三七互娱:2023年年度报告摘要(英文版)

37 Interactive Entertainment Network

Technology Group Co., Ltd.

2023 Annual Report (Summary)

April 2024

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

Part I Important Notes, Table of Contents and Definitions

The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of 37 Interactive Entertainment Network Technology Group
Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee the truthfulness, accuracy
and completeness of the contents of this Report, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.

Xu Zhigao, the Company’s legal representative, and Ye Wei, the Company’s Chief Financial
Officer & Board Secretary, hereby guarantee that the financial statements carried in this Report
are truthful, accurate and complete.

All the Company’s directors have attended the Board meeting for the review of this Report.
Any plans and other forward-looking statements in this Report shall not be deemed as
promises to investors. Investors and other stakeholders shall be fully aware of the risk and
understand the difference between plans, forecasts and promises. Most of these forward-
looking contents can be found in “XI Prospects” of “Part III Management Discussion and Analysis”
herein.

The Company is subject to the disclosure requirements for listed companies engaged in
software and IT services.

The Board has approved a final dividend plan as follows: based on the total issued share
capital (exclusive of shares in the Company’s account for repurchased shares) on the date of
record, a cash dividend of RMB 3.70 (tax inclusive) per 10 shares is planned to be distributed to
all the shareholders of the Company, with no bonus issue from either profit or capital reserves.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


Table of Contents


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

Part II Corporate Information and Key Financial Information...... 4

Part III Management Discussion and Analysis...... 8

Part IV Corporate Governance...... 32

Part V Environmental and Social Responsibility...... 50

Part VI Share Changes and Shareholder Information ...... 54

Part VII Financial Statements......62
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


Part II Corporate Information and Key Financial Information

I Corporate Information

Stock name 37 Interactive Entertainment Stock code 002555

Place of listing Shenzhen Stock Exchange

Company name in Chinese 三七互娱网络科技集团股份有限公司

Abbr. 三七互娱

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

any)

Legal representative Xu Zhigao

Registered address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road, Wuhu City, Anhui Province

Zip code 241000

For business development purposes, the registered address of the Company has changed from

Change of registered address “11/F, Creative Advertising Complex, Wuhu Advertising Industrial Park, Middle Beijing Road, 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 https://www.37wan.net/

Email address ir@37.com

II Contact Information

Board Secretary Securities Affairs Representative

Name Ye Wei Wang Sijie

Office address Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza,
88 Ruixiang Road, Wuhu City, Anhui Province 88 Ruixiang Road, Wuhu City, Anhui Province

Tel. 0553-7653737 0553-7653737

Fax 0553-7653737 0553-7653737

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

III Media for Information Disclosure and Place where this Report Is Lodged

Stock exchange website where this Report is China Securities Journal, Shanghai Securities News, Securities Times, and
disclosed Securities Daily

Media and website where this Report is disclosed http://www.cninfo.com.cn

Place where this Report is lodged Room 7001, 7/F, Tower B1, Wanjiang Fortune Plaza, 88 Ruixiang Road,

Wuhu City, Anhui Province

IV Change to Company Registered Information

Unified social credit code 91340200713927789U

Changes to the principal activities of the Company since going public (if any) No changes in the Reporting Period

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


Every change of controlling shareholder since incorporation (if any) No changes in the Reporting Period

V Other Information

The independent auditor hired by the Company:

Name Huaxing Certified Public Accountants LLP

Office address 7-9/F, Tower B, Zhongshan Building, 152 Hudong Road, Gulou District, Fuzhou City, Fujian

Province

Accountants writing signatures Zhang Fengbo and Gao Yunjun

The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:

 Applicable □ Not applicable

Name Office address Representative Period of supervision

Orient Securities Investment 24/F, 318 South Zhongshan From 10 March 2021 until the

Banking Co., Ltd. Road, Huangpu District, Wang Bin and Wang Dehui proceeds of the private

Shanghai placement are used up

VI Key Financial Information

Indicate by tick mark whether there is any retrospectively restated datum in the table below.

 Yes □ No

Reasons for the retrospective restatement:

Change to the accounting policies

2022 2023-over-2022 2021

2023 change (%)

Before Restated Restated Before Restated

Operating revenue (RMB) 16,546,871,737. 16,406,034,152. 16,406,034,152. 0.86% 16,216,498,23 16,216,498,239.
85 65 65 9.02 02

Net profit attributable to 2,658,570,193.4 2,954,376,856.5 2,954,377,452.3 2,875,575,877. 2,875,575,877.6
the Listed Company’s 4 3 8 -10.01% 62 2
shareholders (RMB)
Net profit attributable to

the Listed Company’s 2,497,299,725.7 2,883,121,625.9 2,883,122,221.7 2,626,749,135. 2,626,749,135.3
shareholders after 9 0 5 -13.38% 34 4
deducting non-recurring
profits and losses (RMB)

Net cash flows from 3,147,037,336.4 3,557,168,897.2 3,557,168,897.2 3,658,748,941. 3,658,748,941.0
operating activities 6 6 6 -11.53% 03 3
(RMB)

Basic earnings per share 1.20 1.34 1.34 -10.45% 1.31 1.31
(RMB/share)

Diluted earnings per 1.20 1.34 1.34 -10.45% 1.31 1.31
share (RMB/share)

Weighted average return 20.83% 25.41% 25.41% -4.58% 30.24% 30.24%
on equity (%)

31 December Change of 31

2023 31 December 2022 December 2023 over 31 December 2021

31 December 2022 (%)

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


Before Restated Restated Before Restated

Total assets (RMB) 19,134,551,079. 17,094,617,736. 17,095,183,320. 11.93% 14,437,181,24 14,437,181,242.
36 46 91 2.76 76

Equity attributable to the 12,706,945,475. 12,183,346,432. 12,184,007,604. 10,773,716,31 10,773,716,314.
Listed Company’s 87 51 82 4.29% 4.49 49
shareholders (RMB)

Reasons for the change to the accounting policies and the correction of accounting errors:

The Ministry of Finance issued Interpretation No. 16 for the Accounting Standards for Business Enterprises (C.K. [2022] No. 31)

on 30 November 2022, which stipulates the “accounting treatments for deferred income taxes associated with assets and liabilities

arising from a single transaction to which the initial recognition exemption does not apply”. For a single transaction that is not a

business combination and does not affect either accounting profit or taxable income (or deductible losses) at the time the

transaction occurs, and where the initial recognition of assets and liabilities results in taxable temporary differences and deductible

temporary differences in equal amounts (including lease transactions where the lessee initially recognises a lease liability on the

commencement date of the lease term and records it in the right-of-use assets, and transactions where a provision is recognised

and recorded in the cost of the relevant assets because of the existence of a disposal obligation for a fixed asset, etc., hereinafter

referred to as a “single transaction to which this Interpretation applies”), the provisions pertaining to exemption from the initial

recognition of deferred income tax liabilities and assets as stipulated in Articles 11.2 and 13 of Accounting Standard No. 18 for

Business Enterprises - Income Tax shall not apply. An enterprise shall recognise the corresponding deferred income tax liabilities

and deferred income tax assets at the time of the transaction in accordance with the relevant provisions of Accounting Standard No.

18 for Business Enterprises - Income Tax and other relevant regulations for taxable temporary differences and deductible

temporary differences arising from the initial recognition of assets and liabilities in respect of the transaction.

The Company has implemented the said accounting policy since 1 January 2023, and has adjusted the cumulative effect to the

opening retained earnings and other related financial statement items. For details of the adjusted items and amounts, please refer

to “35. Changes to Significant Accounting Policies and Accounting Estimates” under Item V of Part X herein.

VII Key Financial Information by Quarter

Unit: RMB

Q1 Q2 Q3 Q4

Operating revenue 3,764,728,286.75 3,995,845,600.54 4,282,389,285.62 4,503,908,564.94

Net profit attributable to the Listed 774,563,286.72 451,498,048.35 966,242,525.44 466,266,332.93

Company’s shareholders

Net profit attributable to the Listed

Company’s shareholders after 670,414,241.63 445,076,877.11 962,355,135.09 419,453,471.96

deducting non-recurring profits

and losses

Net cash flows from operating 1,311,265,301.83 1,008,691,874.58 337,531,636.81 489,548,523.24

activities

VIII Non-recurring Profits and Losses

 Applicable □ Not applicable

Unit: RMB

Items 2023 2022 2021 Note

Gain or loss on disposal of non-current

assets (inclusive of impairment 2,836,160.40 2,302,146.59 7,111,889.34

allowance write-offs)

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


Government grants recognised in profit

or loss (exclusive of those that are closely Mainly due to

related to the Company's normal government grants
business operations and given in 59,144,627.86 44,774,565.68 78,301,526.84 other than the

accordance with defined criteria and in rebates of value-
compliance with government policies, added tax

and have a continuing impact on the

Company's profit or loss)

Gain or loss on fair-value changes in

financial assets and liabilities held by a

non-financial enterprise, as well as on

disposal of financial assets and liabilities 113,869,356.66 40,786,428.45 184,512,740.33

(exclusive of the effective portion of

hedges that is related to the Company's

normal business operations)
Reversed portions of impairment

allowances for receivables which are 4,029,906.92 5,829,134.16

tested individually for impairment

Non-operating income and expenses 7,082,898.99 -7,376,565.55 -12,236,018.48

other than the above

Less: Income tax effects 25,007,516.39 16,473,069.34 14,068,349.49

Non-controlling interests effects -3,344,940.13 -3,211,817.88 624,180.42

(net of tax)

Total 161,270,467.65 71,255,230.63 248,826,742.28 --

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


Part III Management Discussion and Analysis

I Industry Overview for the Reporting Period

1. The domestic market gradually picked up, while overseas markets saw further expansion

According to the 2023 China's Game Industry Report issued by the Game Publishing Committee of the China Audio-video
and Digital Publishing Association (CADPA), in 2023, the domestic game market recorded RMB302.964 billion in sales revenue,
marking a year-over-year (YoY) increase of 13.95% and surpassing RMB300 billion for the first time. The total number of users
reached 668 million, with a YoY increase of 0.61%, hitting a new record high.

Specifically, mini-games reached a new milestone in development. Their total number skyrocketed in 2023, with multiple
standing out. This helped the Company tap into previously unexplored user bases in the existing application scenarios.
Characterised by easy accessibility, mini-games proved instrumental in attracting target players with precision. Their features,
such as fragmented gameplay and portability, offered players a more lightweight gaming option, meeting players' demands for
light and fragmented entertainment. This opened up new growth opportunities in the game industry.

As to the overseas market, China's self-developed games achieved USD16.366 billion in sales revenue in 2023, marking the
fourth consecutive year with a scale exceeding RMB100 billion. However, a YoY decline of 5.65% was observed in the statistics,
reflecting increasing challenges and operating costs for overseas expansion. The US, Japan and South Korea remained the major
overseas markets for China's mobile games, accounting for 32.51%, 18.87% and 8.18%, respectively. Among the top 100 self-
developed mobile games in terms of overseas revenue, strategy games accounted for 40.31%, while role-playing games (RPGs)
constituted 15.97%. Shooting and casual games represented 10.03% and 5.11%, respectively. Strategy games (SLGs) have been
the main driver of overseas revenue in the recent three years, with the combined revenue of the top three games climbing from
63.87% last year to 66.31% this year, while the revenue share of shooting games declined. Casual games experienced notable
growth in revenue share.

2. Industry regulations prioritised sustainability, aiming to advance the promotion of Chinese culture

To enhance the guiding role of online games in disseminating positive values and uplifting content and drive the healthy and
orderly development of the game industry, the National Press and Publication Administration (NPPA), in the second half of 2023,
determined to initiate the Select Online Game Publishing Project. By selecting a range of online games that embody correct
values and cultural depth and combine education and entertainment, this initiative was aimed at making positive energy the
main tone of the development of online games. The unswerving pursuit of boutique, premium, and healthy products in the
industry has led to a constant stream of exceptional works, substantially contributing to the preservation and promotion of
traditional Chinese culture.

In response to national policies, the Company has earnestly implemented management requirements and delved into the
essence of traditional culture in game R&D and operational strategies. We have sought to integrate cultural significance into
player experiences and apply innovative technologies, thereby empowering both cultural and industrial values. For example, the
Company incorporated Peking opera facial makeup, Cantonese culture, and the ancient Maritime Silk Road into its globally
published game The Road to Be Shopkeeper (叫我大掌柜), helping overseas players gain a deeper understanding of Chinese
culture. Furthermore, we have launched an innovative model that combines the virtual character "CongMei" and real-world
cultural tourism scenarios to facilitate the promotion of urban cultural tourism. The ultimate goal is to advance the digital
promotion and preservation of traditional culture in the new era. The Company focuses on youth-oriented expression,
continuously excavating historical and cultural resources, hoping to showcase the beauty of Chinese traditional culture in an
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.

integrated way through "Games+".

3. Active efforts were made to implement protective and anti-addiction measures for minors

The State Council, in the second half of 2023, released the Regulation on the Protection of Minors in Cyberspace. This
regulation has provided specific guidelines for the game industry to refine and implement protection for minors, advance minors'
web literacy, enforce stricter regulations on online content, strengthen the protection of the personal information of minors, and
curb Internet addiction among minors.

In terms of protection for minors, apart from implementing the real-name authentication system and anti-addiction
requirements required by competent authorities, the Company has strengthened protection for minors by consistently improving
and upgrading its protection system for minors. We have always advanced various tasks in a proactive and positive manner to
ensure minors are well-protected in cyberspace. The Company has rolled out an upgraded version of the "real-name registration
and anti-addiction system for minors" for our proprietary platforms. Additionally, we have optimised the logo and wording of the
"age-appropriate prompt". Meanwhile, the Company has refined and upgraded our "Parent Monitoring Platform", optimised our
customer service procedures, and aided guardians in queries and verification, all aimed at creating a clean and healthy
cyberspace for minors. Furthermore, during the Reporting Period, the Company participated in drafting association standards
such as the Guidelines on Account Names of Internet Users, the Basic Requirements for Game Distribution and Promotion, and
the Guidelines on the Implementation of Social Responsibilities of Online Game Enterprises, furthering the collective effort
towards a community of shared responsibility.

4. The role of technologies in the industry became increasingly prominent, heightening the effects of cross-sector
empowerment

Technological innovation contributes to the boom of the game industry, and industry advancements inject fresh impetus
into innovative technological breakthroughs. Empowering each other, they jointly propel constant technological innovation and
breakthroughs and guide the industry to new heights.

The Company adheres to technology-driven innovation, closely follows the latest trends in scientific and technological
innovation, actively embraces cutting-edge technologies like generative AI, and explores the potential for deep integration of AI
and other emerging technologies with the Company's business, continuously improving creative efficiency. At the same time,
focusing on promoting the cross-industry integration of game technologies, the Company launched a series of popular science
games with rich themes covering medicine, traditional Chinese medicine, aerospace, intangible cultural heritage, and more to
maximise the positive social impact of games by leveraging the unique interactivity and vividness of games. Furthermore, the
Company also ventures into the fields of computing power, optical displays, XR integrated devices, entertainment content,
semiconductors and materials, space computing engines, artificial intelligence, new-type sensor and the AIGC gaming and social
platform, among other entertainment technology domains. By strategically embracing "hard technology" investments and
integrating ecological resources, the Company seizes opportunities for business innovation brought by cutting-edge technology,
thereby further propelling the high-quality development of its corporate ecosystem.

Amidst this industry trend, the Company has remained focused on its core business and deepened its "integration of R&D and
operation" strategy. We have continued to enhance our capability of producing quality games, solidify our core competitive edge in
overseas expansion, and explore possibilities of integrating technology into our business by leveraging resources both within and
outside the technology domain. With steady strides, we have advanced high-quality and sustainable business development,
dedicated to offering the public a wealth of premium cultural content.

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


II Principal Operations of the Company in the Reporting Period

The Company specializes in the development and publishing of games for global players, with the excellent game development
brand “Three Seven Games”, as well as professional game publishing brands “37Mobile”, “37GAMES” and “37Online”. The
Company precisely grasped the industry development trends, made continuous improvements in operation, and remained a top
performer in the industry, while adhering to the "boutiqueization, diversification and globalization" strategy.

37 Interactive Entertainment

Three Seven Games 37Mobile 37GAMES 37Online

(game development) (publishing of mobile (overseas publishing) (publishing of mobile &
games) browser games)

1. Breakthroughs in diverse game genres bolstered the Company's capability of long-term operation

During the Reporting Period, multiple games of the Company, including The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对

决), Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜), Fan Ren Xiu Xian Zhuan: Ren Jie Pian (凡人修仙传：人界篇),

Song of the Castle in the Sky (云上城之歌), Underground Kingdom (小小蚁国), Xun Dao Da Qian (寻道大千), and Ling Hun Xu

Zhang (灵魂序章), exhibited outstanding performance, maintaining a notable presence in the market.

In response to industry trends, the Company has consistently adhered to the "diversification" strategy, understanding the

demands of diverse user bases and continuously expanding its user base. By tapping into new markets and nurturing new growth

drivers, we have continuously pushed back the boundaries of our game genres. In addition to delving into the existing four

primary genres: Massive multiplayer online role playing games (MMORPGs), SLGs, card games, and simulation games, we have

developed games where RPG, casual, and puzzle elements are incorporated. These diverse and lightweight games have

diversified player experiences.

On one hand, the Company's R&D team avoids staying within comfort zones and actively expands into various categories,

developing products with a global perspective. The Company carefully worked out details regarding gameplay design, art quality,

music effects, etc., and continued to invest in product iteration, user experience and other aspects, formed professional layouts

in MMORPGs, SLGs and light games, remaining "Dedicated to Making Premium Games". On the other hand, based on our self-

developed brands, the Company has deepened our cooperation with external R&D teams through investments to bolster our

self-development capabilities. This approach has allowed us to accumulate abundant external R&D reserves, which is conducive

to our diversified arrangements for product supply.

During the Reporting Period, the most anticipated MMORPG mobile game, Fan Ren Xiu Xian Zhuan: Ren Jie Pian (凡人修仙

传：人界篇), distributed by the Company as the agent, became a big hit among MMO players. This success can be attributed to

the game's respect for and full reconstruction of the original storyline, its creative and engaging gameplay, and diverse artistic

expressions. Meanwhile, we adopted an innovative marketing approach combined with top-tier celebrity endorsements for Ba Ye

(霸业), one of our self-developed strategy mobile games on the theme of the Three Kingdoms. With a constant stream of

creative materials, this game exhibited robust performance after being launched, helping the Company stabilise the structure of

its SLG portfolio.

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


The Road to Be Shopkeeper (叫我大掌柜), a Chinese-style simulation mobile game rolled out by the Company in 2020, has
successfully converted new players through an engaging and nostalgic marketing approach and intellectual property (IP)
collaborations. By creating a long-term ecosystem with a focus on user interactions, this game has consistently sparked a boom
and achieved long-term operation. During the Reporting Period, this game still performed robustly in gross billing, solidifying the
Company's expertise in the long-term operation of simulation games.

The 3D realistic ant-themed strategy mobile game, Underground Kingdom (小小蚁国), has earned continuous player favour
since its launch in 2022. Its success is attributed to its unique theme and gameplay and its launch on both mini-game platforms
and applications. It has maintained a trend towards robust long-term operation.

The Chinese-style fun cultivation game Xun Dao Da Qian (寻道大千) has secured constant breakthroughs in user pool, and
achieved long-term operation through brand empowerment and social interaction. This game helps the Company garner leading
experience in the mini-game domain and lay a solid foundation for future products. Additionally, the self-developed game based
on the Soul Land IP, Ling Hun Xu Zhang (灵魂序章), has displayed robust potential since its launch, further reinforcing the
Company's competitive edge in the mini-game industry.

The Company consistently adheres to long-term operation, providing players with meticulous and comprehensive long-term
services. It deeply integrates the highlights of its intellectual property (IP) to continuously innovate in terms of reflow methods
and activities, consistently prolonging the product life cycle and igniting product vitality. Games that have been launched for
years, such as The Road to Be Shopkeeper (叫我大掌柜), The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), and Song of the
Castle in the Sky (云上城之歌), have maintained enduring popularity.

During the Reporting Period, 8 products operated by the Company globally each recorded monthly average gross billing
exceeding RMB100 million. In terms of the monthly gross billing achieved by mobile games the Company launched globally, the
highest amount surpassed RMB 2.3 billion.

2. Effective global market expansion contributed to the promotion of excellent Chinese culture

According to the 2023 China's Game Industry Report, the actual sales revenue of China's self-developed games in overseas
markets was USD16.366 billion, down 5.65% YoY. The main reasons are that the consumption willingness and capacity of users in
major overseas markets have been adversely affected by economic downturn, and the market competition has become
increasingly fierce, leading to higher overseas market marketing costs. This has increased hurdles for overseas expansion.

Against this backdrop, the Company, drawing upon its years of experience in overseas expansion, has continuously explored
its overseas markets in line with the "tailored games" strategy. We have consolidated our strengths in sectors such as MMORPGs,
SLGs, card games, and simulation games, and opened up opportunities in the casual game market, thereby boosting the steady
growth of our overseas business. According to Sensor Tower's rankings, the Company secured a spot among the top three
Chinese mobile game publishers in terms of overseas revenue in 2023, firmly establishing itself as a frontrunner among Chinese
game developers expanding into overseas markets.

Overseas Revenue of 37 Interactive Entertainment between 2017 and 2023

(RMB'00,000,000) 59.94 58.07

47.77

9.20 9.27 10.49 21.43

2017 2018 2019 2020 2021 2022 2023

During the Reporting Period, the Company achieved overseas operating revenue of RMB 5,807 million. In the global market,
it has established a product portfolio anchored in MMORPG, SLG, card games, and simulation games. Multiple benchmark
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


products for overseas expansion such as Puzzles & Survival, The Road to Be Shopkeeper (叫我大掌柜), 데블 M, Song of the
Castle in the Sky (云上城之歌), The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决), and Ant Legion have shown steady
performance.

The Company has deeply integrated the gameplay themes and promotional materials of its products with excellent
traditional Chinese culture. This approach creates a communication method that resonates with diverse regional, national, and
audience groups, promoting the global expression of Chinese stories.

Puzzles & Survival, a phenomenal product launched overseas by the Company, integrates "Match-3 gameplay + SLG". It
demonstrates the continuous efforts made by the Company to explore the in-depth integration of creative elements and games.
For example, the Company rolled out the "Kung Fu version" that revolves around traditional Chinese martial arts to immerse
players in the charm of Chinese kung fu. This strategy has helped the Company continuously acquire more active users and
prolong the product's life cycle. It has become a benchmark for long-term operation within the Company. Puzzles & Survival
made innovative breakthroughs in the fusion of game genres and the integration of game themes and regional cultures. In April
2023, the game once again set a new record in monthly billing. From its launch in 2020 to February 2024, Puzzles & Survival has
recorded over RMB10 billion in the cumulative total of gross billing.

The Road to Be Shopkeeper (叫我大掌柜) adopted a localised publishing strategy in various regions worldwide. The
Company collaborated with official cultural institutions in Guangzhou to promote Cantonese culture, authentically representing
the prosperity of the ancient Maritime Silk Road. The game integrates gameplay such as treasure salvage and restoration to
combine education and entertainment. By incorporating elements of traditional Chinese culture such as the lion dance,
traditional festivals, Dunhuang Caves, and Peking Opera, players vividly experience the charm of ancient Chinese trade and
culture, allowing overseas users to immerse themselves in the beauty of Chinese culture and achieving a historic breakthrough
for historical simulation games in the European and American regions.

The Company has also implemented a strategy of "lightening hardcore games and intensifying light games" to create
differentiated competitive edges. For example,데블 M focuses on highlighting the core enjoyment through "simplification", thus
establishing a distinctive edge in the gaming experience. This approach has enabled the game to stand out in the fiercely
competitive MMORPG mobile game market in South Korea, contributing to sustained and robust gross billing. Furthermore, plans
are underway for its subsequent launch in Vietnam and Japan. Song of the Castle in the Sky (云上城之歌), an MMORPG mobile
game focusing on adventures in different worlds, has emerged as the highest-grossing overseas game in the South Korean market
in 2022. By offering a unique gaming experience coupled with its combined marketing and operational strategy of branding +
sales effects, it has achieved remarkable success in the Japanese and South Korean markets, solidifying its position as the flagship
product in the Company's overseas MMORPG segment. The Company has also continuously optimised its strategies for product
content iteration and accumulated experience in long-term operation to consolidate its competitive edge in the overseas
MMORPG market.

The Company has made ongoing attempts to promote casual incremental games overseas. For example, the casual
incremental mobile game Xiao Yao Wen Dao (小妖问道) has garnered exceptional market performance after its launch in regions
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


including China's Hong Kong, Macao and Taiwan, Japan, South Korea, Southeast Asia, Europe and the US. This success can be
attributed to its meticulously customised promotions in localities and thematic packaging. It has laid a solid foundation for the
Company's expansion into overseas markets of casual incremental games.

3. Arrangements for both self-developed and agency games enriched the portfolio of products in the pipeline

The Company focuses on its core gaming business, continuously expanding the boundaries of self-development capabilities,
and delving into core genre tracks, accumulating a variety of refined self-developed mobile games. Furthermore, the Company
consistently prioritises high-quality content as its strategic direction. Through multi-dimensional approaches such as investment
empowerment and business support, the Company has carried out in-depth collaborations with reputable game developers such
as EyuGame and Yanqu Network. These collaborations involve agency and customisation to enrich the Company's supply of high-
quality products and deepen the diversification of its product portfolio.

The Company has amassed a pipeline of over 40 premium self-developed or agency mobile games, covering various genres
such as MMORPGs, SLGs, card games, simulation games, as well as incremental RPGs, casual and puzzle games. These products
will be rolled out in global markets.

Certain key games in the pipeline are presented below:

Self-developed games: Code Soul MMO (代号斗罗 MMO), a Chinese comic oriental fantasy MMORPG; Code MLK (代号
MLK), a Japanese Chibi-style MMORPG; Code Xiu Xian SLG (代号休闲 SLG), a Chibi-style SLG integrating war elements; Code
Zheng Qi SLG (代号正奇 SLG), a realistic Three Kingdoms SLG; Code Battle Song M (代号战歌 M), a Western magic MMORPG;
Code DQ (代号 DQ), a cartoon-style incremental RPG on a Japanese fantasy theme; Code M1 (代号 M1), a casual game with
European and American cartoon elements; Code TD (代号 TD), a tower defence game set in a fantasy world.

Agency games: Shi Guang Za Huo Dian (时光杂货店), a modern-themed simulation game; Zhui Xu (赘婿), a traditional
Chinese ink painting-themed simulation game; Shi Guang Da Bao Zha (时光大爆炸), a picture book-style simulation game on a
Chinese cultural theme; Yes Your Highness, a simulation game set in the medieval era; Code Shang Tu (代号商途), a simulation
game focusing on temporal travel and business competition; Zhu Shen Huang Hun: Zheng Fu (诸神黄昏：征服), a Western magic
MMORPG; Heroes of the Three Kingdoms: Hong Hu Ba Ye (三国群英传：鸿鹄霸业) and Battle of Chibi 2 (赤壁之战 2), two SLGs
based on the Three Kingdoms; Mecha Domination, an SLG game featuring giant monsters; Primal Conquest: Dino Era, a cartoon-
style SLG on the theme of dinosaurs; Abyss Survivor, a magical, cartoon-style SLG; Lost Star Ring (失落星环), an interstellar card
game; Code Xiu Xian (代号休闲), a modern resort leisure game; Match Cozy 3D, a modern cartoon-style casual puzzle game;
Code Dreamland (代号梦境), a realistic urban female-oriented game set in modern times.

Several of the Company's key products have been officially licenced in China and are progressing towards launch. We hope
to deliver diverse gaming experiences to players.

4. Artificial intelligence (AI) empowerment bolstered the Company's R&D and operations, improved its quality and efficiency,
and optimised experiences

With the rapid advancement of technology, AI has brought limitless possibilities and profound impacts to the game industry.
Embracing the application of AI in the game industry, the Company has adopted a "Three-step AI" strategy.

First, pioneering arrangements for AI applications have been made to progressively incorporate AI into various business
processes. Second, leveraging accumulated experience, the Company has striven to achieve tool- and module-based
development, thereby establishing a more automated and intelligent pipeline of game industrialisation. Third, the Company has
explored more possibilities of enriching gameplay through AI.

In 2018, the Company made ongoing efforts to explore the application of industrialised AI in gaming. By deeply integrating
cutting-edge technologies such as AI and big data into its business, the Company effectively empowered various processes,
ranging from product proposal, content generation, publishing and operation to asset accumulation. This has allowed the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


Company to enhance efficiency and accumulate a wealth of data and technological advantages over the years.

Since then, we have bolstered the tool-based and module-based development of our capabilities in alignment with our
business procedures, integrating discriminant AI and generative AI into each process of our business. This has culminated in the
development of a digitalised and intelligent product portfolio that runs through our entire R&D and operational procedures. This
portfolio covers nine platforms, including "Zeus", "Athena", "Poseidon", "Ares", and "Cupid" on the R&D end and "Turing",
"Quantum", "Destiny", and "Yi Lan" on the ends of promotion and operations. Additionally, our self-developed internal AI Agent
platform enables autonomous decision-making regarding the upgrading of each digitalised and intelligent product and enhances
the efficiency of collaborative offices, improving the industrialisation of the game R&D and operation pipeline and the overall
operational efficiency of the Company. At present, our generative AI technology has been well-applied in sectors such as 2D
drawings, intelligent customer service, localisation and translation, copywriting, and collaborative offices, leading to significant
improvements in human efficiency.

For example, our art design platform "Turing" has substantially facilitated the collaborative management of art processes on
the creativity end, art asset preservation and retrieval, and the intelligent generation of 2D images, significantly boosting asset
reuse efficiency and design-production synergy. By carrying out consistent training of its proprietary art assets garnered over the
years, the Company has experienced substantial efficiency improvements in 2D art-related tasks through AI empowerment, with
a combined monthly output of over 280,000 AI-generated 2D drawings across R&D and publishing business lines. In the concept
design process for characters, the Company has implemented a new process of AI-generated 2D drawings, resulting in an average
saving of 60% to 80% in working hours.

In terms of R&D, the Company has utilised its intelligent R&D platform "Cupid" to conduct a variety of technological studies
and applications, including AI balance testing, the translation of art materials, AI imitation learning, game Q&A assistant, natural
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


language processing (NLP) public opinion analysis, and data trend forecasting. Moreover, AI algorithms have been employed to
capture high-precision and high-performance motions, addressing the pain points such as high costs and overly long periods
typically identified with specialised traditional motion capture equipment. This has enhanced both R&D efficiency and quality.
Many of our self-developed products such as The Soul Land: Hun Shi Dui Jue (斗罗大陆：魂师对决) and Ba Ye (霸业) have
benefited from the AI-assisted stat balance testing function, resulting in improved player experiences and prolonged game life
cycles.

AI technology has been deeply integrated into each business type of the Company, notably enhancing the operational
efficiency of each process. Furthermore, as to the exploration of AI's potential for enriching gameplay, the Company is
wholeheartedly embracing the AI trend, continually delving into novel gameplay mechanics and experiences internally. This
includes exploring methods to recommend and generate images, elements, and gameplay preferred by players using AI-
generated content (AIGC). The ultimate goal is to lower the barriers to content creation, encourage player engagement in
creation, and tap into the possibility of creating non-linear gaming procedures and experiences.

Benefiting from our pioneering strides in the exploration of AI applications, we have remained open-minded about
transformations in industry technologies and ecosystems. Marching forwards steadily and surely, we have insisted on a
progressive layout of AI applications and continuously iterated and optimised innovative tools in better alignment with the
Company's business development requirements. Furthermore, taking into consideration the requirements of each business
process, we have been exploring the in-depth integration of advanced technologies and business.

In addition, while conducting self-exploration and internal incubation, the Company strives to open up AI opportunities
through technology investments. Focusing on large models and application layers, the Company has directly or indirectly invested
in Zhipu AI, as well as leading tech firms, including DeepLang AI, and aiXcoder. As to spatial computing and game social platforms,
companies in which the Company has invested, such as DeepMirror Technology and YAHAHA, have embraced AIGC tools to
empower their primary business. In integrated devices, investments in enterprises such as Rayneo, INMO, and Ximmerse were
aimed at facilitating their transformation into premier AI platforms, capable of hosting diverse AI content and functions. The
Company remains focused on hard & core technology, continuously monitoring hardware and technological advancements to
empower innovative and sustainable business growth through investments, thereby forging new competitive edges in the
industry.

(III) The Company’s principal operations and business models

The Company is principally engaged in the development, publishing, and operation of online games (mostly mobile and
browser games). The business models of the Company’s online games mainly include independent operation and third-party joint
operation.

Under the independent operation mode, the Company obtains the licenses of games through independent R&D or being an
operator of other games, and publishes and operates these products through its own or third-party channels. The Company is fully
responsible for the operation, promotion and maintenance of the games; providing unified management services for online
promotion, online customer service and top-up payment; and updating games along with game developers based on the real-time
feedback of users and games.

Under the third-party joint operation mode, the Company cooperates with one or more game operators or game application
platforms to jointly operate games. And the aforesaid parties are responsible for the management of their own channels, including
operation, promotion, the recharge and charge system, while the Company provides technical support services along with game
developers.

(IV) The Company’s presence on the market and primary growth drivers

Focusing on cultural and creative businesses based on the development, publishing, and operation of online games, the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


Company is an excellent comprehensive entertainment provider in China’s A-stock market. It is one of the top 20 global public
game companies, key cultural export companies of China, civilized institutions in Guangdong Province, and Top 30 Cultural
Enterprises of Guangzhou, and MSCI ESG A-rated Companies, among others. With “bringing joy to the world” as its mission, the
Company is dedicated to becoming an excellent and sustainable entertainment provider.

During the Reporting Period, the Company steadily advanced with the development strategy of “boutiqueization,
diversification and globalization”, adhered to the strategy of "dual engines at home and abroad", as well as continuously promoted
high-quality and sustainable development.
III Core Competitiveness Analysis

1. Forging ahead with determination, the team has seized market opportunities swiftly

The Company has been deeply engaged in the cultural and creative industry for many years. Its core management team is
deeply involved in the front line of business, working hard together with all the employees. Always upholding the spirit of
marathon-like perseverance, the Company has been forging ahead with breakthroughs, as well as pursuing better financial
results and faster growth while maintaining sound operation. Over the years, the Company has demonstrated keen market
insight, seizing emerging opportunities in the industry through a robust team of skilled professionals and scientific management
mechanisms. Anticipating the "shift from web games to mobile games" in its early stages, the Company spearheaded overseas
market penetration over a decade ago. Presently, we remain aligned with the trend towards mini-games. Navigating numerous
industry transitions, we have achieved sustained growth. Throughout the development, the Company has consistently
emphasised talent cultivation and team building. The Company has built a high-calibre talent pool. Through a scientific talent
promotion mechanism, remuneration management system, and performance incentive scheme, the Company inspires employee
motivation and creativity. With "bringing joy to the world" as its mission, the Company is advancing towards the vision of
"becoming an excellent and sustainable entertainment provider".

2. Strengths in the integration of R&D and operation have been consolidated, enriching the product
portfolio

The Company has continuously advanced its strategy of "integration of R&D and operation", deepened its diversified
product portfolio, and established a robust and efficient multidimensional product supply system. First, the Company has
consistently pushed back the boundaries of its self-development capabilities, delved into core product categories, and adopted a
global perspective to create a central supply layer with self-developed products at the core. Second, through investment
empowerment and business support, the Company has fostered deeper partnerships with numerous high-quality developers
both domestically and internationally, continuously accumulating deeply customised premium products. Third, by collaborating
with long-term and stable developers, the Company has further refined its product offerings. Under this supply system, the
Company has built a robust product supply chain, continuously enriched the portfolio of high-quality products and drove steady
business growth.

With the “integration of R&D and operation” model, the Company can fully combine its strengths in product R&D and
operation. This, on the one hand, facilitates a deeper understanding of the market and user demands by the R&D team, thereby
increasing the success rate of products under development. On the other, through close collaboration between R&D and
operations teams, the Company can optimise the updates and promotions of already launched products, thus effectively
achieving long-term operation and prolonging product life cycles.

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


3. Publishing capabilities have been continuously iterated to facilitate long-term operation from a

global perspective

Over the years, the Company's publishing team has successfully launched numerous quality games across diverse genres and

themes in global markets. During this journey, we have kept abreast of the latest market trends, and accordingly, innovated our

marketing strategies. By employing various creative marketing strategies, such as collaboration with renowned IP, celebrity

endorsements, and immersive storytelling, we have established a long-term ecosystem revolving around user interactions, thus

fortifying robust publishing barriers and facilitating the long-term operation of multiple products. Moreover, the Company has

placed significant emphasis on the impact of AI technology and automated production tools on the Company's business.

Leveraging a wealth of data accumulated over the years, the Company has continually iterated our self-developed intelligent ad

and operational platforms to boost promotional efficiency and effectiveness. The Company has made comprehensive

arrangements for digitalised and intelligent products on the publishing end. This has bolstered the Company's capabilities of

intelligent and sophisticated operations, allowing the Company to effectively manage marketing expenses, amplify publishing

effectiveness, and prolong product life cycles.

IV Analysis of Principal Operations

1. Overview

See “II Principal Operations of the Company in the Reporting Period” above.

2. Revenue and Cost Analysis

(1) Breakdown of Operating Revenue

Unit: RMB

2023 2022

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

revenue (%) revenue (%)

Total operating 16,546,871,737.85 100% 16,406,034,152.65 100% 0.86%

revenue

By operating division

Online games 16,546,871,737.85 100.00% 16,406,034,152.65 100.00% 0.86%

By product category

Mobile games 15,898,475,091.13 96.09% 15,631,909,881.38 95.28% 1.71%

Browser games 497,165,026.29 3.00% 599,189,194.88 3.65% -17.03%

Others 151,231,620.43 0.91% 174,935,076.39 1.07% -13.55%

By operating segment

Domestic 10,739,497,361.46 64.90% 10,412,051,866.74 63.46% 3.14%

Overseas 5,807,374,376.39 35.10% 5,993,982,285.91 36.54% -3.11%

By marketing model

Independent operation 14,691,612,109.38 88.79% 14,213,891,135.04 86.64% 3.36%

Joint operation and 1,855,259,628.47 11.21% 2,192,143,017.61 13.36% -15.37%

others

Unit: RMB

2023 2022

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Operating revenue 3,764,728, 3,995,845, 4,282,389, 4,503,908, 4,089,237, 4,003,000, 3,585,841, 4,727,954,
286.75 600.54 285.62 564.94 792.70 891.70 376.32 091.93

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


Net profit attributable 774,563,28 451,498,04 966,242,52 466,266,33 759,344,27 935,428,14 561,705,33 697,899,69
to the Listed Company’s 6.72 8.35 5.44 2.93 4.35 7.13 8.71 2.19
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

Unit: RMB

Gross YoY change in YoY change YoY change in

Operating revenue Cost of sales profit operating in cost of gross profit

margin revenue (%) sales (%) margin (%)

By operating division

Online games 16,546,871,737.85 3,391,580,579.32 79.50% 0.86% 11.25% -1.92%

By product category

Mobile games 15,898,475,091.13 3,221,697,799.51 79.74% 1.71% 12.87% -2.00%

Browser games 497,165,026.29 149,033,406.59 70.02% -17.03% -15.55% -0.53%

Others 151,231,620.43 20,849,373.22 86.21% -13.55% 17.65% -3.66%

By operating segment

Domestic 10,739,497,361.46 1,789,104,263.23 83.34% 3.14% 4.55% -0.23%

Overseas 5,807,374,376.39 1,602,476,316.09 72.41% -3.11% 19.83% -5.28%

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

□Applicable  Not applicable

(3) Breakdown of Cost of Sales

By operating division

Unit: RMB

Operating 2023 2022

division Items Amount As % of cost Amount As % of cost of Change (%)

of sales sales

Royalties 3,046,472,983.28 89.82% 2,761,332,426.03 90.58% 10.33%

Cost of servers 210,656,293.98 6.21% 192,141,722.90 6.30% 9.64%

Online games Amortization of 106,404,582.53 3.14% 65,480,367.38 2.15% 62.50%

copyright money

Other costs 28,046,719.53 0.83% 29,585,123.55 0.97% -5.20%

Total 3,391,580,579.32 100.00% 3,048,539,639.86 100.00% 11.25%

Note:

Other costs are mainly labor costs and technical service charges.

Breakdown of the cost of sales for the principal operations:

Unit: RMB

Breakdown of 2023 2022 Change (%)

cost Amount As % of cost of sales Amount As % of cost of sales

Royalties 3,046,472,983.28 89.82% 2,761,332,426.03 90.58% 10.33%

Cost of servers 210,656,293.98 6.21% 192,141,722.90 6.30% 9.64%

Amortization of 106,404,582.53 3.14% 65,480,367.38 2.15% 62.50%

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

copyright money

Other costs 28,046,719.53 0.83% 29,585,123.55 0.97% -5.20%

Total 3,391,580,579.32 100.00% 3,048,539,639.86 100.00% 11.25%

(4) Changes in the Scope of Consolidated Financial Statements for the Reporting Period

 Yes □ No

For details, see Note IX Changes in the Scope of Consolidated Financial Statements in Part X.

(5) Major Customers and Suppliers
Major customers:

Total sales to top five customers (RMB) 7,041,778,587.57

Total sales to top five customers as a % of total sales of the Reporting Period (%) 42.55%

Total sales to related parties among top five customers as a % of total sales of the 0.00%
Reporting Period (%)
Top five customers:

No. Customer Sales revenue contributed for the As a % of total sales revenue
Reporting Period (RMB) (%)

1 Customer A 2,447,320,251.65 14.79%

2 Customer B 2,387,617,269.50 14.43%

3 Customer C 1,538,658,532.93 9.30%

4 Customer D 510,353,285.92 3.08%

5 Customer E 157,829,247.57 0.95%

Total -- 7,041,778,587.57 42.55%

Other information about major customers:
□ Applicable  Not applicable
Major suppliers:

Total purchases from top five suppliers (RMB) 2,348,118,098.40

Total purchases from top five suppliers as a % of total purchases of the Reporting Period (%) 69.24%

Total purchases from related parties among top five suppliers as a % of total purchases of the 0.00%
Reporting Period (%)
Top five suppliers:

No. Supplier Purchase in the Reporting As a % of total purchases (%)
Period (RMB)

1 Supplier A 1,090,931,371.53 32.17%

2 Supplier B 520,539,074.78 15.35%

3 Supplier C 378,970,902.89 11.17%

4 Supplier D 254,739,925.68 7.51%

5 Supplier E 102,936,823.52 3.04%

Total -- 2,348,118,098.40 69.24%

Other information about major suppliers:
□ Applicable  Not applicable
3. Expenses

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


2023 2022 Change (%) Main reason for change

Distribution and selling 9,090,808,791.22 8,732,600,168.08 4.10%

expenses

General and administrative 592,119,581.61 526,013,657.81 12.57%

expenses

Interest income from deposits

Financial expenses -221,476,247.52 -74,038,437.25 -199.14% increased during the Reporting

Period as compared to last year.

In the second half of 2022, the

Company optimised its product
Research and development 713,563,181.73 904,696,560.53 -21.13% development structure, reducing
expenses R&D investments in some non-

strategic categories and increasing
R&D investments in strategic ones.

4. R&D Investments
 Applicable □ Not applicable

Major R&D project Purpose Progress Specific objectives Expected impact on the
Company

To enrich the product To become a benchmark To further enhance the R&D
Code Battle Song M matrix and improve Under game product with capacity, strengthen the

(代号战歌 M) product development Western magic realism capability to develop quality
competitiveness and next-generation games, and enrich the

quality diversified product portfolio

To enrich the product To further enhance the R&D
Code MLK (代号 matrix and improve Under To become a high-quality capacity, strengthen the

MLK) product development MMO game in Japanese capability to develop quality
competitiveness Chibi style. games, and enrich the

diversified product portfolio

To enrich the product To further enhance the R&D
Code Zheng Qi SLG matrix and improve Under To become a high-quality capacity, strengthen the

(代号正奇 SLG) product development SLG game in a realistic capability to develop quality
competitiveness Three Kingdoms style. games, and enrich the

diversified product portfolio

To enrich the product To further enhance the R&D
Code Xiu Xian SLG matrix and improve Under To become a high-quality capacity, strengthen the

(代号休闲 SLG) product development SLG game featuring Chibi- capability to develop quality
competitiveness style war elements. games, and enrich the

diversified product portfolio

To enrich the product To become a high-quality To further enhance the R&D
matrix and improve Under casual game in European capacity, strengthen the

Code M1 (代号 M1) product development and American cartoon capability to develop quality
competitiveness style. games, and enrich the

diversified product portfolio

To enrich the product To become a high-quality To further enhance the R&D
Code Soul MMO (代 matrix and improve Under MMO game in the style of capacity, strengthen the

号斗罗 MMO) product development Chinese comic oriental capability to develop quality
competitiveness fantasy. games, and enrich the

diversified product portfolio

To enrich the product To become a high-quality To further enhance the R&D
matrix and improve Under incremental game in capacity, strengthen the

Code DQ (代号 DQ) product development Japanese fantasy cartoon capability to develop quality
competitiveness style. games, and enrich the

diversified product portfolio

To enrich the product To become a high-quality To further enhance the R&D
matrix and improve Under tower defence game capacity, strengthen the

Code TD (代号 TD) product development featuring fantasy capability to develop quality
competitiveness elements. games, and enrich the

diversified product portfolio

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

Details about R&D personnel:

2023 2022 Change (%)

Number of R&D personnel 1,471 1,654 -11.06%

R&D personnel as % of total 42.67% 46.57% -3.90%
employees

Educational background of R&D personnel

Bachelor’s degree 1,108 1,221 -9.25%

Master’s degree 71 83 -14.46%

Junior college and below 292 350 -16.57%

Age structure of R&D personnel

Below 30 831 1,071 -22.41%

30~40 625 572 9.27%

Over 40 15 11 36.36%

Details about R&D investments:

2023 2022 Change (%)

R&D investments (RMB) 713,563,181.73 904,696,560.53 -21.13%

R&D investments as % of operating revenue 4.31% 5.51% -1.20%

Capitalized R&D investments (RMB) 0.00 0.00 0.00%

Capitalized R&D investments as % of total R&D 0.00% 0.00% 0.00%
investments
5. Cash Flows

Unit: RMB

Items 2023 2022 Change (%)

Sub-total of cash inflows from 17,171,716,871.55 17,126,009,759.70 0.27%
operating activities

Sub-total of cash outflows 14,024,679,535.09 13,568,840,862.44 3.36%
used in operating activities

Net cash flows from 3,147,037,336.46 3,557,168,897.26 -11.53%
operating activities

Sub-total of cash inflows from 13,847,650,873.38 10,742,510,933.45 28.91%
investing activities

Sub-total of cash outflows 15,293,575,099.80 14,072,934,577.10 8.67%
used in investing activities

Net cash flows from investing -1,445,924,226.42 -3,330,423,643.65 56.58%
activities

Sub-total of cash inflows from 3,267,000,000.00 1,847,151,400.00 76.87%
financing activities

Sub-total of cash outflows 5,553,398,865.79 3,431,725,758.42 61.83%
used in financing activities

Net cash flows from financing -2,286,398,865.79 -1,584,574,358.42 -44.29%
activities

Net increase in cash and cash -574,990,372.12 -1,297,921,636.44 55.70%
equivalents

Explanation of why any of the data above varies significantly on a year-over-year basis:

 Applicable □ Not applicable

1. Net cash flows from investing activities increased 56.58% YoY, primarily driven by the increased net cash inflows from the
Company’s purchase and redemption of wealth management instruments and time deposits in the Reporting Period.

2. Net cash flows from financing activities decreased 44.29% YoY, primarily driven by the combined effects of the increased
dividend payout, and the use of repurchased shares for employee incentives in the Reporting Period.

Explanation of why the net cash flows from operating activities varied significantly from the net profit of the Reporting Period:

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


 Applicable □ Not applicable

The net cash flows from operating activities varied from the net profit of the Reporting Period primarily because items of asset
impairment allowances, asset depreciation and amortization, deferred income tax expense, gain on changes in fair value,
investment income, etc. did not affect cash flows from operating activities but did affect net profit, and there were movements in
trade receivables and payables. For further information, see “55. Supplementary information for the cash flow statement” in Note
VII of Part X.

V Analysis of Non-principal Operations

 Applicable □ Not applicable

Unit: RMB

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

Mainly due to gains on investments from

Investment disposal of equity investments, dividends

income 7,525,623.19 0.25% during the period of holding equity No

investments, and wealth management

products

Gain/loss on Mainly due to changes in fair value of

changes in fair 103,982,672.05 3.41% equity investments and wealth No

value management products

Impairment losses on
long-term equity

Impairment loss -125,473,870.50 -4.12% Mainly due to impairment losses on long- investments are not

on assets term equity investments and credit risks recurrent, while

impairment losses on
credit risks are recurrent

Non-operating 20,123,970.73 0.66% Mainly due to the write-off of inactive No

income payables and compensation income

Non-operating 13,041,071.75 0.43% Mainly due to expenditure on donations No

expenses

Mainly due to refund of VAT, over- Refund of VAT is

deductions of input VAT, refund of recurrent while other
Other income 110,038,707.84 3.61% handling fee for personal income tax, and government grants are
other government grants that are related not.

to normal business operations

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


VI Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB

31 December 2023 1 January 2023 Change in Reason for any significant change

Amount As % of total assets Amount As % of total assets percentage (%)

No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the

beginning balance mainly due to net cash
flows from operating activities. For further
Monetary funds 6,176,992,875.55 32.28% 5,129,481,882.65 30.01% 2.27% information, see “II 5. Consolidated Cash
Flow Statement”, “54. Cash flow statement
items” and “55. Supplementary

information for the cash flow statement”
under Note VII, in “Part X Financial

Statements”.

Accounts receivable 1,479,267,695.67 7.73% 1,433,563,842.43 8.39% -0.66% No significant change

Long-term equity 520,735,613.55 2.72% 621,794,374.74 3.64% -0.92% No significant change

investments

Fixed assets 823,508,284.60 4.30% 850,030,034.92 4.97% -0.67% No significant change

No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the

Construction in progress 534,491,192.20 2.79% 242,508,087.97 1.42% 1.37% beginning balance mainly due to the

investments in the Guangzhou

Headquarters Building construction

project during the Reporting Period.

No significant change occurred to this item
as a percentage of total assets, while the
ending balance was lower than the

Right-of-use assets 16,622,471.20 0.09% 31,967,946.49 0.19% -0.10% beginning balance mainly due to the

depreciation provisions and the

termination of certain lease contracts

during the Reporting Period.

Short-term loans 1,554,577,083.34 8.12% 901,046,888.89 5.27% 2.85% Mainly due to the increased note

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


financings and bank loans during the

Reporting Period

Contract liabilities 280,023,602.87 1.46% 259,519,734.14 1.52% -0.06% No significant change

Long-term loans 306,000,000.00 1.60% 323,000,000.00 1.89% -0.29% No significant change

No significant change occurred to this item
as a percentage of total assets, while the
ending balance was lower than the

Lease liabilities 3,944,589.05 0.02% 16,786,536.53 0.10% -0.08% beginning balance mainly due to the

decreased lease payables as a result of

rental payments made during the

Reporting Period.

Mainly because the Company recovered
Trading financial assets 2,024,681,502.03 10.58% 2,792,984,819.12 16.34% -5.76% mature bank’s wealth management

instruments and structured deposits

during the Reporting Period

No significant change occurred to this item
as a percentage of total assets, while the
ending balance was higher than the

Prepayments 1,143,237,497.90 5.97% 855,193,135.12 5.00% 0.97% beginning balance mainly due to the

increased prepayments for Internet traffic
charges as a result of new game launches
during the Reporting Period.

Intangible assets 1,040,204,870.96 5.44% 1,059,676,921.41 6.20% -0.76% No significant change

No significant change occurred to this item
as a percentage of total assets, while the
Goodwill 1,578,065,048.53 8.25% 1,589,065,048.53 9.30% -1.05% ending balance was lower than the

beginning balance mainly due to goodwill
impairment provisions made during the
Reporting Period.

Mainly due to the increased balance of

Other non-current assets 2,280,577,680.43 11.92% 1,024,113,999.86 5.99% 5.93% over-one-year deposits purchased to

increase return on capital, and the

purchase of additional land

Accounts payable 1,825,714,480.74 9.54% 1,648,560,259.52 9.64% -0.10% No significant change

Mainly due to the increased bank

Notes payable 1,087,000,000.00 5.68% 555,000,000.00 3.25% 2.43% acceptance bills paid to suppliers during
the Reporting Period.

Indicate whether overseas assets account for a higher percentage of total assets.

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


 Applicable □ Not applicable

Management Control measures to Return As % of the Material

Asset Source Asset value (RMB) Location model protect asset safety generated (RMB) Company’s equity impairment risk or

not

A sound business

Other equity Investments in Hong Kong in supervision mechanism

assets overseas 418,382,339.31 China, Canada, and a sound risk control 58,803,256.67 3.29% No

companies etc. mechanism have been

put in place

A sound business

Income from Hong Kong in supervision mechanism

Monetary funds investments and 1,494,843,060.13 China, the US, and a sound risk control 11.76% No

operations etc. mechanism have been

put in place

2. Assets and Liabilities at Fair Value

 Applicable □ Not applicable

Unit: RMB

Gain/loss on fair- Cumulative fair- Impairment

Item Beginning amount value changes in value changes allowance made Purchased in the Sold in the Other changes Ending amount
the Reporting through equity in the Reporting Reporting Period Reporting Period

Period Period

Financial assets
1. Trading financial assets

(exclusive of derivative 2,792,984,819.12 112,238,705.37 7,650,510,435.98 8,532,575,914.07 1,523,455.63 2,024,681,502.03
financial assets)

2. Other equity investments 269,990,212.51 -240,478,042.75 714,360.74 247,132,794.34

3. Other non-current 685,698,473.75 -8,183,428.72 170,956,341.77 24,171,912.50 1,361,213.10 825,660,687.40
financial assets

Subtotal of financial assets 3,748,673,505.38 104,055,276.65 -240,478,042.75 7,821,466,777.75 8,556,747,826.57 3,599,029.47 3,097,474,983.77

Total of the above 3,748,673,505.38 104,055,276.65 -240,478,042.75 7,821,466,777.75 8,556,747,826.57 3,599,029.47 3,097,474,983.77

Financial liabilities -84,380.59 -72,604.60 -85,096.02 -2,422.24 -74,311.41

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

Contents of other changes:

Other changes were incurred by exchange rate fluctuations, etc.

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

Item Ending carrying amount (RMB) Reason for restriction

Monetary funds 40,880,261.11 Money frozen by bank and security deposits

Monetary funds 1,388,919,536.10 Principals and interest of term deposits with a maturity within one year as pledges

Non-current assets due within one year 112,347,024.36 Principals and interest of term deposits with a maturity of over one year (due in 2023) as pledges

Other non-current assets 951,809,927.98 Principals and interest of term deposits with a maturity of over one year as pledges

Fixed assets-buildings and constructions 657,116,164.90 As collateral for bank loan to the Company

Total 3,151,072,914.45

VII Principal Subsidiaries and Joint Stock Companies

 Applicable □ Not applicable

Principal subsidiaries and joint stock companies with an over 10% effect on the Company’s net profit:

Unit: RMB

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

the Company

Anhui 37 Jiyu Development of

Network Subsidiary mobile and 6,250,000.00 2,302,031,506.86 1,623,408,561.03 1,651,453,817.81 956,486,033.70 906,528,263.47
Technology Co., browser games

Ltd.
37 Interactive

Entertainment Publishing and

(Shanghai) Subsidiary operation of 10,000,000.00 14,688,462,786.75 5,014,409,770.06 16,561,550,611.68 2,199,358,148.44 1,846,249,982.54
Technology Co., mobile games

Ltd.

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

VIII Prospects
(I) Industry landscape and trends

After years of development, the current game industry is in a period of historical change from high-speed growth to
high-quality development.

On the one hand, China's innovation capacity of developing original game products is generally enhanced. Types of
game products will be expanded towards multiple directions. High-quality works focus on long-term development. The
implementation of the Select Online Game Publishing Project has further propelled the game industry towards quality games.
The introduction of the Regulation on the Protection of Minors in Cyberspace has provided clearer guidelines for enhancing
and implementing measures to safeguard minors by the game industry, marking a shift towards regular protection for minors.
Concurrently, breakthroughs in key technologies such as AI have presented the industry with fresh opportunities, not only
leading to breakthroughs in game technologies but also offering new ways to demonstrate the fulfilment of social benefits
and corporate responsibilities through "Games+" cross-sector empowerment.

On the other hand, the pace of China's game industry going overseas has accelerated, and game enterprises continue to
take the global publishing strategy, opening up diversified development paths with refined operation and localized
marketing. The number of countries and regions playing China's games has soared, and the international competitiveness
has been strengthened day by day. Games going overseas has become an important way to boost the "going global" of
Chinese culture, and the international influence of Chinese culture and Chinese elements has been continuously improved.
In this sense, the game industry is making remarkable contributions to the inheritance and promotion of the traditional
Chinese culture and the telling of China's stories to the rest of the world.

(II) Development strategy and business plan of the Company

Based on the current industry pattern and development trend, the Company will continue to steadily take the
development strategy of "boutiqueization, diversification, and globalization", continuously improve the operation quality,
and practice the socialist core values. With "bringing joy to the world" as its mission, the Company is dedicated to becoming
an excellent and sustainable entertainment enterprise, which will continue to provide high-quality and healthy
entertainment products for the public.

1. Effectively enhance self-development capacity and expand the diversified product matrix

In the future, the Company will continue to scale up R&D, pay attention to the cultivation of R&D talents, deepen the
core advantages of "boutiqueization", and give full play to the strategic advantages of "integration of R&D and operation”.
With an inheritable and iterative R&D system, it will build a pipeline for the development of next-generation games,
empower product development with innovative technologies, and enhance industrialization of research findings. Also, it will
break through the ceiling of self-research ability, and carry out diversified layout on the product supply side through rich
self-research and external R&D reserves to bring more high-quality games to players.

2. Expand the advantages of overseas business and help spread Chinese culture

Since 2012, the Company has begun to lay emphasis on overseas markets. With the accumulation of many years of
experience of overseas business, the Company has achieved remarkable results in the globalization of its business. In the
future, the Company will strengthen its pace of "Going Global", give further play to the first mover advantage in the
overseas market, accelerate overseas business development, and continuously integrate Chinese excellent traditional
culture in game themes, content gameplay and promotion materials. Deeply integrating high-quality games with Chinese
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


traditional culture, the Company will continue to arouse foreign players' interest in experiencing and exploring Chinese
culture from the game, and launch more excellent works with Chinese characteristics, reflecting Chinese spirit and
containing Chinese wisdom.

3. Continuously ignite talent vitality to erect a strong talent fortress

Talent stands as the core driver of enterprise progress. The Company is committed to igniting talent vitality and
identifying organisational prospects, establishing a unique talent development paradigm, and consistently building the
Company's talent fortress. Through multidimensional measures such as safeguarding employee rights, ensuring
comprehensive welfare and healthcare benefits, fostering diversity, equality, and inclusivity, and incentivising employee
growth, the Company has supported the retention and sustainable development of innovative talent. Introducing diverse
initiatives, including core sequence and pivotal role recognition, capability enhancement, promotion incentives, and talent
development challenge initiatives, the Company has actively propelled the transition of the talent structure's focus towards
individuals in core roles or exhibiting great potential, offering talent wider ways to growth and diverse organisational
opportunities. This ongoing endeavour is aimed at propelling the trend towards young talent and elites and establishing a
healthy and reasonable talent pool. In the future, the Company will continually optimise its talent cultivation system and
development model to adeptly navigate market challenges and facilitate business growth, thus driving the growth of both
the Company and its employees.

4. Explore the frontier of science and technology in a forward-looking way and focus on the leading business forms in
the industry

The Company will remain dedicated to its dual identity as both a technology-driven Internet enterprise and a social
entertainment service provider. Grounded in an ecosystem of high-quality content, the Company will strive to enhance the
national fundamental innovation capabilities and accumulate cutting-edge technologies. The ultimate goal is to support
talent development using innovation and utilise technology for the betterment of society.

The Company has continuously refined the layout of entertainment technology ecosystem and actively embraced
industrial transformations brought about by the rapid advancement of technologies such as AI. Through independent
incubation and external investments, the Company has explored the in-depth integration of AIGC technology with business
and seized opportunities presented by technological innovation. In combination with its business requirements, the
Company has consistently iterated and optimised its self-developed digitalised and intelligent products and developed AI
tools tailored to its game business procedures, thereby empowering its own business. Furthermore, we have relentlessly
explored AI's potential for optimising game content and user experiences. In the future, the 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 will capitalise on
opportunities arising from industrial transformation.

5. Earnestly shoulder its own responsibilities and achieve long-term, healthy and sustainable development

The Company always adheres to the unity of economic and social benefits. The Company 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. Going
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


forward, the Company will continue to stick to its content baseline, further give play to its advantages, serve society with its
professional ability, practice corporate social responsibilities, and share the development achievements with society to the
greatest extent.
(III) Possible Risks and Countermeasures

1. Changes in industry policies, risks of violation and countermeasures

In recent years, the authority in charge has attached great importance to the development of game industry, made a
series of major decisions and arrangements and issued a series of policies and regulations to guide the industry to develop
in a standardized and healthy way. For example, clear new standards and requirements have been put forward for
protection of minors and anti-addiction of online games. Further strict management measures have been taken to promote
standardized management of game industry. At the same time, information security and protection of users' privacy have
drawn much attention from the society. In the long term, the reg ulation 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, the
Company will strictly abide by various industry policies, rules and regulations, actively implement relevant requirements for
industry development, establish an internal sound quality management and control mechanism, strengthen industry policy
risk management capability, and fully reduce and avoid the business risks caused by changes in industry policies.

2. Market competition risks and countermeasures

The online game industry is facing increasingly fierce competition as it gradually matures. At the same time, online
game users are maturing with higher quality demand for game products. The industry is 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 game categories through independently-
developed and agency games to deepen the competitive edge of "integration of R&D and operation". Meanwhile, the
Company will speed up the pace of exporting, give full play to the edges of it in overseas markets, face diversified operations
of overseas markets, deepen the cultivation of key markets, and broaden the categories of games and increase market share.
In addition, the Company will dig deeper into operational data, and timely adjust operational and R&D strategies, to meet
the core demands of users, further play the role of new ideas of digital marketing operation, deepen the business strategy of
multi-channel marketing and long-term service, and continuously enhance core competitiveness in the market.

Facing the current industrial competition pattern, the top-performing enterprise has obvious edges in technology R&D
ability, channel operation ability, product promotion ability, user scale and market share. The Company will continue to
consolidate and cement its competitive edges, actively respond to changes in the industry, reduce market competition risks
and seize market opportunities.

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


3. Risks of core personnel turnover and countermeasures

A stable and high-quality talent team is an important guarantee for the Company to maintain its core competitive
advantage. If the Company fails to effectively build a core talent team, give reasonable incentives and manages the core
personnel, the employees’ enthusiasm and creativity will be affected, which will have an adverse impact on the Company’s
core competitiveness.

In response, much attention has been attached to cultivation and acquisition of professional talents. The Company
creatively builds a platform-based talent management mechanism, according to which excellent game producers are
rewarded with project bonus, and given discretion of research and project concept creation. In order to attract and retain
outstanding management talents and business elites, the Company has vigorously reformed the project mechanism,
shortened the review cycle and established diversified objectives, so as to stimulate the innovative vitality of employees. 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 and innovative incentive activities to encourage employees’ creativity, so
as to increase the attractiveness to core staffs and R&D personnel.

In addition, the Company cares about the long-term development of employees. The Company has established “37
Interactive Entertainment Learning and Development Center” to provide sufficient training and learning opportunities for
employees and help them grow rapidly. The Company actively carried out training for newcomers and professional abilities
such as "Marathon Leadership Training Camp", "Huangpu New Army", "X+ Plan" and "37TALK", promoted talent upgrading
to meet the needs of business upgrading, paid attention to internal sharing, 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",
“Healthy 37ers” and other thematic activities were regularly held. Inter-departments' team building promoted the
connection between employees and their friends, relatives and colleagues. In addition, the Company has established
recreational clubs for employees, covering “Super Runners”, e-sports, table games, dancing, badminton, footfall and yoga,
created cultural atmosphere that meets the characteristics of the younger generation, strengthened employees' sense of
belonging, balanced employees' work and life, and took care of employees' physical and mental health in various forms.

4. Technology iteration and innovation risk and countermeasures

The game industry has seen rapid technology iteration and faster changes in cutting-edge technologies, and demand for
new types of products has emerged among young users. Against this backdrop, if a game company fails to grasp the industry
development trend in a forward-looking manner and promptly innovate its technology and products, its R&D and application
of key technologies will be outdated, resulting in the risk of products falling behind the market.

In response, the Company continued to focus on changes in the industry's cutting-edge technologies. First, it closely
followed industry changes and probed into cutting-edge technologies through investment layout to maintain sensitive to
leading technologies. Second, it intensified the incubation of internal technologies, valued investment in self-developed
games, improved self-development system, established an effective R&D system framework, and introduced diversified
incentives to encourage employees to explore new technologies. By taking these actions, the Company has reserved
technologies and products for the industry development trend.

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


5. Risk associated with being investigated by the China Securities Regulatory Commission with no clear conclusion yet
On 27 June 2023, the Company, Mr. Li Weiwei (the actual controller and Chairman of the Board of the Company), and
Mr. Zeng Kaitian (the Vice Chairman of the Board of the Company) received the "Notification of the China Securities
Regulatory Commission on Case Filing" (CSRC Case No. 03720230061, No. 03720230062, No. 03720230063) from the said
commission (hereinafter referred to as the "CSRC") respectively. For suspected information disclosure violations, according
to the Securities Law of the People's Republic of China, the Law of the People's Republic of China on Administrative
Penalties and other applicable laws and regulations, the CSRC decided to file a case against the Company, Li Weiwei and
Zeng Kaitian.

During the period of investigation, the Company will actively cooperate with the CSRC’s investigation and fulfil its
information disclosure obligations in strict accordance with applicable laws, regulations and regulatory requirements.

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


Part IV Corporate Governance

I Corporate Governance Overview

The Company has been improving its corporate governance structure in strict accordance with the Company Law, the
Securities Law, the Stock Listing Rules of the Shenzhen Stock Exchange, Guideline No. 1 of the Shenzhen Stock Exchange for
Self-regulation of Listed Companies—Operation Standards for Main Board Listed Companies and other applicable laws and
regulations, as well as the Company’s Articles of Association. It has established a sound and strict system for functioning of
the general meeting of shareholders, the Board of Directors and the Supervisory Committee. Meanwhile, the Company has
also put in place sound internal management and control systems to further improve its corporate governance. In the
Reporting Period, the Company carried out operations and discloses information in compliance with standards, the decision-
making procedures for operation and management were compliant and effective, and its actual situation of corporate
governance met the relevant requirements of the normative documents on the governance of listed companies issued by
the China Securities Regulatory Commission.

(I) Shareholders and general meeting of shareholders

The Company convenes and holds general meetings of shareholders in strict accordance with the Company Law, the
Securities Law, the Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Company’s Articles of Association,
the Rules of Procedure for General Meetings of Shareholders and other relevant laws and regulations, and engages lawyers
to attend as witnesses, to ensure that all shareholders, especially mi nority shareholders, enjoy equal status and fully
exercise their rights.

(II) The controlling shareholder and the Company

The Company has an independent business system and is able to operate on its own. The Company and its controlling
shareholder are independent of each other in terms of business, personnel, assets, organization and finance. The Board of
Directors, the Supervisory Committee and the internal management bodies of the Company operate independently
according to the rules of procedure and the Company's systems. The controlling shareholder of the Company strictly
regulates his behaviors, and, through the general meetings of shareholders, exercises his rights as an investor. He has not
directly or indirectly intervened the Company's decisions or operating activities without holding a general meeting of
shareholders. The controlling shareholder does not have any occupation of the Company's funds, nor does Company
provides any guarantee for the controlling shareholder or any of his related parties.

(III) Directors and the Board of Directors

The Company elects directors in strict accordance with the applicable laws and regulations, as well as the Company’s
Articles of Association. At the end of the Reporting Period, there were nine members in the Company’s Board of Directors,
including four independent directors. The number of members of and composition of the Company's Board of Directors
complies with relevant requirements of laws and regulations. All directors of the Company do their jobs earnestly according
to the laws, regulations, Guideline No. 1 of the Shenzhen Stock Exchange for Self-regulation of Listed Companies—Operation
Standards for Main Board Listed Companies, the Articles of Association, the Company's Rules of Procedure for the Board of
Directors, the Independent Director System, etc., attend meetings of the Board of Directors and the general meeting of
shareholders on time, actively participate in training, study relevant laws and regulations, and earnestly perform their duties
as directors honestly, diligently and conscientiously. The independent directors of the Company have maintained full
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


independence in their work, actively participated in the meetings of the Board of Directors, carefully deliberated on
proposals, and expressed independent opinions on the relevant matters, so as to effectively safeguard the interests of the
Company and its minority shareholders. Under the Board of Directors, there are four special committees, i.e. the Audit
Committee, the Compensation and Appraisal Committee, the Nomination Committee and the Strategy Committee, which
play an important role in promoting the standardized operation and sound and sustainable development of the Company.
(IV) Supervisors and the Supervisory Committee

The Company elects supervisors in strict accordance with the relevant provisions of the laws, regulations, the
Company’s Articles of Association, the Rules of Procedure for General Meetings of Shareholders, the Rules of Procedure for
the Supervisory Committee, etc. At the end of the Reporting Period, the Supervisory Committee consisted of three
supervisors, including two employee supervisors elected by the Employees' Congress of the Company. The number of
members of and composition of the Company's Supervisory Committee complies with the requirements of laws, regulations
and the Company’s Articles of Association. In accordance with the requirements of laws, regulations, the Rules of Procedure
for the Supervisory Committee, etc., to protect the interests of shareholders, all 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. Meanwhile, it has designated China Securities Journal, Shanghai Securities News, Securities Times, Securities
Daily and www.cninfo.com.cn as the newspapers and website for its information disclosure, thus ensuring that all investors
have equal access to corporate information, enhancing the transparency of the Company and effectively protecting the right
to know of minority investors.

(VI) Stakeholders

While maintaining its steady development and maximizing shareholders' interests, the Company actively concerns itself
with the welfare, undertakings for the public good and other issues of the region where it is located, attaches importance to
social responsibilities, fully respects and safeguards the lawful interests of employees, creditors and other 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, answering
investors’ phone calls, online interactions, on-site surveys and other means.

(VIII) Internal audit system

The Company has put in place an internal audit system, set up an Internal Audit Department and employed full-time
auditors, who audit and supervise the quality of economic operations, economic benefits, internal control system and
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


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. 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.

II Independence of the Company from the Controlling Shareholder and Actual Controller in
Terms of Assets, Personnel, Finance, Structure and Business

The Company and its controlling shareholder are independent of each other in terms of business, personnel, assets,
organization and finance. It has an independent and complete business system and is able to operate on its own.

1. Independence of business

The Company is an enterprise legal person engaged in production and operation independently, owns independent and
complete R&D, purchasing and sales systems, an independent and complete business system and the ability to operate
independently in the market. It does not reply on its shareholders or any other related party, and there is no horizontal
competition between the Company and its controlling shareholder, who has not directly or indirectly intervened in 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,
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


proprietary technologies and other assets, and does not rely on the assets of shareholders for production and operation.
The Company has full right to control and dispose of all of its assets.

4. Independence of structure

The Company has established and improved the general meetings of shareholders, the Board of Directors, the
Supervisory Committee, the management team headed by the General Manager and some other bodies, as well as the
corresponding rules for the general meetings of shareholders, the Board of Directors and the Supervisory Committee and
the Work Rules for the General Manager, thus creating a sound corporate governance structure; each functional department
operates independently according to the prescribed responsibilities; there is no superior-subordinate relationship between
the functional departments of the Company and its corporate shareholders or their functional departments, and no
corporate shareholder has intervened in the establishment or operation of the Company's organizational structure.

5. Independence of finance

The Company has an independent financial department, an independent accounting system and an independent
financial management system, and independently makes financial decisions; the Company has opened bank accounts
independently and does not share bank accounts with its corporate shareholders. The Company files taxes and performs tax
payment obligations independently in accordance with the law. None of its corporate shareholders and other related parties
have illegally occupied or used the Company's monetary funds or other assets; the Company signs external contracts
independently.

III Annual and Extraordinary General Meetings of Shareholders Convened during the
Reporting Period

1. General Meetings of Shareholders Convened during the Reporting Period

Meeting Type Investor Date of the Date of Resolutions of the

participation ratio meeting disclosure meeting

Announcement on

Resolutions of the

The 2022 Annual Annual General 2022 Annual General

General Meeting Meeting of 50.25% 23 May 2023 24 May 2023 Meeting of

of Shareholders Shareholders Shareholders

(Announcement No.

2023-032), disclosed

on www.cninfo.com.cn

Announcement on

The First Resolutions of the First
Extraordinary Extraordinary Extraordinary General
General Meeting General 44.97% 18 September 19 September Meeting of

of Shareholders Meeting of 2023 2023 Shareholders of 2023
of 2023 Shareholders (Announcement No.

2023-057), disclosed

on www.cninfo.com.cn

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


IV Directors, Supervisors and Senior Management

1. General Information

Incumbent/ Start of End of Beginning Increase in Decrease in Other Ending Reasons for share
Name Gender Age Office title Former tenure tenure shareholdin the period the period increase/dec shareholding changes

g (share) (share) (share) rease (share) (share)

Li Weiwei Male 46 Chairman of the Board Incumbent 20 January 23 March 322,113,019 1,115,300 323,228,319 Volunteered increase
2015 2025 in shareholding

Zeng Male 48 Vice Chairman of the Incumbent 5 July 2019 23 March 245,344,374 245,344,374

Kaitian Board 2025

Hu Yuhang Male 47 Vice Chairman of the Incumbent 16 September 23 March 201,597,684 201,597,684

Board 2020 2025

Xu Zhigao Male 45 General Manger Incumbent 23 May 2023 23 March 36,453,903 36,453,903

2025

Yang Jun Male 44 Director and Deputy Incumbent 20 January 23 March 2,100,000 2,100,000

General Manager 2015 2025

Liu Jun Male 43 Director and Deputy Incumbent 24 March 23 March 5,296,801 5,296,801

General Manager 2022 2025

Li Yang Male 55 Independent Director Incumbent 24 December 23 March

2019 2025

Ye Xin Male 48 Independent Director Incumbent 24 December 23 March

2019 2025

Lu Rui Male 48 Independent Director Incumbent 24 March 23 March

2022 2025

Tao Feng Male 43 Independent Director Incumbent 24 March 23 March

2022 2025

He Yang Male 42 Chairman of the Incumbent 27 December 23 March

Supervisory Committee 2018 2025

Cheng Lin Female 41 Supervisor Incumbent 27 November 23 March

2015 2025

Liu Female 46 Supervisor Incumbent 20 January 23 March

Fengyong 2015 2025

Zhu Male 41 Deputy General Incumbent 21 January 23 March

Huaimin Manager 2019 2025

Ye Wei Male 40 Chief Financial Officer Incumbent 12 October 23 March

and Board Secretary 2016 2025

Total -- -- -- -- -- -- 812,905,781 1,115,300 0 0 814,021,081 --

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


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


Indicate whether any director, supervisor or senior management resigned before the expiry of their tenures during the
Reporting Period.
□ Yes  No

Changes of directors, supervisors and senior management:

 Applicable □ Not applicable

Name Office title Type of change Date of change Reason for change

Xu Zhigao General Manger Appointed 23 May 2023 Job arrangements

Li Weiwei General Manger Resigned 23 May 2023 Job arrangements

2. Biographical Information

Professional backgrounds, major work experience and current posts in the Company of the incumbent directors, supervisors
and senior management:

Mr. Li Weiwei was born in 1977. Mr. Li is a member of the CPC and has no right of permanent residence in a foreign
country. He has received an EMBA degree from Cheung Kong Graduate School of Business and a Doctor of Business
Administration degree from Singapore Management University. From August 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 Boarder of Directors and
General Manager of the Company. Mr. Li is currently Chairman of the sixth Board of Directors of 37 Interactive
Entertainment Network Technology Group Co., Ltd.

Mr. Zeng Kaitian, Han nationality, was born in 1975. Mr. Zeng is of Chinese nationality and has no right of permanent
residence in a foreign country. He received an EMBA degree from China Europe International Business School. He is a co-
founder of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. In October 2011, he became Director of 37
Interactive Entertainment (Shanghai) Technology Co., Ltd., overseeing the overseas publishing of the company's online game
business. On 5 July 2019, he became Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr.
Zeng is currently Vice Chairman of the sixth Board of Directors of 37 Interactive Entertainment Network Technology Group
Co., Ltd.

Mr. Hu Yuhang, Han nationality, was born in 1976. He graduated from Lanzhou University and received an EMBA degree
from Cheung Kong Graduate School of Business. He has no right of permanent residence in a foreign country. Mr. Hu
became President of 37 Interactive Entertainment in Octob er 2013 in charge of the strategic planning and day-to-day
management of 37 Games, an R&D brand of 37 Interactive Entertainment. He is a seasoned expert in game R&D
management and has rich experience in game R&D and project management. On 16 September 2020, he became Director of
Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd.. Mr. Hu is currently Vice Chairman of the sixth
Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.

Mr. Xu Zhigao was born in 1978. Mr. Xu is a member of the CPC, with a bachelor’s degree from Sun Yat-Sen University,
and has no right of permanent residence in a foreign country. With more than a decade of experience in Mobile Internet, Mr.
Xu Zhigao successively founded several Internet enterprises, and entered the industry of mobile games in 2012; in 2014, he
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


joined 37 Interactive Entertainment, holding the post of the President of the branch company Guangzhou 37 Network
Technology Co., Ltd., and taking charge of establishing the mob ile-game-publishing team of the Company and developing its
mobile-game-publishing business, and now, he assumes the post of the President of 37Mobile; since 23 May 2023, he has
assumed the office of the General Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.

Mr. Yang Jun, born in 1979, is a member of the CPC and has no right of permanent residence in a foreign country. He
has received a master's degree in corporate management and is working on a Doctor of Business Administration 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 sixth Board of Directors and Deputy General Manager of 37 Interactive Entertainment
Network Technology Group Co., Ltd.

Mr. Liu Jun was born in 1980, with Chinese nationality, and has no right of permanent residence in a foreign country. At
present, Mr. Liu Jun holds the offices of a Vice President of the 37 Interactive Entertainment Group, and a Senior Vice
President of 37Mobile, in charge of overseas cooperation business; since 24 March 2022, he has assumed the posts of a
Director and a Deputy General Manager of 37 Interactive Entertainment Network Technology Group Co., Ltd.; now, he is a
Director of the Sixth Board of Directors and a Deputy General Manager of 37 Interactive Entertainment Network Technology
Group Co., Ltd.

Mr. Li Yang, Han nationality, was born in 1968. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received an LL.B. from Zhongnan University of Economics and Law and an LL.M. and a J.D. from Peking
University and completed a postdoctoral research program in laws at Wuhan University. He is a certified Independent
Director. Since December 2020, he has been serving as Professor and Doctorate Supervisor of the Civil, Commercial and
Economic Law School of China University of Political Science and 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, and Hearing Officer of The Supreme People’s Procuratorate, among other roles. On 24 December 2019, he became
Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. Mr. Li is currently
Independent Director of the sixth Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.

Mr. Ye Xin, Han nationality, was born in 1975. He is of Chinese nationality and has no right of permanent residence in a
foreign country. He received a bachelor's degree in accounting from Xi'an Jiaotong University, a Master of Management
degree from Xi'an University of Technology and an EMBA degree from Guanghua School of Management, Peking University
and Cheung Kong Graduate School of Business. He is a certified Independent Director. From 1995 to 2003, he worked at the
Civil Aviation Administration of China. From 2003 to 2005, he served as Deputy General Manager of Tsinghua Unisplendour
Venture Investment Co., Ltd. From 2005 to 2015, he served as Director, Deputy General Manager, Board Secretary and
General Manager of Shenzhen Coship Electronics Co., Ltd.. From 2016 to present, he was General Manager of Tianshi Fund
Management (Shenzhen) Co., Ltd. And since 12 July 2021, he has been acting as Executive Director of Huili Resources. On 24
December 2019, he became Independent Director of Wuhu 37 Interactive Entertainment Network Technology Group Co.,
Ltd. Mr. Ye is currently Independent Director of the sixth Board of Directors of 37 Interactive Entertainment Network
Technology Group Co., Ltd.

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


Mr. Lu Rui, Han nationality, was born in 1975, with Chinese nationality, and has no right of permanent residence in a
foreign country. In 2006, he graduated from Accounting Department, Sun Yat-Sen University where he obtained the Doctor’s
degree in Management Science, and he has become a leading accounting talent nationwide. At present, he is a Professor
and a Doctoral Supervisor in the Accounting Department, School of Business, Sun Yat-sen University. From July 1996 to
August 2003, he served successively as a Teaching Assistant and a Lecturer in the Department of Finance and Accounting,
Guangzhou Finance and Trade Management Cadre Institute; from July 2006 to December 2008, he worked as a Lecturer at
Lingnan (University) College, Sun Yat-sen University; from January 2009 to June 2016, he was an Associate Professor at
Lingnan (University) College, Sun Yat-sen University; from July 2016 to December 2021, he became a Professor and a
Doctoral Supervisor at Lingnan (University) College, Sun Yat-sen University; since January 2022, he has served as a Professor
and a Doctoral Supervisor at School of Business, Sun Yat-sen University. From April 2010 to July 2018, he was an
Independent Director of Guangzhou GCI Science & Technology Co. Ltd.; from July 2011 to January 2017, he was an
Independent Director of Guangzhou Haozhi Industrial Co., Ltd.; from January 2015 to May 2019, he was an Independent
Director of Xilong Scientific Co., Ltd; from December 2015 to October 2021, he was an Independent Director of Foshan
Electrical and Lighting Co., Ltd.; from April 2015 to December 2018, he was an Independent Director of Guangzhou Huayuan
Landscape Architecture Co., Ltd.; from April 2016 to March 2019, he was an Independent Director of Youmi Technology Co.,
Ltd.; from January 2017 to March 2021, he concurrently held the posts of a Director and the General Manager of Sun Yat-sen
University Zijing Education Co., Ltd., Guangzhou; from August 2019 to October 2021, he was an Independent Director of
Huabang Construction and Investment Group Co., Ltd.; from September 2019 to September 2022, he was an Independent
Director of Shenzhen Kingsino Technology Co., ltd.; from May 2017 to May 2023, he was an Independent Director of
Guangzhou Goaland Energy Conservation Tech Co., Ltd.; Since April 2019, he has been an Independent Director of Bank of
Guangzhou Co., Ltd.; Since May 2020, he has been an Independent Director of PSBC Consumer Finance Co., Ltd.; Since
November 2021, he has been an Independent Director of Guangzhou Resource Environmental Protection Technology Co.,
ltd.; Since 24 March 2022, he has served as an Independent Director of 37 Interactive Entertainment Network Technology
Group Co., Ltd.; at present, he assumes the post of an Independent Director of the Sixth Board of Directors of 37 Interactive
Entertainment Network Technology Group Co., Ltd.

Mr. Tao Feng, Han nationality, was born in 1980, with Chinese nationality, and has no right of permanent residence in a
foreign country. He received the Doctor’s degree in Industrial Economics from Jinan University, and has obtained the
Independent Director Qualification Certificate. From March 2013 to April 2014, he was engaged in the scientific research in
the direction of Industrial Economics at University of California, Irvine in the United States; since July 2009, he has
successively held posts, such as Deputy Director of Institute of Industrial Economics, at Jinan University, and at present, he
assumes the posts of the Director of Institute of Industrial Economics, Jinan University, a Deputy Director of “the Belt and
Road Initiative” and the Guangdong-Hong Kong-Macao Greater Bay Area Research Institute, the Chief Expert of JNU’s Urban
High-Quality Development Research Think Tank, and a Doctoral Supervisor. Since 2020, he has held a concurrent post of a
Vice President of the China Society of Industrial Economics; from February 2021 to June 2023, he was an Independent
Director of Guangxi Bossco Environmental Protection Technology Co., Ltd.; Since 24 March 2022, he has served as an
Independent Director of 37 Interactive Entertainment Network Technology Group Co., Ltd.; at present, he assumes the post
of an Independent Director of the Sixth Board of Directors of 37 Interactive Entertainment Network Technology Group Co.,
Ltd.

Mr. He Yang, Han nationality, was born in 1981. He is of Chinese nationality, is a member of the CPC and has no right of
permanent residence in a foreign country. He received an MBA degree from University of Electronic Science and Technology
of China. From June 2012 to July 2014, he was Deputy General Manager of Chengdu 37Wan Network Technology Co., Ltd.. In
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


July 2014, he became Director and General Manager of Jiangsu Aurora Network Technology Co., Ltd. In December 2018, he
became Employee Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. In January 2019, he became Chairman of the Supervisory Committee of Wuhu 37 Interactive
Entertainment Network Technology Group Co., Ltd. Mr. He is currently Chairman of the sixth Supervisory Committee of 37
Interactive Entertainment Network Technology Group Co., Ltd.

Ms. Cheng Lin, Han nationality, was born in 1982. She is of Chinese nationality and has no right of permanent residence
in a foreign country. She is working on an EMBA program at Lingnan College, Sun Yat-sen University. From 2011 to 2016, she
was Director of Public Affairs of 37 Interactive Entertainment (Shanghai) Technology Co., Ltd. She is currently Shareholder
Supervisor of the sixth Supervisory Committee of 37 Interactive Entertainment Network Technology Group Co., Ltd.

Ms. Liu Fengyong, Han nationality, was born in 1977. She is of Chinese nationality, a member of the CPC, and a
bachelor’s degree holder. And she has no right of permanent residence in a foreign country. From July 2000 to September
2005, she worked for Guangzhou Pearl River Piano Group Co., Ltd. as a Legal Specialist. From November 2005 to August
2012, she was Legal Director of Guangzhou Rockmobile Network Co., Ltd. In August 2012, she became Legal Manager of 37
Interactive Entertainment (Shanghai) Technology Co., Ltd. In January 2015, she became Employee Supervisor of the Third
Supervisory Committee of Wuhu 37 Interactive Entertainment Network Technology Group Co., Ltd. And in January 2017, she
became Employee Supervisor of the Fourth Supervisory Committee of Wuhu 37 Interactive Entertainment Network
Technology Group Co., Ltd. She is currently Employee Supervisor of the sixth Supervisory Committee of 37 Interactive
Entertainment Network Technology Group Co., Ltd.

Mr. Zhu Huaimin, Han nationality, was born in 1982. He is of Chinese nationality and has no right of permanent
residence in a foreign country. He holds an EMBA degree of China Europe International Business School. From July 2004 to
July 2008, he worked for Beijing Sina Internet Information Service Co., Ltd. From August 2008 to December 2009, he was
Technical Manager of Molihe Network Technology (Beijing) Co., Ltd. In October 2011, he joined 37 Interactive Entertainment
(Shanghai) Technology Co., Ltd., serving as Vice President of Technology. On 21 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 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 Secretary to the sixth
Board of Directors of 37 Interactive Entertainment Network Technology Group Co., Ltd.

Offices held concurrently in shareholding entities:

□ Applicable  Not applicable

Offices held concurrently in other entities:

 Applicable □ Not applicable

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


Name Other entity Office held in the Start of tenure End of Paid by the

entity tenure entity or not

the Civil, Commercial and Professor and

Li Yang Economic Law School of China Doctorate 1 December 2020 Yes

University of Political Science Supervisor

and Law

Ye Xin Tianshi Fund Management General Manager 20 January 2016 Yes

(Shenzhen) Co., Ltd.

The School of Business of Sun Professor and

Lu Rui Yat-Sen University Doctorate 1 January 2022 Yes

Supervisor

The Institute of Industrial Dean and

Tao Feng Economics of the Jinan Doctorate 1 January 2020 Yes

University Supervisor

Li Yang: Since December 2020, he has been serving as Professor and Doctorate Supervisor of the Civil,

Commercial and Economic Law School of China University of Political Science and Law.

Ye Xin: From 2016 to present, he was General Manager of Tianshi Fund Management (Shenzhen) Co., Ltd.
Other And since July 2021, he has been acting as Executive Director of Huili Resources.

information Lu Rui: Since January 2022, he has been serving as Professor and Doctorate Supervisor at The School of

Business of Sun Yat-Sen University.

Tao Feng: Since January 2020, he has been serving as Dean and Doctorate Supervisor at The Institute of

Industrial Economics of the Jinan University.

Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and
senior management as well as those who resigned in the Reporting Period:

□ Applicable  Not applicable

3. Remuneration of Directors, Supervisors and Senior Management

Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:

(1) Procedure for determining the remunerations of directors, supervisors and senior management: The Remuneration
and Performance Assessment Committee of the Company's Board of Directors formulates the policy and plan for
compensating the Company's directors, supervisors and senior management. The remunerations of directors and
supervisors are reviewed and approved by the General Meeting of Shareholders. The remunerations of senior management
are reviewed and approved by the Board of Directors. The Human Resources and Finance Departments of the Company
support the Remuneration and Performance Assessment Committee to implement the remuneration plan for the Company's
directors, supervisors and senior management.

(2) Criteria for determining the remunerations of directors, supervisors and senior management: The remunerations of
directors and supervisors are determined based on the operational performance of the Company and the current market
conditions. The remunerations of senior management are determined according to the Company's relevant regulations,
taking into account the overall remuneration of the gaming industry and the remuneration of comparable companies with a
similar business size, as well as the responsibilities and contributions of the senior management in the Company.

(3) Payment of remunerations of directors, supervisors and senior management: The remunerations of independent
directors are paid semiannually to their personal accounts as scheduled. The remunerations of other directors, 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.

Remuneration of directors, supervisors and senior management for the Reporting Period

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


Unit: RMB'0,000

Incumbent/ Total before-tax Paid by any
Name Gender Age Office title Former remuneration from related party
the Company or not

Li Weiwei Male 46 Chairman of the Board Incumbent 852.85 No

Zeng Kaitian Male 48 Vice Chairman of the Incumbent 895.72 No

Board

Hu Yuhang Male 47 Vice Chairman of the Incumbent 979.62 No

Board

Yang Jun Male 44 Director and Deputy Incumbent 895.33 No

General Manager

Liu Jun Male 43 Director and Deputy Incumbent 873.59 No

General Manager

Li Yang Male 55 Independent Director Incumbent 21 No

Ye Xin Male 48 Independent Director Incumbent 21 No

Lu Rui Male 48 Independent Director Incumbent 21 No

Tao Feng Male 43 Independent Director Incumbent 21 No

Chairman of the

He Yang Male 42 Supervisory Incumbent 226.37 No

Committee

Cheng Lin Female 41 Supervisor Incumbent 287.18 No

Liu Fengyong Female 46 Supervisor Incumbent 74.53 No

Xu Zhigao Male 45 General Manager Incumbent 940.73 No

Zhu Huaimin Male 41 Deputy General Incumbent 316.63 No

Manager

Ye Wei Male 40 Chief Financial Officer Incumbent 455.84 No

and Board Secretary

Total -- -- -- -- 6,882.39 --

Other information:
 Applicable □ Not applicable

In terms of the remuneration of its relevant directors and senior management in 2023, the Company has
comprehensively considered its actual situation, the overall remuneration level of the game industry and that of the
comparable companies with equivalent business volume as the Company, as well as the responsibility assumed by the
relevant personnel for the Company and the contribution made by them to it. Compared with the market average, the
remuneration of the Company’s principal directors and senior management is reasonable, because the remuneration can
basically reflect the efforts and contribution given by the principal senior management to the Company’s development, and
the Company has performed the procedures for the examination and approval of the high remuneration of both the
directors and the supervisors. Therefore, there are no circumstances where the interests of the Company’s shareholders are
damaged.

V Duty Performance by Directors during the Reporting Period

1. Board Meetings Convened during the Reporting Period

Meeting Date of the meeting Date of disclosure Resolutions of the meeting

Announcement on Resolutions of the

The Seventh Meeting of the 3 March 2023 4 March 2023 Seventh Meeting of the Sixth Board of

Sixth Board of Directors Directors (Announcement No. 2023-009),

disclosed on www.cninfo.com.cn

Announcement on Resolutions of the Eighth
The Eighth Meeting of the 27 April 2023 28 April 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-013), disclosed

on www.cninfo.com.cn

The Ninth Meeting of the Announcement on Resolutions of the Ninth
Sixth Board of Directors 28 April 2023 29 April 2023 Meeting of the Sixth Board of Directors

(Announcement No. 2023-027), disclosed

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


on www.cninfo.com.cn

Announcement on Resolutions of the 10th
The 10th Meeting of the 23 May 2023 24 May 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-033), disclosed
on www.cninfo.com.cn

Announcement on Resolutions of the 11th
The 11th Meeting of the 3 July 2023 4 July 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-039), disclosed
on www.cninfo.com.cn

Announcement on Resolutions of the 12th
The 12th Meeting of the 15 August 2023 16 August 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-044), disclosed
on www.cninfo.com.cn

Announcement on Resolutions of the 13th
The13th Meeting of the 30 August 2023 31 August 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-047), disclosed
on www.cninfo.com.cn

Announcement on Resolutions of the 14th
The 14th Meeting of the 30 October 2023 31 October 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-061), disclosed
on www.cninfo.com.cn

Announcement on Resolutions of the 15th
The 15th Meeting of the 26 December 2023 28 December 2023 Meeting of the Sixth Board of Directors

Sixth Board of Directors (Announcement No. 2023-070), disclosed
on www.cninfo.com.cn

2. Attendance of Directors at Board Meetings and General Meetings of Shareholders

Attendance of directors at board meetings and general meetings of shareholders

Board The director

Total number of Board meetings Board Board failed to General
board meetings meetings attended by meetings meetings attend two meetings of
Director the director was attended way of attended the director consecutive shareholder
supposed to on site telecommu through a failed to board s attended
attend nication proxy attend meetings or

not

Li Weiwei 9 9 0 0 0 No 2

Zeng Kaitian 9 9 0 0 0 No 2

Hu Yuhang 9 9 0 0 0 No 2

Yang Jun 9 9 0 0 0 No 2

Liu Jun 9 9 0 0 0 No 2

Li Yang 9 1 8 0 0 No 2

Ye Xin 9 1 8 0 0 No 2

Lu Rui 9 0 9 0 0 No 1

Tao Feng 9 1 8 0 0 No 1

Explanation of why any director failed to attend two consecutive board meetings:

3. Objections Raised by Directors on Matters of the Company

Indicate whether any directors raised any objections on any matter of the Company.

□ Yes  No

No such cases in the Reporting Period.

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


4. Other Information about Duty Performance by Directors

Indicate whether any recommendations from directors were adopted by the Company.

 Yes □ No

Explanation on adoption/rejection of recommendations of directors:

During the Reporting Period, all directors of the Company actively performed their duties in accordance with the
Company Law, the Securities Law and other laws and regulations, as well as the Articles of Association of the Company and
other regulations and requirements. They put forward relevant proposals on important operational matters of the Company
in the light of the actual situation of the Company. The Company listened carefully to the suggestions of the directors to
ensure that the decision-making was scientific, timely and efficient, and that the interests of the listed Company and the
shareholders were effectively safeguarded.

VI Duty Performance by the Supervisory Committee

Indicate whether the Supervisory Committee identified any risk to the Company during its supervision in the Reporting

Period.
□ Yes  No

The Supervisory Committee raised no objections with respect to matters of the Company.

VII Employees

1. Number, Functions and Educational Backgrounds of Employees

Number of in-service employees of the parent at the 2
period-end

Number of in-service employees of principal subsidiaries at 3,445
the period-end

Total number of in-service employees at the period-end 3,447

Total number of paid employees in the Reporting Period 3,447

Number of retirees to whom the parent or its major 0
subsidiaries need to pay retirement pensions

Functions

Function Employees

Marketing 1,073

Technical 323

Financial 111

Administrative 49

R&D 1,148

Teaching 181

Operation 251

Others 311

Total 3,447

Educational backgrounds

Educational background Employees

Master’s degree and above 257

Bachelor’s degree 2,399

Junior college and below 791

Total 3,447

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

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 bene fits, such as supplementary commercial insurance,
interest-free housing loans, solid breakfast, meal allowances, physical checks, extra holidays, employee clubs, and gifts for
holidays.

The total amount of employee remunerations of the Reporting Period is RMB 1,599 million, accounting for 11.60% of
the total costs (including cost of sales, distribution and selling expenses, general and administrative expenses and R&D
expenses). The profitability of the Company has a low sensitivity to the variation in the total amount of employee
remunerations. At the end of the Reporting Period, the Company's core technical staff accounts for 21.85% of the total
number of employees, and their remunerations account for 26.85% of the total amount of employee remunerations.

3. Training Plans

The Company conducts staff training focusing on improving employee’s quality and working skills, promoting their
occupational development, and attracting, developing and retaining talents to support the Company’s business
development and human resources appreciation. In addition, the training program is committed to building a unified
corporate culture, values and code of conduct to strengthen cohesion. Guided by the Company’s sustainable development
strategy, the program also introduced advanced management concepts, and facilitated internal management progress,
which was a booster for cadre training and strategy implementation.

In 2023, centering on the organisational objectives of “retention of core talents” and “accumulation of organisational
experience”, 37 Interactive Entertainment Learning and Development Centre (the “Centre”) started with four aspects,
namely boosting leadership, deepening professional competence, consolidating core general ability, and establishing
systems and improving efficiency synergistically. Focusing on core talent empowerment, the Centre carried out such training
as Leading Leap Plan, Integration Plan, “Super Assistance” mentor and lecturer training, AIGC series of livestreaming courses,
37TALK professional sharing, core general ability empowerment, and training of regularly and on-campus recruited new
hires. Based on business requirements, the Centre customised training solutions to help solve practical business problems.
4. Labor Outsourcing
 Applicable □ Not applicable

Total hours of labor outsourced 840,597.26

Total payment for labor outsourcing (RMB) 47,097,830.46

VIII Profit Distribution (in the Form of Cash and/or Stock)

The profit distribution policy, especially the formulation, implementation and amendments to the cash dividend policy, in the
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.

Reporting Period:
 Applicable □ Not applicable

The Company actively strengthens the awareness of returning to shareholders, promotes the concept of returning to
shareholders and value creation, and shares the growth of the Company with shareholders. During the Reporting Period, the
Company put forward the 2022 final dividend plan and the 2023 interim dividend plan on the premise of ensuring the
normal operation and development of the Company, taking into account the reasonable investor returns and the sustainable
development of the Company. The dividend plans of the Company are all in compliance with the Articles of Association of
the Company.

The Company’s 2022 final dividend plan was approved at the Eighth Meeting of the Sixth Board of Directors and the
2022 Annual General Meeting of Shareholders. According to the plan, with a fixed dividend payout ratio, based on the total
issued share capital (exclusive of shares in the Company’s account for repurchased shares) on the date of record, a cash
dividend of RMB4.50 (tax inclusive) per 10 shares was planned to be distributed to all the shareholders of the Company, with
the remaining undistributed profit carried forward to the next year; and there would be no bonus issue from either profit or
capital reserves.

The Company’s 2023 interim dividend plan was approved at the 13th Meeting of the Sixth Board of Directors and the
First Extraordinary General Meeting of Shareholders of 2023. According to the plan, with a fixed dividend payout ratio, based
on the total issued share capital (exclusive of shares in the Company’s account for repurchased shares) on the date of record,
a cash dividend of RMB4.50 (tax inclusive) per 10 shares was planned to be distributed to all the shareholders of the
Company; and there would be no bonus issue from either profit or capital reserves.

The above-mentioned dividend plans were carried out on 2 June 2023 and 28 September 2023, representing a total
dividend payout of RMB1.988 billion (tax inclusive) in cash.

Special statement about the cash dividend policy

In compliance with the Company’s Articles of Association Yes

and resolution of general meeting of shareholders

Specific and clear dividend standard and ratio Yes

Complete decision-making procedure and mechanism Yes

Independent directors faithfully performed their duties Yes

and played their due role

If the Company has no dividend plan, it should disclose the

specific reasons and the next steps it intends to take to N/A

enhance investor returns

Non-controlling shareholders are able to fully express their

opinion and desire and their legal rights and interests are Yes

fully protected

In case of adjusting or changing the cash dividend policy,

the conditions and procedures involved are in compliance N/A

with applicable regulations and transparent

Indicate whether the Company fails to put forward a cash dividend proposal despite the facts that the Company has 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

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


Cash dividend/10 shares (RMB) (tax inclusive) 3.70

Share base (share) 2,217,864,281

Cash dividends (RMB) (tax inclusive) 820,609,783.97

Cash dividends in other forms (such as share repurchase) (RMB) 217,418,706.23

Total cash dividends (including those in other forms) (RMB) 1,038,028,490.20

Distributable profit (RMB) 4,846,565,105.07

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

Applicable cash dividend policy

If it is difficult to identify the development stage of the Company but it has a significant capital expenditure arrangement,
when making profit distribution, cash dividends shall account for no less than 20% in the profit distribution.

Details of the cash and/or stock dividend plan

Upon approval by the Board of Directors, the Company’s 2023 final dividend plan is as follows: With a fixed dividend
payout ratio, based on the total issued share capital (exclusive of shares in the Company’s account for 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, etc. The
independent directors of the Company have expressed consent as their independent opinion on the above dividend plan.

IX Establishment and Implementation of Internal Control System during the Reporting
Period

1. Internal Control Establishment and Implementation

During the Reporting Period, in strict accordance with the requirements of the CSRC, the Shenzhen Stock Exchange, and
such laws and regulations as the Company Law and the Company’s Articles of Association, the Company established a strict
internal control management system. Based on this, in combination with industry characteristics and actual business
operation, the Company continuously improved and refined its internal control system, and intensified internal audit
supervision. Meanwhile, the Company continuously intensified the internal control awareness and responsibility of the
Board of Directors and key positions, fully recognised the significance of complete internal control system in improving
business management, enhancing risk prevention and control, and helping enterprises to achieve high-quality development,
and strengthened the awareness of operation in compliance. By doing so, the Company has ensured that its internal control
system has been effectively executed, practically boosted its level of standardised operation, promoted its healthy and
sustainable development, and protected the interests of the Company and all of its shareholders.

2. Material Internal Control Weaknesses Identified during the Reporting Period

□ Yes  No

XI Subsidiary Management during the Reporting Period

Subsidiary Management plan Progress Problems Solutions Solution progress Subsequent plan

Guangzhou Runyi In strict accordance with the

Network Technology Rules for the Management of

Co., Ltd. and other Majority-owned Subsidiaries,

subsidiaries newly the Company strengthened Completed N/A N/A N/A N/A

included in the guidance and compliance

consolidated with respect to the

financial statements subsidiaries newly included

of the Reporting in the consolidated financial

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


Period, see Note IX statements. Under the

Changes to the authorization of the

Consolidation Scope Company, the subsidiaries

in Part X. carried out activities and

operated independently.

XI Internal Control Assessment Report or Internal Control Audit Report

1. Internal Control Assessment Report

Date of full disclosure of the internal 20 April 2024
control assessment report

Index of full disclosure of the internal http://www.cninfo.com.cn
control assessment report

Ratio of the total assets of the

organizations included in the 100.00%
assessment to the Company's
consolidated total assets

Ratio of the revenue of the

organizations included in the 100.00%
assessment to the Company's
consolidated revenue

Deficiency identification criteria

Category Financial report Non-financial report

Signs of material deficiencies in financial The identification of deficiencies in
report include: (1) Failure of control non-financial reports is mainly based
environment. (2) Misconduct of directors, on the degree of impact of the
supervisors or senior managers. (3) Major deficiencies on the effectiveness of
mistakes in current financial report which business procedures and the
fail to be identified by the Company's possibility of their occurrence. If the
internal control. (4) The supervision of the possibility of the deficiency is
Audit Committee and audit department relatively low, it will reduce the work
on the Company’s financial report and on efficiency or effectiveness, increase
the internal control over internal report is the uncertainty of the effectiveness,
ineffective. Signs of significant or make the work result deviate from
deficiencies in financial report include: (1) the expected goal, the deficiency is a
Failure to choose and apply accounting general deficiency. If the possibility of
policies according to widely accepted the deficiency is relatively high, it will
Qualitative criteria accounting standards. (2) Failure to significantly reduce the work
establish anti-fraud procedures and efficiency or effectiveness,
control management. (3) Lack of significantly increase the uncertainty
corresponding control mechanism for of the effectiveness, or make the work
accounting treatment of unconventional result significantly deviate from the
or special transactions or lack of expected goal, the deficiency is a
corresponding compensatory control. (4) significant deficiency. If the possibility
One or more deficiencies in the control of of the deficiency is relatively high, it
the period-end financial reporting process will severely reduce the work
and failure to reasonably ensure true and efficiency or effectiveness, severely
complete financial reports. General increase the uncertainty of the
deficiencies refer to the control effectiveness, or make the work result
deficiencies other than material and severely deviate from the expected
significant deficiencies mentioned above. goal, the deficiency is a general
deficiency.

The Company views 5% of the total profit The Company views 5% of direct loss
as the indicator of overall importance of of the Company’s net assets as the
Quantitative criteria its income statement, and views 5% of net indicator of importance of non-
assets as the indicator of overall financial report. When the direct loss
importance of its balance sheet. When a is larger than or equal to 5% of the net

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


potential misstatement is larger than or assets, it is considered as a material
equal to 5% of the total profit in the deficiency. If the direct loss is lower
income statement, or a potential than 5% but larger than or equal to 3%
misstatement is larger than or equal to of the net assets, it is considered as a
5% of net assets in the balance sheet, it is significant deficiency. If the direct loss
considered as a material deficiency. If a is lower than 3% of the net assets, it is
potential misstatement is lower than 5% considered as a general deficiency.

but larger than or equal to 3% of the total

profit in the income statement, or a

potential misstatement is lower than 5%

but larger than or equal to 3% of the net

assets in the balance sheet, it is

considered as a significant deficiency. If a

potential misstatement is lower than 3%

of the total profit in the income

statement, or a potential misstatement is

lower than 3% of the net assets in the

balance sheet, it is considered as a

general deficiency.

Number of material deficiencies in 0
financial reports

Number of material deficiencies in non- 0
financial reports

Number of significant deficiencies in 0
financial reports

Number of significant deficiencies in 0
non-financial reports
2. Internal Control Audit Report
 Applicable □ Not applicable

Opinion paragraph

Huaxing Certified Public Accountants LLP is of the opinion that 37 Interactive Entertainment Network Technology Group

Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as of 31 December 2023,

based on the Basic Rules on Enterprise Internal Control and other applicable regulations.

Report disclosed or not Disclosed

Disclosure date 20 April 2024

Index to the disclosed report http://www.cninfo.com.cn

Type of opinion Unmodified unqualified opinion

Material defects in internal control not related to financial No

reporting

Indicate whether any modified opinion is expressed in the Internal Control Audit Report.

□ Yes  No

Indicate whether the Internal Control Audit Report is consistent with the internal control self-assessment report issued by
the Company’s Board of Directors.
 Yes □ No

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


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 punishment Regulation violated Punishment Company Rectification

subsidiary

N/A N/A N/A N/A N/A N/A

Other environmental information in relation to major pollutant-discharge entities:

N/A

Actions taken during the Reporting Period to reduce carbon emissions and the results:

 Applicable □ Not applicable

Incorporating “sustainable development” into its corporate vision, 37 Interactive Entertainment has established its
objective of achieving carbon neutrality within its scope of business operations by 2025, continuously optimised its carbon
neutrality path, and implemented high-quality carbon emission management, so as to advance the zero-carbon
transformation of the enterprise, boost the development of its green productive forces, and jointly respond to climate
change.

In terms of green operations management, the Company proactively carries out the analysis of climate risks and
opportunities, optimises the energy efficiency of administrative operations management, advances the green construction
of the Guangzhou Headquarters building, and joins hands with the value chain partner Alibaba Cloud to explore how to
boost green decision making through cloud-service carbon bills. The Company continuously monitors and discloses the
carbon emissions throughout the full life cycle of the enterprise. In 2023, its direct emissions (Scope 1) were 162.59 tons,
and its indirect emissions from energy (Scope 2) were 704.98 tons. The two items were the carbon emissions within the
Company’s operation boundary, down 37.30% YoY.

In terms of green market trading, the Company continuously explores green electricity certificate trading and carbon
sink trading. In 2023, the Company domestically purchased 6,600 MWh of wind electricity and photovoltaic green electricity
through the certificates, with the green electricity usage accounting for 81% of the annual total, thus supporting the
development of China’s renewable energy industry. To participate in forestry carbon sink trading, the Company purchased
200 tons of carbon credits through the project of converting logged to protected forests in Inner Mongolia, and boosted the
development of the under-forestry economy and sustainable ecology of the Great Khingan Region. The Company also plans
to explore the direct use of green electricity in the Guangzhou Headquarters building in 2024, so as to further reduce carbon
emissions caused by electricity usage.

In terms of the initiatives for green transformation, the Company carried out the environmental protection month of
“Act Now to Shape a Zero-Carbon Future”, and led employees to the establishment of green lifestyles; participated in
industry communication, and shared the Company’s practical experience in carbon neutrality; also participated in action for
global climate change, such as the “Race to Zero” initiative, the Science Based Targets initiative (SBTi), the temperature-
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


limiting target of Business Ambition for 1.5℃, and the “Playing for the Planet” Alliance initiated by the United Nations
Environment Programme, thus strengthening international cooperation.

On the occasion of World Environment Day 2023, the Company issued the first Climate Risk Management Progress
Report. Prepared in line with the internationally recognised climate risk management frameworks, this report offered a
systematic disclosure of the Company’s environmental information, including the Company’s performance and
achievements in governance, strategy, risk management, and performance indicators. It demonstrated our ongoing efforts
to strengthen the transparency of environmental information.

Due to our exceptional performance in carbon neutrality practices, we improved our rating from D (disclosure rating) in
2021 to B- (management rating) in the CDP Scores for Climate Change 2023 released by CDP. This achievement positioned us
ahead of the industry average. Furthermore, our sustainable development case has been included in the Harvard Business
School Case Selections, underscoring our leadership and exemplary role in the industry.

Reasons for the non-disclosure of other environmental information:

The Company is not a major pollutant-discharge entity published by environmental protection authorities. During the
Reporting Period, the Company received no punishments due to violation of environmental protection laws and regulations.
II Corporate Social Responsibility (CSR)

37 Interactive Entertainment is dedicated to fulfilling its corporate social responsibility, persevering in high-quality
socially responsible practices to contribute to the co-creation of social value and a better life for everyone.

1. Deepening industry-research cooperation in the collaborative cultivation of talent

The Company has been deepening resource sharing and complementary cooperation with renowned domestic
universities such as Sun Yat-sen University, Xi’an Jiaotong University, South China University of Technology, and Sichuan
University, aiming to build a sustainable collaborative talent cultivation system. We have organised diverse activities such as
practical sessions for professional skills, campus meetings on the theme of “The Fun with Games”, and corporate training
camps to foster the pre-employment cultivation of young talent and provide them with broader employment opportunities.
We have also helped cultivate innovation and sustainable development capabilities among young talent through
competitions such as innovation challenges. Specifically, the inaugural “Innovation+” micro-innovation competition for
college and university students focused on nurturing talent with great potential. It encouraged students to unleash their
creativity in small game development and game publishing. This allowed students to practice technical skills and develop
diverse perspectives during creation. The event attracted over 1,000 students from prestigious domestic and international
universities to participate. Furthermore, the “2023 Sustainable Development Innovation Challenge for College and
University Students” drew students’ attention to topics such as cultural preservation and promotion, rural revitalisation,
rural aesthetic education, carbon neutrality, marine ecosystem conservation and volunteer services. Through digital
creations, young talent contributed their ingenuity to the cause of building a sustainable future.

2. Contributing to building a better society

37 Interactive Entertainment has always been concerned about social development and actively responded to major
social events. During the Reporting Period, the Company donated RMB 1 million to support earthquake relief and post-
disaster reconstruction in Jishishan Bonan-Dongxiang-Salar Autonomous County of Gansu Province.

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


Under the leadership of the Party Committee of 37 Interactive Entertainment, we mobilised employees from various
business units to participate in volunteer services spanning 55 sessions. In the process, a variety of activities were organised,
including blood donations, providing care for children with special needs and their families, visiting sick children and
residents in need in communities, supporting youth in enhancing their digital literacy, and assisting in the operation of
community charity supermarkets, aiming to spread warmth throughout society.

As a pioneer in social responsibility fulfilment in the industry, we have been actively engaged in cultivating innovative
talent, safeguarding a safe cyberspace, regulating corporate governance, and promoting the establishment of a responsible
ecosystem. Collaborating with stakeholders, we aspire to build a community of shared responsibility. For specific initiatives
regarding the aforementioned topics, please refer to the relevant sections of the Environmental, Social and Governance
Report 2023.

III Efforts in Poverty Alleviation and Rural Revitalization

For details, please refer to the "Practices of Strategic Philanthropy" section of the Environmental, Social and
Governance Report 2023.

1. Supporting the high-quality educational development of high schools in counties

In 2014, 37 Interactive Entertainment initiated the establishment of the Guangdong Youxin Charity Foundation, which
would focus on “supporting rural educational revitalisation and promoting the cultivation of outstanding talent”. We have
been concerned about the high-quality and balanced development of high school education in counties, providing support
to rural young talent through scholarships, grants, knowledge enrichment, and technology literacy enhancement
programmes.

During the Reporting Period, the Company, through the Guangdong Youxin Foundation, launched programmes such as
the “Youxin Peers” high school education assistance programme, the high school enrolment guarantee programme for
ethnic minority girls, the “Vocational Wisdom Calling” career programme, the “Embrace Exploration” Guangzhou Summer
Camp, and the free reading programme. The ultimate goal was to empower the diversified development of rural young
talent.

To further support rural young talent in developing core competencies required in the future and bolster their
technological innovation capabilities, we have encouraged our employee volunteers to conduct specialised sharing sessions
for high school students, thereby inspiring them to explore how technology can enrich their lives. Furthermore, certain
recipients of our financial aid have been invited to partake in aerospace-related programme-based learning journeys.
Through field exploration and study at the aerospace science popularisation base and the co-creation of games aimed at
disseminating aerospace knowledge, students are allowed to apply the scientific theories and knowledge they have acquired.
By the end of 2023, our rural educational revitalisation efforts had reached 5,072 high school students across 49
counties in 11 provinces/autonomous regions, including Anhui, Sichuan, Gansu, Guizhou, and Jiangxi. Among these students,
2,598 were receiving our aid during the Reporting Period. Certain sponsored students who took the 2023 National College
Entrance Examination performed impressively, securing spots in Double First-Class-recognised universities such as Nanjing
University, Sun Yat-sen University, and Wuhan University.

With years of dedication to the field of rural education, 37 Interactive Entertainment’s “Youxin Peers” County-Level
High School Scholarship Programme for underdeveloped areas was selected as a “Brand Programme” in the 2022 National
Charity Federation Role Models Campaign.

2. Driving the improvement of quality and efficiency of industry assistance

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


In 2023, 37 Interactive Entertainment actively leveraged its corporate influence to engage in rural industry assistance,
contributing to the “Project of Promoting the High-quality Development of Villages, Towns, and Counties”. Guided by
government authorities, 37 Interactive Entertainment reached an agreement of intent with Huangjin Town, Fengshun
County, Meizhou City, on special assistance. Leveraging our expertise in creative expression, we formulated a special
assistance plan focusing on “Huangjin Ginger Candy”, an agricultural product recognised as an intangible cultural heritage in
the local ginger specialty industry. We also designed creative gift boxes showcasing traditional cultural elements for
Huangjin Ginger Candy and launched a special cultural promotional video titled “Sweet ‘Ginger’ Love”, showcasing the phase
achievements of rural revitalisation and targeted assistance efforts and expanding the distribution channels for Huangjin
Ginger Candy.

Additionally, we have enhanced the value of rural specialty products by infusing them with cultural significance.
Specifically, collaborating with a professional rural cooperative in Wuhu, Anhui Province, we introduced the “Anhui Tea
Culture” non-profit gift box, incorporating the artistic style of the national intangible cultural heritage “Wuhu Iron Picture”
into its design. Additionally, we showcased the craftsmanship of Huangshan Maofeng tea leaves through hand-drawn comics
in festive gift boxes.

During the Reporting Period, 37 Interactive Entertainment spent RMB 1.0364 million to support the development of
characteristic industries such as tea and ginger in Anhui, Guizhou, Guangdong, and other regions.

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


Part VI Share Changes and Shareholder Information

I Share Changes

1. Share Changes

Unit: share

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

New Shares as dividend Shares as dividend

Number Percentage (%) issues converted from converted from Other Subtotal Number Percentage (%)
profit capital reserves

1. Restricted shares 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%

1.1 Shares held by

the government

1.2 Shares held by

state-owned
corporations

1.3 Shares held by

other domestic 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%
investors

Including: Shares

held by domestic
corporations

Shares held

by domestic natural 582,338,908 26.26% 28,176,902 28,176,902 610,515,810 27.53%
persons

1.4 Shares held by

overseas investors

Including: Shares

held by overseas
corporations

Shares

held by overseas
natural persons

2. Un-restricted shares 1,635,525,373 73.74% -28,176,902 -28,176,902 1,607,348,471 72.47%

2.1 RMB-denominated 1,635,525,373 73.74% -28,176,902 -28,176,902 1,607,348,471 72.47%
common shares

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


2.2 Domestically
listed foreign shares

2.3 Overseas listed
foreign shares

2.4 Others

3. Total shares 2,217,864,281 100.00% 0 0 2,217,864,281 100.00%

Reasons for share changes:

 Applicable □ Not applicable

During the Reporting Period, the shares held by the newly appointed general manager in the Company were locked up according to applicable laws, regulations and regulatory

documents.

Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s common shareholders and other financial

indicators of the prior year and the prior accounting period, respectively:

 Applicable □ Not applicable

During the Reporting Period, the Company implemented share repurchases with its securities account for repurchased shares by the way of centralized bidding. For details of

the repurchases, see the announcements on repurchase progress. As per the Accounting Standards for Business Enterprises, the aforesaid repurchased shares were excluded in the

calculation of basic earnings per share.

2. Changes in Restricted Shares

 Applicable □ Not applicable

Unit: share

Beginning restricted Shares with restriction Increase in restricted Ending restricted Reason for

Name of shareholder shares lifted in the Reporting shares in the Reporting shares restriction Lifting date

Period Period

Li Weiwei 241,584,764 836,475 0 242,421,239 Subject to regulations in

Zeng Kaitian 184,008,280 0 0 184,008,280 Locked-up shares respect of changes in

Hu Yuhang 151,198,263 0 0 151,198,263 of senior shareholdings of directors,

Xu Zhigao 0 27,340,427 0 27,340,427 management supervisors and senior

Yang Jun 1,575,000 0 0 1,575,000 management in the Company

Liu Jun 3,972,601 0 0 3,972,601 Law, etc.

Total 582,338,908 28,176,902 0 610,515,810 -- --

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


III Shareholders and Actual Controller

1. Shareholders and Their Holdings as at the Period-End

Unit: share

Number of Number of

common preferred Number of preferred shareholders

Number of common shareholders at shareholders with with resumed voting rights at the

shareholders 134,005 the month-end 157,927 resumed voting 0 month-end prior to the disclosure of 0
prior to the rights (if any) (see this Report (if any) (see note 8)

disclosure of this note 8)

Report

5% or greater shareholders or the top 10 shareholders (exclusive of shares lent in refinancing)

Nature of Shareholding Increase/decrease Restricted Un-restricted Pledged, marked or frozen status
Name of shareholder shareholder percentage Shares held in the Reporting shares held shares held Status Shares

Period

Li Weiwei Domestic natural 14.57% 323,228,319 1,115,300 242,421,239 80,807,080

person

Zeng Kaitian Domestic natural 11.06% 245,344,374 0 184,008,280 61,336,094

person

Hong Kong Securities Overseas 10.98% 243,610,204 81,199,478 0 243,610,204

Clearing Company Ltd. corporation

Hu Yuhang Domestic natural 9.09% 201,597,684 0 151,198,263 50,399,421 Pledged 19,650,000
person

Xu Zhigao Domestic natural 1.64% 36,453,903 0 27,340,427 9,113,476

person

Wu Weihong Domestic natural 1.59% 35,253,178 -36,314,684 0 35,253,178

person

China Minsheng Banking
Corp., Ltd.－China

Securities Cartoon Games Other 1.12% 24,870,003 20,628,403 0 24,870,003

Trading Open-ended Index
Securities Investment Fund

Industrial and Commercial A new top 200

Bank of China Limited－ shareholder during

Dongfanghong Ruixi Three- Other 1.02% 22,633,000 the Reporting 0 22,633,000

year Fixed Term Open- Period, with the

ended Dynamic Asset increase in its

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


Allocation Mixed Securities shareholding

Investment Fund unknown

Wu Weidong Domestic natural 1.00% 22,091,357 -38,505,200 0 22,091,357

person

Shanghai Dongyonghong Domestic non-

Business Management state-owned 0.90% 20,000,000 20,000,000 0 20,000,000

Partnership (Limited corporation

Partnership)
Strategic investor or general corporation

becoming a top-10 shareholder in a rights issue N/A

(if any) (see note 3)

1. Among the top 10 shareholders of the Company, Wu Weihong, Wu Weidong and Shanghai Dongyonghong Business Management

Related or acting-in-concert parties among the Partnership (Limited Partnership) are shareholders acting in concert.

shareholders above 2. The Company is not aware of whether there is, among the other top 10 shareholders, any related parties or acting-in-concert parties as
defined in the Measures on the Administration of Acquisition of Listed Companies.

Explain if any of the shareholders above was

involved in entrusting/being entrusted with N/A

voting rights or waiving voting rights

Special account for share repurchases (if any) N/A

among the top 10 shareholders (see note 10)

Top 10 un-restricted shareholders

Name of shareholder Un-restricted shares held Shares by class

Class Shares

Hong Kong Securities Clearing Company Ltd. 243,610,204 RMB-denominated common 243,610,204
shares

Li Weiwei 80,807,080 RMB-denominated common 80,807,080
shares

Zeng Kaitian 61,336,094 RMB-denominated common 61,336,094
shares

Hu Yuhang 50,399,421 RMB-denominated common 50,399,421
shares

Wu Weihong 35,253,178 RMB-denominated common 35,253,178
shares

China Minsheng Banking Corp., Ltd.－China RMB-denominated common

Securities Cartoon Games Trading Open-ended 24,870,003 shares 24,870,003
Index Securities Investment Fund

Industrial and Commercial Bank of China Limited

－Dongfanghong Ruixi Three-year Fixed Term 22,633,000 RMB-denominated common 22,633,000
Open-ended Dynamic Asset Allocation Mixed shares

Securities Investment Fund

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


Wu Weidong 22,091,357 RMB-denominated common 22,091,357
shares

Shanghai Dongyonghong Business Management 20,000,000 RMB-denominated common 20,000,000
Partnership (Limited Partnership) shares

Industrial Bank Co., Ltd.－Xingquan Trend 16,549,583 RMB-denominated common 16,549,583
Investment Mixed Securities Investment Fund shares

Related or acting-in-concert parties among the 1. Among the top 10 shareholders of the Company, Wu Weihong, Wu Weidong and Shanghai Dongyonghong Business Management

top 10 un-restricted shareholders, as well as Partnership (Limited Partnership) are shareholders acting in concert.

between the top 10 un-restricted shareholders 2. The Company is not aware of whether there is, among the other top 10 shareholders, any related parties or acting-in-concert parties as
and the top 10 shareholders defined in the Measures on the Administration of Acquisition of Listed Companies.

Related or acting-in-concert parties among the

top 10 un-restricted shareholders, as well as As of the end of the Reporting Period, shareholder China Minsheng Banking Corp., Ltd.－China Securities Cartoon Games Trading Open-

between the top 10 un-restricted shareholders ended Index Securities Investment Fund held 5,167,400 shares that were lent in refinancing.

and the top 10 shareholders

Top 10 shareholders involved in refinancing shares lending:

 Applicable □ Not applicable

Unit: Share

Top 10 shareholders involved in refinancing shares lending

Shares in the common account and Shares lent in refinancing and not Shares in the common account and Shares lent in refinancing and not yet
Full name of shareholder credit account at the period-begin yet returned at the period-begin credit account at the period-end returned at the period-end

Total shares As % of total Total shares As % of total Total shares As % of total Total shares As % of total

share capital share capital share capital share capital

China Minsheng Banking

Corp., Ltd.－China

Securities Cartoon Games 4,241,600 0.19% 230,000 0.01% 24,870,003 1.12% 5,167,400 0.23%
Trading Open-ended Index

Securities Investment Fund

Changes in top 10 shareholders compared with the prior period:

 Applicable □ Not applicable

Unit: Share

Changes in top 10 shareholders compared with the end of the prior period

Newly added to or exiting Shares lent in refinancing and not yet Shares in the common account and credit account plus

Full name of shareholder from top 10 shareholders in returned at the period-end shares lent in refinancing and not yet returned at the

the Reporting Period period-end

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


Total shares As % of total share capital Total shares As % of total share capital

As this shareholder was no As this shareholder was no
China Construction Bank Corporation－ longer among the top 200 longer among the top 200
Lombarda China Senior Care Industry Exiting 0 0.00% shareholders at the end of shareholders at the end of
Mixed Securities Investment Fund the Reporting Period, its the Reporting Period, its

shareholding is unknown. shareholding is unknown.

Industrial Bank Co., Ltd.－Fullgoal

Xingyuan Selected 12-month-holding Exiting 0 0.00% 6,579,572 0.30%
Mixed Securities Investment Fund
37 Interactive Entertainment Network

Technology Group Co., Ltd.-The Fourth Exiting 0 0.00% 16,301,534 0.74%
Employee Stock Ownership Plan
China Minsheng Banking Corp., Ltd.－

China Securities Cartoon Games Trading Newly added 5,167,400 0.23% 30,037,403 1.35%
Open-ended Index Securities Investment
Fund

Industrial and Commercial Bank of China

Limited－Dongfanghong Ruixi Three-

year Fixed Term Open-ended Dynamic Newly added 0 0.00% 22,633,000 1.02%
Asset Allocation Mixed Securities
Investment Fund
Shanghai Dongyonghong Business

Management Partnership (Limited Newly added 0 0.00% 20,000,000 0.90%
Partnership)

Indicate whether any of the top 10 common shareholders or the top 10 un-restricted common shareholders of the Company conducted any promissory repo during the Reporting
Period.
□ Yes  No

No such cases in the Reporting Period.

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

2. Controlling Shareholder

Nature of the controlling shareholder: controlled by a natural person

Type of the controlling shareholder: natural person

Name of the controlling shareholder Nationality Residency in other countries or regions or not

Li Weiwei Chinese Not

Main occupation and position Chairman of the Board

Interests held in other domestically and overseas None

listed companies in the Reporting Period

Change of the controlling shareholder in the Reporting Period:

□ Applicable  Not applicable

No such cases in the Reporting Period.

3. Actual Controller and Acting-in-Concert Parties

Nature of the actual controller: domestic natural person

Type of the actual controller: natural person

Name of the actual Relationship with the actual Nationality Residency in other

controller controller countries or regions or not

Li Weiwei Actual controller himself Chinese Not

Main occupation and Chairman of the Board

position
Controlling interests in

other domestically and None

overseas listed companies

in the past 10 years

Change of the actual controller in the Reporting Period:

□ Applicable  Not applicable

No such cases in the Reporting Period.

Ownership and control relationship between the actual controller and the Company:

Li Weiwei

14.57%

37 Interactive Entertainment Network Technology Group Co.,

Ltd.

Indicate whether the actual controller controls the Company via trust or other ways of asset management.

□ Applicable  Not applicable

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


6. Restrictions on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Undertaking Makers

 Applicable □ Not applicable

Mr. Li Weiwei, the controlling shareholder and actual controller of the Company, increased his shareholding in the
Company by 1,115,300 shares by way of centralised bidding through the trading system of the Shenzhen Stock Exchange on
28 December 2023. Mr. Li has undertaken to strictly comply with the relevant provisions of the China Securities Regulatory
Commission and the Shenzhen Stock Exchange in respect of relevant laws, regulations and regulatory documents, refrain
from insider trading, trading in shares during sensitive periods and short-term trading, and not to voluntarily reduce his
holdings of the Company's shares within six months from the date of completion of the increase in holdings.

IV Share Repurchases during the Reporting Period

Progress on share repurchases:

 Applicable □ Not applicable

Shares

Date of the Number of Amount to Intended Purpose of Number of repurchased as %
repurchase shares to be As % of total be used for repurchase repurchased shares of total target
plan’s repurchased share capital repurchase period shares repurchase shares (if any)
disclosure (RMB’0,000) d under equity
incentive plan

Within 12 For

months subsequent

following employee

11 30,000- the Board’s stock

November 26,086,956 1.18% 60,000 approval of ownership 12,539,547

2022 the plans or

repurchase other equity

plan incentive

plans

Within 12

months

following

the approval All to be

28 10,000- of the retired to

December 5,899,705 0.27% 20,000 repurchase reduce the 0

2023 plan by a registered

general capital

meeting of

shareholder

s

Note: The Proposal on the Plan to Repurchase Shares by Way of Centralized Bidding was approved at the 15th Meeting of the
Sixth Board of Directors on 26 December 2023 and the First Extraordinary General Meeting of Shareholders of 2024 on 12
January 2024. According to the Announcement on Progress on the Share Repurchase disclosed by the Company on 2 April
2024, as of 31 March 2024, a cumulative number of 5,626,600 shares had been repurchased, accounting for 0.25% of the
Company’s existing total share capital.

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


Part VII Financial Statements

I Independent Auditor’s Report

Type of the independent auditor’s opinion Unqualified opinion with emphasis paragraph

Name of the independent auditor Huaxing Certified Public Accountants LLP

Name of the certified public accountants Zhang Fengbo and Gao Yunjun

Independent Auditor’s Report

To all the shareholders of 37 Interactive Entertainment Network Technology Group Co., Ltd.:

I Opinion

We have audited the financial statements of 37 Interactive Entertainment Network Technology Group Co., Ltd.
(hereinafter referred to as the “Company”), which comprise the consolidated and the Company’s balance sheets as at 31
December 2023, the consolidated and the Company’s income statements, the consolidated and the Company’s cash flow
statements, and the consolidated and the Company’s statements of changes in shareholders’ equity for the year then ended,
as well as the notes to the financial statements.

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and the
Company’s financial positions as at 31 December 2023, and the consolidated and the Company’s operating results and cash
flows for the year then ended, in conformity with China’s Accounting Standards for Business Enterprises (CAS).

II Basis for Opinion

We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of Ethics for
Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the said Code of
Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III Emphasis Matter

Users of the financial statements are kindly reminded to pay attention to Note XVI (VII) “Other Significant Transactions
and Events with Influence on Investors’ Decision-making” to the financial statements: For suspected information disclosure
violations, On 27 June 2023, the Company, Mr Li Weiwei (the actual controller and Chairman of the Board of the Company),
and Mr Zeng Kaitian (the Vice Chairman of the Board of the Company) received the Notification of the China Securities
Regulatory Commission on Case Filing (CSRC Case No. 03720230061, No. 03720230062, No. 03720230063) from the said
commission (hereinafter referred to as the “CSRC”), respectively. As of the date of the auditor’s report issuance, the CSRC’s
investigation is ongoing, and no definitive conclusions or decisions have been reached regarding the aforementioned matter
under investigation. The content of this paragraph does not affect the issued audit opinion.

IV Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

(I) Revenue recognition

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


1. Description

As described in Notes III - XXIX Revenue and V - XXXVIII Operating Revenue and Cost of Sales," the Company is mainly
engaged in the R&D and (independent and joint) operation of online games. The operation of online games 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.

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. (XXXX) Distribution and Selling Expenses, the Internet traffic fee charges in the 2023
consolidated financial statements amount to RMB 8,466 million. Because Internet traffic fee charges amount to a substantial
amount and there is inherent risk in terms of their exactness and accuracy, we highlighted the exactness and accuracy of
Internet traffic charges as a key audit matter.

2. Audit response

The major audit procedures performed to address the exactness and accuracy of Internet traffic fee charges include:

(1) We investigated and tested Internet traffic fee charges-related internal controls and assessed the effectiveness of the
design and operation of relevant internal controls;

(2) We performed an analytical review to comparatively analyze the proportion of and variation in the monthly Internet
traffic fee charges and assess the appropriateness of the variation;

(3) We performed a detail test on Internet traffic charges by checking the supporting documents of large vouchers, such
as contracts, invoices, bills of payment and statements of accounts, and reviewing the accuracy of such charges;

(4) We performed external confirmations by checking the amounts of transactions and the balance of the accounts
payable/receivable between the Company and its major suppliers and verifying the exactness and completeness of
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.


distribution and selling expenses through letters of confirmation;

(5) We performed a cut-off test on the Internet traffic fee charges recognized before and after the date of balance sheet,
focusing on whether there are major inter-period adjustments.

V Other Information

The Company’s management is responsible for the other information. The other information comprises all of the
information included in the Company’s 2023 Annual Report other than the financial statements and our auditor’s report
thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

VI Responsibilities of Management and Those Charged with Governance for Financial Statements

The Company’s management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.

In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as
a going concern, disclosing going concern-related matters (if applicable), and using the going concern basis of accounting
unless the management either intends to liquidate the Company or to cease operations, or have no realistic alternative but
to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

VII Auditor ’s Responsibilities for Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CAS will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.

As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and 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.

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


(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 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 2023

Unit: RMB

Item 31 December 2023 1 January 2023

Current assets:

Monetary funds 6,176,992,875.55 5,129,481,882.65

Transaction settlement funds

Loans to other banks

Trading financial assets 2,024,681,502.03 2,792,984,819.12

Derivative financial assets

Notes receivable

Accounts receivable 1,479,267,695.67 1,433,563,842.43

Accounts receivable financing

Prepayments 1,143,237,497.90 855,193,135.12

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


Premiums receivable

Reinsurance receivables

Receivable reinsurance contract reserve

Other receivables 46,247,241.46 87,419,373.81

Including: Interest receivable

Dividends receivable 10,000,000.00 0.00

Redemptory monetary capital for sale

Inventories

Contract assets

Assets held for sale

Non-current assets due within one year 164,307,298.27 225,739,517.70

Other current assets 88,085,256.86 62,124,622.63

Total current assets 11,122,819,367.74 10,586,507,193.46

Non-current assets:

Loans and advances to customers

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 520,735,613.55 621,794,374.74

Other equity investments 247,132,794.34 269,990,212.51

Other non-current financial assets 825,660,687.40 685,698,473.75

Investment properties

Fixed assets 823,508,284.60 850,030,034.92

Construction in progress 534,491,192.20 242,508,087.97

Productive living assets

Oil and gas assets

Right-of-use assets 16,622,471.20 31,967,946.49

Intangible assets 1,040,204,870.96 1,059,676,921.41

Development expenditure

Goodwill 1,578,065,048.53 1,589,065,048.53

Long-term deferred expenses 90,785,937.93 99,473,412.05

Deferred income tax assets 53,947,130.48 34,357,615.22

Other non-current assets 2,280,577,680.43 1,024,113,999.86

Total non-current assets 8,011,731,711.62 6,508,676,127.45

Total assets 19,134,551,079.36 17,095,183,320.91

Current liabilities:

Short-term loans 1,554,577,083.34 901,046,888.89

Loans from the central bank

Loans from other banks

Trading financial liabilities 74,311.41 84,380.59

Derivative financial liabilities

Notes payable 1,087,000,000.00 555,000,000.00

Accounts payable 1,825,714,480.74 1,648,560,259.52

Advances from customers

Contract liabilities 280,023,602.87 259,519,734.14

Financial assets sold under repurchase

agreements

Customer deposits and interbank deposits

Payables for acting trading of securities

Payables for underwriting of securities

Employee benefits payable 408,786,174.15 374,469,366.73

Taxes payable 280,471,436.39 294,163,918.06

Other payables 201,521,074.52 210,926,206.25

Including: Interest payable

Dividends payable

Handling charges and commissions payable

Reinsurance payables

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


Liabilities held for sale

Non-current liabilities due within one year 212,167,632.34 45,909,085.65

Other current liabilities 55,277,993.63 51,763,224.36

Total current liabilities 5,905,613,789.39 4,341,443,064.19

Non-current liabilities:

Insurance contract reserve

Long-term loans 306,000,000.00 323,000,000.00

Bonds payable

Including: Preferred shares

Perpetual bonds

Lease liabilities 3,944,589.05 16,786,536.53

Long-term payables

Long-term employee benefits payable

Provisions

Deferred income

Deferred income tax liabilities 106,630,292.58 101,348,616.16

Other non-current liabilities

Total non-current liabilities 416,574,881.63 441,135,152.69

Total liabilities 6,322,188,671.02 4,782,578,216.88

Shareholders' equity:

Share capital 2,217,864,281.00 2,217,864,281.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserves 2,823,040,832.04 2,776,585,669.95

Less: Treasury shares 300,524,656.78 83,105,950.55

Other comprehensive income -129,511,563.25 -153,044,746.45

Special reserves

Surplus reserves 666,869,940.33 666,869,940.33

General risk reserves

Retained earnings 7,429,206,642.53 6,758,838,410.54

Total equity attributable to shareholders of the 12,706,945,475.87 12,184,007,604.82
Company

Non-controlling interests 105,416,932.47 128,597,499.21

Total shareholders' equity 12,812,362,408.34 12,312,605,104.03

Total liabilities and shareholders’ equity 19,134,551,079.36 17,095,183,320.91

Legal representative: Xu Zhigao Chief Financial Officer:
Ye Wei
Board Secretary: Ye Wei

2. Balance Sheet of the Company

Unit: RMB

Item 31 December 2023 1 January 2023

Current assets:

Monetary funds 802,609,416.49 808,790,749.20

Trading financial assets 800,986,301.37 802,418,630.14

Derivative financial assets

Notes receivable

Accounts receivable

Accounts receivable financing

Prepayments 66,418.86

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


Other receivables 3,679,202,452.33 3,829,192,595.78

Including: Interest receivable

Dividends receivable

Inventories

Contract assets

Assets held for sale

Non-current assets due within one year

Other current assets 7,068,190.52 5,937,414.70

Total current assets 5,289,932,779.57 5,446,339,389.82

Non-current assets:

Debt investments

Other debt investments

Long-term receivables

Long-term equity investments 9,659,679,501.59 9,614,010,297.65

Other equity investments

Other non-current financial assets 76,589,599.00 76,589,599.00

Investment properties

Fixed assets

Construction in progress

Productive living assets

Oil and gas assets

Right-of-use assets 4,605,089.46 6,730,515.43

Intangible assets

Development expenditure

Goodwill

Long-term deferred expenses

Deferred income tax assets

Other non-current assets

Total non-current assets 9,740,874,190.05 9,697,330,412.08

Total assets 15,030,806,969.62 15,143,669,801.90

Current liabilities:

Short-term loans 200,155,833.34

Trading financial liabilities

Derivative financial liabilities

Notes payable

Accounts payable

Advances from customers

Contract liabilities

Employee benefits payable 30,200.00 922,157.55

Taxes payable 11,281,109.24 9,115,058.72

Other payables 28,901,705.53 40,786,313.26

Including: Interest payable

Dividends payable

Liabilities held for sale

Non-current liabilities due within one year 200,318,482.28 30,122,770.55

Other current liabilities

Total current liabilities 440,687,330.39 80,946,300.08

Non-current liabilities:

Long-term loans 306,000,000.00 323,000,000.00

Bonds payable

Including: Preferred shares

Perpetual bonds

Lease liabilities 2,552,367.43 4,983,409.97

Long-term payables

Long-term employee benefits payable

Provisions

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


Deferred income

Deferred income tax liabilities 142,444.51 803,191.39

Other non-current liabilities

Total non-current liabilities 308,694,811.94 328,786,601.36

Total liabilities 749,382,142.33 409,732,901.44

Shareholders' equity:

Share capital 2,217,864,281.00 2,217,864,281.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserves 6,468,587,957.50 6,421,769,953.60

Less: Treasury shares 300,524,656.78 83,105,950.55

Other comprehensive income -60,000,000.00 -60,000,000.00

Special reserves

Surplus reserves 1,108,932,140.50 1,108,932,140.50

Retained earnings 4,846,565,105.07 5,128,476,475.91

Total shareholders' equity 14,281,424,827.29 14,733,936,900.46

Total liabilities and shareholders’ equity 15,030,806,969.62 15,143,669,801.90

3. Consolidated Income Statement

Unit: RMB

Item 2023 2022

1. Total operating revenue 16,546,871,737.85 16,406,034,152.65

Including: Operating revenue 16,546,871,737.85 16,406,034,152.65

Interest income

Premium income

Handling charge and commission

income

2. Total operating costs and expenses 13,603,488,187.84 13,169,671,748.81

Including: Cost of sales 3,391,580,579.32 3,048,539,639.86

Interest expense

Handling charge and commission

expenses

Surrenders

Net claims paid

Net amount provided as policy

reserve

Expenditure on policy dividends

Reinsurance premium expenses

Taxes and surcharges 36,892,301.48 31,860,159.78

Distribution and selling expenses 9,090,808,791.22 8,732,600,168.08

General and administrative 592,119,581.61 526,013,657.81
expenses

Research and development 713,563,181.73 904,696,560.53
expenses

Financial expenses -221,476,247.52 -74,038,437.25

Including: Interest expense 65,589,638.61 46,685,488.68

Interest income 306,044,467.16 146,860,105.25

Add: Other income 110,038,707.84 133,197,530.89

Investment income (“-” for loss) 7,525,623.19 75,647,461.76

Including: Share of profits and losses -17,776,565.55 -59,373,741.59
of joint ventures and associates

Gain on derecognition of

financial assets measured at amortised cost (“-”

for loss)

Gain on exchange (“-” for loss)

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


Net gain on exposure hedges (“-” for

loss)

Gain on changes in fair value (“-” for 103,982,672.05 -39,816,230.89
loss)

Impairment loss on credit (“-” for loss) -13,743,024.22 -8,381,295.23

Impairment loss on assets (“-” for loss) -111,730,846.28 -90,420,714.53

Gain on disposal of assets (“-” for loss) 1,431,156.84 2,302,146.59

3. Operating profit (“-” for loss) 3,040,887,839.43 3,308,891,302.43

Add: Non-operating income 20,123,970.73 11,149,873.50

Less: Non-operating expenses 13,041,071.75 18,526,439.05

4. Profit before income tax expenses (“-” for loss) 3,047,970,738.41 3,301,514,736.88

Less: Income tax expenses 414,443,596.24 391,772,296.96

5. Net profit (“-” for net loss) 2,633,527,142.17 2,909,742,439.92

5.1 Classified by continuity of operations

5.1.1 Net profit from continuing operations 2,633,527,142.17 2,909,742,439.92
(“-” for net loss)

5.1.2 Net profit from discontinued

operations (“-” for net loss)

5.2 Classified by ownership of the equity

5.2.1 Net profit attributable to shareholders 2,658,570,193.44 2,954,377,452.38
of the Company

5.2.2 Net profit attributable to non- -25,043,051.27 -44,635,012.46
controlling interests

6. Other comprehensive income, net of tax 23,533,183.20 31,198,584.93

Other comprehensive income attributable to 23,533,183.20 31,198,584.93
shareholders of the Company, net of tax

6.1 Other comprehensive income that will -23,571,778.91 -75,133,385.17
not be reclassified subsequently to profit or loss

6.1.1 Changes caused by

remeasurement of defined benefit pension

schemes

6.1.2 Share of the other

comprehensive income of the investee

accounted for using equity method that will not

be reclassified subsequently to profit or loss

6.1.3 Changes in fair value of other -23,571,778.91 -75,133,385.17
equity investments

6.1.4 Changes in the fair value of the

company's own credit risk

6.1.5 Others

6.2 Other comprehensive income that will 47,104,962.11 106,331,970.10
be reclassified subsequently to profit or loss

6.2.1 Share of the other

comprehensive income of the investee 524,693.70
accounted for using equity method that will be

reclassified subsequently to profit or loss

6.2.2 Changes in fair value of other

equity investments

6.2.3 Other comprehensive income

arising from the reclassification of financial

assets

6.2.4 Allowance for credit

impairments in other debt investments

6.2.5 Cash flow hedge reserve

6.2.6 Exchange differences on

translation of foreign currency financial 47,104,962.11 105,807,276.40
statements

6.2.7 Others

Other comprehensive income attributable to

non-controlling interests, net of tax

7. Total comprehensive income 2,657,060,325.37 2,940,941,024.85

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


Total comprehensive income attributable to 2,682,103,376.64 2,985,576,037.31
shareholders of the Company

Total comprehensive income attributable to -25,043,051.27 -44,635,012.46
non-controlling interests
8. Earnings per share:

8.1 Basic earnings per share 1.20 1.34

8.2 Diluted earnings per share 1.20 1.34

Where business combinations under common control occurred in the current period, the net profit achieved by the
acquirees before the combinations was RMB 0.00 with the amount for the same period of last year being RMB 0.00.

Legal representative: Xu Zhigao Chief Financial Officer:
Ye Wei
Board Secretary: Ye Wei

4. Income Statement of the Company

Unit: RMB

Item 2023 2022

1. Operating revenue 9,433.96 0.00

Less: Cost of sales 0.00 0.00

Taxes and surcharges 50,349.85 359,344.65

Distribution and selling expenses

General and administrative expenses 19,286,684.94 12,473,738.25

Research and development expenses

Financial expenses 1,373,974.08 -14,096,585.25

Including: Interest expense 23,604,095.16 13,877,655.65

Interest income 23,391,950.84 28,940,424.67

Add: Other income 6,938,175.62 3,014,074.12

Investments income (“-” for loss) 1,704,272,876.72 5,319,803,261.37

Including: Share of profits and losses

of joint ventures and associates

Gain on derecognition of

financial assets measured at amortised cost (“-”

for loss)

Net gain on exposure hedges (“-” for

loss)

Gain on changes in fair value (“-” for 18,294,520.55 12,333,374.40
loss)

Impairment loss on credit (“-” for loss)

Impairment loss on assets (“-” for loss)

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

2. Operating profit (“-” for loss) 1,708,803,997.98 5,336,414,212.24

Add: Non-operating income 1,478.73 2.59

Less: Non-operating expenses 70,214.21 31,234.89

3. Profit before income tax expenses (“-” for loss) 1,708,735,262.50 5,336,382,979.94

Less: Income tax expenses 2,444,671.89 5,827,837.11

4. Net profit (“-” for net loss) 1,706,290,590.61 5,330,555,142.83

4.1 Net profit from continuing operations (“- 1,706,290,590.61 5,330,555,142.83
” for net loss)

4.2 Net profit from discontinued operations

(“-” for net loss)

5. Other comprehensive income, net of tax

5.1 Other comprehensive income that will

not be reclassified subsequently to profit or loss

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


5.1.1 Changes caused by

remeasurement of defined benefit pension

schemes

5.1.2 Share of the other

comprehensive income of the investee

accounted for using equity method that will not

be reclassified subsequently to profit or loss

5.1.3 Changes in fair value of other

equity investments

5.1.4 Changes in the fair value of the

company's own credit risk

5.1.5 Others

5.2 Other comprehensive income that will

be reclassified subsequently to profit or loss

5.2.1 Share of the other

comprehensive income of the investee

accounted for using equity method that will be

reclassified subsequently to profit or loss

5.2.2 Changes in fair value of other

equity investments

5.2.3 Other comprehensive income

arising from the reclassification of financial

assets

5.2.4 Allowance for credit

impairments in other debt investments

5.2.5 Cash flow hedge reserve

5.2.6 Exchange differences on

translation of foreign currency financial

statements

5.2.7 Others

6. Total comprehensive income 1,706,290,590.61 5,330,555,142.83

7. Earnings per share:

7.1 Basic earnings per share

7.2 Diluted earnings per share

5. Consolidated Cash Flow Statement

Unit: RMB

Item 2023 2022

1. Cash flows from operating activities:

Cash received from the sales of goods or 16,904,176,555.70 16,885,987,333.81
rendering services

Net increase in customer deposits and

interbank deposits

Net increase in loans from the central bank

Net increase in loans from other financial

institutions

Premiums received on original insurance

contracts

Net proceeds from reinsurance

Net increase in deposits and investments of

policy holders

Interest, handling charges and commissions

received

Net increase in loans from other banks

Net increase in proceeds from repurchase

transactions

Net proceeds from acting trading of

securities

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


Refunds of taxes and levies 2,434,967.58 26,604,668.69

Cash received relating to other operating 265,105,348.27 213,417,757.20
activities

Sub-total of cash inflows from operating 17,171,716,871.55 17,126,009,759.70
activities

Cash paid for purchases of goods and 3,413,825,692.72 2,869,139,576.62
services

Net increase in loans and advances to

customers

Net increase in deposits in the central bank

and other banks and financial institutions

Payments for claims on original insurance

contracts

Net increase in loans to other banks

Interest, handling charges and commissions

paid

Policy dividends paid

Cash paid to and on behalf of employees 1,564,676,531.31 1,669,997,016.50

Payments of taxes and levies 645,283,417.51 479,137,620.16

Cash paid relating to other operating 8,400,893,893.55 8,550,566,649.16
activities

Sub-total of cash outflows used in operating 14,024,679,535.09 13,568,840,862.44
activities

Net cash flows from operating activities 3,147,037,336.46 3,557,168,897.26

2. Cash flows from investing activities:

Cash received from disposal of investments 150,435,928.42 193,845,697.24

Cash received from investment income 172,415,699.41 143,313,003.86

Cash received from disposal of fixed assets, 3,105,437.71 3,238,847.63
intangible assets and other long-term assets

Net cash received from disposal of

subsidiaries and other business units

Cash received relating to other investing 13,521,693,807.84 10,402,113,384.72
activities

Sub-total of cash inflows from investing activities 13,847,650,873.38 10,742,510,933.45

Cash paid for acquisition of fixed assets, 1,311,950,763.69 319,970,836.68
intangible assets and other long-term assets

Cash paid to acquire investments 237,738,371.40 274,845,766.52

Net increase in pledged loans granted

Net cash paid for the acquisition of 59,324.28 136,258.81
subsidiaries and other business units

Cash paid relating to other investing 13,743,826,640.43 13,477,981,715.09
activities

Sub-total of cash outflows used in investing 15,293,575,099.80 14,072,934,577.10
activities

Net cash flows from/used in investing activities -1,445,924,226.42 -3,330,423,643.65

3. Cash flows from financing activities:

Cash received from capital contributions 620,000.00 93,310,000.00

Including: Cash received from capital

contributions by non-controlling interests of 620,000.00 93,310,000.00
subsidiaries

Cash received from borrowings 2,911,380,000.00 1,640,448,000.00

Cash received relating to other financing 355,000,000.00 113,393,400.00
activities

Sub-total of cash inflows from financing activities 3,267,000,000.00 1,847,151,400.00

Cash repayments of borrowings 2,104,998,000.00 859,003,000.00

Cash paid for interest and dividends 2,052,191,844.69 1,634,202,543.31

Including: Dividends paid by subsidiaries to 405,402.09
non-controlling interests

Cash paid relating to other financing 1,396,209,021.10 938,520,215.11
activities

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


Sub-total of cash outflows used in financing 5,553,398,865.79 3,431,725,758.42
activities

Net cash flows from/used in financing activities -2,286,398,865.79 -1,584,574,358.42

4. Effect of foreign exchange rate changes on 10,295,383.63 59,907,468.37
cash and cash equivalents

5. Net increase/decrease in cash and cash -574,990,372.12 -1,297,921,636.44
equivalents

Add: Cash and cash equivalents at beginning 3,320,472,098.94 4,618,393,735.38
of the period

6. Cash and cash equivalents at end of the period 2,745,481,726.82 3,320,472,098.94

6. Cash Flow Statement of the Company

Unit: RMB

Item 2023 2022

1. Cash flows from operating activities:

Cash received from the sales of goods or 10,000.00

rendering services

Refunds of taxes and levies

Cash received relating to other operating 2,866,152,757.49 3,146,560,844.15
activities

Sub-total of cash inflows from operating 2,866,162,757.49 3,146,560,844.15
activities

Cash paid for purchases of goods and

services

Cash paid to and on behalf of employees 1,939,875.23 5,196,912.26

Payments of taxes and levies 4,280,167.75 4,903,666.87

Cash paid relating to other operating 2,710,211,734.70 6,890,189,374.35
activities

Sub-total of cash outflows used in operating 2,716,431,777.68 6,900,289,953.48
activities

Net cash flows from/used in operating activities 149,730,979.81 -3,753,729,109.33

2. Cash flows from investing activities:

Cash received from disposal of investments

Cash received from investment income 1,737,876,392.74 5,340,237,466.85

Cash received from disposal of fixed assets,

intangible assets and other long-term assets

Net cash received from disposal of

subsidiaries and other business units

Cash received relating to other investing 4,580,000,000.00 4,220,000,000.00
activities

Sub-total of cash inflows from investing activities 6,317,876,392.74 9,560,237,466.85

Cash paid for acquisition of fixed assets,

intangible assets and other long-term assets

Cash paid to acquire investments 15,000,000.00 20,000,000.00

Net cash paid for the acquisition of

subsidiaries and other business units

Cash paid relating to other investing 4,280,000,000.00 4,870,000,000.00
activities

Sub-total of cash outflows used in investing 4,295,000,000.00 4,890,000,000.00
activities

Net cash flows from/used in investing activities 2,022,876,392.74 4,670,237,466.85

3. Cash flows from financing activities:

Cash received from capital contributions

Cash received from borrowings 690,000,000.00 640,000,000.00

Cash received relating to other financing

activities

Sub-total of cash inflows from financing activities 690,000,000.00 640,000,000.00

Cash repayments of borrowings 337,000,000.00 659,500,000.00

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


Cash paid for interest and dividends 2,011,301,921.19 1,604,022,872.37

Cash paid relating to other financing 220,234,866.23 85,922,110.55
activities

Sub-total of cash outflows used in financing 2,568,536,787.42 2,349,444,982.92
activities

Net cash flows from/used in financing activities -1,878,536,787.42 -1,709,444,982.92

4. Effect of foreign exchange rate changes on

cash and cash equivalents

5. Net increase/decrease in cash and cash 294,070,585.13 -792,936,625.40
equivalents

Add: Cash and cash equivalents at beginning 205,561,434.13 998,498,059.53
of the period

6. Cash and cash equivalents at end of the period 499,632,019.26 205,561,434.13

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


7. Consolidated Statement of Changes in Shareholders’ Equity

2023

Unit: RMB

2023

Equity attributable to shareholders of the Company

Other equity Less: Spec Gener Non- Total

Item Share instruments Capital Treasur Other ial Surplus al risk Retained Oth controlling shareholders'
capital Preferr Perpe Oth reserves y comprehensive rese reserves reserv earnings ers Sub-total interests equity

ed tual ers shares income rves es

shares bonds

1. Balance as at the 2,217,864,2 2,776,585,6 83,105 - 666,869, 6,758,838, 12,184,007,6 128,597,4 12,312,605,10
end of prior year 81.00 69.95 ,950.5 153,044,746.45 940.33 410.54 04.82 99.21 4.03
5

Add:
Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors

Others

2. Balance as at 2,217,864,2 2,776,585,6 83,105 - 666,869, 6,758,838, 12,184,007,6 128,597,4 12,312,605,10
beginning of year 81.00 69.95 ,950.5 153,044,746.45 940.33 410.54 04.82 99.21 4.03
5

3. Increase/ 217,41 -

decrease in the 46,455,162. 8,706. 23,533,183.20 670,368,2 522,937,871. 23,180,56 499,757,304.3
period (“-” for 09 23 31.99 05 6.74 1
decrease)

3.1 Total 2,658,570, 2,682,103,37 - 2,657,060,325
comprehensive 23,533,183.20 193.44 6.64 25,043,05 .37
income 1.27

3.2 Capital 217,41 - -
contribution and 46,690,199. 8,706. 170,728,506. 1,847,283. 168,881,222.3
withdrawal by 89 23 34 95 9
shareholders

3.2.1 Common 1,719,479. 1,719,479.94

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


shares contribution 94

and withdrawal by
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based

payments included 46,690,199. 46,690,199.8 127,804.0 46,818,003.90
in shareholders’ 89 9 1

equity

217,41 - -
3.2.4 Others 8,706. 217,418,706. 217,418,706.2
23 23 3

3.3 Profit - - -
distribution 1,988,201, 1,988,201,96 1,988,201,961
961.45 1.45 .45

3.3.1 Appropriation
to surplus reserves
3.3.2 Appropriation
to general risk
reserves

3.3.3 Distribution to - - -
shareholders 1,988,201, 1,988,201,96 1,988,201,961
961.45 1.45 .45

3.3.4 Others
3.4 Internal
transfers within
shareholders’ equity
3.4.1 Capital
reserves transferred
into capital (or
share capital)
3.4.2 Surplus
reserves transferred
into capital (or
share capital)
3.4.3 Surplus
reserves for making
up losses

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

3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in the
period
3.5.2 Used in the
period

3.6 Others -235,037.80 -235,037.80 15,200.58 -219,837.22

4. Balance as at the 2,217,864,2 2,823,040,8 300,52 - 666,869, 7,429,206, 12,706,945,4 105,416,9 12,812,362,40
end of the period 81.00 32.04 4,656. 129,511,563.25 940.33 642.53 75.87 32.47 8.34
78

2022

Unit: RMB

2022

Equity attributable to shareholders of the Company

Other equity Less: Spec Gener Non- Total

Item Share instruments Capital Treasu Other ial Surplus al risk Retained Oth controlling shareholders'
capital Preferr Perpe Oth reserves ry comprehensive reser reserves reserv earnings ers Sub-total interests equity

ed tual ers shares income ves es

shares bonds

1. Balance as at the 2,217,864,2 2,978,593, 299,99 - 166,559, 5,894,941, 10,773,716,3 83,619,695 10,857,336,0
end of prior year 81.00 891.37 9,563. 184,243,331.38 856.09 180.68 14.49 .37 09.86
27

Add:

Adjustments for 660,576.46 660,576.46 5,684.56 666,261.02
changed accounting
policies
Adjustments for
corrections of

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

previous errors

Others

2. Balance as at 2,217,864,2 2,978,593, 299,99 - 166,559, 5,895,601, 10,774,376,8 83,625,379 10,858,002,2
beginning of year 81.00 891.37 9,563. 184,243,331.38 856.09 757.14 90.95 .93 70.88
27

3. Increase/ - -

decrease in the 202,008,22 216,89 31,198,584.93 500,310, 863,236,65 1,409,630,71 44,972,119 1,454,602,83
period (“-” for 1.42 3,612. 084.24 3.40 3.87 .28 3.15
decrease) 72

3.1 Total 2,954,377, 2,985,576,03 - 2,940,941,02
comprehensive 31,198,584.93 452.38 7.31 44,635,012 4.85
income .46

3.2 Capital - -

contribution and 200,521,57 216,89 16,372,041.4 90,012,533 106,384,575.
withdrawal by 1.29 3,612. 3 .83 26
shareholders 72

3.2.1 Common

shares contribution 227,361.52 227,361.52 89,788,517 90,015,879.3
and withdrawal by .83 5
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based

payments included 99,250,630 99,250,630.4 224,016.00 99,474,646.4
in shareholders’ .46 6 6
equity

- - - -
3.2.4 Others 299,999,56 216,89 83,105,950.5 83,105,950.5
3.27 3,612. 5 5
72

3.3 Profit 500,310, - - - -
distribution 084.24 2,091,140, 1,590,830,71 405,402.09 1,591,236,11
798.98 4.74 6.83

3.3.1 Appropriation 500,310, -

to surplus reserves 084.24 500,310,08

4.24

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

3.3.2 Appropriation
to general risk
reserves

3.3.3 Distribution to - - - -
shareholders 1,590,830, 1,590,830,71 405,402.09 1,591,236,11
714.74 4.74 6.83

3.3.4 Others
3.4 Internal
transfers within
shareholders’ equity
3.4.1 Capital
reserves transferred
into capital (or
share capital)
3.4.2 Surplus
reserves transferred
into capital (or
share capital)
3.4.3 Surplus
reserves for making
up losses
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in the
period
3.5.2 Used in the
period

- -

3.6 Others 1,486,650. 1,486,650.13 -1,486,650.13
13

4. Balance as at the 2,217,864,2 2,776,585, 83,105 - 666,869, 6,758,838, 12,184,007,6 128,597,49 12,312,605,1

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


end of the period 81.00 669.95 ,950.5 153,044,746.45 940.33 410.54 04.82 9.21 04.03
5

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

2023

Unit: RMB

2023

Item Other equity instruments Less: Treasury Other Special Retained Ot Total shareholders'
Share capital Preferre Perpetua Oth Capital reserves shares comprehensive reserve Surplus reserves earnings he equity

d shares l bonds ers income s rs

1. Balance as at the 2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
end of prior year

Add:
Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors

Others

2. Balance as at 2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
beginning of year
3. Increase/

decrease in the 46,818,003.90 217,418,706.23 -281,911,370.84 -452,512,073.17
period (“-” for
decrease)
3.1 Total

comprehensive 1,706,290,590.61 1,706,290,590.61
income
3.2 Capital

contribution and 46,818,003.90 217,418,706.23 -170,600,702.33
withdrawal by
shareholders
3.2.1 Common
shares contribution
and withdrawal by

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

shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based

payments included 46,818,003.90 46,818,003.90
in shareholders’
equity

3.2.4 Others 217,418,706.23 -217,418,706.23

3.3 Profit - -1,988,201,961.45
distribution 1,988,201,961.45

3.3.1 Appropriation
to surplus reserves

3.3.2 Distribution - -1,988,201,961.45
to shareholders 1,988,201,961.45

3.3.3 Others
3.4 Internal
transfers within
shareholders’
equity
3.4.1 Capital
reserves
transferred into
capital (or share
capital)
3.4.2 Surplus
reserves
transferred into
capital (or share
capital)
3.4.3 Surplus
reserves for making
up losses
3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other

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

comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Others

4. Balance as at the 2,217,864,281.00 6,468,587,957.50 300,524,656.78 -60,000,000.00 1,108,932,140.50 4,846,565,105.07 14,281,424,827.29
end of the period

2022

Unit: RMB

2022

Item Other equity instruments Less: Treasury Other Special Ot Total shareholders'
Share capital Preferre Perpetua Oth Capital reserves shares comprehensive reserv Surplus reserves Retained earnings he equity

d shares l bonds ers income es rs

1. Balance as at the 2,217,864,281.00 6,622,294,870.41 299,999,563.27 -60,000,000.00 608,622,056.26 1,888,900,038.53 10,977,681,682.93
end of prior year

Add:

Adjustments for 162,093.53 162,093.53
changed accounting
policies
Adjustments for
corrections of
previous errors

Others

2. Balance as at 2,217,864,281.00 6,622,294,870.41 299,999,563.27 -60,000,000.00 608,622,056.26 1,889,062,132.06 10,977,843,776.46
beginning of year
3. Increase/

decrease in the -200,524,916.81 -216,893,612.72 500,310,084.24 3,239,414,343.85 3,756,093,124.00
period (“-” for
decrease)
3.1 Total

comprehensive 5,330,555,142.83 5,330,555,142.83
income

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

3.2 Capital

contribution and -200,524,916.81 -216,893,612.72 16,368,695.91
withdrawal by
shareholders
3.2.1 Common
shares contribution
and withdrawal by
shareholders
3.2.2 Capital
contribution and
withdrawal by
holders of other
equity instruments
3.2.3 Share-based

payments included 99,474,646.46 99,474,646.46
in shareholders’
equity

3.2.4 Others -299,999,563.27 -216,893,612.72 -83,105,950.55

3.3 Profit 500,310,084.24 -2,091,140,798.98 -1,590,830,714.74
distribution

3.3.1 Appropriation 500,310,084.24 -500,310,084.24

to surplus reserves

3.3.2 Distribution -1,590,830,714.74 -1,590,830,714.74
to shareholders
3.3.3 Others
3.4 Internal
transfers within
shareholders’
equity
3.4.1 Capital
reserves
transferred into
capital (or share
capital)
3.4.2 Surplus
reserves
transferred into
capital (or share
capital)
3.4.3 Surplus
reserves for making
up losses

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

3.4.4 Changes in
defined benefit
pension schemes
transferred into
retained earnings
3.4.5 Other
comprehensive
income transferred
into retained
earnings
3.4.6 Others
3.5 Special reserves
3.5.1 Increase in
the period
3.5.2 Used in the
period
3.6 Others

4. Balance as at the 2,217,864,281.00 6,421,769,953.60 83,105,950.55 -60,000,000.00 1,108,932,140.50 5,128,476,475.91 14,733,936,900.46
end of the period

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