37 Interactive Entertainment Network
Technology Group Co., Ltd.
2021 Annual Report (Summary)
April 2022
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 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.
This Report contains plans and other forward-looking statements, which shall not be
deemed as promises to investors. Investors are reminded to exercise caution when making
investment decisions.
The Company is subject to the disclosure requirements for listed companies engaged in
software and IT services.
The Board has approved a final dividend plan as follows: based on 2,217,864,281 shares, a
cash dividend of RMB 3.7 (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 ............................................................................................. 6
Part III Management Discussion and Analysis .................................................................................................................. 11
Part IV Corporate Governance .......................................................................................................................................... 62
Part V Environmental and Social Responsibility ................................................................................................................ 84
Part VI Share Changes and Shareholder Information ....................................................................................................... 88
Part VII Financial Statements ............................................................................................................................................ 97
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
Company/ the Company/ the Listed Company/ 37 Entertainment Network Technology Co., Ltd./ Wuhu 37 Interactive
Interactive Entertainment Entertainment Network Technology Group Co., Ltd./ 37 Interactive
Entertainment Network Technology 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
Guideline No. 1 of the Shenzhen Stock Exchange for Self-regulation of Listed
Guideline for Compliant Operation
Companies—Compliant Operation of Main Board Listed Companies
Articles of Association of Wuhu Shunrong Auto Parts Co., Ltd./Articles of
Association of Wuhu Shunrong Sanqi Interactive Entertainment Network
Articles of Association Technology Co., Ltd./Articles of Association of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd./Articles of Association of 37
Interactive Entertainment Network Technology Group Co., Ltd.
Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB, RMB’0,000
of Renminbi
Reporting Period/the Reporting Period The period from 1 January 2021 to 31 December 2021
Period-end/end of the Reporting Period 31 December 2021
Clientless or browser kernel-based micro-client games that are based on web
development technologies and utilize standard protocols as basic transmission
Browser games
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
Mobile games
other mobile terminals
RPG Role playing game
ARPG Action role playing game
SLG Strategy game
MMORPG Massive multiplayer online role-playing game
Chengdu Pengwan Technology Co., Ltd. Chengdu Pengwan Technology Co., Ltd. and its subsidiaries
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
4
Zengame Technology Zengame Technology Holding Limited and its business entities
X.D.Network XD Inc. and its business entities
Jiangsu Aurora/Aurora Network/Jiangsu Aurora
Jiangsu Aurora Network Technology Co., Ltd.
Network
Guangzhou 37 Guangzhou 37 Network Technology Co., Ltd.
YOULIFE HOLDINGS YOULIFE HOLDINGS and its business entities
Wonder Power Inc. Wonder Power Inc. and its business entities
Guangzhou Xuyang Network Technology Co., Ltd. Guangzhou Xuyang Network Technology Co., Ltd. and its subsidiaries
FTX Technology Shenzhen Co. Ltd. FTX Technology Shenzhen Co. Ltd. and its subsidiaries
Guangzhou Shilizuo Catering Management Co., Ltd. Guangzhou Shilizuo Catering Management Co., Ltd. and its subsidiaries
UGC User generated content
The abbreviation of "Virtual Reality", which uses computers to simulate and
VR produce a three-dimensional virtual space. It provides users with sensory
experience such as realistic visual and auditory experience.
The abbreviation of "Augmented Reality", which uses computer technology to
apply virtual information to the real world, where the real environment and
AR
virtual objects exist simultaneously in one picture or space through
superimposition in real time.
5G 5th generation mobile communication technology.
AI Artificial Intelligence
A mobile application data analytical company that specializes in mobile
Sensor Tower application data analytics. It provides global mobile application economy with
data at enterprise level.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
5
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name 37 Interactive Entertainment Stock code 002555
Place of listing Shenzhen Stock Exchange
Company name in Chinese 三七互娱网络科技集团股份有限公司
Abbr. 三七互娱
Company name in English (if
37 INTERACTIVE ENTERTAINMENT NETWORK TECHNOLOGY GROUP CO.,LTD.
any)
Legal representative Li Weiwei
Registered address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province
Zip code 241000
For business development purposes, the registered address of the Company has changed from
“11/F, Creative Advertising Complex, Wuhu Advertising Industrial Park, Middle Beijing Road,
Change of registered address
Jiujiang District, Wuhu City, Anhui Province” to “Room 7001, 7/F, Tower B1, Wanjiang Fortune
Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province” on 31 March 2022.
Office address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province
Zip code 241000
Company website http://www.37wan.net/
Email address ir@37.com
II Contact Information
Board Secretary Securities Affairs Representative
Name Ye Wei Wang Sijie
Room 7001, 7/F, Tower B1, Wanjiang Room 7001, 7/F, Tower B1, Wanjiang
Office address Fortune Plaza, 88 Ruixiang Road, Wuhu Fortune Plaza, 88 Ruixiang Road, Wuhu
City, Anhui Province City, Anhui Province
Tel. 0553-7653737 0553-7653737
Fax 0553-7653737 0553-7653737
Email address ir@37.com ir@37.com
III Media for Information Disclosure and Place where this Report Is Lodged
Stock exchange website where this Report is China Securities Journal, Shanghai Securities News, Securities Times, and
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
6
disclosed Securities Daily
Media and website where this Report is disclosed http://www.cninfo.com.cn
Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road,
Place where this Report is lodged
Wuhu City, Anhui Province
IV Change to Company Registered Information
Organization code 91340200713927789U
Changes to the principal activities of the
No changes in the Reporting Period
Company since going public (if any)
Every change of controlling shareholder
No changes in the Reporting Period
since incorporation (if any)
V Other Information
The independent auditor hired by the Company:
Name Huaxing Certified Public Accountants LLP
7-9/F, Tower B, Zhongshan Building, 152 Hudong Road, Gulou District, Fuzhou City, Fujian
Office address
Province
Accountants writing signatures Yang Xinchun and Lin Hualong
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
√ Applicable □ Not applicable
Name Office address Representative Period of supervision
24/F, 318 South Zhongshan
Orient Securities Investment From 10 March 2021 to 31
Road, Huangpu District, Lu Shaoyu and Wang Bin
Banking Co., Ltd. December 2022
Shanghai
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2021-over-2020
2021 2020 2019
change (%)
Operating revenue (RMB) 16,216,498,239.02 14,399,703,084.56 12.62% 13,227,135,966.70
Net profit attributable to the
2,875,575,877.62 2,760,951,475.22 4.15% 2,114,770,061.55
Listed Company’s shareholders
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
7
(RMB)
Net profit attributable to the
Listed Company’s shareholders
2,626,749,135.34 2,391,804,997.01 9.82% 2,089,129,849.82
after deducting non-recurring
profits and losses (RMB)
Net cash flows from operating
3,658,748,941.03 2,927,937,304.65 24.96% 3,257,563,997.94
activities (RMB)
Basic earnings per share
1.31 1.31 0.00% 1
(RMB/share)
Diluted earnings per share
1.31 1.31 0.00% 1
(RMB/share)
Weighted average return on equity
27.62% 34.84% -7.22% 32.66%
(%)
Change of 31
31 December 2021 31 December 2020 December 2021 over 31 December 2019
31 December 2020 (%)
Total assets (RMB) 14,437,181,242.76 10,564,331,499.85 36.66% 10,145,259,855.73
Equity attributable to the Listed
10,773,716,314.49 6,037,383,625.95 78.45% 7,029,307,859.08
Company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the Listed Company’s shareholders before and after
deducting non-recurring profits and losses was negative for the last three accounting years, and the latest independent auditor’s
report indicated that there was uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the Listed Company’s shareholders before and after
deducting non-recurring profits and losses was negative.
□ Yes √ No
VII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 3,817,828,434.02 3,721,120,944.51 4,571,714,142.74 4,105,834,717.75
Net profit attributable to the
116,773,000.58 736,944,855.07 867,467,406.86 1,154,390,615.11
Listed Company’s shareholders
Net profit attributable to the
Listed Company’s shareholders
3,833,765.53 633,692,785.79 881,569,604.53 1,107,652,979.49
after deducting non-recurring
profits and losses
Net cash flows from operating
672,915,264.53 581,003,887.93 862,702,213.94 1,542,127,574.63
activities
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
8
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from
what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
VIII Non-recurring Profits and Losses
√ Applicable □ Not applicable
Unit: RMB
Items 2021 2020 2019 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance 7,111,889.34 -5,016,442.19 9,097,544.61
write-offs)
Mainly due to refund
of value-added tax
Government grants through profit or loss
and government
(exclusive of government grants consistently
grants other than
given in the Company’s ordinary course of 78,301,526.84 94,879,456.95 83,976,058.58
super-deduction in
business at fixed quotas or amounts as per
the calculation of
governmental policies or standards)
taxable amount for
VAT
Capital occupation charges on non-financial
enterprises that are recognized in current 3,399,910.00
profits and losses
Gain equal to the amount by which
investment costs for the Company to
acquire subsidiaries, associates and joint
ventures are lower than the Company’s 18,216.32
enjoyable fair value of identifiable net
assets of investees when making
investments
Gain or loss on fair-value changes on
trading financial assets and liabilities &
income from disposal of trading financial
assets and liabilities and available-for-sale 184,512,740.33 317,000,879.97 -73,399,855.36
financial assets (exclusive of the effective
portion of hedges that arise in the
Company’s ordinary course of business)
Reversed portions of impairment
allowances for receivables which are tested 5,829,134.16
individually for impairment
Non-operating income and expenses other -12,236,018.48 -6,978,497.94 2,855,883.24
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
9
than the above
Other gains and losses that meet the
definition of non-recurring profits and 21,156,420.83
losses
Less: Income tax effects 14,068,349.49 21,437,227.96 16,818,250.53
Non-controlling interests effects (net of
624,180.42 9,301,690.62 4,645,715.96
tax)
Total 248,826,742.28 369,146,478.21 25,640,211.73 --
Particulars about other gains and losses that meet the definition of non-recurring profits and losses:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Explanation of why the Company reclassifies as recurrent a non-recurring profits and losses item 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.
10
Part III Management Discussion and Analysis
I Industry Overview for the Reporting Period
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
1. Changes in industry-related economic situation and their impacts on the Company
Against the backdrop of a booming digital economy, China's game industry is also leveraging the advantages of resources and
users. It pushes the boundaries and accelerates the pace of industrial development through methods such as technology drivers,
industrial integration and cultural innovation. The game industry has seriously implemented the requirements of the central
government, maintained righteousness and innovation, forged ahead, strove to take up the cultural mission, continuously
strengthened the content construction, continued to regulate the development of the industry and made efforts to expand
overseas markets. The industry's ecosystem has continued to be improved, the strength and competitiveness have been
continuously enhanced, and the pace of high-quality development has become more determined. It insists on giving priority to
social benefits, and actively assumes social responsibilities, which has increasingly become an industry consensus. The game
industry has ushered into new development opportunities.
According to the 2021 China's Game Industry Report jointly released by Game Publishing Committee of China Audio-video and
Digital Publishing Association (CADPA) and China Game Industry Research Institute, the actual sales revenue of China’s game
market still remained a trend of growth in 2021, and products with high quality led the innovation and development in many fields
of the industry. The scale and capacity of users had a trend of saturation. It would become the focus of competition in future
market to mine user segmentation needs. In 2021, the actual sales revenue of China's game market was RMB296.513 billion, an
increase of RMB17.826 billion over 2020 and a year-over-year (YoY) increase of 6.4%. The scale of Chinese game users has kept
growing steadily, with the user scale reaching 666 million, a year-over-year increase of 0.22% The dividends of the game population
had a trend of saturation. Meanwhile, the protection of minors reaped effective results because of the new anti-addiction
regulation, and the user structure had a trend of being healthy and reasonable. On the other hand, the actual sales revenue of
China's independently-developed games in the overseas market has kept relatively high growth momentum. The number of
countries and regions of overseas markets has increased significantly. The types of products for global market have become more
diversified. In 2021, China's actual sales revenue of independently-developed games in the overseas market was USD18.013 billion,
an increase of USD2,563 million over 2020 and a YoY increase of 16.59%. The growth rate decreased by 17% YoY, mainly due to the
fading of the surge effect on global ACG economy under COVID-19 last year. From the average growth rate in the past five years,
the share of China's game export has shown a stable increase. Exported games have maintained better growth in the three aspects
of download, use length and payment of users.
On the whole, the current game industry is still in a period of historical change from high-speed growth to high-quality
development. Players are posing higher requirements for online games. The threshold of game development and barriers to
competition have been substantially raised. 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. Against this backdrop, the Company adheres to the
development strategy of “boutiqueization, diversification and globalization”. It takes the main business as its core and deepens the
strategy of "integration of R&D and operation" and "dual engines at home and abroad", with an aim to drive high-quality,
sustainable development. During the Reporting Period, the Company kept its leading role in R&D capabilities by raising R&D
investments and strengthening the output of quality games. Moreover, it advanced the "diversification" strategy from the aspects
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
11
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 systems, consolidated refined operation, increased operating efficiency, and
prolonged the life cycle of quality games. The Company's overseas business has grown rapidly and the pace of exporting has been
accelerated. With the strategy of "tailored games", the Company has explored the global market through diversified high-quality
games, and the overseas business has become the new growth engine of the Company.
In addition, with the continuous upgrading of industry technology, the development efficiency and product experience of
games have been constantly improved, and the business transformation has accelerated. The rise of "Metaverse" and other
emerging concepts have triggered extensive attention from many industries and investors. As the one with a proactive strategic
vision, the Company continues to extend on the basis of early investment in VR/AR content, and enters fields involving
multi-metaverse infrastructure such as arithmetic, semiconductor, optics, display, whole device, application and infrastructure
technology, invests in many high-quality enterprises in the fields including optical module, optical display, AR glasses, VR content,
cloud game, spatial intelligence technology and semiconductor materials, and carries out integration of technology and high-quality
content. Through the investment layout in the field of technology, the Company has realized the collaboration of internal and
external resources. The investments of the Company create new momentum for the existing game business to open new fields, and
makes the Company's understanding of pan-entertainment more advanced and deeper. The relevant investment will feed the
existing business ecosystem of 37 Interactive Entertainment and further stimulate its innovation and attempts to new business in
the process of the new generation of industry change. The Company will continue exploring various possibilities of the combination
with its existing advantages and leading technologies for application in the Metaverse, keep an eye on new things and new
opportunities, explore new businesses, continue accumulating key technologies and build core strengths.
2. Changes in industrial policy environment and their impacts on the Company
(1) On 6 June 2021, the Guidelines on Enhancing the Protection of Minors of the Steering Group of the Protection of Minors of
the State Council (hereinafter referred to as the “Guidelines”) were officially issued. Revolving around the implementation of the
Civil Code and the Law on the Protection of Minors, the Guidelines refined and specified the relevant articles of law, raising a total
of 25 tasks. Specifically, in terms of cyber protection, the Guidelines raised requirements such as improving the system of
regulations and policies, making more efforts to prevent minors from Internet addiction, and strengthening the online protection of
minors' personal information.
On 30 August 2021, the National Press and Publication Administration issued the Notice on Further Imposing Strict
Administrative Measures to Prevent Minors from Becoming Addicted to Online Games (hereinafter referred to as the "Notice"),
which addresses further strict management measures to resolutely prevent minors from being addicted to online games and
effectively protect their physical and mental health in terms of the problem of excessive use and even addiction to online games of
minors.
The Notice requires that online time for minors shall be strictly limited. All online game businesses can only provide online
game services to minors for one hour from 20:00 to 21:00 on Fridays, Saturdays, Sundays and statutory holidays, and shall not
provide online game services to minors in any form at other times; the requirements of real-name registration and login of online
game for online game user accounts shall be strictly implemented, and no game service can be provided in any form to users
without real-name registration and login; publication management department at all levels shall strengthen supervision and
inspection of the implementation of measures to prevent minors from being addicted to online games. For online game businesses
that fail to strictly implement the measures, they shall be severely punished by laws and regulations.
In response to the above Notice, the Company has now completed the connection to the national real-name authentication
system, and all its independent online games have launched the upgraded version of "real-name registration and anti-addiction
system for minors". The Company has also strictly implemented the restrictions on the length, time and transactions of games for
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
12
minors in accordance with the latest requirements. In addition, considering that the implementation of "anti-addiction" is
connected to the user system, the Company has reconstructed the user system in the design process, and increased the real-name
registration of players and anti-addiction system for minors in all aspects, including online face recognition technology to prevent
the problem of minors using adult accounts fraudulently. The technology currently has been launched in some independent games
of the Company's platform, and it will be promoted to all game products in the future. The Company actively proceeds with the
online game age suitability reminders and strengthens the online management of age suitability reminders for new products. Age
suitability reminders have currently been launched on the official channels of all independent games in the Company. For products
that have not been reviewed by the editorial team for description terms of age suitability reminders and have not completed the
age suitability reminders process, they will not be officially operated on the official website platform.
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 guardians. 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.
In addition to various anti-addiction protection measures for minors, the Company has launched the "Guardianship Project of
Online Games for Minors' Parents" many years ago, and connected parents to do a good job in supervising minors on the basis of
the implementation of the new anti-addiction rules, allowing parents to limit or prohibit minor's game time in accordance with the
actual situation. The Company has set up the special process and the customer compliant specialists to deal with all kinds of
problems related to minor players. The Company will further upgrade the guardianship project for parents in the future, further
upgrade and improve the protection system for minors through the positive synergy of multiple dimensions, and build a green and
healthy game ecosystem to protect the healthy growth of minors.
(2) On 10 June 2021, the Data Security Law of the People's Republic of China (hereinafter referred to as the "Data Security
Law") was adopted at the 29th session of the Standing Committee of the 13th National People's Congress of the People's Republic
of China. The Data Security Law is enacted for the purposes of regulating data processing activities, safeguarding data security,
promoting data development and utilization, and protecting the legal rights and interests of individuals and organizations.
In the process of management system construction for information security, the Company has identified and evaluated
information security risks of products and services around more than ten aspects such as information asset management, access
control, password management, information security event management, information security management in business continuity
management, compliance management, etc., established information security policy, risk level evaluation and disposal measures
for each sub-business module, improved system documents and management processes, and formed a complete information
security management system.
In terms of information security management and user privacy protection, based on strict management policies and process
system, the Company adopts industry-leading technologies and benchmark them with international standards, strictly controls
information security risks, and guarantees data security to ensure the security of users' personal information to the maximum
extent. In user privacy protection, for example, the Company implements the seven principles of legality, consistent authority and
responsibility, minimum sufficient information collection, individual consent, user participation, and ensuring security in the
management of the whole life cycle of user data. Around the security of user private information, the Company has also adopted a
variety of technical means to prevent illegal access to unauthorized information by personnel. Meanwhile, the Company also
encrypts, anonymizes and de-identifies sensitive information assets to protect them from being illegal cracked. Such technologies
and measures strongly ensure the security of user privacy information. 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. During the Reporting Period, the Company has obtained the international-standard ISO/IEC 27001 certification for
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
13
information security management system issued by SGS, an internationally recognized inspection, testing and certification
institution, which marks that the Company's information security management has been met the current international
authoritative, strictly and widely used information security standard requirements.
(3) On 7 June 2021, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, and the
National Development and Reform Commission jointly released the Work Arrangements for Deepening the Extensive Deployment
and Application of IPv6 (hereinafter referred to as "the Work Arrangements"), which clarify the main goals and key tasks for the
extensive deployment of IPv6 in 2021, and make careful and accurate arrangements mainly from the aspects of enhancing network
carrying capacity, optimizing the service performance of apps, improving terminal support capacity, strengthening the R&D of key
technologies, promoting the formulation of standard specifications, and reinforcing security assurance, and aim to promote the
extensive deployment and application of IPv6 in a down-to-earth manner by taking multiple measures.
As one of the first batch of Internet enterprises responding to the Action Plan for Advancing the Extensive Deployment of
Internet Protocol Version 6 (IPv6), the Company has completed the phased goals for upgrading and transformation of TOP100
domestic Internet apps to IPv6 with its products rated as excellent products in the overall assessment. Next, the Company will add
more products to the IPv6 upgrading plan to promote the integrated innovation of the Next Generation Internet and businesses.
II Principal Activity of the Company in the Reporting Period
As one of the top 20 global public game companies, key cultural export companies of China, companies nominated for “Top 30
Cultural Enterprises of China”, civilized institutions in Guangdong Province, and Top 30 Cultural Enterprises of Guangzhou, 37
Interactive Entertainment is an outstanding listed Chinese A-share company engaged in comprehensive cultural and entertainment
offerings. The Company focuses on cultural and creative businesses based on the development, publishing, and operation of online
games. It also invests in the VR segment as part of its Metaverse plan. Meanwhile, it continues to invest in segments such as film
and television, music, artist agency, animation, social entertainment, e-sports, cultue and health, and new consumption, with an
aim to build a comprehensive ecosystem and drive mutual empowerment of business value and cultural value. It has been steadily
advancing its development strategy of “boutiqueization, diversification and globalization”. With “bringing joy to the world” as its
mission, the Company is dedicated to becoming an excellent and sustainable entertainment enterprise.
The Company has been operating in a steady and healthy manner. It adhered to the strategy of “integration of R&D and
operation”, continued to pursue its strategic objectives, as well as kept driving product diversification and global marketing. During
the Reporting Period, the Company recorded operating revenue of RMB16.216 billion, with a year-over-year (YoY) increase of
12.62%; and a net profit attributable to the Listed Company’s shareholders of RMB2.876 billion, up by 4.15% YoY. With the
continual rollout of the Company’s “globalization” strategy, the overseas business soared to a new high in 2021 and the operating
revenue from the overseas game business amounted to RMB4.777 billion, increasing by 122.94% YoY.
As a public company, 37 Interactive Entertainment focuses on corporate social responsibility and social welfare. In 2021, it
continued to support rural education and industrial development, respond to major social events, etc., playing its part in building a
better society. In addition, the Company plans to further invest RMB500 million by 2025 in six areas, including scientific and
technological innovation, rural education, rural industrial development, industry-university-research talent training, functional
game development, and employee career development, to create shared value with all sectors of society.
1. Main businesses and business models of the Company
During the Reporting Period, the Company's main businesses included the development, publishing, and operation of online
games. The operating modes of the Company’s online games mainly include independent operation and third-party joint operation.
Under the independent operation mode, the Company obtains the licenses of games through independent R&D or being an
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
14
operator of other games, and publishes and operates these products through its own or third-party channels. The Company is fully
responsible for the operation, promotion and maintenance of the games; providing unified management services for online
promotion, online customer service and top-up payment; and updating games along with game developers based on the real-time
feedback of users and games.
Under the third-party joint operation mode, the Company cooperates with one or more game operators or game application
platforms to jointly operate games. And the aforesaid parties are responsible for the management of their own channels, including
operation, promotion, the recharge and charge system, while the Company provides technical support services along with game
developers.
2. Overview of the Company’s main businesses and products
The Company specializes in the development and publishing of games for global players, with the world’s leading game
development brand “Three Seven Games”, as well as professional game publishing brands “37Mobile”, “37GAMES” and “37Online”.
During the Reporting Period, the domestic game industry entered a period of high-quality development. Game players'
requirements for the quality of online games have increased significantly, the effect of the boutique strategy has been obvious, and
the development of high-quality games has been certified. The Company precisely grasped the industry development trends, made
continuous improvements in operation, and remained a top performer in the industry, while adhering to the "boutiqueization,
diversification and globalization" strategy.
37 Interactive Entertainment
Three Seven Games 37Mobile 37GAMES 37Online
(game development) (publishing of mobile (overseas publishing) (publishing of mobile &
games) browser games)
(I) Mobile game business
During the Reporting Period, the Company recorded operating revenue of RMB 15.364 billion from mobile games, a YoY
increase of 15.55%. The mobile game offering has become more diversified, game quality sees considerable improvement, and the
mobile game business maintains the leading position in domestic and overseas markets. During the Reporting Period, the
Company's newly launched games such as The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), All for Glory (荣耀大天使), The
Soul Land: Wu Hun Jue Xing (斗罗大陆：武魂觉醒), and globally published games such as Puzzles & Survival, The Road to Be
Shopkeeper ( 叫 我 大 掌 柜 ), and Song of the Castle in the Sky ( 云 上 城 之 歌 ) performed well, continuously promoting
boutiqueization, diversification, and market globalization, and achieving milestones.
① Research and development of mobile games
The Company continuously exerts more efforts for R&D, emphasizes R&D investments and R&D talent cultivation, and refines
management to improve quality and efficiency. During the Reporting Period, the Company's R&D investments amounted to
RMB1.25 billion, up by 12.37% YoY, with an R&D expense ratio of 7.71% and more than 1900 R&D personnel, accounting for 48.97%
of the total number of employees. The Company's self-developed team is mainly based in Guangzhou, while the Company has also
established R&D subsidiaries or R&D branches in Suzhou, Xiamen, Wuhan and Chengdu to attract multi-category talents. In
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
15
addition, on the basis of self-developed brand, the Company also strengthens its self-development capability by acquiring R&D
teams, and cooperates with Shanghai Eyugame, Karma Game, and other excellent game developers in a long-term and in-depth
manner through its investments, forming a rich external R&D reserve and diversifying the presence on the product supply side.
The Company gives play to the advantage of the "integration of R&D and operation" strategy, using its own numerical
experience to polish the products together with the developers to ensure that the quality of the products reaches a better level
before launching. The Company also assists the R&D team in polishing and adjusting the products with the feedback from the
operation department, so as to improve the success rate of the products and prolong the product life cycle.
In July 2021, the Company's self-developed battle strategy mobile card game The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师
对决) performed well after its launch, ranking as high as the Top 4 of iOS grossing chart and the 11th on average, which is a proof
of the Company's boutiqueization strategy. The game is developed using the Next-Gen 3D engine. Through technologies such as
real-time seamless day-night switch and dynamic volume-based ray tracing, it creates The Soul Land that meets the fantasies of
each fan of The Soul Land with its multi-aspect gameplay design and construction of a friendly social system. The Soul Land: Hun Shi
Dui Jue (斗罗大陆：魂师对决) represents a practice of the current cutting-edge R&D technologies. It has unified the Company's
R&D process and underlying logic in the field of next-gen games, developed a set of systems that can be inherited and constantly
iterated, effectively improved the efficiency of game R&D and the ceiling for idea creation, and laid a solid foundation for the
Company's boutiqueization strategy.
During the Reporting Period, the Company's R&D profoundly implemented the strategy of "boutiqueization, diversification, and
globalization", and its self-developed reserve product projects included game genres such as MMORPG, SLG, card games, and
simulation games, while the Company considered the plan of global publishing of products at the early stage of the projects. The
Company continued to explore diversification in product types, themes, gameplay, etc. and kept improving art quality. It is
dedicated to in-depth exploration and becoming 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 R&D department has developed the Zeus platform, a middle platform with AI big data computing power.
Supported by one-stop service module, the Zeus platform can do deep learning calculations flexibly and freely and realize
automated operation and maintenance. It can realize the automation and standardization across the whole process of R&D,
deployment and operation, and clear a path for interconnectivity between systems of different departments, thus greatly
automating systems and the original business process. The emergence of the platform marks the transfer of equipment resources
from reserved mode to on-demand dynamic expansion mode. It sharply cuts costs and increases margins, utilizes idle equipment
and provides a flexible computing power environment for data analysts. Based on the three data analysis systems, "Athena",
"Poseidon" and "Ares", it helped the research team find and solve problems in a quick and accurate way, further reduced
development costs, substantially improved the quality of products, and provided assistance for the refined operation of games.
Furthermore, the Company actively explores industry-leading technologies, including carrying out the research on "3D key point
detection-based AI motion capture", conducting spatial modeling of videos, and using AI algorithms to achieve high-precision and
high-performance motion capture, reduces R&D cost and improves R&D efficiency.
② Publishing of mobile games
1) Domestic market
The Company's advantages in refined operations in the domestic mobile games publishing were highlighted during the
Reporting Period. The highest monthly gross billing of its domestic mobile games exceeded RMB1,700 million, with the total
number of newly registered users surpassing 300 million and the highest number of MAUs of over 46 million.
During the Reporting Period, the Company brought diversified experiences to players through high-quality
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
16
independently-developed and agency games, insisted on refined operation ideas, improved publishing efficiency through precise
marketing methods such as interesting and sentimental marketing ideas and cross-sector collaboration between games and IPs,
and achieved remarkable results. The Company was ranked among the top in terms of market share in China's mobile game
publishing market.
For instance, The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) is released through "content-based publishing", in which
the Company aims to construct a publishing system focusing on underlying gameplays, game content, user experience, and
creation of community cultures with the game as the foundation. Highly loyal to the original novel and animation, the Company has
consolidated the foundation of content-based publishing with excellent game quality. The publishing plan was made based on
content. With the enormous momentum of the Dou Luo IP, the Company is able to constantly expand user boundaries and target
audience by attracting potential game players. The Company's Chinese style simulation game The Road to Be Shopkeeper (叫我大
掌柜) is developed based on the core gameplay, theme and style of the game, establishing cross-sector collaboration with national
tourist attractions, singers, bands, animation IPs, restaurant brands, etc. to find users' interest points, effectively broadening the
breadth of brand communication, and promoting the brand's image shaping towards the young generation. In addition, the
adventure in another world theme MMORPG Song of the Castle in the Sky (云上城之歌), also breaks through the boundary of the
marketing circle by introducing "virtual idol + original music" and establishing collaboration with animation IP, expanding the circle
of users and driving the market of younger users.
The Company kept breaking through its previous ARPG-based product publishing ideas, with its publishing and operation
capabilities in different categories such as MMORPG, SLG, card games and simulation having been greatly strengthened.
Meanwhile, it kept exploring innovative marketing in the younger communities, laying a solid foundation for the publishing and
operation of diversified products.
During the Reporting Period, the Company insisted on systematic digital marketing to accurately grasp user needs by
delivering creative marketing plans. Through sophisticated operation of launched games, the Company provides players with
meticulous and comprehensive long-term service, with a purpose of improving player satisfaction, activity and retention rate to
prolong the product life cycle. Multiple games witnessed a second phase of growth in gross billing during the Reporting Period. In
terms of multi-channel marketing, the Company had formed a unique marketing approach featuring "branding + sales effects". On
the one hand, by selecting spokespersons that are consistent with the product’s connotation, the Company produced high-quality
micro-film-style promotional materials for promotion. By doing so, it can quickly "break the circle" and reach a wider user group; on
the other hand, combinations were made with the short video platform to provide rich material output and to meet the different
cultural consumption needs of users in different angles, to further expand the scope of users, and then to enlarge brand value and
influence.
In addition, the independently developed intelligent ad platform "Quantum" and intelligent operation analysis platform
"Destiny" have been brought to full play, increasing publishing efficiency. 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 predict the life cycle of games through data analysis
models, so as to improve user stickiness and stabilize product life cycle.
2) Overseas market
The Company started to work on the overseas market in 2012. With years of overseas operations, the Company made
substantial breakthroughs with respect to the strategic expansion of global footprint during the Reporting Period. Its overseas
operating revenue amounted to RMB 4.777 billion, up by 122.94% YoY. Its overseas brand, 37GAMES, covered many countries and
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
17
regions, whose products included SLGs, MMORPG, simulation and card games. During the Reporting Period, the highest monthly
gross billing of its overseas mobile games exceeded RMB 700 million, with the total number of newly registered users surpassing 55
million and the highest number of MAUs of over 8.5 million.
During the Reporting Period, the Company's overseas business has grown rapidly and the pace of exporting has been
accelerated. Supported by years of accumulation of experience in publishing games overseas, the Company now adopts the
strategy of "tailored games" to open up the global market with diversified high-quality games. On the one hand, the Company has
formed a product matrix with MMORPG, SLG, card games and simulation games as the cornerstones in overseas market, and
focuses on publishing different genres of games in different regions according to the characteristics of the markets. On the other
hand, the Company has tailored its operation and promotion strategies to different markets in the publishing and promotion side,
and made differentiation in game content and promotion materials in view of the characteristics of local users to better capture
and retain local players. Using this strategy, in 2021, the Company's Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜),
Song of the Castle in the Sky (云上城之歌), The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) and other products achieved
overseas revenue growth. In the second half of the year, the Company ranked among the top in overseas revenue chart of Chinese
game publishers for several months, with overseas business becoming the second driver of the Company's steady development.
For example, Puzzles & Survival, the Company's phenomenal overseas product that integrates the "match-3 + SLG" gameplay, is
attractive and its gameplay is innovative, perfectly integrating the most popular match-3 gameplay in the European and American
markets with the traditional heavy SLG gameplay, offering a unique audio-visual experience to users, while deeply implementing
the strategy of "tailored games". It achieves outstanding performance in Europe, the US, Japan, Korea and other countries and
regions, and becomes a classic case of SLG fusion game that successfully gain new user groups. As at December 2021, the
cumulative gross billing of Puzzles & Survival has exceeded RMB 2.50 billion, and the game successfully ranked 4th in the global
mobile game revenue growth list in 2021 according to Sensor Tower. After the MMORPG mobile game Song of the Castle in the Sky
(云上城之歌) with the theme of otherworldly adventure was launched on the Korean market, it successfully entered the top 5 of
the grossing charts in Korean region, and ranked among the top 20 in the overseas revenue chart of domestic mobile games.
In addition, the overseas layout of China's game industry shoulders the important task of cultural transmission. As the
"window" of China's cultural exchange, games have become an important way of foreign exchange and dissemination of excellent
traditional Chinese culture with the advantage of natural landing and direct contact with people. In 2021, the Company was once
again listed in the 2021-2022 national key export enterprises of culture by the Ministry of Commerce, the Central Propaganda
Department, the Ministry of Finance, the Ministry of Culture and Tourism, and the General Administration of Radio, Film and
Television. It tried to integrate excellent traditional Chinese culture into game themes, content and gameplay, and promotion
materials, and constantly advanced foreign players to take interest in the Chinese Culture in their experience and exploration of
games by promoting the deep integration of quality games and traditional Chinese culture. For example, The Road to Be
Shopkeeper (叫我大掌柜), a mobile game simulating business operation in ancient China published overseas by the Company,
integrated historical and cultural elements in innovative ways, adding elements rich in Chinese history and culture such as the
Maritime Silk Road, dragon boat racing and shadow play, so as to arouse the interest of global users to experience and explore
traditional Chinese culture in the product. The product achieved good responses after it was published in countries such as South
Korea, Japan, and Vietnam, and has been ranking among the top in grossing charts in various regions.
After the self-developed mobile card game The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) was launched in 2021 in
overseas markets, it quickly topped the grossing charts and free-play charts of Apple and Google in multiple overseas regions,
achieving outstanding performance. Self-developed products are increasingly recognized by overseas players. In the future, the
Company plans to publish the product in Japan, South Korea and other regions continuously, and integrates IP culture with user
content creation for cultural dissemination, allowing local players to feel the unique charm of China's high-quality cultural IP.
The Company pursues the publishing model of publishing diversified, tailored games in big markets around the world, and
continues offering more quality Chinese games to global players. During the Reporting Period, the Company steadily ranked in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
18
top 10 of the global revenue rank of Chinese mobile game publishers released every month by Sensor Tower, and ranked as high as
the 4th, further proving its overseas multi-region and multi-category publishing ability.
3) Game pipeline
During the Reporting Period, the Company's popular multi-category games such as The Soul Land: Hun Shi Dui Jue (斗罗大陆：
魂师对决), Song of the Castle in the Sky (云上城之歌), Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜), The Elves
Carnival: The Dawn (精灵盛典：黎明), The Soul Land H5 (斗罗大陆H5), The Soul Land: Wu Hun Jue Xing (斗罗大陆：武魂觉醒), All
for Glory (荣耀大天使), Puzzle Continent (谜题大陆) performed well. In 2022, the Company insists on the strategy of product
boutiqueization, diversification and market globalization, and reserves nearly 30 products at home and abroad through
self-development, agency and customization, including MMORPG, card games, SLG, simulation games and other categories,
covering multi-civilization, magic, fairy tale, urban, female-oriented and other genres. The Company's diversified product matrix has
taken shape, and its product structure has been continuously optimized. Part of the Company’s pipeline of games under
development and testing at home and abroad is as follows:
Part of the Company’s Pipeline of Games under Development and Testing——for Domestic Publishing
Expcted region for Product
No. Game Product type Developer
launch category
1 Code Magic M (代号魔幻 M) Domestic MMORPG Western magic Self-developed
Theme of
2 Code C6 (代号 C6) Domestic Card game Self-developed
multi-civilization
3 Code Gu Feng (代号古风) Domestic MMORPG Beautiful ancient style Self-developed
4 Code WTB 3D (代号 3D 版 WTB) Domestic MMORPG Chibi 3D Self-developed
Theme of the Three
5 Code Three Kingdoms BY (代号三国 BY) Domestic SLG Self-developed
Kingdoms
History of the medieval
6 Code AOE (代号 AOE) Domestic SLG Self-developed
times
Business
7 Code CY (代号 CY) Domestic Ancient style business Self-developed
simulation
8 Dream of Voyager (梦想大航海) Domestic MMORPG Voyage and shooting Agency
9 Shu Guang Ji Hua (曙光计划) Domestic MMORPG Future technologies Agency
10 Kong Zhi Yao Sai: Qi Hang (空之要塞：启航) Domestic Card game Steampunk Agency
11 Code YG (代号 YG) Domestic SLG Theme of insects Agency
Theme of immortality
12 Code Xiu Xian Zhuan (代号修仙传) Domestic MMORPG Agency
cultivation
13 Code Er Ci Yuan ZQ (代号二次元 ZQ) Domestic Card game Anime Agency
14 Code Match-3 Card (代号三消卡牌) Domestic Card game RPG integration Agency
15 Zui Hou De Yuan Shi Ren (最后的原始人) Domestic Card game Turn-based idle Agency
16 Code Forest (代号森林) Domestic Business Farming Agency
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
19
simulation
17 Code Magic K Project (代号魔幻 K 计划) Domestic MMORPG Western magic Agency
Theme of the Three
18 Code Three Kingdoms CB (代号三国 CB) Domestic SLG Agency
Kingdoms
19 Code WG (代号 WG) Domestic SLG Multi-civilization realism Agency
Urban construction in the
20 Code DG (代号 DG) Domestic SLG Middle Ages/casual Agency
match-3
Part of the Company’s Pipeline of Games under Development and Testing——for Overseas Publishing
Expcted
No. Game region for Product category Product type Developer
launch
1 Code Magic M (代号魔幻 M) Overseas MMORPG Western magic Self-developed
Theme of
2 Code C6 (代号 C6) Overseas Card game Self-developed
multi-civilization
3 Code Gu Feng (代号古风) Overseas MMORPG Beautiful ancient style Self-developed
4 Code WTB 3D (代号 3D 版 WTB) Overseas MMORPG Chibi 3D Self-developed
Theme of the Three
5 Three Kingdoms: Honor of Heroes (三国：英雄的荣光) Overseas SLG Self-developed
Kingdoms
History of the
6 Code AOE (代号 AOE) Overseas SLG Self-developed
medieval times
7 Code CY (代号 CY) Overseas Business simulation Ancient style business Self-developed
8 The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) Overseas Card game Oriental fantasy Self-developed
Theme of immortality
9 Code Xiu Xian Zhuan (代号修仙传) Overseas MMORPG Agency
cultivation
10 Code Magic K Project (代号魔幻 K 计划) Overseas MMORPG Western magic Agency
11 Kong Zhi Yao Sai: Qi Hang (空之要塞：启航) Overseas Card game Steampunk Agency
12 Code S (代号 S) Overseas SLG Western magic Agency
13 Ant Legion Overseas SLG Theme of insects Agency
14 Code BX (代号 BX) Overseas MMORPG Western magic Agency
15 Code ZH (代号 ZH) Overseas Business simulation Business in Japan Agency
16 Code PK (代号 PK) Overseas SLG Steampunk Agency
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
20
(2) Browser games
In 2021, the actual sales revenue of China's browser game market was RMB6.03 billion, a decrease of RMB1.578 billion over
2020, down 20.74% YoY, accounting for 2.03% of China's game market revenue. The browser game market is continuing to shrink.
During the Reporting Period, the Company’s browser game business achieved operating revenue of RMB 829 million, which was
lower than that of the same period of last year. It was mainly affected by both the shift of users to mobile phones and the decrease
in the number of browser game products. During the Reporting Period, the Company strengthened partnership with domestic 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.
3. Business investments
In terms of investment layout, on the one hand, the Company focuses on its main business of games, actively develops quality
game R&D companies through strategic investments with a strategic focus on quality content, establishes long-term and in-depth
cooperation, enriches the supply of high-quality products in MMORPG, SLG, card games, simulation games and other categories,
forms a rich external R&D reserve, diversifies the layout on the product supply side, and makes a strategic layout for the long-term
sustainable development of the Company.
On the other hand, the Company has always adhered to the concept of long-term value investment, and continuously explores
around the main business of games, while focusing on the new trends of cultural entertainment consumption and technology
development of the next generation, following the footsteps of the development of Metaverse era, selecting high-quality tracks for
forward-looking layout, realizing the mutual achievement of internal resources, and feeding the Company's main business of games,
which has now formed a closed loop of investment ecology covering virtual reality industry chain, film and television, music, artist
agency, animation, social entertainment, e-sports, culture and health, social media, new consumption and other fields.
Along with the rise of "Metaverse" and other emerging concepts, the curtain of technological change has been drawn. 37
Interactive Entertainment, as an enterprise that insists on technological innovation and keeps up with the changes in the industry,
is firmly optimistic about the future development of the relevant fields.
At present, the Company continues to extend on the basis of early investment in VR/AR content, and enters fields involving
multi-Metaverse infrastructure such as arithmetic, semiconductor, optics, display, whole machine, application and infrastructure
technology, invests in many high-quality enterprises in the fields including optical module, optical display, AR glasses, VR content,
cloud game, spatial intelligence technology and semiconductor materials, and carries out integration of technology and high-quality
content. Through the investment layout in the field of technology, the Company realizes the collaboration of internal and external
resources, and creates more globalized high-quality digital assets in learning and exploration.
As of the date of this report, cultural & creative and technology enterprises funded or acquired by the Company included:
Metaverse: Archiact, Wave Optics, Raxium, Digilens, Deep Mirror, INMO Technology, Optiark Semiconductor, Enkris
Semiconductor, KP Cloud Games
Film and television: Huace Film&TV, Youying Culture, Zhonghui Television, Mowei Pictures, JinhaiShiyi, etc.
Music: FenghuaQiushi
Artist agency: Original Plan, and T Entertainment
Animation: YHKT Entertainment, and IDRAGONS Creative Studio
Culture and health: Wake
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
21
E-sports: AG E-Sports Club
Social Entertainment: Wuli Planet and Wonderful Party
Consumption: Nowwa Coffee, LINLEE, Yangji Mountain, Savasana, Duokitty, Dong Eating, GuanZhan, Weeget, HomeRun
Technology, EZVALO
In the future, the Company will keep pace with the times, embrace future changes, continue to tap the incremental market of
Generation Z, explore the collaboration of resources within the cultural innovation ecosystem, build a "young and diversified"
cultural innovation brand trusted by the future Chinese young generation, and at the same time, drive startups with investment,
participate in promoting social technology innovation, and collaborate with invested enterprises to achieve sustainable and
high-quality growth.
III Core Competitiveness Analysis
During the Reporting Period, the Company steadily promoted the development strategy of "boutiqueization, diversification
and globalization" and formed the following core competitiveness:
1. Industry-leading R&D strength
The Company carries on with its strategy of “integration of R&D and operation”, as well as emphasizes R&D investments and
talent cultivation. After years of efforts in R&D, the Company is ranked among the top in terms of R&D strengths. The Company's
independently developed products are characterized by high output, a high success rate and a long period, and center on
"boutiqueization, diversification and globalization". The Company keeps strengthening R&D. R&D investments amounted to
RMB1.25 billion during the Reporting Period, up by 12.37% YoY. With the support of cutting-edge technologies like Next-Gen 3D
engine, AI, and big data analysis platforms, the Company has established a professional layout in multiple market segments like
MMORPG, card games, SLG, and simulation. With sophisticated efforts in gameplay, art quality, music and other details, as well as
continued investments in product iteration and user experience, the "boutiqueization” strategy is embedded into the entire life
cycle of the Company’s homegrown products, making it a benchmark for the R&D of quality games in the industry.
Adhering to the long-term development idea, the Company opened up development channels for professionals, and embraced
employee diversity. Moreover, it encouraged innovation by employees and increased the proportion of senior R&D staff to build an
excellent team. The Company vigorously refined the mechanism for R&D project approval, shortened the evaluation cycle and
established diversified indicators, so as to stimulate employees’ innovative vitality. At the same time, the Company adjusted the
incentive mechanism for the R&D department, established a tiered incentive system for different categories of products, promoted
the incentive for new categories of products, and encouraged employees to be creative and step out of their comfort zone. The
Company has also established a project lifecycle management process for game development, which run through many links, such
as idea creation, project approval, process and review, to achieve the risk control of the entire R&D process, greatly improve the
success rate of product R&D while effectively controlling the cost, and lay the foundation for creating diverse, high-quality games.
Internal management continued to improve, with leaner and more scientific management in terms of game development. At the
same time, the way of selecting the track for R&D personnel allocation by the producer makes him or her focus more on the
category segment he or she is good at, further concentrate resources, form a joint force and improve R&D efficiency.
2. Excellent publishing strength
During the Reporting Period, the Company maintained its leading position in mobile game and browser game publishing
business. 37 Interactive Entertainment enriched the product supply via independent R&D, investments, and cooperation with
excellent developers, improved the ability in publishing diverse, high-quality games and promoted the publishing strength to a new
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
22
height. In 2021, 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 The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), Song of the Castle
in the Sky (云上城之歌), The Soul Land H5 (斗罗大陆H5), The Soul Land: Wu Hun Jue Xing (斗罗大陆：武魂觉醒), All for Glory (荣
耀大天使), The Elves Carnival: The Dawn (精灵盛典：黎明), Puzzle Continent (谜题大陆), and The City of Superpowers (异能都市)
in the domestic mobile game market, all of which have recorded an excellent performance. Meanwhile, the Company has
accumulated rich experience in overseas game publishing thanks to years of practice. Breakthroughs have been made in the
publishing areas and game categories. With its overseas business covering over 200 countries and regions, the Company improved
its global influence. The Company successfully launched multiple independently-developed and agent products such as Puzzles &
Survival, The Road to Be Shopkeeper (叫我大掌柜), Song of the Castle in the Sky (云上城之歌), Swords of Archangels (大天使之剑),
and The Soul Land H5 (斗罗大陆H5). Going forward, the Company will further play its existing advantages in overseas markets,
constantly expand the scale of overseas business based on its strong game R&D capacity and localized marketing capabilities, and
make new contributions to promoting the Chinese culture industry and boosting cultural confidence.
The Company constantly sought innovative publishing approaches, and thus created a barrier to entry for competitors in
game publishing. First, the Company developed its own AI system to improve the ability of accurate ad placement. With this system,
the Company has optimized placement methods, improved the quality of materials, took advantage of high-quality materials, and
thereby effectively controlled the marketing cost. Second, the efficiency of publishing, including tool construction and data
algorithm to help form a real-time monitoring system and reduce cost waste. The Company puts forward the publishing idea of
“branding + sales effects”, grasps the market changes to carry out high-quality publicity, and attracts target users for better
distribution results. 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 quality of games, attract users
through better content and prolong the product life cycle.
3. Advantage of the model of “integration of R&D and operation”
As the Company’s business mode of "integration of R&D and operation” becomes sophisticated, it 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 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 Company has been deeply involved in the field of cultural and creative industries for many years. Its core management
team has long been on the front lines of the industry, and has forward-looking capabilities for strategic layout. During the Reporting
Period, thanks to its outstanding performance in terms of the development speed and personnel training and development, the
Company won the title of "the Best Employer" of CNG. The Company has established a fully-fledged personnel training system. It
has completed the personnel system reform, made new promotion mechanism, remuneration management system and incentive
mechanism. The new promotion and remuneration management system does not only make the employee’s growth path clearer,
more open and more transparent but also motivates their enthusiasm and creativity in a better way. The Company lays emphasis
on the sharing of development achievements and is committed to improving the career development level of employees. During
the Reporting Period, the Company launched a value co-creation plan with a further investment of RMB500 million in six directions,
including the employee development plan before 2025, so as to encourage employees to better strive and create value and
promote the long-term, sustainable and healthy development of the Company, realizing joint creation, responsibility sharing,
growth sharing and common prosperity between the Company and its employees. The Company has always adhered to the
entrepreneurial spirit like marathoners and been clear about its goals. It aims to promote sustainable development, and
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
23
progressively realize long-term goals rather than short-term ones.
IV Core Business Analysis
1. Overview
See “II Principal Activity of the Company in the Reporting Period” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2021 2020
As % of operating As % of operating Change (%)
Amount Amount
revenue (%) revenue (%)
Total operating
16,216,498,239.02 100% 14,399,703,084.56 100% 12.62%
revenue
By operating division
Online games 16,216,498,239.02 100.00% 14,399,703,084.56 100.00% 12.62%
By product category
Mobile games 15,363,931,421.93 94.74% 13,295,895,373.41 92.33% 15.55%
Browser games 829,434,830.89 5.11% 1,079,617,086.01 7.50% -23.17%
Others 23,131,986.20 0.14% 24,190,625.14 0.17% -4.38%
By operating segment
Domestic 11,439,384,280.51 70.54% 12,256,885,640.40 85.12% -6.67%
Overseas 4,777,113,958.51 29.46% 2,142,817,444.16 14.88% 122.94%
By marketing model
Independent
13,040,897,289.84 80.42% 10,270,770,907.92 71.33% 26.97%
operation
Joint operation and 3,175,600,949.18 19.58% 4,128,932,176.64 28.68% -23.09%
Others
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Unit: RMB
2021 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating revenue 3,817,828,43 3,721,120,94 4,571,714,14 4,105,834,71 4,343,108,71 3,645,566,47 3,300,855,13 3,110,172,75
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
24
4.02 4.51 2.74 7.75 9.33 6.24 2.34 6.65
Net profit
attributable to the 116,773,000. 736,944,855. 867,467,406. 1,154,390,61 728,824,406. 970,911,716. 560,489,992. 500,725,359.
Listed Company’s 58 07 86 5.11 61 85 17 59
shareholders
Reasons for business seasonality (or periodicity) and risk of fluctuations:
There is no significant seasonality or periodicity in the operations of the Company.
(2) Operating Division, Product Category, Operating Segment and Marketing Model Contributing over 10% of
Operating Revenue or Operating Profit
√ Applicable □ Not applicable
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Unit: RMB
YoY change in YoY change in
Gross profit YoY change in
Operating revenue Cost of sales operating gross profit
margin cost of sales (%)
revenue (%) margin (%)
By operating division
Online games 16,216,498,239.02 2,466,077,310.61 84.79% 12.62% 40.29% -3.00%
By product category
Mobile games 15,363,931,421.93 2,210,997,062.20 85.61% 15.55% 49.09% -3.24%
Browser games 829,434,830.89 239,981,069.59 71.07% -23.17% -8.67% -4.59%
Others 23,131,986.20 15,099,178.82 34.73% -4.38% 25.71% -15.62%
By operating segment
Domestic 11,439,384,280.51 1,664,591,263.72 85.45% -6.67% 19.08% -3.15%
Overseas 4,777,113,958.51 801,486,046.89 83.22% 122.94% 122.66% 0.02%
Core business data restated according to the changed methods of measurement that occurred in the Reporting Period:
□Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
□ Yes √ No
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□Applicable √ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
25
(5) Breakdown of Cost of Sales
By operating division
Unit: RMB
2021 2020
Operating
Items As % of cost of As % of cost of Change (%)
division Amount Amount
sales sales
Online games Royalties 2,224,099,867.14 90.19% 1,560,019,412.64 88.75% 42.57%
Online games Cost of servers 173,920,755.98 7.05% 147,742,407.21 8.41% 17.72%
Amortization of
Online games 51,480,589.10 2.09% 36,340,772.79 2.07% 41.66%
copyright money
Online games Other costs 16,576,098.39 0.67% 13,680,957.12 0.78% 21.16%
Online games Total 2,466,077,310.61 100.00% 1,757,783,549.76 100.00% 40.29%
Note: Other costs are mainly labor costs.
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Breakdown of the cost of sales for the core business:
Unit: RMB
2021 2020
Breakdown of cost Change (%)
Amount As % of cost of sales Amount As % of cost of sales
Royalties 2,224,099,867.14 90.19% 1,560,019,412.64 88.75% 42.57%
Cost of servers 173,920,755.98 7.05% 147,742,407.21 8.41% 17.72%
Amortization of
51,480,589.10 2.09% 36,340,772.79 2.07% 41.66%
copyright money
Other costs 16,576,098.39 0.67% 13,680,957.12 0.78% 21.16%
Total 2,466,077,310.61 100.00% 1,757,783,549.76 100.00% 40.29%
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
For details, see Note VIII Changes in the Scope of Consolidated Financial Statements in Part X.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
26
Total sales to top five customers (RMB) 7,094,841,977.13
Total sales to top five customers as a % of total sales of
43.75%
the Reporting Period (%)
Total sales to related parties among top five customers as
0.00%
a % of total sales of the Reporting Period (%)
Top five customers:
Sales revenue contributed for
No. Customer As a % of total sales revenue (%)
the Reporting Period (RMB)
1 Customer A 3,474,206,789.82 21.42%
2 Customer B 2,062,294,433.15 12.72%
3 Customer C 731,095,954.64 4.51%
4 Customer D 513,300,589.44 3.16%
5 Customer E 313,944,210.08 1.94%
Total -- 7,094,841,977.13 43.75%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 1,212,808,363.24
Total purchases from top five suppliers as a % of total
49.18%
purchases of the Reporting Period (%)
Total purchases from related parties among top five
suppliers as a % of total purchases of the Reporting 0.00%
Period (%)
Top five suppliers:
Purchase in the Reporting
No. Supplier As a % of total purchases (%)
Period (RMB)
1 Supplier A 432,350,198.01 17.53%
2 Supplier B 236,755,769.31 9.60%
3 Supplier C 227,832,000.82 9.24%
4 Supplier D 160,123,607.74 6.49%
5 Supplier E 155,746,787.36 6.32%
Total -- 1,212,808,363.24 49.18%
Other information about major suppliers:
□ Applicable √ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
27
3. Expenses
Unit: RMB
Project 2021 2020 Change (%) Reason for any significant change
The Company increased Internet traffic
expenditures for a variety of newly
launched games such as All for Glory
(荣耀大天使), The Soul Land: Wu Hun
Distribution and selling
9,125,341,989.92 8,212,936,504.81 11.11% Jue Xing (斗罗大陆：武魂觉醒),
expenses
Peerless King (绝世仙王), and Puzzles
& Survival (launched globally),
resulting in an increase in Internet
traffic fee charges.
1) The increased number of
management personnel compared
with last year and the adjusted
General and
462,767,933.71 366,208,400.81 26.37% remuneration policy resulted in an
administrative expenses
increase in expenditures on employee
benefits; 2) Right-of-land-use
amortization expenses increased.
1) Interest expense decreased during
Financial expenses -55,181,848.40 -23,004,271.22 -139.88% the Reporting Period; and 2) Gain on
exchange increased.
The Company increased R&D
investments, and refined the
Research and remuneration and incentive
1,250,238,810.24 1,112,654,352.49 12.37%
development expenses mechanism, resulting in increased
expenditures on the remunerations
and benefits of the R&D personnel.
4. R&D Investments
√ Applicable □ Not applicable
Expected impact on the
Major R&D project Purpose Progress Specific objectives
Company
To become a benchmark To further enhance the R&D
To enrich the product
Code Magic M (代 game product with Western capacity and consolidate the
matrix and improve Under development
号魔幻 M) magic realism and leading position in the
product competitiveness
next-generation quality industry
To enrich the product To become a high-quality card To further enhance the R&D
Code C6 (代号 C6) matrix and improve Under development game product with capacity and consolidate the
product competitiveness next-generation quality leading position in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
28
industry
To further enhance the R&D
To enrich the product To become a beautiful and
Code Gu Feng (代 capacity and consolidate the
matrix and improve Under development exquisite female-oriented
号古风) leading position in the
product competitiveness turn-based game product
industry
To further enhance the R&D
To enrich the product To become a chibi version of
Code WTB 3D (代号 capacity and consolidate the
matrix and improve Under development Japanese fantastic style
3D 版 WTB) leading position in the
product competitiveness boutique game product
industry
To further enhance the R&D
Code Three To enrich the product To become a high-quality
capacity and consolidate the
Kingdoms BY (代号 matrix and improve Under development national war SLG game
leading position in the
三国 BY) product competitiveness product with top art quality
industry
To further enhance the R&D
To enrich the product To become a high-quality SLG
Code AOE (代号 capacity and consolidate the
matrix and improve Under development game product with in-depth
AOE) leading position in the
product competitiveness battlefield strategies
industry
To further enhance the R&D
To enrich the product To become a high-quality
capacity and consolidate the
Code CY (代号 CY) matrix and improve Under development simulative operation
leading position in the
product competitiveness boutique game product
industry
Launched in Hong To further enhance the R&D
Three Kingdoms: To enrich the product To become a high-quality
Kong, Macao and capacity and consolidate the
Honor of Heroes matrix and improve national war SLG game
Taiwan in January leading position in the
(三国：英雄的荣光) product competitiveness product with top art quality
2022 industry
Details about R&D personnel:
2021 2020 Change (%)
Number of R&D personnel 1,957 2,343 -16.47%
R&D personnel as % of total
48.97% 57.68% -8.71%
employees
Educational background of R&D
—— —— ——
personnel
Bachelor’s degree 1,426 1,657 -13.94%
Master’s degree 87 88 -1.14%
Junior college and below 444 598 -25.75%
Age structure of R&D personnel —— —— ——
Below 30 1,416 1,731 -18.20%
30~40 534 597 -10.55%
Over 40 7 15 -53.33%
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
29
Details about R&D investments:
2021 2020 Change (%)
R&D investments (RMB) 1,250,238,810.24 1,112,654,352.49 12.37%
R&D investments as % of
7.71% 7.73% -0.02%
operating revenue
Capitalized R&D investments
0.00 0.00 0.00%
(RMB)
Capitalized R&D investments
0.00% 0.00% 0.00%
as % of total R&D investments
Reasons for any significant change in the composition of R&D personnel and the impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Items 2021 2020 Change (%)
Sub-total of cash inflows from
17,002,262,607.58 15,534,023,490.34 9.45%
operating activities
Sub-total of cash outflows used
13,343,513,666.55 12,606,086,185.69 5.85%
in operating activities
Net cash flows from operating
3,658,748,941.03 2,927,937,304.65 24.96%
activities
Sub-total of cash inflows from
6,570,566,715.25 6,993,035,534.58 -6.04%
investing activities
Sub-total of cash outflows used
7,653,483,295.72 7,602,685,681.65 0.67%
in investing activities
Net cash flows used in investing
-1,082,916,580.47 -609,650,147.07 -77.63%
activities
Sub-total of cash inflows from
3,450,887,344.10 889,324,326.07 288.03%
financing activities
Sub-total of cash outflows used
3,164,066,053.63 3,517,673,494.41 -10.05%
in financing activities
Net cash flows used in financing
286,821,290.47 -2,628,349,168.34 110.91%
activities
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
30
Net increase in cash and cash
2,844,312,226.83 -361,178,898.22 887.51%
equivalents
Explanation of why any of the data above varies significantly on a year-over-year basis:
√ Applicable □ Not applicable
Sub-total of cash inflows from financing activities increased 288.03% YoY, primarily driven by cash received in the new offering of
shares implemented by the Company in the Reporting Period.
Explanation of why the net cash flows from operating activities varied significantly from the net profit of the Reporting Period:
√ Applicable □ Not applicable
The net cash flows from operating activities varied from the net profit of the Reporting Period primarily because items of asset
impairment allowances, asset depreciation and amortization, deferred income tax expense, gain on changes in fair value,
investment income, etc. did not affect cash flows from operating activities but did affect net profit, and there were movements in
trade receivables and payables. For further information, see “52. Supplementary information for the cash flow statement” in Note
VII of Part X.
V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As % of profit
Amount before income Reason/source Recurrent or not
tax expenses
Mainly due to gains on investments from
disposal of equity investments, dividends
Investment
122,970,638.91 3.79% during the period of holding equity Not
income
investments, and wealth management
products
Gain/loss on
Mainly due to changes in fair value of
changes in fair 77,766,109.01 2.39% Not
equity investments
value
Impairment losses on long-term
Impairment loss Mainly due to impairment losses on equity investments are not
39,224,372.19 1.21%
on assets long-term equity investments and credit recurrent while impairment losses
on credit risk are recurrent
Non-operating
4,395,931.93 0.14% Mainly due to compensation income Not
income
Non-operating
16,631,950.41 0.51% Mainly due to charity donations Not
expenses
Mainly due to refund of VAT, Refund VAT and over-deductions
over-deductions of VAT and input tax and of VAT and input tax is recurrent
Other income 167,198,424.90 5.15%
other government grants given in the while other government grants
Company’s ordinary course of business are not.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
31
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2021 1 January 2021
Change in percentage
As % of total As % of total Reason for any significant change
Amount Amount (%)
assets assets
Cash received in the new offering of shares
Monetary funds 4,618,532,776.92 31.99% 1,776,856,909.85 16.70% 15.29% implemented by the Company in the Reporting
Period
Accounts receivable 1,264,319,473.08 8.76% 1,164,657,998.35 10.95% -2.19% No significant change
Long-term equity investments as a percentage of
total assets did not change significantly. The
ending amount was higher than the beginning
Long-term equity
509,058,912.99 3.53% 360,566,552.56 3.39% 0.14% amount primarily driven by new equity
investments
investments made during the Reporting Period.
For further information, see “7. Long-term equity
investments” in Note VII of Part X.
Fixed assets 892,006,774.60 6.18% 922,736,638.76 8.67% -2.49% No significant change
Construction in progress as a percentage of total
assets did not change significantly. The ending
Construction in amount was higher than the beginning amount
77,637,189.70 0.54% 4,180,019.75 0.04% 0.50%
progress primarily driven by investments in the
construction of the Company’s Headquarters
Building in Guangzhou in the Reporting Period.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
32
Right-of-use assets 59,925,125.24 0.42% 75,894,431.88 0.71% -0.29% No significant change
Repayment of financings obtained through notes
Short-term loans 445,635,500.00 3.09% 889,324,326.07 8.36% -5.27%
which became due in the Reporting Period
Contract liabilities 260,658,631.26 1.81% 204,231,829.45 1.92% -0.11% No significant change
Long-term loans 20,000,000.00 0.14% 0.00% 0.14% New three-year bank loan in the Reporting Period
Lease liabilities 39,641,414.25 0.27% 57,211,118.22 0.54% -0.27% No significant change
Increases in the balances of low-risk bank’s wealth
Trading financial management products and structured deposits
2,098,526,001.60 14.54% 1,321,234,029.61 12.42% 2.12%
assets purchased by the Company for higher capital
returns
The Company paid for the acquisition of minority
Other payables 199,296,971.30 1.38% 1,317,972,818.79 12.39% -11.01% interests in Guangzhou 37 Network Technology
Co., Ltd. in the Reporting Period
Prepayments 1,055,295,139.07 7.31% 999,890,031.00 9.40% -2.09% No significant change
Intangible assets 1,088,487,381.04 7.54% 1,108,434,647.51 10.42% -2.88% No significant change
Increase in Internet traffic fee charges payable, no
Accounts payable 1,565,004,179.17 10.84% 1,078,096,658.12 10.13% 0.71%
significant change in the proportion of total assets
Indicate whether overseas assets account for a higher percentage of total assets.
√ Applicable □ Not applicable
Material
Control measures to Return generated As % of the
Asset Source Asset value (RMB) Location Management model impairment risk or
protect asset safety (RMB) Company’s equity
not
Income from A sound business
Hong Kong, the US,
Monetary funds investments and 1,255,831,990.87 supervision 11.57%
etc.
operations mechanism and a
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
33
sound risk control
mechanism have
been put in place
A sound business
supervision
Investments in Hong Kong, Canada, mechanism and a
Other equity assets 384,394,357.14 77,747,984.66 3.54%
overseas companies etc. sound risk control
mechanism have
been put in place
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on Cumulative Impairment
Purchased in the Sold in the Reporting
Item Beginning amount fair-value changes in fair-value changes allowance made in Other changes Ending amount
Reporting Period Period
the Reporting Period through equity the Reporting Period
Financial assets
1. Trading financial
assets (exclusive of
1,321,234,029.61 95,277,092.81 6,451,873,382.71 5,765,955,380.98 -3,903,122.55 2,098,526,001.60
derivative financial
assets)
4. Other equity
294,824,927.02 -133,972,878.67 41,000,000.00 3,000,000.00 -902,496.77 326,561,477.94
investments
Other non-current
372,195,483.93 -17,510,983.80 281,174,566.00 73,992,294.70 -186,141.40 561,680,630.03
financial assets
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
34
Total of the above 1,988,254,440.56 77,766,109.01 -133,972,878.67 6,774,047,948.71 5,842,947,675.68 -4,991,760.72 2,986,768,109.57
Financial liabilities 0.00 0.00
Contents of other changes:
Other changes were incurred by exchange rate fluctuations, etc.
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
Unit: RMB
Item Ending carrying amount(RMB) Reason for restriction
Monetary funds 139,041.54 Money frozen by bank and security deposits
Fixed assets-constructions 27,819,584.42 As collateral for bank loan to the Company
Total 27,958,625.96
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount in 2021 (RMB) Total investment amount in 2020 (RMB) Change (%)
7,071,976,460.56 9,833,076,338.66 -28.08%
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
35
Unit: RMB
Investment Investment Any legal
Way of The Type of the Index (if any) to
Amount of Funding Co-inv Term of progress as of Anticipate income in the matter Date (if any)
Investee Principal activity investm Company’ investee’s disclosed
investment source estor investment the balance d income Reporting involved of disclosure
ent s interest products information
sheet date Period or not
Technology development, consultancy,
transfer and services of computer software
and hardware; Internet information
technology services; computer system
integration; basic software services;
Chengdu Ownership
application software services; multimedia
Longyou change
design; arts and crafts design; design,
Tianxia Capital Self-fun Game completed with
production, agency, and release of ads 5,000,000.00 20.00% None Permanent -905,944.48 Not
Technolo increase ded development the industrial
(excluding balloon ads); technology
gy Co., and commercial
consultancy; information system integration
Ltd. administration
services; network engineering design and
construction (construction works operated
with qualification certificate);
communication and automation control
system development.
Licensed activities: All kinds of engineering
Chengdu
construction activities. (Business activities Ownership
Jianguo
that require approval according to law shall change
Guangnia
be carried out only after approval from Incorpo Self-fun Game completed with
n 20,000,000.00 30.00% None Permanent -1,871,020.44 Not
relevant authorities is obtained. The specific ration ded development the industrial
Technolo
business activities shall be subject to the and commercial
gy Co.,
approval documents or licenses issued by administration
Ltd.
the relevant authorities.) General activities:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
36
Software development; development of
animation and gaming; information system
integration services; graphic design and
production; office services; information
consultant services (excluding the
information consultant services requiring
any license); online sale (excluding the sale
of goods requiring any license); technical
services, technological development,
technological consultation, technical
exchange, technology transfer, technology
promotion; sale of software; IT consultant
services; big data services; sale of cloud
computing equipment; Internet data
services; the associated software and
services of blockchain technology; sale of
artificial intelligence hardware; application
development of artificial intelligence; basic
software development of artificial
intelligence; research and development of
Internet of Things technology; technical
services of Internet of Things; sale of
integrated circuit; professional design
services; wholesale of computer software,
hardware, and auxiliary equipment; sale of
office supplies; sale of electronic products.
Shanghai Licensed activities: The second type of Capital Self-fun Game Ownership
21,000,000.00 21.00% None Permanent -2,013,979.31 Not
Dragons value-added telecommunication business; increase ded development change
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
37
Hunter import and export of goods; import and completed with
Network export of technologies. (Business activities the industrial
Technolo that require approval according to law shall and commercial
gy Co., be carried out only after approval from administration
Ltd. relevant authorities is obtained. The specific
business activities shall be subject to the
approval documents or licenses issued by
the relevant authorities.) General activities:
Technical services, technological
development, technological consultation,
technical exchange, technology transfer,
technology promotion; software
development; retail of computer software,
hardware, and auxiliary equipment; sale of
telecommunication equipment; sale of
electronic products; personal business
services.
General business activities: Network
technology development, with the licensed Ownership
FTX
business activities as follows: Development, change
Technolo
operation, and maintenance of online games Capital Self-fun Game completed with
gy 30,000,000.00 20.00% None Permanent -1,450,910.31 Not
(restrictive activities shall be put into increase ded development the industrial
Shenzhen
operation after license is obtained); and commercial
Co. Ltd.
information service business (limited to administration
Internet information services).
Shanghai General activities: Technical services, Ownership
Capital Self-fun Game
Chimeng technological development, technological 15,000,000.00 25.00% None Permanent change -2,570,641.60 Not
increase ded development
Network consultation, technical exchange, technology completed with
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
38
Technolo transfer, technology promotion; Internet the industrial
gy Co., data services; software development; and commercial
Ltd. information system integration services; administration
intelligent control system integration;
software development of digital culture
originality; advertising design and agency;
enterprise image planning; graphic design
and production; organization of cultural and
artistic exchange activities; enterprise
management; information consultant
services (excluding the information
consultant services requiring any license);
conference and exhibition services;
wholesale of computer software, hardware,
and auxiliary equipment; sale of toys.
Advertising production; advertising release
(excluding that of radio and television
stations, and newspaper and periodical
Guangzho publishers); advertising design and agency;
Ownership
u technical services, technological
change
Chumen development, technological consultation,
Incorpo Self-fun Game completed with
Network technical exchange, technology transfer, 12,500,000.00 30.00% None Permanent -72,297.65 Not
ration ded development the industrial
Technolo technology promotion; production and
and commercial
gy Co., services of digital content (excluding
administration
Ltd. publication and issuance); software
development; professional design services;
information system integration services; the
second type of value-added
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
39
telecommunication business; Internet
information services; import and export of
technologies.
It is engaged in technological development,
technology transfer, technical services, and
technological consultation in the fields of
network; computer, and information
Shanghai technologies; animation design; sale of Ownership
Woowii computer software, hardware, and auxiliary change
Network equipment, handicrafts (excluding ivory and Capital Self-fun Game completed with
70,000,000.00 20.00% None Permanent -560,860.28 Not
Technolo its products), toys; stationery, clothing and increase ded development the industrial
gy Co., accessories, articles of daily use, and and commercial
Ltd. communication equipment; import and administration
export of goods and technologies;
e-commerce (value-added
telecommunication and financial business is
prohibited).
Wholesale of fresh fruits; sale of vending
machines; brand management;
management services of commercial
Guangzho Ownership
complex; trade brokerage; sale of daily used
u Shilizuo change
glassware; investment activities with
Catering Capital Self-fun completed with
self-owned funds; hotel management; 27,000,000.00 18.00% None Permanent Food -1,908,322.97 Not
Managem increase ded the industrial
catering management; take-out delivery
ent Co., and commercial
services; enterprise management;
Ltd. administration
enterprise management consultation;
enterprise image planning; consultation
planning services; conference and exhibition
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
40
services; sale of daily used articles; sale of
daily used groceries; retail of fresh fruits;
sale of enamelware; sale of special ceramics;
domestic trading agency; beverage
production; catering services; small-sized
catering; food business (selling pre-packed
food); food business (selling unpacked food);
small-sized business of catering, grocery,
and mill.
Software development; network
engineering; IT consultant services;
information system integration services;
distribution of computer software,
hardware, and auxiliary equipment;
professional design services; organization
and planning of large-scale activities; design,
Suzhou Ownership
production, agency and release of
Xingli change
advertisements; conference and exhibition
Network Capital Self-fun Game completed with
services; analytic and investigating services 30,000,000.00 6.90% None Permanent Not
Technolo increase ded development the industrial
of market; commercial consultant services;
gy Co., and commercial
enterprise marketing planning; design
Ltd. administration
services of animation products; broker
services of cultural entertainment. (Business
activities that require approval according to
law shall be carried out only after approval
from relevant authorities is obtained.)
Licensed activities: Food business; online
sale of food (Business activities that require
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
41
approval according to law shall be carried
out only after approval from relevant
authorities is obtained. The specific business
activities shall be subject to the approval
documents or licenses issued by the
relevant authorities). General activities:
Online sale (excluding the sale of goods
requiring any license).
Technological development; technological
consultation; technology transfer; technical
services, technology promotion (excluding
those for stem cells, genetic diagnosis and
treatment of human); software
development; conference services; sale of
electronic products, clothing, shoes and
Beijing hats; communication equipment; clocks and Ownership
Qixu watches; glasses; electric appliances; design, change
Beibei production, agency, and release of Capital Self-fun completed with
15,000,000.00 6.64% None Permanent Food Not
Technolo advertisements; marketing planning; increase ded the industrial
gy Co., undertaking of exhibitions and shows; and commercial
Ltd. manufacturing consignment of food; sale of administration
food. (This enterprise was domestically
invested before December 3, 2020; and was
changed to be foreign invested after
December 3, 2020. Market entities have the
right to select and carry out business
activities in accordance with laws and
regulations; business activities that involve
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
42
food selling and that require approval in
accordance with law shall be subject to
approval by relevant authorities for an
approved scope; business activities are
subject to the prohibition and restriction of
the industrial policies of the state and the
city.)
Licensed activities: Labor dispatch services;
job intermediary activities. (Business
activities that require approval according to
law shall be carried out only after approval
from relevant authorities is obtained. The
specific business activities shall be subject to
the approval documents or licenses issued
by the relevant authorities.) General
Ownership
activities: Technological development,
Blue collar change
YOULIFE technology transfer, technological
Capital Self-fun employment completed with
HOLDING consultation, and technical services in the 20,000,000.00 0.90% None Permanent Not
increase ded + vocational the industrial
S field of Information technology; software
education and commercial
development; information system
administration
integration services; design, production,
agency and release of advertisements;
services of exhibitions and shows,
consultant services of commercial
information; warehousing (excluding
hazardous goods); manual loading and
unloading (excluding hazardous goods);
production section management in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
43
means of service outsourcing; human
resources management in the means of
service outsourcing; plant operation
management, sale of electronic and network
equipment.
Technological research and development of
electronics, communication, and automatic
control; technical services of information
electronics; technological development and
technical services of computer; research and
development of network technologies,
design services of packing and decoration;
advertising industry; wholesale trade of
commodities (excluding the commodities
Ownership
Guangzho requiring any license or approval); retail
change
u Moji trade of commodities (excluding the New
Capital Self-fun completed with
Technolo commodities requiring any license or 16,000,000.00 5.00% None Permanent consumer Not
increase ded the industrial
gy Co., approval); wholesale of vegetables; retail of goods
and commercial
Ltd. vegetables; wholesale of fruits; wholesale of
administration
grains and potatoes; wholesale of grain
by-products; purchasing of agricultural and
sideline products; retail of other meat
products (excluding pork, beef, and mutton);
comprehensive retail of daily used groceries;
wholesale of electric appliances; domestic
services; wholesale of fresh poultry; retail of
fresh poultry; information system
integration services; data services of
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
44
processing and storage; software
development; design of integrated circuit; IT
consultant services; retail of fruits; retail of
pre-packed food; wholesale of pre-packed
food; wholesale of health-care food (the
specific business activities are subject to
Food Business License); retail of health-care
food (the specific business activities are
subject to Food Business License).
Research and development and design of
robots, intelligent furniture, electronic
products, communication products,
telecommunication equipment, mobile
client terminals, as well as provision of
associated technological consultation and
technical services; wholesale and retail of
Donggua Ownership
pet supplies, pet food, and daily used
n change
articles; technological development, New
HomeRun Capital Self-fun completed with
technology transfer, online sale, and 21,000,000.00 9.00% None Permanent consumer Not
Technolo increase ded the industrial
domestic trade agency of computer goods
gy Co., and commercial
software, educational equipment, and toys;
Ltd. administration
design and production of computer
software; business information consulting,
and pet beauty services; design, production,
release, and agency of domestic and
overseas advertisements; import and export
of goods and technologies (excluding import
and export of those prohibited by the state
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
45
and subject to administrative approval).
Retail trade of commodities (excluding the
commodities subject to license or approval);
import and export of goods (except
franchised and specially controlled goods);
online sale of commodities (excluding the
commodities subject to license or approval);
import and export of technologies;
wholesale trade of commodities (excluding
Guangzho the commodities subject to license or
u approval); retail of electronic products; retail Ownership
Leyaoyao of software; services of software; change
Informati development of software; research and Capital Self-fun Equipment completed with
50,000,000.00 2.59% None Permanent Not
on development of computer hardware; increase ded renovation the industrial
Technolo wholesale of products of safety technologies and commercial
gy Co., and protection; retail of products of safety administration
Ltd. technologies and protection; research and
development of network technologies; IT
consultant services; promotion services of
network information technology; advertising
industry; wholesale of electronic products;
value-added telecommunication services
(business categories subject to the content
clarified by License of Value-added
Telecommunication Services).
Guangdo Research services for food science and Ownership
Capital Self-fun
ng technology; research and development on 20,000,000.00 2.08% None Permanent Food change Not
increase ded
Ginseng health science projects; wholesale of dry completed with
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
46
Essence seafood; retail of dry seafood; services for the industrial
Health developing biological technologies; services and commercial
and of conference and exhibition; consultant administration
Technolo services of enterprise management;
gy Co., investment of enterprise with self-owned
Ltd. funds; planning services for marketing; retail
of edible mushrooms; wholesale of edible
mushrooms; comprehensive retail of daily
used groceries; services of planning
originality; import and export of goods
(except franchised and specially controlled
goods); retail of pre-packed food; wholesale
of pre-packed food; retail of dairy products;
wholesale of dairy products.
General activities: Venture capital, project
Gongqing
investment, and industrial investment.
cheng
(Without the authorization of financial
Feidian
regulators, the entity is prohibited to
Hongchua Ownership
undertake such financial business as
ng change
absorption of deposits, financing assurance,
Investme Capital Self-fun completed with 30 October http://www.cni
provision of financial management for 13,079,470.20 20.66% None Permanent Fund Not
nt increase ded the industrial 2021 nfo.com.cn
clients; or collecting funds (financing) to the
Partnersh and commercial
society and public.) (Apart from licensed
ip administration
business activities, the entity may make its
(Limited
own decision to operate its business
Partnersh
activities that are not prohibited or
ip)
restricted by law or regulation.)
Beijing Catering services; retail of publications; sale Capital 10,000,000.00 10.00% Self-fun None Permanent Food Ownership Not
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
47
Qingchun of food; sale of ceramics, glassware, leather increase ded change
Zhaolu products, daily used articles, bags and completed with
Tea Co., suitcases, furniture, electric appliances, the industrial
Ltd. electronic products, and primary edible and commercial
produces; catering management; product administration
design; technological development and
technology promotion, marketing planning,
business information consulting and
enterprise management consulting.
General business activities: Development,
technological consultation, and technology
Shenzhen
transfer of the software for designing Ownership
Optiark
micro-nano chips. Licensed business change
Semicond
activities include such high-end and Capital Self-fun completed with
uctor 15,000,000.00 1.87% None Permanent Visual display Not
advanced technological development and increase ded the industrial
Technolo
manufacturing as semiconductor chips; and commercial
gy Co.,
diffraction optical chips; optical modules; administration
Ltd.
modules for micro-projection; micro-nano
semiconductor materials and processes.
The natural and scientific research and
Guangzho
experimental development of cosmetics;
u Ownership
wholesale of cosmetics; retail of daily used
Blispring change
groceries; manufacturing of daily used New
Cosmetic Capital Self-fun completed with
groceries; sale of electric appliances; 15,000,000.00 1.72% None Permanent consumer Not
s increase ded the industrial
manufacturing of electric appliances; sale of goods
Technolo and commercial
Class II medical appliances; consultant
gy Co., administration
services of sale information (excluding
Ltd.
information consultant services subject to a
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
48
license); production of cosmetics.
Technological development and technical
services of computer; technical services of
information electronics; research and
development of network technologies;
planning services of marketing; social legal
consultation; legal document agency;
wholesale trade of commodities (excluding Ownership
the commodities subject to license or change
Weeget approval); retail trade of commodities Capital Self-fun e-commerce completed with
32,043,896.69 1.80% None Permanent Not
Inc. (excluding the commodities subject to increase ded platform the industrial
license or approval); IT consultant services; and commercial
value-added telecommunication services administration
(business categories subject to the content
clarified by License of Value-added
Telecommunication Services), retail of
health-care food (the specific business
activities are subject to Food Business
License); retail of pre-packed food.
Ownership
change
DigiLens Capital Self-fun completed with
Supplier for solutions of optical waveguide. 19,127,099.11 0.70% None Permanent Visual display Not
Inc. increase ded the industrial
and commercial
administration
Ownership
RAXIUM, Capital Self-fun
Manufacturer of Micro-LED micro-displays. 12,751,400.00 1.19% None Permanent Visual display change Not
INC. increase ded
completed with
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
49
the industrial
and commercial
administration
489,501,866.0 -11,353,977.0
Total -- -- -- -- -- -- -- -- 0.00 -- -- --
0 4
3. Major Non-Equity Investments Ongoing in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Reason for
failing to
Cumulative
Investment Investment in Cumulative reach the Index (if any)
Name of Way of Industry of Funding Project Anticipated income as of Date (if any)
in fixed the Reporting investment as of scheduled to disclosed
project investment investment source progress income the of disclosure
assets or not Period the period-end progress and information
period-end
anticipated
income
Announcement
No. 2020-003
on a
Guangzhou
Self-funded Wholly-Owned
HQ Building Commercial 7 January
Other Yes 97,428,511.85 1,207,071,932.87 and raised 6.04% N/A Subsidiary
construction property 2020
funds-funded Bidding for the
project
Use Rights of
State-Owned
Land
Total -- -- -- 97,428,511.85 1,207,071,932.87 -- -- 0.00 0.00 -- -- --
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
50
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on
Initial Accounting Cumulative
Beginning fair-value Purchased in Sold in the Gain/loss in the
Variety of Code of Name of measurem fair-value Ending carrying Accounting Funding
investment carrying changes in the the Reporting Reporting Reporting
securities securities securities ent changes amount title source
cost amount Reporting Period Period Period
method through equity
Period
Domestic/foreign Fair value Trading Self-fun
002445- SZSE ZNHI 21,743,091.99 4,058,398.15 1,250,294.70 5,308,692.85 961,123.42
stock method financial assets ded
Domestic/foreign Fair value Trading Self-fun
02660- HKEX ZENGAME 18,000,000.00 21,856,632.40 1,013,780.22 2,147,451.02 22,358,908.67
stock method financial assets ded
Domestic/foreign Fair value Trading Self-fun
950180- KRX SNK 1,036.35 31,669,701.53 5,381,681.38 36,689,287.98 8,416,427.17
stock method financial assets ded
Domestic/foreign 02400- Fair value Trading Self-fun
XD INC 49,977,148.52 169,222,061.74 20,281,860.50 115,672,719.93 67,759,035.96 70,801,678.67
stock HKEX method financial assets ded
Domestic/foreign 835067- Fair value Other equity Self-fun
Mokylin 60,000,000.00 -60,000,000.00
stock NEEQ method investments ded
Domestic/foreign Huace Fair value Trading Self-fun
300133- SZSE 140,000,000.00 44,748,060.00 140,000,000.00 25,351,795.00 50,342,811.72 159,396,265.00
stock Film&TV method financial assets ded
Domestic/foreign Fair value Trading Self-fun
SNAP.N-NYSE Snap 13,355,082.71 1,430,482.22 13,355,082.71 14,785,564.90 2,714,083.92
stock method financial assets ded
Total 303,076,359.57 -- 226,806,793.82 74,106,159.02 -60,000,000.00 153,355,082.71 197,808,060.66 132,340,933.21 252,556,852.34 -- --
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
51
Disclosure date of the announcement on the
board’s approval of the securities
investments
Disclosure date of the announcement on the
general meeting of shareholders’ approval
of the securities investment (if any)
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Raised Funds
√ Applicable □ Not applicable
(1) General Information about Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB’0,000
Cumulative
Re-purposed Purpose and
Cumulative re-purposed Amount being
Total amount Used in the Cumulatively amount in the whereabouts of
Year of raising Way of raising re-purposed amount as % of Unused amount idle for more
raised Current Period used Reporting the unused
amount total amount than two years
Period amount
raised
Used for cash
Private
2021 293,286.15 12,285.61 12,285.61 0 0 0.00% 283,644.79 management or 0
placement
deposited in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
52
raised funds
account
Total -- 293,286.15 12,285.61 12,285.61 0 0 0.00% 283,644.79 -- 0
More information
With the Reply on Approval of the Application of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. for Private Placement (CSRC Permit [2021] No. 16) issued by the
China Securities Regulatory Commission (CSRC), the Company issued 105,612,584 RMB-denominated common shares (A-stock) in a private placement, with the par value per share at
RMB1.00 and the offering price at RMB27.77/share. With the gross raised amount of RMB2,932,861,457.68 minus the issuance costs (net of tax) of RMB31,309,777.95, the net raised amount
stood at RMB2,901,551,679.73. Up to 10 February 2021, the raised funds were deposited in the Company’s raised funds account. And Huaxing Certified Public Accounts LLP issued the Capital
Verification Report No. Huaxing Verification [2021] 21000650029 on the raised funds on 10 February 2021.
(2) Promised Use of Raised Funds
√ Applicable □ Not applicable
Unit: RMB’0,000
Total Investment Significant
Re-purposed Cumulative Time when Returns
Promised project funded with promised Adjusted total Investment in progress as at Meeting the change to
or partially investment the project is derived in the
raised funds and investment with investment investment the Reporting the expected project
re-purposed amount at the ready for its Reporting
over-raised funds amount with amount (1) Period period-end (3) returns or not feasibility or
or not period-end (2) intended use Period
raised funds ＝(2)/(1) not
Promised projects
Online games development and 10 February
Not 154,500 87,376.64 2,122.91 2,122.91 2.43% N/A Not
operation project 2024
5G-based cloud gaming platform 10 February
Not 159,500 87,178.53 N/A Not
project 2024
Guangzhou headquarters building 31 December
Not 115,600 115,600 10,162.7 10,162.7 8.79% N/A Not
project 2024
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
53
Subtotal of promised projects -- 429,600 290,155.17 12,285.61 12,285.61 -- -- 0 -- --
Over-raised funds invested in
N/A
Total -- 429,600 290,155.17 12,285.61 12,285.61 -- -- 0 -- --
Reasons for not reaching the
scheduled progress or expected N/A
returns (project by project)
Particulars about significant
N/A
change to project feasibility
Amount, purpose and use N/A
progress of over-raised funds
Change of implementation N/A
location of raised funds
investment projects
Adjustments to the way of N/A
implementation of raised funds
investment projects
Advance investments in promised Applicable
projects funded with raised funds In 2021, the Company swapped the self-pooled funds which had been used in advance for raised funds investment projects and issuance costs with raised
and subsequent swaps funds of RMB8.404 million in total.
Use of idle raised funds for N/A
temporarily supplementing the
working capital
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
54
Surplus amount of raised funds N/A
upon project implementation and
the reasons
Purpose and whereabouts of
Used for cash management or deposited in the raised funds account
unused raised funds
Problems or other issues arising in
the use and disclosure of raised N/A
funds
Note 1: As games in the online games development and operation project were still in the development stage and had not been launched for operation, estimated returns were not available
for now.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
55
Note 2: As the 5G-based cloud gaming platform project was still in the development stage, estimated returns were not available for
now.
Note 3: Estimated returns are not applicable for the Guangzhou headquarters building project.
(3) Re-purposed Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII 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
IX Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:
Unit: RMB
Relationshi Principal Registered Operating
Name p with the activity Total assets Net assets Operating profit Net profit
capital revenue
Company
Development
Jiangsu
Subsidiary of mobile and 6,250,000.00 4,476,703,059.76 3,290,672,973.15 2,035,372,930.67 807,297,122.38 747,538,333.33
Aurora
browser games
Publishing and
Guangzhou 37 Subsidiary operation of 11,764,706.00 2,694,451,240.75 1,223,253,984.93 8,789,261,986.13 1,843,572,022.18 1,625,559,026.93
mobile games
Subsidiaries obtained or disposed of in the Reporting Period:
√ Applicable □ Not applicable
Effects on the overall operations and
Name of subsidiary How it was obtained or disposed of
performance
In line with the Company’s strategic
Frontier Games Co., Limited Acquisition planning and helpful for business
development of the Company
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
56
No material effects on the overall
Guangzhou Tieji Network Technology Co.,
Transfer operations and performance of the
Ltd.
Company
Other information on principal subsidiaries and joint stock companies:
N/A
X Prospects
(I) Industry landscape and trends
After years of development, the current game industry is in a period of historical change from high-speed growth to
high-quality development. On the one hand, China's innovation capacity of developing original game products is generally
enhanced. Types of game products will be expanded towards multiple directions. High-quality works focus on long-term
development. Boutiqueization has become an industry trend. On the other hand, the pace of China's game industry going overseas
has accelerated, and game enterprises continue to take the global publishing strategy, opening up diversified development paths
with refined operation and localized marketing. The number of countries and regions playing China's games has soared, and the
international competitiveness has been strengthened day by day. Going overseas has become an important way to boost the
"going global" of Chinese culture, and the international influence of Chinese culture and Chinese elements has been continuously
improved.
(II) Development strategy and business plan of the Company
Based on the current industry pattern and development trend, the Company will continue to steadily take the development
strategy of "boutiqueization, diversification, and globalization", continuously improve the operation quality, and practice the
socialist core values. With "bringing joy to the world" as its mission, the Company is dedicated to becoming an excellent and
sustainable entertainment enterprise, which will continue to provide high-quality and healthy entertainment products for the
public.
1. Effectively enhance self-development capacity and expand the diversified product matrix
In the future, the Company will continue to scale up R&D, pay attention to the cultivation of R&D talents, deepen the core
advantages of "boutiqueization", give full play to the strategic advantages of "integration of R&D and operation", create a
next-generation game production pipeline, develop next-generation high-quality games, break through the ceiling of self-research
ability, and carry out diversified layout on the product supply side through rich self-research and external R&D reserves to bring
more high-quality boutique games to players.
In 2022, the Company insists on the strategy of boutiqueization, diversification and market globalization, and reserves nearly
30 products at home and abroad through self-development, agency and customization, such as Code C6 (代号C6), Code CY (代号
CY), Code BY (代号BY), Code Gu Feng (代号古风), including MMORPG, card games, SLG, simulation games and other categories,
covering multi-civilization, magic, fairy tale, urban, female-oriented and other genres. The Company's diversified product matrix has
taken shape, and its product structure has been continuously optimized. Please refer to "II Principal Activity of the Company in the
Reporting Period" for the product pipeline.
2. Expand the advantages of overseas business and help spread Chinese culture
Since 2012, the Company has begun to lay emphasis on overseas markets. With the accumulation of many years of experience
of overseas business, the Company has made significant breakthroughs in its global strategic layout during the Reporting Period. In
the future, the Company will strengthen its pace of "Going Global", give further play to the first mover advantage in the overseas
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
57
market, continuously expand the scale of overseas business by relying on its strong game R&D capacity and localized marketing
ability, and continuously integrate Chinese excellent traditional culture in game themes, content gameplay and promotion
materials. Deeply integrating high-quality games with Chinese traditional culture, the Company will continue to arouse foreign
players' interest in experiencing and exploring Chinese culture from the game, and launch more excellent works with Chinese
characteristics, reflecting Chinese spirit and containing Chinese wisdom.
3. Explore the frontier of science and technology in a forward-looking way and focus on the leading business forms in the
industry
The Company continues to build the ecological layout of entertainment technology in the whole industry chain and promote
the mutual empowerment of industrial value and cultural value. Nowadays, new concepts such as "Metaverse" have become more
and more popular. As an enterprise with a proactive strategic vision, the Company continues to extend on the basis of early
investment in VR/AR content, and enters fields involving multi-metaverse infrastructure such as arithmetics, semiconductor, optics,
display, whole machine, application and infrastructure technology, invests in many high-quality enterprises in the fields including
optical module, optical display, AR glasses, VR content, cloud game, spatial intelligence technology and semiconductor materials,
and carries out integration of technology and high-quality content. At the same time, The Company carries out technical research
on using AI algorithm to realize high-precision and high-performance motion capture within the Company, and explore the
immersive UGC ecology of the combination of players' independent content creation and virtual game image. Taking advantage of
the high-quality digital collection platform to launch its self-developed IP digital collection such as The Epoch of Eternity (永恒纪元),
the Company will simultaneously build the 37 Interactive Entertainment Metaverse Game Art Museum, and explore new
interactive gameplay in the social field of non-fungible tokens (NFT) and Metaverse. In the future, the Company will continue to
conduct external exploration and internal breakthrough based on the existing principal business, core R&D capability and industrial
ecological layout, focusing on the integration of emerging technologies and industries, and continue its attempt and exploration in
the new generation of industrial transformation.
4. Earnestly shoulder its own responsibilities and achieve long-term, healthy and sustainable development
As a public company, 37 Interactive Entertainment always adheres to the unity of economic and social benefits. The Company
abides by the bottom line of compliance, establishes an all-round content audit mechanism, actively responds to and strictly
implements the relevant policies, requirements and rules and regulations of the industry, and continuously takes actions in the
direction of juvenile protection, information security, user personal privacy protection, ecological governance of network
information content, cultural inheritance and dissemination. At the same time, the Company continues to increase investment in
scientific and technological innovation, rural revitalization, rural assistance, industry-university-research training, functional game
development, employee development plan and other directions, so as to firmly shoulder its social responsibilities. In the future, 37
Interactive Entertainment will stick to its content baseline, further give play to its advantages, serve society with its professional
ability, practice corporate social responsibilities, and share the development achievements with society to the greatest extent.
(III) Possible Risks
1. Changes in industry policies, risks of violation and countermeasures
In recent years, the authority in charge has attached great importance to the development of game industry, made a series of
major decisions and arrangements and issued a series of policies and measures to guide the industry to develop in a standardized
and healthy way. For example, clear new standards and requirements have been put forward for protection of minors and
anti-addiction of online games. Further strict management measures have been taken to promote standardized management of
game industry. At the same time, information security and protection of users' privacy have drawn much attention from the society.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
58
In the long term, the regulation of the online game industry is becoming more and more standardized, which is conducive to the
healthy development of the industry. The enterprises with standardized operation will benefit from it. However, in the future, if the
Company fails to make corresponding adjustments timely in accordance with changes in industry policies or has a deviation in
understanding management regulations in its operation, there may be a risk that the Company will be punished by relevant
departments or the works will not go online as planned, which will have a significant negative impact on the Company's business
development and brand image. In this regard, 37 Interactive Entertainment will strictly abide by various industry policies, rules and
regulations, actively implement relevant requirements for industry development, establish an internal sound quality management
and control mechanism, strengthen industry policy risk management capability, and fully reduce and avoid the business risks
caused by changes in industry policies.
2. Market competition risks and countermeasures
The online game industry is facing increasingly fierce competition as it gradually matures. At the same time, online game users
are maturing with higher quality demand for game products. The industry is characteristic of fast product transition, limited
product life cycle and volatile player preferences, among others. Intense market competition will challenge the Company’s
development in terms of products and market channels.
In response, the Company will continue to implement the strategy of "boutiqueization, diversification and globalization". On
the one hand, it will strengthen its core competitiveness of its own business, pay continuous attention to self-research investment,
carry out R&D and innovation in product creativity, gameplay, theme, art and technology, and keep up with industry technology
development trend; at the same time, it will maintain close cooperation with excellent developers to guarantee the supply of
quality products, and continue to expand domestic game categories through independently-developed and agency games to
deepen the competitive edge of "integration of R&D and operation". Meanwhile, the Company will speed up the pace of exporting,
give full play to the edges of it in overseas markets, face diversified operations of overseas markets, deepen the cultivation of key
markets, and broaden the categories of games and increase market share. In addition, the Company will dig deeper into
operational data through independently developed AI systems, and timely adjust operational and R&D strategies, to meet the core
demands of users, further play the role of new ideas of digital marketing operation, deepen the business strategy of multi-channel
marketing and long-term service, and continuously enhance core competitiveness in the market.
Facing the current industrial competition pattern, the top-performing enterprise has obvious edges in technology R&D ability,
channel operation ability, product promotion ability, user scale and market share. The Company will continue to consolidate and
cement its competitive edges, actively respond to changes in the industry, reduce market competition risks and seize market
opportunities.
3. Risks of core personnel turnover and countermeasures
A stable and high-quality talent team is an important guarantee for the Company to maintain its core competitive advantage.
If the Company fails to effectively build a core talent team, give reasonable incentives and manages the core personnel, the
employees’ enthusiasm and creativity will be affected, which will have an adverse impact on the Company’s core competitiveness.
In response, much attention has been attached to cultivation and acquisition of professional talents. The Company creatively
builds a platform-based talent management mechanism, according to which excellent game producers are rewarded with high
project bonus, and given discretion of research and creation. In order to attract and retain outstanding management talents and
business elites, the Company has vigorously reformed the project mechanism, shortened the review cycle and established
diversified objectives, so as to stimulate the innovative vitality of employees. In terms of employee performance management, the
Company has set up diversified KPIs based on employees' contribution and ability, as well as reasonable team objectives to
encourage employees’ creativity. Through refining the remuneration system with diversified incentives such as employee stock
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
59
ownership plans, the Company increases the attractiveness to core staffs and R&D personnel. During the Reporting Period, the
Company continuously promoted the reform of rank system, ability system and development system, optimized talent structure,
differentiated talent management and activated talents.
In addition, the Company cares about the long-term development of employees. The Company has established “37 Interactive
Entertainment Learning and Development Center” to provide sufficient training and learning opportunities for employees and help
them grow rapidly. The Company actively carried out training for newcomers and professional abilities such as "Marathon
Leadership Training Camp", "Huangpu New Army", "X+ Plan" and "37TALK", explored seedlings of game industry, promoted talent
upgrading to meet the needs of business upgrading, paid attention to internal sharing, established a team of internal professional
lecturers among employees, spread culture of sharing, built a talent echelon and upgraded talent development system.
Centering on the cultural concept of "health, happiness and sustainability", the Company upgraded colorful welfare system,
strengthened humanistic care and promoted retention of talents. The colorful welfare system encompasses interest-free loan, love
fund, commercial insurance and employee health management. In addition, seasonal activities on holidays, annual physical
examination, singles' fellowship, "Family Day", "Boss Face-to-Face", "37 Battle Talk", "Carnival" and other thematic activities were
regularly held. Inter-departments' team building promoted the connection between employees and their friends, relatives and
colleagues. In addition, the Company built employee clubs with interest activities such as e-sports, table games and dances, created
cultural atmosphere that meets the characteristics of Generation Z, strengthened employees' sense of belonging, balanced
employees' work and life, and took care of employees' physical and mental health in various forms.
XI Communications with the Investment Community such as Researches, Inquiries and
Interviews during the Reporting Period
√ Applicable □ Not applicable
Main discussions
Type of the
Way of Communication and materials Index to the relevant
Date Place communication
communication party provided by the information
party
Company
Institutional
About the
investors and Log Sheet of Investor
operations and
28 January 2021 Conference call By phone Institution research Relations Activities (No.
outlook of the
analysts from 2021-001)
Company
securities firms
Institutional
About the
investors and Log Sheet of Investor
operations and
14 March 2021 Conference call By phone Institution research Relations Activities (No.
outlook of the
analysts from 2021-002)
Company
securities firms
Institutional About the 2020
investors and Annual Report Log Sheet of Investor
6 May 2021 Conference call By phone Institution research and the 2021 Relations Activities (No.
analysts from First Quarterly 2021-003)
securities firms Report
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
60
Investors at the
Company’s 2020
Annual Report
About the Log Sheet of Investor
Video Online
18 May 2021 Other Other Company’s Relations Activities (No.
conferencing Roadshow
fundamentals 2021-004)
through the
Quanjing
platform
Institutional
About the
Company investors and Log Sheet of Investor
operations and
19 May 2021 Conference By visit Institution research Relations Activities (No.
outlook of the
Room analysts from 2021-005)
Company
securities firms
Institutional About the
investors and operations of Log Sheet of Investor
Video
31 August 2021 Other Institution research the Company in Relations Activities (No.
conferencing
analysts from H1 and its 2021-006)
securities firms outlook
Institutional
investors and About the 2021 Log Sheet of Investor
1 November Video
Other Institution research Third Quarterly Relations Activities (No.
2021 conferencing
analysts from Report 2021-007)
securities firms
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
61
Part IV Corporate Governance
I Corporate Governance Overview
Since it went public, the Company has been improving its corporate governance structure in strict accordance with the
Company Law, the Securities Law, and relevant laws and regulations laid down by the China Securities Regulatory Commission and
Shenzhen Stock Exchange. It has gradually established a strict system for functioning of the general meeting of shareholders, the
Board of Directors and the Supervisory Committee. Meanwhile, the Company has also strengthened and improved its internal
management and control systems to further improve its corporate governance. The Company carries out operations and discloses
information in compliance with standards, and its actual situation of corporate governance meets the relevant requirements of the
normative documents on the governance of listed companies issued by the China Securities Regulatory Commission.
(I) Shareholders and general meeting of shareholders
The Company convenes and holds general meetings of shareholders in strict accordance with the Company Law, the Securities
Law, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Company’s Articles of Association, the Rules of
Procedure for General Meetings of Shareholders and other relevant laws and regulations, and engages lawyers to attend as
witnesses, to ensure that all shareholders, especially minority shareholders, enjoy equal status and fully exercise their rights.
(II) The controlling shareholder and the Company
The Company is able to independently do business and operate. The controlling shareholder of the Company strictly regulates
his behaviors, and, through the general meetings of shareholders, exercises his rights as an investor. He has not directly or
indirectly intervened the Company's decisions or operating activities without holding a general meeting of shareholders, and the
Company and its controlling shareholder are independent of each other in terms of personnel, assets, finance, structure and
business. The Board of Directors, the Supervisory Committee and the internal management bodies of the Company operate
independently according to the rules of procedure and the Company's systems.
(III) Directors and the Board of Directors
The Company elects directors in accordance with the provisions and requirements of the Company Law, the Securities Law,
the Company’s Articles of Association, the Rules of Procedure for General Meetings of Shareholders, and the Rules of Procedure for
the Board of Directors, etc. The number of members of and composition of the Company's Board of Directors complies with
relevant requirements of laws, regulations and the Company’s Articles of Association. All directors of the Company do their jobs
according to the laws, regulations, Standardized Operation Guidelines, the Company's Rules of Procedure for the Board of Directors,
the Independent Director System, etc., earnestly attend meetings of the Board of Directors and the general meeting of
shareholders, actively participate in training, study relevant laws and regulations, and earnestly perform their duties as directors
honestly, diligently and conscientiously. Under the Board of Directors, there are four special committees, i.e. the Audit Committee,
the Compensation and Appraisal Committee, the Nomination Committee and the Strategy Committee, which play an important
role in promoting the standardized operation and sound and sustainable development of the Company.
(IV) Supervisors and the Supervisory Committee
The Company elects supervisors in strict accordance with the relevant provisions of the laws, regulations, the Company’s
Articles of Association, the Rules of Procedure for General Meetings of Shareholders, the Rules of Procedure for the Supervisory
Committee, etc. The number of members of and composition of the Company's Supervisory Committee complies with the
requirements of laws, regulations and the Company’s Articles of Association. The Supervisory Committee currently consists of three
supervisors, including two Employee Representative Supervisors elected by the Employees' Congress of the Company. In
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
62
accordance with the requirements of laws, regulations, the Rules of Procedure for the Supervisory Committee, etc., to protect the
interests of shareholders, all supervisors of the Company earnestly perform their duties, supervises the financial affairs of the
Company as well as the legality and compliance of the performance of duties by directors and senior managers of the Company,
and safeguards the legitimate rights and interests of the Company and its shareholders loyally and diligently.
(V) Information disclosure and transparency
The Company fulfills its information disclosure obligations in strict accordance with relevant laws and regulations as well as the
Measures for the Management of Information Disclosure by Listed Companies. The Company can disclose information in a truthful,
accurate, complete and timely manner without false records, misleading statements or material omissions, thus ensuring that all
investors have equal access to corporate information, enhancing the transparency of the Company and effectively protecting the
right to know of small and medium investors.
(VI) Stakeholders
While maintaining its steady development and maximizing shareholders' interests, the Company actively concerns itself with
the welfare, undertakings for the public good and other issues of the region where it is located, attaches importance to social
responsibilities, fully respects and safeguards the legitimate right of employees, creditors and other stakeholders, and strengthens
communication and cooperation with all parties to promote its sustainable and sound development with them.
(VII) The Company and investors
In accordance with the provisions of the Investor Relations Management System, the Company has strengthened investor
relations management, and expressly specified the Board Secretary as the person in charge of investor relations management, who
organizes and implements the daily management of investor relations. During the Reporting Period, the Company strengthened its
communication with investors through the online briefing on its annual report, telephone answering, online interactions, on-site
surveys and other means.
(VIII) Internal audit system
The Company has set up an Internal Audit Department and employed full-time auditors, who audit and supervise the quality of
economic operations, economic benefits, internal control system and implementation, use of expenses and assets of the Company
and its subsidiaries under the leadership of the Audit Committee of the Board of Directors.
(IX) Protection of legitimate rights and interests of shareholders
The Company protects the rights of shareholders in accordance with law, attaches importance to reasonable investment
returns for shareholders, and expressly prescribes the profit allocation policies in the Company's Articles of Association, especially
the cash dividend policies. In addition, it has formulated the Shareholder Dividend Plan of Wuhu 37 Interactive Entertainment
Network Technology Group Co., Ltd. for the Next Three Years (2020-2022). Thus, its profit distribution policies have been
continuous and stable, with the long-term interests of the Company, the overall interests of all shareholders and the sustainable
development of the Company taken into account.
Indicate whether the actual situation of corporate governance significantly deviates from the laws, administrative regulations and
regulations issued by the China Securities Regulatory Commission on listed company governance.
□ Yes √ No
No such cases.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
63
II Independence of the Company from the Controlling Shareholder and Actual Controller in
Terms of Assets, Personnel, Finance, Structure and Business
The Company has independent production and operation capacity and independent production, supply and sales systems, and
is independent from its controlling shareholder and major shareholders in terms of business, personnel, assets, structure and
finance. The Company owns complete assets necessary for production and operation, and legally and independently owns the
technologies necessary for production and operation, over which there is no ownership dispute; the Company has a complete
business system and the ability to operate independently in the market; the Company manages labor and salary independently of
its controlling shareholder and major shareholders; its directors, supervisors, senior management and core technical personnel
have not been cross-appointed in a way prohibited by law; the Company has an independent financial department, an independent
financial accounting system and an independent financial accounting system, and independent bank accounts, and it pays taxes
independently according to law. Details of independent operation are as follows:
1. Independence of business
The Company is an enterprise legal person engaged in production and operation independently, owns independent and
complete R&D, purchasing and sales systems, an independent and complete business system and the ability to operate
independently in the market. It does not reply on its shareholders or any other related party, and there is no horizontal competition
between the Company and its controlling shareholder, who has not directly or indirectly intervened in the operations of Company.
2. Independence of personnel
The Company's senior management, including its General Manager, Deputy General Manager, Board Secretary and Chief
Financial Officer, and its core technical personnel all work at the Company on a full-time basis and receive remunerations. They do
not hold any administrative position at or receive salary from the corporate shareholders; the directors, supervisors and senior
management of the Company are all selected in strict accordance with the relevant provisions of the Company Law and the
Company's Articles of Association. The controlling shareholder has not made decisions on appointment and removal by bypassing
the general meetings of shareholders, the Board of Directors and the Supervisory Committee of the Company. The employees of
the Company are independent of its corporate shareholders and related parties, and the Company implements independent labor,
personnel and salary management systems.
3. Independence of assets
The ownership of assets of the Company, its controlling shareholder and major shareholders is clear, and its controlling
shareholder and major shareholders have not illegally occupied or used the Company's funds, assets or other resources. The
Company independently owns all of its land use rights, real estate, machinery and equipment, trademarks, patents, proprietary
technologies and other assets, and does not rely on the assets of shareholders for production and operation. The Company has full
right to control and dispose of all of its assets.
4. Independence of structure
The Company has established and improved the general meetings of shareholders, the Board of Directors, the Supervisory
Committee, the management team headed by the General Manager and some other bodies, as well as the corresponding rules for
the general meetings of shareholders, the Board of Directors and the Supervisory Committee and the Work Rules for the General
Manager, thus creating a sound corporate governance structure; each functional department operates independently according to
the prescribed responsibilities; there is no superior-subordinate relationship between the functional departments of the Company
and its corporate shareholders or their functional departments, and no corporate shareholder has intervened in the establishment
or operation of the Company's organizational structure.
5. Independence of finance
The Company has an independent financial department, an independent accounting system and an independent financial
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
64
management system, and independently makes financial decisions; the Company has opened bank accounts independently and
does not share bank accounts with its corporate shareholders. The Company files taxes and performs tax payment obligations
independently in accordance with the law. None of its corporate shareholders and other related parties have illegally occupied or
used the Company's monetary funds or other assets; the Company signs external contracts independently.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Extraordinary General Meetings of Shareholders Convened during the Reporting
Period
1. General Meetings of Shareholders Convened during the Reporting Period
Investor Resolutions of the
Meeting Type Date of the meeting Date of disclosure
participation ratio meeting
Announcement on
Resolutions of the
The First
First Extraordinary
Extraordinary Extraordinary
General Meeting of
General Meeting of General Meeting of 38.51% 29 March 2021 30 March 2021
Shareholders of
Shareholders of Shareholders
2021
2021
(Announcement No.
2021-017)
Announcement on
Resolutions of the
The 2020 Annual Annual General 2020 Annual General
General Meeting of Meeting of 47.76% 22 June 2021 23 June 2021 Meeting of
Shareholders Shareholders Shareholders
(Announcement No.
2021-038)
Announcement on
Resolutions of the
The Second Second
Extraordinary Extraordinary Extraordinary
General Meeting of General Meeting of 37.38% 16 September 2021 17 September 2021 General Meeting of
Shareholders of Shareholders Shareholders of
2021 2021
(Announcement No.
2021-064)
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
65
2. Extraordinary General Meetings of Shareholders Convened at the Request of Preferred Shareholders with Resumed Voting Rights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. General Information
Beginning Increase in Decrease in Other Ending Reasons for
Start of End of
Name Office title Incumbent/Former Gender Age shareholding the period the period increase/decrease shareholding share
tenure tenure
(share) (share) (share) (share) (share) changes
Chairman of
the Board 20 January
Li Weiwei Incumbent Male 44 7 April 2022 361,413,019 39,300,000 322,113,019
and General 2015
Manger
Vice
Zeng Kaitian Chairman of Incumbent Male 46 5 July 2019 7 April 2022 245,344,374 245,344,374
the Board
16
Hu Yuhang Director Incumbent Male 45 September 7 April 2022 147,857,684 53,740,000 201,597,684
2020
Director and
Deputy 20 January
Yang Jun Incumbent Male 42 7 April 2022 693,400 2,100,000 693,400 2,100,000
General 2015
Manager
Independent 24 December
Li Yang Incumbent Male 53 7 April 2022
Director 2019
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
66
Independent
Chen Jianlin Incumbent Male 42 13 May 2016 7 April 2022
Director
Independent 24 December
Ye Xin Incumbent Male 46 7 April 2022
Director 2019
Liu Independent 24 December
Incumbent Male 39 7 April 2022
Guangqiang Director 2019
Chairman of
the 27 December
He Yang Incumbent Male 40 7 April 2022
Supervisory 2018
Committee
27 November
Cheng Lin Supervisor Incumbent Female 39 7 April 2022
2015
Liu 20 January
Supervisor Incumbent Female 44 7 April 2022
Fengyong 2015
Deputy
21 January
Zhu Huaimin General Incumbent Male 39 7 April 2022
2019
Manager
Chief
Financial
12 October
Ye Wei Officer and Incumbent Male 38 7 April 2022
2016
Board
Secretary
Total -- -- -- -- -- -- 755,308,477 55,840,000 39,993,400 0 771,155,077 --
Indicate whether any director, supervisor or senior management resigned before the expiry of their tenures during the Reporting Period.
□ Yes √ No
Changes of directors, supervisors and senior management:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
67
□ Applicable √ Not applicable
2. Biographical Information
Professional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors and
senior management:
Mr. Li Weiwei was born in November 1977. Mr. Li is a member of the CPC and has no right of permanent residence in a foreign
country. He received an EMBA degree from Cheung Kong Graduate School of Business and is working on a Doctor of Business
Administration program at the school. From August 2000, he worked for Shenzhen Zhuanjia Network Technology Co., Ltd., then
Shenzhen Quanzhi Information Technology Co., Ltd. and then Guangzhou Haiyan Network Technology Co., Ltd. From October 2011
to 18 March 2015, he served as Executive Director and General Manager of 37 Interactive Entertainment (Shanghai) Technology Co.,
Ltd. On 20 January 2015, he became Vice Chairman of the Third Board of Directors of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. On 24 August 2015, he was also appointed General Manager of the Company. On 21 January 2019, he
became Chairman of the Fourth Boarder of Directors and General Manager of the Company. On 8 April 2019, he became Chairman
of the Fifth Boarder of Directors and General Manager of the Company. Mr. Li is currently Chairman of the Fifth Board of Directors
and General Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Zeng Kaitian, Han nationality, was born in March 1975. Mr. Zeng is of Chinese nationality and has no right of permanent
residence in a foreign country. He received an EMBA degree from China Europe International Business School. He is a co-founder of
37 Interactive Entertainment (Shanghai) Technology Co., Ltd. In October 2011, he became Director of 37 Interactive Entertainment
(Shanghai) Technology Co., Ltd., overseeing the overseas publishing of the company's online game business. On 5 July 2019, he
became Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Zeng is currently Vice Chairman of
the Fifth Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Hu Yuhang, Han nationality, was born in February 1976. He graduated from Lanzhou University and received an EMBA
degree from Cheung Kong Graduate School of Business. He has no right of permanent residence in a foreign country. Mr. Hu
became President of 37 Interactive Entertainment in October 2013 in charge of the strategic planning and day-to-day management
of 37 Games, an R&D brand of 37 Interactive Entertainment. He is a seasoned expert in game R&D management and has rich
experience in game R&D and project management. On 16 September 2020, he became Director of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd.. Mr. Hu is currently Director of the Fifth Board of Directors of 37 Interactive
Entertainment Network Technology Group Co., Ltd.
Mr. Yang Jun, born in January 1979, is a member of the CPC and has no right of permanent residence in a foreign country. He
has received a master's degree in corporate management and is working on a Doctor of Business Administration program at the
Cheung Kong Graduate School of Business .He is a Chinese certified public accountant. From June 2006 to April 2012, he worked for
Deloitte Touche Tohmatsu (special general partner) as the Manager of the Audit Department. From April 2012 to present, he served
as CFO of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. On 20 January 2015, he became Director and Deputy
General Manager of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. He is currently Director of the Fifth
Board of Directors and Deputy General Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Chen Jianlin, Han nationality, was born in April 1979. He is of Chinese nationality and has no right of permanent residence
in a foreign country. He holds a Ph.D. and is a certified Independent Director. From July 2009 to present, he worked at Guangdong
University of Finance & Economics, serving as Lecturer, then Associate Professor and then Professor. He is currently Vice Dean,
Professor and Master's Degree Supervisor of the School of Accounting, Guangdong University of Finance & Economics. In 2015, he
was included in the list of Ministry of Finance National (Reserve) Leading Accounting Talents (Academics). On 13 May 2016, he
became Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Li is currently
Independent Director of the Fifth Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
68
Mr. Li Yang, Han nationality, was born in June 1968. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received an LL.B. from Zhongnan University of Economics and Law and an LL.M. and a J.D. from Peking
University and completed a postdoctoral research program in laws at Wuhan University. He is a certified Independent Director. Since
December 2020, he has been serving as Professor and Doctorate Supervisor of the Civil, Commercial and Economic Law School of
China University of Political Science and Law, with concurrent roles as Vice Chairman of the Intellectual Property Law Association of
China Law Society, Guest Consultant (the Fifth Session) of the Supreme People’s Court, Researcher of the Intellectual Property Right
Judicial Protection Research Center of the Supreme People's Court, and Expert Consultant to Guangzhou Intellectual Property Court,
among other roles. On 24 December 2019, he became Independent Director of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. Mr. Li is currently Independent Director of the Fifth Board of Directors of 37 Interactive Entertainment
Network Technology Group Co., Ltd.
Mr. Ye Xin, Han nationality, was born in July 1975. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received a bachelor's degree in accounting from Xi'an Jiaotong University, a Master of Management degree from
Xi'an University of Technology and an EMBA degree from Guanghua School of Management, Peking University and Cheung Kong
Graduate School of Business. He is a certified Independent Director. From 1995 to 2003, he worked at the Civil Aviation
Administration of China. From 2003 to 2005, he served as Deputy General Manager of Tsinghua Unisplendour Venture Investment
Co., Ltd. From 2005 to 2015, he served as Director, Deputy General Manager, Board Secretary and General Manager of Shenzhen
Coship Electronics Co., Ltd.. From 2016 to present, he was General Manager of Tianshi Fund Management (Shenzhen) Co., Ltd. And
since 12 July 2021, he has been acting as Executive Director of Huili Resources. On 24 December 2019, he became Independent
Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Ye is currently Independent Director of the
Fifth Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Mr. Liu Guangqiang, Han nationality, was born in February 1982. He is of Chinese nationality and has no right of permanent
residence in a foreign country. He received a Ph.D. in public economic management from Wuhan University. He is a member of the
CPC and a certified Independent Director. From July 2014 to present, he worked at Zhongnan University of Economics and Law,
holding positions of Associate Professor of the School of Accounting, Vice Dean of the Faculty of Accounting and Director of the
Accounting Information Research Center. He is currently on the list of National High-end (Reserve) Accounting Talents. On 24
December 2019, he became Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr.
Liu is currently Independent Director of the fifth Board of Directors of 37 Interactive Entertainment Network Technology Group Co.,
Ltd.
Mr. He Yang, Han nationality, was born in June 1981. He is of Chinese nationality, is a member of the CPC and has no right of
permanent residence in a foreign country. He received an MBA degree from University of Electronic Science and Technology of
China. From June 2012 to July 2014, he was Deputy General Manager of Chengdu 37Wan Network Technology Co., Ltd.. In July
2014, he became Director and General Manager of Jiangsu Aurora Network Technology Co., Ltd. In December 2018, he became
Employee Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network Technology Group Co.,
Ltd. In January 2019, he became Chairman of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. Mr. He is currently Chairman of the Fifth Supervisory Committee of 37 Interactive Entertainment
Network Technology Group Co., Ltd.
Ms. Cheng Lin, Han nationality, was born in July 1982. She is of Chinese nationality and has no right of permanent residence in
a foreign country. She is working on an EMBA program at Lingnan College, Sun Yat-sen University. From 2011 to 2016, she was
Director of Public Affairs of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. She is currently Shareholder Supervisor of
the Fifth Supervisory Committee of 37 Interactive Entertainment Network Technology Group Co., Ltd.
Ms. Liu Fengyong, Han nationality, was born in April 1977. She is of Chinese nationality and has no right of permanent
residence in a foreign country. She has received a university degree and is a member of the CPC. From July 2000 to September 2005,
she worked for Guangzhou Pearl River Piano Group Co., Ltd. as a Legal Specialist. From November 2005 to August 2012, she was
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
69
Legal Director of Guangzhou Rockmobile Network Co., Ltd. In August 2012, she became Legal Manager of 37 Interactive
Entertainment (Shanghai) Technology Co., Ltd. In January 2015, she became Employee Supervisor of the Third Supervisory
Committee of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. And in January 2017, she became Employee
Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. She is
currently Employee Supervisor of the Fifth Supervisory Committee of 37 Interactive Entertainment Network Technology Group Co.,
Ltd.
Mr. Zhu Huaimin, Han nationality, was born in January 1982. He is of Chinese nationality and has no right of permanent
residence in a foreign country. He holds an EMBA degree of China Europe International Business School. From July 2004 to July
2008, he worked for Beijing Sina Internet Information Service Co., Ltd. From August 2008 to December 2009, he was Technical
Manager of Molihe Network Technology (Beijing) Co., Ltd. In October 2011, he joined 37 Interactive Entertainment (Shanghai)
Technology Co., Ltd., serving as Vice President of Technology. On 21 January 2019, he became Deputy General Manager of Wuhu 37
Interactive Entertainment Network Technology Group Co., Ltd. Mr. Zhu is currently Deputy General Manager of 37 Interactive
Entertainment Network Technology Group Co., Ltd.
Mr. Ye Wei was born in December 1983. He is a member of the CPC and has no right of permanent residence in a foreign
country. He has received a bachelor's degree, is a Certified Public Accountant in China, and is a Shenzhen Stock Exchange certified
Board Secretary. From August 2006 to July 2013, he was Audit Manager of Ernst & Young Guangzhou Office. From July 2013 to
March 2015, he was Chief Financial Officer of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. On 30 March 2015, he
became Chief Financial Officer of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. On 6 January 2017, he
became Chief Financial Officer and Secretary to the Fourth Board of Directors of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. Mr. Ye is currently Chief Financial Officer and Board Secretary of 37 Interactive Entertainment Network
Technology Group Co., Ltd.
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
1. Procedure for determining the remunerations of directors, supervisors and senior management: The Remuneration and
Performance Assessment Committee of the Company's Board of Directors formulates the policy and plan for compensating the
Company's directors, supervisors and senior management. The remunerations of directors and supervisors are reviewed and
approved by the General Meeting of Shareholders. The remunerations of senior management are reviewed and approved by the
Board of Directors. The Human Resources and Finance Departments of the Company support the Remuneration and Performance
Assessment Committee to implement the remuneration plan for the Company's directors, supervisors and senior management.
2. Criteria for determining the remunerations of directors, supervisors and senior management: The remunerations of directors,
supervisors and senior management are determined based on the operational performance of the Company and the current market
conditions. The remunerations of senior management are determined according to the Company's relevant regulations, the
Company's annual operational targets for 2021 and the functions and duties the senior management have fulfilled in achieving the
annual operational targets and sustainable development objectives.
3. Payment of remunerations of directors, supervisors and senior management: The remunerations of independent directors are
paid semiannually to their personal accounts as scheduled. The remunerations of other directors, supervisors and senior
management are determined based on the results of their performance assessment and are paid monthly or as scheduled in the
remuneration payment system.
4. To further improve the Company's non-independent director remuneration management, stimulate their initiative and
creativity, improve the Company's operations and management, promote healthy, sustainable and stable development of the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
70
Company and ensure the realization of the strategic development objectives for the Company, the Proposal for Revising the
Remuneration Plan for the Directors of the Fifth Board of Directors was reviewed and approved by the First Extraordinary General
Meeting of Shareholders of 2020 on 15 May 2020. The remuneration plan is revised as follows: each independent director is
compensated a fixed amount of director fees of RMB120,000 per annum, which is paid out in two half-year disbursements. On 30
April 2021, the Proposal for Revising the Remuneration Plan for the Non-independent Directors of the Fifth Board of Directors was
reviewed and approved by the 2020 Annual General Meeting of Shareholders. The remuneration plan for non-independent
directors is revised as follows: All non-independent directors work full time for the Company, tackle day-to-day decision-making
tasks and perform important functions and duties, so they are compensated RMB0.6 million to RMB8 million per annum, with the
exact amount of remuneration to be determined based on their job functions and duties and the Company's performance. The
compensation described above does not include the reward covered under ESOPs or equity incentive programs.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-tax
Remuneration
Incumbent/Form remuneration
Name Office title Gender Age from any related
er from the
party or not
Company
Chairman of the
Li Weiwei Board and Male 44 Incumbent 558.69 Not
General Manger
Vice Chairman of
Zeng Kaitian Male 46 Incumbent 575.49 Not
the Board
Hu Yuhang Director Male 45 Incumbent 786.97 Not
Director and
Yang Jun Deputy General Male 42 Incumbent 527.42 Not
Manager
Independent
Li Yang Male 53 Incumbent 12 Not
Director
Independent
Chen Jianlin Male 42 Incumbent 12 Not
Director
Independent
Ye Xin Male 46 Incumbent 12 Not
Director
Independent
Liu Guangqiang Male 39 Incumbent 12 Not
Director
Chairman of the
He Yang Supervisory Male 40 Incumbent 511.03 Not
Committee
Cheng Lin Supervisor Female 39 Incumbent 156.92 Not
Liu Fengyong Supervisor Female 44 Incumbent 69.89 Not
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
71
Deputy General
Zhu Huaimin Male 39 Incumbent 217.42 Not
Manager
Chief Financial
Ye Wei Officer and Board Male 38 Incumbent 177.34 Not
Secretary
Total -- -- -- -- 3,629.17 --
VI Duty Performance by Directors during the Reporting Period
1. Board Meetings Convened during the Reporting Period
Meeting Date of the meeting Date of disclosure Resolutions of the meeting
Announcement on Resolutions
th th
The 17 Meeting of the Fifth of the 17 Meeting of the Fifth
10 March 2021 11 March 2021
Board of Directors Board of Directors
(Announcement No. 2021-005)
Announcement on Resolutions
th th
The 18 Meeting of the Fifth of the 18 Meeting of the Fifth
29 April 2021 30 April 2021
Board of Directors Board of Directors
(Announcement No. 2021-018)
Announcement on Resolutions
th th
The 19 Meeting of the Fifth of the 19 Meeting of the Fifth
12 July 2021 13 July 2021
Board of Directors Board of Directors
(Announcement No. 2021-040)
Announcement on Resolutions
th th
The 20 Meeting of the Fifth of the 20 Meeting of the Fifth
1 August 2021 2 August 2021
Board of Directors Board of Directors
(Announcement No. 2021-048)
Announcement on Resolutions
st st
The 21 Meeting of the Fifth of the 21 Meeting of the Fifth
30 August 2021 31 August 2021
Board of Directors Board of Directors
(Announcement No. 2021-055)
Announcement on Resolutions
nd nd
The 22 Meeting of the Fifth of the 22 Meeting of the Fifth
22 September 2021 23 September 2021
Board of Directors Board of Directors
(Announcement No. 2021-066)
Announcement on Resolutions
rd rd
The 23 Meeting of the Fifth of the 23 Meeting of the Fifth
29 October 2021 30 October 2021
Board of Directors Board of Directors
(Announcement No. 2021-068)
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
72
2. Attendance of Directors at Board Meetings and General Meetings of Shareholders
Attendance of directors at board meetings and general meetings of shareholders
The director
Total number Board
Board failed to
of board Board meetings Board General
meetings attend two
meetings the meetings attended by meetings the meetings of
Director attended consecutive
director was attended on way of director failed shareholders
through a board
supposed to site telecommunic to attend attended
proxy meetings or
attend ation
not
Li Weiwei 7 7 0 0 0 Not 3
Zeng Kaitian 7 7 0 0 0 Not 3
Hu Yuhang 7 7 0 0 0 Not 2
Yang Jun 7 7 0 0 0 Not 3
Li Yang 7 0 7 0 0 Not 1
Chen Jianlin 7 0 7 0 0 Not 1
Ye Xin 7 0 7 0 0 Not 1
Liu Guangqiang 7 0 7 0 0 Not 1
Explanation of why any director failed to attend two consecutive board meetings:
3. Objections Raised by Directors on Matters of the Company
Indicate whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about Duty Performance by Directors
Indicate whether any recommendations from directors were adopted by the Company.
√ Yes □ No
Explanation on adoption/rejection of recommendations of directors:
All the directors of the Company have faithfully and diligently performed their duties, worked diligently, done a lot of work for
realization of the resolutions of the general meeting of shareholders and Board of Directors, and actively provided valuable
suggestions, which has played an effective role in promoting development of various businesses and improving corporate
governance level. As per the Company Law, the Securities Law, the Articles of Association, as well as other applicable laws and
regulations, the independent directors paid attention to compliance in the Company’s operations, performed their duties
independently, and offered valuable professional recommendations with respect to the Company’s system improvement and
decision-making. During the Reporting Period, they issued their independent and fair opinion on matters of the Company that
required their opinion, including the appointment of the independent auditor for the annual financial statements, related-party
transactions, provision of guarantees for external entities, the private placement, etc. They have played their part to refine the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
73
Company’s supervision mechanism and protect the lawful rights and interests of the Company and its shareholders.
VII Duty Performance by Specialized Committees under the Board of Directors during the
Reporting Period
Substantial Other Particulars
Number of
opinion and information about
Committee Members meetings Date of meeting Topic of meeting
recommendati on duty objections
convened
ons performance (if any)
1. The full 2020 Annual
Report was approved. 2.
The Proposal on
Appointment of
Chairman: 29 April 2021 Independent Auditor for N/A N/A
Chen Jianlin Financial Statements was
approved. 3. The full 2021
Audit Other
1 First Quarterly Report was
Committee members: Yang
approved.
Jun and Liu
Guangqiang 1. The full 2021 Interim
30 August 2021 N/A N/A
Report was approved.
1. The full 2021 Third
29 October
Quarterly Report was N/A N/A
2021
approved.
Chairman: Ye
1. The Proposal for Revising
Xin
Remuneration the Remuneration Plan for
Other
and Appraisal 1 29 April 2021 the Non-independent N/A N/A
members: Zeng
Committee Directors of the Fifth Board
Kaitian and
of Directors was approved.
Chen Jianlin
VIII Duty Performance by the Supervisory Committee
Indicate whether the Supervisory Committee identified any risk to the Company during its supervision in the Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections with respect to matters of the Company.
IX Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the parent at the period-end 1
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
74
Number of in-service employees of principal subsidiaries at the period-end 3,995
Total number of in-service employees at the period-end 3,996
Total number of paid employees in the Reporting Period 3,996
Number of retirees to whom the parent or its major subsidiaries need to pay retirement
0
pensions
Functions
Function Employees
Marketing 1,225
Technical 403
Financial 100
Administrative 51
R&D 1,554
Teaching 120
Operation 252
Others 291
Total 3,996
Educational backgrounds
Educational background Employees
Master’s degree and above 240
Bachelor’s degree 2,723
Junior college and below 1,033
Total 3,996
2. Employee Remuneration Policy
The Company strictly observes the Labor Law of the People's Republic of China and other relevant laws and regulations,
including rules, regulations and normative documents issued by the various ministries and commissions of the State Council, and
has implemented an employment contract system. The Company protects the rights and interests of employees by strictly
implementing China's employment system, labor protection system, social security system and medical security system and paying
premiums of pension insurance, medical insurance, unemployment insurance, work injury insurance and maternity insurance and
making contributions to the Housing Provident Fund for employees.
The Company provides employees with generous welfare benefits, such as supplementary commercial insurance, interest-free
housing loans, solid breakfast, meal allowances, flower tea, transportation allowances, telecommunication allowances, notebook
allowances, physical checks, extra holidays, and employee clubs.
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
75
The total amount of employee remunerations of the Reporting Period is RMB1.647 billion, accounting for 12.38% of the total
costs (including cost of sales, distribution and selling expenses, general and administrative expenses and R&D expenses). The
profitability of the Company has a low sensitivity to the variation in the total amount of employee remunerations. At the end of the
Reporting Period, the Company's core technical staff accounts for 17.67% of the total number of employees, and their
remunerations account for 30.26% of the total amount of employee remunerations.
3. Training Plans
The Company conducts staff training focusing on improving employee’s quality and working skills, promoting their
occupational development, and attracting and developing talents to support the Company’s business development and human
resources appreciation. In addition, the training program is committed to building a unified corporate culture, values and code of
conduct to form a core centripetal force. In line with the Company’s long-term development strategy, the program also introduced
advanced management concepts, and facilitated internal management progress, which was a booster for cadre training and strategy
implementation.
The Company established "37 Interactive Entertainment Learning Development Center" to provide employees with sufficient
training and learning opportunities to help them grow rapidly. The Company actively carried out training for newcomers and
professional abilities such as "Marathon Leadership Training Camp", "Huangpu New Army", "X+ Plan" and "37TALK", covering
26,573 people.
4. Labor Outsourcing
√ Applicable □ Not applicable
Total hours of labor outsourced 1,062,224.66
Total payment for labor outsourcing (RMB) 58,735,450.10
X Profit Distribution (in the Form of Cash and/or Stock)
The profit distribution policy, especially the formulation, implementation and amendments to the cash dividend policy, in the
Reporting Period:
√ Applicable □ Not applicable
The Company formulated the Shareholder Return Plan for the Next Three Years (2020-2022) of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd. (hereinafter referred to as the "Shareholder Return Plan") to further promote
the establishment of a sound, sustainable and stable shareholder return mechanism, increase the transparency and operability of
the profit distribution policy and effectively protect the legitimate rights and interests of public investors.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and resolution of general meeting of
Yes
shareholders
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and played their due role Yes
Non-controlling shareholders are able to fully express their opinion and desire and their legal rights and Yes
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
76
interests are fully protected
In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in
Yes
compliance with applicable regulations and transparent
Indicate whether the Company fails to put forward a cash dividend proposal despite the facts that the Company has made profits in
the Reporting Period and the profits of the Company as the parent distributable are positive.
□ Applicable √ Not applicable
Final dividend plan:
√ Applicable □ Not applicable
Bonus issue from profit (share/10 shares) 0
Cash dividend/10 shares (RMB) (tax inclusive) 3.70
Share base (share) 2,217,864,281
Cash dividends (RMB) (tax inclusive) 820,609,783.97
Cash dividends in other forms (such as share repurchase) (RMB) 299,954,365.22
Total cash dividends (including those in other forms) (RMB) 1,120,564,149.19
Distributable profit (RMB) 1,888,900,038.53
Total cash dividends (including those in other forms) as % of total profit to be distributed 100.00%
Applicable cash dividend policy
If it is difficult to identify the development stage of the Company but it has a significant capital expenditure arrangement, when
making profit distribution, cash dividends shall account for no less than 20% in the profit distribution.
Details of the cash and/or stock dividend plan
Upon approval by the Board of Directors, the Company’s 2021 final dividend plan is as follows: With a fixed dividend payout
ratio, based on the total issued share capital (exclusive of shares in the Company’s account for repurchased shares) on the date of
record, a cash dividend of RMB 3.70 (tax inclusive) per 10 shares is planned to be distributed to all the shareholders of the
Company, with the remaining undistributed profit carried forward to the next year; and there will be no bonus issue from either
profit or capital reserves. The above dividend plan is consistent with the Company’s performance growth, and also in line with
relevant provisions of the Company Law, the Articles of Association and the Company’s shareholder return plan. The independent
directors of the Company have expressed consent as their independent opinion on the above dividend plan.
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
√ Applicable □ Not applicable
1. Equity Incentives
N/A
Equity incentives granted to directors and senior management:
□ Applicable √ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
77
Appraisal mechanism and incentives for senior management:
N/A
2. Implementation of Employee Stock Ownership Plans
√ Applicable □ Not applicable
Outstanding employee stock ownership plans during the Reporting Period:
Number of Total shares As % of the total
Awardee coverage Change Funding source
awardees held share capital
The leadership team of the Company
Shares under the
(directors, supervisors and senior
They held employee stock
management); chief officers and deputy
9,119,783 ownership plans were
chief officers; key management and 341 N/A 0.41%
shares in total at transferred from
technological staff (mid-level employees);
the period-end. repurchased shares for
and other employees approved by the
no compensation.
Company
Shares held by directors, supervisors and senior management under employee stock ownership plans during the Reporting Period:
Number of shares held at Number of shares held at As % of the total share
Name Office title
the period-begin the period-end capital
Hu Yuhang Director 1,045,144 610,000 0.03%
Director and Deputy
Yang Jun 245,000 140,000 0.01%
General Manager
Chairman of the
He Yang 210,000 120,000 0.01%
Supervisory Committee
Cheng Lin Supervisor 56,000 32,000 0.00%
Liu Fengyong Supervisor 31,500 18,000 0.00%
Chief Financial Officer
Ye Wei 175,000 100,000 0.00%
and Board Secretary
Zhu Huaimin Deputy General Manager 126,000 72,000 0.00%
Change of the asset management institution during the Reporting Period:
□ Applicable √ Not applicable
Share ownership changes due to share disposal by holders and other reasons during the Reporting Period:
√ Applicable □ Not applicable
During the Reporting Period, certain awardees reduced, in compliance with applicable regulations, their shareholdings upon
the expiry of the second lockup period of the Third Employee Stock Ownership Plan. As at the end of the Reporting Period,
9,119,783 shares were held under the Third Employee Stock Ownership Plan, accounting for 0.41% of the total share capital.
Exercise of shareholder rights during the Reporting Period:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
78
N/A
Other information about employee stock ownership plans during the Reporting Period:
√ Applicable □ Not applicable
According to the Third Employee Stock Ownership Plan (draft), if the Company's performance target defined in the ESOP is
achieved -- that is, the total net profit (which is measured based on the net profit attributable to the Listed Company’s shareholders
and does not include costs incurred by the shares under this ESOP) from 2019 to 2021 is not lower than RMB5.2 billion), then 30%
of the total number of shares in this ESOP can be unlocked. According to the Audit Report issued by Huaxing Certified Public
Accountants LLP (special general partnership), the net profit attributable to the Listed Company’s shareholders in 2021 of RMB2.876
billion, and the net profit attributable to the Listed Company’s shareholders minus the cost incurred by this ESOP in 2021 is
RMB2.942 billion. Therefore, the total net profit attributable to the Listed Company’s shareholders from 2019 to 2021 minus the
cost incurred by this ESOP is RMB8.019 billion. That is, the Company's performance target defined in the ESOP has been achieved.
Therefore, 40% of the total number of shares under this ESOP were unlocked 36 months after the date (27 July 2019) of the
Company's announcement on the transfer of the last shares to this ESOP upon the confirmation that the performance target has
been achieved. That is, the lock-up period of the third batch of shares (8,939,015 shares) under the Company's third ESOP will
expire on 26 July 2022.
Changes in the members of the employee stock ownership plan management committee:
□ Applicable √ Not applicable
Impact of employee stock ownership plans on the finance of the Company during the Reporting Period and the relevant accounting
treatments:
√ Applicable □ Not applicable
As per the Accounting Standard No. 11 for Business Enterprises—Share-based Payments, the amortized share-based payments
were approximately RMB66.4262 million for 2021.
Termination of employee stock ownership plans during the Reporting Period:
□ Applicable √ Not applicable
Other information:
N/A
3. Other Incentive Measures for Employees
□ Applicable √ Not applicable
The Company is subject to the disclosure requirements for listed companies engaged in software and IT services as stated in
Guideline No. 3 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Industry-specific Information Disclosure.
XII Establishment and Implementation of Internal Control System during the Reporting Period
1. Internal Control Establishment and Implementation
In accordance with Company Law, Securities Law, Code of Corporate Governance for Listed Companies, Guideline for
Compliant Operation, Basic Standards for Enterprise Internal Control and other relevant laws and regulations and Company’s
Articles of Association, the Company formulated Rules of Procedure for General Meeting of Shareholders, Rules of Procedure for
Board of Directors, Rules of Procedure for Supervisory Committee, Rules for the Work of General Manager, System of Independent
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
79
Directors, System for the Work of Board Secretary, Code of Daily Behavior of Directors, Supervisors and Senior Managers,
Management Policy for Holding Subsidiaries, Management Policy for External Guarantees, Management Policy for Foreign
Investment, Management Policy for Related Party Transactions, Management Policy for Information Disclosure, Internal Reporting
Policy for Major Events, Management Measures for Raising Funds, Reporting Policy for Insiders, Registration Management Policy
for Insiders and Management Policy for Investor Relations and other important rules and regulations, so as to ensure the convening
of general meeting of shareholders and meetings of the Board of Directors and Supervisory Committee, major decisions and other
behaviors are lawful, compliant, authentic and effective. The internal management and control system formulated by the Company
is based on the Company's basic control system. It covers the entire production and operation procedures, including financial
management, human resources management operation management, procurement management, R&D management, foreign
investment, organization establishment and department responsibilities, and administrative management. It ensures that all work
has rules to follow and forms a normative management policy system. The Company implemented and evaluated the effectiveness
of its internal control system in eight aspects, namely, corporate governance, financial and accounting system, related party
transaction control, major investment management, management of the use of raised funds, information disclosure management,
management of subsidiaries and internal audit, which reasonably ensured the legality and compliance of operation and
management, asset safety, authenticity and integrity of financial reports and related information, so as to improve operation
efficiency and promote the implementation of strategies.
2. Material Internal Control Weaknesses Identified during the Reporting Period
□ Yes √ No
XIII Subsidiary Management during the Reporting Period
Subsidiary Management plan Progress Problems Solutions Solution progress Subsequent plan
In strict accordance with the
Rules for the Management of
Frontier Games Co.,
Majority-owned Subsidiaries,
Limited and other
the Company strengthened
subsidiaries newly
guidance and compliance with
included in the
respect to the subsidiaries
consolidated financial
newly included in the Completed N/A N/A N/A N/A
statements of the
consolidated financial
Reporting Period, see
statements. Under the
Note VIII Changes to
authorization of the Company,
the Consolidation
the subsidiaries carried out
Scope in Part X.
activities and operated
independently.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
80
XIV Internal Control Self-assessment Report or Internal Control Audit Report
1. Internal Control Self-Assessment Report
Date of full disclosure of the internal
26 April 2022
control assessment report
Index of full disclosure of the internal
http://www.cninfo.com.cn
control assessment report
Ratio of the total assets of the
organizations included in the
100.00%
assessment to the Company's
consolidated total assets
Ratio of the revenue of the
organizations included in the
100.00%
assessment to the Company's
consolidated revenue
Deficiency identification criteria
Category Financial report Non-financial report
Signs of material deficiencies in financial report The identification of deficiencies in
include: (1) Failure of control environment. (2) non-financial reports is mainly based on
Misconduct of directors, supervisors or senior the degree of impact of the deficiencies
managers. (3) Major mistakes in current on the effectiveness of business
financial report which fail to be identified by the procedures and the possibility of their
Company's internal control. (4) The supervision occurrence. If the possibility of the
of the Audit Committee and audit department deficiency is relatively low, it will reduce
on the Company’s financial report and on the the work efficiency or effectiveness,
internal control over internal report is increase the uncertainty of the
ineffective. Signs of significant deficiencies in effectiveness, or make the work result
financial report include: (1) Failure to choose deviate from the expected goal, the
Qualitative criteria and apply accounting policies according to deficiency is a general deficiency. If the
widely accepted accounting standards. (2) possibility of the deficiency is relatively
Failure to establish anti-fraud procedures and high, it will significantly reduce the work
control management. (3) Lack of corresponding efficiency or effectiveness, significantly
control mechanism for accounting treatment of increase the uncertainty of the
unconventional or special transactions or lack effectiveness, or make the work result
of corresponding compensatory control. (4) One significantly deviate from the expected
or more deficiencies in the control of the goal, the deficiency is a significant
period-end financial reporting process and deficiency. If the possibility of the
failure to reasonably ensure true and complete deficiency is relatively high, it will
financial reports. General deficiencies refer to severely reduce the work efficiency or
the control deficiencies other than material and effectiveness, severely increase the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
81
significant deficiencies mentioned above. uncertainty of the effectiveness, or make
the work result severely deviate from
the expected goal, the deficiency is a
general deficiency.
The Company views 5% of the total profit as the
indicator of overall importance of its income
statement, and views 5% of net assets as the
indicator of overall importance of its balance
sheet. When a potential misstatement is larger
The Company views 5% of direct loss of
than or equal to 5% of the total profit in the
the Company’s net assets as the
income statement, or a potential misstatement
indicator of importance of non-financial
is larger than or equal to 5% of net assets in the
report. When the direct loss is larger
balance sheet, it is considered as a material
than or equal to 5% of the net assets, it
deficiency. If a potential misstatement is lower
is considered as a material deficiency. If
Quantitative criteria than 5% but larger than or equal to 3% of the
the direct loss is lower than 5% but
total profit in the income statement, or a
larger than or equal to 3% of the net
potential misstatement is lower than 5% but
assets, it is considered as a significant
larger than or equal to 3% of the net assets in
deficiency. If the direct loss is lower than
the balance sheet, it is considered as a
3% of the net assets, it is considered as a
significant deficiency. If a potential
general deficiency.
misstatement is lower than 3% of the total
profit in the income statement, or a potential
misstatement is lower than 3% of the net assets
in the balance sheet, it is considered as a
general deficiency.
Number of material deficiencies in
0
financial reports
Number of material deficiencies in
0
non-financial reports
Number of significant deficiencies in
0
financial reports
Number of significant deficiencies in
0
non-financial reports
2. Internal Control Audit Report
□ Applicable √ Not applicable
XV Remediation of Problems Identified by Self-inspection in the Special Action on the
Governance of Listed Companies
After self-examination, the Company has established and improved a relatively complete and reasonable corporate
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
82
governance structure in accordance with relevant laws and regulations such as the Company Law, the Code of Corporate
Governance for Listed Companies and the Listing Rules of Shenzhen Stock Exchange. The Company will continue to improve itself,
further improving its corporate governance in light of actual situation, promoting standardized operation of the Company, and
promoting the high-quality development of the Company. Relevant matters have been remedied as required.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
83
Part V Environmental and Social Responsibility
I Material Environmental Issues
Indicate whether the Company or any of its subsidiaries falls into major pollutant-discharge entities published by environmental
protection authorities.
□ Yes √ No
Administrative punishments received during the Reporting Period due to environmental issues:
Name of the
Reason for Impact on the
Company or Regulation violated Punishment Rectification
punishment Company
subsidiary
N/A N/A N/A N/A N/A N/A
Other environmental information in relation to major pollutant-discharge entities:
N/A
Actions taken during the Reporting Period to reduce carbon emissions and the results:
√ Applicable □ Not applicable
37 Interactive Entertainment actively responds to the strategic deployment of the target "Peak Carbon Emission and Carbon
Neutralization". Combining with its own carbon emission reality, the Company manages its carbon emissions by controlling energy
consumption and exploring green power certificate trading.
According to ISO 14064: 2013 Standard for Greenhouse Gas Emission Accounting, in 2021, the Company's direct greenhouse
gas emissions (Scope 1) were 152.13 tons, down 10.12% year-over-year; indirect greenhouse gas emissions from energy (Scope 2)
were 1,793.91 tons, down 25.11% year-over-year; and carbon emissions from the Company's production and operation decreased
by 618.60 tons, down 24.12% year-over-year. The Company made the first detailed disclosure of indirect carbon emissions from the
Company's value chain (Scope III) through its social responsibility report, which amounted to 13,208.09 tons, and received the
carbon emissions report rating of D (a disclosure level) from the Carbon Disclosure Project (CDP) for the first time.
The Company responds to the policies of the National Development and Reform Commission and other departments on the
issuance of the Implementation Plan for Promoting Green Consumption and other policies, and independently explores green
power certificate trading. In 2021, the Company purchased 4.29 million kWh of green power certificates from the 49.5MW project
of Tianrun Sanying, a wind farm in Guyuan, Ningxia. 65.77% of the power consumed by the Company in the year was green power.
The construction of the Company's Guangzhou Headquarters, was carried out in accordance with the highest three-star
standard for green buildings in China, focusing on the economical and intensive use of land and the adoption of sponge city
technology to realize the recycling of water resources. It also focused on the green performance of the whole life cycle of the
building in the areas of sustainable building site, water resource utilization and building energy saving, and strictly complied with
the requirements of LEED, the most influential international green building standard, to reduce the carbon emission in future
operation.
37 Interactive Entertainment has actively participated in environmental protection initiatives, joining the Playing for the Planet
Alliance initiated by the UN Environment Program, using games to drive public attention to environmental protection issues;
through its on-line programming education brand Miaocode and the Nature Conservancy jointly organized a public welfare-themed
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
84
graphic programming competition to stimulate young people's thinking about ecological environmental protection; in response to
the call of the World Earth Day, it launched an environmental protection week to encourage employees to participate in energy
saving and emission reduction actions.
Reasons for the non-disclosure of other environmental information:
The Company is not a major pollutant-discharge entity published by environmental protection authorities. During the Reporting
Period, the Company received no punishments due to violation of environmental protection laws and regulations.
II Corporate Social Responsibility (CSR)
In September 2021, 37 Interactive Entertainment released the Notice on the Framework Scheme of Investment in Six
Directions: Scientific and Technological Innovation, Rural Revitalization, Rural Assistance, Industry-University-Research Incubation,
Functional Game Development and Staff Development Plan, marking the official launch of the social value co-creation plan. It will
invest RMB500 million by 2025 to further support the work in the above six directions so as to create shared value for people's
better life and boost common prosperity.
Under the guidance of the plan, In 2021, the Company continued to support rural education and industrial development,
respond to major social events, etc., playing its part in building a better society.
(I) Support scientific and technological innovation and make strategic investment
For more details, please refer to the "Social Value Co-creation" section of the Corporate Social Responsibility Report 2021.
37 Interactive Entertainment makes investment in value co-creation by comprehensively evaluating factors such as industrial
value, social contribution, environmental impact and sustainable value, driving the emergence of excellent digital content products.
The Company also actively gets involved in technology industry related to Metaverse, explores the deep integration of digital
technology and real life, and advances breakthroughs in cutting-edge scientific and technological innovation. As of December 2021,
the Company has invested more than 100 startup teams, indirectly driving the employment scale of more than 10,000 people and
promoting the prosperity of digital economy, cultural creativity and other industries.
(II) Get involved in industry-university-research incubation and enhance talent support
For more details, please refer to the "Social Value Co-creation" and "Human Capital Development" sections of the Corporate
Social Responsibility Report 2021.
1. Educational empowerment of college students:
In order to strengthen the talent reserve of digital economy and nurture young innovative talents, 37 Interactive
Entertainment launched college education empowerment project, supporting 205 students from six universities, including Sun
Yat-sen University, South China University of Technology and South China Normal University, to achieve all-round self-development
through social practice exploration, innovation and entrepreneurship incentive and other activities.
2. College innovation challenge on sustainable development:
The Company held the first "College Innovation Challenge on Sustainable Development", the purpose of which is to lead
college students to have a deeper understanding of the connotation of sustainable development, encourage them to use scientific
and technological means to solve social problems in an innovative way, and improve their digital literacy and skills. The event
attracted a total of 202 student teams from 48 universities at home and abroad, including Tsinghua University and China Academy
of Art. The student teams created digital works on seven themes, including rural revitalization, carbon neutrality and network
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
85
protection for minors, and their works covered various genres such as anime, H5 and game demo, interpreting their vision of a
sustainable future in an innovative way.
3. Industry-university-research project:
The Company has jointly built a university-enterprise practice base with four universities including Sichuan University and
South China University of Technology, and has cooperated with Jinan University, Xiangtan University and other universities to
develop systematic education projects and set up software technology product training courses, aiming to narrow the difference
between universities and society in demands for talent nurturing and encourage students to carry out innovative practice.
During the Reporting Period, the Company also engaged in active negotiation, expecting to carry out in-depth
industry-university-research cooperation with Sun Yat-sen University on corporate social responsibility management, Beijing
Normal University and Guangdong University of Finance and Economics on digital empowerment, and Xiangtan University on the
digital application of national culture.
(III) Promote digital empowerment and lead positive social trend
For more details, please refer to the "Digital Empowerment" section of the Corporate Social Responsibility Report 2021.
37 Interactive Entertainment actively promotes the integration of enterprise products, traditional culture and social values,
and enhances the cultural, educational and social service functions of its games.
1. Independently develop/publish games to promote traditional culture
(1) In the self-developed game The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), the South School’s Hongquan, part of
the Guangdong intangible cultural heritage culture, is creatively integrated into actions of characters.
(2) The Road to Be Shopkeeper (叫我大掌柜) adds elements such as Maritime Silk Road and paper cutting for window
decoration in gameplay, showing the long history and rich and colorful ancient customs of China to global players.
2. Endow games with multiple functions to deliver positive social values
(1) Star Life Paradise (星星生活乐园) provides auxiliary training for preschool children with autism;
(2) Qingfengxia Go Go Go (清风侠冲冲冲), the country's first functional game themed on "Combat Pornography and Illegal
Publications; Protect Minors", shows teenagers how to deal with various network hazards in a Parkour game;
(3) Functional games Come to the Ice Games (来一场冰嬉运动会) and I Am a Scroll Restorer (我是画卷修复师) present
ancient paintings and intangible heritage crafts in a digital way, injecting vitality into traditional culture.
3. Launch special projects and incorporate cultural elements
(1) The Social Responsibility Report 2020 incorporates traditional cultural elements such as the Book of Songs, bronzes and
tiles;
(2) The Company co-organized the “Guangzhou Red” intangible cultural heritage activity to show the application scenario of
intangible cultural heritages in the Internet era and release the vitality of intangible cultural heritage.
(3) As shown in the Corporate Social Responsibility Report 2021, the Company continued to explore cultural relic activation by
embracing cultural relic elements such as The Songs of Chu, The Classic of Moutains and Seas, Huai Nan Zi, stone portraits of the
Han dynasty, and the Grand Seal Character before the Qin dynasty. The report also adopts China’s traditional colors as the main
colors, demonstrating the beauty of Chinese culture.
4. Carry out network literacy education to empower minors
(1) Carry out the first lesson of “Network Literacy” for students receiving education support;
(2) Cooperate with colleges and universities to develop middle school curriculum package of network literacy education with
game literacy as the core;
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
86
(3) Miaocode, the Company's online programming education brand, leads children to explore the unknown through a wealth
of activities on the popularization of scientific knowledge. Also, it helps Hong Kong students continue learning while schools are
suspended by launching the “Learn More despite the Pandemic” jointly with Knowledge, a notable teenage journal in Hong Kong,
and 12 quality education platforms in Mainland China.
(IV) Promote employee growth and share the fruits of development
For more details, please refer to the "Human Capital Development" section of the Corporate Social Responsibility Report 2021.
Through the learning and development center, the Company provides all employees with professional development resources,
skills learning support, industry general education courses and support on academic qualification upgrading, and launches
high-quality programs such as "Marathon Leadership Extraordinary Class" and "Marathon Leadership Elite Class" to boost the
all-round development of employees. In 2021, the Company’s expenditure on employee training was RMB7.0915 million, with the
number of participants in training courses reaching 26,573.
In 2021, the Company set aside RMB30 million of interest-free loan for employee housing and continued to carry out
employee stock ownership plan, insisting on joint creation, responsibility sharing, growth sharing and common prosperity between
the Company and its employees.
III Efforts in Poverty Alleviation and Rural Revitalization
For details, please refer to the "Social Value Co-creation" section of the Corporate Social Responsibility Report 2021.
(I) Strategic public welfare to help rural education revitalization
Focusing on the revitalization of rural education, 37 Interactive Entertainment initiated the establishment of Guangdong
Youxin Foundation in 2014, carrying out the "Youxin Peers" high school education assistance program, the high school enrollment
guarantee program for ethnic minority girls, the county high school free reading program, and the "Vocational Wisdom Calling"
career program. Through resource donations, volunteer services, and thought enlightenment, the foundation is helping the
balanced development of education in less developed areas and empowering outstanding high school students.
Three new key support areas were added in 2021, including Ji'an, where the holy land of red revolution Jinggangshan is
located. During the Reporting Period, 37 Interactive Entertainment's education support footprint has spread to 60 high schools in
11 provinces/autonomous regions, including Sichuan, Gansu, Guangdong, Jiangxi and Anhui, supporting a total of 3,315 students.
Some of the sponsored students who participated in the college entrance examination in 2021 performed well and were admitted
to double first-class universities such as Xi'an Jiaotong University, Jilin University and Sun Yat-sen University.
In addition, in order to support the healthy growth of children at primary and junior high school levels in some less developed
areas, 37 Interactive Entertainment provided financial assistance to 119 students in need in Gansu and Guangdong, and joined
hands with local charity organizations to carry out rural aesthetic education support in three rural primary schools in Guangdong,
continuously strengthening its educational support.
(II) Multi-party collaboration to support rural industry
In Yunnan and Guizhou, 37 Interactive Entertainment has invested RMB0.9999 million to support the development of
regional featured industries with local agricultural produces such as tea and honey with the help of multiple parties. In addition to
sending working groups to visit villages, the Company also worked with experts in various fields, upstream and downstream
enterprises, and academics from universities to design scientific planting, breeding and marketing plans for local villagers, and set
up specific standards for villagers to refer to in various industrial segments, in order to improve product quality and drive
sustainable income for villagers.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
87
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as Shares as
dividend dividend
Number Percentage (%) New issues Other Subtotal Number Percentage (%)
converted from converted from
profit capital reserves
1. Restricted shares 743,503,103 35.20% -56,457,025 -56,457,025 687,046,078 30.98%
1.1 Shares held by the government
1.2 Shares held by state-owned
corporations
1.3 Shares held by other domestic
743,503,103 35.20% -56,457,025 -56,457,025 687,046,078 30.98%
investors
Including: Shares held by domestic
corporations
Shares held by domestic
743,503,103 35.20% -56,457,025 -56,457,025 687,046,078 30.98%
natural persons
1.4 Shares held by overseas investors
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
88
Including: Shares held by overseas
corporations
Shares held by overseas
natural persons
2. Un-restricted shares 1,368,748,594 64.80% 105,612,584 56,457,025 162,069,609 1,530,818,203 69.02%
2.1 RMB-denominated common shares 1,368,748,594 64.80% 105,612,584 56,457,025 162,069,609 1,530,818,203 69.02%
2.2 Domestically listed foreign shares
2.3 Overseas listed foreign shares
2.4 Others
3. Total shares 2,112,251,697 100.00% 105,612,584 0 105,612,584 2,217,864,281 100.00%
Reasons for share changes:
√ Applicable □ Not applicable
With the Reply on Approval of the Application of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. for Private Placement (CSRC Permit [2021] No. 16) issued by the
CSRC, the Company was approved to issue no more than 105,612,584 shares in a private placement. In the event of a changed share capital resulted from any bonus issue from profit or capital
reserves, the number of shares to be issued could be adjusted accordingly. Eventually, the Company issued 105,612,584 RMB-denominated common shares (A-stock) in a private placement to
14 specified entities, increasing its total share capital from 2,112,251,697 shares to 2,217,864,281 shares. These newly issued shares were allowed for public trading on 10 March 2021. For
further information, see the Report on the Private Placement of Shares by Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. & the Listing Announcement of these
Shares (Summary) disclosed by the Company dated 8 March 2021.
Approval of share changes:
√ Applicable □ Not applicable
With the Reply on Approval of the Application of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. for Private Placement (CSRC Permit [2021] No. 16) issued by the
CSRC, the Company was approved to issue no more than 105,612,584 shares in a private placement. In the event of a changed share capital resulted from any bonus issue from profit or capital
reserves, the number of shares to be issued could be adjusted accordingly. For further information, see the Announcement No. 2021-001 on the Receipt of the CSRC Approval Document for
the Private Placement disclosed by the Company on 13 January 2021.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
89
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s
common shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
√ Applicable □ Not applicable
Based on the diluted share capital of 2,217,864,281.00 shares, for the 12 months ended 31 December 2021, the basic earnings
per share, diluted earnings per share, and equity per share attributable to the Company’s common shareholders were RMB1.30,
RMB1.30 and RMB4.86, respectively.
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Shares with Increase in
Beginning Ending
Name of restriction lifted in restricted shares Reason for
restricted restricted Lifting date
shareholder the Reporting in the Reporting restriction
shares shares
Period Period
Subject to regulations in respect
Locked-up
of changes in shareholdings of
shares of
Li Weiwei 302,743,539 0 31,683,775 271,059,764 directors, supervisors and senior
senior
management in the Company
management
Law, etc.
Subject to regulations in respect
Locked-up
of changes in shareholdings of
Zeng shares of
245,344,330 0 61,336,050 184,008,280 directors, supervisors and senior
Kaitian senior
management in the Company
management
Law, etc.
Subject to regulations in respect
Locked-up
of changes in shareholdings of
shares of
Hu Yuhang 110,893,263 40,305,000 0 151,198,263 directors, supervisors and senior
senior
management in the Company
management
Law, etc.
Locked-up Subject to regulations in respect
Wu
84,001,921 0 7,852,200 76,149,721 shares of of changes in shareholdings of
Weihong
senior directors, supervisors and senior
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
90
management management in the Company
Law, etc.
Subject to regulations in respect
Locked-up
of changes in shareholdings of
shares of
Yang Jun 520,050 1,575,000 0 2,095,050 directors, supervisors and senior
senior
management in the Company
management
Law, etc.
Subject to regulations in respect
Locked-up
of changes in shareholdings of
shares of
Zhang Yun 0 2,535,000 0 2,535,000 directors, supervisors and senior
senior
management in the Company
management
Law, etc.
Total 743,503,103 44,415,000 100,872,025 687,046,078 -- --
II Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
√ Applicable □ Not applicable
Name of stock and Issue price Number Termination Index to
Issue Issued Disclosure
its derivative (or interest Listing date approved for date of disclosed
date number date
securities rate) public trading transaction information
Stocks
Private Placement 24
10 March http://www.c 8 March
of 37 Interactive Februar 27.77 105,612,584 105,612,584
2021 ninfo.com.cn 2021
Entertainment y 2021
Convertible corporate bonds, convertible corporate bonds with warrants, and corporate bonds
Other derivative securities
Particulars about the securities (exclusive of preferred shares) issued in the Reporting Period:
With the Reply on Approval of the Application of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. for
Private Placement (CSRC Permit [2021] No. 16) issued by the CSRC, the Company was approved to issue no more than 105,612,584
shares in a private placement. Eventually, the Company issued 105,612,584 RMB-denominated common shares (A-stock) in a
private placement to 14 specified entities, increasing its total share capital from 2,112,251,697 shares to 2,217,864,281 shares.
These newly issued shares were allowed for public trading on 10 March 2021.
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
√ Applicable □ Not applicable
See “1. Reasons for share changes” in Item I of this Part.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
91
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Holdings as at the Period-End
Unit: share
Number of
preferred
Number of
shareholders
common
Number of preferred with resumed
Number of shareholders at
shareholders with voting rights at
common 109,853 the month-end 98,128 0 0
resumed voting rights the month-end
shareholders prior to the
(if any) (see note 8) prior to the
disclosure of this
disclosure of this
Report
Report (if any)
(see note 8)
5% or greater shareholders or the top 10 shareholders
Shareh Increase/decr Pledged, marked or frozen
Un-restrict
Name of Nature of olding ease in the Restricted status
Shares held ed shares
shareholder shareholder percent Reporting shares held
held Status Shares
age Period
Domestic
Li Weiwei 14.52% 322,113,019 -39,300,000 271,059,764 51,053,255 Pledged 9,100,000
natural person
Domestic
Zeng Kaitian 11.06% 245,344,374 0 184,008,280 61,336,094 Pledged 9,800,000
natural person
Domestic
Hu Yuhang 9.09% 201,597,684 53,740,000 151,198,263 50,399,421 Pledged 19,800,000
natural person
Hong Kong
Overseas
Securities Clearing 3.88% 85,981,106 3,209,020 0 85,981,106
corporation
Company Ltd.
Domestic
Wu Weihong 3.69% 81,852,962 -19,680,000 76,149,721 5,703,241
natural person
Domestic
Wu Weidong 2.83% 62,843,457 -27,675,800 0 62,843,457
natural person
Domestic
Xu Zhigao 1.66% 36,853,103 23,430,103 0 36,853,103
natural person
China Merchants Other 1.14% 25,204,534 14,203,056 0 25,204,534
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
92
Bank Co., Ltd.－
Xingquan Herun
Mixed Securities
Investment Fund
Domestic
Wu Xushun 0.94% 20,801,682 -29,269,000 0 20,801,682
natural person
China Merchants
Bank Co., Ltd.－
Xingquan Heyi
Dynamic Asset
Other 0.87% 19,289,712 6,863,404 0 19,289,712
Allocation Mixed
Securities
Investment Fund
(LOF)
Strategic investor or general
corporation becoming a top-10
Not applicable
common shareholder 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
among the shareholders above
related parties or acting-in-concert parties as defined in the Measures on the Administration
of Acquisition of Listed Companies.
Explain if any of the shareholders
above was involved in
N/A
entrusting/being entrusted with
voting rights or waiving voting rights
Special account for share
repurchases (if any) among the top N/A
10 shareholders (see note 10)
Top 10 un-restricted shareholders
Shares by class
Name of shareholder Un-restricted shares held
Class Shares
Hong Kong Securities Clearing RMB-denominated
85,981,106 85,981,106
Company Ltd. common shares
RMB-denominated
Wu Weidong 62,843,457 62,843,457
common shares
RMB-denominated
Zeng Kaitian 61,336,094 61,336,094
common shares
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
93
RMB-denominated
Li Weiwei 51,053,255 51,053,255
common shares
RMB-denominated
Hu Yuhang 50,399,421 50,399,421
common shares
RMB-denominated
Xu Zhigao 36,853,103 36,853,103
common shares
China Merchants Bank Co., Ltd.－
RMB-denominated
Xingquan Herun Mixed Securities 25,204,534 25,204,534
common shares
Investment Fund
RMB-denominated
Wu Xushun 20,801,682 20,801,682
common shares
China Merchants Bank Co., Ltd.－
Xingquan Heyi Dynamic Asset RMB-denominated
19,289,712 19,289,712
Allocation Mixed Securities common shares
Investment Fund (LOF)
Industrial and Commercial Bank of
China Limited－Fullgoal Innovative RMB-denominated
18,963,683 18,963,683
Technology Mixed Securities common shares
Investment Fund
Related or acting-in-concert parties
1. Among the top 10 shareholders of the Company, Wu Xushun is the father of Wu Weihong
among the top 10 un-restricted
and Wu Weidong, which makes them shareholders acting in concert.
shareholders, as well as between
2. The Company is not aware of whether there is, among the other top 10 shareholders, any
the top 10 un-restricted
related parties or acting-in-concert parties as defined in the Measures on the Administration
shareholders and the top 10
of Acquisition of Listed Companies.
shareholders
Related or acting-in-concert parties
1. Among the top 10 shareholders of the Company, Wu Xushun is the father of Wu Weihong
among the top 10 un-restricted
and Wu Weidong, which makes them shareholders acting in concert.
shareholders, as well as between
2. The Company is not aware of whether there is, among the other top 10 shareholders, any
the top 10 un-restricted
related parties or acting-in-concert parties as defined in the Measures on the Administration
shareholders and the top 10
of Acquisition of Listed Companies.
shareholders
Indicate whether any of the top 10 common shareholders or the top 10 un-restricted common shareholders of the Company
conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: controlled by a natural person
Type of the controlling shareholder: natural person
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
94
Name of the controlling shareholder Nationality Residency in other countries or regions or not
Li Weiwei Chinese Not
Main occupation and position Chairman of the Board and General Manager
Interests held in other domestically and
overseas listed companies in the Reporting None
Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Acting-in-Concert Parties
Nature of the actual controller: domestic natural person
Type of the actual controller: natural person
Relationship with the actual Residency in other countries
Name of the actual controller Nationality
controller or regions or not
Li Weiwei Actual controller himself Chinese Not
Main occupation and position Chairman of the Board and General Manager
Controlling interests in other
domestically and overseas listed None
companies in the past 10 years
Change of the actual controller in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relationship between the actual controller and the Company:
Li Weiwei
14.52%
37 Interactive Entertainment Network Technology Group Co., Ltd.
IV Share Repurchases during the Reporting Period
Progress on share repurchases:
√ Applicable □ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
95
Shares
repurchased
Date of the Number of
Number of Amount to be as % of total
repurchase As % of total Intended Purpose of shares
shares to be used for target shares
plan’s share capital repurchase period repurchased shares repurchase
repurchased repurchase (if any) under
disclosure d
equity
incentive plan
Within six months For subsequent
following the employee stock
2 August 2021 10,714,285 0.0048 300,000,000 Board’s approval ownership plans or 16,301,534
of the repurchase other equity
plan incentive plans
Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable √ Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
96
Part VII Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of report signing 25 April 2022
Name of the independent auditor Huaxing Certified Public Accountants LLP
Number of the independent auditor’s report Huaxing [2022] No. 21013050010
Name of the certified public accountants Yang Xinchun and Lin Hualong
Independent Auditor’s Report
To all the shareholders of 37 Interactive Entertainment Network Technology Group Co., Ltd.:
I Opinion
We have audited the financial statements of 37 Interactive Entertainment Network Technology Group Co., Ltd. (hereinafter
referred to as the “Company”), which comprise the consolidated and the Company’s balance sheets as at 31 December 2021, the
consolidated and the Company’s income statements, the consolidated and the Company’s cash flow statements, and the
consolidated and the Company’s statements of changes in shareholders’ equity for the year then ended, as well as the notes to the
financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and the
Company’s financial positions as at 31 December 2021, and the consolidated and the Company’s operating results and cash flows
for the year then ended, in conformity with China’s Accounting Standards for Business Enterprises (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for Audit of Financial Statements section of our report.
We are independent of the Company in accordance with the China Code of Ethics for Certified Public Accountants, and we have
fulfilled our other ethical responsibilities in accordance with the said Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue recognition
1. Description
As described in Notes III - XXXI Revenue and V - XXXV Operating Revenue and Cost of Sales," the Company is mainly engaged in
the R&D and (independent and joint) operation of online games. The operation of online games depends highly on internal control
and IT system, leading to inherent risk in revenue recognition, so we highlighted the revenue recognition of online games as a key
audit matter.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
97
2. Audit response
(1) The Company investigated and tested revenue-related internal controls and assessed the appropriateness of the key control
points of internal control and the effectiveness of the operation of internal controls.
(2) The Company performed IT audit. The consistency between the background recharge amount and consumption amount of
substantial self-developed games and the financial information was tested. The exactness of the consumption amount of ingots at
period end was verified. Game operation data such as average number of online users, number of paying uses and average
consumption amount per user were checked for their consistency with revenue data.
(3) The Company checked the accuracy of revenue accounting and estimate. To align the accounting process with the time
cycle of reconciliation or settlement and follow the accrual basis of accounting, the Company makes revenue estimates based on
the recharge amount and the agreed revenue distribution scheme or the actual consumption amount at month end and adjusts the
revenue estimates according to the actually settled revenues; thus, the accuracy of revenue estimates directly influences the
accuracy of revenue recognition. The accuracy of revenue estimates was assessed by sampling major games and checking the
estimated monthly or annual revenues of these sampled games against the settled revenues in terms of the average discrepancy
between the estimated and settled revenues.
(4) The Company checked the collection of accounts receivable from sales. Third-party collections/payments or bank deposit
receipts were checked, focusing on the consistency between the original documents and book records in terms of the recipient and
amount of payment.
(5) The Company performed follow-up test. A follow up test was conducted on accounts receivable to check whether they
were collected in time and whether there were chargebacks to customers. Period-end estimated revenues were checked against
revenues settled after the Reporting Period for assessing the existence of major discrepancies between the estimated and actually
settled revenues.
(II) Internet traffic fee charges
1. Description
As described in Note V. (XXXVII) Distribution and Selling Expenses, the Internet traffic fee charges in the 2021 consolidated
financial statements amount to RMB8.77 billion. Because Internet traffic fee charges amount to a substantial amount and there is
inherent risk in terms of their exactness and accuracy, we highlighted the exactness and accuracy of Internet traffic charges as a key
audit matter.
2. Audit response
The major audit procedures performed to address the exactness and accuracy of Internet traffic fee charges include:
(1) We investigated and tested Internet traffic fee charges-related internal controls and assessed the effectiveness of the design
and operation of relevant internal controls;
(2) We performed an analytical review to comparatively analyze the proportion of and variation in the monthly Internet traffic
fee charges and assess the appropriateness of the variation;
(3) We performed a detail test on Internet traffic charges by checking the supporting documents of large vouchers, such as
contracts, invoices, bills of payment and statements of accounts, and reviewing the accuracy of such charges;
(4) We performed external confirmations by checking the amounts of transactions and the balance of the accounts
payable/receivable between the Company and its major suppliers and verifying the exactness and completeness of distribution and
selling expenses through letters of confirmation;
(5) We performed a cut-off test on the Internet traffic fee charges recognized before and after the date of balance sheet,
focusing on whether there are major inter-period adjustments.
IV Other Information
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
98
The Company’s management is responsible for the other information. The other information comprises all of the information
included in the Company’s 2021 Annual Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management is responsible for the preparation of the financial statements that give a fair view in accordance
with CAS, and for designing, implementing and maintaining such internal control as the management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a
going concern, and using the going concern basis of accounting unless the management either intends to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing opinion on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CAS to
draw users’ attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
99
represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance
of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by 37 Interactive Entertainment Network Technology Group Co., Ltd.
31 December 2021
Unit: RMB
Item 31 December 2021 31 December 2020
Current assets:
Monetary funds 4,618,532,776.92 1,776,856,909.85
Transaction settlement funds
Loans to other banks
Trading financial assets 2,098,526,001.60 1,321,234,029.61
Derivative financial assets
Notes receivable
Accounts receivable 1,264,319,473.08 1,164,657,998.35
Accounts receivable financing
Prepayments 1,055,295,139.07 999,890,031.00
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
100
reserve
Other receivables 89,898,027.86 85,138,773.10
Including: Interest receivable
Dividends receivable 14,481,435.97 10,100,000.00
Redemptory monetary capital for
sale
Inventories
Contract assets
Assets held for sale
Non-current assets due within one
year
Other current assets 60,264,139.07 452,435,284.38
Total current assets 9,186,835,557.60 5,800,213,026.29
Non-current assets:
Loans and advances to customers
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 509,058,912.99 360,566,552.56
Other equity investments 326,561,477.94 294,824,927.02
Other non-current financial assets 561,680,630.03 372,195,483.93
Investment properties
Fixed assets 892,006,774.60 922,736,638.76
Construction in progress 77,637,189.70 4,180,019.75
Productive living assets
Oil and gas assets
Right-of-use assets 59,925,125.24
Intangible assets 1,088,487,381.04 1,108,434,647.51
Development expenditure
Goodwill 1,589,065,048.53 1,589,065,048.53
Long-term deferred expenses 97,947,759.66 71,442,122.88
Deferred income tax assets 17,700,526.83 9,967,411.35
Other non-current assets 30,274,858.60 30,705,621.27
Total non-current assets 5,250,345,685.16 4,764,118,473.56
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
101
Total assets 14,437,181,242.76 10,564,331,499.85
Current liabilities:
Short-term loans 445,635,500.00 889,324,326.07
Loans from the central bank
Loans from other banks
Trading financial liabilities
Derivative financial liabilities
Notes payable 208,000,000.00 393,351,017.72
Accounts payable 1,565,004,179.17 1,078,096,658.12
Advances from customers
Contract liabilities 260,658,631.26 204,231,829.45
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 455,632,387.06 410,000,161.52
Taxes payable 188,987,667.45 160,224,192.87
Other payables 199,296,971.30 1,317,972,818.79
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance payables
Liabilities held for sale
Non-current liabilities due within
23,773,918.12
one year
Other current liabilities 52,341,276.62 45,287,027.61
Total current liabilities 3,399,330,530.98 4,498,488,032.15
Non-current liabilities:
Insurance contract reserve
Long-term loans 20,000,000.00
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
102
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 39,641,414.25
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income
Deferred income tax liabilities 120,873,287.67 391,763.97
Other non-current liabilities
Total non-current liabilities 180,514,701.92 391,763.97
Total liabilities 3,579,845,232.90 4,498,879,796.12
Shareholders' equity:
Share capital 2,217,864,281.00 2,112,251,697.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 2,978,593,891.37 114,693,519.91
Less: Treasury shares 299,999,563.27
Other comprehensive income -184,243,331.38 -149,074,272.37
Special reserves
Surplus reserves 166,559,856.09
General risk reserves
Retained earnings 5,894,941,180.68 3,959,512,681.41
Total equity attributable to
10,773,716,314.49 6,037,383,625.95
shareholders of the Company
Non-controlling interests 83,619,695.37 28,068,077.78
Total shareholders' equity 10,857,336,009.86 6,065,451,703.73
Total liabilities and shareholders’ equity 14,437,181,242.76 10,564,331,499.85
Legal representative: Li Weiwei Chief Financial Officer: Ye Wei
Board Secretary: Ye Wei
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
103
2. Balance Sheet of the Company
Unit: RMB
Item 31 December 2021 31 December 2020
Current assets:
Monetary funds 998,498,059.53 274,246.17
Trading financial assets 753,493,150.68
Derivative financial assets
Notes receivable
Accounts receivable
Accounts receivable financing
Prepayments
Other receivables 1,180,095,000.00 1,000,017,597.10
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 5,345,366.16 3,352,745.35
Total current assets 2,937,431,576.37 1,003,644,588.62
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 9,516,402,451.17 9,449,976,259.36
Other equity investments
Other non-current financial assets 29,040,909.54 29,040,909.54
Investment properties
Fixed assets
Construction in progress
Productive living assets
Oil and gas assets
Right-of-use assets 8,855,941.39
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
104
Intangible assets
Development expenditure
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets 9,554,299,302.10 9,479,017,168.90
Total assets 12,491,730,878.47 10,482,661,757.52
Current liabilities:
Short-term loans 350,000,000.00
Trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable 186,277.50
Advances from customers
Contract liabilities
Employee benefits payable 2,653,397.00 492,264.00
Taxes payable 8,909,954.92 4,749,796.66
Other payables 1,122,108,240.45 3,062,581,644.17
Including: Interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one year 2,205,420.44
Other current liabilities
Total current liabilities 1,485,877,012.81 3,068,009,982.33
Non-current liabilities:
Long-term loans 20,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 7,298,895.06
Long-term payables
Long-term employee benefits payable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
105
Provisions
Deferred income
Deferred income tax liabilities 873,287.67
Other non-current liabilities
Total non-current liabilities 28,172,182.73
Total liabilities 1,514,049,195.54 3,068,009,982.33
Shareholders' equity:
Share capital 2,217,864,281.00 2,112,251,697.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 6,622,294,870.41 3,759,929,582.87
Less: Treasury shares 299,999,563.27
Other comprehensive income -60,000,000.00 -60,000,000.00
Special reserves
Surplus reserves 608,622,056.26 442,062,200.17
Retained earnings 1,888,900,038.53 1,160,408,295.15
Total shareholders' equity 10,977,681,682.93 7,414,651,775.19
Total liabilities and shareholders’ equity 12,491,730,878.47 10,482,661,757.52
3. Consolidated Income Statement
Unit: RMB
Item 2021 2020
1. Total operating revenue 16,216,498,239.02 14,399,703,084.56
Including: Operating revenue 16,216,498,239.02 14,399,703,084.56
Interest income
Premium income
Handling charge and commission income
2. Total operating costs and expenses 13,287,295,471.69 11,468,915,314.31
Including: Cost of sales 2,466,077,310.61 1,757,783,549.76
Interest expense
Handling charge and commission expenses
Surrenders
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
106
Net claims paid
Net amount provided as insurance contract
reserve
Expenditure on policy dividends
Reinsurance premium expenses
Taxes and surcharges 38,051,275.61 42,336,777.66
Distribution and selling expenses 9,125,341,989.92 8,212,936,504.81
General and administrative expenses 462,767,933.71 366,208,400.81
Research and development expenses 1,250,238,810.24 1,112,654,352.49
Financial expenses -55,181,848.40 -23,004,271.22
Including: Interest expense 26,788,458.65 41,162,339.42
Interest income 75,730,210.86 73,943,032.87
Add: Other income 167,198,424.90 162,027,080.81
Investment income (“-” for loss) 122,970,638.91 155,254,765.65
Including: Share of profits and losses of joint
804,477.28 28,694,143.21
ventures and 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) 77,766,109.01 195,629,632.38
Impairment loss on credit (“-” for loss) -3,403,348.29 4,606,858.28
Impairment loss on assets (“-” for loss) -35,821,023.90 -192,660,311.72
Gain on disposal of assets (“-” for loss) 2,771,407.94 304,974.69
3. Operating profit (“-” for loss) 3,260,684,975.90 3,255,950,770.34
Add: Non-operating income 4,395,931.93 4,066,295.96
Less: Non-operating expenses 16,631,950.41 11,044,793.90
4. Profit before income tax expenses (“-” for loss) 3,248,448,957.42 3,248,972,272.40
Less: Income tax expenses 398,477,803.90 213,140,950.93
5. Net profit (“-” for net loss) 2,849,971,153.52 3,035,831,321.47
5.1 Classified by continuity of operations
5.1.1 Net profit from continuing operations (“-” for net
2,849,971,153.52 3,035,831,321.47
loss)
5.1.2 Net profit from discontinued operations (“-” for net
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
107
loss)
5.2 Classified by ownership of the equity
5.2.1 Net profit attributable to shareholders of the
2,875,575,877.62 2,760,951,475.22
Company
5.2.2 Net profit attributable to non-controlling interests -25,604,724.10 274,879,846.25
6. Other comprehensive income, net of tax -35,169,059.01 -54,736,001.82
Other comprehensive income attributable to shareholders
-35,169,059.01 -54,491,772.24
of the Company, net of tax
6.1 Other comprehensive income that will not be
-5,360,952.31 -7,240,888.31
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
-5,360,952.31 -7,240,888.31
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
-29,808,106.70 -47,250,883.93
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
-29,808,106.70 -47,250,883.93
foreign currency financial statements
6.2.7 Others
Other comprehensive income attributable to
-244,229.58
non-controlling interests, net of tax
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
108
7. Total comprehensive income 2,814,802,094.51 2,981,095,319.65
Total comprehensive income attributable to
2,840,406,818.61 2,706,459,702.98
shareholders of the Company
Total comprehensive income attributable to
-25,604,724.10 274,635,616.67
non-controlling interests
8. Earnings per share:
8.1 Basic earnings per share 1.31 1.31
8.2 Diluted earnings per share 1.31 1.31
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees
before the combinations was RMB , with the amount for the same period of last year being RMB .
Legal representative: Li Weiwei Chief Financial Officer: Ye Wei
Board Secretary: Ye Wei
4. Income Statement of the Company
Unit: RMB
Item 2021 2020
1. Operating revenue 0.00 0.00
Less: Cost of sales 0.00 0.00
Taxes and surcharges 47,537.79 1,469,257.30
Distribution and selling expenses
General and administrative expenses 11,020,080.50 6,412,086.86
Research and development expenses
Financial expenses -17,358,639.34 785,537.00
Including: Interest expense 9,303,621.14
Interest income 27,153,413.37 3,662.65
Add: Other income 6,442,351.75 1,636,316.93
Investments income (“-” for loss) 1,652,647,399.27 1,055,329,436.91
Including: Share of profits and losses of joint
-530,563.09
ventures and associates
Gain on derecognition of financial
assets measured at amortised cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) 3,493,150.68 -2,665,863.25
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
109
Impairment loss on credit (“-” for loss) 10,000.00 38,468.66
Impairment loss on assets (“-” for loss) -25,856,711.23
Gain on disposal of assets (“-” for loss)
2. Operating profit (“-” for loss) 1,668,883,922.75 1,019,814,766.86
Add: Non-operating income 0.38 0.63
Less: Non-operating expenses
3. Profit before income tax expenses (“-” for loss) 1,668,883,923.13 1,019,814,767.49
Less: Income tax expenses 3,285,362.21
4. Net profit (“-” for net loss) 1,665,598,560.92 1,019,814,767.49
4.1 Net profit from continuing operations (“-” for net
1,665,598,560.92 1,019,814,767.49
loss)
4.2 Net profit from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax -7,240,888.31
5.1 Other comprehensive income that will not be
-7,240,888.31
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
-7,240,888.31
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
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
110
debt investments
5.2.5 Cash flow hedge reserve
5.2.6 Exchange differences on translation of
foreign currency financial statements
5.2.7 Others
6. Total comprehensive income 1,665,598,560.92 1,012,573,879.18
7. Earnings per share:
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2021 2020
1. Cash flows from operating activities:
Cash received from the sales of goods or rendering
16,798,146,507.23 15,289,245,739.20
services
Net increase in customer deposits and interbank
deposits
Net increase in loans from the central bank
Net increase in loans from other financial institutions
Premiums received on original insurance contracts
Net proceeds from reinsurance
Net increase in deposits and investments of policy
holders
Interest, handling charges and commissions received
Net increase in loans from other banks
Net increase in proceeds from repurchase transactions
Net proceeds from acting trading of securities
Refunds of taxes and levies 11,104,760.98 32,303,345.84
Cash received relating to other operating activities 193,011,339.37 212,474,405.30
Sub-total of cash inflows from operating activities 17,002,262,607.58 15,534,023,490.34
Cash paid for purchases of goods and services 2,450,903,325.34 2,189,923,584.52
Net increase in loans and advances to customers
Net increase in deposits in the central bank and other
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
111
banks and financial institutions
Payments for claims on original insurance contracts
Net increase in loans to other banks
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and on behalf of employees 1,599,562,488.60 1,097,401,697.48
Payments of taxes and levies 373,899,171.10 398,994,011.54
Cash paid relating to other operating activities 8,919,148,681.51 8,919,766,892.15
Sub-total of cash outflows used in operating activities 13,343,513,666.55 12,606,086,185.69
Net cash flows from operating activities 3,658,748,941.03 2,927,937,304.65
2. Cash flows from investing activities:
Cash received from disposal of investments 427,481,175.20 244,768,186.69
Cash received from investment income 91,728,871.90 83,046,513.56
Cash received from disposal of fixed assets, intangible
2,172,540.15 1,093,427.90
assets and other long-term assets
Net cash received from disposal of subsidiaries and other
business units
Cash received relating to other investing activities 6,049,184,128.00 6,664,127,406.43
Sub-total of cash inflows from investing activities 6,570,566,715.25 6,993,035,534.58
Cash paid for acquisition of fixed assets, intangible assets
341,688,985.43 1,071,675,513.91
and other long-term assets
Cash paid to acquire investments 816,411,556.23 396,190,603.30
Net increase in pledged loans granted
Net cash paid for the acquisition of subsidiaries and
6,860,763.05
other business units
Cash paid relating to other investing activities 6,488,521,991.01 6,134,819,564.44
Sub-total of cash outflows used in investing activities 7,653,483,295.72 7,602,685,681.65
Net cash flows from/used in investing activities -1,082,916,580.47 -609,650,147.07
3. Cash flows from financing activities:
Cash received from capital contributions 2,983,232,843.10
Including: Cash received from capital contributions by
79,700,000.00
non-controlling interests of subsidiaries
Cash received from borrowings 466,754,500.00 889,324,326.07
Cash received relating to other financing activities 900,001.00
Sub-total of cash inflows from financing activities 3,450,887,344.10 889,324,326.07
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
112
Cash repayments of borrowings 889,324,326.07 281,176,106.33
Cash paid for interest and dividends 793,119,332.95 1,508,520,111.64
Including: Dividends paid by subsidiaries to
200,000,000.00
non-controlling interests
Cash paid relating to other financing activities 1,481,622,394.61 1,727,977,276.44
Sub-total of cash outflows used in financing activities 3,164,066,053.63 3,517,673,494.41
Net cash flows from/used in financing activities 286,821,290.47 -2,628,349,168.34
4. Effect of foreign exchange rate changes on cash and cash
-18,341,424.20 -51,116,887.46
equivalents
5. Net increase/decrease in cash and cash equivalents 2,844,312,226.83 -361,178,898.22
Add: Cash and cash equivalents at beginning of the
1,774,081,508.55 2,135,260,406.77
period
6. Cash and cash equivalents at end of the period 4,618,393,735.38 1,774,081,508.55
6. Cash Flow Statement of the Company
Unit: RMB
Item 2021 2020
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 2,456,722,480.09 3,035,884,451.81
Sub-total of cash inflows from operating activities 2,456,722,480.09 3,035,884,451.81
Cash paid for purchases of goods and services
Cash paid to and on behalf of employees 1,713,081.92 734,366.23
Payments of taxes and levies 2,340,276.64 41,881.80
Cash paid relating to other operating activities 4,409,233,445.81 1,112,962,155.21
Sub-total of cash outflows used in operating activities 4,413,286,804.37 1,113,738,403.24
Net cash flows from/used in operating activities -1,956,564,324.28 1,922,146,048.57
2. Cash flows from investing activities:
Cash received from disposal of investments
Cash received from investment income 2,652,647,399.27 1,055,860,000.00
Cash received from disposal of fixed assets, intangible
assets and other long-term assets
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
113
Net cash received from disposal of subsidiaries and other
business units
Cash received relating to other investing activities 1,710,000,000.00
Sub-total of cash inflows from investing activities 4,362,647,399.27 1,055,860,000.00
Cash paid for acquisition of fixed assets, intangible assets
and other long-term assets
Cash paid to acquire investments 1,140,480,000.00 1,710,720,000.00
Net cash paid for the acquisition of subsidiaries and
other business units
Cash paid relating to other investing activities 2,460,000,000.00 426,330.01
Sub-total of cash outflows used in investing activities 3,600,480,000.00 1,711,146,330.01
Net cash flows from/used in investing activities 762,167,399.27 -655,286,330.01
3. Cash flows from financing activities:
Cash received from capital contributions 2,903,532,843.10
Cash received from borrowings 370,000,000.00
Cash received relating to other financing activities
Sub-total of cash inflows from financing activities 3,273,532,843.10
Cash repayments of borrowings
Cash paid for interest and dividends 779,504,461.46 1,267,351,018.20
Cash paid relating to other financing activities 301,407,643.27
Sub-total of cash outflows used in financing activities 1,080,912,104.73 1,267,351,018.20
Net cash flows from/used in financing activities 2,192,620,738.37 -1,267,351,018.20
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase/decrease in cash and cash equivalents 998,223,813.36 -491,299.64
Add: Cash and cash equivalents at beginning of the
274,246.17 765,545.81
period
6. Cash and cash equivalents at end of the period 998,498,059.53 274,246.17
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
114
7. Consolidated Statement of Changes in Shareholders’ Equity
2021
Unit: RMB
2021
Equity attributable to shareholders of the Company
Other equity
Gener Total
Item instruments Non-controllin
Less: Other
Special Surplus al risk Retained Othe shareholders'
Share capital Capital reserves Treasur comprehensive Sub-total g interests
Preferr Perpetu equity
Othe reserves reserves reserv earnings rs
ed al y shares income
rs es
shares bonds
1. Balance as
at the end of 2,112,251,697.00 114,693,519.91 -149,074,272.37 3,959,512,681.41 6,037,383,625.95 28,068,077.78 6,065,451,703.73
prior year
Add:
Adjustments
for changed -3,040,560.81 -3,040,560.81 -2,224.58 -3,042,785.39
accounting
policies
Adjustments
for corrections
of previous
errors
Adjustments
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
115
for business
combinations
under
common
control
Others
2. Balance as
at beginning 2,112,251,697.00 114,693,519.91 -149,074,272.37 3,956,472,120.60 6,034,343,065.14 28,065,853.20 6,062,408,918.34
of year
3. Increase/
decrease in 2,863,900,371. 299,999 166,559,
105,612,584.00 -35,169,059.01 1,938,469,060.08 4,739,373,249.35 55,553,842.17 4,794,927,091.52
the period (“-” 46 ,563.27 856.09
for decrease)
3.1 Total
-25,604,724.1
comprehensiv -35,169,059.01 2,875,575,877.62 2,840,406,818.61 2,814,802,094.51
0
e income
3.2 Capital
contribution
2,862,365,287. 299,999
and 105,612,584.00 2,667,978,308.27 78,500,000.00 2,746,478,308.27
54 ,563.27
withdrawal by
shareholders
3.2.1 Common
shares
2,795,939,095.
contribution 105,612,584.00 2,901,551,679.73 78,500,000.00 2,980,051,679.73
73
and
withdrawal by
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
116
shareholders
3.2.2 Capital
contribution
and
withdrawal by
holders of
other equity
instruments
3.2.3
Share-based
payments
66,426,191.81 66,426,191.81 66,426,191.81
included in
shareholders’
equity
299,999
3.2.4 Others -299,999,563.27 -299,999,563.27
,563.27
3.3 Profit 166,559,
-937,106,817.54 -770,546,961.45 -770,546,961.45
distribution 856.09
3.3.1
Appropriation 166,559,
-166,559,856.09
to surplus 856.09
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.
117
3.3.3
Distribution to -770,546,961.45 -770,546,961.45 -770,546,961.45
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.
118
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 1,535,083.92 1,535,083.92 2,658,566.27 4,193,650.19
4. Balance as
2,978,593,891. 299,999 166,559, 10,857,336,009.8
at the end of 2,217,864,281.00 -184,243,331.38 5,894,941,180.68 10,773,716,314.49 83,619,695.37
37 ,563.27 856.09 6
the period
2020
Unit: RMB
2020
Item
Equity attributable to shareholders of the Company Non-controlling Total
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
119
Other equity Gene interests shareholders'
instruments Less: Other ral equity
Share Capital Special Surplus Oth
Perpet Treasur comprehensive risk Retained earnings Sub-total
capital Preferred Oth reserves reserves reserves ers
ual y shares income reser
shares ers
bonds ves
1. Balance as at
2,112,251,6
the end of prior 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
97.00
year
Add:
Adjustments for
changed
accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations
under common
control
Others
2. Balance as at 2,112,251,6
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
beginning of 97.00
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
120
year
3. Increase/
decrease in the -227,390,965.9 -236,332,666.6
41,539,719.42 -54,491,772.24 -751,581,214.41 -991,924,233.13 -1,228,256,899.80
period (“-” for 0 7
decrease)
3.1 Total
comprehensive -54,491,772.24 2,760,951,475.22 2,706,459,702.98 274,635,616.67 2,981,095,319.65
income
3.2 Capital
contribution and 131,668,677.7 -310,968,283.3
131,668,677.79 -179,299,605.55
withdrawal by 9 4
shareholders
3.2.1 Common
shares
-317,165,286.0
contribution and -317,165,286.05
5
withdrawal by
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity
instruments
3.2.3
Share-based 131,668,677.7
131,668,677.79 6,197,002.71 137,865,680.50
payments 9
included in
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
121
shareholders’
equity
3.2.4 Others
3.3 Profit -1,267,351,018.2 -200,000,000.0
101,981,476.75 -1,369,332,494.95 -1,467,351,018.20
distribution 0 0
3.3.1
Appropriation to 101,981,476.75 -101,981,476.75
surplus reserves
3.3.2
Appropriation to
general risk
reserves
3.3.3
-1,267,351,018.2 -200,000,000.0
Distribution to -1,267,351,018.20 -1,467,351,018.20
0 0
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
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
122
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
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
123
period
-90,128,958.3 -329,372,442.6 -2,562,701,595.7
3.6 Others -2,143,200,194.68 -2,562,701,595.70
7 5 0
4. Balance as at
2,112,251,6 114,693,519.9 -149,074,272.3
the end of the 3,959,512,681.41 6,037,383,625.95 28,068,077.78 6,065,451,703.73
97.00 1 7
period
8. Statement of Changes in Shareholders’ Equity of the Company
2021
Unit: RMB
2021
Other equity instruments Other Total
Item Less: Treasury Special Surplus Retained
Share capital Preferred Perpetual Capital reserves comprehensive Others shareholders'
Others shares reserves reserves earnings
shares bonds income equity
1. Balance as at the end of
2,112,251,697.00 3,759,929,582.87 -60,000,000.00 442,062,200.17 1,160,408,295.15 7,414,651,775.19
prior year
Add: Adjustments for
changed accounting policies
Adjustments for
corrections of previous
errors
Others
2. Balance as at beginning of
2,112,251,697.00 3,759,929,582.87 -60,000,000.00 442,062,200.17 1,160,408,295.15 7,414,651,775.19
year
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
124
3. Increase/ decrease in the
105,612,584.00 2,862,365,287.54 299,999,563.27 166,559,856.09 728,491,743.38 3,563,029,907.74
period (“-” for decrease)
3.1 Total comprehensive
1,665,598,560.92 1,665,598,560.92
income
3.2 Capital contribution and
105,612,584.00 2,862,365,287.54 299,999,563.27 2,667,978,308.27
withdrawal by shareholders
3.2.1 Common shares
contribution and withdrawal 105,612,584.00 2,795,939,095.73 2,901,551,679.73
by shareholders
3.2.2 Capital contribution
and withdrawal by holders
of other equity instruments
3.2.3 Share-based payments
included in shareholders’ 66,426,191.81 66,426,191.81
equity
3.2.4 Others 299,999,563.27 -299,999,563.27
3.3 Profit distribution 166,559,856.09 -937,106,817.54 -770,546,961.45
3.3.1 Appropriation to
166,559,856.09 -166,559,856.09
surplus reserves
3.3.2 Distribution to
-770,546,961.45 -770,546,961.45
shareholders
3.3.3 Others
3.4 Internal transfers within
shareholders’ equity
3.4.1 Capital reserves
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
125
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
2,217,864,281.00 6,622,294,870.41 299,999,563.27 -60,000,000.00 608,622,056.26 1,888,900,038.53 10,977,681,682.93
the period
2020
Unit: RMB
Item 2020
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
126
Other equity instruments Less: Other Total
Special Surplus
Share capital Preferred Perpetual Capital reserves Treasury comprehensive Retained earnings Others shareholders'
Others reserves reserves
shares bonds shares 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 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
year
3. Increase/ decrease in the
137,865,680.50 -7,240,888.31 101,981,476.75 -349,517,727.46 -116,911,458.52
period (“-” for decrease)
3.1 Total comprehensive
-7,240,888.31 1,019,814,767.49 1,012,573,879.18
income
3.2 Capital contribution and
137,865,680.50 137,865,680.50
withdrawal by shareholders
3.2.1 Common shares
contribution and withdrawal
by shareholders
3.2.2 Capital contribution
and withdrawal by holders
of other equity instruments
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
127
3.2.3 Share-based payments
included in shareholders’ 137,865,680.50 137,865,680.50
equity
3.2.4 Others
3.3 Profit distribution 101,981,476.75 -1,369,332,494.95 -1,267,351,018.20
3.3.1 Appropriation to
101,981,476.75 -101,981,476.75
surplus reserves
3.3.2 Distribution to
-1,267,351,018.20 -1,267,351,018.20
shareholders
3.3.3 Others
3.4 Internal transfers within
shareholders’ equity
3.4.1 Capital reserves
transferred into capital (or
share capital)
3.4.2 Surplus reserves
transferred into capital (or
share capital)
3.4.3 Surplus reserves for
making up losses
3.4.4 Changes in defined
benefit pension schemes
transferred into retained
earnings
3.4.5 Other comprehensive
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
128
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 3,759,929,582.87 -60,000,000.00 442,062,200.17 1,160,408,295.15 7,414,651,775.19
the period
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
129
