 861,361,862.82 -247,827,351.49 II. Cash flows from investing activities Cash received from withdrawal of 50,000,000.00 84,456,687.93 investment Cash received from return on 6,000,000.00 110,543,312.07 23 investment Sub-total of cash inflow from investing 56,000,000.00 195,000,000.00 activities Cash paid for investment 1,120,000,000.00 0.00 Sub-total of cash outflow from 1,120,000,000.00 investing activities Net cash flows from investing activities -1,064,000,000.00 195,000,000.00 III. Cash flows from financing activities: Cash received from absorbing 428,962,496.88 investment Cash received from borrowings 649,000,000.00 560,000,000.00 Cash received from issuing bond Other cash received relating to 91,195.70 financing activities Sub-total of cash inflow from financing 649,091,195.70 988,962,496.88 activities Cash paid for repayment of debts 369,000,000.00 300,000,000.00 Cash paid for distribution of 10,627,267.52 218,729,086.30 dividends or profits or interest payment Other cash paid relating to 491,089.23 financing activities Sub-total of cash outflow from 380,118,356.75 518,729,086.30 financing activities Net cash flows from financing activities 268,972,838.95 470,233,410.58 IV. Effect of changes in foreign exchange rate on cash and cash equivalents V. Net increase in cash and cash 66,334,701.77 417,406,059.09 equivalents Add: Opening balance of cash and 5,437,518.91 15,360,874.41 cash equivalents VI. Closing balance of cash and cash 71,772,220.68 432,766,933.50 equivalents 7. Consolidated statement of changes in owner's equity Current amount Unit: RMB 24 Current period Owner’s equity attributable to parent company Other equity Other Provisio Minorit Total Item instruments Less: Undistri Share Capital compre Special Surplus ns for y owner's Prefer Perpet treasury buted capital Other reserves hensive reserves reserves general interests equity red ual stocks profit s incomes risks Share bond 2,148, 1,947, 1,972,6 2,819,5 7,286,6 I. Closing balance -25,087, 99,561, 269,888 110,84 846.6 39,580. 97,585. 58,456. of the prior year 592.30 946.09 ,245.23 4.00 2 66 78 08 Add: Change in accounting policy Correction of prior errors Business combination under common control Others II. Opening 2,148, 1,947, 1,972,6 2,819,5 7,286,6 -25,087, 99,561, 269,888 balance of current 110,84 846.6 39,580. 97,585. 58,456. 592.30 946.09 ,245.23 year 4.00 2 66 78 08 III. Increase and decrease of current -23,24 -1,608,6 -165,80 -1,220,7 -11,959, 588,891 year (represented 0,591. 57,849. 3,442.4 69,398. 438.02 ,922.93 in “-” for 00 98 6 53 decrease) (I) Total -11,959, 801,378 81,303, 870,722 comprehensive 438.02 ,948.23 275.17 ,785.38 incomes (II) Capital input -23,24 -1,608,6 -157,10 -1,789,0 and reduced by 0,591. 57,849. 6,717.6 05,158. owners 00 98 3 61 1. Common shares -23,24 -375,62 -391,57 7,286,9 input by 0,591. 1,894.0 5,527.3 57.72 shareholders 00 6 4 2. Capital input by owners of other equity instruments 25 3. Amount of share-based payment recorded in owner's equity -1,233,0 -164,39 -1,397,4 4. Others 35,955. 3,675.3 29,631. 92 5 27 -212,48 -302,48 (III) Profit -90,000, 7,025.3 7,025.3 distribution 000.00 0 0 1. Appropriation of surplus reserves 2. Appropriation of provisions for general risks 3. Distribution to -212,48 -302,48 -90,000, owners (or 7,025.3 7,025.3 000.00 shareholder) 0 0 4. Others (IV) Internal carryover of owner's equity 1. Transfers from capital reserves to paid-in capital (or stock capital) 2. Transfers from surplus reserves to paid-in capital (or stock capital) 3. Surplus reserves used to offset losses 4. Others (V) Special reserves 1. Withdrawal in current period 2. Use in current period 26 (VI) Others IV. Closing 2,124, 1,947, 3,408,4 6,065,8 363,981 -37,047, 99,561, 104,084 balance of current 870,25 846.6 89,508. 89,057. ,730.68 030.32 946.09 ,802.77 period 3.00 2 71 55 Prior amount Unit: RMB Prior period Owner’s equity attributable to parent company Other equity Minorit Other Provisio Total Item instruments Less: Undistri y Share Capital compre Special Surplus ns for owner's treasury buted interest Prefer Perpet equity capital Other reserves hensive reserves reserves general red ual stocks profit s s incomes risks Share bond 2,084, 1,947, 1,413,5 4,729,1 I. Closing balance 934,484 -4,618,5 93,488, 205,489 794,78 846.6 67,635. 54,283. of the prior year ,599.29 35.07 947.26 ,001.44 8.00 2 94 48 Add: Change in accounting policy Correction of prior errors Business combination under common control Others II. Opening 2,084, 1,947, 1,413,5 4,729,1 934,484 -4,618,5 93,488, 205,489 balance of current 794,78 846.6 67,635. 54,283. ,599.29 35.07 947.26 ,001.44 year 8.00 2 94 48 III. Increase and decrease of current 63,316 1,038,1 1,406,0 2,557,5 -20,469, 6,072,9 64,399, year (represented ,056.0 54,981. 29,949. 04,172. 057.23 98.83 243.79 in “-” for 0 37 84 60 decrease) (I) Total 1,620,5 1,816,7 -20,469, 216,603 comprehensive 82,427. 16,385. 057.23 ,015.41 incomes 47 65 (II) Capital input 63,316 1,038,1 -24,203 1,077,2 and reduced by ,056.0 54,981. ,771.62 67,265. 27 owners 0 37 75 1. Common shares 63,316 1,148,0 1,216,2 4,900,0 input by ,056.0 09,452. 25,508. 00.00 shareholders 0 24 24 2. Capital input by owners of other equity instruments 3. Amount of share-based 85,836, 15,147, 100,984 payment recorded 485.00 615.00 ,100.00 in owner's equity -195,69 -239,94 -44,251 4. Others 0,955.8 2,342.4 ,386.62 7 9 -214,55 -128,00 -336,47 (III) Profit 6,072,9 2,477.6 0,000.0 9,478.8 distribution 98.83 3 0 0 1. Appropriation 6,072,9 -6,072,9 of surplus reserves 98.83 98.83 2. Appropriation of provisions for general risks 3. Distribution to -208,47 -128,00 -336,47 owners (or 9,478.8 0,000.0 9,478.8 shareholder) 0 0 0 4. Others (IV) Internal carryover of owner's equity 1. Transfers from capital reserves to paid-in capital (or stock capital) 2. Transfers from surplus reserves to paid-in capital (or stock capital) 3. Surplus reserves used to offset losses 28 4. Others (V) Special reserves 1. Withdrawal in current period 2. Use in current period (VI) Others IV. Closing 2,148, 1,947, 1,972,6 2,819,5 7,286,6 -25,087, 99,561, 269,888 balance of current 110,84 846.6 39,580. 97,585. 58,456. 592.30 946.09 ,245.23 period 4.00 2 66 78 08 8. Statement of changes in owner's equity of the parent company Current amount Unit: RMB Current period Other equity instruments Other Less: Undistri Total Item Share Capital comprehe Special Surplus Preferre Perpetu treasury buted owner's capital Others reserves nsive reserves reserves d Share al bond stocks profit equity incomes I. Closing balance 2,148,11 4,401,934 99,561,94 399,437 7,049,044 of the prior year 0,844.00 ,248.25 6.09 ,078.96 ,117.30 Add: Change in accounting policy Correction of prior errors Others II. Opening 2,148,11 4,401,934 99,561,94 399,437 7,049,044 balance of current 0,844.00 ,248.25 6.09 ,078.96 ,117.30 year III. Increase and decrease of current -23,240, -378,124, -24,590, -425,955, year (represented 591.00 394.06 017.73 002.79 in “-” for decrease) (I) Total 187,897 187,897,0 comprehensive ,007.57 07.57 incomes 29 (II) Capital input -23,240, -378,124, -401,364, and reduced by 591.00 394.06 985.06 owners 1. Common shares -23,240, -378,124, -401,364, input by 591.00 394.06 985.06 shareholders 2. Capital input by owners of other equity instruments 3. Amount of share-based payment recorded in owner's equity 4. Others -212,48 (III) Profit -212,487, 7,025.3 distribution 025.30 0 1. Appropriation of surplus reserves 2. Distribution to -212,48 -212,487, owners (or 7,025.3 025.30 shareholders) 0 3. Others (IV) Internal carryover of owner's equity 1. Transfers from capital reserves to paid-in capital (or stock capital) 2. Transfers from surplus reserves to paid-in capital (or stock capital) 3. Surplus reserves used to offset losses 4. Others (V) Special reserves 30 1. Withdrawal in current period 2. Use in current period (VI) Others IV. Closing 2,124,87 4,023,809 99,561,94 374,847 6,623,089 balance of current 0,253.00 ,854.19 6.09 ,061.23 ,114.51 period Prior amount Unit: RMB Prior period Other equity instruments Other Less: Undistri Total Item Share Capital comprehe Special Surplus Preferre Perpetu treasury buted owner's capital Others reserves nsive reserves reserves d Share al bond stocks profit equity incomes I. Closing balance 2,084,79 3,253,924 93,488,94 553,259 5,985,468 of the prior year 4,788.00 ,796.01 7.26 ,568.27 ,099.54 Add: Change in accounting policy Correction of prior errors Others II. Opening 2,084,79 3,253,924 93,488,94 553,259 5,985,468 balance of current 4,788.00 ,796.01 7.26 ,568.27 ,099.54 year III. Increase and -153,82 decrease of current 63,316,0 1,148,009 6,072,998 1,063,576 2,489.3 year (represented 56.00 ,452.24 .83 ,017.76 1 in “-” for decrease) (I) Total 60,729, 60,729,98 comprehensive 988.32 8.32 incomes (II) Capital input 63,316,0 1,148,009 1,211,325 and reduced by 56.00 ,452.24 ,508.24 owners 1. Common shares 63,316,0 1,148,009 1,211,325 input by 56.00 ,452.24 ,508.24 31 shareholders 2. Capital input by owners of other equity instruments 3. Amount of share-based payment recorded in owner's equity 4. Others -214,55 (III) Profit 6,072,998 -208,479, 2,477.6 distribution .83 478.80 3 1. Appropriation of 6,072,998 -6,072,9 surplus reserves .83 98.83 2. Distribution to -208,47 -208,479, owners (or 9,478.8 478.80 shareholder) 0 3. Others (IV) Internal carryover of owner's equity 1. Transfers from capital reserves to paid-in capital (or stock capital) 2. Transfers from surplus reserves to paid-in capital (or stock capital) 3. Surplus reserves used to offset losses 4. Others (V) Special reserves 1. Withdrawal in current period 2. Use in current period 32 (VI) Others IV. Closing 2,148,11 4,401,934 99,561,94 399,437 7,049,044 balance of current 0,844.00 ,248.25 6.09 ,078.96 ,117.30 period 33