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公司公告

三七互娱:2020年半年度报告摘要(英文版)2020-08-31  

						                       Wuhu 37 Interactive Entertainment Network
                                           Technology Group Co., Ltd.

                                                     2020 Interim Report




                                                             August 2020




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         1
                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 Wuhu 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.
     Li Weiwei, 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.
     Possible risks facing the Company and countermeasures have been detailed in “X Risks
Facing the Company and Countermeasures” under “Part IV Operating Performance Discussion
and Analysis” herein, which investors are kindly reminded to pay attention to.
     The Company is subject to the disclosure requirements for listed companies engaged in
software and IT services.
     The Board has approved an interim dividend plan as follows: based on 2,112,251,697 shares,
a cash dividend of RMB 3 (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.
                                                                         2
                                                                  Table of Contents



Part I Important Notes, Table of Contents and Definitions...................................................................................................... 2

Part II Corporate Information and Key Financial Information ................................................................................................. 5

Part III Business Summary........................................................................................................................................................... 8

Part IV Operating Performance Discussion and Analysis .......................................................................................................13

Part V Significant Events ...........................................................................................................................................................34

Part VI Share Changes and Shareholder Information .............................................................................................................37

Part VII Financial Statements....................................................................................................................................................40




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                          3
                                                                 Definitions

                    Term                                                                        Definition

CSRC                                             China Securities Regulatory Commission

SZSE/the Stock Exchange                          Shenzhen Stock Exchange

                                                 Wuhu Shunrong Auto Parts Co., Ltd./Wuhu Shunrong Sanqi Interactive Entertainment
Company/ the Company/ the Listed
                                                 Network Technology Co., Ltd./ Wuhu 37 Interactive Entertainment Network Technology
Company/ 37 Interactive Entertainment
                                                 Group Co., Ltd.

37 Interactive Entertainment (Shanghai)          37 Interactive Entertainment (Shanghai) Technology Co., Ltd.

Company Law                                      Company Law of the People's Republic of China

Securities Law                                   Securities Law of the People's Republic of China

                                                 Articles of Association of Wuhu Shunrong Auto Parts Co., Ltd./Articles of Association of
Articles of Association                          Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd./Articles of
                                                 Association of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd.

RMB, RMB’0,000                                  Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi

Reporting Period/the Reporting Period            The period from 1 January 2020 to 30 June 2020

Period-end/end of the Reporting Period           30 June 2020

                                                 Clientless or browser kernel-based micro-client games that are based on web development
Browser games                                    technologies and utilize standard protocols as basic transmission modes. Game users can
                                                 play browser games directly through an Internet browser
                                                 Games that are downloaded via mobile network and run on mobile phones or other mobile
Mobile games
                                                 terminals

RPG                                              Role playing game

ARPG                                             Action role playing game

SLG                                              Strategy game

STG                                              Shooting game

MMO                                              Massive Multiplayer Online

MOBA                                             Multiplayer Online Battle Arena

Chengdu Pengwan Technology Co., Ltd.             Chengdu Pengwan Technology Co., Ltd. and its subsidiaries

Wangzhong Investment                             ZhangshuWangzhong Investment Management Center (Limited Partnership)

Zengame Technology                               Zengame Technology Holding Limited and its business entities

X.D.Network                                      XD Inc. and its business entities

Jiangsu Aurora/Aurora Network/Jiangsu
                                                 Jiangsu Aurora Network Technology Co., Ltd.
Aurora Network

Guangzhou 37                                     Guangzhou 37 Network Technology Co., Ltd.




  Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                           4
             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             芜湖三七互娱网络科技集团股份有限公司

 Abbr. (if any)                      三七互娱

 Company name in English (if
                                     WUHU 37 INTERACTIVE ENTERTAINMENT NETWORK TECHNOLOGY GROUP CO.,LTD.
 any)

 Legal representative                Li Weiwei


II Contact Information

                                                 Board Secretary                                   Securities Affairs Representative

 Name                      Ye Wei                                                         Wang Sijie

                           11/F, Creative Advertising Complex, Wuhu                       11/F, Creative Advertising Complex, Wuhu
 Office address            Advertising Industrial Park, Middle Beijing Road,              Advertising Industrial Park, Middle Beijing Road,
                           Jiujiang District, Wuhu City, Anhui Province                   Jiujiang District, Wuhu City, Anhui Province

 Tel.                      0553-7653737                                                   0553-7653737

 Fax                       0553-7653737                                                   0553-7653737

 Email address             ir@37.com                                                      ir@37.com


III Other Information

1. Contact Information of the Company

Indicate by tick mark whether any change occurred to the registered address, office address and their zip codes, website address
and email address of the Company in the Reporting Period.

□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2019 Annual Report.


2. Media for Information Disclosure and Place where this Report is Lodged

Indicate by tick mark whether any change occurred to the information disclosure media and the place for lodging the Company’s
periodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for disclosing the

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         5
Company’s periodic reports and the place for lodging such reports did not change in the Reporting Period. The said information can
be found in the 2019 Annual Report.


3. Other Information

Indicate by tick mark whether any change occurred to other information in the Reporting Period.
√ Applicable □ Not applicable
The Proposal on Amendments to the Articles of Association was approved at the 12th Meeting of the Fifth Board of Directors on 29
April 2020 and later at the First Extraordinary General Meeting of Shareholders of 2020 on 15 May 2020. As such, th e business term
of the Company has been changed to “permanent” and its name in English to “WUHU 37 INTERACTIVE ENTERTAINMENT NETWORK
TECHNOLOGY GROUP CO.,LTD.”. For the relevant announcement, please visit http://www.cninfo.com.cn.


IV Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No

                                                             H1 2020                          H1 2019                        Change (%)

 Operating revenue (RMB)                                     7,988,675,195.57                 6,070,957,503.06                           31.59%

 Net profit attributable to the Listed
                                                             1,699,736,123.46                1,033,074,405.38                            64.53%
 Company’s shareholders (RMB)

 Net profit attributable to the Listed
 Company’s shareholders after deducting                     1,464,942,321.24                  949,369,446.08                            54.31%
 non-recurring profits and losses (RMB)

 Net cash flows from operating activities
                                                             2,450,226,546.90                  616,354,936.37                            297.53%
 (RMB)

 Basic earnings per share (RMB/share)                                        0.80                           0.49                         63.27%

 Diluted earnings per share (RMB/share)                                      0.80                           0.49                         63.27%

 Weighted average return on equity (%)                                  22.05%                           16.31%                            5.74%

                                                          30 June 2020                  31 December 2019                     Change (%)

 Total assets (RMB)                                        12,470,434,893.08                10,145,259,855.73                            22.92%

 Equity attributable to the Listed
                                                             8,189,534,514.66                7,029,307,859.08                            16.51%
 Company’s shareholders (RMB)


V Accounting Data Differences under China’s Accounting Standards for Business Enterprises (CAS)
and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable √ Not applicable
No difference 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.
                                                                         6
2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable
No difference for the Reporting Period.


VI Non-recurring profits and losses

√ Applicable □ Not applicable
                                                                                                                                         Unit: RMB

                                      Items                                                Amount                            Note

 Gain or loss on disposal of non-current assets (inclusive of impairment
                                                                                                75,379.94
 allowance write-offs)

                                                                                                              Mainly due to refund of
                                                                                                              value-addad tax and
 Government grants through profit or loss (exclusive of government
                                                                                                              government grants other than
 grants given in the Company’s ordinary course of business at fixed                       49,692,383.85
                                                                                                              super-deduction in the
 quotas or amounts as per the government’s uniform standards)
                                                                                                              calculation of taxable amount
                                                                                                              for VAT

 Gain or loss on fair-value changes on trading and derivative financial
 assets and liabilities & income from disposal of trading and derivative
 financial assets and liabilities and other debt investments (exclusive of                206,999,039.68
 the effective portion of hedges that arise in the Company’s ordinary
 course of business)

 Non-operating income and expenses other than the above                                     -5,127,802.70

 Less: Income tax effects                                                                  12,310,377.16

         Non-controlling interests effects (net of tax)                                     4,534,821.39

 Total                                                                                    234,793,802.22                       --

Explanation of why the Company reclassifies as recurrent an non-recurring profits and losses item defined or listed in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring
profits and losses Items:

□ Applicable √ Not applicable
No such cases 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.
                                                                         7
                                               Part III Business Summary

I Principal Activity of the Company in the Reporting Period

The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No.
12—Listed Companies Engaged in Software and IT Services.

     During the Reporting Period, the Company focused on cultural and creative businesses based on the development, publishing,
and operation of mobile and browser games, as well as the development in segments such as film and television, music, anime, VR,
cultural health, e-learning for children, and social entertainment. As a top performer in the industry, the Company steadily
advanced its development strategy of "boutiqueization, diversification, platformization and globalization".

     During the Reporting Period, the Company achieved robust performance growth and recorded operating revenue of
RMB7,989 million, with a year-over-year (YoY) increase of 31.59%; a profit before income tax expenses of RMB1,993 million, up by
54.41% YoY; and a net profit attributable to the Listed Company’s shareholders of RMB1,700 million, rising by 64.53% YoY. The
above growth was mainly attributable to a YoY growth of 36.59% in mobile games in the first half of 2020.

     1. Changes in industry-related economic situation and their impacts on the Company

     China's game market has developed rapidly. In accordance with the 2019-2020 Report on the Competitiveness of Listed Game
Enterprises issued by Gamma Data, China's gaming industry has grown quickl y since 2019, especially in the first half of 2020. The
actual sales revenue of the mobile game market accounted for 75.7% of the Chinese game market in 2020. According to the China
Mobile Games Annual Market Comprehensive Analysis 2020 H1 released by Analysys, 37 Interactive Entertainment’s market share
in domestic mobile games publishing has further risen to 10.51%.

     The competition landscape of the gaming industry has changed. In the first half of 2020, on the one hand, the industry's
attention was increasingly concentrated on top games and leading manufacturers, suggesting a prominent "head" effect in the
industry. On the other hand, players were posing higher requirements for online games, which had substantially raised the
threshold of game development and barriers to competition. Top game companies embracing strengths in the R&D and publishing
of quality products and operation are more likely to benefit from the new situation.

     The Company furthered the strategy of "integration of R&D and operation". During the Reporting Period, the Company kept its
leading role in R&D capabilities by raising R&D investments and strengthened the output of quality games. Moreover, it advanc ed
the "diversification" strategy from the aspects of R&D and publishing, and reserved varied quality games on different themes
through independent development, investment in R&D-oriented companies, and enhanced cooperation with developers capable of
producing quality games. In addition, the Company, through independently developed AI sy stems, consolidated refined operation,
prolonged the life cycle of quality games, improved operation efficiency, and gave full play to the "integration of R&D and
operation" model.

     2. Changes in industrial policy environment and their impacts on the Company

     (1) An important article of General Secretary Xi Jinping entitled Speech on COVID-19 Prevention and Control at Meeting of
Standing Committee of Political Bureau of CPC Central Committee was published in Qiushi 2020 Issue 4 on February 16, 2020. Th e
article stressed that, "Great efforts shall be exerted to stabilize consumer spending. Expanding consumption is one of the crucial
methods to offset the impact of the epidemic. China will accelerate the release of emerging consumption potential, vigorously
enrich the application scenarios of 5G technology, push the end-consumer market including 5G mobiles, and promote consumption
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         8
in e-commerce, e-government affairs, online education, and Internet-based entertainment." Further promotion of 5G technology
will bring opportunities for new growth to the online gaming industry.

     Furthermore, the overall operation of cloud gaming was made based on R&D strengths. During the Reporting Period, the
Company leveraged on its R&D strengths to actively reserve cloud gaming technologies, including building internal cloud and
providing computing and network supports for cloud gaming; developing a universal framework covering user interaction, video
decoding, and cloud server communication to support the universal light Apps for clo ud gaming; and developing ads based on
game demos integrating game demos based on the cloud gaming service framework for promotion.

     (2) In June 2020, the 20th Meeting of the Standing Committee of the 13th National People's Congress ("NPC") reviewed the
Second Reading Draft of the Law on the Protection of Minors ("Draft Revisions"). The Second Reading Draft planned to strengthen
juvenile protection online, required to build a unified online game electronic authentication system for minors nationwide, a nd
specified the online game service time for minors. Besides, it asked Internet service providers ("ISPs") to enhance user and
information management and timely adopt appropriate measures to control illegal information or criminal offenses against
juveniles. Meanwhile, the Second Reading Draft specified penalties for ISPs who fail to fulfill obligations, such as anti -addiction and
anti-cyberbully obligations.

     The Company promoted the standardized development of the industry. During the Reporting Period, 37 Inter active
Entertainment fully upgraded the "real-name registration and anti-addiction system for minors" and launched it on all its
independent operation online games (including browser and mobile games) early this year. Additionally, the Company added
contents applicable to children to its Privacy Policy in line with the user habits of juveniles under 14 years old and their guardi ans. It
contributed to turning China's gaming industry more standardized by actively participating in the compilation of group standards
for the gaming industry led by the China Audio-video and Digital Publishing Association ("CADPA"), such as the Specifications on
Age Ratings of Online Games, the Specifications on Parent Monitoring Platforms, and Online Game Terminology.

     (3) In July 2020, the General Office of the State Council issued the Legislative Work Plan of the State Council for 2020
(hereinafter referred to as the "Plan"). The Plan mentioned that the Standing Committee of the NPC would be invited to review the
Cultural Industry Promotion Law (Draft). Previously, the Ministry of Justice published a notice to solicit public opinions on the
Cultural Industry Promotion Law of the People’s Republic of China (Draft for Review) in December 2019, which determined to
invest more resources in the three key processes, namely, creation and production, cultural enterprises, and the cultural market,
and support talent, technology, finance, and taxation. The formulation of the "Cultural Industry Promotion Law" reflected the
importance attached by China to cultural industry development. The Cultural Industry Promotion Law will serve as significant
guidance to cultural industry development direction and drive high-quality development of the cultural industries of China.

     37 Interactive Entertainment facilitated the diffusion of traditional Chinese culture. Recently, China has become the largest
online gaming market around the world. Chinese games have become a vital cultural carrier to "tell Chinese stories". 37 Interactive
Entertainment, engaging in cultural industries, has centered on the games business, earnestly expanded its business presence to
film and television, anime, and music, and paid close attention to innovative development and talent cultivation. Over the pa st two
years, it endeavored to promote overseas business, and took advantage of its experience, strengths, and the cultural carrier of
games to facilitate the diffusion of traditional Chinese culture.

     3. Main businesses and business models of the Company

     During the Reporting Period, the Company's main businesses included the development, publishing, and operation of mobile
games and browser games. The operating modes of the Company’s mobile games and browser 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

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         9
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 for third parties
along with game developers.

II Significant Changes in Major Assets

1. Significant Changes in Major Assets


          Major assets                                                 Main reason for significant changes


 Equity assets                      No significant change in equity assets

                                    The ending balance of fixed assets increased 1853.66%, or RMB873 million, compared to the
 Fixed assets                       beginning balance, primarily driven by the transfer of office building from construction in
                                    progress to fixed assets.

 Intangible assets                  No significant change in intangible assets

                                    The ending balance of construction in progress decreased 100.00%, or RMB797 million,
 Construction in progress           compared to the beginning balance, primarily driven by the transfer of office building from
                                    construction in progress to fixed assets.

                                    The ending balance of monetary funds increased 61.52%, or RMB1,324 million, compared to the
 Monetary funds                     beginning balance, primarily driven by the increase in revenue, including a year-over-year
                                    increase of RMB1,834 million in net cash flows from operating activities.

                                    The ending balance of other current assets increased 36.11%, or RMB45 million, compared to the
 Other current assets               beginning balance, primarily driven by the combined effects of the increase in term deposits held
                                    in bank and of the decrease in overpaid and pending VAT.

                                    The ending balance of other non-current assets increased 308.82%, or RMB837 million,
 Other non-current assets           compared to the beginning balance, primarily driven by the payment made in the Reporting
                                    Period for acquisition of land use rights together with the relevant tax and fees.


2. Major Assets Overseas

□ Applicable √ Not applicable


III Core Competitiveness Analysis

     During the Reporting Period, the Company steadily promoted the development strategy of "boutiqueization, diversification,
platformization and globalization" and formed the following core competitiveness:


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         10
     1. Industry-leading R&D strength

     The Company is ranked among the top in terms of R&D strengths. It has always emphasized R&D investments and talent
cultivation. Particularly, R&D investments increased significantly during the Reporting Period. Meanwhile, the Company's
independently developed products are characterized by high output, a high success rate and a long period, and center on
"boutiqueization and diversification". During the Reporting Period, a number of independently developed quality games, such a s
Yong Heng Ji Yuan (永恒纪元) and Swords of Archangels H5 (大天使之剑H5), have achieved steady gross billing in the markets
after being launched for more than one year.

     (1) Prominent YoY increase in R&D investments

     The Company’s R&D investments amounted to RMB645 million during the Reporting Period, up by 102.48% YoY. It expanded
from product upgrading to talent cultivation, established a training system for young employees, and embraced employee diversity.
Moreover, the Company encouraged innovation by employees, welcomed employees with diversified backgrounds, and strove to
provide global players with more quality content.

     (2) "Boutiqueization and diversification" of independently developed products

     First, the "boutiqueization" strategy greatly improved the R&D success rate. The "boutiqueization" strategy runs through the
entire life cycle of the Company's independently developed products. Before the launch of games, the Company carefully worked
out details regarding product planning, art quality, music effects, etc.; after the launch of games, the Company continued to invest
in product iteration, process optimization, user experience and other aspects to ensure high gross billing and a long life cy cle of
games. In the meantime, its independently developed AI systems assisted in producing "quality games". T he Company offered
precise reference value for the design of new products and iteration and optimization of existing products, improved product
development and procedure optimization, and substantially enhanced product experience, by analyzing and studying the
enormous data accumulated with the two independently developed AI ad systems, i.e. "Quantum" and "Destiny", as well as the
three platform-based big data products—"Athena", "Ares", and "Poseidon".

     Second, the Company made breakthroughs in the "diversification" strategy. During the Reporting Period, the Company's R&D
team, based on its R&D strengths in ARPGs, expanded its game categories to card games and SLGs. It will continue innovation i n
diversified aspects, including product types, themes, art performance, and gameplay. The main products developed during the
Reporting Period were mobile games like Code Xiu Xian ( 代号修仙) and Code DL (代号DL). With its profound experience and
continuous innovation, the Company is expected to continue to produce long-life-cycle quality games that surpass Yong Heng Ji
Yuan (永恒纪元) and Swords of Archangels (大天使之剑).

     2. Excellent publishing strength

     Publishing capabilities were enhanced. The Company constantly promoted the "boutiqueization, diversification and
platformization" strategy and published multiple types of quality games on different themes. According to the China Mobile Games
Annual Market Comprehensive Analysis 2020 H1 released by Analysys, its market share in domestic mobile games publishing
further rose to 10.51% during the Reporting Period. Its highest monthly gross billing of domestic mobile games under operation
surpassed RMB1.8 billion. Newly registered users totaled over 132 million. The highest number of monthly active users (MAUs) was
up to 82 million. Besides, the Company maintained its leading position in domestic browser games, strengthened the precise
distribution capabilities of independently developed AI systems, and dramatically improved operation efficiency.

     (1) Improvement in publishing capabilities based on the "boutiqueization" strategy

     The "boutiqueization" strategy applies to product supply before the launch of games and operation optimization after the
launch.

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         11
     In terms of product supply, the Company has garnered abundant product resources, establish ed a rigorous evaluation process
and evaluation criteria for product introduction, and also utilized its own advantages in user data and numerical experiences to
work out products along with game developers, thus ensuring a better quality of games before their launch.

     In terms of operation optimization, the Company possesses strong capabilities for operation and optimization in numerical
management, process optimization, event planning, etc. After the launch of games, the Company continues to improve the qu ality
of games, attract users through better contents, prolong the product life cycle, and accumulate higher gross billing.

     (2) Efficiency improvement in multiple aspects based on the "diversification" strategy

     With the "diversification" strategy, the Company achieved good results in multiple aspects, including products, promotion, and
services.

     With respect to products, on the one hand, 37 Interactive Entertainment enriched the product supply via independent R&D,
investments, and cooperation with excellent developers. On the other hand, the Company constantly explored diversification in
product types and themes. During the Reporting Period, the Company expanded its product matrix and offered diversified gaming
experience to players by launching quality games in different types and on varied themes, including Yun Shang Cheng Zhi Ge ( 云上
城之歌), to the domestic mobile game market.

     In regard to promotion, the Company independently developed the two AI ad systems, i.e. "Quantum" and "Destiny", as well
as the three platform-based big data products—"Athena", "Ares", and "Poseidon". Besides, it mined big data on user demand
graphs according to behavior characteristics like browsing of game ads and in-game activities. 37 Interactive Entertainment, based
on the AI systems, diverted users with the same demands to the same game or the same server. Therefore, it conducted
differentiated iteration and refined operation for specific types of users of specific games and servers in order to enhance user
interaction and activity, activate the paid game ecology, and maximize the effect of life time value ("LTV").

     In terms of services, the Company is committed to providing players with comprehensive, detailed, and long -term services.
Through an improved user account and service system, and an experienced service team, the Company uses abundant product
supplies to provide users with comprehensive gaming products and one-stop services to continuously improve user satisfaction,
activation and retention, and also to extend the product life cycle.

     3. Advantage of the model of "integration of R&D and operation"

     The efficiency of R&D and operation was improved. The model of “integration of R&D and operation” of the Company is
conducive to making full use of resources and creating quality products from a long-term perspective. On the one hand, the
Company can ensure the stable supply of quality products to support the operation development and reduce its reliance on
external supplies through strong R&D strengths. At the same time, the R&D team can utilize the feedback of the operation
department to optimize products and extend the product life cycle. On the other hand, at the early stage of product R&D, the
operation team can provide advises and suggestions to the R&D team based on its years of experience and keen market insights.

     4. Team strengths

     The fighting entrepreneurial spirit was upheld. The Company has been deeply involved in the field of cultural and creative
industries for many years. Its core management team consists of experienced employees who engage in front-line work and have
strong and forward-looking capabilities for strategic layout, while the core team consists of highly skilled R&D personnel, creative
operators, and highly efficient managers. The Company has always adhered to the entrepreneurial spirit like marathoners and
constantly caught up to surpass the industry leader.




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         12
                  Part IV Operating Performance Discussion and Analysis

I Overview

     The competition landscape of the domestic gaming industry underwent great changes during the Reporting Period. The "head"
effect was prominent. The industry ushered in a new period of development. The Company precisely grasped the industry
development trends, made continuous improvements in operation, and remained a top performer in the indust ry, while adhering
to the "boutiqueization, diversification, platformization and globalization" strategy.

     During the Reporting Period, the Company achieved robust performance growth and recorded operating revenue of
RMB7,989 million, with a year-over-year (YoY) increase of 31.59%; a profit before income tax expenses of RMB1,993 million, up by
54.41% YoY; and a net profit attributable to the Listed Company’s shareholders of RMB1,700 million, rising by 64.53% YoY. The
growth of publishing and R&D for mobile games was the main driver for the increase in overall revenue and profit during the
Reporting Period.

     (I) Mobile game business

     During the Reporting Period, the Company recorded operating revenue of RMB7,412 million from mobile games, a YoY
increase of 36.59%. Its gross profit margin remained stable. The Company’s business revenue from, and R&D investments in,
mobile games continue to increase, and the mobile game business maintains the leading position in domestic and overseas
markets.

     1. Research and development of mobile games

     During the Reporting Period, the Company continuously exerted more efforts for R&D, published more independently
developed products, and improved the profitability of individual product from the previous year. Especially, the Company achieved
a significant increase in the gross billing of mobile game R&D business, thereby enhancing the Company's profitability.

     R&D investments grew YoY. The Company’s R&D investments amounted to RMB645 million during the Reporting Period, up by
102.48% YoY. The continuous investment into mobile game R&D is an important pillar of the Company’s “boutiqueization,
diversification and globalization” business strategy. The R&D investments were mainly concentrated on improvement of product
quality and exploration of product categories.

     Product quality was improved. The "boutiqueization" strategy runs through the entire life cycle of the Company's
independently developed products. The Company is committed to making better the product engines, art design and sound quality
of gaming products to meet the user demand in experiencing high-quality games at the technical level; it is dedicated to game
innovation and process optimization to meet user demand in fun and smooth experience at the planning level. High -quality
development and high-frequency iterations turned new products more attractive to users, and allowed most independently
developed products to maintain high gross billing for a long time.

     Product diversification was intensified. The Company improved the "dive rsification" of product R&D. During the Reporting
Period, it made new attempts at multiple types of games, including simulation games ("SIM" games), card games, and SLGs: 37
Interactive Entertainment has published independently developed SIM games to overseas markets. Besides, it will release the card
game Code DL (代号DL) this year. In addition, the quality SLG, Wild Frontier (狂野西境), has been published globally, especially
European and American markets. The Company will continue innovation in diversified aspects, including product types, themes, art
performance, and gameplay. It will pay close attention to the in-depth exploration of SLGs and card games and endeavor to

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         13
become a first-class game company that can provide global players with various gaming products, based on quality content,
operation experience in multiple types of products, and advantages in numerical value and gameplay.

     Meanwhile, the Company turned the product supply side more diversified, by buying a stake in and joining hands with
excellent developers. In order to further raise the product success rate, the Company established a rigorous evaluation process,
utilized its own advantages in user data and numerical experiences to work out products along with game developers, thus
ensuring a better quality of games before their launch.

     A cloud gaming system is being built. The Company is currently committed to building a better cloud gaming system, including:
building internal cloud, providing computing and network supports for cloud gaming; building cloud gaming operation services,
proactively developing efficient game video transcoding and decoding technologies; developing a universal framework with user
interaction, video decoding, and cloud server communication, so as to support the universal light apps for cloud gaming. In the
upcoming 5G era, the Company’s smooth transition among cloud gaming technologies is expected to bring new experiences to
game players.

     2. Publishing of mobile games

     (1) Domestic market

     During the Reporting Period, according to the China Mobile Games Annual Market Comprehensive Analysis 2020 H1 released
by Analysys, the Company's market share in the domestic mobile game market jumped to 10.51%, suggesting its prominent
advantage in "refined" operation. The highest monthly gross billing of its domestic mobile games exceeded RMB1.8 billion, with the
total number of newly registered users surpassing 132 million and the highest number of MAUs of over 82 million. Meanwhile, the
Company continuously promoted the "boutiqueization, diversification and platformization" strategy, and published multiple types
of quality games on different themes to expand its product matrix.

     (1.1) Product life cycle prolonged via "refined" operation

     During the Reporting Period, the Company accurately understood users' needs, delivered advertisements to target groups
accurately, and provided a full range of high-quality services from initial contact, access to games to start of games, thereby
prolonging the product life cycle and accumulating higher gross billing. The Company has achieved this by adhering to the core idea
of systemic traffic management and the diversified methods of "multi -channel marketing + targeted advertising + long-term
service" that cover "products + promotion + users" under the principles of "refinement, datamation and intelligentization".

     Self-developed AI systems facilitated "refined" operation. During the Reporting Period, the Company put its independently
developed intelligent ad platform, "Quantum" and intelligent operation anal ysis platform, "Destiny", into production. On the one
hand, "Quantum" can connect with all mainstream channels to achieve rapid and automatic advertising. Meanwhile, the platform
can be used together with multiple systems and connect procedures in series to greatly reduce the time to create plans, perform
standardized processing of plans in batches, and maintain plans automatically and systematically. Moreover, the platform can
improve promotion efficiency and effect through big data analysis and AI algorithms. On the other hand, "Destiny" is a
comprehensive operational decision system for statistics, analysis and prediction of game data. The system can accurately pre dict
the life cycle of games through data analysis models. It supports operation teams to adopt differentiated event marketing based on
user data, so that customer service can focus on higher value user services to generate more revenue.

     (1.2) Product supply enriched via the "diversification" strategy

     During the Reporting Period, the Company applied the "diversification" strategy to multiple aspects, including products,
promotion, and services, based on its capabilities of operating multiple types of games. Thanks to the strategy, the Company
reserved adequate products in terms of type, theme, and quantity. Its product matrix covered different types of games, such as

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         14
ARPGs, MMO games, card games, SLGs, and SIM games, as well as varied themes, such as fantasy, mythology/martial arts, city li fe,
campus and galgames.

     The product pipeline is strong. During the Reporting Period, the Company offered diversified gaming experience to players by
launching quality games in different types and on varied themes, including Hun Dun Qi Yuan ( 混沌起源) and Yun Shang Cheng Zhi
Ge (云上城之歌). As of the date of this report, the Company’s pipeline of independently developed games include Code NB ( 代号
NB), Code DL (代号DL), etc. Besides, it distributes and operates an array of domestic agency games, including:

     Fantasy and swordsman games: Code JZ (代号JZ) and Code XN (代号XN)

     Card games: My Girls (王牌高校)

     SIM games: Code RS (代号RS)

     MMORPG: Code GC (代号GC)

     Galgames: Queen of Diamonds (一千克拉女王)

     (2) Overseas market

     During the Reporting Period, the Company significantly accelerated the strategic expansion of global footprint. Its overseas
operating revenue rose by 94.77% YoY. As of the end of the Reporting Period, its overseas brand, 37GAMES, covered over 200
countries and regions, whose products included RPGs, card games, and SLGs in a dozen of languages, such as traditional Chinese,
English, Japanese, simplified Chinese, and Thai.

     The product pipeline for the overseas market was enriched via multiple means. During the Reporting Period, the Company
input resources in the upstream and downstream of the industry chain, invested in outstanding R&D -oriented companies
worldwide, and promoted the localization of products. Furthermore, it achieved results in the "globalization" of overseas bus iness.
The Company published products overseas from a global vision by expanding its layout from advantageous re gions to the whole
world, while maintaining the competitiveness in advantageous regions like Southeast Asia, Japan, and South Korea. Since this year,
the Company has distributed SLGs on multiple themes, such as Western, military, and apocalypse, which are highly received by
global players.

     Multiple games were well received. As of the date of this report, 37 Interactive Entertainment achieved remarkable results in
several games published globally: SNK All Star (SNKオールスター) rose quickly to the top of the Google Play Store and iOS App
Store app lists, after being launched in Japan. Within less than one month after its launch, the SLG, Heroes of Three Kingdom s (三国
英雄たちの夜明け), was highly received by players. Swords of Archangels H5 (大天使之剑H5) was ranked No. 1 on top grossing
chart in Vietnam. During the Reporting Period, the Company constantly updated and iterated its flagship product, Yong Heng Ji
Yuan (永恒纪元), keeping a stable gross billing in regional markets. MU: Across Time ( 奇迹MU:跨时代) was launched in Hong
Kong, Macao, and Taiwan regions of China in February this year and quickly came out top on the list of best-selling games on App
Store and the free game list on the Google Play Store.

     The global footprint expansion was accelerated. The Company will continue to expand its global footprint by launching several
quality SLGs in the second half of the year. As of the date of this report, the quality SLG of Wild Frontier ( 狂野西境) had been
launched globally, especially in Europe and North America. The Western fantasy game, P&C, was released in Europe and North
America as well. It quickly opened the market and maintained a stable increase in gross billing, attributable to its innovative
gameplay of RPG plus SLG. Furthermore, based on the stable growth of gross billing, the Company will introduce card games in
Japan catering for the taste of local players, and primarily promote MMO games in South Korea in the second half of the year.

     Main products to be promoted overseas in the second half of 2020 also include:

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         15
     SIM games: Code ZG (代号ZG)

     SLGs: Code FRZ (代号FRZ) and Code FO (代号FO)

     Card games: Code OX (代号OX)

     Casual RPGs: Code CM (代号CM)

     MMO games: Code E (代号E) and Code AH (代号AH)

     (II) Browser games

     Refined operation supported the steady growth of operating revenue. During the Reporting Period, the operating revenue
from the browser game business reached RMB565 million. The gross profit margin rose by 2.75% YoY. The Company will continue
to launch new products in the second half of the year. The Company strengthened partnership with dom estic top browser game
developers through strategic investment and business cooperation on the one hand, on the other hand, the Company also refined
the operation of its major quality games, improved user stickiness, stabilized the product life cycle, and further maintained its
operating revenue.

     (III) Cultural industry

     The Company invested into other fast-growing cultural and creative segments, while maintaining the high-speed growth of its
core business. The Company exploited opportunities in 5G cloud gaming, film and television, anime, music, VR/AR, cultural health,
e-learning for children, and social entertainment with a strategic focus on quality content. As of the date of this report, cultural and
creative enterprises funded or acquired by the Company included:

     Film and television: DSMovie, Youying Culture, Zhonghui Television, Mowei Pictures, JinhaiShiyi, etc.

     Music: FenghuaQiushi

     Talent agent: Original Plan and Haohao Bangyang

     Anime: YHKT Entertainment, IDRAGONS Creative Studio, and Junengwan

     VR/AR: Archiact

     Cultural health: Wake

     E-learning for children: KaDa Story and Miaocode

     Social entertainment: Wuli Planet
     Consumption: Mutual Help Parking and Nowwa Coffee

     The long-term value investment concept was upheld. In terms of investment concept and logic, the Company adhered to the
long-term investment concept. Based on the main business of games, it reached audiences in varied segments by investing in the
upstream and downstream companies of the industry chain. With respect to investment strategies, the Co mpany paid close
attention to new products and technologies in the industry and overseas and international distribution of products. In regard to the
selection of investment targets, the Company valued the ability to constantly output quality products, excellent team or talent
reserves, and future growth potential. The Company continuously consolidated its status in the cultural and creative industry by
integrating quality resources in the industry.

     A closed loop of the entertainment eco-system has been developed. The Company made constant efforts to create a closed
loop of the entertainment eco-system and achieved favorable multi-directional synergy in the first half of the year. 37 Interactive

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         16
Entertainment's mobile game, "The King of Fighters (拳魂觉醒)", performed noticeably well and achieved outstanding results at
home and abroad in the first half of the year, thanks to the integration of the SNK IP under DIGital Color where the Company holds
equity. Meanwhile, Karma Game led by a top producer and the project of Chengdu Xinghe Interactive Entertainment Technology
Co., Ltd. are about to go live and expected to bring good returns in key overseas SLG markets. In addition, companies in vert ical
fields where the Company invests have been more closely connected. For instance, Zhonghui Television and YHKT Entertainment
cooperated to purchase the copyright of "Incarnation", a sci-fi blockbuster on bilibili.com, and would make a series. "Original Plan",
the talent agent of He Luoluo and Liu Xiening who made a debut at "Creation Camp 2019" and "Creation Camp 2020", respectively,
and "Haohao Bangyang" are working with FenghuaQiushi, Zhonghui Television, and 37 Interactive Entertainment to maximize the
outstanding talent resources. Besides, "DSMovie", a superb domestic Mul ti-Channel Network (MCN), is used as a promotional
channel to exert an amplified and superimposed effect on the entertainment eco-system of 37 Interactive Entertainment.

     The education division is taking shape gradually. The education division serves as a key and long-term sector of 37 Interactive
Entertainment. Miaocode.com, a platform offering online programming training courses to kids acquired by the Company, has
grown to be a top-performing company in China. It will establish chain stores to integrate i n-person classes in order to make
high-quality courses available to increasing users. In terms of content and quantity, the audiobook platform of "KaDa Story" has
become a top platform in China and achieved positive growth and profitability amid the COVID-19 pandemic. Likewise, "Wake
Yoga", an online yoga platform, has turned profitable despite the pandemic. Overall, the Company has achieved sound progress in
the education division by devoting enormous resources in quality content and traffic operation.

     Returns on investments were good. As of the date of this report, the Company's many target investees have shown the great
potential for development, and the Company's investment strategies in the whole cultural and creative industrial chain have begun
to produce preliminary results. In March 2020, the Company exited from ZLONGAME and obtained considerable return. In June
2020, the Company partially exited from X.D.Network after its IPO, gaining substantial return. This deal won the CV Source the Best
Exit of the Year. Additionally, the Company participated in the management of Fuhai 37 Fund. After its investment target, Weimob,
went public, the fund exited and obtained high return.

     Investments are made in new areas. In the coming future, the Company will focus on the main business of games and continue
to invest in entertainment technologies. In connection to previous operations in VR, AR and cloud gaming, the Company will
actively explore, in the 5G era, operations in emerging fields such as interactive games, virtual hosts, VR social and esports, in a bid
to empower and coordinate strategically with the invested companies, offer more high-quality content with new experience, create
a one-stop cultural and entertainment ecosystem, and become the most trusted cul tural brand of China’s younger generation.

     (IV) IP strategy

     It’s a long-term development goal of the Company to create quality content and establish a quality content brand. Based on
this, the Company continues to explore, by the methods of internal incubation and external access, high-quality IPs for the
development of quality cultural products including games, relying on its own advantages.

     A cultural and creative strategy system was built based on the IP strategy. As of the date of this report, the IPs of the
Company's reserves covered different segments, including games, anime, literature, film, and television. Meanwhile, the Compa ny
will gradually develop its own IPs to create higher value. Relying on its excellent IP strategy, the Company will continue to build its
cultural and creative strategy system, satisfy the diversified demands of users for entertainment, and exploit the opportunit ies of IP
value in film and television, music, anime, VR, cultural health industry, e-learning for children and social entertainment.


II Core Business Analysis

Overview:

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         17
See “I Overview” above.
Year-over-year changes in key financial data:

                                                                                                                                         Unit: RMB

                                     H1 2020                 H1 2019              Change (%)                 Main reason for change

                                                                                                   Significant increase in revenue as a result
 Operating revenue              7,988,675,195.57          6,070,957,503.06             31.59%      of good business results for mobile
                                                                                                   games

 Cost of sales                    863,666,663.98            838,986,561.51               2.94%     No significant change

 Distribution and selling                                                                          Increase in Internet traffic fee charges for
                                4,549,628,282.98          3,632,067,521.84             25.26%
 expenses                                                                                          games

                                                                                                   Increase in depreciation of office building
                                                                                                   transferred to fixed assets, and increase
 General and                                                                                       in the remuneration and equity
 administrative                   166,919,490.05             88,053,838.68             89.57%      incentives for employees as a result of a
 expenses                                                                                          larger scale of operating and better
                                                                                                   operating results of the Company in the
                                                                                                   Reporting Period

 Financial expenses                  9,827,281.57              4,333,541.72           126.77%      Increase in interest expense

 Income tax expenses              110,659,828.94            131,634,742.44             -15.93%     No significant change

                                                                                                   Increase in employee remuneration and
 Research and                                                                                      design expenses in research and
 development                      644,896,512.00            318,493,874.16            102.48%      development projects as a result of
 investments                                                                                       greater investments in this respect in the
                                                                                                   Reporting Period

                                                                                                   Net cash flows from operating activities
                                                                                                   increased significantly year-over-year,
                                                                                                   primarily driven by increase in cash
 Net cash flows from
                                2,450,226,546.90            616,354,936.37            297.53%      received from the sales of goods or
 operating activities
                                                                                                   rendering services as a result of higher
                                                                                                   operating revenue compared to the
                                                                                                   same period of last year

 Net cash flows used
                                                                                                   Payment for the acquisition of land use
 in/from investing                -952,419,788.81           476,138,307.69           -300.03%
                                                                                                   rights in the Reporting Period
 activities

 Net cash flows used in                                                                            New discounted notes in the Reporting
                                  -180,181,077.21          -823,976,503.10             -78.13%
 financing activities                                                                              Period

                                                                                                   Significant increase in net cash flows
 Net increase in cash                                                                              from operating activities, as well as
                                1,328,403,368.73            268,388,648.05            394.96%
 and cash equivalents                                                                              decrease in net cash flows used in
                                                                                                   investing and financing activities

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         18
Significant changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable

No such changes in the Reporting Period.
Breakdown of operating revenue:
                                                                                                                                         Unit: RMB

                                            H1 2020                                          H1 2019

                                                   As % of operating                                 As % of operating           Change (%)
                                Amount                                             Amount
                                                      revenue (%)                                        revenue (%)

 Total operating
                            7,988,675,195.57                      100%         6,070,957,503.06                    100%                   31.59%
 revenue

 By operating division

 Online games               7,988,675,195.57                  100.00%          6,070,957,503.06                100.00%                    31.59%

 By product category

 Mobile games               7,412,153,082.93                     92.78%        5,426,572,514.55                  89.39%                   36.59%

 Browser games                564,975,213.48                      7.07%         644,384,988.51                   10.61%                  -12.32%

 Others                        11,546,899.16                      0.14%                                                                  100.00%

 By operating segment

 Domestic                   7,019,815,819.74                     87.87%        5,573,514,047.04                  91.81%                   25.95%

 Overseas                     968,859,375.83                     12.13%         497,443,456.02                    8.19%                   94.77%

Operating division, product category or operating segment contributing over 10% of operating revenue or operating profit:

√ Applicable □ Not applicable
                                                                                                                                         Unit: RMB

                                                                                       YoY change in        YoY change in        YoY change in
                           Operating                                 Gross profit
                                                 Cost of sales                           operating           cost of sales         gross profit
                            revenue                                       margin
                                                                                        revenue (%)               (%)              margin (%)

 By operating division

 Online games          7,988,675,195.57         863,666,663.98             89.19%              31.59%                   2.94%              3.01%

 By product category

 Mobile games          7,412,153,082.93         729,296,931.11             90.16%              36.59%                   7.95%              2.61%

 Browser games           564,975,213.48         128,538,647.98             77.25%              -12.32%              -21.32%                2.75%

 By operating segment

 Domestic              7,019,815,819.74         716,853,000.99             89.79%              25.95%                   6.76%              1.84%

 Overseas                968,859,375.83         146,813,662.99             84.85%              94.77%               -12.35%               18.52%

Core business data restated according to the changed methods of measurement that occurred in the Reportin g Period:

□Applicable √ Not applicable
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No.
12—Listed Companies Engaged in Software and IT Services.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                          19
Operating division contributing over 10% of operating revenue or operating profit:
√ Applicable □ Not applicable

                                                                                                                                         Unit: RMB
                                                                         Gross         YoY change in        YoY change in         YoY change in
                      Operating revenue          Cost of sales           profit          operating           cost of sales         gross profit
                                                                        margin          revenue (%)               (%)              margin (%)

 By operating division of customers

 Online games           7,988,675,195.57        863,666,663.98            89.19%               31.59%                   2.94%              3.01%

 By product category

 Mobile games           7,412,153,082.93        729,296,931.11            90.16%               36.59%                   7.95%              2.61%

 Browser games            564,975,213.48        128,538,647.98            77.25%               -12.32%              -21.32%                2.75%

 By operating segment

 Domestic               7,019,815,819.74        716,853,000.99            89.79%               25.95%                   6.76%              1.84%

 Overseas                 968,859,375.83        146,813,662.99            84.85%               94.77%               -12.35%              18.52%

Ongoing sales contracts with a single contract amount that is over RMB50 million and accounts for over 30% of the Company’s
audited operating revenue in the most recent accounting year:
□Applicable √ Not applicable

Breakdown of the cost of sales for the core business:
                                                                                                                                         Unit: RMB

                                              H1 2020                                             H1 2019
 Breakdown of cost                                                                                                                 Change (%)
                                Amount              As % of cost of sales           Amount             As % of cost of sales

 Royalties                    756,529,181.79                       87.60%         713,853,625.84                      85.09%               5.98%

 Cost of servers               77,914,092.53                         9.02%         52,216,599.22                        6.22%            49.21%

 Amortization of
                               22,029,060.95                         2.55%         72,014,090.09                        8.58%            -69.41%
 copyright money

 Other costs                     7,194,328.71                        0.83%            902,246.36                        0.11%            697.38%

Any over 30% YoY movements in the data above and why:

√ Applicable □ Not applicable
1. The online and mobile games divisions recorded a year-over-year increase of 31.59% and 36.59% respectively in operating
revenue, primarily because the Company’s mobile game development and launch business continued to grow in the Reporting
Period, resulting in a significant increase in operating revenue.
2. Overseas operating revenue increased 94.77% year-over-year, primarily because the Company launched a number of new games
overseas in the Reporting Period.


III Analysis of Non-Core Businesses

√ Applicable □ Not applicable

                             Amount           As % of profit before                    Reason/source                         Recurrent or not

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         20
                                                   income tax expenses

                                                                              Mainly due to gains on investments
                                                                              from disposal of equity investments,
     Investment income         108,093,257.02                         5.42% dividends during the period of holding Not
                                                                              equity investments, and wealth
                                                                              management products

     Gain/loss on
                                                                              Mainly due to changes in fair value of
     changes in fair           115,130,432.61                         5.78%                                                Not
                                                                              equity investments
     value

                                                                                                                           Loss on doubtful
                                                                              Mainly due to impairment loss on             accounts is recurrent
     Impairment loss on
                                 51,573,042.74                        2.59% accounts and other receivables and             while impairment loss on
     assets
                                                                              long-term equity investments                 long-term equity
                                                                                                                           investments is not.

     Non-operating
                                  2,297,869.41                        0.12% Mainly due to compensation income              Not
     income

                                                                              Mainly due to donations for
     Non-operating                                                            governments and medical institutions
                                  7,429,745.23                        0.37%                                                Not
     expenses                                                                 in the fight against the COVID-19
                                                                              pandemic

                                                                              Mainly due to refund of VAT and other Refund VAT is recurrent
     Other income                95,213,596.55                        4.78% government grants given in the                 while other government
                                                                              Company’s ordinary course of business grants are not.


     IV Analysis of Assets and Liabilities

     1. Significant Changes in Asset Composition

                                                                                                                                              Unit: RMB

                                 30 June 2020                        31 December 2019
                                                                                                       Change in
                                                                                        As % of
                                                As % of                                               percentage        Reason for any significant change
                           Amount                                   Amount               total
                                              total assets                                                 (%)
                                                                                        assets

                                                                                                                       Year-over-year increase of
                                                                                                                       RMB1,834 million in net cash flows
                                                                                                                       from operating activities as a result
Monetary funds         3,476,651,621.54           27.88%       1,788,431,889.15          20.40%              7.48%
                                                                                                                       of increasing revenue, as well as
                                                                                                                       decrease in net cash flows used in
                                                                                                                       investing and financing activities

Accounts                                                                                                               Stepped-up efforts in the collection
                       1,275,085,408.62           10.22%       1,717,575,938.59          19.59%             -9.37%
receivable                                                                                                             of accounts receivable

     Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                              21
 Long-term equity
                           466,187,441.61                 3.74%         514,224,823.77        5.87%            -2.13%
 investments

                                                                                                                          Transfer of office building from
 Fixed assets              920,231,133.44                 7.38%          36,385,942.05        0.42%             6.96%     construction in progress to fixed
                                                                                                                          assets in the Reporting Period

                                                                                                                          Transfer of office building from
 Construction in
                                                          0.00%         751,293,007.77        8.57%            -8.57%     construction in progress to fixed
 progress
                                                                                                                          assets in the Reporting Period

                                                                                                                          New undue discounted bank
 Short-term loans          889,324,326.07                 7.13%                   0.00        0.00%             7.13%     acceptance bills in the Reporting
                                                                                                                          Period

                                                                                                                          Repayment of mortgage loan for
 Long-term loans                          0.00            0.00%         265,883,241.55        3.03%            -3.03%     office building purchase in the
                                                                                                                          Reporting Period

                                                                                                                          Payment made in the Reporting
 Other
                                                                                                                          Period for acquisition of land use
 non-current             1,107,475,299.02                 8.88%          58,269,048.52        0.66%             8.22%
                                                                                                                          rights together with the relevant
 assets
                                                                                                                          tax and fees


        2. Assets and Liabilities at Fair Value

        √ Applicable □ Not applicable
                                                                                                                                                 Unit: RMB

                                             Gain/loss
                                                  on          Cumulative       Impairment
                                                                                              Purchased
                                             fair-value           fair-value   allowance                       Sold in the
                          Beginning                                                              in the                            Other
        Item                                 changes in           changes      made in the                      Reporting                        Ending amount
                           amount                                                              Reporting                         changes
                                                  the             through      Reporting                         Period
                                                                                                 Period
                                             Reporting             equity        Period
                                                 Period

Financial assets

1. Trading
financial assets
                        2,042,903,416       7,062,542.6                                       4,754,790,0      -4,726,866,
(exclusive of                                                                                                                   286,785.89       2,078,176,380.47
                                    .32                   2                                           00.00         364.36
derivative
financial assets)

4. Other equity         119,521,347.6                             -125,795,9                  5,717,169.5
                                                                                                                                573,436.28        125,811,953.38
investments                           0                                26.21                              0

Other
                        389,489,978.6        108,067,88                                       32,615,650.      -102,136,15       2,314,604.
non-current                                                                                                                                       430,351,973.16
                                      8                9.99                                               00            0.48               97
financial assets
        Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                  22
                        2,551,914,742       115,130,43       -125,795,9                       4,793,122,8      -4,829,002,         3,174,827.
Total of the above                                                                    0.00                                                       2,634,340,307.01
                                     .60            2.61           26.21                             19.50          514.84                 14

Financial
                                    0.00            0.00            0.00              0.00            0.00             0.00             0.00                0.00
liabilities

        Contents of other changes:
        Other changes were incurred by exchange rate fluctuations during the shareholding period.

        Significant changes to the measurement attributes of the major assets in the Reporting Period:
        □ Yes √ No


        3. Restricted Asset Rights as at the End of the Reporting Period

                             Item                          Ending carrying amount(RMB)                            Reason for restriction
        Monetary funds                                                         12,989,136.84 Money frozen by bank and security deposits
        Trading financial assets                                            1,401,658,473.29 Security deposits for notes
        Total                                                               1,414,647,610.13                                  --


        V Investments Made

        1. Total Investment Amount

        √ Applicable □ Not applicable

              Total investment amount in H1 2020             Total investment amount in H1 2019
                                                                                                                              Change (%)
                             (RMB)                                            (RMB)

                                    5,787,414,868.16                                  2,518,507,340.85                                           129.80%




        Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                 23
               2. Major Equity Investments Made in the Reporting Period

               √ Applicable □ Not applicable
                                                                                                                                                                                                                   Unit: RMB

                                                                                                                                                        Type of                                                                     Index (if
                                                                                                                                                                                                               Any        Date
                                                                                                                                           Term           the       Investment      Antici    Investment                            any) to
                                                                  Way of                                The          Fundin     Co-in                                                                         legal      (if any)
                                                                                 Amount of                                                   of         investee   progress as of   pated    income in the                          disclose
 Investee                   Principal activity                    investm                           Company’s          g       vesto                                                                        matter        of
                                                                                 investment                                                invest          ’s      the balance     incom     Reporting                                d
                                                                    ent                               interest       source        r                                                                         involved    disclos
                                                                                                                                           ment         product      sheet date       e         Period                              informat
                                                                                                                                                                                                              or not       ure
                                                                                                                                                           s                                                                          ion
              Technology development; basic software
              services; application software services;
              computer system services; computer
              technology training (not for national                                                                                                                Ownership
              enrollment); data processing (except for
Beijing       bank card centers that are processing data                                                                                                           change
Meng52        and cloud computing data centers with a                                                                                                   Game       completed
              PUE value of 1.5 or more); organization of         Capital                                            Self-fun              Perma
Network                                                                         28,600,000.00            22.00%                 None                    develop    with the                  13,398,234.25   Not
              cultural and artistic exchange activities;         increase                                           ded                   nent
Technolog     conference services; exhibition activities;                                                                                               ment       industrial and
y Co., Ltd.   product design; packaging and decoration                                                                                                             commercial
              design; computer animation design;
              design, production, agency, and release of                                                                                                           administration
              ads; sales of computers, software, and
              auxiliary equipment; and Internet-based
              cultural activities.
              Technology development, transfer, and
              consultancy and services of network and                                                                                                              Ownership
Shanghai      computer technologies, design,                                                                                                                       change
              production, and agency of ads, publication
Dobala                                                                                                                                                  Game       completed
              of ads through self-owned media, planning          Capital                                            Self-fun              Perma
Network       of cultural and artistic exchanges,                                5,000,000.00            10.00%                 None                    develop    with the                                  Not
              organization and planning of public                increase                                           ded                   nent
Technolog                                                                                                                                               ment       industrial and
              relation activities, conference services,
y Co., Ltd.   exhibition services, creative services, and                                                                                                          commercial
              sales of computers, software, and auxiliary                                                                                                          administration
              equipment.
               Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          24
              Operations of parking lots; property
              management; engineering and technical
              research and experimental development;
              R&D of electronic, communication, and
              automatic control technologies; software
              development; information system
              integration services; information
              technology consultancy services;
              electromechanical equipment installation
              services; special equipment installation
              (except for elevators and boilers);
              electronic equipment installation services;
              general equipment repair; special
              equipment repair; electrical equipment                                                                                                               Ownership
Guangzho      repairs; sales of general mechanical                                                                                                                 change
              equipment; professional contracting of                                                                                                    Internet
u Kapark      electromechanical equipment installation                                                                                                             completed
                                                                 Capital                                            Self-fun              Perma         -based
Network       projects; R&D, installation, and                                  15,000,000.00            12.00%                 None                               with the         Not
              maintenance of parking berths with                 increase                                           ded                   nent          car
Technolog                                                                                                                                                          industrial and
              automatic are collection function; motor                                                                                                  parking
y Co., Ltd.   vehicle agency management business;                                                                                                                  commercial
              battery charging services for electric                                                                                                               administration
              vehicles; car rental; sales of auto parts; car
              rescue services; motor vehicle
              performance inspection services; network
              information technology promotion
              services; advertising services; installation
              and construction of street nameplates,
              road signs, and advertising board;
              designated driver services; computer
              network system engineering services;
              intelligent installation services; site leasing
              (excluding warehouses); car sales; car
              cleaning services; and car repair and
              maintenance.
              Licensed items: Food. General items:
Shanghai                                                                                                                                                Operati    Ownership
              Technical development, transfer,
Lixing        consultancy, and services of information           Capital                                            Self-fun              Perma         on of a    change
                                                                                 7,000,000.00            11.67%                 None                                                Not
Technolog     technology, computer hardware, and                 increase                                           ded                   nent          coffee     completed
              network technology; sales of furniture,
y Co., Ltd.   kitchen equipment, household appliances,                                                                                                  brand      with the

               Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          25
            hotel equipment, instruments and                                                                                                                    industrial and
            apparatus, building materials, metal
            materials, hardware and electrical                                                                                                                  commercial
            equipment, mechanical equipment,                                                                                                                    administration
            automobile and motorcycle accessories,
            household supplies, kitchenware, feedstuff,
            flowers, jewelry, handicrafts (except for
            ivory and its products), automobile
            supplies, road traffic safety equipment,
            automobiles, chemical raw materials and
            products (except for hazardous chemicals,
            monitored chemicals, fireworks and
            firecrackers, civil explosives, and precursor
            chemicals), advertising equipment, printing
            materials, packaging materials, mineral
            products, electronic products, elevators,
            mechanical equipment, molds, and
            lubricants (including online retail). The
            following items are exclusive to branch
            offices: catering services.
            Network consultancy and information
            security management consultancy;                                                                                                                    Ownership
            technology development, technology                                                                                                        Game-b    change
            promotion, and technical services:
                                                                                                                                                      ased      completed
            Information technology, computer                   Capital                                            Self-fun              Perma
GUGI INC.   technology, and computer software and                             10,615,650.00             5.46%                 None                    social    with the                                Not
            hardware; design and development: toys             increase                                           ded                   nent
                                                                                                                                                      softwar   industrial and
            and anime; network sales: computer
            software and hardware, toys, and anime;                                                                                                   e         commercial
            telecommunications value-added services;                                                                                                            administration
            and operating Internet cultural services.
Total                              --                              --         66,215,650.00            --             --         --        --             --          --         0.00   13,398,234.25     --   --   --




             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                        26
              3. Major Non-Equity Investments Ongoing in the Reporting Period

              √ Applicable □ Not applicable
                                                                                                                                                                                                              Unit: RMB

                                                                                                                                                                         Reason for failing
                            Way      Investment       Industry                                                                                          Cumulative
                                                                    Investment in           Cumulative                                      Anticipat                       to reach the       Date (if
                             of         in fixed          of                                                     Funding       Project                  income as of                                       Index (if any) to disclosed
   Name of project                                                  the Reporting        investment as of                                       ed                       scheduled progress    any) of
                           invest      assets or      investm                                                      source      progress                     the                                                   information
                                                                        Period            the period-end                                     income                       and anticipated     disclosure
                            ment           not            ent                                                                                           period-end
                                                                                                                                                                               income

                                                                                                                                                                                                           Announcement No.
Land Lot AH040124 in                                  Comme
                                                                                                                                                                                                           2020-003 on a
Pazhou West Zone,                                     rcial                                                    Self-funde                                                                     7 January
                           Other     Yes                           890,579,700.00        1,105,179,700.00                                        0.00             0.00   N/A                               Wholly-Owned Subsidiary
Haizhu District,                                      propert                                                  d                                                                              2020
                                                                                                                                                                                                           Bidding for the Use Rights
Guangzhou                                             y
                                                                                                                                                                                                           of State-Owned Land

Office space on 12/F,
14/F and 17/F to 23/F,
                                                                                                               Self-funde
as well as parking                                    Comme                                                                                                                                                Announcement No.
                                                                                                               d and
space on -3/F and -4/F                                rcial                                                                                                                                   26 April     2017-034 on a Subsidiary
                           Other     Yes                             75,112,348.66         957,843,541.68      mortgage                          0.00             0.00   N/A
of Zhongrong Plaza,                                   propert                                                                                                                                 2017         Intending to Purchase
                                                                                                               loan-fund
666 Huangbu Road                                      y                                                                                                                                                    Office and Parking Space
                                                                                                               ed
Central, Tianhe
District, Guangzhou

Total                         --           --             --       965,692,048.66        2,063,023,241.68            --            --            0.00             0.00           --               --                   --


              4. Financial Assets at Fair Value

              √ Applicable □ Not applicable

                                                                                                                                                                                                              Unit: RMB
              Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          27
                                               Gain/loss on fair-value
   Type of        Initial investment                                              Cumulative fair-value            Purchased in the             Sold in the             Cumulative
                                            changes in the Reporting                                                                                                                        Ending amount          Funding source
    assets                 cost                                                  changes through equity            Reporting Period           Reporting Period           income
                                                         Period

Stock                  278,899,199.76                      101,862,285.85                    -52,759,111.69                                       101,486,150.48        24,362,105.75         184,632,631.62     Self-funded

Other              2,647,448,274.12                         13,268,146.76                    -73,036,814.52          4,793,122,819.50           4,727,516,364.36        70,599,981.21        2,449,707,675.39    Self-funded

Total              2,926,347,473.88                        115,130,432.61                   -125,795,926.21          4,793,122,819.50           4,829,002,514.84        94,962,086.96        2,634,340,307.01               --


             5. Financial Investments

             (1) Securities Investments

             √ Applicable □ Not applicable

                                                                  Accounti                          Gain/loss on
                Code                                                                                                      Cumulative         Purchas                                                                             Fun
                                               Initial               ng         Beginning            fair-value                                           Sold in the        Gain/loss in
Variety of       of        Name of                                                                                          fair-value      ed in the                                        Ending carrying    Accounting       ding
                                                                  measure        carrying         changes in the                                           Reporting        the Reporting
securities     securit     securities    investment cost                                                                    changes         Reportin                                            amount              title        sour
                                                                   ment          amount              Reporting                                              Period             Period
                 ies                                                                                                    through equity       g Period                                                                             ce
                                                                  method                               Period

Domestic/                                                         Fair                                                                                                                                          Trading          Self-
               00244
foreign                    ZNHI            21,743,091.99          value         2,725,492.78           557,035.08                                                                               3,282,527.86    financial        fund
               5-SZSE
stock                                                             method                                                                                                                                        assets           ed

                                                                                                                                                                                                                Other
Domestic/                                                         Fair                                                                                                                                                           Self-
               02660-      ZENGAM                                                                                                                                                                               non-current
foreign                                    18,000,000.00          value       14,301,324.38          7,683,996.94                                                                             22,231,519.71                      fund
               HKEX        E                                                                                                                                                                                    financial
stock                                                             method                                                                                                                                                         ed
                                                                                                                                                                                                                assets

Domestic/                                                         Fair                                                                                                                                          Trading          Self-
               96018
foreign                    SNK                    1,036.35        value       23,021,920.43         -3,861,552.17                                                                             19,447,154.15     financial        fund
               0-KRX
stock                                                             method                                                                                                                                        assets           ed

             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                       28
                                                                                                                                                                                                          Other
Domestic/                                                      Fair                                                                                                                                                     Self-
               02400-                                                                                                                                                                                     non-current
foreign                     XD INC        100,055,903.60       value         103,133,292.11       100,422,951.19                                         88,989,266.99   20,640,508.22   116,646,208.80                 fund
               HKEX                                                                                                                                                                                       financial
stock                                                          method                                                                                                                                                   ed
                                                                                                                                                                                                          assets

                            CMGE                                                                                                                                                                          Other
Domestic/                                                      Fair                                                                                                                                                     Self-
               00302-       Technolo                                                                                                                                                                      non-current
foreign                                    14,101,880.71       value          15,438,704.59         -2,940,145.19                                        12,496,883.49    3,721,597.53                                  fund
               HKEX         gy Group                                                                                                                                                                      financial
stock                                                          method                                                                                                                                                   ed
                            Limited                                                                                                                                                                       assets

                                                                                                                                                                                                          Other
Domestic/      83360                                           Fair                                                                                                                                                     Self-
                            Southern                                                                                                                                                                      non-current
foreign        4-NEE                       64,997,287.11       value          15,784,332.79                                                                                               15,784,332.79                 fund
                            Pictures                                                                                                                                                                      financial
stock          Q                                               method                                                                                                                                                   ed
                                                                                                                                                                                                          assets

Domestic/      83506                                           Fair                                                                                                                                       Other         Self-
foreign        7-NEE        Mokylin        60,000,000.00       value            7,240,888.31                            -52,759,111.69                                                     7,240,888.31   equity        fund
stock          Q                                               method                                                                                                                                     investments   ed

Total                                     278,899,199.76           --        181,645,955.39       101,862,285.85        -52,759,111.69           0.00   101,486,150.48   24,362,105.75   184,632,631.62        --        --

Disclosure        date      of     the
announcement on the board’s
                                          6 December 2019
approval     of     the      securities
investments
Disclosure        date      of     the
announcement on the general
meeting       of         shareholders’   25 December 2019
approval     of     the      securities
investment (if any)




             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                       29
(2) Investments in Derivative Financial Instruments

□ Applicable √ Not applicable
No such cases in the Reporting Period.


6. Use of Raised Funds

□ Applicable √ Not applicable
No such cases in the Reporting Period.


7. Significant Projects Invested with Non-Raised Funds

□ Applicable √ Not applicable

No such cases in the Reporting Period.


VI Sale of Major Assets and Equity Investments

1. Sale of Major Assets

□ Applicable √ Not applicable
No such cases in the Reporting Period.


2. Sale of Major Equity Investments

□ Applicable √ Not applicable


VII Principal Subsidiaries and Joint Stock Companies

√ Applicable □ Not applicable

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                          30
         Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:
                                                                                                                                                                                               Unit: RMB

                           Relationship
       Name                  with the            Principal activity         Registered capital            Total assets                Net assets       Operating revenue    Operating profit    Net profit
                             Company

                                             Development of mobile
Jiangsu Aurora             Subsidiary                                              6,250,000.00         4,931,895,434.41            3,389,070,354.63     1,212,422,839.46     600,800,831.35    629,776,283.93
                                             and browser games

                                             Launch and operation
Guangzhou 37               Subsidiary                                             11,764,706.00         7,328,807,906.38            1,495,082,563.16     5,121,786,020.32   1,033,382,969.23    918,920,434.10
                                             of mobile games

         Subsidiaries obtained or disposed of in the Reporting Period:
         □ Applicable √ Not applicable

         Other information on principal subsidiaries and joint stock companies:




         Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                   31
VIII Structured Bodies Controlled by the Company

□ Applicable √ Not applicable


IX Operating Performance Forecast for January-September 2020

Warning of a forecast negative net profit for the January-September period of the current year or a considerable YoY change therein,
as well as the reasons:

□ Applicable √ Not applicable


X Risks Facing the Company and Countermeasures

     1. Market competition risks and countermeasures

     The online gaming industry is facing increasingly fierce competition as it gradually matures. Meanwhile, the development of
various Internet-based cultural creative segments other than online games is further exacerbating external competition. At the
same time, online game users are also becoming more sophisticated, and onl ine game users have increasingly higher quality
requirement for game products. Intense market competition will challenge the Company’s development in terms of products and
market channels.

     In response, the Company will continue to increase R&D investments, R&D and innovation in product creativity, gameplay,
theme, art and technology. It will maintain close cooperation with excellent developers to guarantee the supply of quality pr oducts,
and continue to connect users with quality games. In terms of market channels, the Company will further bring in play the role of
new ideas in traffic operation, deepen the business strategy of multi -channel marketing, targeted advertising and long-term
services, and continuously enhance its core market competitiveness.

     2. Business risks and countermeasures

     The online gaming 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 pa ce with trend of the industrial
technologies. If the technology, products and other aspects of the game undergo major changes, and game enterprises fail to keep
up with the development of industry technology, their products will fail to meet the market dem ands. 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 to the user experience and brand image. Consequently, its operation performance
will be impaired.

     In response, increasing R&D investments are needed to maintain continuous product innovation. The Company also needs to
dig deeper into operational data through independently developed AI systems, continuously update the understanding of changes
in target users' preferences, and timely adjust operational and R&D strategies, 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. In terms of information security, the Company has developed a serie s of
internal control systems to define and classify security incidents and to respond to possible data security problems. Information
security audits take place once every six months for systematic control of information security risks. In terms of privacy pr otection,
the Privacy Policy has been established, which 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 informatio n. In
this way the Company will make sure with greatest efforts that all users’ personal information are protected at the highest level.

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         32
The Company ensures that it runs the business in compliance with applicable laws and regulations throughout the world, and
protects the users’ right to manage personal information. A response procedure has been stipulated to inform users of any possible
cost and necessary actions needed to be taken.

     3. Risks of core personnel turnover and countermeasures

     A stable and high-quality talent team for game development, operation and management 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 reasonabl e
incentives and manages the core personnel, the employees’ enthusiasm and creativity will be affected, which will have an adve rse
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 high
project bonus, and given discretion of research and creation. In order to flexibly attract and retain quality management and
business talents, taking into account the Company’s long-term and recent interests and the Company’s long-term, sustainable and
sound development, the Company implemented the employee stock ownership plan during the Reporting Period to establish and
improve the benefit sharing mechanism between workers and owners, further improve the corporate govern ance structure of the
Company and effectively mobilize the enthusiasm of workers and employees. The Company maintains the stability of core
technology and management personnel by signing agreements with core personnel, creating a favorable working environment and
building a great corporate culture. Meanwhile, the Company helps employees to realize their potential through a well -trained
employee training system, and rationally manages the team by using a clear rule of survival of the fittest to reinforce the team’s
dynamics.




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         33
                                                 Part V Significant Events

I 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             Index to disclosed
          Meeting                        Type               participation
                                                                                  meeting          disclosure               information
                                                                ratio

 The 2019 Annual               Annual General
                                                                                                 23 April
 General Meeting of            Meeting of                          44.13%     22 April 2020                         http://www.cninfo.com.cn
                                                                                                 2020
 Shareholders                  Shareholders

 The First Extraordinary       Extraordinary
 General Meeting of            General Meeting of                  42.78%     15 May 2020        16 May 2020        http://www.cninfo.com.cn
 Shareholders of 2020          Shareholders


2. Extraordinary General Meetings of Shareholders Convened at the Request of Preferred Shareholders with
Resumed Voting Rights

□ Applicable √ Not applicable


II Interim Dividend Plan

√ Applicable □ Not applicable

 Bonus issue from profit (share/10 shares)                                                                                                    0

 Cash dividend/10 shares (RMB) (tax inclusive)                                                                                                3

 Bonus issue from capital reserves (share/10 shares)                                                                                          0

 Share base (share)                                                                                                               2,112,251,697

 Cash dividends (RMB) (tax inclusive)                                                                                           633,675,509.10

 Cash dividends in other forms (such as share repurchase) (RMB)                                                                            0.00

 Total cash dividends (including those in other forms) (RMB)                                                                    633,675,509.10

 Distributable profit (RMB)                                                                                                     873,232,208.83

 Total cash dividends (including those in other forms) as % of total
                                                                                                                                          100%
 profit to be distributed

                                                        Applicable cash dividend policy

 If the Company is in the growth stage and has a significant capital expenditure arrangement, when making profit distribution,


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         34
 cash dividends shall account for no less than 20% in the profit distribution.

                                                Details of the cash and/or stock dividend plan

       In view of the Company’s sustained and solid profitability and good financial position, as well as the expe ctations and
 confidence for the Company’s future development, and fully considering the interests and reasonable demands of investors, the
 Company’s Board of Directors proposed a 2020 interim dividend plan in accordance with the No. 3 Listed Companies Regulatory
 Guidelines, the Company Law, the Articles of Association and the Company’s shareholder return plan, under the principle of
 profit distribution and the premise of ensuring the normal operation and long-term development of the Company.
       Upon approval by the Board of Directors, the Company’s 2020 interim dividend plan is as follows: Based on the total issued
 share capital on the date of record, a cash dividend of RMB3 (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 interim dividend plan is consistent with the Company’s
 performance growth, and also in line with relevant provisions of the Company Law, the Securities Law, the Articles of
 Association and the Company’s shareholder return plan. Therefore, it is legal, valid and reasonable.


III Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees

√ Applicable □ Not applicable

     The Proposal on the Third Employee Stock Ownership Plan (Draft) and Its Summary, along with related proposals, was
approved at the Fourth Meeting of the Fifth Board of Directors and the Fourth Extraordinary General Meeting of Shareholders of
2019 of the Company. The company performance requirement for this employee stock ownership plan is a net profit (based on net
profit attributable to shareholders of the Company and exclusive of share -based payments under this employee stock ownership
plan) not lower than RMB1.5 billion for 2019.
     According to the Independent Auditor’s Report Hua Xing Suo (2020) Shen Zi GD—No. 026 issued by Huaxing Certified Public
Accountants LLP, the net profit attributable to shareholders of the Company for 2019 was RMB2.115 billion (RMB2.185 billion after
excluding the share-based payments under this employee stock ownership plan in 2019). As such, the company performance
requirement for this employee stock ownership plan was fulfilled. Therefore, 30% shares under this employee stock ownership plan
would be unlocked for the 12 months commencing from 27 July 2019 (the date when the Company announced that the final batch
of target shares were transferred to this employee stock ownership plan). For further information, please visit
http://www.cninfo.com.cn.
     The lock-up period for the first batch of shares (6,704,261 shares) under the third employee stock ownership plan expired on
26 July 2020. For further information, please refer to the Reminder of the Expiry of the Lock-up Period of the First Batch of Shares
under the Third Employee Stock Ownership Plan disclosed by the Company on http://www.cninfo.com.cn dated 23 July 2020.


IV Other Significant Events

√ Applicable □ Not applicable

    The Proposal on the 2020 Private Placement Plan, along with related proposals, was approved at the Eleventh Meeting of the
Fifth Board of Directors and the 2019 Annual General Meeting of Shareholders of the Company. According to the Plan, the Company
intended to raise funds not exceeding RMB4.5 billion (inclusive) by offering shares of no more than 5% of the total pre -offering
share capital. The raised funds after deducting the issuance expenses would be invested in the online games development and
operation project (RMB1.6 billion), the 5G-based cloud gaming platform project (RMB1.65 billion) and the Guangzhou headquarters

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         35
building project (RMB1.25 billion). On 27 April 2020, the Company received the Acceptance of Application for Administrative
Permission (acceptance No.: 200844) issued by the China Securities Regulatory Commission (hereinafter, the “CSRC”) on 26 Apri l
2020. Upon preliminary examination of the Application for Private Placement by Listed Company submitted by the Company,
together with related materials, the CSRC decided to accept the application for further review on the ground that the applica tion
materials were in compliance with the prescribed form.
    On 1 June 2020, the Company received the First Feedback Concerning Application for Administration Permission (No. 200844)
issued by the CSRC on 29 May 2020. Upon the receipt of the Feedback, the Company, together with the relevant intermediary
agencies, carefully analyzed and discussed the issues raised in the Feedback, and made a corresponding reply, upon relevant checks,
as required by the Feedback. The reply has been disclosed to the public. Please refer to the Reply of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd. Concerning the Feedback to Its Private Placement Application Documents
disclosed by the Company on http://www.cninfo.com.cn dated 24 June 2020.
    The Proposal on Reducing the Total Funds to Be Raised in the 2020 Private Placement, along with related proposals, was
approved at the Thirteenth Meeting of the Fifth Board of Directors of the Company. As such, the total funds to be raised was agreed
to be reduced to an amount not exceeding RMB4.463 billion. The raised funds after deducting the issuance expenses would be
invested in the online games development and operation project (RMB1.6 billion), the 5G-based cloud gaming platform project
(RMB1.65 billion) and the Guangzhou headquarters building project (RMB1.213 billion).
    On 9 July 2020, the Company received the Letter on Preparations for the Issuance Appraisal Committee Meeting on the
Application of 37 Interactive Entertainment for Private Placement (hereinafter, the “Letter”) issue d by the CSRC. The Company,
together with Orient Securities Investment Banking Co., Ltd. and other relevant intermediary agencies, carried out careful ch ecks in
respect of the issues raised in the Letter, and made a corresponding reply as required. For further information, please refer to the
Reply of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. and Orient Securities Investment Banking Co., L td.
on the Letter on Preparations for the Issuance Appraisal Committee Meeting on the Application of 37 Interactive Entertainment for
Private Placement disclosed by the Company on http://www.cninfo.com.cn dated 18 July 2020.




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         36
                             Part VI Share Changes and Shareholder Information

        I Share Changes

        1. Share Changes

                                                                                                                                                   Unit: share

                                         Before                             Increase/decrease in the Reporting Period (+/-)                            After

                                                                                                Shares
                                                                                Shares
                                                                                                  as
                                                                                  as
                                                                                            dividend
                                                   Percenta        New          dividend                                                                         Percenta
                                   Number                                                   converte          Other           Subtotal         Number
                                                     ge (%)       issues        converte                                                                          ge (%)
                                                                                                d from
                                                                                d from
                                                                                                capital
                                                                                 profit
                                                                                            reserves

1. Restricted shares               794,755,467        37.63%                                                -84,000,441      -84,000,441      710,755,026         33.65%

1.1 Shares held by
other          domestic            794,755,467        37.63%                                                -84,000,441      -84,000,441      710,755,026         33.65%
investors

                  Shares
held    by     domestic            794,755,467        37.63%                                                -84,000,441      -84,000,441      710,755,026         33.65%
natural persons

2. Un-restricted shares       1,317,496,230           62.37%                                                84,000,441       84,000,441      1,401,496,671        66.35%

2.1 RMB-denominated
                              1,317,496,230           62.37%                                                84,000,441       84,000,441      1,401,496,671        66.35%
common shares

3. Total shares               2,112,251,697        100.00%                                                               0               0   2,112,251,697       100.00%


        2. Changes in Restricted Shares

        √ Applicable □ Not applicable
                                                                                                                                                   Unit: share

                                        Shares with           Increase in
                     Beginning          restriction           restricted               Ending
  Name of                                                                                                  Reason for
                      restricted        lifted in the     shares in the            restricted                                                Lifting date
 shareholder                                                                                               restriction
                       shares            Reporting            Reporting                shares
                                          Period                Period

                                                                                                                               Subject to regulations in respect of
                                                                                                       Locked-up shares of
Li Weiwei            302,743,539                      0                     0      302,743,539                                 changes in shareholdings of directors,
                                                                                                       senior management
                                                                                                                               supervisors and senior management

        Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                       37
                                                                                                                           Subject to regulations in respect of
                                                                                                Locked-up shares of
Zeng Kaitian        276,978,130        -31,633,800                      0      245,344,330                                 changes in shareholdings of directors,
                                                                                                senior management
                                                                                                                           supervisors and senior management

                                                                                                                           Subject to regulations in respect of
                                                                                                Locked-up shares of
Wu Weihong          112,002,562        -28,000,641                      0       84,001,921                                 changes in shareholdings of directors,
                                                                                                senior management
                                                                                                                           supervisors and senior management

                                                                                                Post-offering
Hu Yuhang              4,315,518                   0                    0        4,315,518                                 17 July 2020
                                                                                                restricted shares

                                                                                                                           Subject to regulations in respect of
                                                                                                Locked-up shares of
Wu Weidong           98,195,668        -24,375,000                      0       73,820,668                                 changes in shareholdings of directors,
                                                                                                senior management
                                                                                                                           supervisors and senior management

                                                                                                                           Subject to regulations in respect of
                                                                                                Locked-up shares of
Yang Jun                 520,050                   0                    0             520,050                              changes in shareholdings of directors,
                                                                                                senior management
                                                                                                                           supervisors and senior management

                                                                                                                           Subject to regulations in respect of
                                                                                                Locked-up shares of
Qi Jifeng                        0                 0               9,000                9,000                              changes in shareholdings of directors,
                                                                                                senior management
                                                                                                                           supervisors and senior management

Total               794,755,467        -84,009,441                 9,000       710,755,026                 --                                    --


        II Issuance and Listing of Securities

        □ Applicable √ Not applicable



        III Shareholders and Their Holdings as at the Period-End

                                                                                                                                                  Unit: share

                                                                                  Number         of       preferred
                                                                                  shareholders with resumed
Number of common shareholders                                          55,993                                                                                        0
                                                                                  voting rights (if any) (see note
                                                                                  8)

                                          5% or greater common shareholders or the top 10 common shareholders

                                                 Shareho                        Increase/decre                                                   Pledged or frozen
                                                                                                       Restricted        Un-restricted
                               Nature of          lding         Common             ase in the                                                         status
 Name of shareholder                                                                                    common             common
                              shareholder        percent      shares held          Reporting
                                                                                                      shares held         shares held        Status         Shares
                                                   age                                 Period

                            Domestic
Li Weiwei                                         19.11%      403,658,052                       0      302,743,539        100,914,513       Pledged       29,000,000
                            natural person

                            Domestic
Zeng Kaitian                                      11.62%      245,344,374             -81,781,400      245,344,330                    44    Pledged        9,810,000
                            natural person

Hong Kong Securities        Overseas               6.98%      147,487,787              73,694,639                   0      147,487,787

        Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                 38
Clearing Company Ltd.         corporation

                              Domestic
Wu Weihong                                           5.30%      112,002,562                       0       84,001,921          28,000,641
                              natural person

                              Domestic
Hu Yuhang                                            5.00%      105,612,651              31,975,100        4,315,518         101,297,133      Pledged       5,050,000
                              natural person

                              Domestic
Wu Weidong                                           4.66%        98,427,557                      0       73,820,668          24,606,889
                              natural person

                              Domestic
Wu Xushun                                            3.50%        73,937,782                      0                   0       73,937,782
                              natural person

National Social Security
                              Other                  1.21%        25,503,030             25,503,030                   0       25,503,030
Fund—Portfolio 111

Wuhu 37 Interactive
Entertainment Network
Technology Group Co.,         Other                  1.06%        22,347,537                      0                   0       22,347,537
Ltd.—third employee
stock ownership plan

China Universal Asset
Management (CUAM) -
Bank of
Ningbo—Zhuhai Rongxi         Other                  0.95%        20,089,263            -17,839,168                   0       20,089,263
Equity Investment
Partnership (Limited
Partnership)

Strategic investor or general corporation
becoming a top-10 common shareholder               Not applicable
in a rights issue (if any) (see note 3)
                                                   1. Among the top 10 shareholders of the Company, Wu Xushun is the father of Wu Weihong and Wu
                                                   Weidong, which makes them shareholders acting in concert.
Related     or   acting-in-concert     parties
                                                   2. The Company is not aware of whether there is, among the other top 10 shareholders, any related
among the shareholders above
                                                   parties or acting-in-concert parties as defined in the Measures on the Administration of Acquisition of
                                                   Listed Companies.

                                                            Top 10 un-restricted common shareholders

                                                     Un-restricted common shares                                          Shares by class
             Name of shareholder
                                                                    held                                      Class                                Shares

Hong Kong Securities Clearing Company
                                                                           147,487,787     RMB-denominated common shares                                147,487,787
Ltd.

Hu Yuhang                                                                  101,297,133     RMB-denominated common shares                                101,297,133

Li Weiwei                                                                  100,914,513     RMB-denominated common shares                                100,914,513

Wu Xushun                                                                   73,937,782     RMB-denominated common shares                                 73,937,782


          Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                   39
Wu Weihong                                                              28,000,641      RMB-denominated common shares                            28,000,641

National Social Security Fund—Portfolio
                                                                        25,503,030      RMB-denominated common shares                            25,503,030
111

Wu Weidong                                                              24,606,889      RMB-denominated common shares                            24,606,889

Wuhu 37 Interactive Entertainment
Network Technology Group Co., Ltd.—third                               22,347,537      RMB-denominated common shares                            22,347,537
employee stock ownership plan

China Universal Asset Management (CUAM)
- Bank of Ningbo—Zhuhai Rongxi Equity
                                                                        20,089,263      RMB-denominated common shares                            20,089,263
Investment Partnership (Limited
Partnership)

National Social Security Fund—Portfolio
                                                                        15,831,558      RMB-denominated common shares                            15,831,558
416

Related or acting-in-concert parties among         1. Among the top 10 shareholders of the Company, Wu Xushun is the father of Wu Weihong and Wu
the top 10 un-restricted common                    Weidong, which makes them shareholders acting in concert.
shareholders, as well as between the top 10        2. The Company is not aware of whether there is, among the other top 10 shareholders, any related
un-restricted common shareholders and              parties or acting-in-concert parties as defined in the Measures on the Administration of Acquisition of
the top 10 common shareholders                     Listed Companies.

Top 10 common shareholders engaged in
securities margin trading (if any) (see note       None
4)

        Indicate by tick mark 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.




                                                    Part VII Financial Statements

        I Independent Auditor’s Report

        Are these interim financial statements audited by an independent auditor?
        □ Yes √ No
        They are unaudited by such an auditor.


        II Financial Statements

        Currency unit for the financial statements and the notes thereto: RMB



        Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                 40
1. Consolidated Balance Sheet

Prepared by Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd.
                                                                  30 June 2020

                                                                                                                                         Unit: RMB

                           Item                                            30 June 2020                            31 December 2019

 Current assets:

       Monetary funds                                                              3,476,651,621.54                           2,152,508,643.76

       Transaction settlement funds

       Loans to other banks

       Trading financial assets                                                    2,078,176,380.47                           2,042,903,416.32

       Derivative financial assets

       Notes receivable

       Accounts receivable                                                        1,275,085,408.62                            1,287,915,082.56

       Accounts receivable financing

       Prepayments                                                                  648,900,877.82                              661,089,054.70

       Premiums receivable

       Reinsurance receivables

       Receivable reinsurance contract reserve

       Other receivables                                                              80,200,345.60                               84,842,613.18

          Including: Interest receivable

                      Dividends receivable                                            10,400,000.00                               10,400,000.00

       Redemptory monetary capital for sale

       Inventories

       Contract assets

       Assets held for sale

       Non-current assets due within one year

       Other current assets                                                          171,339,570.64                             125,885,754.42

 Total current assets                                                             7,730,354,204.69                            6,355,144,564.94

 Non-current assets:

       Loans and advances to customers

       Debt investments

       Other debt investments

       Long-term receivables

       Long-term equity investments                                                 466,187,441.61                              468,792,240.20

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         41
       Other equity investments                                                     125,811,953.38                              119,521,347.60

       Other non-current financial assets                                            430,351,973.16                             389,489,978.68

       Investment properties

       Fixed assets                                                                 920,231,133.44                                47,102,974.14

       Construction in progress                                                                                                 797,245,599.78

       Productive living assets

       Oil and gas assets

       Right-of-use assets

       Intangible assets                                                              16,210,163.97                               16,997,408.09

       Development expenditure

       Goodwill                                                                   1,614,909,880.35                            1,614,909,880.35

       Long-term deferred expenses                                                    32,136,689.41                               38,593,956.25

       Deferred income tax assets                                                     26,766,154.05                               26,566,306.68

       Other non-current assets                                                   1,107,475,299.02                              270,895,599.02

 Total non-current assets                                                         4,740,080,688.39                            3,790,115,290.79

 Total assets                                                                    12,470,434,893.08                           10,145,259,855.73

 Current liabilities:

       Short-term loans                                                             889,324,326.07

       Loans from the central bank

       Loans from other banks

       Trading financial liabilities

       Derivative financial liabilities

       Notes payable                                                                540,000,000.00                              300,000,000.00

       Accounts payable                                                            1,492,117,378.94                           1,418,946,404.24

       Advances from customers                                                                                                  196,924,263.69

       Contract liabilities                                                         236,490,124.28

       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                                                    399,363,683.28                              278,936,676.53

       Taxes payable                                                                178,142,122.00                              161,110,700.51

       Other payables                                                               156,831,656.54                              141,387,120.09


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         42
          Including: Interest payable

                       Dividends payable

       Handling charges and commissions payable

       Reinsurance payables

       Liabilities held for sale

       Non-current liabilities due within one year                                                                                31,158,472.31

       Other current liabilities                                                      56,387,620.73                               71,925,723.44

 Total current liabilities                                                        3,948,656,911.84                            2,600,389,360.81

 Non-current liabilities:

       Insurance contract reserve

       Long-term loans                                                                                                          250,017,634.02

       Bonds payable

          Including: Preferred shares

                       Perpetual bonds

       Lease liabilities

       Long-term payables

       Long-term employee benefits payable

       Provisions

       Deferred income                                                                                                               721,630.66

       Deferred income tax liabilities                                                 1,102,695.20                                  422,626.71

       Other non-current liabilities

 Total non-current liabilities                                                         1,102,695.20                             251,161,891.39

 Total liabilities                                                                3,949,759,607.04                            2,851,551,252.20

 Shareholders' equity:

       Share capital                                                              2,112,251,697.00                            2,112,251,697.00

       Other equity instruments

          Including: Preferred shares

                       Perpetual bonds

       Capital reserves                                                             156,939,080.75                                73,153,800.49

       Less: Treasury shares

       Other comprehensive income                                                    -84,201,739.17                              -94,582,500.13

       Special reserves

       Surplus reserves                                                              227,390,965.90                             227,390,965.90

       General risk reserves

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         43
       Retained earnings                                                          5,777,154,510.18                            4,711,093,895.82

 Total equity attributable to shareholders of the
                                                                                  8,189,534,514.66                            7,029,307,859.08
 Company

       Non-controlling interests                                                    331,140,771.38                              264,400,744.45

 Total shareholders' equity                                                       8,520,675,286.04                            7,293,708,603.53

 Total liabilities and shareholders’ equity                                     12,470,434,893.08                           10,145,259,855.73


Legal representative: Li Weiwei                                                                                 Chief Financial Officer: Ye Wei


Board Secretary: Ye Wei


2. Balance Sheet of the Company

                                                                                                                                         Unit: RMB

                           Item                                           30 June 2020                            31 December 2019

 Current assets:

       Monetary funds                                                                    324,975.12                                  765,545.81

       Trading financial assets

       Derivative financial assets

       Notes receivable

       Accounts receivable

       Accounts receivable financing

       Prepayments                                                                                                                       5,000.00

       Other receivables                                                            375,998,167.92                            1,010,549,806.19

          Including: Interest receivable

                      Dividends receivable                                                                                    1,000,000,000.00

       Inventories

       Contract assets

       Assets held for sale

       Non-current assets due within one year

       Other current assets                                                            3,066,714.15                                2,895,886.32

 Total current assets                                                               379,389,857.19                            1,014,216,238.32

 Non-current assets:

       Debt investments

       Other debt investments

       Long-term receivables

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         44
       Long-term equity investments                                               6,574,316,138.89                            6,487,297,853.18

       Other equity investments                                                        7,240,888.31                                7,240,888.31

       Other non-current financial assets                                            31,706,772.79                                31,706,772.79

       Investment properties

       Fixed assets

       Construction in progress

       Productive living assets

       Oil and gas assets

       Right-of-use assets

       Intangible assets

       Development expenditure

       Goodwill

       Long-term deferred expenses

       Deferred income tax assets

       Other non-current assets

 Total non-current assets                                                         6,613,263,799.99                            6,526,245,514.28

 Total assets                                                                     6,992,653,657.18                            7,540,461,752.60

 Current liabilities:

       Short-term loans

       Trading financial liabilities

       Derivative financial liabilities

       Notes payable

       Accounts payable                                                                  122,179.29                                      14,203.83

       Advances from customers

       Contract liabilities

       Employee benefits payable                                                         136,748.20                                  120,059.83

       Taxes payable                                                                   3,740,774.87                                1,958,201.03

       Other payables                                                                  6,051,829.21                                6,806,054.20

          Including: Interest payable

                        Dividends payable

       Liabilities held for sale

       Non-current liabilities due within one year

       Other current liabilities

 Total current liabilities                                                           10,051,531.57                                 8,898,518.89

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         45
 Non-current liabilities:

       Long-term loans

       Bonds payable

          Including: Preferred shares

                       Perpetual bonds

       Lease liabilities

       Long-term payables

       Long-term employee benefits payable

       Provisions

       Deferred income

       Deferred income tax liabilities

       Other non-current liabilities

 Total non-current liabilities

 Total liabilities                                                                   10,051,531.57                                 8,898,518.89

 Shareholders' equity:

       Share capital                                                              2,112,251,697.00                            2,112,251,697.00

       Other equity instruments

          Including: Preferred shares

                       Perpetual bonds

       Capital reserves                                                           3,709,796,608.05                            3,622,063,902.37

       Less: Treasury shares

       Other comprehensive income                                                   -52,759,111.69                               -52,759,111.69

       Special reserves

       Surplus reserves                                                             340,080,723.42                              340,080,723.42

       Retained earnings                                                            873,232,208.83                            1,509,926,022.61

 Total shareholders' equity                                                       6,982,602,125.61                            7,531,563,233.71

 Total liabilities and shareholders’ equity                                      6,992,653,657.18                            7,540,461,752.60


3. Consolidated Income Statement

                                                                                                                                         Unit: RMB

                                       Item                                                    H1 2020                        H1 2019

 1. Total operating revenue                                                                  7,988,675,195.57                 6,070,957,503.06

       Including: Operating revenue                                                          7,988,675,195.57                 6,070,957,503.06

                     Interest income

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         46
                   Premium income

                   Handling charge and commission income

 2. Total operating costs and expenses                                                        6,257,275,520.69                4,908,533,506.03

       Including: Cost of sales                                                                863,666,663.98                   838,986,561.51

                   Interest expense

                   Handling charge and commission expenses

                   Surrenders

                   Net claims paid

                   Net amount provided as insurance contract reserve

                   Expenditure on policy dividends

                   Reinsurance premium expenses

                   Taxes and surcharges                                                          22,337,290.11                    20,392,371.96

                   Distribution and selling expenses                                         4,549,628,282.98                 3,632,067,521.84

                   General and administrative expenses                                         166,919,490.05                     88,053,838.68

                   Research and development expenses                                           644,896,512.00                   324,699,670.32

                   Financial expenses                                                             9,827,281.57                     4,333,541.72

                      Including: Interest expense                                                34,655,637.60                    18,926,518.37

                                   Interest income                                               23,176,748.76                     8,475,803.74

       Add: Other income                                                                         95,213,596.55                    49,294,108.11

            Investment income (“-” for loss)                                                  108,093,257.02                    18,932,969.82

               Including: Share of profits and losses of joint ventures and
                                                                                                 13,131,170.06                    -6,172,892.49
 associates

                          Gain on derecognition of financial assets
 measured at amortised cost (“-” for loss)

            Gain on exchange (“-” for loss)

            Net gain on exposure hedges (“-” for loss)

            Gain on changes in fair value (“-” for loss)                                     115,130,432.61                     41,603,452.48

            Impairment loss on credit (“-” for loss)                                            -7,237,074.09                   33,094,388.44

            Impairment loss on assets (“-” for loss)                                          -44,335,968.65                   -14,789,077.01

            Gain on disposal of assets (“-” for loss)                                               75,379.94                          -77,711.53

 3. Operating profit (“-” for loss)                                                        1,998,339,298.26                 1,290,482,127.34

       Add: Non-operating income                                                                  2,297,869.41                     3,082,997.15

       Less: Non-operating expenses                                                               7,429,745.23                     2,674,771.67

 4. Profit before income tax expenses (“-” for loss)                                       1,993,207,422.44                 1,290,890,352.82


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         47
        Less: Income tax expenses                                                              110,659,828.94                   131,634,742.44

 5. Net profit (“-” for net loss)                                                          1,882,547,593.50                 1,159,255,610.38

    5.1 Classified by continuity of operations

        5.1.1 Net profit from continuing operations (“-” for net loss)                     1,882,547,593.50                 1,159,255,610.38

        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 of the Company                         1,699,736,123.46                 1,033,074,405.38

        5.2.2 Net profit attributable to non-controlling interests                              182,811,470.04                  126,181,205.00

 6. Other comprehensive income, net of tax                                                       10,361,892.43                           -25,288.71

    Other comprehensive income attributable to shareholders of the
                                                                                                 10,380,760.96                           -25,288.71
 Company, net of tax

        6.1 Other comprehensive income that will 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 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 be reclassified
                                                                                                 10,380,760.96                           -25,288.71
 subsequently to profit or loss

               6.2.1 Share of the other comprehensive income of the
 investee accounted for using equity method that will be reclassified
 subsequently to profit or loss

               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
                                                                                                 10,380,760.96                           -25,288.71
 currency financial statements

               6.2.7 Others

    Other comprehensive income attributable to non-controlling                                       -18,868.53

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         48
 interests, net of tax

 7. Total comprehensive income                                                               1,892,909,485.93                 1,159,230,321.67

       Total comprehensive income attributable to shareholders of the
                                                                                             1,710,116,884.42                 1,033,049,116.67
 Company

       Total comprehensive income attributable to non-controlling
                                                                                               182,792,601.51                   126,181,205.00
 interests

 8. Earnings per share:

       8.1 Basic earnings per share                                                                         0.80                             0.49

       8.2 Diluted earnings per share                                                                       0.80                             0.49

Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees
before the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00.


Legal representative: Li Weiwei                                                                                  Chief Financial Officer: Ye Wei


Board Secretary: Ye Wei


4. Income Statement of the Company

                                                                                                                                          Unit: RMB

                                       Item                                                   H1 2020                         H1 2019

 1. Operating revenue                                                                                     0.00                               0.00

       Less: Cost of sales                                                                                0.00                               0.00

             Taxes and surcharges                                                                   21,933.20                             8,651.83

             Distribution and selling expenses

             General and administrative expenses                                                 2,375,644.75                        664,215.31

             Research and development expenses

             Financial expenses                                                                    389,882.06                      5,026,558.14

               Including: Interest expense                                                                                         8,467,829.41

                          Interest income                                                               810.35                     3,444,301.05

       Add: Other income                                                                           439,106.01                            25,780.49

             Investments income (“-” for loss)                                                  -714,419.97                   789,008,294.71

               Including: Share of profits and losses of joint ventures and
                                                                                                  -714,419.97                        -979,081.27
 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 loss)


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         49
             Impairment loss on credit (“-” for loss)                                             44,468.66                            -2,270.00

             Impairment loss on assets (“-” for loss)

             Gain on disposal of assets (“-” for loss)

 2. Operating profit (“-” for loss)                                                           -3,018,305.31                   783,332,379.92

        Add: Non-operating income                                                                         0.63

        Less: Non-operating expenses

 3. Profit before income tax expenses (“-” for loss)                                          -3,018,304.68                   783,332,379.92

        Less: Income tax expenses                                                                                                         -567.49

 4. Net profit (“-” for net loss)                                                             -3,018,304.68                   783,332,947.41

        4.1 Net profit from continuing operations (“-” for net loss)                          -3,018,304.68                   783,332,947.41

        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

               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


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         50
               5.2.7 Others

 6. Total comprehensive income                                                                  -3,018,304.68                   783,332,947.41

 7. Earnings per share:

       7.1 Basic earnings per share

       7.2 Diluted earnings per share


5. Consolidated Cash Flow Statement

                                                                                                                                         Unit: RMB

                                       Item                                                  H1 2020                          H1 2019

 1. Cash flows from operating activities:

       Cash received from the sales of goods or rendering services                         8,468,127,558.75                   5,978,803,476.57

       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

       Refunds of taxes and levies                                                              6,317,294.49                      18,148,222.30

       Cash received relating to other operating activities                                  106,875,881.05                       53,303,204.02

 Sub-total of cash inflows from operating activities                                       8,581,320,734.29                   6,050,254,902.89

       Cash paid for purchases of goods and services                                       1,036,250,684.73                     663,495,847.03

       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                                               580,145,971.94                     384,362,339.55

       Payments of taxes and levies                                                           196,576,891.94                    234,010,246.88


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         51
       Cash paid relating to other operating activities                                    4,318,120,638.78                   4,152,031,533.06

 Sub-total of cash outflows used in operating activities                                   6,131,094,187.39                   5,433,899,966.52

 Net cash flows from operating activities                                                  2,450,226,546.90                     616,354,936.37

 2. Cash flows from investing activities:

       Cash received from disposal of investments                                            224,285,017.49                     105,816,280.71

       Cash received from investment income                                                    53,388,661.32                      16,060,855.44

       Cash received from disposal of fixed assets, intangible assets and
                                                                                                  614,635.00                         204,690.00
 other long-term assets

       Net cash received from disposal of subsidiaries and other business
                                                                                                                                433,449,673.50
 units

       Cash received relating to other investing activities                                4,678,500,000.00                   2,488,320,540.52

 Sub-total of cash inflows from investing activities                                       4,956,788,313.81                   3,043,852,040.17

       Cash paid for acquisition of fixed assets, intangible assets and
                                                                                              968,397,533.12                      59,645,209.49
 other long-term assets

       Cash paid to acquire investments                                                        86,020,569.50                      78,068,522.99

       Net increase in pledged loans granted

       Net cash paid for the acquisition of subsidiaries and other
 business units

       Cash paid relating to other investing activities                                    4,854,790,000.00                   2,430,000,000.00

 Sub-total of cash outflows used in investing activities                                   5,909,208,102.62                   2,567,713,732.48

 Net cash flows from/used in investing activities                                            -952,419,788.81                    476,138,307.69

 3. Cash flows from financing activities:

       Cash received from capital contributions

       Including: Cash received from capital contributions by
 non-controlling interests of subsidiaries

       Cash received from borrowings

       Cash received relating to other financing activities                                  889,324,326.07

 Sub-total of cash inflows from financing activities                                         889,324,326.07

       Cash repayments of borrowings                                                          281,176,106.33                    383,609,640.58

       Cash paid for interest and dividends                                                  788,329,296.95                     138,359,549.65

       Including: Dividends paid by subsidiaries to non-controlling
                                                                                             120,000,000.00                     122,000,000.00
 interests

       Cash paid relating to other financing activities                                                                         302,007,312.87

 Sub-total of cash outflows used in financing activities                                   1,069,505,403.28                     823,976,503.10

 Net cash flows used in financing activities                                                 -180,181,077.21                    -823,976,503.10


Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         52
 4. Effect of foreign exchange rate changes on cash and cash equivalents                       10,777,687.85                        -128,092.91

 5. Net increase in cash and cash equivalents                                              1,328,403,368.73                     268,388,648.05

       Add: Cash and cash equivalents at beginning of the period                           2,135,260,406.77                   1,515,740,344.79

 6. Cash and cash equivalents at end of the period                                         3,463,663,775.50                   1,784,128,992.84


6. Cash Flow Statement of the Company

                                                                                                                                         Unit: RMB

                                       Item                                                  H1 2020                         H1 2019

 1. Cash flows from operating activities:

       Cash received from the sales of goods or rendering services

       Refunds of taxes and levies

       Cash received relating to other operating activities                                  650,095,006.21                   1,355,608,209.24

 Sub-total of cash inflows from operating activities                                         650,095,006.21                   1,355,608,209.24

       Cash paid for purchases of goods and services

       Cash paid to and on behalf of employees                                                    545,424.75                         360,009.16

       Payments of taxes and levies                                                                 21,933.20                      1,736,261.21

       Cash paid relating to other operating activities                                    1,016,292,709.85                   2,256,700,554.73

 Sub-total of cash outflows used in operating activities                                   1,016,860,067.80                   2,258,796,825.10

 Net cash flows used in operating activities                                                -366,765,061.59                     -903,188,615.86

 2. Cash flows from investing activities:

       Cash received from disposal of investments                                                                                  4,999,610.00

       Cash received from investment income                                                1,000,000,000.00                   1,289,987,375.98

       Cash received from disposal of fixed assets, intangible assets and
 other long-term assets

       Net cash received from disposal of subsidiaries and other business
                                                                                                                                404,709,910.00
 units

       Cash received relating to other investing activities

 Sub-total of cash inflows from investing activities                                       1,000,000,000.00                   1,699,696,895.98

       Cash paid for acquisition of fixed assets, intangible assets and
 other long-term assets

       Cash paid to acquire investments                                                                                            8,000,000.00

       Net cash paid for the acquisition of subsidiaries and other business
 units

       Cash paid relating to other investing activities

 Sub-total of cash outflows used in investing activities                                                                           8,000,000.00

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         53
 Net cash flows from investing activities                                                  1,000,000,000.00                   1,691,696,895.98

 3. Cash flows from financing activities:

       Cash received from capital contributions

       Cash received from borrowings

       Cash received relating to other financing activities

 Sub-total of cash inflows from financing activities

       Cash repayments of borrowings                                                                                            369,000,000.00

       Cash paid for interest and dividends                                                  633,675,509.10                        8,520,671.25

       Cash paid relating to other financing activities                                                                         302,007,312.87

 Sub-total of cash outflows used in financing activities                                     633,675,509.10                     679,527,984.12

 Net cash flows used in financing activities                                                -633,675,509.10                     -679,527,984.12

 4. Effect of foreign exchange rate changes on cash and cash equivalents

 5. Net decrease/increase in cash and cash equivalents                                           -440,570.69                    108,980,296.00

       Add: Cash and cash equivalents at beginning of the period                                  765,545.81                       4,325,959.18

 6. Cash and cash equivalents at end of the period                                                324,975.12                    113,306,255.18




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         54
                7. Consolidated Statement of Changes in Shareholders’ Equity

                H1 2020
                                                                                                                                                                                                                Unit: RMB

                                                                                                                                  H1 2020

                                                                                    Equity attributable to shareholders of the Company

                                              Other equity
                                                 instruments

                                                                                     Less:                         Speci                       Gener                                                                            Total
     Item                                   Pre     Per                                                                                                                                               Non-controlling
                                                                                                    Other
                                                                     Capital        Treasu                          al          Surplus        al risk     Retained         Othe                                            shareholders'
                                            fer     pet                                                                                                                                                  interests
                        Share capital                      Ot                                   comprehensi                                                                         Sub-total
                                            red      ual            reserves           ry                          reser        reserves       reserv      earnings          rs                                                equity
                                                           her                                   ve income
                                             sh      bo                             shares                          ves                          es
                                                            s
                                            are      nd
                                             s       s

1. Balance as
at the end of            2,112,251,697.00                          73,153,800.49                 -94,582,500.13             227,390,965.90               4,711,093,895.82          7,029,307,859.08      264,400,744.45     7,293,708,603.53

prior year

     Add:
Adjustments
for changed
accounting
policies


Adjustments
for corrections
of previous
errors

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                           55
Adjustments
for business
combinations
under
common
control


Others

2. Balance as
at beginning of          2,112,251,697.00                          73,153,800.49                 -94,582,500.13             227,390,965.90               4,711,093,895.82   7,029,307,859.08   264,400,744.45   7,293,708,603.53

year

3. Increase/
decrease in
                                                                   83,785,280.26                  10,380,760.96                                          1,066,060,614.36   1,160,226,655.58    66,740,026.93   1,226,966,682.51
the period (“-”
for decrease)

3.1 Total
comprehensiv                                                                                      10,380,760.96                                          1,699,736,123.46   1,710,116,884.42   182,792,601.51   1,892,909,485.93

e income

3.2 Capital
contribution
and                                                                83,785,280.26                                                                                              83,785,280.26      3,947,425.42     87,732,705.68
withdrawal by
shareholders

3.2.1 Common
shares
contribution

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          56
and
withdrawal by
shareholders

3.2.2 Capital
contribution
and
withdrawal by
holders of
other equity
instruments

3.2.3
Share-based
payments
                                                                   83,785,280.26                                                                                            83,785,280.26       3,947,425.42    87,732,705.68
included in
shareholders’
equity

3.2.4 Others

3.3 Profit
                                                                                                                                                         -633,675,509.10   -633,675,509.10   -120,000,000.00   -753,675,509.10
distribution

3.3.1
Appropriation
to surplus
reserves

3.3.2
Appropriation
to general risk
reserves

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          57
3.3.3
Distribution to                                                                                                                                          -633,675,509.10   -633,675,509.10   -120,000,000.00   -753,675,509.10

shareholders

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

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          58
schemes
transferred
into retained
earnings

3.4.5 Other
comprehensiv
e 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 end of            2,112,251,697.00                         156,939,080.75                 -84,201,739.17              227,390,965.90              5,777,154,510.18         8,189,534,514.66     331,140,771.38     8,520,675,286.04

the period

                H1 2019

                                                                                                                                                                                                              Unit: RMB

                                                                                                                                 H1 2019

  Item                                                                             Equity attributable to shareholders of the Company                                                                Non-controlling          Total

                   Share capital        Other equity            Capital         Less: Treasury         Other          Spe        Surplus        Genera       Retained       Oth    Sub-total            interests         shareholders'

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                            59
                                         instruments            reserves            shares         comprehensi        cial          reserves        l risk     earnings         ers                                          equity
                                                                                                     ve income        res                          reserve
                                                Per    O
                                      Prefe                                                                           erv                             s
                                                pet     t
                                       rred                                                                           es
                                                ual    h
                                       shar
                                               bon      e
                                        es
                                                ds     rs

1. Balance as
at the end of     2,124,870,253.00                            298,739,967.21                         46,376,346.58                170,477,835.88             3,332,211,003.19         5,972,675,405.86   141,026,934.06   6,113,702,339.92

prior year

      Add:
Adjustments
for changed                                                                                         -26,836,801.80                                             26,836,801.80

accounting
policies


Adjustments
for
corrections
of previous
errors


Adjustments
for business
combination
s under
common
control


                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                             60
Others

2. Balance as
at beginning      2,124,870,253.00                            298,739,967.21                        19,539,544.78              170,477,835.88            3,359,047,804.99   5,972,675,405.86   141,026,934.06   6,113,702,339.92

of year

3. Increase/
decrease in
the period           -12,618,556.00                          -106,500,613.64     302,007,311.87         -25,288.71                                        615,093,573.38     193,941,803.16     11,692,555.24    205,634,358.40

(“-” for
decrease)

3.1 Total
comprehensi                                                                                             -25,288.71                                       1,033,074,405.38   1,033,049,116.67   126,181,205.00   1,159,230,321.67

ve income

3.2 Capital
contribution
and
                     -12,618,556.00                          -106,500,613.64     302,007,311.87                                                                             -421,126,481.51      7,511,350.24   -413,615,131.27
withdrawal
by
shareholders

3.2.1
Common
shares
contribution
                     -12,618,556.00                          -106,500,613.64     302,007,311.87                                                                             -421,126,481.51                     -421,126,481.51
and
withdrawal
by
shareholders


                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          61
3.2.2 Capital
contribution
and
withdrawal
by holders of
other equity
instruments

3.2.3
Share-based
payments
included in
shareholders
’ equity

3.2.4 Others                                                                                                                                                                                    7,511,350.24      7,511,350.24

3.3 Profit
                                                                                                                                                         -417,980,832.00   -417,980,832.00   -122,000,000.00   -539,980,832.00
distribution

3.3.1
Appropriatio
n to surplus
reserves

3.3.2
Appropriatio
n to general
risk reserves

3.3.3
Distribution                                                                                                                                             -417,980,832.00   -417,980,832.00   -122,000,000.00   -539,980,832.00

to

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          62
shareholders

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


                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          63
pension
schemes
transferred
into retained
earnings

3.4.5 Other
comprehensi
ve 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 end of     2,112,251,697.00                            192,239,353.57     302,007,311.87      19,514,256.07             170,477,835.88            3,974,141,378.37   6,166,617,209.02   152,719,489.30   6,319,336,698.32

the period


                8. Statement of Changes in Shareholders’ Equity of the Company

                H1 2020

                Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                          64
                                                                                                                                                                                                          Unit: RMB

                                                                                                                                      H1 2020

                                                            Other equity instruments                                   Less:          Other                                                                           Total
             Item                                                                                                                                     Special     Surplus          Retained
                                    Share capital       Preferre     Perpetual                  Capital reserves     Treasur      comprehensiv                                                       Others     shareholders'
                                                                                    Others                                                            reserves   reserves           earnings
                                                        d shares        bonds                                        y shares       e income                                                                          equity

1. Balance as at the end of
                                    2,112,251,697.00                                             3,622,063,902.37                   -52,759,111.69               340,080,723.42   1,509,926,022.61               7,531,563,233.71
prior year

     Add: Adjustments for
changed accounting
policies

            Adjustments for
corrections of previous
errors

            Others

2. Balance as at beginning
                                    2,112,251,697.00                                             3,622,063,902.37                   -52,759,111.69               340,080,723.42   1,509,926,022.61               7,531,563,233.71
of year

3. Increase/ decrease in
the period (“-” for                                                                               87,732,705.68                                                                 -636,693,813.78                 -548,961,108.10

decrease)

3.1 Total comprehensive
                                                                                                                                                                                     -3,018,304.68                    -3,018,304.68
income

3.2 Capital contribution
and withdrawal by                                                                                   87,732,705.68                                                                                                     87,732,705.68

shareholders

3.2.1 Common shares
contribution and
             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                       65
withdrawal by
shareholders

3.2.2 Capital contribution
and withdrawal by holders
of other equity
instruments

3.2.3 Share-based
payments included in                                                                              87,732,705.68                                                        87,732,705.68

shareholders’ equity

3.2.4 Others

3.3 Profit distribution                                                                                                                             -633,675,509.10   -633,675,509.10

3.3.1 Appropriation to
surplus reserves

3.3.2 Distribution to
                                                                                                                                                    -633,675,509.10   -633,675,509.10
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

           Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                     66
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

4. Balance as at the end of
                                    2,112,251,697.00                                             3,709,796,608.05                   -52,759,111.69                    340,080,723.42        873,232,208.83                6,982,602,125.61
the period

             H1 2019

                                                                                                                                                                                                                  Unit: RMB

                                                                                                                                             H1 2019

                                                                       Other equity instruments                                                        Other
                                                                                                                                     Less:                                                                                     Total
                  Item                                                                                          Capital                               compreh   Special       Surplus            Retained
                                              Share capital       Preferred      Perpetual                                         Treasury                                                                      Others   shareholders'
                                                                                                Others         reserves                                ensive   reserves     reserves            earnings
                                                                    shares         bonds                                            shares                                                                                     equity
                                                                                                                                                      income

1. Balance as at the end of prior             2,124,870,253.00                                              3,952,461,239.82                                               170,477,835.88       612,706,036.45             6,860,515,365.15


             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                       67
year

       Add: Adjustments for changed
accounting policies

           Adjustments for
corrections of previous errors

           Others

2. Balance as at beginning of year           2,124,870,253.00                                              3,952,461,239.82                          170,477,835.88   612,706,036.45    6,860,515,365.15

3. Increase/ decrease in the period
                                                -12,618,556.00                                              -106,500,613.64     302,007,311.87                        365,352,115.41      -55,774,366.10
(“-” for decrease)

3.1 Total comprehensive income                                                                                                                                        783,332,947.41     783,332,947.41

3.2 Capital contribution and
                                                -12,618,556.00                                              -106,500,613.64     302,007,311.87                                          -421,126,481.51
withdrawal by shareholders

3.2.1 Common shares contribution
                                                -12,618,556.00                                              -106,500,613.64     302,007,311.87                                          -421,126,481.51
and withdrawal by shareholders

3.2.2 Capital contribution and
withdrawal by holders of other
equity instruments

3.2.3 Share-based payments
included in shareholders’ equity

3.2.4 Others

3.3 Profit distribution                                                                                                                                               -417,980,832.00   -417,980,832.00

3.3.1 Appropriation to surplus
reserves

3.3.2 Distribution to shareholders                                                                                                                                    -417,980,832.00   -417,980,832.00

3.3.3 Others
            Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                      68
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

4. Balance as at the end of the
                                              2,112,251,697.00                                              3,845,960,626.18     302,007,311.87       170,477,835.88   978,058,151.86   6,804,740,999.05
period




             Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                                                                       69
                                                                     (The End)




Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
                                                                         70