2018 Annual Report Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd.
2018 Annual Report
April, 2019
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Section I Contents and Interpretation
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Table of Contents
Section I Contents and Interpretation ...................................................................................................................................................... 2 Section II Company Profile and Key Financial Indicators ...................................................................................................................... 7 Section III Business Overview .............................................................................................................................................................. 13 Section V Discussion and Analysis of Operation Status ........................................................................................................................ 18 Section V Financial Report .................................................................................................................................................................... 52
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Definitions
||||
|-|-|-|
|Term|means|Definition|
|CSRC|means|China Securities Regulatory Commission|
|SZSE|means|Shenzhen Stock Exchange|
|The Company/Company/Listed||Wuhu Shunrong Auto Parts Co., Ltd./Wuhu Shunrong Sanqi Interactive|
||means||
|Company/Sanqi Interactive Entertainment||Entertainment Network Technology Co., Ltd.|
|Shanghai Sanqi Interactive Entertainment|means|Sanqi Interactive Entertainment (Shanghai) Technology Co., Ltd.|
|Company Law|means|Company Law of the People's Republic of China|
|Securities Law|means|Securities Law of the People's Republic of China|
|||Articles of Association of Wuhu Shunrong Auto Parts Co., Ltd./Articles of|
|Articles of Association|means|Association of Wuhu Shunrong Sanqi Interactive Entertainment Network|
|||Technology Co., Ltd.|
|Audit Institution|means|GP Certified Public Accountants Co., Ltd. (Special General Partnership)|
|RMB/RMB 10,000|means|Chinese yuan/10,000 Chinese yuan|
|Reporting Period|means|January 1st, 2018 to December 31st, 2018|
|End of Reporting Period|means|December 31st, 2018|
|||Clientless or browser kernel-based micro-client games that are based on|
|||web development technologies and utilize standard protocols as basic|
|Browser games|means||
|||transmission modes. Game users can play browser games directly through|
|||an Internet browser|
|||Games that are downloaded via mobile network and run on mobile phones|
|Mobile games|means||
|||or other mobile terminals.|
|RPG|means|Role playing game|
|ARPG|means|Action role playing game|
|SLG|means|Simulation game|
|||Net profit attributable to ordinary shareholders of the Company, net of|
|||performance compensation due to mergers and acquisitions and related|
|Non-GAAP net profit|means||
|||goodwill impairment, after-tax income of accidental equity investment|
|||disposal, and equity incentive fees|
|Domestic|means|Mainland China|
|Overseas|means|Outside of mainland China|
|Shanghai Mokun|means|Shanghai Mokun Digital Technology Co., Ltd.|
|Jiangsu Zhiming|means|Jiangsu Zhiming Network Technology Co., Ltd.|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Shunrong Investment Company|means|Wuhu Shunrong Investment Co., Ltd.|
|Shunrong Yonghong Company|means|Shanghai Shunrong Yonghong Technology Development Co., Ltd.|
|Guangzhou Senyun Co., Ltd.|means|Guangzhou Senyun Auto Parts Co., Ltd.|
|Shunrong Auto Parts|means|Wuhu Shunrong Auto Parts Co., Ltd.|
|Yanling Investment Co., Ltd.|means|Shanghai Yanling Investment Management Co., Ltd.|
|Tibet Xintai|means|Tibet Xintai Culture Media Co., Ltd.|
|Anhui Vogue Entertainment|means|Anhui Vogue Entertainment Network Technology Co., Ltd.|
|Vogue Entertainment International|means|Vogue Entertainment International Limited|
|G-MEI Network|means|G-MEI Network Technology Co., Ltd.|
|Guangzhou Sanqi|means|Guangzhou Sanqi Network Technology Co., Ltd.|
|Guangzhou Xingzhong|means|Guangzhou Xingzhong Information Technology Co., Ltd.|
|Anhui Xuhong|means|Anhui Xuhong Information Technology Co., Ltd.|
|Wuji Entertainment Games Co., Ltd.|means|Wuji Entertainment Games Co., Ltd.|
|Anhui Sanqi|means|Anhui Sanqi Network Technology Co., Ltd.|
|Jiangsu Aurora|means|Jiangsu Aurora Network Technology Co., Ltd.|
|Shanghai Yingtong|means|Shanghai Yingtong Network Technology Co., Ltd.|
|Wisdom Entertainment International|means|Wisdom Entertainment Online International Limited|
|Wisdom Game International|means|Wisdom Game Online International Limited|
|Shanghai Guanhang|means|Shanghai Guanhang Network Technology Co., Ltd.|
|Anhui Jiashang|means|Anhui Jiashang Network Technology Co., Ltd.|
|Chengdu Shengge Times Network Technology|||
||means|Chengdu Shengge Times Network Technology Co., Ltd.|
|Co., Ltd.|||
|Beijing Shangheng|means|Beijing Shangheng Jiatian Network Technology Co., Ltd.|
|Jiangsu Jiaqu|means|Jiangsu Jiaqu Network Technology Co., Ltd.|
|Shanghai Zhiren|means|Shanghai Zhiren Culture Media Co., Ltd.|
|Tibet Taifu|means|Tibet Taifu Culture Media Co., Ltd.|
|37Games Entertainment Co., Ltd.|means|37 Games Entertainment Limited|
|Shanghai Mobile Game|means|Shanghai Shouyou Tianxia Digital Technology Co., Ltd.|
|Anhui Guanyu|means|Anhui Guanyu Culture Media Co., Ltd.|
|Tibet Yaotong|means|Tibet Yaotong Network Technology Co., Ltd.|
|Tibet Shengge|means|Tibet Shengge Network Technology Co., Ltd.|
|Guangzhou Sanqi Interactive Entertainment|means|Sanqi Interactive Entertainment (Guangzhou) Technology Co., Ltd.|
|Guangzhou Huoshanhu|means|Guangzhou Huoshanhu Information Technology Co., Ltd.|
|Guangzhou Jisheng|means|Guangzhou Jisheng Network Technology Co., Ltd.|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Guangzhou Jishi|means|Guangzhou Jishi Network Technology Co., Ltd.|
|Khorgas Qianyu|means|Khorgos Entertainment Network Technology Co., Ltd.|
|Khorgas Xinghui|means|Khorgos Xinghui Network Technology Co., Ltd.|
|Khorgos Xinrui|means|Khorgos Xinrui Network Technology Co., Ltd.|
|Top Increase|means|Top Increase Global Limited|
|Khorgas Sanqi|means|Khorgos Sanqi Entertainment Venture Capital Co., Ltd.|
|Anhui Aurora|means|Anhui Sanqi Aurora Network Technology Co., Ltd.|
|Shanghai Langkun|means|Shanghai Langkun Digital Technology Co., Ltd.|
|Shanghai Kunkun|means|Shanghai Kunkun Digital Technology Co., Ltd.|
|Shanghai Miji|means|Shanghai Miji Digital Technology Co., Ltd.|
|Shanghai Aojue|means|Shanghai Aojue Digital Technology Co., Ltd.|
|Khorgas Jiaji|means|Khorgos Jiaji Digital Technology Co., Ltd.|
|Khorgas Mopeng|means|Khorgos Mopeng Digital Technology Co., Ltd.|
|Guangzhou Jisheng|means|Guangzhou Jisheng Network Technology Co., Ltd.|
|Anhui Wanhu|means|Anhui Wanhu Information Technology Co., Ltd.|
|Zhuhai Miaohu|means|Zhuhai Miaohu Network Technology Co., Ltd.|
|Zhuhai Shangjie|means|Zhuhai Shangjie Network Technology Co., Ltd.|
|Ningbo Langkun|means|Ningbo Langkun Digital Technology Co., Ltd.|
|Shanghai Jiakun|means|Shanghai Jiakun Digital Technology Co., Ltd.|
|||Huai’an Sanqi Yijian Pan-Entertainment Asset Management Center|
|Huai’an Sanqi|means||
|||(Limited Partnership)|
|Anhui Zhusheng|means|Anhui Zhusheng Network Technology Co., Ltd.|
|Guangzhou Sanqi Culture & Entertainment|means|Sanqi Entertainment Network Technology (Guangzhou) Co., Ltd.|
|Chengdu Pengwan Technology Co., Ltd.|means|Chengdu Pengwan Technology Co., Ltd. and its subsidiaries|
|Shenzhen Mokylin Technology Co., Ltd.|means|Shenzhen Mokylin Technology Co., Ltd. and its subsidiaries|
|||Zhangshu Wangzhong Investment Management Center (Limited|
|Wangzhong Investment|means||
|||Partnership)|
|||The proportion of transaction amount from the Company’s domestic|
|Market share of the Company’s domestic||mobile game business during the reporting period to actual sales revenue|
||means||
|mobile game business||of mobile game market indicated in the China Game Industry Report of|
|||2018|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Section II Company Profile and Key Financial Indicators
I. Company profile
|||||
|-|-|-|-|
|Stock abbreviation|Sanqi Interactive Entertainment|Stock code|002555|
|Place of Listing|Shenzhen Stock Exchange|||
|Company name in Chinese|芜湖顺荣三七互娱网络科技股份有限公司|||
|Company short name in||||
||三七互娱|||
|Chinese||||
|Company name in English (if|WUHU SHUNRONG SANQI INTERACTIVE ENTERTAINMENT NETWORK|||
|any)|TECHNOLOGY CO., LTD.|||
|Legal representative|Li Weiwei|||
|Registered address|Nanling County Economic Development Zone, Wuhu City, Anhui Province|||
|Post code of registered||||
||243000|||
|address||||
||11/F, Tower A1, Wanjiang Fortune Plaza, No. 88, Ruixiang Road, Jiujiang District, Wuhu City,|||
|Business address||||
||Anhui Province|||
|Zip Code of business address|241000|||
|Website|www.37.com|||
|Email|ir@37.com|||

Note: The Company held the 3rd Extraordinary General Meeting of Shareholders on April 8th, 2019, during which the Proposal on Changing the Name of the Company was reviewed and approved. It is proposed to change its Chinese name to“芜湖三七互娱网络科技集团股份有限公司” and its English name to “WUHU SANQI INTERACTIVE ENTERTAINMENT NETWORK TECHNOLOGY GROUP CO., LTD.”. The Company is currently completing relevant procedures for industrial and commercial registration of changes.
II. Contact person and contact information
||||
|-|-|-|
||Secretary of the Board of Directors|Securities Affairs Representative|
|Name|Ye Wei|Wang Sijie|
||11/F, Tower A1, Wanjiang Fortune Plaza,|11/F, Tower A1, Wanjiang Fortune Plaza,|
|Contact address|No. 88, Ruixiang Road, Jiujiang District,|No. 88, Ruixiang Road, Jiujiang District,|
||Wuhu City, Anhui Province|Wuhu City, Anhui Province|
|Tel.|0553-7653737|0553-7653737|
|Facsimile|0553-7653737|0553-7653737|
|Email|ir@37.com|ir@37.com|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report III. Information disclosure and designated place
|||
|-|-|
|Name of newspaper designated by the Company for|China Securities Journal, Securities Times, Shanghai Securities News,|
|information disclosure|Securities Daily|
|Website designated by CSRC for publication of||
||http://www.cninfo.com.cn|
|annual reports||
||11/F, Tower A1, Wanjiang Fortune Plaza, No. 88, Ruixiang Road, Jiujiang|
|Designated place of annual reports||
||District, Wuhu City, Anhui Province|

IV. Changes in Registration Information
|||
|-|-|
|Organization code|71392778-9|
||1. On March 2nd, 2011, the Company issued its IPO on SME Board of Shenzhen Stock|
||Exchange. The Company is mainly engaged in manufacturing and selling plastic fuel|
||tanks of automobiles. 2. On May 27th, 2014, the material asset restructuring of the|
||Company involving shares issuance, assets purchase with cash, supporting fund|
||raising, and related-party transactions was conditionally approved by the 22nd Session|
||in 2014 of the Merger, Acquisition and Reorganization Examination Committee of|
||Listed Companies of the CSRC. On December 2nd, 2014, the Company received from|
||CSRC the Reply Regarding Wuhu Shunrong Auto Parts Co., Ltd. Issuing Shares to Li|
||Weiwei and Others, Purchasing Assets, and Raising Supporting Funds. Through|
||purchase of 60% shares of Shanghai Sanqi Interactive Entertainment, the Company|
||developed its single main business of manufacturing automotive plastic fuel tanks into|
||dual main businesses of advanced manufacturing and modern cultural creativity. 3. On|
|Changes to main business after IPO (if|December 18th, 2015, the Company received the Reply Regarding Approval of|
|any)|Non-public Offering of Shares of Wuhu Shunrong Sanqi Interactive Entertainment|
||Network Technology Co., Ltd. (Z.J.X.K. [2015] No. 2941) from CSRC , thus being|
||approved to issue at most 165,289,300 new shares by non-public offering and the funds|
||raised would be used for purchasing 40% shares of Shanghai Sanqi Interactive|
||Entertainment. Shanghai Sanqi Interactive Entertainment has become a wholly-owned|
||subsidiary of the Company since 2016. 4. On October 8th, 2018, as approved by the|
||Company’s 4th general meeting of shareholders in 2018, 100% shares of Wuhu|
||Shunrong Auto Parts Co., Ltd. (hereinafter referred to as “Auto parts Company”) held|
||by the Company were transferred. On November 29th, 2018, the industrial and|
||commercial registration of changes for the equity transfer of Auto parts Company was|
||completed. Since then, the Company will no longer hold the equity of Auto parts|
||Company, and exclude the financial information of Auto parts Company from its|
||consolidated financial statements.|
|Changes to controlling shareholders (if||
||None|
|any)||

Note: On April 8th, 2019, the Company held the 3rd Extraordinary General Meeting of 2019, at which the Proposal on Advancing the
General Election of Non-independent Directors for the Fifth Board of Directors and the Proposal on Advancing the General Election
of Independent Directors for the Fifth Board of Directors were reviewed and approved. Seven directors nominated by Li Weiwei
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report were elected in the general election of Board of Directors and secured more than half of the seats on the Board of Directors. The voting rights held by Li Weiwei have had a material influence on the resolution of theCompany’s 3rd Extraordinary General Meeting of 2019, played a decisive role in electing more than half of the members of theCompany’s Board of Directors through this meeting, and effectively controlled the majority of the new Board of Directors. Therefore, the controlling shareholders and actual controllers of the Company were changed from Wu Xushun, Wu Weidong and Wu Weihong to Li Weiwei.
V. Other relevant information
Accounting Firm appointed by the Company
|||
|-|-|
|Name of the Accounting Firm|GP Certified Public Accountants Co., Ltd. (Special General Partnership)|
|Business address of Accounting||
||10/F, Guangdong Holdings Tower, No. 555, East Dongfeng Road, Yuexiu District, Guangzhou|
|Firm||
|Signature of Certified Public||
||Xiong Yongzhong & Yang Xinchun|
|Accountant||

Sponsors performing duty of continuous supervision employed by the Company during the reporting period
□Applicable√Not Applicable
Financial consultants performing duty of continuous supervision employed by the Company during the reporting period
√Applicable□Not Applicable
|||||
|-|-|-|-|
|Name of financial consultant|Business address|Name of representative|Continuous supervision period|
||GF Securities Headquarters,|||
||No. 26, Machang Road, Tianhe||May 9th, 2017 to December|
|GF Securities Co., Ltd.||Lyu Shaoyu & Tian Li||
||District, Guangzhou City,||31st, 2018|
||Guangdong Province|||

VI. Main accounting data and financial index
Does the Company need to retroactively adjust or restate accounting data of previous years?
□ Yes√ No
||||||
|-|-|-|-|-|
||||Increase or decrease of||
||2018|2017|current year against|2016|
||||previous year||
|Operating income (RMB)|7,632,679,668.47|6,188,828,116.75|23.33%|5,247,893,728.73|
|Net profits attributable to the listed|1,008,503,357.80|1,620,582,427.47|||
||||-37.77%|1,070,162,324.07|
|company shareholders (RMB)|||||
|Net profits attributable to listed|||||
|company shareholders after|||||
||474,909,138.00|1,048,251,240.84|-54.70%|1,010,769,599.36|
|deducting non-recurring profits and|||||
|losses (RMB)|||||
|Net cash flows from operating|1,954,433,620.84|1,831,895,928.30|||
||||6.69%|1,051,939,577.83|
|activities (RMB)|||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|Basic earning per share|0.47|0.76|||
||||-38.16%|0.51|
|(yuan/share)|||||
|Diluted earning per share|0.47|0.76|||
||||-38.16%|0.51|
|(yuan/share)|||||
|Weighted average rate of return on|||||
||16.59%|28.12%|-11.53%|26.56%|
|equity|||||
||||Increase or decrease||
||End of 2018|End of 2017|compared with the end|End of 2016|
||||of previous year||
|Total assets (RMB)|8,395,761,716.98|9,160,137,685.38|-8.34%|6,386,216,011.34|
|Net assets attributable to listed|5,972,675,405.86|7,016,770,210.85|||
||||-14.88%|4,523,665,282.04|
|company shareholders (RMB)|||||
|The Company uses the non-GAAP adjusted net profit attributable to common shareholders as a complementary indicator tomeasure its actual operating results. The non-GAAP adjusted net profit attributable to common shareholders is not an independentindicator, and its presentation does not imply replacement of the financial information prepared in accordance with therequirements of ASBE. The non-GAAP adjusted net profit attributable to common shareholders of the Company during the currentperiod was RMB 1,501,161,065.93, which was equal to the net profit attributable to common shareholders (RMB1,008,503,357.80) less the performance compensation due to mergers and acquisitions (RMB 446,156,583.73) and related goodwillimpairment (RMB 959,833,685.66), and after-tax income of accidental equity investment disposal (RMB 21,019,393.81). Inaddition, no equity incentive fee occurred during the reporting period. In 2017, the non-GAAP adjusted net profit attributable tocommon shareholders of the Company on the same basis was RMB 1,408,706,561.26. In this year, the non-GAAP adjusted netprofit attributable to common shareholders of the Company increased by 6.56% on a year-on-year basis.|||||

VII. Data differences due to different accounting standards in China and the rest of the world 1. Differences regarding to net profits and net assets between financial statements disclosed according to international standards and Chinese standards
□Applicable√Not Applicable
During the reporting period, there is no difference regarding to net profits and net assets between financial statements disclosed according to international standards and Chinese standards.
2. Differences regarding to net profits and net assets between financial statements disclosed according to standards of other countries and Chinese standards
□Applicable√Not Applicable
During the reporting period, there is no difference regarding to net profits and net assets between financial statements disclosed according to standards of other countries and Chinese standards
VIII. Quarterly Key financial indicators
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
||Q1|Q2|Q3|Q4|
|Operating income|1,661,159,158.79|1,641,336,987.98|2,232,318,268.92|2,097,865,252.78|
|Net profits attributable to the listed|||||
||410,093,180.04|391,285,768.19|416,969,559.37|-209,845,149.80|
|company shareholders|||||
|Net profit attributable to listed|||||
|company shareholders after|||||
||392,281,177.22|368,901,354.63|407,269,424.34|-693,542,818.19|
|deducting non-recurring profits and|||||
|losses|||||
|Net cash flows from operating|||||
||562,120,649.09|415,115,368.87|411,326,826.18|565,870,776.70|
|activities|||||

The net profit attributable to listed company shareholders in the fourth quarter was RMB -209,845,149.80, mainly due to theCompany’s provision of RMB 959,833,685.66 set aside for ShanghaiMokun’s goodwill impairment loss. The amount of the impairment loss significantly exceeded the performance compensation and operating profit;
In the fourth quarter, the net profit attributable to listed company shareholders after deducting non-recurring profits and losses was RMB -693,542,818.19, mainly because the Company recognized the compensation of RMB 453,859,535.09 arising from the failure of performance commitments by Shanghai Mokun as non-recurring gains and losses, and the corresponding goodwill impairment of RMB 959,833,685.66 as the recurring profits and losses.
Is there any significant difference between the above financial indicators or their sum and those in theCompany’s disclosed quarterly reports and semi-annual reports?
□ Yes√ No
IX. Non-recurring profits and losses and their amount
√Applicable□Not Applicable
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Amount in 2018|Amount in 2017|Amount in 2016|Description|
||56,085,328.82|||Mainly profit and loss fromthe disposal of long-termequity investment and fixedassets.|
|Profits or losses on disposal of|||||
|non-marketable asset, including offset||200,975,719.36|7,667,198.02||
|amount accrued for impairment provision|||||
|Government subsidy included in current|38,851,289.40|||Mainly government subsidyother than the refund ofvalue-added tax.|
|profit or loss (except those closely related to|||||
|enterprise operation and received based on||29,695,208.76|68,413,211.24||
|consolidated national standard quota or|||||
|quantitative)|||||
|Funds occupation fees collected from|17,307,831.49|||Mainly interest incomefrom borrowings.|
|non-financial enterprises and included in||15,607,133.62|||
|current profit or loss|||||
|Profit or loss of asset whose investment or|16,941,398.12|13,370,838.07|6,931,102.57|Mainly the income from|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|management is entrusted to others||||bank’s financial products.|
|Except effective hedging business relating to|-9,740,417.35|||Mainly the investmentincome from disposal ofavailable-for-sale financialassets.|
|normal operating business of the company,|||||
|profit or loss caused by change in the fair|||||
|value of held-for-trading financial asset and|||||
|||40,268,035.00|3,608,355.70||
|financial liabilities, and investment profit for|||||
|disposal of trading financial asset, trading|||||
|financial liabilities and available-for-sales|||||
|financial assets.|||||
|Other non-operating revenue and|2,945,610.96||||
|||1,251,440.52|-8,461,639.08||
|expenditure except the foregoing items|||||
||446,156,583.73|||Mainly includingperformance compensationincome (the Company’simpairment loss accruedagainst the goodwill ofShanghai Mokun Companyis RMB 959,833,685.66 andincluded in recurring profitand loss) and performancecompensation expenses.|
|Other items consistent with definition of|||||
|||296,624,143.44|||
|non-recurring profit and loss|||||
|Less: Affected amount of income taxes|33,857,857.74|36,707,567.83|10,764,962.34||
|Affected amount of minority interest|1,095,547.63||||
|||-11,246,235.69|8,000,541.40||
|income (after-tax)|||||
|Total|533,594,219.80|572,331,186.63|59,392,724.71|--|

As to non-recurring profits and losses determined based on the definition provided in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-Recurring Profit and Loss, and the recurring profits and losses determined from non-recurring profits and losses listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-Recurring Profit and Loss, reasoning shall be provided□Applicable√Not Applicable
During the reporting period, the Company recognized no non-recurring profit and loss defined and listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-Recurring Profit and Loss as recurring profit and loss.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Section III Business Overview
I. Main business in the reporting period
Does the Company need to comply with the disclosure requirements for special industries?
Yes
Software and IT services
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 - Listed Companies Engaged in Software and IT Services.
During the reporting period, the Company focused on cultural and creative businesses based on the development, distribution and operation of mobile games and browser games, and also development in cultural segments such as film and television, animation, music, education, social contact, VR, etc. TheCompany’s comprehensive strength ranks 23rd among the top 100 Internet companies in China, and 1st among A-share game companies due to steady promotion of development strategy of “perfection, diversification, platformization and globalization” around IPs.
During the reporting period, the Company gained an operating income of RMB 7.633 billion, with a year-on-year increase of23.33%; a total profit of RMB 1.219 billion, with a year-on-year decrease of36.38%; a net profit attributable to the listed company shareholders of RMB 1.009 billion, with a year-on-year decrease of37.77%; a non-GAAP net profit of RMB 1.501 billion, with a year-on-year increase of6.56%.
The main reasons for changes in the net profit attributable to the listed company shareholders include:
1) During the reporting period, the performance compensation income and goodwill impairment loss were recognized due to the under-performance of Shanghai Mokun, a subsidiary of the Company, therefore the net profit attributable to the listed company shareholders was decreased by RMB 506 million;
2) In 2017, the Company disposed of the equities of Shanghai Zheyuan Culture& Media Co., Ltd., Shanghai Aurora Network Technology Co., Ltd. and other companies, and recognized the after-tax investment income of RMB 200 million. No significant equity disposal income existed in 2018;
3) In addition to the above-mentioned affects, theCompany’s non-GAAP net profit also increased by6.56%, and the main reason for driving performance growth is theCompany’s continued development in mobile games.
1. Changes in industry-related economic situation and their impacts on the Company
1) According to the China Game Industry Report of 2018 jointly released by China Game Publishing Committee (GPC) and Gamma Data (CNG), the actual sales revenue of the Chinese game market reached RMB 214.44 billion in 2018 with a year-on-year increase of5.3%, and the number of Chinese game users reached 626 million in 2018 with an year-on-year increase of7.3%. The growth rate of Chinese game users exceeded that of 2014-2017. The actual sales revenue of mobile games was RMB 133.96 billion with a year-on-year increase of15.4%, and increased to62.5% of total sales revenue of the Chinese game market on a year-on-year basis; and the number of Chinese mobile game users was 605 million, with a year-on-year increase of9.2% higher than that of 2017. The mobile game market remains the main driver of overall growth in the game market.
During the reporting period, theCompany’s transaction amount of domestic mobile game business totaled RMB 8.683 billion, with a year-on-year increase of85% higher than the average industry level. During the reporting period, the market share of theCompany’s domestic mobile game business was6.48%.
2) On the one hand, the growth rate of the game industry is declining and the competition among participants in the game industry is
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report becoming increasingly fierce. On the other hand, the spiritual and cultural products available for selection are increasingly enriched, and game users require more high-quality spiritual and cultural products, and the competition between different cultural consumer segments is also developing. Providing high-quality products and valuable user services is an effective way to increase
competitiveness.
During the reporting period, the Company increasedR&D investments, enhanced its output capability of high-quality games, and strengthened cooperation withR&D vendors to expand the reserve of high-quality games, as well as further promoted the user value through three-dimensional marketing methods and perfect operational services, thus further exploiting the mode of “integration ofR&D and operation” to help the Company gain a greater competitive advantage.
2. Changes in industrial policy environment and their impacts on the Company
In May 2017, General Office of the CPC Central Committee and the General Office of the State Council issued the Outline of the National Plan for Cultural Development Reform in the 13th Five-Year Plan Period, which required “optimizing the layout of cultural industries and accelerating the development of emerging industries such as online audiovisual services, mobile multimedia, digital publishing, animation and games, creative design, 3D and giant screen movies”, and supporting the development of the game industry.
During the reporting period, the Company actively responded to relevant requirements of industrial development, increased investments in high-quality games and innovative gameplay settings, and vigorously protected intellectual property rights to ensure compliant operations.
In December 2018, the General Office of the State Council issued the Regulations on Further Supporting the Development of Cultural Enterprises, which explicitly increased the national supports for key enterprises and projects for national cultural exports and strengthened the construction of national cultural export bases.
Sanqi Interactive Entertainment actively responds to the national “Go Out policy” for cultural industries, and strives to promote Chinese cultural services to the rest of world. 37GAMES will further develop its first-mover advantage in overseas markets, and rely on its advanced gameR&D and localized marketing capabilities to continuously expand the scale of overseas business and create more foreign currency earnings, thus escorting the exports of cultural industries and helping Chinese cultural and entertainment enterprises to enhance their cultural confidence.
3. Main businesses, main products and business models of the Company
During the reporting period, theCompany’s main businesses include the development, distribution and operation of mobile games and browser games. The operating modes of theCompany’s mobile games and browser games mainly include independent operation and third-party joint operation.
Under the independent operation mode, the Company obtains the operation rights of game products through independentR&D or agencies, 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 game; providing unified management services for online promotion, online customer service and top-up payment; and iteratively updating game products 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 to jointly operate games. The third-party game operators are responsible for operation and promotion of respective channels and management of recharge and charge system, while the Company provides technical support services along with game developers.
During the reporting period, the Company disposed of the manufacturing and sales business of automotive plastic fuel tanks. Apart from that, there is no significant change to theCompany’s main businesses, main products and business models, and major performance drivers.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report II. Material changes in major assets
1. Material changes in major assets
|||
|-|-|
|Major assets|Material changes|
||The balance of equity assets at the end of the period increased by RMB 415 million compared to the opening|
||balance, mainly due to the new investment into the equity of Sanqi Guangzheng (Guangzhou) Cultural|
||Technology Investment Partnership (Limited Partnership), Shenzhen Zhonghui Television Culture|
|Equity assets|Communication Co., Ltd., Shanghai Fenghua Qiushi Culture Media Co., Ltd., New Cues (Beijing) Television|
||Investment Co., Ltd. and other companies during the reporting period. Refer to Note 8 of the consolidated|
||financial statements, available-for-sale financial assets and Section 9 Long-term Equity Investments for more|
||details.|
||The balance of fixed assets at the end of the period decreased by RMB 256 million compared to the opening|
|Fixed assets||
||balance, mainly due to the disposal of Shunrong Auto Parts during the reporting period.|
|Construction in|The balance of construction in process at the end of the period decreased by RMB 51 million compared to the|
|progress|opening balance, mainly due to the disposal of Shunrong Auto Parts during the reporting period.|
||At the end of the period, the balance of notes receivable and accounts receivable increased by RMB 358|
|Notes receivable and||
||million compared to the opening balance, mainly due to the increase in operating income in the fourth quarter|
|accounts receivable||
||of the current year compared with the same period of the previous year.|
||At the end of the period, the balance of other current assets decreased by RMB 235 million compared to the|
|Other current assets||
||opening balance, mainly due to the decrease in performance compensation receivables.|
||At the end of the period, the balance of other receivables increased by RMB 404 million compared to the|
|Other receivables|opening balance, mainly due to the increase in the amount of equity receivable from the disposal of Shunrong|
||Auto Parts during the reporting period.|
||The balance of goodwill at the end of the period decreased by RMB 962 million compared to the opening|
|Goodwill|balance, mainly due to provision made by the Company for impairment on the goodwill formed by the merger|
||resulting from Shanghai Mokun’s failure to reach the expected performance in 2018.|
||The balance of other non-current assets at the end of the period decreased by RMB 113 million compared to|
|Other non-current|the opening balance, mainly due to the recognition of prepaid equity investments to Shenzhen Zhonghui|
|assets|Television Culture Communication Co., Ltd. as available-for-sale financial assets and decreases in|
||engineering equipment prepayment arising from the disposal of Shunrong Auto Parts.|

2. Main foreign assets
□Applicable√Not Applicable
III. Analysis of core competitiveness
Does the Company need to comply with the disclosure requirements for special industries?
Yes
Software and IT services
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report The Company has steadily promoted the development strategy of “perfection, diversification, platformization and globalization” around IPs to form the following core competitiveness:
1. Industry-leadingR&D strength
Since the launch of the first self-developed product in 2014, the Company has launched nearly 20 self-developed products, of which more than half of the products has a monthly transaction amount exceeding RMB 100 million. During the reporting period, a number of self-developed quality games, such asYong Heng Ji Yuan(永恒纪元) , Chuan Qi Ba Ye(传奇霸业), andSwords of Archangels(大天使之剑) , have achieved steady transaction amount in the markets at which these games have been launched for more than one year. TheCompany’s self-developed products are characterized by high output, high success rate and long period, indicating that theCompany’sR&D strength is at the leading level in the industry.
The “Perfection”R&D strategy runs through the entire life cycle of theCompany’s self-developed products: Before the launch of games, the Company carefully worked out details of product planning, art quality, music effects, etc.; after the launch of games, the Company continued to invest in product iteration, process optimization, user experience and other aspects to ensure the high transaction amount and long period of games.
The Company has always attached great importance toR&D investments. During the reporting period, the Company incurred anR&D expenditure of RMB 540 million, with a year-on-year increase of22.94%. Through continuousR&D investments, the Company has accumulated a large number of core technologies: A series of high-performance and stable game engines and
frameworks are independently developed by the Company to support the development of highly playable large-scale online games of high performance and quality, which provide an important guarantee for the Company to continuously launch high-quality games. As an important tool to enhance the product experience, the Company analyzes its game data through self-developed big data analysis system, and uses the analysis results to provide accurate numerical reference for design of new products and iterative optimization of previous products, thus improving theCompany’s insights and capacity for process optimization in terms of product development. TheCompany’s product research and development has always been market-oriented. The Company adheres to the principle of sustainable development, constantly breaks through itself, and also maintains its advantages in the ARPG category while at the same time making initial attempts in new areas. The leisure sports game Chao Neng Qiuqiu (workingtitle)（超能球球（暂定名））, the turn-based game Mobile GameAOD（手游项目AOD） and the simulation business game CodeDG（代号DG）developed during the reporting period are expected to be launched in 2019. As of the end of the reporting period, the Company was carrying out market researches on other types of games such as SLG. In 2019, the Company will continue to make diversified innovation in product types, themes, art performance, gameplay settings, etc.
As of the issuance date of this report, the Company was developing a browser game of MU X (workingtitle)(奇迹X（暂定名）), and mobile games such as Chuan QiNB（传奇NB）, CodeYZD（代号YZD）, Chuan QiS（传奇S）, CodeDG（代号DG）, Chao Neng Qiuqiu (workingtitle)（超能球球（暂定名））, An Hei HouYi（暗黑后裔）, Jing Ling ShengDian（精灵盛典） and Mobile GameAOD（手游项目AOD）. With its accumulated experiences and continuous innovation, the Company is expected to continue to produce long-period quality games that surpass theYong Heng Ji Yuan(永恒纪元) , Chuan Qi Ba Ye(传奇霸业), and Swords of Archangels(大天使之剑) .
2. Excellent distribution strength
During the reporting period, the market share of theCompany’s mobile game distribution business in China increased to6.48%; theCompany’s browser game business in China also continued to maintain its leading position; while maintaining market advantages inChina’s Hong Kong, Macao, Taiwan and Southeast Asia, the Company has also made breakthroughs in the Japanese and South Korean markets. The Company actively adheres to the “perfection and diversification” business strategy and promotes its own business capacity to a new height through continuous innovation:
1) The promotion of “perfection” strategy is reflected in product supply before the launch of games and operation optimization after
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report the launch.
In terms of product supply, the Company has accumulated abundant product resources, established a rigorous evaluation process and evaluation criteria for product introduction, and also utilized its own advantages in user data and numerical experiences to work out products along with game developers, thus ensuring a better quality of games before their launch.
In terms of operation optimization, the Company has strong capabilities for operation and optimization in numerical management, process optimization, event planning, etc. After the launch of games, the Company continues to improve the quality of games, attract users through better contents, extend the product life cycle, and accumulate higher income.
2) The “diversification” strategy has achieved good results in multiple business dimensions such as products, promotion and services. In terms of game products, the Company on the one hand brings a diversified layout to the product supply side through independent research and development, investment in capital and cooperation with many largeR&D manufacturers such as Tencent, NetEase, Perfect World, Century Huatong Group, etc.; on the other hand, the Company has also made diversified attempts in product categories and product themes, and achieved good results. Since 2018, the Company has successively launched a series of game products with different categories and themes and excellent performances in the Chinese mobile game market, such as Gui Yu Mi Cheng, Tu Long Po Xiao, Dou Luo Da Lu H5, etc. The successful launch of these games indicates that theCompany’s multi-theme and multi-category product matrix has begun to take shape and the Company has also accumulated preliminary success experiences on the way to diversified development.
In terms of promotion, the Company adopts a multi-dimensional approach of “three-dimensional marketing+ precise delivery” to create a new idea for systemic flow management. In terms of three-dimensional marketing, the Company tries to meet the different cultural consumption needs of users from different perspectives by choosing spokespersons who match the product connotation, promoting games through high-quality micro-movie-style promotional materials, carrying out cross-border cooperation amongYong Heng Ji Yuan(永恒纪元) , Xian Ling JueXing（仙灵觉醒）, and finance, catering and FMCG industries, and implanting public welfare activities into game products. In terms of precise delivery, the Company analyzes big data such as “user portrait” and “user model” with the user resources accumulated over the years to accurately deliver advertisements to targeted user groups and improve the advertising effect.
In terms of services, the Company is committed to providing game users with comprehensive and detailed long-term services. Through an improved user account and service system, and an experienced service team, the Company uses abundant product supplies to provide users with comprehensive game products and one-stop services to continuously improve user satisfaction, activation and retention, and also to extend the product life cycle.
3. Advantage of “integration ofR&D and operation” mode
The “integration ofR&D and operation” mode of the Company is conducive to making full use of resources and creating quality products from a long-term perspective. On the one hand, the Company can ensure the stable supply of quality products to support the operation development through strongR&D strengths. At the same time, theR&D team can utilize the feedback of the operation department to optimize products and extend the product life cycle; on the other hand, in the early stages of productR&D, the operation team can provide advices and suggestions to theR&D team with years of experiences and keen market insights.
Additionally, in the early stage of commercialization of products, the operation team can also support theR&D team to conduct a large number of product tests, and utilize the promotion and marketing strategies to guide theR&D team to adjust the iterative updates of product activities and improve the product success rate.
4. Team strengths
The Company has been deeply involved in the field of cultural and creative industries for many years. Its core management team consists of experienced employees who have strong and forward-looking capabilities for strategic layout, while the core team consists of highly skilledR&D personnel, creative operators, and highly efficient managers. The Company has always adhered to the marathon-style entrepreneurial spirit, and constantly caught up to surpass the industry leader.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Section V Discussion and Analysis of Operation Status
I. Overview
|||||
|-|-|-|-|
|Key performance indicators|2018|2017|Year-on-year change|
|Operating income (RMB 100 million)|76.33|61.89|23.33%|
|Total profit (RMB 100 million)|12.19|19.17|-36.38%|
|Net profits attributable to the listed company shareholders(RMB 100 million)|10.09|16.21|-37.77%|
|Non-GAAP net profit (RMB 100 million)|15.01|14.09|6.56%|
|Net cash flows from operating activities (RMB 100 million)|19.54|18.32|6.69%|
|Basic earning per share (yuan/share)|0.47|0.76|-38.16%|
|Weighted average rate of return on equity|16.59%|28.12%|-11.53%|

 During the reporting period, the Company has steadily promoted the development strategy of “perfection, diversification, platformization and globalization” around IPs, making its comprehensive strength in the forefront among Chinese competitors. During the reporting period, the Company achieved an operating income of RMB 7.633 billion, with a year-on-year increase of23.33%, and the growth of distribution andR&D for mobile games was the main driver of overall income growth during the period. The Company achieved a total profit of RMB 1.219 billion, with a year-on-year decrease of36.38%; and a net profit attributable to the listed company shareholders of RMB 1.009 billion, with a year-on-year decrease of37.77%. The main reasons for the year-on-year decline in net profit attributable to the listed company shareholders are stated as below: 1) During the reporting period, the performance compensation income and goodwill impairment loss were recognized due to the under-performance of Shanghai Mokun, a subsidiary of the Company, therefore the net profit attributable to shareholders was decreased by RMB 506 million; 2) In 2017, the Company disposed of the equities of Shanghai Zheyuan Culture& Media Co., Ltd., Shanghai Aurora Network Technology Co., Ltd. and other companies, and recognized the after-tax investment income of RMB 200 million. No significant equity disposal income existed in 2018;
The Company uses non-GAAP net profit as a complementary indicator to measure actual operating results. TheCompany’s non-GAAP net profit for the period was RMB 1.501 billion, a year-on-year increase of6.56%. The main driver for profit growth was mainly theCompany’s continued growth in mobile games.
(I) Mobile game business
During the reporting period, the Company achieved an operating income of RMB 5,582 million and a gross profit of RMB 4,518 million from mobile games, a year-on-year increase of69.99% and79.89% respectively. TheCompany’s business revenue from andR&D investment into mobile games continue to increase, and the mobile game business maintains the leading position in domestic and overseas markets.
1. Release of mobile games
(1) Domestic market
The Company continued to play a vital role in domestic mobile game publishing market. During the reporting period, the market share of theCompany’s mobile game business in China increased to6.48%. During the reporting period, the Company
operated more than 5 products with a monthly gross billing of more than RMB 100 million, with the highest exceeding RMB 930
million, the total number of new registered users exceeding 110 million, and the greatest number of monthly active users exceeding
20 million.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report During the reporting period, the Company, based on its capability of operating different games, adjusted its publishing strategy from simple “ARPG+ SLG” to “diversification”. The Company applies diversification strategies at various levels such as products, promotion and services in a creative manner.During the reporting period, the Company formed a broad partnership with well-known internal and external firms such as Aurora Network, Tencent, NetEase, Perfect World, Century Huatong Group (CHT) and completed a diversified product layout. The product matrix includes ARPG, MMO, CARD, SLG and other types, covering a wide range of themes such as magic, western fantasy, eastern fantasy, adventure, fairy tales and nijigen. In 2018, more than 20 games of different types and themes were launched. As of the issuance date of this report, the Company had obtained the exclusive right to operate 9 mobile games, including Sword andRebirth（剑与轮回）, Zhu Yu Di XiaCheng（猪与地下城）, Xian Ling 2 (workingtitle)（仙灵2（暂定名））, and rich reserves of independently-developed games such as Chao Neng Qiu Qiu (workingtitle)（超能球球（暂定名））, CodeYZD(代号YZD), Chuan QiS（传奇S）and Jing Ling ShengDian（精灵盛典）.
In the meantime, relying on its in-depth understanding of user demands, the Company created a new way of systemic traffic operation, and adopted a diversified mode of “multi-channel marketing+ targeted advertising+ long-term service” to provide users with comprehensive high-quality services for the whole process from their initial contact with the product to play the game and meet the deeper spiritual and cultural needs of users.
(2) Overseas market
During the reporting period, the Company further executed global strategies, and made breakthroughs in newly developed business areas such as Japan and Korea while maintaining competitiveness in advantageous areas such asChina’s Hong Kong, Macao, Taiwan and Southeast Asia. As of the end of the reporting period, the Company maintained good relations with many local manufacturers in Hong Kong, Macao and Taiwan. 37GAMES, theCompany’s overseas brand, covered more than 200 countries, and operated nearly 80 mobile games around the world.
During the reporting period, the Company made breakthroughs in having games published in Japan and South Korea:Yong Heng Ji Yuan(永恒纪元) , released in Japan in late June, achieved the highest monthly gross billing of over 10 million; the new game운명:무신의후예 achieved a gross billing of over 10 million in Korea, ranked among Top 10 best-selling games.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report The Company also maintained its advantageous position inChina’s Hong Kong, Macao, Taiwan and Southeast Asia: During the reporting period, the self-developed product Swords of
Archangels(大天使之剑) H5 was launched inChina’s
Hong Kong, Macao, Taiwan and Vietnam, and rose to
the top of bestselling games in merely two months after
its launching; Clans ofIntrigue（楚留香）, an MMORPG
launched in the reporting period, ranked first among
best-selling games in terms of downloads only three
days after launched inChina’s Taiwan market, with the
maximum daily installations exceeding 150,000,
renewing the game downloading record on the day in Taiwan. Gui Yu MiCheng（鬼语迷城） launched at the end of the reporting period was ranked 2nd in terms of best-selling games and 1st in terms of downloads in the first month when it was released inChina’s Taiwan.
During the reporting period, the Company constantly updated and iterated its flagship product,Yong Heng Ji Yuan(永恒纪元) , keeping a stable gross billing inChina’s Hong Kong, Macao, Taiwan, Southeast Asia, Europe, America, Korea and other regional markets.
As of the issuance date of this report, the Company has reserved many global products, including Western Magic SLG game CodeMH（代号MH）, SLG game CodeZSJ（代号ZSJ）to gain a position in the global SLG market; in addition, the following games were introduced to the Japanese market: card game SNKオールスター, female game Tian EZuo（天鹅座）, nijigen game Mo Wang JiHua（魔王计划） and others; the following games were introduced to the Korean market: nijigen game Dengeki Bunko Crossing Void(电击文库：零境交错), SLG game Zhen Long BaYe（真龙霸业）, ARPG game An Hei HouYi（暗黑后裔） and others; in addition, there are a wide variety of games, including Shi Hun: Long Yue Chuan Shuo(侍魂：胧月传说), Dou Luo Da Lu（斗罗大陆H5）, Xi Wang M(希望M), which will be brought to overseas market in 2019 to help the Company further explore overseas markets.
2. Research and development of mobile games
During the reporting period, the Company registered a year-on-year increase of61.05% in the gross billing of mobile gameR&D business, and the increased proportion of the income from self-developed products enhanced theCompany’s profitability. The continuous investment into mobile gameR&D is an important part of theCompany’s “quality and diversified” business strategy. The increasedR&D investment mainly focuses on improvement of product quality and exploration of new product categories.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report To improve product quality, the Company is committed to make better the product engines, and the artistic and sound quality of products to meet the user demand in experiencing high-quality games at technical level; it is dedicated to game innovation and process optimization to meet user demand in fun and smooth experience at the planning level. High-quality development and high-frequency iterations made new products attractive to users, and allowed most self-developed products to maintain high gross billing for a long time. Since 2018, more than 10 self-developed mobile games have been launched, among which Dou Luo Da LuH5（斗罗大陆H5）and Yi Dao ChuanShi（一刀传世） and other games achieved a monthly gross billing of over RMB 100 million. The Company updated and iterated several long-cycled popular games that have been launched. For the Swords of Archangels(大天使之剑) H5, the Company follows the long-term operation concept, and makes it an industry-standard H5 product through design and development of innovative gameplay to satisfy user demands. For Yong Heng Ji Yuan(永恒纪元) , theCompany’sR&D team keeps updating and iterating the cross-server system in combination with the SLG game mode, to enhance the social interaction between players, continuously optimize the version content, and enhance the game experience of new and old players.
In the exploration of new product categories, the Company set foot onR&D of casual sports games, turn-based games and simulation and education games during the reporting period, and conducted preliminary research on the development of other categories such as SLG. As of the issuance date of this report, Chao Neng Qiu Qiu (workingtitle)（超能球球（暂定名））, a casual sports game developed by the Company, was under test and is expected to be launched in 2019. In the future, the goal of the Company is to become a first-rate game developer capable of providing players with various game products, focusing on high-quality content and utilizing its own advantages in anticipating user needs. It will apply core technologies to further explore new themes, gameplay and categories, and to actively expand its product lines.
As of the end of the reporting period, the Company was developing 12 mobile games, including Chuan QiNB（传奇NB）, CodeYZD（代号YZD）, ChuanqiS（传奇S）, CodeDG（代号DG）, Chao Neng Qiu Qiu (workingtitle)（超能球球（暂定名））, An Hei HouYi（暗黑后裔）, Jing Ling ShengDian（精灵盛典） and Mobile GameAOD（手游项目AOD）.
(II) Browser games
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report More than 36,000 new servers were opened in 2018 in the domestic market, topping the ranking list of operation platforms in term of server opening (source of data from 9k9k). During the reporting period, the operating from the browser game business reached RMB 1,646 million, a slight drop year on year, which was mainly due tousers’ shift to mobile clients and reduction in browser game products. The Company improved user adhesiveness and stabilized the product life cycle through refined operation of major high-quality games, while strengthening cooperation with domestic top browser game developers through strategic investment and business cooperation. A series of excellent games were launched during the reporting period, including The Rise ofTaichi（太极崛起）, the browser game Zhen MoQu（镇魔曲网页版）and MieShen（灭神）, which helps further stabilize the operating income. At the same time, the Company continued its efforts to develop browser games. MU X (workingtitle)(奇迹X（暂定名）), which is under development, and The Legendary Swordsman (workingtitle)（笑傲江湖（暂定名））, the game to be operated by the Company as an agent, are expected to be launched in 2019.
(III) Other cultural and creative businesses
During the reporting period, the Company invested into other fast-growing cultural and creative segments, while maintaining the high-speed growth of its core business, and deeply explored the opportunity to extend film and television, animation, music, literature, VR/AR, Internet health and other fields with a key focus centering a strategy on quality content, to create a brand that can provide quality content for all ages. In addition to maintaining the existing layout in film, animation, music and other fields, the Company made arrangements for new cultural and creative segments by investing in Internet sports (Wake Yoga), children's education (Miaocode, KaDa Story), youth cultural communication (Eomchat), talent agent (Original Plan) and IP incubation (Jinhai Shiyi), to provide high-quality content for all ages and segments.
Focusing on main game business and traffic operation advantages, combined with the previous layout of VR and AR, the Company will empower and coordinate strategically with the invested companies, and prepare for the upcoming 5G era, offering more high-quality content with new experience, create a one-stop cultural and entertainment ecosystem, and become the most trusted cultural brand ofChina’s younger generation.
(IV) IP strategy
It’s a long-term development goal of the Company to create quality content and establish a quality content brand. Based on this, the Company continues to explore high-quality IP for development of quality cultural products including games, relying on its own advantages. During the reporting period, the Company had three new IP reserves: AstroBoy（阿童木）, SealOnline（希望OL） and The AncientCentury（上古世纪）, and one IP cooperation project Dou Luo Da LuH5（斗罗大陆H5）.As of the end of the reporting period, the IPs of theCompany’s reserves covered different segments, including games, animation, literature, film and television. The cooperation projects Dou Luo Da LuH5（斗罗大陆H5）, Yi Dao ChuanShi（一刀传世） which was adapted from ChuanQi（传奇）, and Seal Online had been launched as of the reporting date, all of which achieved a high gross billing. As of the issuance date of this report, the web project of Miracle MU MU X (workingtitle)(奇迹X（暂定名）) and the mobile game Jing Ling Shen Dian(精灵盛典）was at the late development stage, and are expected to be launched by 2019. Relying on its excellent IP strategy, the Company will continue to build its cultural and creative strategy system, satisfy the diversified demands of users for entertainment, and exploit
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report the value extension space of IP in film and television, game, animation and comic, music and VR in depth.
II. Analysis of main business
1. General
See “I. Overview” in “Discussion and Analysis of Operation Status” for related content.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2. Income and cost
(1) Composition of operating income
Unit: RMB
|||||||
|-|-|-|-|-|-|
||2018||2017|||
||||||Year-on-year increase/decrease|
||Amount|Proportion of operating revenue|Amount|Proportion of operating revenue||
|Total operating income|7,632,679,668.47|100%|6,188,828,116.75|100%|23.33%|
|By industry||||||
|Online game industry|7,247,460,500.55|94.95%|5,628,616,443.76|90.95%|28.76%|
|Automobile parts industry|385,219,167.92|5.05%|560,211,672.99|9.05%|-31.24%|
|By products||||||
|Browser games|1,645,957,054.96|21.56%|2,298,860,026.39|37.15%|-28.40%|
|Mobile games|5,581,764,190.33|73.13%|3,283,622,990.10|53.06%|69.99%|
|Automobile parts|385,219,167.92|5.05%|560,211,672.99|9.05%|-31.24%|
|Others|19,739,255.26|0.26%|46,133,427.27|0.74%|-57.21%|
|By regions||||||
|Domestic|6,705,946,316.22|87.86%|5,269,286,525.60|85.14%|27.26%|
|Overseas|926,733,352.25|12.14%|919,541,591.15|14.86%|0.78%|

 The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 - Listed Companies Engaged in Software and IT Services. Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||2018||||2017||||
||Q1|Q2|Q3|Q4|Q1|Q2|Q3|Q4|
|Operating income|1,661,159,158.79|1,641,336,987.98|2,232,318,268.92|2,097,865,252.78|1,618,738,028.5|1 1,460,690,875.99|1,384,968,829.74|1,724,430,382.51|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Net profits attributable to|||||||||
|the listed company|410,093,180.04|391,285,768.19|416,969,559.37|-209,845,149.80|433,033,150.06|417,517,368.31|360,788,807.71|409,243,101.39|
|shareholders|||||||||

Explain the reasons for seasonal (or periodic) characteristics of theCompany’s business and fluctuation risks
The Company does not have seasonal or periodic characteristics in its business.
The net profit attributable to listed company shareholders in the fourth quarter was RMB -209,845,149.80, mainly due to theCompany’s provision of RMB 959,833,685.66 set aside for ShanghaiMokun’s goodwill impairment loss. The amount of the impairment loss significantly exceeded the performance compensation and operating profit.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Industries, products or regions that account for over10% of theCompany’s operating income or operating profit
√Applicable□Not Applicable
Does the Company need to comply with the disclosure requirements for special industries?
Yes
Software and IT services
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 - Listed Companies Engaged in Software and IT Services.
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||Year-to-year|Year-to-year||
|||||||Year-to-year|
||||Gross profit|increase/decrease|increase/decrease||
||Operating income|Operating cost||||increase/decrease|
||||margin|of the operating|of the operating||
|||||||of gross profit|
|||||income|cost||
|Industry of clients|||||||
|Online game|||||||
||7,247,460,500.55|1,525,929,424.69|78.95%|28.76%|-0.52%|6.20%|
|industry|||||||
|Automobile parts|||||||
||385,219,167.92|285,491,515.41|25.89%|-31.24%|-31.10%|-0.15%|
|industry|||||||
|By products|||||||
|Browser games|1,645,957,054.96|462,583,409.98|71.90%|-28.40%|-39.29%|5.04%|
|Mobile games|5,581,764,190.33|1,063,346,014.71|80.95%|69.99%|37.76%|4.46%|
|Automobile parts|385,219,167.92|285,491,515.41|25.89%|-31.24%|-31.10%|-0.15%|
|Others|19,739,255.26|0.00|100.00%|-57.21%|0.00%|0.00%|
|By regions|||||||
|Domestic|6,705,946,316.22|1,565,632,670.32|76.65%|27.26%|-10.31%|9.78%|
|Overseas|926,733,352.25|245,788,269.78|73.48%|0.78%|21.36%|-4.49%|

 For change of statistical caliber for main business data during the reporting period, the Company adjusted the main business data according to year-end statistical caliber
□Applicable√Not Applicable
(3) Whether the Company has goods sales revenue higher than service revenue
□ Yes√ No
(4) Performance of the major sales contracts signed by the Company as of the reporting period
□Applicable√Not Applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (5) Composition of operating cost
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 - Listed Companies Engaged in Software and IT Services.
Composition of main business cost
Unit: RMB
|||||||
|-|-|-|-|-|-|
||Reporting period||Amount of previous year|||
||||||Year-on-year|
|Cost composition||Proportion in||Proportion in||
||Amount||Amount||increase/decrease|
|||operating cost||operating cost||
|Shared revenue from||||||
||1,404,939,973.86|77.56%|1,423,838,815.22|73.08%|-1.33%|
|games||||||
|Cost of servers|63,107,660.73|3.48%|54,854,972.77|2.82%|15.04%|
|Amortization of||||||
||37,821,137.65|2.09%|54,778,687.09|2.81%|-30.96%|
|copyright money||||||
|Production cost|20,060,652.45|1.11%|371,026.02|0.02%|5,306.80%|
|Direct materials cost|220,361,708.66|12.17%|337,461,925.72|17.32%|-34.70%|
|Direct labor||||||
||14,430,238.31|0.80%|17,028,724.64|0.87%|-15.26%|
|expenses||||||
|Manufacturing||||||
||50,699,568.44|2.80%|59,863,088.30|3.07%|-15.31%|
|expenses||||||
|Total cost|1,811,420,940.10|100.00%|1,948,197,239.76|100.00%|-7.02%|

 Industry category
Industry category
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||2018||2017|||
|||||||Year-on-year|
|Industry category|Item||Proportion in||Proportion in||
|||Amount||Amount||increase/decrease|
||||operating cost||operating cost||
|Online game|Shared revenue||||||
|||1,404,939,973.86|77.56%|1,423,838,815.22|73.08%|-1.33%|
|industry|from games||||||
|Online game|||||||
||Cost of servers|63,107,660.73|3.48%|54,854,972.77|2.82%|15.04%|
|industry|||||||
|Online game|Amortization of||||||
|||37,821,137.65|2.09%|54,778,687.09|2.81%|-30.96%|
|industry|copyright money||||||
|Online game|||||||
||Production cost|20,060,652.45|1.11%|371,026.02|0.02%|5,306.80%|
|industry|||||||
|Automobile parts|Direct materials||||||
|||220,361,708.66|12.17%|337,461,925.72|17.32%|-34.70%|
|industry|cost||||||
|Automobile parts|Direct labor|14,430,238.31|0.80%|17,028,724.64|0.87%|-15.26%|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|industry|expenses||||||
|Automobile parts|Manufacturing||||||
|||50,699,568.44|2.80%|59,863,088.30|3.07%|-15.31%|
|industry|expenses||||||

Description
None
(6) Whether the consolidation scope changes in the reporting period
√Yes□ No
See Note III. Consolidation scope change under Section V for details
(7) Significant changes or adjustments to businesses, products or services during the reporting period√Applicable□Not Applicable
During the reporting period, the Company disposed of the manufacturing and sales business of automotive plastic fuel tanks. Apart from that, there is no significant change to theCompany’s main businesses, main products and business models, and major
performance drivers.
(8) Major sales customers and major suppliers
Major sales customers
|||
|-|-|
|Total sales revenue of top 5 customers (RMB)|2,557,588,746.03|
|Proportion of total sales revenue of top 5 customers||
||33.51%|
|against the total sales revenue||
|Proportion of related parties’ sales among the sales of top||
||0.00%|
|5 customers against total annual sales||

Profile of top 5 customers
|||||
|-|-|-|-|
|S/N|Customer name|Sales (RMB)|Proportion to annual total sales revenue|
|1|No. 1|1,129,853,810.91|14.80%|
|2|No. 2|684,819,228.17|8.97%|
|3|No. 3|359,505,079.95|4.71%|
|4|No. 4|208,935,938.85|2.74%|
|5|No. 5|174,474,688.15|2.29%|
|Total|--|2,557,588,746.03|33.51%|

 Description of majorcustomers’ other situation
□Applicable√Not Applicable
Major suppliers of the Company
|||
|-|-|
|Total purchase amount of top five suppliers (RMB)|565,682,491.87|
|Proportion of total purchase amount of top 5 suppliers|31.83%|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||
|-|-|
|against the total purchase amount||
|Proportion of related parties’ total purchase among the||
|purchase amount of top 5 suppliers against the total|0.00%|
|purchase amount||

Profiles of top 5 suppliers
|||||
|-|-|-|-|
||||Proportion in annual total purchase|
|S/N|Supplier Name|Purchasing amount (RMB)||
||||amount|
|1|No. 1|222,561,545.35|12.52%|
|2|No. 2|123,298,738.37|6.94%|
|3|No. 3|88,873,339.60|5.00%|
|4|No. 4|81,570,946.86|4.59%|
|5|No. 5|49,377,921.69|2.78%|
|Total|--|565,682,491.87|31.83%|

 Description of majorcustomers’ other situation
□Applicable√Not Applicable
3. Expenses
Unit: RMB
||||||
|-|-|-|-|-|
||||Year-on-year||
||2018|2017|increase/decr|Explanation|
||||ease||
||3,347,261,308.33|1,908,207,466.32||This was mainly due to a huge year-on-year increase in Internet traffic|
|||||expenses of the Company’s mobile game business during the reporting|
|||||period. The increase in mobile game business expenses was mainly due|
|||||to the increase in the number of registered users. The number of new|
|||||users in the reporting period exceeded 110 million. The main reasons|
|||||were: (1) During the reporting period, games such as Gui Yu Mi Cheng,|
|||||Swords of Archangels H5, Xian Ling Jue Xing, and Tu Long Po Xiao|
|Selling and|||||
|||||were in the main promotion period; (2) Gui Yu Mi Cheng, Xian Ling Jue|
|distribution|||75.41%||
|||||Xing and other products of new themes attracted users from more|
|expenses|||||
|||||market segments, which enlarged the Company’s customer acquisition|
|||||scope, and promoted the new theme products. Products of new themes|
|||||were effectively promoted. During the reporting period, games such as|
|||||Gui Yu Mi Cheng, Swords of Archangels H5, Xian Ling Jue Xing, and|
|||||Tu Long Po Xiao were in the main promotion period. In the same period|
|||||last year, the main source of income,Yong Heng Ji Yuan (永恒纪元)|
|||||and other games entered the peak period of gross billing.|
|Administrati|246,062,902.36|340,490,511.74||Mainly because the Company received equity incentive fee of RMB 101|
||||-27.73%||
|ve expense||||million in the same period last year, but did not receive such fee in the|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|||||current period.|
|Financial|17,097,099.24|28,555,783.27||Mainly due to the decrease in exchange losses during the reporting|
||||-40.13%||
|expense||||period.|
|R&D|537,705,604.63|436,169,030.12||Mainly due to the increase in the number of R&D personnel in the game|
||||23.28%||
|expense||||business and the increase in salary during the reporting period.|

 4.R&D investment
√Applicable□Not Applicable
Since 2018, more than 10 self-developed mobile games have been launched, among which Dou Luo Da LuH5（斗罗大陆H5） and Yi Dao ChuanShi（一刀传世） and other games achieved a monthly gross billing of over 100 million RMB. As of the issuance date of this report, the Company was developing a browser game of MU X (workingtitle)(奇迹X（暂定名）), and mobile games such as Chuan QiNB（传奇NB）, CodeYZD（代号YZD）, Chuan QiS（传奇S）, CodeDG（代号DG）, Chao Neng Qiu Qiu (workingtitle)（超能球球（暂定名））, An Hei HouYi（暗黑后裔）, Jing Ling ShengDian（精灵盛典）and Mobile GameAOD（手游项目AOD）. Through continuousR&D investment, deep technical accumulation and continuous innovation, the Company is expected to continue to launch high-quality games to realize continuous revenue growth.
As of the end of the reporting period, the number ofR&D staff decreased by5.61% compared with that at the end of 2017, mainly due to theCompany’s disposal of Shunrong Auto Parts in November 2018, resulting a fall in the number ofR&D staff by 178 compared with that at the beginning of the current period.
R&D investment
|||||
|-|-|-|-|
||2018|2017|Change proportion (%)|
|Number of R&D staff|1,379|1,461|-5.61%|
|Proportion of R&D staff|60.94%|54.05%|6.89%|
|Amount of R&D investment||||
||539,841,128.36|439,094,559.01|22.94%|
|(RMB)||||
|Proportion of R&D investment||||
||7.07%|7.09%|-0.02%|
|in operating income||||
|Amount of capitalized R&D||||
||2,254,237.93|7,663,076.06|-70.58%|
|investment (RMB)||||
|Percentage of capitalized R&D||||
||0.42%|1.75%|-1.33%|
|investment in R&D investment||||

The reason for the significant change in the proportion of totalR&D investment in operating income compared with the previous year
□Applicable√Not Applicable
Reasons and justification for the substantial change in the capitalization rate ofR&D investment
□Applicable√Not Applicable
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 -
Listed Companies Engaged in Software and IT Services.
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|||Basic information of relevant||
|Project name|Capitalized amount of R&D||Schedule|
|||projects||
|||Get a genuine license, use 3D||
||||At the late development stage,|
|||engine support, and ARPG||
|Browser game projects|6,205,796.16||and expected to be launched by|
|||browser games with MU client||
||||2019.|
|||games as the theme.||

Basis for the above amount of capitalizedR&D investment is as follows:
(1) Technically feasible in completing the use or sales of the intangible assets;
(2) Intention of the Company to complete the use or sales of the intangible assets for use and sale;
(3) There are markets for intangible assets, which can produce economic benefits for the Company;
(4) The Company has richR&D experience and good business performance, gains the support of enough technique, finance and other resources to accomplish the development of intangible assets, and is able to use or sell the intangible assets;
(5) The expenditures in the development period of intangible assets can be measured reliably.
The above projects have undergone rigorous evaluation through market research, project initiating report and development plan, and the accounting treatment of capitalization ofR&D expenditure has been properly reviewed, and the internal control of the
Company’sR&D expenditure is sound.
5. Cash flow
Unit: RMB
|||||
|-|-|-|-|
|Item|2018|2017|Year-on-year increase/decrease|
|Sub-total of cash inflows from operating|7,656,830,471.69|6,764,509,897.17||
||||13.19%|
|activities||||
|Sub-total of cash outflows from operating|5,702,396,850.85|4,932,613,968.87||
||||15.61%|
|activities||||
|Net cash flows from operating activities|1,954,433,620.84|1,831,895,928.30|6.69%|
|Sub-total of cash inflows from investing|4,242,654,828.03|2,567,482,176.55||
||||65.25%|
|activities||||
|Sub-total of cash outflows from investing|4,297,762,675.44|3,935,420,406.47||
||||9.21%|
|activities||||
|Net cash flows from investing activities|-55,107,847.41|-1,367,938,229.92|95.97%|
|Sub-total of cash inflows from financing|668,789,457.72|1,344,262,496.88||
||||-50.25%|
|activities||||
|Sub-total of cash outflows from financing|2,638,059,560.80|1,034,016,584.46||
||||155.13%|
|activities||||
|Net cash flows from financing activities|-1,969,270,103.08|310,245,912.42|-734.74%|
|Net increase of cash and cash equivalents|-65,170,587.19|761,697,925.86|-108.56%|

 Description of main factors influencing major year-on-year changes in relevant data
√Applicable□Not Applicable
1. The sub-total of cash inflows from investing activities increased by65.25% from the previous year, mainly due to the increase in
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report theCompany’s redemption of financial products during the reporting period.
2. The cash inflow of financing activities decreased by50.25% from the previous year, mainly due to: 1) theCompany’s issuance of shares to raise funds in the same period last year; 2) decrease in theCompany’s bank loans during the reporting period.
3. The sub-total of cash inflows from investing activities increased by155.13% from the previous year, mainly due to theCompany’s payment for acquiring the minorityshareholders’ equity of Jiangsu Aurora during the reporting period.
Reasons for the significant difference between the net cash flow from theCompany’s operating activities and the net profit for the year during the reporting period
□Applicable√Not Applicable
III. Analysis of non-main business
√Applicable□Not Applicable
Unit: RMB
||||||
|-|-|-|-|-|
||Amount|Proportion of total profit|Cause|Is it consistently applied?|
||||Mainly due to investment||
|Investment income|80,543,972.30|6.61%|profits from the disposal of|No|
||||equity investment||
||||Mainly due to the asset||
|Asset impairment|1,049,355,112.25|86.06%|impairment losses of the|No|
||||goodwill of Shanghai Mokun.||
||||Mainly due to the income from||
||||performance compensation||
|Non-operating|||||
||463,914,478.18|38.05%|recognized resulting from the|No|
|income|||||
||||under-performance of Shanghai||
||||Mokun||
||||Mainly refund of VAT upon|Refund of VAT upon collection|
||||collection and other|can be consistently applied, but|
|Other profits|97,647,310.60|8.01%|||
||||government subsidies related to|other government subsidies|
||||daily operations.|cannot be consistently applied.|

 IV. Analysis of assets and liabilities
1. Significant changes in the composition of assets
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2018||End of 2017||||
||||||Increase/d||
|||Proportion||Proportion|||
||||||ecrease of|Explanation|
||Amount|of total|Amount|of total|||
||||||proportion||
|||assets||assets|||
|Monetary fund|1,532,965,200.05|18.26%|1,580,910,931.98|17.26%|1.00%|No significant change.|
|Accounts|1,298,554,481.23|15.47%|884,909,012.77|9.66%|5.81%|Mainly due to the increase in operating income|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|receivable||||||in the fourth quarter of the current year|
|||||||compared with the same period of the previous|
|||||||year.|
||||101,828,085.31|||Mainly due to the disposal of Shunrong Auto|
|Inventories||||1.11%|-1.11%||
|||||||Parts during the reporting period.|
||555,602,013.99||376,972,832.08|||Mainly due to the new investment into the|
|||||||equity of Sanqi Guangzheng (Guangzhou)|
|||||||Cultural Technology Investment Partnership|
|Long-term equity|||||||
|||6.62%||4.12%|2.50%|(Limited Partnership), Shanghai Fenghua|
|investments|||||||
|||||||Qiushi Culture Media Co., Ltd., New Cues|
|||||||(Beijing) Television Investment Co., Ltd. and|
|||||||other companies during the reporting period.|
||36,458,454.56||292,395,887.17|||Mainly due to the disposal of Shunrong Auto|
|Fixed assets||0.43%||3.19%|-2.76%||
|||||||Parts during the reporting period.|
|Construction in|||50,672,878.42||||
|||||0.55%|-0.55%|No significant change.|
|progress|||||||
|Short-term loan|369,000,000.00|4.40%|372,054,500.00|4.06%|0.34%|No significant change.|
|Long-term loans|281,176,106.33|3.35%|310,775,272.06|3.39%|-0.04%|No significant change.|
|||||||Mainly due to the increase in the amount of|
|Other receivables|792,425,628.90|9.44%|388,694,512.02|4.24%|5.20%|equity receivable from the disposal of Shunrong|
|||||||Auto Parts during the reporting period.|
|Other current||||||Mainly due to the decrease in the performance|
||356,865,377.91|4.25%|592,189,323.99|6.46%|-2.21%||
|assets||||||compensation receivables.|
|||||||Mainly due to provision made by the Company|
|||||||for impairment on the goodwill formed by the|
|Goodwill|1,578,567,397.76|18.80%|2,540,312,996.76|27.73%|-8.93%|merger resulting from Shanghai Mokun’s|
|||||||failure to reach the expected performance in|
|||||||2018.|
|||||||Mainly due to the increase in the cost of|
|Notes payable|||||||
|||||||Internet traffic resulting from the year-on-year|
|and accounts|1,082,362,368.29|12.89%|741,792,973.33|8.10%|4.79%||
|||||||increase in Internet traffic expenses during the|
|payable|||||||
|||||||reporting period.|

2. Assets and liabilities measured by fair value
√Applicable□Not Applicable
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Profits and||||||
||||Change in fair|Impairment|Purchase|||
||Beginning|losses from||||Sales amount in||
|Item|||value included|accrued in|amount in||Ending balance|
||balance|change of fair||||current period||
||||in equity|current period|current period|||
|||value in this||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|||period||||||
|Financial assets||||||||
|3. Financial assets||||||||
||81,100,692.72||31,572,708.00|-52,732,066.85|35,582,900.00|16,845,591.30|78,678,642.57|
|available for sale||||||||
|Subtotal of financial||||||||
||81,100,692.72||31,572,708.00|-52,732,066.85|35,582,900.00|16,845,591.30|78,678,642.57|
|assets||||||||
|Total of the above|81,100,692.72||31,572,708.00|-52,732,066.85|35,582,900.00|16,845,591.30|78,678,642.57|
|Financial liabilities|0.00||||||0.00|

 Whether there is significant change to measurement attributes of main assets during the reporting period
□ Yes√ No
3. Restriction of main assets and rights as if the end of the reporting period
1. The prepaid purchase price ofCompany’s subsidiaries corresponding to the borrowing with the office building as the mortgage was RMB 799,637,688.54 in total.
2. In the bank account balance of theCompany’s subsidiaries, RMB 12,925,183.70 was the restricted fund, and RMB 4,299,671.56 was the guarantee.
V. Analysis of Investment Situations
1. Overview
√Applicable□Not Applicable
||||
|-|-|-|
|Investment amount during the reporting|||
||Investment amount of previous year (yuan)|Change %|
|period (yuan)|||
|1,914,383,167.80|2,401,535,373.99|-20.29%|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2. Major equity investment during the reporting period
√Applicable□Not Applicable
Unit: RMB
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Progress as|Antici||Involved|||
|Name of||Way of|||||Investm||||Current||Date of||
||||Investment|Sharehold|Capital|||Product|of the|pated||in||Index of disclosure (if|
|invested|Main businesses|contributi||||Partner|ent||||investment||disclosure||
||||amount|ing ratio|sources|||types|balance|reven||lawsuit||any)|
|company||on|||||period||||profit and loss||(if any)||
||||||||||sheet date|ue||or not?|||
|||||||||||||||Announcement of Wuhu|
||Technology development, technology||||||||||||||
|||||||||||||||Shunrong Sanqi|
||transfer, technical consultation, technical||||||||||||||
||||||||||Industrial|||||Interactive|
||services in the field of network technology||||||||||||||
||||||||||and|||||Entertainment Network|
||and computer technology; computer system||||||||||||||
|Jiangsu|||||||Long-te|R&D of|commercial||||February|Technology Co., Ltd. on|
||integration, network engineering, animation|Purchase|1,400,000,000.00|20.00%|Self-owned|None||||0.00|157,665,891.95|No|||
|Aurora|||||||rm|games|changes||||8th, 2018|Acquiring 20% equity of|
||design, creative services; graphic design||||||||||||||
||||||||||have been|||||Jiangsu Aurora Network|
||and production; sales of computer||||||||||||||
||||||||||registered|||||Technology Co., Ltd.|
||hardware, software and auxiliary||||||||||||||
|||||||||||||||(Announcement No.:|
||equipment.||||||||||||||
|||||||||||||||2018-008)|
|||||||||||||||Announcement on the|
|||||||||||||||Subsidiary’s Intention to|
||||||||||Industrial|||||Invest in and Receive|
|||||||||Investmen|and|||||Shares of Huai’an Sanqi|
|Huai’an|Equity investment, investment and asset||||||Long-te|t|commercial||||December|Yijian|
|||Purchase|155,215,923.89|60.30%|Self-owned|None|||||238,480.95|No|||
|Sanqi|management in the cultural media industry.||||||rm|managem|changes||||4th, 2018|Pan-Entertainment Asset|
|||||||||ent|have been|||||Management Center|
||||||||||registered|||||(Limited Partnership)|
|||||||||||||||(Announcement No.:|
|||||||||||||||2018-090)|
|Beijing|Organizational culture and art exchange|Capital|25,000,000.00|2.50%|Self-owned|None|Long-te|Culture|Industrial|||No|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Chenming|activities; film and television planning;|increase|||||rm|media|and||
|Media|economic information consultation;||||||||commercial||
|Co., Ltd.|animation design; design, production,||||||||changes||
||agency and release of ads; conference||||||||have been||
||services; hosting exhibition and display||||||||registered||
||events; technology promotion.||||||||||
||Technology consulting, technical services,||||||||||
||technology development and technology||||||||||
||transfer in network technology,||||||||||
||communication technology, computer||||||||||
||technology, information technology,||||||||||
||||||||||Industrial||
|Shanghai|electronic technology, intelligent||||||||||
||||||||||and||
|Zhangmen|technology and multimedia professional||||||||||
|||Capital|||||Long-te|R&D of|commercial||
|g Network|fields, communication engineering, network||10,000,000.00|10.00%|Self-owned|None||||No|
|||increase|||||rm|games|changes||
|Technolog|engineering, computer system integration,||||||||||
||||||||||have been||
|y Co., Ltd.|graphic design and production, art design,||||||||||
||||||||||registered||
||design and production of various ads, the||||||||||
||use of self-owned media to release ads,||||||||||
||business information consulting (except for||||||||||
||brokerage), R&D and sales of electronic||||||||||
||products.||||||||||
||Production, reproduction, distribution,||||||||||
||||||||||Industrial||
|Hebei|copyright transactions and agency||||||||||
||||||||||and||
|Youying|transactions of TV dramas, TV variety||||||||||
|||Capital|||||Long-te|Culture|commercial||
|Culture|shows, TV feature shows, animated story,||26,800,000.00|7.00%|Self-owned|None||||No|
|||increase|||||rm|media|changes||
|Spreading|columns and radio play (production of TV||||||||||
||||||||||have been||
|Co., Ltd.|dramas requires separate licenses)||||||||||
||||||||||registered||
||(operating with licenses); design,||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||production and agent of domestic||||||||||
||advertising business, release of domestic||||||||||
||outdoor advertising, organization of cultural||||||||||
||and artistic exchange activities (except for||||||||||
||commercial performance); marketing||||||||||
||planning; corporate image planning.||||||||||
||Planning of cultural and artistic exchange||||||||||
||activities, design, production, agent and||||||||||
||release of various advertisements, etiquette||||||||||
||services, exhibition and display services,||||||||||
||animation design, network technology||||||||||
||(acting as a technology intermediary is not||||||||||
|Shanghai|permitted); technology development,||||||||Industrial||
|Touch|technology transfer, technology consulting||||||||and||
|Culture|and technical services in the field of|Capital|||||Long-te|Culture|commercial||
||||15,000,000.00|10.00%|Self-owned|None||||No|
|Communi|computer software and hardware|increase|||||rm|media|changes||
|cation Co.,|technology; investment management,||||||||have been||
|Ltd.|literary creation, photography services||||||||registered||
||(other than developing and enlargement||||||||||
||printing), computer system integration;||||||||||
||sales of computers, software and auxiliary||||||||||
||equipment (other than dedicated products||||||||||
||for computer information system security)||||||||||
||and electronic products.||||||||||
|Shanghai|Cultural and artistic exchanges and||||||||Industrial||
|Original|planning, corporate image planning,|Capital|||||Long-te|Culture|and||
||||10,000,000.00|2.50%|Self-owned|None||||No|
|Plan|animation design and production, etiquette|increase|||||rm|media|commercial||
|Culture &|services, exhibition and conference||||||||changes||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Media Co.|services, design, production, agency and||||||||have been||
|Ltd.|release of various ads, organization and||||||||registered||
||planning of public relations activities,||||||||||
||performance broker; technological||||||||||
||development, technology transfer, technical||||||||||
||consulting and technical services in the field||||||||||
||of computer and network technology;||||||||||
||e-commerce (value-added||||||||||
||telecommunications and financial services||||||||||
||are not permitted); sales of daily necessities||||||||||
||and cosmetics; production of radio and||||||||||
||television programs.||||||||||
||Technology R&D, technical consulting,||||||||||
||technical services and transfer of||||||||||
||technology results: computer software and||||||||||
||hardware, network technology, education||||||||||
||software; computer system integration, data||||||||||
||processing technology services; education||||||||||
|Hangzhou|||||||||Industrial||
||information consultation (other than||||||||||
|Honghua||||||||Children’s|and||
||services for studying abroad and agencies||||||||||
|Duoduo||Capital|||||Long-te|digital|commercial||
||for studying abroad); copyright agency,||16,978,390.00|5.00%|Self-owned|None||||No|
|Network||increase|||||rm|reading|changes||
||conference and exhibition; sales of:||||||||||
|Technolog||||||||platform|have been||
||electronic products (other than electronic||||||||||
|y Co., Ltd.|||||||||registered||
||publications), communication equipment,||||||||||
||articles, toys and audio-visual products for||||||||||
||children; design, production, agent and||||||||||
||release of: domestic ads; value-added||||||||||
||telecom services; wholesale and retail of||||||||||
||publications; computer animation design,||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||electronic equipment leasing, art training,||||||||||
||organization and planning of cultural and||||||||||
||artistic exchange activities (other than||||||||||
||performances and performance agencies);||||||||||
||commercial Internet culture services;||||||||||
||production of radio and television||||||||||
||programs; import and export of goods||||||||||
||Management of entrusted assets (it is not||||||||||
||permitted to engage in trust, financial asset||||||||||
||management, securities asset management,||||||||||
||etc.); equity investment; investment||||||||||
||consulting, business management||||||||||
||consulting; corporate marketing planning;||||||||||
||cultural event planning; planning of culture||||||||||
||and art exchange activities themed at film||||||||||
|Shenzhen|||||||||||
||and television; organization and planning of||||||||Industrial||
|Zhonghui|||||||||||
||public relations activities; planning of||||||||and||
|Television|||||||||||
||conference affairs and activities; planning||||||Long-te|Culture|commercial||
|Culture||Others|50,000,000.00|3.85%|Self-owned|None||||No|
||of etiquette events; corporate image||||||rm|media|changes||
|Communi|||||||||||
||planning; investment in film and television||||||||have been||
|cation Co.,|||||||||||
||projects; investment in cultural industry||||||||registered||
|Ltd.|||||||||||
||projects; creation of literary scripts, music||||||||||
||works, songs, folk art, calligraphy and seal||||||||||
||cutting works; technological development,||||||||||
||technology transfer, technical consultation||||||||||
||and technical maintenance in film and||||||||||
||television culture; multimedia design;||||||||||
||animation design; graphic design;||||||||||
||advertising business; radio play, TV drams,||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||cartoons (production must be declared|||||||||||||
||separately), special topics, columns|||||||||||||
||(excluding political news), production,|||||||||||||
||reproduction and distribution of variety|||||||||||||
||shows, film distribution.|||||||||||||
||Technology development, technical|||||||||||||
||consultation, technical services, technology||||||||Industrial|||||
|Jiangsu||||||||||||||
||transfer in the fields of network technology||||||||and|||||
|Yezi||||||||||||||
||and computer technology; design and|Capital|||||Long-te|R&D of|commercial|||||
|Network|||15,000,000.00|20.00%|Self-owned|None||||-1,098,251.51|No|||
||production of various ads; animation|increase|||||rm|games|changes|||||
|Technolog||||||||||||||
||design; computer graphic design and||||||||have been|||||
|y Co., Ltd.||||||||||||||
||production; sales of computer software and||||||||registered|||||
||auxiliary equipment.|||||||||||||
|Sanqi||||||||||||||
|Guangzhe||||||Guangz|||||||Announcement on the|
|ng||||||hou|||||||Subsidiary’s Proposed|
|(Guangzh||||||Securiti|||||||Foreign Investment and|
|ou)||||||es|||Industrial||||Participation in the|
|Cultural||||||Innovat||Investmen|and||||Establishment of Sanqi|
||Corporate financial consulting; investment|||||||||||||
|Technolog||Newly-es||||ion|Long-te|t|commercial|||December|Guangzheng|
||consulting; investment of corporate’s own||45,000,000.00|45.00%|Self-owned||||||No|||
|y||tablished||||Invest|rm|managem|changes|||4th, 2018|(Guangzhou) Cultural|
||funds; project investment|||||||||||||
|Investmen||||||ment||ent|have been||||Technology Investment|
|t||||||Manag|||registered||||Partnership (Limited|
|Partnershi||||||ement|||||||Partnership)|
|p (Limited||||||Co.,|||||||(Announcement No.:|
|Partnershi||||||Ltd.|||||||2018-088)|
|p)||||||||||||||
|Chengdu|R&D and sales of computer hardware and|Capital|12,000,000.00|20.00%|Self-owned|None|Long-te|R&D of|Industrial|-388,213.60|No|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Popcorn|software and electronic products; network|increase|||||rm|games|and||
|Interactive|technology development; computer system||||||||commercial||
|Entertain|integration; basic software services;||||||||changes||
|ment|application software services; technology||||||||have been||
|Technolog|import and export.||||||||registered||
|y Co., Ltd.|||||||||||
||Production of broadcasting and television||||||||||
||programs; cultural entertainment brokerage;||||||||||
||performance brokerage; technical||||||||||
||consulting services for electronic products||||||||||
||and accessories; intelligent technology||||||||||
||consulting and related services; computer||||||||||
||hardware development; computer network||||||||||
||system engineering services; computer||||||||||
||technology transfer; development and||||||||||
||||||||||Industrial||
||construction of computer network platform;||||||||||
|Mango|||||||||and||
||computer technology consultation;||||||||||
|Excellent|||||||Long-te|Culture|commercial||
||computer technology development and|Others|35,582,900.00|0.18%|Self-owned|None||||No|
|Media|||||||rm|media|changes||
||technical services; information network||||||||||
|Co., Ltd.|||||||||have been||
||communication audio-visual program||||||||||
||||||||||registered||
||business; sales of electronic products and||||||||||
||accessories and intelligent products; R&D||||||||||
||of electronic products and intelligent||||||||||
||technologies; retail of household chemicals,||||||||||
||daily necessities, cultural and sports goods,||||||||||
||toys, hardware tools, household appliances,||||||||||
||clothing, shoes and hats, furniture,||||||||||
||communication equipment and jewelry;||||||||||
||development and sales of tourism products,||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||tourism information consulting and related||||||||||||||
||services; advertising design and outdoor||||||||||||||
||advertising, and agent for television and||||||||||||||
||newspaper advertising; event planning,||||||||||||||
||exhibition and training; sales of||||||||||||||
||pre-packaged food and liquor; retail of||||||||||||||
||Chinese medicine, health food, medical||||||||||||||
||equipment, audio-visual products, book and||||||||||||||
||newspaper; information service of||||||||||||||
||second-class value-added telecom business||||||||||||||
||(excluding fixed-line telephone information||||||||||||||
||service business and mobile network||||||||||||||
||information service); part-time insurance||||||||||||||
||agency; import and export of various||||||||||||||
||commodities and technologies (other than||||||||||||||
||those limited or prohibited by the country);||||||||||||||
||fertilizer retail; sales of packaged seeds that||||||||||||||
||are not repackaged; sales of tree and crop||||||||||||||
||seeds.||||||||||||||
|Total|--|--|1,816,577,213.89|--|--|--|--|--|--|0.00|156,417,907.79|--|--|--|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3. Major non-equity investment during the reporting period
√Applicable□Not Applicable
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Accumulat||||
|||Is it|||||||||||
||||Industries|Investment|||||ed gains as|Reasons for failure|||
||Way of|fixed|||Accumulated input||||||Date of||
||||relevant for|amount during||Capital|Project|Anticipated|of the end|to reach planned|||
|Project name|contribut|assets|||amount as of the end||||||disclosure (if|Index of disclosure (if any)|
||||investment|the reporting||sources|progress|revenue|of the|schedule or|||
||ion|investme|||of reporting period||||||any)||
||||projects|period|||||reporting|expected revenue|||
|||nt|||||||||||
||||||||||period||||
|12F, 14F, 17F~23F|||||||||||||
|office premises,||||||||||||Announcement on the|
|underground 3F and||||||||||||Subsidiary’s Purchase of|
|||||||Own +|||||||
|4F parking spaces of|||Commercial real|||||||||Office Space and|
||Others|Yes||40,940,000.00|836,804,793.02|mortgage||0.00|0.00|Not applicable|April 26th, 2017||
|Zhongrong Plaza,|||estate|||||||||Supporting Parking Lot|
|||||||loans|||||||
|No. 666, Huangpu||||||||||||(Announcement No.:|
|Avenue, Tianhe||||||||||||2017-034)|
|District, Guangzhou|||||||||||||
|Total|--|--|--|40,940,000.00|836,804,793.02|--|--|0.00|0.00|--|--|--|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 4. Financial assets that are measured by fair value
√Applicable□Not Applicable
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Profits and losses|||||||
||||Change in fair||||||
|||from change of||Purchase amount during|Amount sold during the|Accumulated|||
|Assets category|Initial investment cost||value included in||||Ending amount|Capital sources|
|||fair value in this||the reporting period|reporting period|investment income|||
||||equity||||||
|||period|||||||
|Share|112,016,157.36|0.00|-21,159,358.85|35,582,900.00|12,178,155.94|-9,114,992.25|78,678,642.57|Self-owned|
|Total|112,016,157.36|0.00|-21,159,358.85|35,582,900.00|12,178,155.94|-9,114,992.25|78,678,642.57|--|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 5. Utilization of raised fund
√Applicable□Not Applicable
(1) Utilization of raised fund
√Applicable□Not Applicable
Unit: RMB 10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||||||Total||||||
||||Total||||Proportion||||
||||||raised fund|Accumulat|||||
||||amount of|Total|||of||Use and|Amount of|
||||||with|ed total||Total|||
|Year of||Total|used raised|amount of|||accumulat||expenditur|raised fund|
||Way of fund||||changed|raised fund||amount of|||
|fund||amount of|fund|raised fund|||ed raised||e of|left unused|
||raising||||purpose|with||unused|||
|raising||raised fund|during the|that has|||fund with||unused|for over|
||||||during the|changed||raised fund|||
||||reporting|been used|||changed||raised fund|two years|
||||||reporting|purpose|||||
||||period||||purpose||||
||||||period||||||
||Non-public||||||||||
|2017||45,596.25|45,596.25|45,596.25|0|0|0.00%|0|--|0|
||offerings||||||||||
|Total|--|45,596.25|45,596.25|45,596.25|0|0|0.00%|0|--|0|
|Description of overall utilization of raised fund|||||||||||
|Upon verification of Reply on Verification of Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd.|||||||||||
|Issuing Shares to, Purchasing Assets from, and Raising Supporting Funds from Wuhu Shunrong Sanqi Mutual Entertainment|||||||||||
|Network Technology Co., Ltd. (Z.J.X.K. [2017] No. 579) from China Securities Regulatory Commission, Wuhu Shunrong Sanqi|||||||||||
|Interactive Entertainment Network Technology Co., Ltd. issued, in the form of non-public offerings, 17,866,869 shares of common|||||||||||
|stocks (“A-shares”) with par value of RMB 1 per share and issue price of 25.52 yuan/share to two specific investors: Shenzhen|||||||||||
|State-owned Enterprise Structural Adjustment, Investment Attraction & M&A Equity Investment Fund Partnership (Limited|||||||||||
|Partnership) and Shenzhen Yidun Media Investment Fund Partnership (Limited Partnership), and the total raised funds were RMB|||||||||||
|455,962,496.88. After deducting the issuance expenses of RMB 31,313,316.06 (including tax), and considering the VAT input tax|||||||||||
|of RMB 1,768,867.93, the net raised funds were RMB 426,418,048.75. As of June 30th, 2017, the supporting fund raised from the|||||||||||
|above issuance was in place and verified by Pan-China Certified Public Accountants (Special Ordinary Partnership), which issued|||||||||||
|the Capital Verification Report (T.J.Y. [2017] No. 3-64) on July 1st, 2017. The raised fund was mainly used for purchasing 68.43%|||||||||||
|equity of Shanghai Mokun and 49.00% equity of Jiangsu Zhiming, with cash consideration of RMB 422,642,500.00 and relevant|||||||||||
|intermediary fees of RMB 33,320,000.00 for this transaction.|||||||||||

(2) Change items of the raised fund
√Applicable□Not Applicable
Unit: RMB 10,000
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Whether|Total|Total|Investme|Accumul|Investme|Date on|Benefits|Whether|Significa|
|Committed investment|||||||||||
||the|committe|investme|nt|ated|nt|which the|realized|realize|nt change|
|project and investment|||||||||||
||project|d|nt after|amount|investme|schedule|project|during|the|to the|
|of extra raised fund|||||||||||
||has been|investme|adjustme|during|nt|at the|will reach|the|expected|project|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||changed|nt|nt (1)|the|amount at|closing|expected|reporting|benefits|feasibility|
||(includin|amount||reporting|the|period (3)|use state|period|||
||g partial|for raised||period|closing|＝(2)/(1)|||||
||change)|fund|||period (2)||||||
|Committed investment project|||||||||||
|Cash consideration for|||||||||||
|purchasing 68.43%|||||||May 31st,||||
||No|33,346.25|33,346.25|0|33,346.25|100.00%||-330.17|No|No|
|equity of Shanghai|||||||2017||||
|Mokun|||||||||||
|Cash consideration for|||||||||||
|purchasing 49.00%|||||||May 31st,||||
||No|8,918|8,918|0|8,918|100.00%||3,155.69|Yes|No|
|equity of Jiangsu|||||||2017||||
|Zhiming|||||||||||
|Fees for intermediary|||||||June||||
|agency related to the|No|3,332|3,332|0|3,332|100.00%|30th,|0|Yes|No|
|transaction|||||||2017||||
|Subtotal of committed|||||||||||
||--|45,596.25|45,596.25|0|45,596.25|--|--|2,825.52|--|--|
|investment projects|||||||||||
|Investment of extra raised fund|||||||||||
|None|||||||||||
|Total|--|45,596.25|45,596.25|0|45,596.25|--|--|2,825.52|--|--|
|Description and reason|||||||||||
||During the reporting period, due to the restrictions on the publication number and the overall decline in||||||||||
|for failure to reach|||||||||||
||growth rate of the game industry, the R&D and launch schedule of Shanghai Mokun, a subsidiary of the||||||||||
|planned schedule or|||||||||||
||Company, was not up to expectations, resulting in its major games failing to be launched in 2018 and||||||||||
|expected revenue (by|||||||||||
||generate revenue and profits and Shanghai Mokun’s operating results lower than expected.||||||||||
|individual project)|||||||||||
|Description of major|||||||||||
|change to project|None||||||||||
|feasibility|||||||||||
|Amount, purpose and|Not applicable||||||||||
|use schedule of extra|||||||||||
|raised fund|||||||||||
|Change of|Not applicable||||||||||
|implementation|||||||||||
|location of raised fund|||||||||||
|investment project|||||||||||
|Adjustment of|Not applicable||||||||||
|implementation mode|||||||||||
|of raised fund|||||||||||
|investment project|||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||
|-|-|
||Applicable|
||Before the raised funds were in place, to ensure the smooth implementation of the Company’srestructuring, the Company made a preliminary investment in the use of raised funds by self-raised fundaccording to the actual situation, including the payment of the cash consideration of RMB 50 million forthe transaction, and relevant intermediary agency of RMB 4,466,000, totaling RMB 54,466,000. After theraised funds were in place, the Proposal on Replacing the Funds That Have Been Put into InvestmentProjects with the Raised Funds was reviewed and approved at the 7th Meeting of the 4th Board of Directors,and it was agreed to use RMB 54,466,000 of the raised funds to replace the pre-invested self-raised funds.|
|Initial input and||
|replacement of raised||
|fund investment project||
|Use idle raised fund as|Not applicable|
|temporary||
|supplementary working||
|capital||
|Amount of raised fund|Not applicable|
|balance and reasons for||
|project implementation||
|Use and expenditure of||
||As of the end of the reporting period, the Company's raised funds have been used up, without any surplus.|
|unused raised fund||
|Other problems or||
|circumstances in the||
||None|
|use and disclosure of||
|raised fund||

(3) Change items of the raised fund
□Applicable√Not Applicable
No change items of the raised funds during the reporting period.
VI. Major asset and equity sales
1. Sales of major assets
□Applicable√Not Applicable
The Company did not sell major assets during the reporting period.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2. Sales of major equity
√Applicable□Not Applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||Profits|||||||Is it|||
|||||contributed||Percentage of|||||implemented|||
|||||by the equity||profits|||||as|||
|||||to the listed||contributed|||||scheduled?|||
||||Transactio|||||||||||
|||||company||by sales of|Pricing|Is it an|Relationship|Are the equity|If not,|||
||Sold||n price||Impact of the selling on the|||||||Date of||
|Counterparty||Sale date||from the||assets to the|principle of|associated|with the|involved fully|explain the||Index of disclosure|
||equity||(10,000||Company|||||||disclosure||
|||||beginning of||listed|selling equity|transaction?|counterparty|transferred?|reasons and|||
||||yuan)|||||||||||
|||||this year to||company of|||||the measures|||
|||||the sale date||total net|||||the|||
|||||(RMB||profits|||||Company|||
|||||10,000)|||||||has taken.|||
||||||By divesting the auto component||||||||Announcement of|
||||||sector assets with low profitability||||||||Wuhu Shunrong Sanqi|
||||||that are not suitable for the||||||||Interactive|
||||||||Refer to the|||||||
|Wuhu|||||long-term strategy of listed||||Companies||||Entertainment|
||||||||appraisal|||||||
|Ningzhong|Shunrong|Novemb|||companies, the Company can use||||under control||||Network Technology|
||||||||value,||||Implemented|September||
|Auto Parts|Auto|er 30th,|81,900|125.84|its resources to focus on|-0.94%||Yes|of the|Yes|||Co., Ltd. on Selling|
||||||||determined||||as schedule|21st, 2018||
|Technology|Parts|2018|||developing cultural and creative||||controlling||||Auto Parts Assets and|
||||||||through|||||||
|Co., Ltd.|||||industries, improve asset operation||||shareholders||||Associated|
||||||||consultation|||||||
||||||efficiency, and improve the asset||||||||Transaction|
||||||quality and profitability of listed||||||||(Announcement No.:|
||||||companies.||||||||2018-075)|

 VII. Analysis of Main Holding and Joint-Stock Company
√Applicable□Not Applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Main subsidiaries and joint-stock companies affecting more than10% of theCompany’s net profit
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||||Registered||||||
|Company name|Company type|Main businesses||Total assets|Net asset|Operating income|Operating profit|Net profit|
||||capital||||||
|Shanghai Sanqi|||||||||
||Subsidiary|Online games|10,000,000.00|6,933,137,265.67|4,056,858,080.40|7,283,837,859.03|1,076,368,498.40|1,463,682,662.09|
|Interactive Entertainment|||||||||

Acquisition and disposal of subsidiaries during this reporting period
√Applicable□Not Applicable
||||
|-|-|-|
||Method for acquisition and disposal of||
|Company name||Influence on overall production, operation and performance|
||subsidiaries during this reporting period||
|||This equity sale was a reasonable choice made by the Company based on its development strategy. By divesting|
|||the auto component sector assets with low profitability that are not suitable for the long-term strategy of listed|
|Shunrong Auto Parts|Sale||
|||companies, the Company can use its resources to focus on developing cultural and creative industries, improve|
|||asset operation efficiency, and improve the asset quality and profitability of listed companies.|

 Major holding and joint-stock companies
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report VIII. The Structured Entity Controlled by the Company
□Applicable√Not Applicable
IX. Prospect on the future development of the Company
(I) Development strategy and business plan for 2019
After years of development, the Chinese game market has seen a drop in growth rate of the actual sales revenue, and a single-digit growth rate of game users for five consecutive years. As the Chinese game industry enters a mature stage, the growth drivers have changed from “demographic dividend” to “content dividend”. Against the backdrop, the Company remains committed to the development strategy of “quality, diversification, platform, and globalization”, and develops incrementally on basis of existing advantages, while exploring other fields to create space for future development.
1. Quality-development strategy
Quality content is an important guarantee for the survival and development of the Company. In 2019, the Company will take the following measures to increase the quality content reserve:
1) Enhance independentR&D strength: IncreaseR&D investment and the reserve of high-qualityR&D talents, and enhance our own ability to produce high-quality products;
2) Strengthen cooperation with upstream high-quality content providers such as Tencent, NetEase, Perfect World and Century Huatong, and increase the reserve of high-quality content;
3) Further explore and support the development of high-qualityR&D companies andR&D teams through investment in capital and strategic cooperation, and expand the supply of quality products;
4) Strengthen IP development: Continue to explore high-quality IPs, deeply understand the essence of IPs, select highly fit IPs for product development to match the characteristics of target game users; continue to create original IPs, bring forth the new through continuous iterative development of excellent original works, add rich content to enhance the awareness of product IPs, and thus increase the value of IPs.
2. Diversification strategy
TheCompany’s diversification strategy includes two aspects: diversification of products and diversification of traffic operation. 1) In terms of product diversification, the Company will intensify its attempt to new products, themes, gameplays and technologies in the process ofR&D and operation, and enhance our ability to develop and operate diversified products in 2019; 2) In terms of diversified traffic operation, the Company will improve traffic conversion efficiency and increase profit margin by adopting a diversified mode of “three-dimensional marketing+ precise delivery+ long-term service” in 2019.
3. Platform strategy
TheCompany’s goal is to become a high-quality content platform, and create a brand providing a wide range of cultural consumer goods in games, movies, animation, music, literature, VR/AR, Internet health, Internet education for all ages. In 2019, the Company will further explore high-quality content targets, improve the layout of cultural and creative industry chain through investment in capital, and expand the coverage of products, especially the coverage of the young, to become a cultural and creative brand that accompanies the growth of the young generation of China.
4. Globalization strategy
In 2019, the company will keep advancing its globalization strategy.
On one hand, the Company will focus on developing high-potential markets such as the United States, Japan and South Korea
depending on localized product selection and marketing tools to achieve new growth. In terms of products, the Company will focus
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report on breakthroughs in operating SLG products in global market. As of the issuance date of this report, it has reserves of such SLG games as developed by excellent teams with successful experience, including Western Magic CodeMH（代号MH）and Code ZSJ（代号ZSJ）, to gain a position in the global SLG market. In terms of regional development, it will focus on the development of the Japanese and Korean markets in 2019 based on the initial breakthrough in the Japanese and Korean markets in 2018. As of the issuance date of this report, it has a wealth of products targeting the two markets: card games SNKオールスター, female game Tian EZuo（天鹅座）, nijigen game Mo Wang JiHua（魔王计划）and Dengeki Bunko: CrossingVoid（电击文库：零境交错）, SLG game Zhen Long BaYe（真龙霸业）, ARPG game An Hei HouYi（暗黑后裔） and others.
On the other hand, the Company will introduce more diversified products intoChina’s Hong Kong, Macao and Taiwan, Southeast Asia and other advantageous areas to meet the diversified used demands to further enhance its dominant position. (II) Possible risks
1. Market competition risks and countermeasures
The online game industry is facing increasingly fierce competition as it gradually matures. The development of various Internet-based cultural creative segments other than online games is further exacerbating external competition. At the same time, online game users are also maturing, and online game users have increasingly higher standards for game products. Intense market competition will challenge theCompany’s development in terms of products and market channels.
In response, the Company will continue to increaseR&D investment,R&D and innovation in product creativity, gameplay, theme, art and technology. It will maintain close cooperation with excellent developers to guarantee the supply of quality products, and continue to connect users with quality games. In terms of market channels, the Company will further bring into play the role of new ideas in traffic operation, deepen the business strategy of three-dimensional marketing, precision delivery and long-term services, and continuously enhance its core market competitiveness.
2. Business risks and countermeasures
The online game industry is characterized by fast product update, limited life cycle and fast change of user preference. Game enterprises need to increase their investment in technology development and closely keep in pace with trend of the industrial technologies. If the technology, products and other aspects of the game undergo major changes, but game enterprises fail to keep up with the development of industry technology, their products will fail to meet the market demands. At the same time, information security and user privacy protection arouse great public concerns. If the Company leaksusers’ information due to negligence, there will be a significant damage on the user experience and brand image. Consequently, its operation performance will be impaired. In response, increasing input in productR&D is needed to maintain continuous product innovation. The Company also needs to dig deeper into operational data, continuously update the understanding of changes in targetusers’ preferences, and timely adjust operational strategies andR&D directions, to meet the core demands of users.
A strict internal control system for information security management and user privacy protection has been set up to ensure the security ofusers’ information to the maximum extent. In terms of information security, the Company has developed a series of internal control systems to define and classify security incidents and to respond to possible data security problems. Information security audits take place once every six months for systematic control of information security risks. In terms of privacy protection, the Privacy Policy has been established, which provides in details the rules and standards for collection and use ofusers’ personal information and sets forth the reasonable and feasible security measures adopted for protection ofusers’ personal information. In this way the Company will make sure with greatest efforts that allusers’ personal information are protected at the highest level. The Company ensures that it runs the business in compliance with applicable laws and regulations throughout the world, and protects theusers’ right to manage personal information. A response procedure has been stipulated to inform users of any possible cost and necessary actions needed to be taken.
3. Risks of core personnel turnover and countermeasures
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report A stable and high-quality talent team for game development, operation and management is an important guarantee for the Company to maintain its core competitive advantage. If the Company fails to effectively build a core talent team, give reasonable incentives and manages the core personnel, theemployees’ enthusiasm and creativity will be affected, which will have an adverse impact on theCompany’s core competitiveness.
In response, much attention has been attached to cultivation and acquisition of professional talents. The Company creatively builds a platform-based talent management mechanism, according to which excellent game producers are rewarded with high project bonus, and given discretion of research and creation. The Company maintains the stability of core technology and management personnel by signing agreements with core personnel, creating a favorable working environment and building a great corporate culture. Meanwhile, the Company helps employees to realize their potential through a well-trained employee training system, and rationally manages the team by using a clear rule of survival of the fittest to reinforce theteam’s dynamics.
Section V Financial Report
I. Financial Statements
Unit in statements in financial notes: RMB
1. Consolidated balance sheet
Prepared by: Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd.
December 31st, 2018
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Current assets:|||
|Monetary fund|1,532,965,200.05|1,580,910,931.98|
|Transaction settlement funds|||
|Loans to other banks|||
|Financial assets measured at fair value|||
|with changes included in current profits|||
|and losses|||
|Derivative financial assets|||
|Notes receivable and accounts|||
||1,298,554,481.23|940,249,012.77|
|receivable|||
|Wherein: Notes receivable||55,340,000.00|
|Accounts receivable|1,298,554,481.23|884,909,012.77|
|Prepayments|193,770,132.83|283,516,789.29|
|Premiums receivable|||
|Reinsurance premiums receivable|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Reinsurance contract reserves|||
|receivable|||
|Other receivables|792,425,628.90|388,694,512.02|
|Wherein: Interest receivable|64,445.20|582,592.17|
|Dividends receivable|||
|Redemptory monetary capital for sale|||
|Inventories||101,828,085.31|
|Assets held-for-sale|7,536,816.46|75,066,714.34|
|Non-current assets due within one|||
|year|||
|Other current assets|356,865,377.91|592,189,323.99|
|Total current assets|4,182,117,637.38|3,962,455,369.70|
|Non-current assets:|||
|Disbursement of advances and loans|||
|Available-for-sale financial assets|1,119,291,025.55|882,481,586.86|
|Held-to-maturity investment|||
|Long-term receivables|||
|Long-term equity investments|555,602,013.99|376,972,832.08|
|Investment property|||
|Fixed assets|36,458,454.56|292,395,887.17|
|Construction in progress||50,672,878.42|
|Productive biological assets|||
|Oil and gas assets|||
|Intangible assets|14,296,437.04|44,898,112.29|
|Development expenditure|6,205,796.16|4,070,272.43|
|Goodwill|1,578,567,397.76|2,540,312,996.76|
|Long-term deferred expenses|74,286,546.49|79,803,089.59|
|Deferred income tax assets|27,325,270.01|11,810,692.92|
|Other non-current assets|801,611,138.04|914,263,967.16|
|Total non-current assets|4,213,644,079.60|5,197,682,315.68|
|Total assets|8,395,761,716.98|9,160,137,685.38|
|Current liabilities:|||
|Short-term loan|369,000,000.00|372,054,500.00|
|Loan from central bank|||
|Receipt of deposits and deposits from|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|other banks|||
|Loans from other banks|||
|Financial liabilities measured at fair|||
|value with changes included in current|||
|profits and losses|||
|Derivative financial liabilities|||
|Notes payable and accounts payable|1,082,362,368.29|741,792,973.33|
|Account received in advance|94,628,742.59|84,886,734.84|
|Financial assets sold for repurchase|||
|Service charges and commissions|||
|payable|||
|Payroll payable|121,978,401.18|113,480,021.50|
|Tax payable|89,275,803.43|58,281,315.47|
|Other payables|108,142,599.83|61,962,553.64|
|Wherein: Interests payable|52,841.84|390,533.38|
|Dividends payable|||
|Reinsured accounts payable|||
|Reserves for insurance contract|||
|Receivings from securities trading for|||
|customers|||
|Receivings from vicariously sold|||
|securities|||
|Liabilities held for sale|||
|Non-current liabilities due within one|||
||29,599,165.73|28,117,893.57|
|year|||
|Other current liabilities|97,256,568.16|57,738,251.19|
|Total current liabilities|1,992,243,649.21|1,518,314,243.54|
|Non-current liabilities:|||
|Long-term loans|281,176,106.33|310,775,272.06|
|Bonds payable||27,163,239.26|
|Wherein: Preferred shares|||
|Perpetual capital securities|||
|Long-term payables|||
|Long-term remuneration payable|||
|Estimated liabilities|||
|Deferred income|3,903,715.32|17,226,474.44|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Deferred income tax liabilities|4,735,906.20||
|Other non-current liabilities|||
|Total non-current liabilities|289,815,727.85|355,164,985.76|
|Total liabilities|2,282,059,377.06|1,873,479,229.30|
|Owners’ equity:|||
|Share capital|2,124,870,253.00|2,148,110,844.00|
|Other equity instruments||1,947,846.62|
|Wherein: Preferred shares|||
|Perpetual capital securities|||
|Capital reserve|298,739,967.21|1,972,639,580.66|
|Less: Treasury stock|||
|Other comprehensive income|46,376,346.58|-25,087,592.30|
|Special reserves|||
|Surplus reserve|170,477,835.88|99,561,946.09|
|General risk provisions|||
|Undistributed profit|3,332,211,003.19|2,819,597,585.78|
|Total equity attributable to parent company|||
||5,972,675,405.86|7,016,770,210.85|
|owners|||
|Minority shareholders' equity|141,026,934.06|269,888,245.23|
|Total owners' equities|6,113,702,339.92|7,286,658,456.08|
|Total liabilities and owners’ equity|8,395,761,716.98|9,160,137,685.38|

 Legal representative: Li Weiwei Accounting supervisor: Ye Wei Legal representative of the accounting firm: Ye Wei 2. Balance sheet of parent company
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Current assets:|||
|Monetary fund|4,325,959.18|5,437,518.91|
|Financial assets measured at fair value|||
|with changes included in current profits and|||
|losses|||
|Derivative financial assets|||
|Notes receivable and accounts|||
|receivable|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Wherein: Notes receivable|||
|Accounts receivable|||
|Prepayments|63,300.00||
|Other receivables|1,391,766,571.39|1,655,547,345.04|
|Wherein: Interest receivable|||
|Dividends receivable|500,000,000.00||
|Inventories|||
|Assets held-for-sale||69,996,897.11|
|Non-current assets due within one year|||
|Other current assets|1,165,393.00|403,527,827.28|
|Total current assets|1,397,321,223.57|2,134,509,588.34|
|Non-current assets:|||
|Available-for-sale financial assets|179,996,897.11|60,000,000.00|
|Held-to-maturity investment|||
|Long-term receivables|||
|Long-term equity investments|6,402,393,690.49|5,754,424,925.15|
|Investment property|||
|Fixed assets|||
|Construction in progress|||
|Productive biological assets|||
|Oil and gas assets|||
|Intangible assets|||
|Development expenditure|||
|Goodwill|||
|Long-term deferred expenses|||
|Deferred income tax assets|8,090.43|3,334,186.37|
|Other non-current assets||50,000,000.00|
|Total non-current assets|6,582,398,678.03|5,867,759,111.52|
|Total assets|7,979,719,901.60|8,002,268,699.86|
|Current liabilities:|||
|Short-term loan|369,000,000.00|369,000,000.00|
|Financial liabilities measured at fair|||
|value with changes included in current|||
|profits and losses|||
|Derivative financial liabilities|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Notes payable and accounts payable|36,357,038.26||
|Account received in advance|||
|Payroll payable|484,767.87|539,632.89|
|Tax payable|1,745,935.68|17,271,522.21|
|Other payables|711,616,794.64|565,476,999.44|
|Wherein: Interests payable|52,841.84|390,533.38|
|Dividends payable|||
|Liabilities held for sale|||
|Non-current liabilities due within one|||
|year|||
|Other current liabilities||936,428.02|
|Total current liabilities|1,119,204,536.45|953,224,582.56|
|Non-current liabilities:|||
|Long-term loans|||
|Bonds payable|||
|Wherein: Preferred shares|||
|Perpetual capital securities|||
|Long-term payables|||
|Long-term remuneration payable|||
|Estimated liabilities|||
|Deferred income|||
|Deferred income tax liabilities|||
|Other non-current liabilities|||
|Total non-current liabilities|||
|Total liabilities|1,119,204,536.45|953,224,582.56|
|Owners’ equity:|||
|Share capital|2,124,870,253.00|2,148,110,844.00|
|Other equity instruments|||
|Wherein: Preferred shares|||
|Perpetual capital securities|||
|Capital reserve|3,952,461,239.82|4,401,934,248.25|
|Less: Treasury stock|||
|Other comprehensive income|||
|Special reserves|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Surplus reserve|170,477,835.88|99,561,946.09|
|Undistributed profit|612,706,036.45|399,437,078.96|
|Total owner’s equity|6,860,515,365.15|7,049,044,117.30|
|Total liabilities and owners’ equity|7,979,719,901.60|8,002,268,699.86|

 3. Consolidated profit statement
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|I. Total operating income|7,632,679,668.47|6,188,828,116.75|
|Wherein: Operating incomes|7,632,679,668.47|6,188,828,116.75|
|Interest incomes|||
|Earned insurance premium|||
|Incomes from service|||
|charges and commissions|||
|II. Total operating cost|7,041,943,419.64|5,039,424,012.89|
|Wherein: Operating costs|1,811,420,940.10|1,948,197,239.76|
|Interest payment|||
|Service charges and|||
|commission expenses|||
|Refunded premium|||
|Net amount of|||
|compensation payout|||
|Net amount of reserves for|||
|reinsurance contract|||
|Policy dividend payment|||
|Reinsured expenses|||
|Taxes and additional|||
||33,040,452.73|26,508,097.89|
|charges|||
|Selling and distribution|||
||3,347,261,308.33|1,908,207,466.32|
|expenses|||
|Administrative expense|246,062,902.36|340,490,511.74|
|R&D expense|537,705,604.63|436,169,030.12|
|Financial expense|17,097,099.24|28,555,783.27|
|Wherein: Interest fee|44,631,901.22|32,858,899.90|
|Interest income|27,632,671.32|24,363,295.31|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Assets impairment losses|1,049,355,112.25|351,295,883.79|
|Add: Other profits|97,647,310.60|111,259,077.18|
|Investment profit (“-”|||
||80,543,972.30|256,030,245.92|
|indicates the loss)|||
|Wherein: Investment income|||
||7,617,107.86|-11,139,329.07|
|of joint-venture and partnership|||
|Income from changes in fair|||
|value (“-” indicates the loss)|||
|Exchange income (“-”|||
|indicates the loss)|||
|Assets disposal income (“-”|||
||1,289,755.10|1,055,284.09|
|indicates the loss)|||
|III. Operation profit (“-” indicates the|||
||770,217,286.83|1,517,748,711.05|
|loss)|||
|Add: Non-operating income|463,914,478.18|403,057,922.86|
|Less: Non-operating expense|14,812,283.49|4,187,038.90|
|IV. Total profit (“-” indicates the total|||
||1,219,319,481.52|1,916,619,595.01|
|loss)|||
|Less: Income taxes|67,889,647.39|80,119,872.98|
|V. Net profit (“-” indicates the loss)|1,151,429,834.13|1,836,499,722.03|
|(I) Net profit of going concern (“-”|||
||1,150,171,412.45|1,826,090,011.93|
|indicates net loss)|||
|(II) Net profit of discontinuing|||
||1,258,421.68|10,409,710.10|
|operation (“-” indicates net loss)|||
|Net profits attributable to parent|||
||1,008,503,357.80|1,620,582,427.47|
|company owners|||
|Gain and loss of minority|||
||142,926,476.33|215,917,294.56|
|shareholders|||
|VI. After-tax net of other|||
||71,463,938.88|-19,783,336.38|
|comprehensive incomes|||
|After-tax net of other comprehensive|||
|incomes owned by the owner of the|71,463,938.88|-20,469,057.23|
|parent company|||
|(I) Other comprehensive incomes|||
|that cannot be classified into profit and|||
|loss|||
|1. Re-measurement of|||
|changes in defined benefit plan|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|2. Other comprehensive|||
|incomes that cannot be reclassified into|||
|profits and losses under the equity|||
|method|||
|(II) Other comprehensive incomes|||
|that would be classified into profit and|71,463,938.88|-20,469,057.23|
|loss|||
|1. Other comprehensive|||
|incomes that can be reclassified into|||
|profits and losses under the equity|||
|method|||
|2. Loss and profit of|||
|change in fair value of|52,307,268.18|-21,799,686.38|
|available-for-sale financial assets|||
|3. Loss and profit of|||
|available-for-sale financial assets of|||
|held-to-maturity investments|||
|4. Effective part of hedge|||
|profit and loss of cash flow|||
|5. Translation difference in|||
||19,156,670.70|1,330,629.15|
|the foreign currency financial statement|||
|6. Others|||
|Other comprehensive income net of|||
|||685,720.85|
|tax attributed to minority stockholders|||
|VII. Total comprehensive income|1,222,893,773.01|1,816,716,385.65|
|Total comprehensive income|||
||1,079,967,296.68|1,600,113,370.24|
|attributable to parent company owners|||
|Total comprehensive income|||
||142,926,476.33|216,603,015.41|
|attributable to minority shareholders|||
|VIII. Earnings per share:|||
|(I) Basic earning per share|0.47|0.76|
|(II) Diluted earning per share|0.47|0.76|

 For combination of enterprises under the same control in this period, the net profit realized by the merged party before combination was: 0.00 yuan, net profit realized by the merged party in last times: RMB 0.00.
Legal representative: Li Weiwei Accounting supervisor: Ye Wei Legal representative of the accounting firm: Ye Wei
4. Profit statement of parent company
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|I. Operating income|0.00|751,646.53|
|Less: Operating cost|0.00|31,646.53|
|Taxes and additional charges|1,439,813.45|1,349,357.00|
|Selling and distribution|||
|expenses|||
|Administrative expense|48,933,572.35|17,159,274.42|
|R&D expense|||
|Financial expense|16,087,126.85|4,144,539.06|
|Wherein: Interest fee|23,907,281.20|19,681,094.85|
|Interest income|8,065,073.02|15,735,776.78|
|Assets impairment losses|-13,304,383.76|10,753,616.43|
|Add: Other profits|191,216.36|156,969.20|
|Investment profit (“-”|||
||766,968,765.34|-294,252,732.59|
|indicates the loss)|||
|Wherein: Investment income|||
||-2,136,170.23|-1,555,025.80|
|of joint-venture and partnership|||
|Income from changes in fair|||
|value (“-” indicates the loss)|||
|Assets disposal income (“-”|||
|indicates the loss)|||
|II. Operating profit ("-" indicates the|||
||714,003,852.81|-326,782,550.30|
|loss)|||
|Add: Non-operating income||401,364,984.06|
|Less: Non-operating expense|805,483.09||
|III. Total profit (“-” indicates the total|||
||713,198,369.72|74,582,433.76|
|loss)|||
|Less: Income taxes|4,039,471.84|13,852,445.44|
|IV. Net profit (“-” indicates the loss)|709,158,897.88|60,729,988.32|
|(I) Net profit of going concern (“-”|||
||709,158,897.88|60,729,988.32|
|indicates net loss)|||
|(II) Net profit of discontinuing|||
|operation (“-” indicates net loss)|||
|V. Net of tax of other comprehensive|||
|incomes|||
|(I) Other comprehensive incomes|||
|that cannot be classified into profit and|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|loss|||
|1. Re-measurement of|||
|changes in defined benefit plan|||
|2. Other comprehensive|||
|incomes that cannot be reclassified into|||
|profits and losses under the equity|||
|method|||
|(II) Other comprehensive incomes|||
|that would be classified into profit and|||
|loss|||
|1. Other comprehensive|||
|incomes that can be reclassified into|||
|profits and losses under the equity|||
|method|||
|2. Loss and profit of|||
|change in fair value of|||
|available-for-sale financial assets|||
|3. Loss and profit of|||
|available-for-sale financial assets of|||
|held-to-maturity investments|||
|4. Effective part of hedge|||
|profit and loss of cash flow|||
|5. Translation difference in|||
|the foreign currency financial statement|||
|6. Others|||
|VI. Total comprehensive income|709,158,897.88|60,729,988.32|
|VII. Earnings per share:|||
|(I) Basic earning per share|||
|(II) Diluted earning per share|||

5. Consolidated cash flow statement
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|I. Cash flows from operating activities:|||
|Cash received from sales of goods|||
||7,517,301,512.57|6,627,148,304.92|
|or rendering of services|||
|Net increase of deposits from|||
|customers and other banks|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Net increase of loans from central|||
|bank|||
|Net increase of loans from other|||
|financial institutions|||
|Cash received from receiving|||
|insurance premium of original|||
|insurance contract|||
|Net cash received from reinsurance|||
|business|||
|Net increase of policy holder|||
|deposits and investment funds|||
|Disposal of financial assets|||
|measured at fair value with changes|||
|included in profits and losses|||
|Cash received from interests, fees|||
|and commissions|||
|Net increase of loans from other|||
|banks|||
|Net capital increase of repurchase|||
|business|||
|Refunds of taxes and levies|58,796,021.20|81,575,068.42|
|Cash received from other operating|||
||80,732,937.92|55,786,523.83|
|activities|||
|Sub-total of cash inflows from|||
||7,656,830,471.69|6,764,509,897.17|
|operating activities|||
|Cash paid for purchasing goods|||
||1,592,652,631.45|1,918,243,942.60|
|and services|||
|Net increase of customer's loans|||
|and advances|||
|Net increase of deposits in central|||
|bank and other banks|||
|Cash paid for indemnity of original|||
|insurance contract|||
|Cash paid for interests, service|||
|charges and commissions|||
|Cash paid for policy dividends|||
|Cash paid to and on behalf of|||
||716,621,799.73|597,184,300.24|
|employees|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Payments of taxes and levies|258,651,093.19|363,818,448.62|
|Other cash paid relating to|||
||3,134,471,326.48|2,053,367,277.41|
|operating activities|||
|Sub-total of cash outflows from|||
||5,702,396,850.85|4,932,613,968.87|
|operating activities|||
|Net cash flows from operating activities|1,954,433,620.84|1,831,895,928.30|
|II. Cash flows from investing activities:|||
|Cash received from withdrawal of|||
||421,971,645.20|304,550,800.00|
|investments|||
|Cash received from returns on|||
||66,495,799.11|25,999,566.33|
|investments|||
|Net cash received from disposal of|||
|fixed assets, intangible assets and other|13,201,717.90|8,909,245.08|
|long-term assets|||
|Net cash received from disposal of|||
||160,122,465.82||
|subsidiaries and other business units|||
|Other cash received relating to|||
||3,580,863,200.00|2,228,022,565.14|
|investing activities|||
|Sub-total of cash inflows from investing|||
||4,242,654,828.03|2,567,482,176.55|
|activities|||
|Cash paid to procure fixed assets,|||
|intangible assets and other long-term|324,484,119.63|1,018,821,190.70|
|assets|||
|Cash paid to acquire investments|227,024,902.40|344,220,277.93|
|Net increase of pledge loans|||
|Net cash received from payment of|||
||155,074,986.19|450,009,937.84|
|subsidiaries and other business entities|||
|Cash payments relating to other|||
||3,591,178,667.22|2,122,369,000.00|
|investment activities|||
|Sub-total of cash outflows from|||
||4,297,762,675.44|3,935,420,406.47|
|investing activities|||
|Net cash flows from investing activities|-55,107,847.41|-1,367,938,229.92|
|III. Cash flows from financing|||
|activities:|||
|Cash received from capital|||
||19,789,457.72|433,862,496.88|
|contribution|||
|Wherein: Cash from the|||
||19,789,457.72|4,900,000.00|
|investment of minority shareholders of|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|the subsidiaries|||
|Cash received from borrowings|649,000,000.00|910,400,000.00|
|Cash received from issuance of|||
|debentures|||
|Other cash received relating to|||
|financing activities|||
|Sub-total of cash inflows from|||
||668,789,457.72|1,344,262,496.88|
|financing activities|||
|Cash repayments of amounts|||
||680,172,393.57|572,506,834.37|
|borrowed|||
|Cash payments for interest|||
|expenses and distribution of dividends|557,419,932.16|368,016,434.03|
|or profits|||
|Wherein: Dividends and profits|||
|paid by subsidiaries to minority|90,000,000.00|128,000,000.00|
|shareholders|||
|Other cash payments relating to|||
||1,400,467,235.07|93,493,316.06|
|financing activities|||
|Sub-total of cash outflows from|||
||2,638,059,560.80|1,034,016,584.46|
|financing activities|||
|Net cash flows from financing activities|-1,969,270,103.08|310,245,912.42|
|IV. Influence of exchange rate change|||
||4,773,742.46|-12,505,684.94|
|on cash and cash equivalents|||
|V. Net increase of cash and cash|||
||-65,170,587.19|761,697,925.86|
|equivalents|||
|Add: Opening balance of cash and|||
||1,580,910,931.98|819,213,006.12|
|cash equivalents|||
|VI. Balance of cash and cash|||
||1,515,740,344.79|1,580,910,931.98|
|equivalents at the end of period|||

6. Cash flow statement of parent company
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|I. Cash flows from operating activities:|||
|Cash received from sales of goods|||
|||831,026.44|
|or rendering of services|||
|Refunds of taxes and levies|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Cash received from other operating|||
||2,839,071,058.58|1,173,262,433.61|
|activities|||
|Sub-total of cash inflows from|||
||2,839,071,058.58|1,174,093,460.05|
|operating activities|||
|Cash paid for purchasing goods|||
|||31,646.53|
|and services|||
|Cash paid to and on behalf of|||
||2,906,501.07|3,096,452.80|
|employees|||
|Payments of taxes and levies|17,678,775.88|1,484,543.09|
|Other cash paid relating to|||
||1,695,271,506.47|1,204,811,508.30|
|operating activities|||
|Sub-total of cash outflows from|||
||1,715,856,783.42|1,209,424,150.72|
|operating activities|||
|Net cash flows from operating activities|1,123,214,275.16|-35,330,690.67|
|II. Cash flows from investing activities:|||
|Cash received from withdrawal of|||
||497,690,000.00|195,000,000.00|
|investments|||
|Cash received from returns on|||
||224,996,712.32|1,582,261.90|
|investments|||
|Net 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|||
|Other cash received relating to|||
|||6,000,000.00|
|investing activities|||
|Sub-total of cash inflows from investing|||
||722,686,712.32|202,582,261.90|
|activities|||
|Cash paid to procure fixed assets,|||
|intangible assets and other long-term|||
|assets|||
|Cash paid to acquire investments|1,400,000,000.00||
|Net cash received from payment of|||
|||372,642,500.00|
|subsidiaries and other business entities|||
|Cash payments relating to other|||
|investment activities|||
|Sub-total of cash outflows from|||
||1,400,000,000.00|372,642,500.00|
|investing activities|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Net cash flows from investing activities|-677,313,287.68|-170,060,238.10|
|III. Cash flows from financing|||
|activities:|||
|Cash received from capital|||
|||428,962,496.88|
|contribution|||
|Cash received from borrowings|649,000,000.00|560,000,000.00|
|Cash received from issuance of|||
|debentures|||
|Other cash received relating to|||
|financing activities|||
|Sub-total of cash inflows from|||
||649,000,000.00|988,962,496.88|
|financing activities|||
|Cash repayments of amounts|||
||649,000,000.00|561,000,000.00|
|borrowed|||
|Cash payments for interest|||
|expenses and distribution of dividends|446,695,312.14|228,181,607.55|
|or profits|||
|Other cash payments relating to|||
||317,235.07|4,313,316.06|
|financing activities|||
|Sub-total of cash outflows from|||
||1,096,012,547.21|793,494,923.61|
|financing activities|||
|Net cash flows from financing activities|-447,012,547.21|195,467,573.27|
|IV. Influence of exchange rate change|||
|on cash and cash equivalents|||
|V. Net increase of cash and cash|||
||-1,111,559.73|-9,923,355.50|
|equivalents|||
|Add: Opening balance of cash and|||
||5,437,518.91|15,360,874.41|
|cash equivalents|||
|VI. Balance of cash and cash|||
||4,325,959.18|5,437,518.91|
|equivalents at the end of period|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 7. Consolidated statement of changes in owners' equity
Amount of current period
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Current period|||||||||||||
||Total owners' equity attributable to the parent company|||||||||||||
|||Other equity instruments||||||||||||
||||Perpet|||||||||||
|||||||||||||Minority||
|Item||||||Less:|Other||||||Total owner’s|
||||ual|||||||||||
|||Prefer||||||Special||General risk|Undistributed|shareholders'||
||Share capital||capita||Capital reserve|Treasur|comprehensive||Surplus reserve||||equity|
|||red||Others||||reserves||provisions|profit|equity||
||||l|||y stock|income|||||||
|||shares||||||||||||
||||securi|||||||||||
||||ties|||||||||||
|I. Balance at the||||||||||||||
|end of previous|2,148,110,844.00|||1,947,846.62|1,972,639,580.66||-25,087,592.30||99,561,946.09||2,819,597,585.78|269,888,245.23|7,286,658,456.08|
|year||||||||||||||
|Add: Changes||||||||||||||
|to accounting||||||||||||||
|policies||||||||||||||
|Fund for||||||||||||||
|corrections of||||||||||||||
|errors of previous||||||||||||||
|period||||||||||||||
|Business||||||||||||||
|combination under||||||||||||||
|the same control||||||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Others|||||||||
|II. Beginning|||||||||
||2,148,110,844.00|1,947,846.62|1,972,639,580.66|-25,087,592.30|99,561,946.09|2,819,597,585.78|269,888,245.23|7,286,658,456.08|
|balance at this year|||||||||
|III.|||||||||
|Increased/decrease|||||||||
|d amount this year|-23,240,591.00|-1,947,846.62|-1,673,899,613.45|71,463,938.88|70,915,889.79|512,613,417.41|-128,861,311.17|-1,172,956,116.16|
|(“-” indicates|||||||||
|decrease)|||||||||
|(I) Total|||||||||
|comprehensive||||71,463,938.88||1,008,503,357.80|142,926,476.33|1,222,893,773.01|
|income|||||||||
|(II) Owner|||||||||
|investment and|-23,240,591.00|-1,947,846.62|-1,669,411,237.39||||-181,787,787.50|-1,876,387,462.51|
|decreased capital|||||||||
|1. Ordinary share|||||||||
||-23,240,591.00||-446,970,507.71||||7,286,957.72|-462,924,140.99|
|invested by Owners|||||||||
|2. Capital invested|||||||||
|by other equity|||||||||
|instrument holders|||||||||
|3. Amounts of|||||||||
|share-based|||||||||
|payments|||||||||
|recognized in|||||||||
|owners' equity|||||||||
|4. Others||-1,947,846.62|-1,222,440,729.68||||-189,074,745.22|-1,413,463,321.52|
|(III) Profit|||||70,915,889.79|-495,889,940.39|-90,000,000.00|-514,974,050.60|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|distribution|||||
|1. Appropriation to|||||
||70,915,889.79|-70,915,889.79|||
|surplus reserves|||||
|2. Appropriation of|||||
|general risk|||||
|reserves|||||
|3. Distribution to|||||
|owners (or||-424,974,050.60|-90,000,000.00|-514,974,050.60|
|shareholders)|||||
|4. Others|||||
|(IV) Internal|||||
|transfer of owners'|||||
|equity|||||
|1. Capital (or share|||||
|capital) from|||||
|capital reserves|||||
|2. Capital (or share|||||
|capital) from|||||
|surplus reserves|||||
|3. Surplus reserves|||||
|for making up|||||
|losses|||||
|4. Set the income|||||
|from the carrying|||||
|forward and|||||
|retaining of benefit|||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|plan change||||||||
|amount||||||||
|5. Others||||||||
|(V) Special||||||||
|reserves||||||||
|1. Withdrawn||||||||
|amount of this||||||||
|period||||||||
|2. Using amount||||||||
|this period||||||||
|(VI) Others||-4,488,376.06|||||-4,488,376.06|
|IV. Closing balance|||||||6,113,702,339.92|
|of this accounting|2,124,870,253.00|298,739,967.21|46,376,346.58|170,477,835.88|3,332,211,003.19|141,026,934.06||
|period||||||||

Amount of previous period
Unit: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Previous period|||||||||||||
||Total owners' equity attributable to the parent company|||||||||||||
|||Other equity instruments||||||||||||
|||||||||||||Minority||
|Item|||Perpet|||Less:|Other|||General|||Total owner’s|
|||||||||Special|Surplus||Undistributed|shareholders'||
||||ual|||||||||||
||Share capital|Preferre|||Capital reserve|Treasur|comprehensive|||risk|||equity|
||||capital|Others||||reserves|reserve||profit|equity||
|||d shares||||y stock|income|||provisions||||
||||securit|||||||||||
||||ies|||||||||||
|I. Balance at the end|2,084,794,788.00|||1,947,846.62|934,484,599.29||-4,618,535.07||93,488,947.26||1,413,567,635.94|205,489,001.44|4,729,154,283.48|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|of previous year|||||||||
|Add: Changes|||||||||
|to accounting|||||||||
|policies|||||||||
|Fund for|||||||||
|corrections of errors|||||||||
|of previous period|||||||||
|Business|||||||||
|combination under|||||||||
|the same control|||||||||
|Others|||||||||
|II. Beginning|||||||||
||2,084,794,788.00|1,947,846.62|934,484,599.29|-4,618,535.07|93,488,947.26|1,413,567,635.94|205,489,001.44|4,729,154,283.48|
|balance at this year|||||||||
|III.|||||||||
|Increased/decreased|||||||||
|amount this year|63,316,056.00||1,038,154,981.37|-20,469,057.23|6,072,998.83|1,406,029,949.84|64,399,243.79|2,557,504,172.60|
|(“-” indicates|||||||||
|decrease)|||||||||
|(I) Total|||||||||
|comprehensive||||-20,469,057.23||1,620,582,427.47|216,603,015.41|1,816,716,385.65|
|income|||||||||
|(II) Owner|||||||||
|investment and|63,316,056.00||1,038,154,981.37||||-24,203,771.62|1,077,267,265.75|
|decreased capital|||||||||
|1. Ordinary share|||||||||
||63,316,056.00||1,148,009,452.24||||4,900,000.00|1,216,225,508.24|
|invested by Owners|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|2. Capital invested||||||
|by other equity||||||
|instrument holders||||||
|3. Amounts of||||||
|share-based||||||
|payments|85,836,485.00|||15,147,615.00|100,984,100.00|
|recognized in||||||
|owners' equity||||||
|4. Others|-195,690,955.87|||-44,251,386.62|-239,942,342.49|
|(III) Profit||||||
|||6,072,998.83|-214,552,477.63|-128,000,000.00|-336,479,478.80|
|distribution||||||
|1. Appropriation to||||||
|||6,072,998.83|-6,072,998.83|||
|surplus reserves||||||
|2. Appropriation of||||||
|general risk reserves||||||
|3. Distribution to||||||
|owners (or|||-208,479,478.80|-128,000,000.00|-336,479,478.80|
|shareholders)||||||
|4. Others||||||
|(IV) Internal transfer||||||
|of owners' equity||||||
|1. Capital (or share||||||
|capital) from capital||||||
|reserves||||||
|2. Capital (or share||||||
|capital) from surplus||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|reserves|||||||||
|3. Surplus reserves|||||||||
|for making up losses|||||||||
|4. Set the income|||||||||
|from the carrying|||||||||
|forward and|||||||||
|retaining of benefit|||||||||
|plan change amount|||||||||
|5. Others|||||||||
|(V) Special reserves|||||||||
|1. Withdrawn|||||||||
|amount of this|||||||||
|period|||||||||
|2. Using amount this|||||||||
|period|||||||||
|(VI) Others|||||||||
|IV. Closing balance|||||||||
|of this accounting|2,148,110,844.00|1,947,846.62|1,972,639,580.66|-25,087,592.30|99,561,946.09|2,819,597,585.78|269,888,245.23|7,286,658,456.08|
|period|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 8. Statement of changes in owner's equity of parent company
Amount of current period
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Current period|||||||||||
|||Other equity instruments|||||Other|||||
|||||||Less:||||||
|Item|||Perpetual||||comprehen|Special||Undistributed|Total owner’s|
||Share capital|Preferred|||Capital reserve|Treasury|||Surplus reserve|||
||||capital|Others|||sive|reserves||profit|equity|
|||shares||||stock||||||
||||securities||||income|||||
|I. Balance at the end of||||||||||||
||2,148,110,844.00||||4,401,934,248.25||||99,561,946.09|399,437,078.96|7,049,044,117.30|
|previous year||||||||||||
|Add: Changes to||||||||||||
|accounting policies||||||||||||
|Fund for||||||||||||
|corrections of errors of||||||||||||
|previous period||||||||||||
|Others||||||||||||
|II. Beginning balance at this||||||||||||
||2,148,110,844.00||||4,401,934,248.25||||99,561,946.09|399,437,078.96|7,049,044,117.30|
|year||||||||||||
|III. Increased/decreased||||||||||||
|amount this year (“-”|-23,240,591.00||||-449,473,008.43||||70,915,889.79|213,268,957.49|-188,528,752.15|
|indicates decrease)||||||||||||
|(I) Total comprehensive||||||||||||
|||||||||||709,158,897.88|709,158,897.88|
|income||||||||||||
|(II) Owner investment and|-23,240,591.00||||-449,473,008.43||||||-472,713,599.43|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|decreased capital||||||
|1. Ordinary share invested||||||
||-23,240,591.00|-449,473,008.43|||-472,713,599.43|
|by Owners||||||
|2. Capital invested by other||||||
|equity instrument holders||||||
|3. Amounts of share-based||||||
|payments recognized in||||||
|owners' equity||||||
|4. Others||||||
|(III) Profit distribution|||70,915,889.79|-495,889,940.39|-424,974,050.60|
|1. Appropriation to surplus||||||
||||70,915,889.79|-70,915,889.79||
|reserves||||||
|2. Distribution to owners (or||||||
|||||-424,974,050.60|-424,974,050.60|
|shareholder)||||||
|3. Others||||||
|(IV) Internal transfer of||||||
|owners' equity||||||
|1. Capital (or share capital)||||||
|from capital reserves||||||
|2. Capital (or share capital)||||||
|from surplus reserves||||||
|3. Surplus reserves for||||||
|making up losses||||||
|4. Set the income from the||||||
|carrying forward and||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|retaining of benefit plan||||||
|change amount||||||
|5. Others||||||
|(V) Special reserves||||||
|1. Withdrawn amount of this||||||
|period||||||
|2. Using amount this period||||||
|(VI) Others||||||
|IV. Closing balance of this|||||6,860,515,365.15|
||2,124,870,253.00|3,952,461,239.82|170,477,835.88|612,706,036.45||
|accounting period||||||

Amount of previous period
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Previous period|||||||||||
|||Other equity instruments||||||||||
|||||||Less:|Other|||||
|Item|||Perpetual|||||Special|||Total owner’s|
||Share capital|Preferred|||Capital reserve|Treasury|comprehensive||Surplus reserve|Undistributed profit||
||||capital|Others||||reserves|||equity|
|||shares||||stock|income|||||
||||securities|||||||||
|I. Balance at the end of||||||||||||
||2,084,794,788.00||||3,253,924,796.01||||93,488,947.26|553,259,568.27|5,985,468,099.54|
|previous year||||||||||||
|Add: Changes to||||||||||||
|accounting policies||||||||||||
|Fund for||||||||||||
|corrections of errors of||||||||||||
|previous period||||||||||||
|Others||||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|II. Beginning balance at this||||||
||2,084,794,788.00|3,253,924,796.01|93,488,947.26|553,259,568.27|5,985,468,099.54|
|year||||||
|III. Increased/decreased||||||
|amount this year (“-”|63,316,056.00|1,148,009,452.24|6,072,998.83|-153,822,489.31|1,063,576,017.76|
|indicates decrease)||||||
|(I) Total comprehensive||||||
|||||60,729,988.32|60,729,988.32|
|income||||||
|(II) Owner investment and||||||
||63,316,056.00|1,148,009,452.24|||1,211,325,508.24|
|decreased capital||||||
|1. Ordinary share invested||||||
||63,316,056.00|1,148,009,452.24|||1,211,325,508.24|
|by Owners||||||
|2. Capital invested by other||||||
|equity instrument holders||||||
|3. Amounts of share-based||||||
|payments recognized in||||||
|owners' equity||||||
|4. Others||||||
|(III) Profit distribution|||6,072,998.83|-214,552,477.63|-208,479,478.80|
|1. Appropriation to surplus||||||
||||6,072,998.83|-6,072,998.83||
|reserves||||||
|2. Distribution to owners (or||||||
|||||-208,479,478.80|-208,479,478.80|
|shareholder)||||||
|3. Others||||||
|(IV) Internal transfer of||||||
|owners' equity||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|1. Capital (or share capital)||||||
|from capital reserves||||||
|2. Capital (or share capital)||||||
|from surplus reserves||||||
|3. Surplus reserves for||||||
|making up losses||||||
|4. Set the income from the||||||
|carrying forward and||||||
|retaining of benefit plan||||||
|change amount||||||
|5. Others||||||
|(V) Special reserves||||||
|1. Withdrawn amount of||||||
|this period||||||
|2. Using amount this period||||||
|(VI) Others||||||
|IV. Closing balance of this||||||
||2,148,110,844.00|4,401,934,248.25|99,561,946.09|399,437,078.96|7,049,044,117.30|
|accounting period||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report II. Item notes to consolidated financial statement
1. Monetary funds
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Cash on hand|29,585.32|59,238.53|
|Bank deposit|1,526,769,012.67|1,573,326,143.60|
|Other monetary funds|6,166,602.06|7,525,549.85|
|Total|1,532,965,200.05|1,580,910,931.98|
|Wherein: Total amount deposited in the|||
||382,759,855.68|309,430,937.71|
|foreign countries|||

Other notes
Other monetary funds are the balances of third party payment platforms and portfolio accounts for the Company and its subsidiaries. 2. Notes receivable and accounts receivable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Notes receivable||55,340,000.00|
|Accounts receivable|1,298,554,481.23|884,909,012.77|
|Total|1,298,554,481.23|940,249,012.77|

 (1) Notes receivable
1) Type of bills receivable is listed
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Bank acceptance||55,340,000.00|
|Total||55,340,000.00|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Accounts receivable
1) Disclosure of accounts receivable types
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||||||||
|||Proportio||Accrual|Book value||||Accrual|Book value|
||Amount||Amount|||Amount|Proportion|Amount|||
|||n||proportion|||||proportion||
|Accounts receivable with|||||||||||
|provision for bad debts|||||||||||
|withdrawn based on the|1,367,120,440.35|100.00%|68,565,959.12|5.02%|1,298,554,481.23|932,039,535.47|99.73%|47,130,522.70|5.06%|884,909,012.77|
|credit risk feature|||||||||||
|portfolio|||||||||||
|Receivables of individual|||||||||||
|account with insignificant|||||||||||
|||||||2,493,589.80|0.27%|2,493,589.80|100.00%||
|amount but accrued for|||||||||||
|provision of bad debts|||||||||||
|Total|1,367,120,440.35|100.00%|68,565,959.12|5.02%|1,298,554,481.23|934,533,125.27|100.00%|49,624,112.50|5.31%|884,909,012.77|

 Receivables of individual account with significant amount and accrued provision for bad account at the end of this period:
□Applicable√Not Applicable
Accounts receivable with bad debts provisions accrued by aging analysis method in the portfolio:
√Applicable□Not Applicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Accounts receivable|Provision for bad debts|Accrual proportion|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|Items within 1 year||||
|Subtotal within 1 year|1,365,178,454.75|68,258,899.39|5.00%|
|1 - 2 year (s)|1,415,470.24|141,547.02|10.00%|
|2 - 3 years|488,724.86|146,617.46|30.00%|
|3 - 4 years|37,790.50|18,895.25|50.00%|
|4 - 5 years|||80.00%|
|Over 5 years|||100.00%|
|Total|1,367,120,440.35|68,565,959.12|5.02%|

 Description of basis for this portfolio determination:
Receivables of same aging share similar characteristics of credit risk
Receivables with bad debts provisions accrued by balance percentage method in the portfolio:
□Applicable√Not Applicable
Account receivables with bad debts provisions accrued by other methods in the portfolio:
None
The Company is required to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 12 - Listed Companies Engaged in Software and IT Services. The Company does not have any account receivable with age of more than 3 years and high single amount.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2) Reserve of the bad debts that are accrued, withdrew and taken back in current period
The provision for bad debt accrued in this current period is RMB 24,946,245.78 and the provision for bad debts returned back or taken back in this current period is RMB 0.00.
Including important provision for bad debt returned back or taken back in this current period:
Unit: RMB
||||
|-|-|-|
|Organization name|Amount returned back or taken back|Change the way of return|

 3) Accounts receivables actually written off in this period
Unit: RMB
|||
|-|-|
|Item|Verification amount|
|Receivable software operating income|2,499,329.10|

 Including important notes for cancellation of receivables after verification:
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Verification|Generated from|
||Nature of account|||||
|Organization name||Verification amount|Verification reason|procedures|related party|
||receivables|||||
|||||performed|transactions or not|

 Note for cancellation of account receivables after verification:
In the current period, the write-off of the provision for bad debts is RMB 2,499,329.10, and the amount arising from the reduction of bad debt provision due to disposal of subsidiaries is RMB 3,505,070.06.
4) Top five arrears balance of accounts receivable by the end of the period
Unit: RMB
|||||
|-|-|-|-|
|Organization name|Book balance|Percentage in accountsreceivable (%)|Provision for bad debts|
|No. 1|645,500,526.41|47.22%|32,275,026.32|
|No. 2|56,721,344.85|4.15%|2,836,067.24|
|No. 3|54,887,510.53|4.01%|2,744,375.53|
|No. 4|49,540,943.92|3.62%|2,477,047.20|
|No. 5|38,602,959.32|2.82%|1,930,147.97|
|Subtotal|845,253,285.03|61.82%|42,262,664.26|

 3. Prepayments
(1) Prepayments listed by aging
Unit: RMB
||||||
|-|-|-|-|-|
||Closing balance||Beginning balance||
|Aging|||||
||Amount|Proportion|Amount|Proportion|
|Within 1 year|146,868,718.41|75.80%|198,328,892.96|69.95%|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|1 - 2 year(s)|39,028,966.61|20.14%|56,723,653.42|20.01%|
|2 - 3 years|4,642,733.10|2.40%|28,413,652.41|10.02%|
|Over 3 years|3,229,714.71|1.66%|50,590.50|0.02%|
|Total|193,770,132.83|--|283,516,789.29|--|

The explanation for the reasons of failure in in-time settlement for significant amount of advance payment with aging of more than 1 year:
Unit: RMB
||||
|-|-|-|
|Unit|Amount of prepayment withage of more than 1 year|Unsettlement reasons|
|WEBZEN INC.|20,670,730.34|The game has not been launched|
|Total|20,670,730.34|/|

(2) Top five ending balances of prepayments classified by prepayment objects:
Unit: RMB
||||
|-|-|-|
|Organization name|Book balance|Proportion in remaining pre-paid amount|
|No. 1|20,670,730.34|10.67%|
|No. 2|18,725,822.60|9.66%|
|No. 3|18,000,000.00|9.29%|
|No. 4|12,353,760.00|6.38%|
|No. 5|10,427,258.32|5.38%|
|Subtotal|80,177,571.26|41.38%|

 Other notes:
None
4. Other receivables
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Interest receivable|64,445.20|582,592.17|
|Other receivables|792,361,183.70|388,111,919.85|
|Total|792,425,628.90|388,694,512.02|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (1) Interest receivable
1) Classification of interests payable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Fixed-term deposits|64,445.20|582,592.17|
|Total|64,445.20|582,592.17|

 (2) Other receivables
1) Classification of other receivables
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||||||||
|||Proportio||Accrual|Book value|||||Book value|
||Amount||Amount|||Amount|Proportion|Amount|Accrual proportion||
|||n||proportion|||||||
|Other accounts|||||||||||
|receivable withdrawn|||||||||||
|provision for bad debts|819,655,662.79|99.98%|27,294,479.09|3.33%|792,361,183.70|411,171,304.86|100.00%|23,059,385.01|5.61%|388,111,919.85|
|based on credit risk|||||||||||
|feature combination|||||||||||
|Other receivables of|||||||||||
|individual account with|||||||||||
|insignificant amount|200,000.00|0.02%|200,000.00|100.00%|||||||
|and accrued for|||||||||||
|provision of bad|||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|account|||||||||||
|Total|819,855,662.79|100.00%|27,494,479.09|3.35%|792,361,183.70|411,171,304.86|100.00%|23,059,385.01|5.61%|388,111,919.85|

 Other receivables of individual account with significant amount and with bad debt provision accrued at the end of current period:
□Applicable√Not Applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio:
√Applicable□Not Applicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Other receivables|Provision for bad debts|Accrual proportion|
|Items within 1 year||||
|Subtotal within 1 year|334,249,175.30|16,712,458.76|5.00%|
|1 - 2 year (s)|80,725,203.02|8,070,461.36|10.00%|
|2 - 3 years|1,122,916.40|336,874.92|30.00%|
|3 - 4 years|147,368.07|73,684.05|50.00%|
|4 - 5 years|||80.00%|
|Over 5 years|2,101,000.00|2,101,000.00|100.00%|
|Total|418,345,662.79|27,294,479.09|6.52%|

 Description of basis for this portfolio determination:
Receivables of same aging share similar characteristics of credit risk
Other receivables with bad debts provisions accrued by balance percentage method in the portfolio:
□Applicable√Not Applicable
Other receivables with provisions of bad debts accrued by other methods in the portfolio:
√Applicable□Not Applicable
||||||
|-|-|-|-|-|
|Other accounts receivable(by unit)|Ending balance||||
||Other receivables|Provision forbad debts|Accrualproportion|Reason for not accruing|
|Wuhu Ningzhong AutoParts Technology Co., Ltd.|RMB401,310,000.00|-|-|Fo r single tests of controllingshareholders’ funds, the presentvalue of estimated future cashflows is equal to the book value.|
|Total|RMB401,310,000.00|-|-|/|

2) Reserve of the bad debts that are accrued, withdrew and taken back in current period
The provision for bad debt accrued in this current period is RMB 5,538,704.08 and the provision for bad debts returned back or taken back in this current period is RMB 0.00.
Including important provision for bad debt transferred back or recovered in this period:
Unit: RMB
||||
|-|-|-|
|Organization name|Amount carried forward or recovered|Change the way of return|

3) Accounts receivables actually written off in this period
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Unit: RMB
|||
|-|-|
|Item|Verification amount|

Important notes for cancellation of other receivables after verification:
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Verification|Generated from|
||Nature of other|||||
|Organization name||Verification amount|Verification reason|procedures|related party|
||receivables|||||
|||||performed|transactions or not|

 Note for cancellation of other receivables after verification:
In the current period, the disposal of subsidiaries reduced the amount of bad debt provision by RMB 1,103,610.00.
4) Classification of other receivables based on the fund nature
Unit: RMB
||||
|-|-|-|
|Fund nature|Ending book value|Opening book balance|
|Security, deposit and imprest|69,863,183.59|45,432,385.25|
|Related parties borrowing||267,459,561.64|
|Receivable sharing and royalty|33,563,609.65|33,849,014.57|
|Equity-related receivables|448,486,888.88|57,768,000.00|
|Performance compensation receivables|260,868,040.88||
|Others|7,073,939.79|6,662,343.40|
|Total|819,855,662.79|411,171,304.86|

 5) Other accounts receivable in top five based on year-end balance collected from arrears party
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Proportion in total|Ending balance of|
|Organization name|Fund nature|Ending balance|Aging|ending balance of|provision for bad|
|||||other receivables|debts|
|Wuhu Ningzhong Auto Parts|Equity disposal|||||
|||401,310,000.00|Within 1 year|48.95%||
|Technology Co., Ltd.|receivables|||||
|Original shareholders of Shanghai||||||
|Mokun Digital Technology Co.,||||||
||Performance|||||
|Ltd. (Zhangshu Wangzhong||||||
||compensation|260,868,040.88|Within 1 year|31.82%|13,043,402.04|
|Investment Management Center||||||
||receivables|||||
|(Limited Partnership), Yang||||||
|Dongmai, Chen Wei)||||||
|Jiangyin Zhongnan Heavy|Equity disposal|||||
|||42,768,000.00|1 - 2 year(s)|5.22%|4,276,800.00|
|Industries Co., Ltd|receivables|||||
|Tibet is also complex Advertising|Cash deposit and||Within 1 year, 1 - 2|||
|||24,450,000.00||2.98%|1,347,500.00|
|Co., Ltd.|pledge||years|||
||Cash deposit and|||||
|Hefei Intermediate People’s Court||20,000,000.00|Within 1 year|2.44%|1,000,000.00|
||pledge|||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|Total|--|749,396,040.88|--|91.41%|19,667,702.04|

 5. Inventories
Does the Company need to comply with the disclosure requirements for real estate industry?
No
(1) Classifications of inventories
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Devaluation|||Devaluation||
||Book balance||Book value|Book balance||Book value|
|||provision|||provision||
|Raw material||||54,932,578.33||54,932,578.33|
|Products in|||||||
|||||3,074,467.07||3,074,467.07|
|process|||||||
|Commodity|||||||
|||0.00||45,497,455.50|1,676,415.59|43,821,039.91|
|stocks|||||||
|Total||0.00||103,504,500.90|1,676,415.59|101,828,085.31|

 Does the Company need to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 4 - Listed Companies Engaged in Seed Industry and Planting Business?
No
Does the Company need to comply with the disclosure requirements of the SZSE Industrial Information Disclosure Guide No. 11 - Listed Companies Engaged in Jewelry Related Business?
No
(2) Inventory valuation allowance
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||Increased amount of current period||Decreased amount of current period|||
||Beginning||||||
|Item||||Write-back or||Ending balance|
||balance|Withdrawing|Others||Others||
|||||write-off|||
|Commodity|||||||
||1,676,415.59|4,004,132.44|||5,680,548.03|0.00|
|stocks|||||||
|Total|1,676,415.59|4,004,132.44|0.00|0.00|5,680,548.03|0.00|

 In the current period, the disposal of subsidiaries reduced the amount of inventory valuation allowance by RMB 5,680,548.03. (3) Description for amount of borrowing costs capitalization in the final balance of the inventory
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (4) Finished but not calculated assets that is formed by construction contract at the end of the period. Unit: RMB
|||
|-|-|
|Item|Amount|

Other notes:
None
6. Assets held-for-sale
Unit: RMB
||||||
|-|-|-|-|-|
||Carrying value at the end||Estimated disposal||
|Item||Fair value||Estimated disposal date|
||of the period||expense||
|Available-for-sale|||||
||7,536,816.46|7,536,816.46|0.00|December 31st, 2019|
|financial assets|||||
|Total|7,536,816.46|7,536,816.46|0.00|--|

Other notes:
The above assets are expected to be disposed of within the next 12 months.
7. Other current assets
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Financing products of bank|116,000,000.00|110,000,000.00|
|Retained VAT and VAT to be certified|115,335,389.59|76,813,938.41|
|Prepaid income tax|6,410,819.68|4,010,401.52|
|Performance compensation receivables|119,119,168.64|401,364,984.06|
|Total|356,865,377.91|592,189,323.99|

 Other notes:
Performance compensation receivables are arising from the acquisition of68.43% equities from Shanghai Mokun Digital Technology Co., Ltd. in 2017 and the signing of profit compensation agreement with Yang Dongmai, Chen Wei and Zhangshu Wangzhong Investment Management Center (Limited Partnership) (original shareholders of Shanghai Mokun). According to the calculation methods stipulated in the profit compensation agreement; Shanghai Mokun Digital Technology Co.,Ltd.’s audited net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses in 2016, 2017 and 2018; and the impairment amount of goodwill and the calculation method of impairment compensation at the end of 2018, it is calculated that three original shareholders of Shanghai Mokun Digital Technology Co., Ltd. in 2018 should compensate the Company at a price of RMB 453,859,535.09, of which: cash compensation is RMB 260,868,040.88 and included in other receivables; and stock compensation is RMB 192,991,494.21 and calculated at the issue price of RMB 17.27/share. In addition, 12,618,556 shares shall be offered to the Company as compensation, and their fair value shall be calculated to be RMB 119,119,168.64 based on the market price on
December 31st, 2018.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 8. Available-for-sale financial assets
(1) Information of available-for-sale financial assets
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Impairment|||Impairment||
||Book balance||Book value|Book balance||Book value|
|||provision|||provision||
|Equity instrument|||||||
||1,131,091,025.55|11,800,000.00|1,119,291,025.55|894,281,586.86|11,800,000.00|882,481,586.86|
|available for sale:|||||||
|Fair value|||||||
||71,141,826.11||71,141,826.11|57,541,101.92||57,541,101.92|
|measurements|||||||
|Measured at cost|1,059,949,199.44|11,800,000.00|1,048,149,199.44|836,740,484.94|11,800,000.00|824,940,484.94|
|Total|1,131,091,025.55|11,800,000.00|1,119,291,025.55|894,281,586.86|11,800,000.00|882,481,586.86|

 (2) Available-for-sale financial assets measured at fair values at the end of the period
Unit: RMB
|||||
|-|-|-|-|
|Classification of||||
||Equity instrument|Available-for-sale||
|available-for-sale financial|||Total|
||available for sale|liability instrument||
|assets||||
|Costs of equity||||
|instruments/amortized costs of|57,810,972.60||57,810,972.60|
|debt instruments||||
|Fair value|71,141,826.11||71,141,826.11|
|Change amount of fair value||||
|accumulatively included in|13,330,853.51||13,330,853.51|
|other comprehensive incomes||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (3) Available-for-sale financial assets measured by cost at the end of term
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Book balance||||Impairment provision||||||
|||||||Increase in|||Shareholding ratio in|Cash bonus of current|
|Invested company||Increase in|Decrease in||Beginning||Decrease in||||
||Beginning balance|||Ending balance||current||Ending balance|invested companies|period|
|||current period|current period||balance||current period||||
|||||||period|||||
|Shenzhen Mokylin|||||||||||
||60,000,000.00|||60,000,000.00|||||1.95%||
|Technology Co., Ltd.|||||||||||
|Tianjin Purple|||||||||||
|Dragon Singular|||||||||||
|Point Interactive|25,264,211.00||2,148,421.10|23,115,789.90|||||1.72%||
|Entertainment Co.,|||||||||||
|Ltd.|||||||||||
|Hangzhou Southern|||||||||||
|||69,996,897.11||69,996,897.11|||||10.00%||
|Pictures Co., Ltd.|||||||||||
|Shenzhen Zhonghui|||||||||||
|Television Culture|||||||||||
|||50,000,000.00||50,000,000.00|||||3.85%||
|Communication Co.,|||||||||||
|Ltd.|||||||||||
|Chengdu Jule|||||||||||
||100,000.00|||100,000.00|100,000.00|||100,000.00|8.00%||
|Technology Co., Ltd.|||||||||||
|Beijing Jizhi Xunyou|||||||||||
||6,000,000.00|||6,000,000.00|6,000,000.00|||6,000,000.00|10.00%||
|Technology Co., Ltd.|||||||||||
|Shenzhen QiFun|||||||||||
||50,000,000.00|||50,000,000.00|||||6.22%||
|Network Corp. Ltd.|||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||
|-|-|-|-|-|-|-|-|
|Gortune Investment||||||||
|||1,000,000.00|1,000,000.00|||0.20%||
|Co., Ltd||||||||
|Guangzhou||||||||
|Joyegame Software|4,000,000.00||4,000,000.00|4,000,000.00|4,000,000.00|15.00%||
|Co., Ltd.||||||||
|Suzhou Youge||||||||
|Hulian Venture||||||||
|Investment Center|5,000,000.00||5,000,000.00|||2.98%||
|(Limited||||||||
|Partnership)||||||||
|Chengdu 91ACT||||||||
|Technology||52,731,000.00|52,731,000.00|||17.01%|2,440,350.00|
|Company||||||||
|Guangzhou Xiaoyi||||||||
|Network Technology|200,000.00||200,000.00|200,000.00|200,000.00|10.00%||
|Co., Ltd.||||||||
|Xiamen Intensive||||||||
|Joint Technology|8,000,000.00||8,000,000.00|||10.00%||
|Co., Ltd.||||||||
|Beijing Chinese Anci||||||||
|Equity Investment||||||||
|Fund Management|50,000,000.00||50,000,000.00|||16.67%||
|Center (Limited||||||||
|Partnership)||||||||
|Hunan Tianlei||||||||
|Network Technology|1,500,000.00||1,500,000.00|1,500,000.00|1,500,000.00|10.00%||
|Co., Ltd.||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Shanghai Mango|||||||
|Creative Equity|||||||
||240,000,000.00||66,418,508.59|173,581,491.41|7.78%|4,956,454.96|
|Investment Fund|||||||
|(L.P.)|||||||
|Beijing Colorful|||||||
|Game Technology|5,000,000.00|||5,000,000.00|8.54%||
|Co., Ltd.|||||||
|Jiangsu Mingtong|||||||
|Information|50,000,000.00|||50,000,000.00|5.00%||
|Technology Co., Ltd.|||||||
|Zhongsheng|||||||
|Chunqiu Film and|||||||
||9,000,000.00|||9,000,000.00|5.00%||
|TV Culture (Beijing)|||||||
|Co., Ltd.|||||||
|Shanghai Mango|||||||
|Interactive|||||||
||42,000,000.00||42,000,000.00||||
|Entertainment|||||||
|Technology Co., Ltd.|||||||
|Wafa Games Limited||875.06||875.06|10.00%||
|SNK Corporation||1,036.35||1,036.35|1.42%||
|Miaocode Education|||||||
|BVI Holding||6,863,200.00||6,863,200.00|3.00%||
|Limited|||||||
|Archiact Interactive|||||||
||20,587,940.96|1,036,481.90||21,624,422.86|7.86%||
|Ltd.|||||||
|Tianjin Digital Color|80,000,000.00|||80,000,000.00|1.51%||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Interactive|||||||
|Technology Co., Ltd.|||||||
|Tianshe (Shanghai)|||||||
|Culture & Media|10,000,000.00|||10,000,000.00|18.30%||
|Co., Ltd.|||||||
|Shanghai Quwei|||||||
|Network Technology|7,000,000.00|||7,000,000.00|4.75%||
|Co., Ltd.|||||||
|Antic gameworld|||||||
||38,332.98||38,332.98||5.00%||
|co.,ltd|||||||
|X.D. Network Co.,|||||||
||100,050,000.00|||100,050,000.00|2.38%|1,194,183.75|
|Ltd.|||||||
|Najia Technology|||||||
||40,000,000.00|||40,000,000.00|7.20%||
|(Shenzhen) Co., Ltd.|||||||
|Shenzhen Zen-game|||||||
||18,000,000.00|||18,000,000.00|2.78%|2,166,684.00|
|Technology Co., Ltd.|||||||
|Haojiahuo Media|||||||
|Fund I Partners|||||||
||5,000,000.00||1,100,000.00|3,900,000.00|20.00%||
|(Limited|||||||
|Partnership)|||||||
|Beijing Chenming|||||||
|||25,000,000.00||25,000,000.00|2.50%||
|Media Co., Ltd.|||||||
|Beijing Longri|||||||
|||2,999,193.00||2,999,193.00|10.00%||
|Technology Co., Ltd.|||||||
|Xiamen Huoyou|||||||
|||5,000,000.00||5,000,000.00|7.00%||
|Information|||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|Technology Co., Ltd.||||
|Shanghai||||
|Zhangmeng Network|10,000,000.00|10,000,000.00|10.00%|
|Technology Co., Ltd.||||
|Hebei Youying||||
|Culture Spreading|26,800,000.00|26,800,000.00|7.00%|
|Co., Ltd.||||
|Shanghai Touch||||
|Culture||||
||15,000,000.00|15,000,000.00|10.00%|
|Communication Co.,||||
|Ltd.||||
|Wake Of Light||||
|Network Technology|9,900,000.00|9,900,000.00|7.00%|
|Co., Ltd.||||
|Shanghai Original||||
|Plan Culture &|10,000,000.00|10,000,000.00|2.50%|
|Media Co. Ltd.||||
|Beijing Jinhai Shiyi||||
|Culture Media Co.,|7,500,000.00|7,500,000.00|15.00%|
|Ltd.||||
|Hangzhou Honghua||||
|Duoduo Network|16,978,390.00|16,978,390.00|5.00%|
|Technology Co., Ltd.||||
|Beijing Blueberry||||
|Time Technology|2,623,200.00|2,623,200.00|10.02%|
|Co., Ltd.||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Beijing Yuge|||||||||
|||2,000,000.00||2,000,000.00|||10.00%||
|Technology Co., Ltd.|||||||||
|YHKT|||||||||
|Entertainment Co.,||14,400,000.00||14,400,000.00|||8.10%||
|Ltd.|||||||||
|Guangzhou Xuyang|||||||||
|Network Technology||1,000,000.00||1,000,000.00|||10.00%||
|Co., Ltd.|||||||||
|Changzhou Pengyou|||||||||
|Interactive|||||||||
|Entertainment||1,500,000.00||1,500,000.00|||15.00%||
|Network Technology|||||||||
|Co., Ltd.|||||||||
|Wuji Entertainment|||||||||
|Games Co., Ltd.||2,583,703.75||2,583,703.75|||14.16%||
|(Korea)|||||||||
||||111,705,262.6|1,059,949,199.4|||||
|Total|836,740,484.94|334,913,977.17|||11,800,000.00|11,800,000.00|--|10,757,672.71|
||||7|4|||||

(4) Change of impairment of available-for-sale financial assets in the reporting period
Unit: RMB
|||||
|-|-|-|-|
|Classification of available-for-sale financial assets|Equity instrument available for|Available-for-sale liability||
||||Total|
||sale|instrument||
|Balance of opening impairment accrued|11,800,000.00||11,800,000.00|
|Accruing of current period|52,732,066.85||52,732,066.85|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Wherein: Transfer in from other comprehensive income|52,732,066.85|52,732,066.85|
|Decrease in current period|52,732,066.85|52,732,066.85|
|Balance of closing impairment accrued|11,800,000.00|11,800,000.00|

 9. Long-term equity investment
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase or decrease in this period||||||||||
||||||||||||Closing|
|||Addition||Profit and loss on|Other||Profit or cash|||||
||Beginning|||||Other||Withdrawn|||balance of|
|Invested company||al|Negative|investments|comprehensive||dividend|||Ending balance||
||balance|||||equity||impairment|Others||depreciation|
|||investme|investment|confirmed with|income||declared to be|||||
|||||||change||provision|||reserves|
|||nts||equity method|adjustment||distributed|||||
|I. Joint ventures||||||||||||
|II. Associates||||||||||||
|Yangzhou Fuhai Sanqi||||||||||||
|Internet Cultural||||||||||||
||50,000,000.00|5,000.00||-1,868,895.65||||||48,136,104.35||
|Investment Center||||||||||||
|(Limited Partnership)||||||||||||
|Chengdu Epietheus||||||||||||
||0.00|||||||||0.00|2,205,871.87|
|Technology Co., Ltd.||||||||||||
|Shenzhen Yiwan||||||||||||
|Network Technology|5,530,326.40|||-986,852.06||||||4,543,474.34||
|Co., Ltd.||||||||||||
|Penta Game Co., Ltd.|530,972.63|||91,040.99|||||-622,013.62|0.00||
|Shanghai Tingting||||||||||||
||0.00|||||||||0.00|6,718,402.50|
|Network Technology||||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Co., Ltd.|||||||
|Shanghai Aoting|||||||
|Network Technology|0.00||||0.00|2,978,876.18|
|Co., Ltd.|||||||
|Shanghai Moe Palace|||||||
|Network Technology|2,462,825.73||-2,462,825.73||0.00|2,462,825.73|
|Co., Ltd.|||||||
|Beijing Zhuayou|||||||
|Interactive Network|0.00||||0.00|4,874,914.55|
|Technology Co., Ltd.|||||||
|YHKT Entertainment|||||||
||5,830,002.99|||-5,830,002.99|0.00||
|Co., Ltd.|||||||
|Longzhang Network|||||||
|Technology|5,722,316.69|-530,438.17|||5,191,878.52||
|(Shanghai) Co., Ltd.|||||||
|Shenzhen Zhanlong|||||||
|Interactive|||||||
||7,313,570.51|-732,632.93|||6,580,937.58||
|Entertainment|||||||
|Technology Co., Ltd.|||||||
|Huai’an Sanqi Yijian|||||||
|Pan-Entertainment|||||||
|Asset Management|101,677,840.80|8,407,544.53||-110,085,385.33|0.00||
|Center (Limited|||||||
|Partnership)|||||||
|Xiamen Yiqi|||||||
|Investment|2,125,258.74|-462,336.57|||1,662,922.17||
|Management Co., Ltd.|||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Mango (Xiamen)|||||||
|Creative Incubation|||||||
|Equity Investment|38,646,762.21||516,747.41|||39,163,509.62|
|Fund Partnership|||||||
|(Limited Partnership)|||||||
|Chengdu 91ACT|||||||
||23,501,260.32||-57,515.85||-23,443,744.47|0.00|
|Technology Company|||||||
|Chengdu Mofei|||||||
||10,962,498.78||4,814,920.27|||15,777,419.05|
|Technology Co., Ltd.|||||||
|Chengdu Modu|||||||
||10,969,974.47||-1,264,717.03|||9,705,257.44|
|Technology Co., Ltd.|||||||
|Chengdu Pengwan|||||||
||57,102,073.65||922,526.36|-2,234,228.00||55,790,372.01|
|Technology Co., Ltd.|||||||
|Shanghai Fuhai Sanqi|||||||
|Investment|3,000,419.01||-13,417.91|||2,987,001.10|
|Management Co., Ltd.|||||||
|Shanghai Jueli Culture|||||||
||29,729,869.92||-2,136,170.23|||27,593,699.69|
|Media Co., Ltd.|||||||
|Jiangsu Yezi Network||15,000,0|||||
||||-1,098,251.51|||13,901,748.49|
|Technology Co., Ltd.||00.00|||||
|Beijing Xize|||||||
|Interactive||6,000,00|||||
||||-488,215.07|||5,511,784.93|
|Entertainment||0.00|||||
|Technology Co., Ltd.|||||||
|Sanqi Guangzheng||45,000,0|||||
|||||||45,000,000.00|
|(Guangzhou) Cultural||00.00|||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Technology||||||||||||
|Investment Partnership||||||||||||
|(Limited Partnership)||||||||||||
|Chengdu Popcorn||||||||||||
|Interactive||12,000,0||||||||||
|||||-388,213.60||||||11,611,786.40||
|Entertainment||00.00||||||||||
|Technology Co., Ltd.||||||||||||
|Shanghai Yuhouyi||||||||||||
|Network Technology|21,866,859.23|||-1,632,900.41||||||20,233,958.82||
|Co., Ltd.||||||||||||
|Shaoxing Shangyu||||||||||||
|||4,900,00||||||||||
|Zhangyu Network||||-253,649.26||||||4,646,350.74||
|||0.00||||||||||
|Technology Co., Ltd.||||||||||||
|Khorgos Tuolu||||||||||||
|||3,600,00||||||||||
|Lingyin Culture||||||||||3,600,000.00||
|||0.00||||||||||
|Technology Co., Ltd.||||||||||||
|Shanghai Fenghua||||||||||||
|Qiushi Culture Media||||3,414,788.87|||||129,263,558.53|132,678,347.40||
|Co., Ltd.||||||||||||
|New Cues (Beijing)||||||||||||
|Television Investment||||1,363,745.68|||||99,921,715.66|101,285,461.34||
|Co., Ltd.||||||||||||
|Longzhang Animation||||||||||||
|(Shanghai) Co., Ltd.||||||||||||
|||86,505,0||||||||||
|Subtotal|376,972,832.08||0.00|7,617,107.86|0.00|0.00|-2,234,228.00|-2,462,825.73|89,204,127.78|555,602,013.99|19,240,890.83|
|||00.00||||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||86,505,0||||||||||
|Total|376,972,832.08||0.00|7,617,107.86|0.00|0.00|-2,234,228.00|-2,462,825.73|89,204,127.78|555,602,013.99|19,240,890.83|
|||00.00||||||||||

Other notes
(1) Other changes in the current period include: The disposal of Wuji Entertainment Games Co., Ltd. (a subsidiary of the Company) caused its shareholding company - Penta Game Co., Ltd. to reduce the other amount of RMB 622,013.62; as the joint venture of Tibet Taifu Culture Media Co., Ltd., a subsidiary of the Company, YHKT Entertainment Co., Ltd. and Chengdu 91ACT Technology Company decreased their shareholding ratio this year, and the other amount was reduced by RMB 5,830,002.99 and RMB 23,443,744.47, respectively with long-term equity investment as available-for-sale financial assets; the Company acquired the remaining equity ofHuai’an Sanqi Yijian Pan-Entertainment Asset Management Center (Limited Partnership) and included it in its consolidated statements, resulting in the reduction of other amounts of RMB 110,085,385.33; in addition, Shanghai Fenghua Qiushi Culture Media Co., Ltd. and New Cues (Beijing) Television Investment Co., Ltd., the original joint stock company ofHuai’an Sanqi Yijian Pan-Entertainment Asset Management Center (Limited Partnership), were included in theCompany’s long-term equity investment, adding to other amounts by RMB 129,263,558.53 and RMB 99,921,715.66.
(2) As of the end of the reporting period, Longzhang Animation (Shanghai) Co., Ltd. has not recognized an excess loss of RMB 7,906,627.53.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 10. Fixed Assets
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Fixed assets|36,458,454.56|292,395,887.17|
|Total|36,458,454.56|292,395,887.17|

 (1) Status of fixed assets
Unit: RMB
|||||||
|-|-|-|-|-|-|
||Houses and|Machinery and||Electric and office||
|Item|||Motor vehicles||Total|
||buildings|equipment||equipment||
|I. Original carrying||||||
|value:||||||
|1. Balance at the||||||
|beginning of this|164,616,484.07|321,150,698.63|18,039,511.37|120,026,021.36|623,832,715.43|
|period||||||
|2. Increase of this||||||
||29,728,748.00|35,686,559.35|181,780.37|20,925,975.65|86,523,063.37|
|period||||||
|(1) Purchasing|27,876,250.00|2,319,334.98|181,780.37|20,925,975.65|51,303,341.00|
|(2)||||||
|Construction in||||||
||1,852,498.00|33,367,224.37|||35,219,722.37|
|progress||||||
|transferred-in||||||
|(3) Increase by||||||
|business||||||
|combination||||||
|3. Decrease of this||||||
||194,345,232.07|356,837,257.98|11,796,962.89|23,971,485.65|586,950,938.59|
|period||||||
|(1) Disposal or||||||
||122,256.76|13,259,910.76||6,747,003.55|20,129,171.07|
|discard as useless||||||
|(2) Disposal of||||||
|subsidiaries or|194,222,975.31|343,577,347.22|11,796,962.89|17,224,482.10|566,821,767.52|
|liquidation||||||
|4. Ending balance|||6,424,328.85|116,980,511.36|123,404,840.21|
|II. Accumulated||||||
|depreciation||||||
|1. Balance at the|39,642,480.79|177,572,760.75|9,547,888.32|87,385,476.20|314,148,606.06|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|beginning of this||||||
|period||||||
|2. Increase of this||||||
||5,098,435.17|23,736,930.77|2,433,786.65|16,050,267.65|47,319,420.24|
|period||||||
|(1) Accruing|5,098,435.17|23,736,930.77|2,433,786.65|16,050,267.65|47,319,420.24|
|3. Decrease of this||||||
||44,740,915.96|201,309,691.52|8,847,579.27|19,623,453.90|274,521,640.65|
|period||||||
|(1) Disposal or||||||
||24,841.74|872,458.22||5,063,458.30|5,960,758.26|
|discard as useless||||||
|(2) Disposal of||||||
|subsidiaries or|44,716,074.22|200,437,233.30|8,847,579.27|14,559,995.60|268,560,882.39|
|liquidation||||||
|4. Ending balance|||3,134,095.70|83,812,289.95|86,946,385.65|
|III. Provision for||||||
|impairment of assets||||||
|1. Balance at the||||||
|beginning of this||17,288,222.20|||17,288,222.20|
|period||||||
|2. Increase of this||||||
|period||||||
|(1) Accruing||||||
|3. Decrease of this||||||
|||17,288,222.20|||17,288,222.20|
|period||||||
|(1) Disposal or||||||
|||701,638.09|||701,638.09|
|discard as useless||||||
|(2) Disposal of||||||
|subsidiaries or||16,586,584.11|||16,586,584.11|
|liquidation||||||
|4. Ending balance||||||
|IV. Book value||||||
|1. Ending book||||||
||||3,290,233.15|33,168,221.41|36,458,454.56|
|value||||||
|2. Book value at||||||
|the beginning of|124,974,003.28|126,289,715.68|8,491,623.05|32,640,545.16|292,395,887.17|
|period||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 11. Construction in progress
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Construction in progress||50,672,878.42|
|Total||50,672,878.42|

 (1) Status of construction under progress
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Impairment|||Impairment|Book value|
||Book balance||Book value|Book balance|||
|||provision|||provision||
|Phase II|||||||
|equipment||||51,102,382.68|429,504.26|50,672,878.42|
|engineering|||||||
|Total||||51,102,382.68|429,504.26|50,672,878.42|

 (2) Change of significant construction during the period
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||Proportio||||||
||||||||n of|||Wherein:|||
||||||||||Accumulatedamountofcapitalized interest||Capitali||
||||||||accumula|||Amount|||
|||||Amount of||Endi|||||zation||
||||Increased||Amount of||tive|Project||of|||
|Project|Budg|Beginning||transfer-in||ng|||||rate of|Capital|
||||amount of||other decreases||engineeri|progres||capitalize|||
|name|et|balance||fixed assets at||balan|||||interest|sources|
||||current period||of this period||ng|s||d interest|||
|||||current period||ce|||||for this||
||||||||investme|||in current|||
||||||||||||period||
||||||||nt in|||period|||
||||||||budget||||||
|Phase II|||||||||||||
|equipment||51,102,382.68|159,573,327.28|35,219,722.37|175,455,987.59||||||||
|engineering|||||||||||||
|Total||51,102,382.68|159,573,327.28|35,219,722.37|175,455,987.59||--|--||||--|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 12. Intangible assets
(1) Status of intangible assets
Unit: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||Cost of||||||
||||Non-patent|||||||
|Item|Land use rights|Patent right||publication|Domain name|Game copyright|Trademark|Office software|Total|
||||technology|||||||
|||||number||||||
|I. Original carrying value||||||||||
|1. Balance at the||||||||||
||26,840,827.98|433,225.73||354,930.00|12,778,182.04|102,289,169.43|1,093,770.09|13,789,477.71|157,579,582.98|
|beginning of this period||||||||||
|2. Increase of this||||||||||
||0.00|46,757.09||0.00|0.00|0.00|10,923.36|2,188,309.03|2,245,989.48|
|period||||||||||
|(1) Purchasing||46,757.09||||||2,188,309.03|2,235,066.12|
|(2) Internal R&D||||||||||
|(3) Increase by||||||||||
|business combination||||||||||
|(4) Exchange rate||||||||||
||0.00|||0.00|0.00|0.00|10,923.36||10,923.36|
|variation||||||||||
|3. Decrease of this period|26,840,827.98|479,982.82||||8,849,452.49|238,929.14|3,617,392.10|40,026,584.53|
|(1) Disposal||||||8,849,452.49|||8,849,452.49|
|(2) Disposal of||||||||||
||26,840,827.98|479,982.82|||||238,929.14|3,617,392.10|31,177,132.04|
|subsidiaries or liquidation||||||||||
|4. Ending balance||||354,930.00|12,778,182.04|93,439,716.94|865,764.31|12,360,394.64|119,798,987.93|
|II. Accumulated amortization|0.00|0.00||0.00|0.00|0.00|0.00|0.00|0.00|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|1. Balance at the|||||||||
||5,039,376.59|88,303.26|354,930.00|2,395,909.31|65,733,536.40|421,636.24|7,422,677.44|81,456,369.24|
|beginning of this period|||||||||
|2. Increase of this|||||||||
||494,536.68|34,752.89|0.00|638,909.16|3,480,714.04|26,424.53|3,293,272.55|7,968,609.85|
|period|||||||||
|(1) Accruing|494,536.68|34,752.89|0.00|638,909.16|3,480,714.04|17,073.10|3,293,272.55|7,959,258.42|
|(2) Exchange rate|||||||||
||0.00|0.00|0.00|0.00|0.00|9,351.43|0.00|9,351.43|
|variation|||||||||
|3. Decrease of this|||||||||
||5,533,913.27|123,056.15|||6,357,983.58|74,362.67|2,680,855.64|14,770,171.31|
|period|||||||||
|(1) Disposal||103,771.15|||6,357,983.58|||6,461,754.73|
|(2) Disposal of|||||||||
||5,533,913.27|19,285.00||||74,362.67|2,680,855.64|8,308,416.58|
|subsidiaries or liquidation|||||||||
|4. Ending balance|||354,930.00|3,034,818.47|62,856,266.86|373,698.10|8,035,094.35|74,654,807.78|
|III. Provision for impairment|||||||||
||0.00|0.00|0.00|0.00|0.00|0.00|0.00|0.00|
|of assets|||||||||
|1. Balance at the|||||||||
||||||30,440,779.99||784,321.46|31,225,101.45|
|beginning of this period|||||||||
|2. Increase of this|||||||||
|period|||||||||
|(1) Accruing|||||||||
|3. Decrease of this|||||||||
||||||||377,358.34|377,358.34|
|period|||||||||
|(1) Disposal|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|4. Ending balance|||||30,440,779.99||406,963.12|30,847,743.11|
|IV. Book value|0.00|0.00|0.00|0.00|0.00|0.00|0.00|0.00|
|1. Ending book value||||9,743,363.57|142,670.09|492,066.21|3,918,337.17|14,296,437.04|
|2. Book value at the|||||||||
||21,801,451.39|344,922.47||10,382,272.73|6,114,853.04|672,133.85|5,582,478.81|44,898,112.29|
|beginning of period|||||||||

The ratio of intangible assets formed through the internal research and development of the Company at the end of the period to the balance of intangible assets is16.48%.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 13. Development expenditure
Unit: RMB
|||||||
|-|-|-|-|-|-|
||Beginning||||Ending|
|Item||Increased amount of current period|Decreased amount of current period|||
||balance||||balance|
|Item I|3,951,558.23|2,254,237.93|||6,205,796.16|
|Item II|118,714.20|||118,714.20||
|Total|4,070,272.43|2,254,237.93||118,714.20|6,205,796.16|

 Other notes
14. Goodwill
(1) Carrying value of goodwill
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|Name of the||Increase in current period||Decrease in current period||Ending balance|
|invested company|||||||
||Beginning|Formed through|||||
|and the matter|||||||
||balance|business|Others|Disposal|Others||
|which forms|||||||
|||combination|||||
|goodwill|||||||
|Shanghai Sanqi|||||||
|Interactive|1,578,065,048.53|||||1,578,065,048.53|
|Entertainment|||||||
|Wuji|||||||
|Entertainment|1,911,913.34|||1,911,913.34|||
|Games Co., Ltd.|||||||
|Chengdu|||||||
|Shengge Times|||||||
|Network|263,737.88|||||263,737.88|
|Technology Co.,|||||||
|Ltd.|||||||
|Shanghai Mokun|1,259,793,585.93|||||1,259,793,585.93|
|Total|2,840,034,285.68|||||2,838,122,372.34|

 (2) Goodwill impairment
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|Name of the||Increase in current period||Decrease in current period||Ending balance|
|invested company|Beginning||||||
|and the matter|balance|Withdrawing|Others|Disposal|Others||
|which forms|||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|goodwill||||
|Chengdu||||
|Shengge Times||||
|Network|263,737.88||263,737.88|
|Technology Co.,||||
|Ltd.||||
|Shanghai Mokun|299,457,551.04|959,833,685.66|1,259,291,236.70|
|Total|299,721,288.92|959,833,685.66|1,259,554,974.58|

 Information about the asset group or portfolio in which the goodwill is recognized
||||||
|-|-|-|-|-|
|Name of asset group|Composition|Carrying amount(Unit: RMB)|Determination method|Whether it is consistent with the assetgroup recognized at the date ofacquisition and the time of goodwillimpairment test in previous years|
|Shanghai SanqiInteractiveEntertainment|All assets andliabilities ofShanghai SanqiInteractiveEntertainment|3,527,707,463.90|S h a n g h a i S a n q i InteractiveE ntertainment can bringindependent cash flows and istherefore identified as a portfolio|Yes|
|Shanghai Mokun|All assets andliabilities ofShanghai Mokun|106,085,800.19|S h a n g h a i M o k u n can bringin dependent cash flows and istherefore identified as a portfolio|Yes|

Explain the process of goodwill impairment test, key parameters (such as the growth rate in forecast period, growth rate in steady period, profit rate, discount rate, forecast period, etc. for estimation of the present value of future cash flows), and the recognition method of goodwill impairment loss:
At the end of 2018, the book value of the goodwill formed by the merger of above-mentioned companies was apportioned to relevant asset groups with a reasonable method as of the date of acquisition, and the relevant asset groups containing goodwill were also tested for impairment. The recoverable amount of the goodwill formed by the merger is calculated by the Company based on the present value of estimated future cash flows, and the above key data are determined based on historical experiences and forecasts on market development.
Shanghai Mokun: The current value of the expected future cash flow of the asset group refers to the evaluation basis, evaluation process and evaluation results in the Evaluation Report (L.X.(Z.)P.B.Z.[2019] No. A0043) issued by Guangdong Union Trust Evaluation Co., Ltd. In 2018, due to the restrictions on the publication number and the overall decline in growth rate of the game industry, the launch schedule of ShanghaiMokun’s developed games was not up to expectations, resulting in its major games failing to be launched in 2018 and generate revenue and profits and ShanghaiMokun’s operating results lower than expected. In 2018, the future cash flow was estimated based on the financial budget and perpetual cash flow of the asset group approved by the management for five years. The annualized growth rate of operating income in the next five years will range from15.91% to7%. The perpetual cash flow after the next five years will be determined by the level of the final year at the detailed forecast period, combined with the industry development trend. The discount rate for calculating the present value is14.11%, which is the pre-tax discount rate that
reflects the specific risks of the relevant asset group. Compared with the present value of the asset group including goodwill, a
provision for impairment of goodwill of RMB 959,833,685.66 shall be set aside this year.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Shanghai Sanqi Interactive Entertainment: The management prepares the cash flow forecast for the next five years based on the most recent financial budget, and estimates the cash flow for the perpetual period. It is expected that the annual growth rate of operating income will be20%-0% in the next 5 years. The perpetual cash flow after the next five years will remain stable, and the discount rate for calculating the present value will be13.74%. Compared with the present value of the asset group including goodwill, the goodwill of Shanghai Sanqi Interactive Entertainment is not impaired.
Impact of goodwill impairment test
In 2018, due to the restrictions on the publication number and the overall decline in growth rate of the game industry, theR&D and launch schedule of Shanghai Mokun, a subsidiary of the Company, was not up to expectations, resulting in its major games failing to be launched in 2018 and generate revenue and profits and ShanghaiMokun’s operating results lower than expected. In 2018, the committed net profit was RMB 168.00 million and ShanghaiMokun’s net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses in 2018 was RMB -4.8249 million. According to the relevant provisions of Accounting Standards for Business Enterprises and theCompany’s accounting policies, the Company conducted an impairment test on the goodwill formed by the acquisition of equities from Shanghai Mokun, and the difference of the total amount of goodwill at the end of the year and the fair value of net identifiable assets minus the assessed value of all equities was deemed as the amount of goodwill impairment that should be accrued at the end of 2018.
Other notes
None
15. Long-term deferred expenses
Unit: RMB
|||||||
|-|-|-|-|-|-|
||||Amortization|||
|||Increased amount of||||
|Item|Beginning balance||amount of the|Other decreases|Ending balance|
|||current period||||
||||current period|||
|Cost of copyright||||||
||74,821,106.66|55,766,989.82|59,910,845.76|502,309.77|70,174,940.95|
|agency||||||
|Trade mark||||||
||99,838.19||96,894.93||2,943.26|
|registration fee||||||
|Cost of building||||||
||4,882,144.74|1,601,805.24|2,375,287.70||4,108,662.28|
|decoration||||||
|Total|79,803,089.59|57,368,795.06|62,383,028.39|502,309.77|74,286,546.49|

 Other notes
None
16. Deferred income tax assets and deferred income tax liabilities
(1) Non-offset deferred income tax assets
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
||Deductible temporary|Deferred income tax|Deductible temporary||
|||||Deferred income tax assets|
||differences|assets|differences||
|Provision for assets|||||
||130,272,445.92|22,476,347.10|36,779,247.42|7,231,974.30|
|impairment|||||
|Deductible losses|23,377,176.05|3,718,400.30|3,304,795.02|826,198.75|
|Changes in fair value of|||||
|available-for-sale financial|||23,559,590.80|2,091,835.89|
|assets (impairment losses)|||||
|Accrued performance|||||
||7,536,817.40|1,130,522.61|3,756,740.62|338,106.66|
|compensation receivables|||||
|Governmental subsidies|||||
|recognized into deferred|||8,817,182.16|1,322,577.32|
|income|||||
|Total|161,186,439.37|27,325,270.01|76,217,556.02|11,810,692.92|

 (2) Details of unrecognized deferred income tax assets
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Deductible temporary differences|80,408,693.08|114,160,721.60|
|Deductible losses|122,954,217.39|186,240,044.70|
|Total|203,362,910.47|300,400,766.30|

 (3) Deductible losses of unrecognized deferred income tax assets will be expired at the end of following years
Unit: RMB
|||||
|-|-|-|-|
|Year|Ending amount|Initial amount|Remarks|
|2019||5,191,066.43||
|2020|2,058,386.09|29,786,482.41||
|2021|18,045,171.61|53,635,799.65||
|2022|85,382,375.75|97,626,696.21||
|After 2022|17,468,283.94|||
|Total|122,954,217.39|186,240,044.70|--|

Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 17. Other non-current assets
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Prepayment for engineering equipment||68,399,174.14|
|Prepayment for equity investment||50,000,000.00|
|Prepayment for house purchase|801,611,138.04|795,864,793.02|
|Total|801,611,138.04|914,263,967.16|

 Other notes:
None
18. Short-term Loans
(1) Classification of short-term loans
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Guaranteed loans|369,000,000.00|372,054,500.00|
|Total|369,000,000.00|372,054,500.00|

 Description of classification of other short-term borrowings:
The Company classifies short-term borrowings by borrowing conditions.
19. Notes payable and accounts payable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Accounts payable|1,082,362,368.29|741,792,973.33|
|Total|1,082,362,368.29|741,792,973.33|

 (1) List of accounts payable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Payables on materials||78,742,772.74|
|Payable shared profits of games|508,051,919.40|406,735,668.55|
|Payable internet traffic costs|560,422,006.00|219,833,849.91|
|Other payable costs|13,888,442.89|36,480,682.13|
|Total|1,082,362,368.29|741,792,973.33|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Significant accounts payable with age of more than one year
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Reasons for outstanding or non-carryover|
|Shengji Information Technology|||
||6,866,723.87|In the process of reconciliation|
|(Shanghai) Co., Ltd.|||
|Total|6,866,723.87|--|

Other notes:
None
20. Account received in advance
(1) List of account received in advance
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Advances on sales||2,085,495.91|
|Recharge received in advance|94,547,117.27|81,795,279.69|
|Shared profits received in advance||1,005,959.24|
|Others|81,625.32||
|Total|94,628,742.59|84,886,734.84|

 21. Staff salaries payable
(1) List of staff salaries payable
Unit: RMB
||||||
|-|-|-|-|-|
||||Decrease in current||
|Item|Beginning balance|Increase in current period||Ending balance|
||||period||
|I. Short-term|||||
||112,808,985.92|701,173,947.60|692,849,384.25|121,133,549.27|
|remuneration|||||
|II. Post-employment|||||
|benefit-defined|596,785.58|39,018,138.69|38,940,125.19|674,799.08|
|contribution plans|||||
|III. Dismiss welfares|74,250.00|1,171,439.98|1,075,637.15|170,052.83|
|Total|113,480,021.50|741,363,526.27|732,865,146.59|121,978,401.18|

(2) List of short-term remuneration
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
||||Decrease in current||
|Item|Beginning balance|Increase in current period||Ending balance|
||||period||
|1. Salaries, bonus,|||||
||108,121,922.68|620,043,409.78|607,671,407.42|120,493,925.04|
|allowances and subsidies|||||
|2. Staff welfare expenses||36,155,187.78|36,155,187.78||
|3. Social insurance|||||
||342,764.93|21,444,703.98|21,407,991.85|379,477.06|
|premiums|||||
|Wherein: Medical|||||
||299,439.24|18,304,959.00|18,271,766.75|332,631.49|
|insurance premiums|||||
|Industrial|||||
|injuries insurance|6,233.18|574,387.94|575,034.84|5,586.28|
|premium|||||
|Maternity|||||
||28,595.97|1,972,851.71|1,967,583.68|33,864.00|
|insurance premiums|||||
|Critical|||||
||8,496.54|592,505.33|593,606.58|7,395.29|
|illness insurance|||||
|4. Housing provident|||||
||223,868.00|18,764,192.84|18,738,999.84|249,061.00|
|fund|||||
|5. Union expenses and|||||
|employee educational|4,120,430.31|4,766,453.22|8,875,797.36|11,086.17|
|expenditure|||||
|Total|112,808,985.92|701,173,947.60|692,849,384.25|121,133,549.27|

 (3) List of defined contribution plans
Unit: RMB
||||||
|-|-|-|-|-|
||||Decrease in current||
|Item|Beginning balance|Increase in current period||Ending balance|
||||period||
|1. Basic endowment|||||
||582,242.35|37,633,046.65|37,561,162.84|654,126.16|
|insurance|||||
|2. Unemployment|||||
||14,543.23|1,385,092.04|1,378,962.35|20,672.92|
|insurance premiums|||||
|Total|596,785.58|39,018,138.69|38,940,125.19|674,799.08|

 Other notes:
None
22. Taxes payable
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|VAT|33,574,036.91|22,778,212.15|
|Enterprise income tax|51,032,839.33|31,249,164.08|
|Individual income tax|971,561.88|1,078,087.62|
|Urban maintenance and construction tax|1,366,222.30|929,920.78|
|Education surtax|590,668.51|497,953.99|
|Local education surcharge|392,703.75|331,969.34|
|Housing property tax||454,278.16|
|Land use tax||253,945.28|
|Water conservancy funds|397,874.74|182,693.41|
|Stamp tax|591,306.68|485,653.80|
|River management fees||39,257.62|
|Embankment protection fee|179.23|179.24|
|Outbound income tax|358,410.10||
|Total|89,275,803.43|58,281,315.47|

 Other notes:
None
23. Other payables
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Interests payable|52,841.84|390,533.38|
|Other payables|108,089,757.99|61,572,020.26|
|Total|108,142,599.83|61,962,553.64|

 (1) Interest payable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Interest payable for short-term loan|52,841.84|390,533.38|
|Total|52,841.84|390,533.38|

 Significant interest overdue but unpaid:
Unit: RMB
||||
|-|-|-|
|Borrower|Default penalty|Overdue reason|

Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Other payables
1) Other accounts payable listed by the nature of accounts
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Deposit and guarantee deposit|8,360,000.00|7,650,158.00|
|Payable temporary receipts||2,000,000.00|
|Freight and storage charges||9,825,807.62|
|Investment funds payable|8,500,000.00|35,448,685.81|
|Equity funds|86,936,207.21||
|Others|4,293,550.78|6,647,368.83|
|Total|108,089,757.99|61,572,020.26|

 24. Non-current liability due within one year
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Long-term loans due within 1 year|29,599,165.73|28,117,893.57|
|Total|29,599,165.73|28,117,893.57|

 Other notes:
Non-current liabilities due within one year are the mortgage loans due within one year for house purchase by legal persons that are used by the subsidiaries of the Company for the purchase of office space.
25. Other current liabilities
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Temporarily estimated output tax|89,719,750.76|53,981,510.57|
|Payable performance compensation|7,536,817.40|3,756,740.62|
|Total|97,256,568.16|57,738,251.19|

 Movements in short-term bonds payable:
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amortizat|||
|||||||Issuance|Withdraw||Repayme||
|||||||||ion of|||
|Name of|Nominal|Issuing|Bond|Issuing|Beginnin|in the|ing||nts in the|Ending|
|||||||||premium|||
|bonds|value|date|period|amount|g balance|current|interest at||current|balance|
|||||||||or|||
|||||||period|par||period||
|||||||||discount|||

Other notes:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Payable performance compensation is the performance compensation arising from canceling 357,483 shares of Jiangyin Zhongnan Heavy Industries Co., Ltd due to Shanghai Aurora Networks Technology Co., Ltd. transferred in 2017 failing to satisfy its
performance commitment in 2018.
26. Long-term loans
(1) Classification of long-term loans
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Mortgage, guaranteed loan|281,176,106.33|310,775,272.06|
|Total|281,176,106.33|310,775,272.06|

 Description of classification of other long-term borrowings:
Long-term borrowings are the mortgage loans for house purchase by legal persons that are used by the subsidiaries of the Company for the purchase of office space. The Company assumes joint and several liabilities for these borrowings.
Other instructions, including interest rate range:
The applicable interest rate is105% of the benchmark interest rate for 5-year RMB loans from financial institutions.
27. Bonds payable
(1) Bonds payable
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Convertible corporate bonds||27,163,239.26|
|Total||27,163,239.26|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Increase and decrease of bonds payable (excluding other financial instruments like preferred shares and perpetual capital securities that were classified into financial liabilities)
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||Issuance in the|Withdrawing|Amortization of|Repayments in the|Decrease in||
|Name of bonds|Nominal value|Issuing date|Bond period|Issuing amount|Beginning balance||||||Ending balance|
|||||||current period|interest at par|premium or discount|current period|current period||
|private||||||||||||
|||December|December 1st,|||||||||
|convertible|23,028,000.00|||20,237,720.27|23,288,349.08||1,151,400.00|718,643.84||25,158,392.92|0.00|
|||2nd, 2016|2021|||||||||
|bonds 1st||||||||||||
|private||||||||||||
|||December|December 1st,|||||||||
|convertible|3,831,571.35|||3,367,303.68|3,874,890.18||191,578.57|119,573.36||4,186,042.11|0.00|
|||2nd, 2016|2021|||||||||
|bonds 2nd||||||||||||
|Total|--|--|--|23,605,023.95|27,163,239.26||1,342,978.57|838,217.20||29,344,435.03||

 (3) Description of the conversion conditions and time of convertible corporate bonds
The issuer of convertible corporate bonds at the beginning of the period is Wuji Entertainment Games Co., Ltd. (Korea), a holding subsidiary of the Company, and the holder of convertible corporate bonds can request conversion during the period from the date of one year from the date of issuance to one month before the expiration date. The decrease of convertible corporate bonds in this period is due to the disposal for control loss by Wuji Entertainment Games Co., Ltd. (Korea).
28. Deferred income
Unit: RMB
|||||||
|-|-|-|-|-|-|
|Item|Beginning balance|Increase in current period|Decrease in current period|Ending balance|Cause|
||||||Governmental subsidy related to|
|Government subsidies|8,817,182.17|681,000.00|9,498,182.17|||
||||||assets|
|Deferred income from royalty income|8,409,292.27|1,931,196.96|6,436,773.91|3,903,715.32|Royalty income|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|Total|17,226,474.44|2,612,196.96|15,934,956.08|3,903,715.32|--|

 Items revolving governmental subsidies:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||||Amount of||||||
|||Amounts of new||Amount of other|Amount of cost||||
||||non-operating||||||
|Items of liabilities|Beginning balance|subsidies in||income in current|offset in the current|Other movements|Ending balance|Related to assets/income|
||||income in||||||
|||current period||period.|period||||
||||current period||||||
|Project subsidies of Automotive Fuel|||||||||
||650,000.08|||119,166.67||-530,833.41||Related to assets|
|System R&D Center|||||||||
|Subsidy for the purchase of single|||||||||
||152,896.27|||25,163.35||-127,732.92||Related to assets|
|equipment by SMEs|||||||||
|Provincial “6+1” subsidies for|||||||||
|building independent innovation|699,833.33|||90,566.67||-609,266.66||Related to assets|
|capacity in Anhui Province|||||||||
|Special funds for development of|||||||||
|provincial enterprises of Nanling|||||||||
||383,333.35|||45,833.33||-337,500.02||Related to assets|
|Country Commission of Economy and|||||||||
|Information Technology|||||||||
|Provincial innovation enterprise R&D|||||||||
||215,062.50|||25,437.50||-189,625.00||Related to assets|
|equipment subsidy|||||||||
|2015 provincial special fund to build|||||||||
||219,687.50|||25,437.50||-194,250.00||Related to assets|
|an innovative province|||||||||
|Subsidies for R&D and purchase of|||||||||
||666,400.00|||71,866.67||-594,533.33||Related to assets|
|instruments and equipment|||||||||
|2016 provincial special fund to build|||||||||
||666,400.00|||71,866.67||-594,533.33||Related to assets|
|an innovative province|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|2017 Construction fund supports for||||||
|building manufacturing strong||||||
|provinces, and equipment subsidies||||||
||3,363,000.00||313,500.00|-3,049,500.00|Related to assets|
|for technological transformation||||||
|projects to improve industrial||||||
|foundation||||||
|Reward and subsidy for industrial||||||
|technology reform of Country||||||
||1,668,677.50||154,247.50|-1,514,430.00|Related to assets|
|Commission of Economy and||||||
|Information Technology||||||
|2017 provincial special fund to build||||||
|an innovative province of Nanling||||||
|County Commission of Economy and|131,891.64||12,191.65|-119,699.99|Related to income|
|Information Technology (technology||||||
|division)||||||
|Special funds for development of||||||
|county-level foreign trade enterprises||681,000.00||-681,000.00|Related to assets|
|in 2017||||||
|Total|8,817,182.17|681,000.00|955,277.51|-8,542,904.66||

Other notes:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 29. Share capital
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Changes (+/-) in this time||||||
|||||Shares||||
||Beginning balance||||||Ending balance|
|||||converted from||||
|||Stock issue|Dividend stock||Others|Subtotal||
|||||accumulated||||
|||||reserves||||
|Total number of|2,148,110,844.00||||||2,124,870,253.00|
||||||-23,240,591.00|-23,240,591.00||
|shares||||||||

Other notes:
According to the resolution of theCompany’s 2017 annual general meeting of shareholders, as Shanghai Mokun failed to fulfill its 2017 annual performance commitment, Yang Dongmai and other performance compensation obligors should compensate for a total of 23,240,591 shares. The Company will repurchase and cancel these shares according to relevant agreements, resulting in changes to theCompany’s registered capital and equity: TheCompany’s registered capital decreased from RMB 2,148,110,844 to RMB 2,124,870,253, and theCompany’s equity decreased from 2,148,110,844 shares to 2,124,870,253 shares.
30. Other equity instruments
(1) Statement of changes in financial instruments such as outstanding preferred shares and perpetual capital securities issued at the end of the period
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Outstanding|Beginning balance||Increase in current period||Decrease in current period||Ending balance||
|financial|||||||||
||Quantity|Book value|Quantity|Book value|Quantity|Book value|Quantity|Book value|
|instruments|||||||||
|Equity component|||||||||
|value of convertible|1|1,947,846.62|||1|1,947,846.62|||
|corporate bonds|||||||||
|Total|1|1,947,846.62|||1|1,947,846.62|||

The changes in other equity instruments in the current period, the reasons for the changes, and the basis for relevant accounting treatment:
The decrease in this period is the reduction of equity component value of convertible corporate bonds due to disposal of Wuji Entertainment Games Co., Ltd. (a subsidiary of the Company).
Other notes:
None
31. Capital reserves
Unit: RMB
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase in current period|Decrease in current|Ending balance|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
||||period||
|Capital Premium (share|1,965,229,405.38||||
|||35,892,959.50|1,705,304,196.89|295,818,167.99|
|premium)|||||
|Other capital reserves|7,410,175.28||4,488,376.06|2,921,799.22|
|Total|1,972,639,580.66|35,892,959.50|1,709,792,572.95|298,739,967.21|

 Other notes, involving changes in the current period and change reasons:
(1) The increase in capital premium in this year included the increase of capital reserve of RMB 18,745,498.96 due to the exercise of conversion rights by the shareholders of preferred shares of Wuji Entertainment Games Co., Ltd. (a subsidiary of the Company); increase of capital reserve of RMB 14,644,959.82 due to Shanghai Sanqi Interactive Entertainment (a subsidiary wholly owned by the Company) transferring its subsidiaries - Guangzhou Huoshanhu Company and Anhui Sanqi to Guangzhou Sanqi (a holding subsidiary of the Company); increase of capital reserve of RMB 2,502,500.72 in Shanghai Mokun, a subsidiary of the Company, due to the increase in capital of minority shareholders.
The decrease in capital premium in this year included the20% equities of Jiangsu Aurora acquired by the Company offsetting the capital reserve - equity premium by RMB 1,248,120,566.34; the acquisition of15% equities of Guangzhou Huoshanhu by
Guangzhou Sanqi (a subsidiary of the Company) offsets capital reserve-share premium by RMB 7,710,622.12; Shanghai Mokun, a subsidiary of the Company, failed to achieve its performance commitments, so it repurchased shares to offset the capital reserve by RMB 449,473,008.43.
(2) The decrease in other capital reserve in this period was due to the fact that as the joint venture of Tibet Taifu Culture Media Co., Ltd., a subsidiary of the Company, YHKT Entertainment Co., Ltd. decreased its shareholding ratio this year with long-term equity investment as available-for-sale financial assets and caused other capital reserve to decline by RMB 4,488,376.06.
32. Other comprehensive income
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Amount incurred in the current period||||||
|||||||Attribu||
||||Less: The amount|||||
|||||||table to||
||||calculated in other|||||
||||||Attributable to|minorit||
||Beginning|Accrual before|comprehensive|||||
|Item||||Less: Income|parent|y|Ending balance|
||balance|income tax in|income in earlier|||||
|||||taxes|company after|shareh||
|||this period|period and carried|||||
||||||tax|olders||
||||over to profit and loss|||||
|||||||after||
||||in current period.|||||
|||||||tax||
|II. Other comprehensiveincomes that would beclassified into profit andloss|||||71,463,938.88|||
||-25,087,592.30|52,311,844.22|-23,888,000.86|4,735,906.20|||46,376,346.58|
|Variable Lossand Profit of fair valueof salable financialassets|||||52,307,268.18|||
||-25,470,466.38|31,572,708.00|-25,470,466.38|4,735,906.20|||26,836,801.80|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Translationdifference in the foreigncurrency financialstatement|||||19,156,670.70||
||382,874.08|20,739,136.22|1,582,465.52|||19,539,544.78|
|Other totalcomprehensive income|-25,087,592.30||||71,463,938.88|46,376,346.58|
|||52,311,844.22|-23,888,000.86|4,735,906.20|||

Other notes, involving conversion of the effective component of the cash flow hedging profit and loss to the initially recognized amount of the hedged items:
None
33. Surplus reserves
Unit: RMB
||||||
|-|-|-|-|-|
||||Decrease in current||
|Item|Beginning balance|Increase in current period||Ending balance|
||||period||
|Statutory surplus|||||
||99,561,946.09|70,915,889.79||170,477,835.88|
|reserves|||||
|Total|99,561,946.09|70,915,889.79||170,477,835.88|

 Surplus reserve notes, involving changes in the current period and change reasons:
The company shall reserve10% of the net profit of the parent company as the provision for legal surplus.
34. Undistributed profits
Unit: RMB
||||
|-|-|-|
|Item|Current period|Previous period|
|Adjustment of undistributed profits of previous year|2,819,597,585.78|1,413,567,635.94|
|Undistributed profits at the beginning of the periodafter adjustment|2,819,597,585.78||
|||1,413,567,635.94|
|Add: Net profit owned by parent company owners inthis year|||
||1,008,503,357.80|1,620,582,427.47|
|Less: Appropriation to legal surplus reserves|70,915,889.79|6,072,998.83|
|Dividends payable on common stock|424,974,050.60|208,479,478.80|
|Undistributed profits at the end of the period|3,332,211,003.19|2,819,597,585.78|

 Details of undistributed profits at the beginning of adjustment period:
1) Due to retroactive adjustment of Enterprise Accounting Standard and its relevant new provisions, the affected undistributed profit at the beginning of the period is RMB 0.00.
2) Due to changes in accounting policies, the affected undistributed profit at the beginning of the period is RMB 0.00.
3) Due to correction of significant accounting errors, the affected undistributed profit at the beginning of the period is RMB 0.00.
4) Due to changes of consolidation scope caused by the same control, the affected undistributed profit at the beginning of the period
is RMB 0.00.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 5) Due to all the other adjustments, the affected undistributed profit at the beginning of the period is RMB 0.00.
35. Operating income and operating costs
Unit: RMB
||||||
|-|-|-|-|-|
||Amount incurred in the current period||Amount incurred in the previous period||
|Item|||||
||Income|Cost|Income|Cost|
|Main business|7,632,679,668.47|1,811,420,940.10|6,188,729,008.57|1,948,067,595.79|
|Other businesses|||99,108.18|129,643.97|
|Total|7,632,679,668.47|1,811,420,940.10|6,188,828,116.75|1,948,197,239.76|

 36. Taxes and additional charges
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Urban maintenance and construction tax|10,486,240.49|7,941,837.63|
|Education surtax|4,693,077.15|3,518,238.96|
|Housing property tax|1,248,953.90|1,145,438.72|
|Land use tax|2,563,885.00|3,207,777.30|
|Vehicle and vessel use tax|22,325.20|20,389.47|
|Stamp tax|8,003,772.08|6,703,094.58|
|Local education surcharge|3,269,512.10|2,345,492.62|
|Water conservancy funds|2,752,686.81|1,404,336.13|
|Construction fund for cultural undertakings||104,319.98|
|River management fees||7,404.96|
|Others||109,767.54|
|Total|33,040,452.73|26,508,097.89|

 Other notes:
None
37. Sales expense
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Salary and welfare|125,454,065.25|94,862,624.16|
|Depreciation cost|2,201,939.07|2,452,462.02|
|Office expense|1,171,092.14|2,294,285.34|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Internet traffic fee|3,188,625,479.94|1,767,614,006.47|
|Traveling expense|1,462,185.31|2,725,380.16|
|Transportation and storage fees|18,091,042.19|27,201,590.38|
|Entertainment expenses|4,025,796.16|4,151,221.02|
|Others|6,229,708.27|6,905,896.77|
|Total|3,347,261,308.33|1,908,207,466.32|

 Other notes:
None
38. Management expense
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Salary and welfare|138,154,150.37|122,730,667.18|
|Office expense|25,604,123.72|34,206,282.94|
|Traveling and conference fees|12,780,600.56|12,278,341.07|
|Fees of depreciation and amortization|11,959,200.23|13,818,326.98|
|Business entertainment expense|12,180,998.39|13,901,648.09|
|Rentals|23,245,925.37|20,591,183.94|
|Agency and consulting fees|19,134,146.42|15,404,989.50|
|Share payment||100,984,100.00|
|Others|3,003,757.30|6,574,972.04|
|Total|246,062,902.36|340,490,511.74|

 Other notes:
None
39.R&D expense
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Salary and welfare|439,113,908.11|344,422,361.03|
|Operation and maintenance fees|42,414,470.88|36,523,870.96|
|Fees of depreciation and amortization|13,015,245.63|18,421,390.26|
|Design cost|17,566,420.48|16,667,400.08|
|Traveling and transportation expenses|5,135,780.17|3,677,004.63|
|Office expense|7,584,107.07|6,566,727.06|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Rent and office utilities|5,107,935.40|2,220,064.44|
|Others|7,767,736.89|7,670,211.66|
|Total|537,705,604.63|436,169,030.12|

 Other notes:
None
40. Financial expenses
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Interest payment|44,631,901.22|32,858,899.90|
|Service charges and others paid to|||
||645,223.32|606,729.28|
|financial authorities|||
|Less: Interest incomes|27,632,671.32|24,363,295.31|
|Exchange gains and losses|-547,353.98|19,453,449.40|
|Total|17,097,099.24|28,555,783.27|

 Other notes:
None
41. Asset impairment losses
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|I. Losses on bad debts|30,322,401.56|19,082,968.12|
|II. Inventory devaluation losses|4,004,132.44|66,962.78|
|III. Available-for-sale financial asset impairment losses|52,732,066.85|3,000,000.00|
|V. Long-term equity investment impairment losses|2,462,825.74|11,593,317.05|
|VII. Fixed asset impairment losses||17,288,222.20|
|IX. Construction in progress impairment losses||429,504.26|
|XII. Intangible asset impairment losses||377,358.34|
|XIII. Goodwill impairment losses|959,833,685.66|299,457,551.04|
|Total|1,049,355,112.25|351,295,883.79|

 Other notes:
None
42. Other profits
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Sources of other incomes|Amount incurred in the current period|Amount incurred in the previous period|
|Government subsidies|97,647,310.60|111,259,077.18|
|Total|97,647,310.60|111,259,077.18|

 43. Investment income
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Long-term equity investment income measured by equity|||
||7,617,107.86|-11,139,329.07|
|method|||
|Investment profits by the disposal of long-term equity|||
||6,403,021.73|218,512,763.55|
|investment|||
|Investment profit by marketable financial assets during|||
||10,930,309.95|10,503,501.81|
|the holding period|||
|Investment profit by the disposal of marketable financial|||
||-9,740,417.35|20,264,211.00|
|assets|||
|Original equity treated as investment income from|||
||48,392,551.99|1,411,495.72|
|disposal|||
|Bank yields from financial products|16,941,398.12|13,370,838.07|
|Others||3,106,764.84|
|Total|80,543,972.30|256,030,245.92|

 Other notes:
None
44. Income from disposal of assets
Unit: RMB
||||
|-|-|-|
|Source of income from asset disposal|Amount incurred in the current period|Amount incurred in the previous period|
|Gains (losses) from disposal of fixed assets|1,289,755.10|1,055,284.09|
|Total|1,289,755.10|1,055,284.09|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 45. Non-operating income
Unit: RMB
|||||
|-|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|Amount recognized into current non-recurring profits and losses|
|Government subsidies||11,200.00||
|Tort compensation|8,891,208.00|1,528,930.43|8,891,208.00|
|Performance compensation||||
||453,859,535.09|401,364,984.06|453,859,535.09|
|receivables||||
|Others|1,163,735.09|152,808.37|1,163,735.09|
|Total|463,914,478.18|403,057,922.86||

Government subsidy recognized in current losses and gains:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||Do subsidies|||||
||||||Whether it is a||Amount incurred||
|||||affect the profit||Amount incurred||Related to|
|Subsidy items|Entity|Reason|Nature and type||special subsidy||in the previous||
|||||and loss of the||in this period||assets/income|
||||||or not?||period||
|||||year?|||||
||||Subsidies received from the government to encourage||||||
|VAT immediate levy|Tax bureaus in Shanghai,||||||||
|||Subsidies|and support specific industries and segments|No|No|58,796,021.20|81,575,068.42|Related to income|
|and refund|Guangzhou, Huai’an, etc.||||||||
||||(according to national policies and regulations)||||||
|Return of handling|Tax bureaus in Guangzhou,||Subsidies received from the government for the||||||
|charges of individual|Huai’an, Shanghai, Nanling|Subsidies|protection of certain utility services or socially|No|No|1,463,852.75|1,135,760.56|Related to income|
|income tax|County (Anhui), etc.||necessary product supply or price control functions||||||
||Social insurance fund||||||||
||||Subsidies received from the government for the||||||
|Subsidy for post|management centers in||||||||
|||Subsidies|protection of certain utility services or socially|No|No|690,765.77|665,044.69|Related to income|
|stability|Guangzhou, Huai’an, Wuhu,||||||||
||||necessary product supply or price control functions||||||
||Shenzhen, etc.||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
||Huai’an Software Park||Subsidies received for compliance with local support||||||
|Subsidies for Huai’an|||||||||
||Management Development|Subsidies|policies for investment promotion by local|No|No|4,556,098.16|10,516,637.23|Related to income|
|Software Park|||||||||
||Co., Ltd.||governments||||||
|Subsidies for Internet|||||||||
||Huai’an Hongze District||Subsidies received for compliance with local support||||||
|Industry Base in|||||||||
||Internet Industry Base|Subsidies|policies for investment promotion by local|No|No|1,011,370.36||Related to income|
|Hongze District,|||||||||
||Management Co., Ltd.||governments||||||
|Huai’an City|||||||||
|Subsidies from|Huai’an Economic and||||||||
|Huai’an Overseas|Technological Development||Subsidies received for compliance with local support||||||
|Students Pioneer Park|Zone Overseas Students|Subsidies|policies for investment promotion by local|No|No|3,007,996.25|3,540,171.40|Related to income|
|Management|Pioneer Park Management||governments||||||
|Committee|Office||||||||
||Tax Bureau of Shanghai||Subsidies received for compliance with local support||||||
|Tax rebate from|||||||||
||Jiading District and Pudong|Subsidies|policies for investment promotion by local|No|No|1,298,632.80||Related to income|
|Shanghai government|||||||||
||New Area||governments||||||
||Finance and Taxation||||||||
||||Subsidies received for compliance with local support||||||
||Service Center in Wuhu||||||||
|Industrial subsidies||Subsidies|policies for investment promotion by local|No|No|2,167,000.00|4,935,700.00|Related to income|
||Machinery Industry||||||||
||||governments||||||
||Development Zone||||||||
||Management Committee of||||||||
||||Subsidies received for compliance with local support||||||
||Anhui Xinwu Economic &||||||||
|Industrial subsidies||Subsidies|policies for investment promotion by local|No|No|961,399.64||Related to income|
||Technological Development||||||||
||||governments||||||
||Zone||||||||
||Treasury Payment Center of||Subsidies received for compliance with local support||||||
|Industrial subsidies|Wuhu Jiujiang District|Subsidies|policies for investment promotion by local|No|No|12,856,498.14||Related to income|
||Finance Bureau||governments||||||
|Industrial subsidies|Wuhu Advertising Industry|Subsidies|Subsidies received for compliance with local support|No|No|62.00|268,618.87|Related to income|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
||Park Asset Management||policies for investment promotion by local||||||
||Co., Ltd.||governments||||||
|Provincial Financial|||||||||
|Research Funds for|||||||||
||Department of Science and||||||||
|Research and|||Subsidies for research and development, technology||||||
||Technology of Guangdong|Subsidies||No|No|1,777,800.00||Related to income|
|Development of|||renewal and renovation||||||
||Province||||||||
|Enterprises in|||||||||
|Guangdong Province|||||||||
|Subsidies to|||||||||
||Guangzhou Science,||||||||
|Guangzhou|||Subsidies for research and development, technology||||||
||Technology and Innovation|Subsidies||No|No|853,900.00|100,000.00|Related to income|
|enterprises’ R&D|||renewal and renovation||||||
||Commission||||||||
|investment|||||||||
|Special fund for|||||||||
||The Bureau of Science,||||||||
|subsidies to|||||||||
||Technology, Industry &||Subsidies for research and development, technology||||||
|Guangzhou||Subsidies||No|No|0.00|100,000.00|Related to income|
||Informatization of Tianhe||renewal and renovation||||||
|enterprises’ R&D|||||||||
||District, Guangzhou||||||||
|investment|||||||||
|Special subsidy of|||||||||
|Tianhe District to|||||||||
||The Bureau of Science,||||||||
|support development|||||||||
||Technology, Industry &||Subsidies for research and development, technology||||||
|of software||Subsidies||No|No|500,000.00||Related to income|
||Informatization of Tianhe||renewal and renovation||||||
|development and|||||||||
||District, Guangzhou||||||||
|enterprise R&D|||||||||
|investment|||||||||
|Special subsidy of|||||||||
||Office of Talent Affairs,||||||||
|Tianhe District to|||Subsidies for research and development, technology||||||
||Tianhe District Committee|Subsidies||No|No|200,000.00||Related to income|
|support innovation|||renewal and renovation||||||
||of Guangzhou||||||||
|and entrepreneurship|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|of high-level talents|||||||||
|Special fund of|||||||||
||The Bureau of Science,||||||||
|Tianhe District for|||Subsidies received for compliance with local support||||||
||Technology, Industry &||||||||
|subsidies to Thero||Subsidies|policies for investment promotion by local|No|No|500,000.00|500,000.00|Related to income|
||Informatization of Tianhe||||||||
|brand building|||governments||||||
||District, Guangzhou||||||||
|service|||||||||
|Funding support of|||||||||
||Guangzhou Municipal||Subsidies received for compliance with local support||||||
|Tianhe District for|||||||||
||Development and Reform|Subsidies|policies for investment promotion by local|No|No|200,000.00||Related to income|
|cultural and creative|||||||||
||Commission||governments||||||
|industry|||||||||
|Provincial financial|Jiangsu Department of||||||||
||||Subsidies for research and development, technology||||||
|reward for enterprise|Finance, Department of|Reward||No|No|2,000,000.00||Related to income|
||||renewal and renovation||||||
|R&D expenses|Science and Technology||||||||
|Supporting subsidy|||||||||
||||Subsidies received for compliance with local support||||||
|from the Finance|Finance Bureau of Jiading||||||||
|||Subsidies|policies for investment promotion by local|No|No|0.00|1,339,770.00|Related to income|
|Bureau of Jiading|District, Shanghai||||||||
||||governments||||||
|District, Shanghai|||||||||
||Nanling Economic||||||||
|Reward for “Four|||Subsidies received for compliance with local support||||||
||Development Zone||||||||
|Standards”||Reward|policies for investment promotion by local|No|No|110,000.00|120,000.00|Related to income|
||Construction Investment||||||||
|enterprises|||governments||||||
||Co., Ltd.||||||||
|Reward for “Four|||Subsidies received for compliance with local support||||||
||Statistics Bureau of Wuhu||||||||
|Standards”||Reward|policies for investment promotion by local|No|No|3,000.00|2,000.00|Related to income|
||County||||||||
|enterprises|||governments||||||
|Reward for scientific|||||||||
||Science & Technology||Subsidies for research and development, technology||||||
|and technical||Reward||No|No|52,000.00|50,000.00|Related to income|
||Bureau of Wuhu County||renewal and renovation||||||
|innovation of Science|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|& Technology Bureau|||||||||
|Reward and subsidy|||||||||
||Wuhu Municipal||Subsidies received for compliance with local support||||||
|to province with|||||||||
||Commission of Economy|Reward|policies for investment promotion by local|No|No|0.00|500,000.00|Related to income|
|strong manufacturing|||||||||
||and Information Technology||governments||||||
|power|||||||||
|Return of handling|||Subsidies received for compliance with local support||||||
|charges of VAT and|Huai’an Tax Service|Reward|policies for investment promotion by local|No|No|71,081.94|25,238.00|Related to income|
|enterprise income tax|||governments||||||
|Incentive fund for|Huai’an Municipal Science||Subsidies for research and development, technology||||||
|||Reward||No|No|100,000.00||Related to income|
|high-tech enterprises|and Technology Bureau||renewal and renovation||||||
||Science and Technology||||||||
|District-level|||||||||
||Division of Huai’an||||||||
|supporting incentive|||Subsidies for research and development, technology||||||
||Economic and|Reward||No|No|100,000.00||Related to income|
|fund for high-tech|||renewal and renovation||||||
||Technological Development||||||||
|enterprises|||||||||
||Zone||||||||
|Incentive fund for|||||||||
|cultivation of|Jiangsu Department of||Subsidies for research and development, technology||||||
|||Reward||No|No|55,555.00||Related to income|
|provincial new|Finance||renewal and renovation||||||
|high-tech enterprises|||||||||
|Special fund of|||Subsidies received for compliance with local support||||||
||Department of Commerce of||||||||
|commercial||Reward|policies for investment promotion by local|No|No|110,100.00||Related to income|
||Jiangsu Province||||||||
|development|||governments||||||
|Rebates of VAT|||Subsidies received for compliance with local support||||||
|levied by South|Sam Sung Tax Office|Subsidies|policies for investment promotion by local|No|No|9,633.64||Related to income|
|Korea|||governments||||||
|Supporting subsidy of|Internal Revenue Services||Subsidies received for compliance with local support||||||
|||Subsidies||No|No|0.00|1,348,511.17|Related to income|
|Guro, Seoul, South|and Government of Guro,||policies for investment promotion by local||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|Korea|Seoul, South Korea||governments||||||
|2017 supporting fund|||||||||
|for animation of|Shanghai Municipal||||||||
||||Subsidies received for compliance with local support||||||
|Shanghai Municipal|Administration of Culture||||||||
|||Subsidies|policies for investment promotion by local|No|No|0.00|235,849.06|Related to income|
|Administration of|and Tourism, Radio and||||||||
||||governments||||||
|Culture and Tourism,|Television||||||||
|Radio and Television|||||||||
||People’s Government of||Subsidies received for compliance with local support||||||
|Tax return of Jiading|||||||||
||Jiading District of Shanghai|Subsidies|policies for investment promotion by local|No|No|0.00|518,800.00|Related to income|
|District Government|||||||||
||Municipality||governments||||||
|2016 city-level|||||||||
||Management Committee of||Subsidies received for compliance with local support||||||
|directing fund for|||||||||
||Huai’an Software Park of|Reward|policies for investment promotion by local|No|No|0.00|400,000.00|Related to income|
|cultural industry|||||||||
||Jiangsu Province||governments||||||
|development|||||||||
||Economic Development||||||||
||Bureau of Huai’an||||||||
|Incentive fund for|||Subsidies for research and development, technology||||||
||Economic and|Reward||No|No|0.00|400,000.00|Related to income|
|offshore outsourcing|||renewal and renovation||||||
||Technological Development||||||||
||Zone||||||||
|Subsidies for|||Subsidies received for compliance with local support||||||
||Leading Group Office for||||||||
|Huaishang Talent||Subsidies|policies for investment promotion by local|No|No|0.00|150,000.00|Related to income|
||Talent Affairs of Huai’an||||||||
|Project|||governments||||||
|Special incentive of|||||||||
|Tianhe District|||Subsidies received for compliance with local support||||||
||Finance Bureau of Tianhe||||||||
|Business and Finance||Reward|policies for investment promotion by local|No|No|0.00|122,100.00|Related to income|
||District||||||||
|Bureau for|||governments||||||
|introduction of key|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|enterprises|||||||||
|Support for fashion|||||||||
|creative animation of|||||||||
|Culture, Radio, Film,|||Subsidies received for compliance with local support||||||
||Guangzhou Municipal||||||||
|Television & Public||Subsidies|policies for investment promotion by local|No|No|0.00|400,000.00|Related to income|
||Bureau of Finance||||||||
|Press Bureau of|||governments||||||
|Guangzhou|||||||||
|Municipality|||||||||
|Special subsidies for|||||||||
||The Bureau of Science,||||||||
|rents of key industrial|||Subsidies received for compliance with local support||||||
||Technology, Industry &||||||||
|enterprises granted by||Subsidies|policies for investment promotion by local|No|No|0.00|90,100.00|Related to income|
||Informatization of Tianhe||||||||
|the Finance Bureau|||governments||||||
||District, Guangzhou||||||||
|of Tianhe District|||||||||
|Supporting fund of|||||||||
|the Finance Bureau|Human Resources and||||||||
|of the Khorgas|Social Security Bureau of||||||||
|Economic|the Khorgas Economic||Subsidies received for compliance with local support||||||
|Development Zone|Development Zone|Subsidies|policies for investment promotion by local|No|No|0.00|118,857.00|Related to income|
|Management|Management Committee of||governments||||||
|Committee of|Xinjiang Uygur||||||||
|Xinjiang Uygur|Autonomous Region||||||||
|Autonomous Region|||||||||
|Copyright grant of|||Subsidies received from the government to encourage||||||
||Copyright Association of||||||||
|Shanghai Copyright||Subsidies|and support specific industries and segments|No|No|0.00|3,500.00|Related to income|
||Shanghai||||||||
|Association|||(according to national policies and regulations)||||||
|2016 Excellent|Huai’an Municipal Bureau||||||||
||||Subsidies for research and development, technology||||||
|Copyright of Chuan|of Culture, Radio, Film and|Reward||No|No|0.00|3,000.00|Related to income|
||||renewal and renovation||||||
|Qi Ba Ye (传奇霸业)|Television Press and||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|of Huai’an|Publication (Copyright)||||||||
|2016 policy fund for|||||||||
|promotion of|||||||||
|provincial foreign|||Subsidies received for compliance with local support||||||
||Commerce Bureau of||||||||
|trade transferred by||Subsidies|policies for investment promotion by local|No|No|0.00|64,500.00|Related to income|
||Nanling County||||||||
|the Commerce|||governments||||||
|Bureau of Nanling|||||||||
|County|||||||||
|Subsidies for blue|||||||||
|collar apartment rents|||||||||
||Nanling Economic||||||||
|granted by Nanling|||Subsidies received for compliance with local support||||||
||Development Zone||||||||
|Economic||Subsidies|policies for investment promotion by local|No|No|0.00|27,648.00|Related to income|
||Construction Investment||||||||
|Development Zone|||governments||||||
||Co., Ltd.||||||||
|Construction|||||||||
|Investment Co., Ltd.|||||||||
||Jishan Town Government of||Subsidies received for compliance with local support||||||
|Return of land use tax|Nanling County, Anhui|Subsidies|policies for investment promotion by local|No|No|1,857,265.44|1,411,521.00|Related to income|
||Province||governments||||||
|Project subsidies of|||||||||
||Anhui Department of||Subsidies for research and development, technology||||||
|Automotive Fuel||Subsidies||No|No|119,166.67|130,000.00|Related to assets|
||Finance||renewal and renovation||||||
|System R&D Center|||||||||
|Subsidy for the|Wuhu Municipal||||||||
||||Subsidies for research and development, technology||||||
|purchase of single|Commission of Economy|Subsidies||No|No|25,163.35|27,450.92|Related to assets|
||||renewal and renovation||||||
|equipment by SMEs|and Information Technology||||||||
|Provincial “6+1”|Nanling County||||||||
||||Subsidies for research and development, technology||||||
|subsidies for building|Commission of Economy|Subsidies||No|No|90,566.67|98,800.00|Related to assets|
||||renewal and renovation||||||
|independent|and Information Technology||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|innovation capacity|||||||||
|Special funds for|||||||||
|development of|||||||||
|provincial enterprises|||||||||
||Nanling County||||||||
|of Nanling Country|||Subsidies for research and development, technology||||||
||Commission of Economy|Subsidies||No|No|45,833.33|50,000.00|Related to assets|
|Commission of|||renewal and renovation||||||
||and Information Technology||||||||
|Economy and|||||||||
|Information|||||||||
|Technology|||||||||
|Provincial innovation|||||||||
||Wuhu Municipal Science||Subsidies for research and development, technology||||||
|enterprise R&D||Subsidies||No|No|25,437.50|27,750.00|Related to assets|
||and Technology Bureau||renewal and renovation||||||
|equipment subsidy|||||||||
|2015 provincial|||||||||
||Nanling County||||||||
|special fund to build|||Subsidies for research and development, technology||||||
||Commission of Economy|Subsidies||No|No|25,437.50|27,750.00|Related to assets|
|an innovative|||renewal and renovation||||||
||and Information Technology||||||||
|province|||||||||
|Subsidies for R&D|||||||||
||Nanling County||||||||
|and purchase of|||Subsidies for research and development, technology||||||
||Commission of Economy|Subsidies||No|No|71,866.67|78,400.00|Related to assets|
|instruments and|||renewal and renovation||||||
||and Information Technology||||||||
|equipment|||||||||
|2016 provincial|||||||||
|special fund to build|Wuhu Municipal Science||Subsidies for research and development, technology||||||
|||Subsidies||No|No|71,866.67|78,400.00|Related to assets|
|an innovative|and Technology Bureau||renewal and renovation||||||
|province|||||||||
|Subsidies for|Nanling County||||||||
||||Subsidies for research and development, technology||||||
|technologically|Commission of Economy|Subsidies||No|No|313,500.00|57,000.00|Related to assets|
||||renewal and renovation||||||
|transformed|and Information Technology||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|equipment to make|||||||||
|the foundation of|||||||||
|industry development|||||||||
|more solid for|||||||||
|provinces with strong|||||||||
|manufacturing power|||||||||
||Nanling County||||||||
|Reward and subsidy|||Subsidies for research and development, technology||||||
||Commission of Economy|Subsidies||No|No|154,247.50|14,022.50|Related to assets|
|for technology reform|||renewal and renovation||||||
||and Information Technology||||||||
|2017 provincial|||||||||
||Nanling County||||||||
|special fund to build|||Subsidies for research and development, technology||||||
||Commission of Economy|Subsidies||No|No|12,191.65|1,108.36|Related to assets|
|an innovative|||renewal and renovation||||||
||and Information Technology||||||||
|province|||||||||
|Reward for scientific|Nanling County||||||||
||||Subsidies for research and development, technology||||||
|and technical|Commission of Economy|Reward||No|No|200,000.00||Related to income|
||||renewal and renovation||||||
|innovation|and Information Technology||||||||
||Nanling County||||||||
|Reward for invention|||Subsidies for research and development, technology||||||
||Commission of Economy|Reward||No|No|86,000.00||Related to income|
|patent|||renewal and renovation||||||
||and Information Technology||||||||
|2017 provincial|||Subsidies received for compliance with local support||||||
||Commerce Bureau of||||||||
|supporting fund of||Subsidies|policies for investment promotion by local|No|No|96,000.00||Related to income|
||Nanling County||||||||
|foreign trade policy|||governments||||||
|Reward and subsidy|||||||||
|for specialized,|Nanling County||||||||
||||Subsidies for research and development, technology||||||
|sophisticated, special|Commission of Economy|Subsidies||No|No|1,000,000.00||Related to income|
||||renewal and renovation||||||
|and new SMEs and|and Information Technology||||||||
|provincial industry|||||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||||
|-|-|-|-|-|-|-|-|-|
|design center which|||||||||
|are identified in the|||||||||
|province|||||||||
|Subsidy of the Wuhu|||||||||
|Joint Conference|||||||||
|Office for Air|||||||||
||Wuhu Municipal||Subsidies received from the government for the||||||
|Pollution Prevention|||||||||
||Environmental Protection|Subsidies|protection of certain utility services or socially|No|No|0.00|11,200.00|Related to income|
|and Control on the|||||||||
||Bureau||necessary product supply or price control functions||||||
|elimination of|||||||||
|heavy-polluting|||||||||
|vehicles|||||||||

Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 46. Non-operating expenses
Unit: RMB
|||||
|-|-|-|-|
||Amount incurred in the|Amount incurred in the previous|Amount recognized into current|
|Item||||
||current period|period|non-recurring profits and losses|
|External donation|3,454,249.54|134,259.40|3,454,249.54|
|Losses on the damage and retirement of||||
||1,107,986.48||1,107,986.48|
|non-current assets||||
|Payable performance compensation|7,702,951.36|3,756,740.62|7,702,951.36|
|Fine and fine for delaying payment|32,392.81|219,253.60|32,392.81|
|Others|2,514,703.30|76,785.28|2,514,703.30|
|Total|14,812,283.49|4,187,038.90||

Other notes:
None
47. Income taxes
(1) Income tax sheet
Unit: RMB
||||
|-|-|-|
||Amount incurred in the current||
|Item||Amount incurred in the previous period|
||period||
|Income taxes of current period|88,775,602.71|83,470,564.82|
|Deferred income tax|-20,885,955.32|-3,350,691.84|
|Total|67,889,647.39|80,119,872.98|

 (2) Accounting profit and income tax expenses adjustment process
Unit: RMB
|||
|-|-|
|Item|Amount incurred in the current period|
|Total profit|1,219,319,481.52|
|Income tax expenses calculated at legal/applicable tax rate|304,829,870.39|
|Impact of various tax rates applicable to subsidiaries|-325,192,357.62|
|Adjustment of impact on the income tax in the previous period|3,411,685.40|
|Impact of non-taxable income|-10,974,398.80|
|Impact of the non-deductible costs, expenses and losses|152,848,212.09|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||
|-|-|
|Impact of deductible losses of unrecognized deferred income tax||
||-17,450,098.57|
|assets in the previous period||
|Impact of deductible temporary differences or deductible loss of||
||7,148,912.28|
|unrecognized deferred income tax assets of this period||
|Impact of weighted R&D cost deduction|-46,224,603.40|
|Others|-507,574.39|
|Income taxes|67,889,647.39|

 Other notes
48. Other comprehensive income
For details, please refer to Note 32 - Other comprehensive income.
49. Items of cash flow statements
(1) Cash received from other operating activities
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Operational incomings and outgoings|||
||7,170,260.47|3,000,000.00|
|received|||
|Government subsidies received|38,577,011.89|29,104,526.97|
|Interest income received|10,849,579.35|8,756,161.69|
|Deposits and guarantees received|12,431,744.54|6,814,202.79|
|Other amounts received|11,704,341.67|8,111,632.38|
|Total|80,732,937.92|55,786,523.83|

 Description of other received cash relevant to operating activities:
None
(2) Cash paid relating to other operating activities
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Out-of-pocket expenses|3,091,233,883.86|2,029,450,687.59|
|Payment of guarantee and reserve|36,152,700.88|19,562,859.61|
|Service charge|645,223.32|606,729.28|
|Non-operating expense|5,635,594.16|430,298.28|
|Other payables|803,924.26|3,316,702.65|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Total|3,134,471,326.48|2,053,367,277.41|

 Description of other cash paid relating to operating activities:
None
(3) Other cash received relating to investment activities
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Government subsidies related to assets|||
|||5,235,700.00|
|received|||
|Financial products|3,580,863,200.00|2,212,369,000.00|
|Earnest money for repurchase of equities||6,000,000.00|
|Return of copyright money||4,417,865.14|
|Total|3,580,863,200.00|2,228,022,565.14|

 Description of other cash received relating to investing activities:
None
(4) Other cash payments relating to investing activities
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Financial products|3,586,863,200.00|2,122,369,000.00|
|Payment of performance compensation|15,795.67||
|Guarantee for government freezing|4,299,671.55||
|Total|3,591,178,667.22|2,122,369,000.00|

 Description of other cash payments relating to investing activities:
None
(5) Other cash payments relating to financing activities
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Issuing costs of raised fund||4,313,316.06|
|Cash payment for acquisition of minority|||
||1,400,150,000.00|89,180,000.00|
|stocks of subsidiary|||
|Repurchase of treasury stocks|317,235.07||
|Total|1,400,467,235.07|93,493,316.06|

Description of cash payments relating to financing activities:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report None
50. Supplementary data of cash flow statement
(1) Supplementary data of cash flow statement
Unit: RMB
||||
|-|-|-|
|Supplementary data|Amount of current period|Amount of previous period|
|1. Net profits transferred to cash flow of|||
||--|--|
|operation activities:|||
|Net profit|1,151,429,834.13|1,836,499,722.03|
|Add: Provision for assets impairment|1,049,355,112.25|351,295,883.79|
|Depreciations of fixed assets, oil and gas|||
||47,319,420.24|54,913,911.20|
|assets, and productive biological assets|||
|Amortization of intangible assets|7,959,258.42|19,083,068.70|
|Amortization of long-term deferred expenses|62,383,028.39|86,013,536.69|
|Losses on disposal of fixed assets, intangible|||
|assets and other long-term assets (“-”|-1,289,755.10|-1,055,284.09|
|indicates the profit)|||
|Losses at discard of fixed assets (“-”|||
||1,107,986.48||
|indicates the profit)|||
|Financial expense (“-” indicates the profit)|22,428,003.26|45,364,584.84|
|Losses on investments (“-” indicates the|||
||-80,543,972.30|-256,030,245.92|
|profit)|||
|Decrease of deferred income tax assets (“-”|||
||-23,600,218.04|-3,350,691.84|
|indicates increase)|||
|Decrease of inventories (“-” indicates|||
||24,488,168.49|-30,413,122.55|
|increase)|||
|Decrease of operational receivable items (“-”|||
||-482,254,618.57|-244,342,642.44|
|indicates increase)|||
|Increase of operational payable items (“-”|||
||621,807,956.92|270,541,351.33|
|indicates decrease)|||
|Others|-446,156,583.73|-296,624,143.44|
|Net cash flows from operating activities|1,954,433,620.84|1,831,895,928.30|
|2. Major investments and financing activities|||
||--|--|
|not related to cash expenditure and income:|||
|3. Changes of cash and cash equivalent:|--|--|
|Ending cash balance|1,515,740,344.79|1,580,910,931.98|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Less: Cash balance at the beginning of the|||
||1,580,910,931.98|819,213,006.12|
|period|||
|Net increase of cash and cash equivalents|-65,170,587.19|761,697,925.86|

 (2) Net cash paid for acquisition of subsidiaries in the current period
Unit: RMB
|||
|-|-|
||Amount|
|Cash or cash equivalent paid in the current period for the business||
||155,215,923.89|
|combination in the current period||
|Wherein:|--|
|Huai’an Sanqi|155,215,923.89|
|Less: Cash and cash equivalent held by subsidiary on purchase date|140,937.70|
|Wherein:|--|
|Huai’an Sanqi|140,937.70|
|Wherein:|--|
|Net cash paid for acquisition of the subsidiary|155,074,986.19|

 Other notes:
None
(3) Net cash received for the disposal of subsidiaries in the current period
Unit: RMB
|||
|-|-|
||Amount|
|Cash or cash equivalent received in current period for the disposal||
||420,169,978.90|
|of subsidiaries in the current period||
|Wherein:|--|
|Shunrong Auto Parts|417,690,000.00|
|Wuji Entertainment Games Co., Ltd.|2,479,978.90|
|Less: Cash and cash equivalent held by subsidiary at the date of||
||260,047,513.08|
|losing control||
|Wherein:|--|
|Shunrong Auto Parts|232,034,091.47|
|Wuji Entertainment Games Co., Ltd.|28,013,421.61|
|Wherein:|--|
|Net cash received for the disposal of subsidiaries|160,122,465.82|

Other notes:
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report None
(4) Constitution of cash and cash equivalent
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|I. Cash|1,515,740,344.79|1,580,910,931.98|
|Wherein: Cash on hand|29,585.32|59,238.53|
|Bank deposit available for payment|||
||1,509,544,157.41|1,573,326,143.60|
|at any time|||
|Other monetary fund available for|||
||6,166,602.06|7,525,549.85|
|payment at any time|||
|III. Balance of cash and cash equivalents at|1,515,740,344.79|1,580,910,931.98|
|the end of period|||

Other notes:
The ending balance of cash and cash equivalents in 2018 annual cash flow statement was RMB 1,515,740,344.79. The ending balance of monetary funds on the balance sheet as of December 31st, 2018 was RMB 1,532,965,200.05. The difference of RMB 17,224,855.25 was the guarantee and frozen fund not meeting the cash and cash equivalent standard.
51. Assets with limited ownership or right of use
Unit: RMB
||||
|-|-|-|
|Item|Carrying value at the end of the period|Reason for restriction|
|||RMB 12,925,183.70 was the frozen fund|
|Monetary fund|17,224,855.26|in bank account, and RMB 4,299,671.56|
|||was the guarantee|
|||Borrowing of the Company’s subsidiaries|
|Other non-current assets|799,637,688.54|with the office building corresponding to|
|||the prepaid purchase price as the mortgage|
|Total|816,862,543.80|--|

Other notes:
None
52. Foreign currency monetary items
(1) Monetary items in foreign currency
Unit: RMB
|||||
|-|-|-|-|
||Balance of foreign currency at||Balance in RMB at the end of|
|Item||Exchange rate||
||the end of period||period|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|Monetary fund|--|--||
|Wherein: USD|58,717,072.67|6.8632|402,987,013.15|
|EUR|79,895.03|7.8741|629,101.46|
|HKD|2,248,414.35|0.8764|1,970,510.34|
|KRW|425,522,955.00|0.0061|2,595,690.03|
|NT|7,799,117.00|0.2244|1,750,121.85|
|JPY|1,131,161.00|0.0625|70,697.56|
|THB|1,856,586.38|0.2128|395,081.58|
|Accounts receivable|--|--||
|Wherein: USD|15,479,578.51|6.8632|106,239,443.23|
|EUR|16,672.53|7.8741|131,281.17|
|HKD|38,880,089.32|0.8764|34,074,510.28|
|PHP|18,676,829.00|0.1311|2,448,532.28|
|RM|5,419,450.42|1.6609|9,001,165.20|
|THB|64,283,102.33|0.2128|13,679,444.18|
|TRY|206,472.59|1.2978|267,960.13|
|IDR (Indonesian||||
||6,246,489,120.87|0.0005|3,123,244.56|
|Rupiah)||||
|VND|32,192,102,114.71|0.0003|9,657,630.63|
|KRW|783,163,539.00|0.0061|4,777,297.59|
|AUD|826,855.17|4.8310|3,994,537.33|
|JPY|408,755,016.97|0.0625|25,547,188.56|
|GBP|414.65|8.7485|3,627.57|
|BRL|2,511.74|1.7680|4,440.76|
|PLN|437.93|1.8345|803.38|
|CAD|6.25|5.0300|31.44|
|SGD|375,691.38|5.0376|1,892,582.90|
|INR|9,315.00|0.0988|920.32|
|SEK|72.80|0.7680|55.91|
|RUB|9,532.32|0.0981|935.12|
|Other receivables||||
|Wherein: USD|640,000.00|6.8632|4,392,448.00|
|NT|68,500.00|0.2244|15,371.40|
|Accounts payable||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|Wherein: NT|116,384,895.97|0.2244|26,116,770.66|
|USD|20,061,742.56|6.8632|137,687,751.54|
|EUR|7,984.30|7.8741|62,869.18|
|THB|28,007.57|0.2128|5,960.01|
|VND|4,676,607,625.40|0.0003|1,402,982.29|
|HKD|29,385.09|0.8764|25,753.09|
|JPY|1,061,811.00|0.0625|66,363.19|

 Other notes:
(2) Notes to overseas operational entities, including disclosures of overseas principal places of business, functional currencies and the basis of choosing the currency of important overseas operational entities, as well as the reasons for the change in functional currencies (if any).
√Applicable□Not Applicable
TheCompany’s wholly-owned subsidiary Vogue Entertainment International and its six subsidiaries, G-MEI Network, Wisdom Entertainment International, Wisdom Game International, Top Increase, 37 Games Company, 37 Games Entertainment Limited (hereinafter referred to as “Vogue Entertainment International”) and Easy Gaming, Inc. are mainly engaged in overseas business. Taking USD as the bookkeeping base currency can better reflect the actual situation of Vogue Entertainment International and Easy Gaming, Inc. The Company carefully considers and combines existing financial settlement conditions and future. To more accurately reflect the information of Vogue Entertainment International and Easy Gaming, Inc., the bookkeeping currency was changed from RMB to USD from January 1st, 2018. This bookkeeping currency change is accounted for using the future applicable method. 53. Government subsidies
(1) Basic information on government subsidies
Unit: RMB
|||||
|-|-|-|-|
||||Amount included in current|
|Type|Amount|Presented item||
||||profits and losses|
|Governmental subsidy relatedto assets||||
||681,000.00|Deferred income||
|Government Subsidy Related toIncome||||
||96,692,033.09|Other profits|96,692,033.09|

(2) Return of government subsidies
□Applicable√Not Applicable
Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report III. Consolidation scope change
1. Business combinations not under the same control
(1) Business combination not under common control in current period
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||||||||Revenue of|Net profit of|
||||||||Acquiree|Acquiree|
|||||Stock||Confirmation|||
|Name of|Time point of|Equity control|Share||Purchasing||from|from|
|||||controlling||basis on|||
|acquiree|stock control|cost|ratio||date||purchase date|purchase date|
|||||mode||purchase day|||
||||||||to the end of|to the end of|
||||||||term|term|
|Huai’anSanqi|||||November30th, 2018|2018.11.30actual handoverdate||4,769,618.99|
||November|||Cash|||||
|||155,215,923.89|60.30%||||||
||30th, 2018|||purchase|||||

Other notes:
Pursuant to the Priority Limited Partnership Share Transfer Agreement signed between the Company and China Resources SZITIC Trust Co., Ltd. in November 2018, the follow-up supplementary agreement, and the purchase agreement signed with Guangdong Yijian Investment Co., Ltd, the Company acquired60.30% equity ofHuai’an Sanqi in cash. For the transaction price of the assets to be purchased, refer to the book value of the identifiable net assets at the purchasing date as stipulated in the Priority Limited Partnership Share Transfer Agreement and the follow-up supplementary agreement, and the transaction price was RMB
155,215,923.89.
The Company originally held39.70% equity ofHuai’an Sanqi, and became a wholly-owned subsidiary of the Company after acquisition of60.30% in cash.
(2) Merger cost and goodwill
Unit: RMB
|||
|-|-|
|Combination cost|Huai’an Sanqi|
|- Cash|155,215,923.89|
|- Fair value on the acquisition date of the equities held before the||
||98,626,954.68|
|acquisition date||
|Total merger cost|253,842,878.57|
|Less: Proportion of fair value of identifiable net assets acquired|253,842,878.57|
|Amount of goodwill/ merger cost which is less than the definable||
||0.00|
|net assets fair proportion||

Recognition method for fair value on the combined costs and description of contingent consideration and its change:
For the transaction price of the assets to be purchased, refer to the book value of the identifiable net assets at the purchasing date as
stipulated in the Priority Limited Partnership Share Transfer Agreement and the follow-up supplementary agreement, and it was
determined by the parties to this restructuring transaction to be RMB 155,215,923.89.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report The main reasons for the large goodwill:
Not applicable
Other notes:
None
(3) Identifiable assets and liabilities of acquiree on the acquisition date
Unit: RMB
||||
|-|-|-|
||Huai’an Sanqi||
||Fair value on purchase day|Book value on purchase day|
|Monetary fund|140,937.70|140,937.70|
|Receivables|25,875,923.89|25,875,923.89|
|Long-term equity investments|229,185,274.20|229,185,274.20|
|Accounts payable|1,359,257.22|1,359,257.22|
|Net asset|253,842,878.57|253,842,878.57|
|Net asset acquired|253,842,878.57|253,842,878.57|

 Recognition method for identifiable assets and fair value:
Determined by book value.
Contingent liabilities of the acquiree assumed in business combination:
None
Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2. Disposal of subsidiaries
Whether there are cases where the control over investment in subsidiary is lost in single disposal
□ Yes√ No
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||Difference of|||||||
|||||||enjoyed net||||||Amount of other|
|||||||asset share of||||||comprehensive|
||||||||||||Recognition methods||
|||||||the subsidiary|Proportion of|Carrying value||Profits or losses||income, related to|
|||Ratio of||Time|||||Fair value of||and main assumption||
||Disposal||Disposal||Determination basis|between|remaining|of remaining||attributing to||equity investment|
|||disposal||point of|||||remaining equity||for fair value of||
|Name of subsidiary|price of||method||of time point of|consolidated|equity on the|equity on the||remaining equity||of original|
|||equity||losing|||||on the date of||remaining equity on||
||equity||of equity||losing control|financial|date of losing|date of losing||re-measured by||subsidiary, carried|
|||(%)||control|||||losing control||the date of losing||
|||||||statements|control|control||fair values||forward to the|
||||||||||||control||
|||||||corresponding to||||||profit and loss on|
|||||||disposal price||||||investments|
|||||||and investment|||||||
|||||Novemb|The equity transfer||||||||
|Shunrong Auto|819,000,||Right||||||||||
|||100.00%||er 30th,|procedure was|6,470,484.05|||||-||
|Parts|000.00||offering||||||||||
|||||2018|completed||||||||
|||||Decemb|The equity transfer||||||||
|Wuji Entertainment|6,935,70||Right||||||||Equity transaction||
|||40.74%||er 31st,|procedure was|-1,117,205.48|14.16%|1,533,960.59|2,583,703.75|1,049,743.16|||
|Games Co., Ltd.|0.00||offering||||||||price||
|||||2018|completed||||||||

Other notes:
None
Whether there are cases where investment in subsidiary is disposed step by step through multiple transactions and the control is lost in the current period
□ Yes√ No
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3. Merger scope change for other reasons
Notes to changes in scope of combination due to other reasons (e.g., establishment of new subsidiaries, liquidation of subsidiaries, etc.) and their related circumstances:
||||
|-|-|-|
|Company name|Cause of changes|Establishment/Change date|
|Anhui Wanhu|Newly-established|March 1st, 2018|
|Zhuhai Miaohu|Newly-established|April 26th, 2018|
|Zhuhai Shangjie|Newly-established|April 26th, 2018|
|Khorgas Mopeng|Newly-established|May 29th, 2018|
|Ningbo Langkun|Newly-established|July 26th, 2018|
|Shanghai Jiakun|Newly-established|July 17th, 2018|
|Guangzhou Sanqi Culture &Entertainment|Newly-established|August 9th, 2018|
|Anhui Zhusheng|Newly-established|October 11th, 2018|
|37Games.Japan Co., Ltd.|Newly-established|December 17th, 2018|
|Guangzhou Jisheng|Write-off|March 23rd, 2018|
|Guangzhou Jishi|Write-off|May 24th, 2018|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report IV. Rights and interests in other parties
1. Rights and interests in subsidiary
(1) Organization of enterprise group
||||||||
|-|-|-|-|-|-|-|
||Principal place of|||Shareholding ratio|||
|Name of subsidiary||Registered address|Business nature|||Acquisition method|
||business|||Directly|Indirectly||
|Level 1 subsidiary|||||||
|Shanghai Sanqi Interactive|||||||
||Guangzhou|Shanghai|Software|100.00%||Business combination not under common control|
|Entertainment|||||||
|Tibet Xintai|Tibet|Tibet|Investment|100.00%||Establishment|
|Guangzhou Sanqi Culture &|||||||
||Guangzhou|Guangzhou|Software|100.00%||Establishment|
|Entertainment|||||||
|Level 2 subsidiary|||||||
|Shanghai Yingtong|Guangzhou|Shanghai|Software||100.00%|Business combination not under common control|
|Anhui Vogue Entertainment|Guangzhou|Wuhu|Software||100.00%|Business combination not under common control|
|Guangzhou Sanqi|Guangzhou|Guangzhou|Software||80.00%|Business combination not under common control|
||British Virgin||||||
|Vogue Entertainment International||British Virgin Islands|Software||100.00%|Business combination not under common control|
||Islands||||||
|Jiangsu Aurora|Guangzhou|Huai’an|Software|20.00%|80.00%|Business combination not under common control|
|Guangzhou Xingzhong|Guangzhou|Guangzhou|Software||100.00%|Business combination not under common control|
|Shanghai Guanhang|Guangzhou|Shanghai|Software||100.00%|Business combination not under common control|
|Anhui Jiashang|Guangzhou|Wuhu|Software||100.00%|Business combination not under common control|
|Easy Gaming, Inc.|United States|United States|Software||100.00%|Business combination not under common control|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|Khorgas Sanqi|Xinjiang|Xinjiang|Investment|100.00%|Establishment|
|Level 3 subsidiary||||||
|Shanghai Zhiren|Guangzhou|Shanghai|Software|100.00%|Business combination not under common control|
|Zhuhai Shangjie|Zhuhai|Zhuhai|Software|100.00%|Establishment|
|G-MEI Network|Taiwan|British Virgin Islands|Software|100.00%|Business combination not under common control|
||British Virgin|||||
|Top Increase||British Virgin Islands|Software|100.00%|Business combination not under common control|
||Islands|||||
|Shanghai Mobile Game|Guangzhou|Shanghai|Software|80.00%|Business combination not under common control|
|Chengdu Shengge Times Network||||||
||Chengdu|Chengdu|Software|80.00%|Business combination not under common control|
|Technology Co., Ltd.||||||
|Beijing Shangheng|Guangzhou|Beijing|Software|80.00%|Business combination not under common control|
|Jiangsu Jiaqu|Guangzhou|Huai’an|Software|80.00%|Business combination not under common control|
|Guangzhou Huoshanhu|Guangzhou|Guangzhou|Software|80.00%|Establishment|
|Anhui Sanqi|Guangzhou|Wuhu|Software|80.00%|Establishment|
|Anhui Wanhu|Guangzhou|Wuhu|Software|80.00%|Establishment|
|Zhuhai Miaohu|Zhuhai|Zhuhai|Software|80.00%|Establishment|
|Guangzhou Sanqi Interactive||||||
||Guangzhou|Guangzhou|Software|100.00%|Establishment|
|Entertainment||||||
|Anhui Aurora|Guangzhou|Wuhu|Software|100.00%|Establishment|
|Guangzhou Jisheng|Guangzhou|Guangzhou|Software|100.00%|Establishment|
|Anhui Xuhong|Guangzhou|Wuhu|Advertising|100.00%|Establishment|
|Anhui Guanyu|Guangzhou|Wuhu|Advertising|100.00%|Business combination not under common control|
|Anhui Zhusheng|Guangzhou|Wuhu|Software|100.00%|Establishment|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|Level 4 subsidiary|||||||
|Tibet Taifu|Tibet|Tibet|Software||100.00%|Business combination not under common control|
||||Software and||||
|Khorgas Xinghui|Xinjiang|Xinjiang|Information||100.00%|Establishment|
||||Technology Service||||
|Jiangsu Zhiming|Guangzhou|Huai’an|Software|49.00%|51.00%|Business combination not under common control|
|37Games Entertainment Co., Ltd.|Hong Kong|Hong Kong|Software||100.00%|Business combination not under common control|
||British Virgin||||||
|Wisdom Game International||British Virgin Islands|Software||100.00%|Business combination not under common control|
||Islands||||||
|Wisdom Entertainment International|Hong Kong|Hong Kong|Software||100.00%|Business combination not under common control|
|37 Games Company|South Korea|South Korea|Software||100.00%|Business combination not under common control|
||||Software and||||
|Khorgos Xinrui|Xinjiang|Xinjiang|Information||80.00%|Establishment|
||||Technology Service||||
|Level 5 subsidiary|||||||
|Tibet Yaotong|Guangzhou|Tibet|Software||100.00%|Establishment|
|Tibet Shengge|Guangzhou|Tibet|Software||100.00%|Establishment|
|Shanghai Mokun|Shanghai|Shanghai|Software||100.00%|Combination not under the same control|
||||Business services||||
|Huai’an Sanqi|Huai’an|Huai’an|||100.00%|Business combination not under common control|
||||industry||||
||||Software and||||
|Khorgas Qianyu|Xinjiang|Xinjiang|Information||100.00%|Establishment|
||||Technology Service||||
|37Games.Japan Co., Ltd.|Japan|Japan|Software||100.00%|Establishment|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|Level 6 subsidiary||||||
|Shanghai Langkun|Shanghai|Shanghai|Software|76.50%|Business combination not under common control|
|Shanghai Miji|Shanghai|Shanghai|Software|100.00%|Business combination not under common control|
|Shanghai Kunkun|Shanghai|Shanghai|Software|100.00%|Business combination not under common control|
|Shanghai Aojue|Shanghai|Shanghai|Software|100.00%|Business combination not under common control|
|Khorgas Mopeng|Xinjiang|Xinjiang|Software|100.00%|Establishment|
|Level 7 subsidiary||||||
|Khorgas Jiaji|Xinjiang|Xinjiang|Software|76.50%|Business combination not under common control|
|Shanghai Jiakun|Shanghai|Shanghai|Software|76.50%|Establishment|
|Ningbo Langkun|Xinjiang|Xinjiang|Software|76.50%|Establishment|

The shareholding ratio in the subsidiary is different from the percentage of the voting rights:
Not applicable
Basis for a company to control the invested organization with half or less than half of voting rights and a company not to control the invested organization with more than half of voting rights: Not applicable
For important structured entities that are included in the scope of consolidation, the basis for control:
Not applicable
Basis for determining whether the company is an agent or a client:
Not applicable
Other notes:
None
(2) Key no-wholly owned subsidiaries
Unit: RMB
||||||
|-|-|-|-|-|
|Name of subsidiary|Shareholding ratio of|Profit and loss belonging to minority|Dividend declared to be distributed to minority|Balance of minority equity at the end of period|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
||minority shareholders|shareholder of the current period|shareholder of the current period||
|Guangzhou Sanqi|20.00%|133,337,736.30|90,000,000.00|147,368,592.82|

 Notes to shareholding ratio of minority shareholders of subsidiaries which is different from the percentage of the voting rights:
Not applicable
Other notes:
None
(3) Main financial information of key non-wholly owned subsidiaries
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Ending balance||||||Beginning balance||||||
|of|||||||||||||
|||Non-current|||Non-current|||Non-currentassets||Current|Non-current||
|subsidi|Current assets||Total assets|Current liabilities||Total liabilities|Current assets||Total assets|||Total liabilities|
|||assets|||liabilities|||||liabilities|liabilities||
|ary|||||||||||||
|Guang|||||||||||||
|zhou|2,156,907,783.27|127,801,334.17|2,284,709,117.44|1,516,725,501.90|31,140,651.44|1,547,866,153.34|1,043,430,956.42|115,896,348.84|1,159,327,305.26|531,531,578.14|34,416,645.44|565,948,223.58|
|Sanqi|||||||||||||

Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Amount incurred in the current period||||Amount incurred in the previous period||||
|Name of subsidiary||||Cash flows from|||Total consolidated|Cash flows from operating|
||Operating incomes|Net profit|Total consolidated income||Operating income|Net profit|||
|||||operating activities|||income|activities|
|Guangzhou Sanqi|3,593,993,326.91|666,688,681.51|666,688,681.51|1,464,777,160.65|2,098,517,906.50|470,530,214.76|470,530,214.76|863,880,248.47|

 Other notes:
None
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 2. Change ofowner’s equity share in subsidiaries and the business of subsidiaries still under control (1) Notes on change ofowner’s equity share in subsidiaries
|||||
|-|-|-|-|
|Name of subsidiary|Change time|Shareholding ratiobefore change|Shareholding ratio afterchange|
|Jiangsu Aurora|February 2018|80.00%|100.00%|
|Guangzhou Huoshanhu|June 2018|85.00%|80.00%|
|Anhui Sanqi|June 2018|100.00%|80.00%|

 (2) Effect of the transaction on minority interests and attributable to owners' equity of the parent company Unit: RMB
|||||
|-|-|-|-|
||Jiangsu Aurora|Anhui Sanqi|Guangzhou Huoshanhu|
|- Cash|1,400,000,000.00||150,000.00|
|Total of purchase cost/ disposal||||
||1,400,000,000.00||150,000.00|
|consideration||||
|Less: Subsidiaries’ share of net||||
|assets calculated based on share|151,879,433.66|-5,028,053.57|-1,756,284.13|
|of equity received/disposed.||||
|Balance|1,248,120,566.34|5,028,053.57|1,906,284.13|
|Wherein: Capital reserves||||
||1,248,120,566.34|5,028,053.57|1,906,284.13|
|adjustment||||

Other notes
(1) In the current year, the Company acquired20% equity of Jiangsu Aurora from Hu Yuhang by paying cash of RMB 1.4 billion, and completed the procedures for industrial and commercial change on February 7th, 2018. According to the Evaluation Report on theShareholders’ Equity Assets of Jiangsu Aurora Network Technology Co., Ltd. Involved in the Equities Acquisition by Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. (L.X.(Z.)P.B.Z.[2017] No. A0553) issued by Guangdong Union Trust Evaluation Co., Ltd., the assessed value of JiangsuAurora’s totalshareholders’ equity was RMB 7,004,652,200, and the consideration price agreed by the parties to the transaction was RMV 1.4 billion.
(2) In June 2018, the Company acquired15% of GuangzhouHuoshanhu’s equity from Wang Ziqiang by paying cash of RMB 150,000.00, and completed the procedures for industrial and commercial changes on July 18th, 2018.
In June 2018, the Company transferred100% equity of Guangzhou Huoshanhu and Anhui Sanqi to Guangzhou Sanqi Network Technology Co., Ltd., one of its holding subsidiaries. After the transfer, the Company indirectly held80% equity of Guangzhou Huoshanhu Information Technology Co., Ltd. and Anhui Sanqi Network Technology Co., Ltd. Guangzhou Huoshanhu Information Technology Co., Ltd. completed the procedures for industrial and commercial changes on July 18th, 2018, and Anhui Sanqi Network Technology Co., Ltd. completed the procedures for industrial and commercial changes on August 3rd, 2018.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3. Equity in jointly operated arrangements or joint ventures
(1) Key joint ventures or associates
||||||||
|-|-|-|-|-|-|-|
|||||Shareholding ratio||Accounting treatment|
|Names of joint ventures or associated|Principal place|Registered|Business|||methods of joint|
|enterprises|of business|address|nature|Directly|Indirectly|ventures or associated|
|||||||enterprises|
|Yangzhou Fuhai Sanqi Internet Cultural|||||||
||Yangzhou|Yangzhou|Investment||25.46%|Equity method|
|Investment Center (Limited Partnership)|||||||
|Mango (Xiamen) Creative Incubation Equity|||||||
|Investment Fund Partnership (Limited|Xiamen|Xiamen|Investment||31.75%|Equity method|
|Partnership)|||||||
|Shanghai Fenghua Qiushi Culture Media Co.,|||||||
||Shanghai|Shanghai|Investment||20.00%|Equity method|
|Ltd.|||||||
|New Cues (Beijing) Television Investment|||||||
||Beijing|Beijing|Investment||20.00%|Equity method|
|Co., Ltd.|||||||

The shareholding ratio in the joint ventures or associates is different from the percentage of the voting rights:
Not applicable
Evidence of voting right below20% but significant, or voting right over20% but not significant:
Not applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Main financial information on key associated enterprises
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||Ending balance/Amount incurred in the current period||||Opening balance/Amount incurred in previous period|||
|||||||Huai’an Sanqi||
|||Mango (Xiamen) Creative|||Yangzhou Fuhai|||
||Yangzhou Fuhai Sanqi||Shanghai|New Cues||Yijian|Mango (Xiamen) Creative|
|||Incubation Equity|||Sanqi Internet|||
||Internet Cultural||Fenghua Qiushi|(Beijing) Television||Pan-Entertainment|Incubation Equity Investment|
|||Investment Fund|||Cultural Investment|||
||Investment Center||Culture Media|Investment Co.,||Asset Management|Fund Partnership (Limited|
|||Partnership (Limited|||Center (Limited|||
||(Limited Partnership)||Co., Ltd.|Ltd.||Center (Limited|Partnership)|
|||Partnership)|||Partnership)|||
|||||||Partnership)||
|Current assets|59,887,123.89|96,865,384.60|88,732,285.69|174,005,448.14|72,887,128.32|2,530,160.27|116,887,443.92|
|Non-current assets|139,000,000.00|26,500,000.00|41,926,172.74|17,240,844.95|37,750,000.00|233,574,085.99|9,300,000.00|
|Total assets|198,887,123.89|123,365,384.60|130,658,458.43|191,246,293.09|110,637,128.32|236,104,246.26|126,187,443.92|
|Current liabilities|||35,247,574.35|142,418,605.58|||4,465,358.22|
|Total liabilities|||35,247,574.35|142,418,605.58|||4,465,358.22|
|Total shareholders’ equity attributed||||||||
||198,887,123.89|123,365,384.60|95,410,884.08|48,827,687.51|110,637,128.32|236,104,246.26|121,722,085.70|
|to parent company||||||||
|Share of net assets calculated at||||||||
||48,136,104.35|39,163,509.62|19,082,176.82|9,765,537.50|50,000,000.00|101,677,840.80|38,646,762.21|
|shareholding ratio||||||||
|- Goodwill|||113,596,170.58|91,519,923.84||||
|Book value of equity investment on||||||||
||48,136,104.35|39,163,509.62|132,678,347.40|101,285,461.34|50,000,000.00|101,677,840.80|38,646,762.21|
|associates||||||||
|Operating income|||22,850,573.32|9,309,366.03||||
|Net profit|-7,680,004.43|1,628,080.84|17,073,944.37|5,994,031.50|137,128.32|11,067,234.25|-4,262,166.26|
|Total consolidated income|-7,680,004.43|1,628,080.84|17,073,944.37|5,994,031.50|137,128.32|11,067,234.25|-4,262,166.26|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||
|-|-|
|Dividend from associated||
|enterprises received in the current|8,769,681.68|
|year||

Other notes
None
(3) Financial information summary on less important joint ventures and associated enterprises
Unit: RMB
||||
|-|-|-|
||Ending balance/Amount incurred in the current period|Opening balance/Amount incurred in previous period|
|Joint ventures:|--|--|
|Totals of the following items calculated as per respective|||
||--|--|
|shareholding proportion|||
|Affiliated enterprises:|--|--|
|Total investment book value|229,338,591.28|186,648,229.07|
|Totals of the following items calculated as per respective|||
||--|--|
|shareholding proportion|||
|- Net profit|4,099,680.58|-10,183,932.08|
|- Total consolidated income|4,099,680.58|-10,183,932.08|

 Other notes
Except for Yangzhou Fuhai Sanqi Internet Cultural Investment Center (Limited Partnership), Mango (Xiamen) Creative Incubation Equity Investment Fund Partnership (Limited Partnership), Shanghai Fenghua Qiushi Culture Media Co., Ltd. and New Cues (Beijing) Television Investment Co., Ltd., other associates are of slight importance.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (4) Excess deficit in joint ventures or associated enterprises
Unit: RMB
|||||
|-|-|-|-|
||Accumulated unconfirmed|Unconfirmed loss of the current||
|Names of joint ventures or|||Accumulated unconfirmed loss|
||losses recognized in the|period (or shared net profits of||
|associated enterprises|||at the end of the period|
||previous period|the current period)||
|Longzhang Animation||||
||-5,201,916.08|-2,704,711.45|-7,906,627.53|
|(Shanghai) Co., Ltd.||||

Other notes
None
V. Risk associated with financial instruments
The target of risk management by the Group is to balance risk and profit, and minimize the negative influence of risk on the Company's operation performance, and maximize the profit of shareholder and other equity investors. Base on this risk management target, the fundamental strategy of the Company's risk management is to identify and analyze various risks in the Company, establish appropriate risk tolerance baseline, manage risks, and to supervise all risks promptly and reliably so as to control risk in limited scope.
The various risks related to financial instruments Company faces in its daily activities mainly include credit risk, liquidity risk and market risk. The policy that has been examined and authorized by the management to manage the risks is summarized as follows. (I) Risks of credit
Credit risk refers to the possibility of financial loss borne by one party caused by the failure to performance obligation by another party of the financial instrument.
The Company's credit risk is mainly derived from bank deposits and receivables. To control the above-mentioned relevant risks, the Company adopts the following measures.
1. Bank deposit
The Company deposits bank deposits in financial institutions with higher credit ratings, so its credit risk is lower.
2. Receivables
The Company regularly conducts credit evaluations for customers who use credit-based transactions. Based on the results of the credit evaluation, the Company chooses to conduct transactions with recognized customers of good credit, and monitors the balance of its receivables to avoid significant risks of bad debts.
As the Company's risk points of accounts receivable are distributed among multiple partners and customers, as of December 31st, 2018,61.82% of theCompany’s accounts receivable (December 31st, 2017:51.36%) was from the top five balance customers. The company does not have significant credit concentration risks.
(II) Liquidity risk
Liquidity risk refers to the risk of a shortage of funds when the Company is required to settle its obligations in the form of cash or other financial assets. The liquidity risk may result from the inability to sell financial assets at fair value as soon as possible; or from the inability of the other party to repay their contractual debts; or from debts that are due in advance; or from the inability to generate expected cash flows.
TheCompany’s current financial assets can meet working capital needs and capital expenditures, so it does not assume significant liquidity risks.
(III) Market risk
Market risk refers to the possibility of fluctuation in the fair value of financial instruments or future cash flow caused by market price
change. Market risk includes interest rate risk and foreign exchange risk.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 1. Interest rate risk
Interest rate risk refers to the possibility of fluctuation in the fair value of financial instruments/future cash flow caused by market interest rate change. The Company does not have the risk of changes in market interest rates.
2. Foreign currency risk
Exchange rate risk refers to the possibility of fluctuation of the fair value of financial instruments or future cash flows due to changes in foreign exchange rates. The exchange rate risk of the company mainly related to monetary assets and debts of foreign currency. The main business place of the Company is in Mainland China and the main activities is calculated in RMB. Therefore, the market risk of foreign exchange changes tolerated by the Company is not significant.
The ending foreign currency monetary assets and liabilities of the Company can be found in the description of foreign currency monetary items under Item Notes to Consolidated Financial Statement in the notes to the financial statements.
VI. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
Unit: RMB
||||||
|-|-|-|-|-|
||Ending fair value||||
|Item|Level I measurement of|Level II measurement of|Level III measurement of||
|||||Total|
||fair value|fair value|fair value||
|I. Continuous fair value|||||
||--|--|--|--|
|measurements|||||
|(II) Available-for-sale|||||
||71,141,826.11|||71,141,826.11|
|financial assets|||||
|(2) Equity instrument|||||
||71,141,826.11|||71,141,826.11|
|investment|||||
|II. Non-continuous|||||
||--|--|--|--|
|measurement of fair value|||||
|(I) Assets held-for-sale|7,536,816.46|||7,536,816.46|

 2. Determining basis for the market price of continuous and non-continuous first-level fair value-measured project
The fair value of available-for-sale financial assets and hold-for-sale is determined based on the open market value.
VII. Related parties and related transaction
1. Information of the Company's parent company
|||||||
|-|-|-|-|-|-|
||||||Percentage of the|
|||||Shareholding ratio of||
|Name of parent|||||Company's vote|
||Registered address|Business nature|Registered capital|the parent company||
|company|||||rights held by the|
|||||against the Company||
||||||parent company|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report Description of the information of the Company's parent company
Final controllers of the Company are Wu Xushun, Wu Weihong and Wu Weidong.
Other notes:
Actual controller of the Company
||||
|-|-|-|
|Name of affiliated parties|Percent of stocks of the Company (%)|The percent of voting share of the Company (%)|
|Wu Xushun|7.89|7.89|
|Wu Weihong|6.99|6.99|
|Wu Weidong|6.16|6.16|

 Wu Xushun is in father-daughter relation with Wu Weihong, and father-son relation with Wu Weidong. The above three shareholders held a total of21.04% of the Company's shares.
2. Information of the Company's subsidiaries
Details of the subsidiaries of the company are shown in Note IX: Rights and Interests in Other Bodies.
3. Affiliates and joint ventures of the Company
For the important joint ventures or affiliated enterprises of the Company, please refer to Notes IX: Rights and Interests in Other Entities.
Details on other joint ventures or associated enterprises with balance from related party transactions with the Company this period or earlier are as follows:
|||
|-|-|
|Names of joint ventures or associated enterprises|Relation with the Company|
|Shenzhen Yiwan Network Technology Co., Ltd.|An associated enterprise of the Company|
|Chengdu Pengwan Technology Co., Ltd.|An associated enterprise of the Company|
|Shanghai Tingting Network Technology Co., Ltd.|An associated enterprise of the Company|
|Chengdu Mofei Technology Co., Ltd.|An associated enterprise of the Company|
|Longzhang Animation (Shanghai) Co., Ltd.|An associated enterprise of the Company|
|Chengdu Modu Technology Co., Ltd.|An associated enterprise of the Company|
|Shenzhen Zhanlong Interactive Entertainment Technology Co., Ltd.|An associated enterprise of the Company|
|Longzhang Network Technology (Shanghai) Co., Ltd.|An associated enterprise of the Company|
|Shaoxing Shangyu Zhangyu Network Technology Co., Ltd.|An associated enterprise of the Company|
|Shanghai Yuhouyi Network Technology Co., Ltd.|An associated enterprise of the Company|
|Shanghai Fuhai Sanqi Investment Management Co., Ltd.|An associated enterprise of the Company|
|Chengdu Popcorn Interactive Entertainment Technology Co., Ltd.|An associated enterprise of the Company|
|Jiangsu Yezi Network Technology Co., Ltd.|An associated enterprise of the Company|
|Shanghai Aoting Network Technology Co., Ltd.|An associated enterprise of the Company|
|Shanghai Aurora Network Technology Co., Ltd.|An associate of the Company before March 31st, 2017|
|Shanghai Mokun|An associate of the Company before May 31st, 2017, and a subsidiary of|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||
|-|-|
||the Company after May 31st, 2017.|
||An associate of the Company before November 30th, 2018, and asubsidiary of the Company after November 30th, 2018.|
|Huai’an Sanqi||

Other notes
1. The Company disposed of the joint venture Shanghai Aurora Network Technology Co., Ltd. on March 31st, 2017, and disclosed amount of the related party transaction with it in the previous period from January to March 2017.
2. The Company completed the overall acquisition of Shanghai Mokun on May 31st, 2017, and disclosed amount of the related party transaction with it in the previous period from January to May 2017.
4. Other affiliated parties
|||
|-|-|
|Names of other related parties|Relationship between other affiliated parties and the Company|
||A related person for the past 12 months ended January 31st, 2018, (Vice|
|Shenzhen Mokylin Technology Co., Ltd.|Chairman and General Manager of the Company and a director of this|
||company)|
||A related person (Deputy General Manager of the Company and a director|
|Beijing Colorful Game Technology Co., Ltd.||
||of this company)|
||A related person (a director and Deputy General Manager of the|
|Shenzhen QiFun Network Corp. Ltd.||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|Guangzhou Joyegame Software Co., Ltd.||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|Chengdu 91ACT Technology Company||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|Xiamen Huoyou Information Technology Co., Ltd.||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|Shanghai Zhangmeng Network Technology Co., Ltd.||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|Shanghai Mango Interactive Entertainment Technology Co., Ltd.||
||Company, and a director of this company)|
||A related person (a director and Deputy General Manager of the|
|YHKT Entertainment Co., Ltd.||
||Company, and a director of this company)|
||A company under of the controlling shareholders before November 13th,|
|Wuhu Ningzhong Auto Parts Technology Co., Ltd.||
||2018|
||Natural person who holds more than 5% of the shares of a listed company,|
|Li Weiwei||
||Vice Chairman and General Manager|
|Zeng Kaitian|Natural person who holds more than 5% of the shares of a listed company|

 Other notes
Vice Chairman and General Manager of the Company, and a director of Shenzhen Mokylin Technology Co., Ltd. before January 31st,
2017, that is, a related person of this company for the past 12 months ended January 31st, 2018. During the reporting period, the
related party transaction with it disclosed was the amount incurred in January 2018.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 5. Status of associated transaction
(1) Associated transaction regarding trade of goods and labor services
Profile on purchasing products and obtaining labor services
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||Amount incurred in|Approved transaction|Whether it exceeds the|Amount incurred in the previous|
|Related party|Details of transaction between related parties|||||
|||the current period|amount|transaction amount|period|
|Shenzhen Yiwan Network|Shared revenue from games, copyright money|||||
|||194,977.48|400,000.00|No|212,164.40|
|Technology Co., Ltd.|purchasing and commissioned R&D fees|||||
|Chengdu Pengwan|Shared revenue from games and commissioned R&D|||||
|||6,482,280.85|40,127,600.00|No|26,751,740.93|
|Technology Co., Ltd.|fees|||||
|Shanghai Aurora Network|Shared revenue from games, copyright money|||||
|||||No|11,932,597.82|
|Technology Co., Ltd.|purchasing|||||
|Shanghai Tingting Network|Shared revenue from games and commissioned R&D|||||
|||300,592.09|300,400.00|Yes|7,495,417.36|
|Technology Co., Ltd.|fees|||||
|Shenzhen Mokylin|Shared revenue from games and commissioned R&D|||||
|||155,553.92|500,000.00|No|5,490,077.96|
|Technology Co., Ltd.|fees|||||
||Shared revenue from games, copyright money|||||
|Shanghai Mokun||||No|1,051,125.60|
||purchasing|||||
|Chengdu Mofei|Shared revenue from games, copyright money|||||
|||36,644,866.42|38,500,000.00|No|157,157.40|
|Technology Co., Ltd.|purchasing|||||
|Beijing Colorful Game||||||
||Shared revenue from games|674,552.81|5,715,000.00|No|952,493.00|
|Technology Co., Ltd.||||||
|Shenzhen QiFun Network|Shared revenue from games, copyright money|||||
|||45,803.04|10,000,000.00|No|121,757.67|
|Corp. Ltd.|purchasing|||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||||
|-|-|-|-|-|-|
|Guangzhou Joyegame|Shared revenue from games and commissioned R&D|||||
|||||No|8,279.46|
|Software Co., Ltd.|fees|||||
|Chengdu 91ACT||||||
||Shared revenue from games||10,000,000.00|No|255,657.80|
|Technology Company||||||
|Longzhang Animation|Shared revenue from games, copyright money|||||
|||6,202,792.26|49,700,000.00|No|514,216.26|
|(Shanghai) Co., Ltd.|purchasing|||||
|Xiamen Huoyou||||||
|Information Technology|Shared revenue from games|432,497.68|500,000.00|No||
|Co., Ltd.||||||
|Shanghai Zhangmeng||||||
|Network Technology Co.,|Shared revenue from games|433,686.77||Yes||
|Ltd.||||||
|Chengdu Modu|Shared revenue from games and commissioned R&D|||||
|||1,794,731.88|6,000,000.00|No||
|Technology Co., Ltd.|fees|||||
|Shenzhen Zhanlong||||||
|Interactive Entertainment|Shared revenue from games|2,707,232.67|2,000,000.00|Yes||
|Technology Co., Ltd.||||||
|Longzhang Network||||||
|Technology (Shanghai)|Commissioned R&D expense|546,721.82||Yes||
|Co., Ltd.||||||
|Shanghai Mango||||||
||Shared revenue from games and fees for new product|||||
|Interactive Entertainment||895,684.27|6,342,800.00|No|4,228,519.65|
||design|||||
|Technology Co., Ltd.||||||
|Shaoxing Shangyu||||||
|Zhangyu Network|Shared revenue from games|76,623.87|112,000,000.00|No||
|Technology Co., Ltd.||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|Shanghai Aoting Network||||
||Shared revenue from games|No|38,453.71|
|Technology Co., Ltd.||||

Profile on selling products/providing labor services
Unit: RMB
|||||
|-|-|-|-|
||||Amount incurred in the previous|
|Related party|Details of transaction between related parties|Amount incurred in the current period||
||||period|
|Shanghai Yuhouyi Network Technology Co., Ltd.|Software operating income|18,624,476.80|5,545,397.18|
|Shanghai Mango Interactive Entertainment Technology||||
||Software operating income|20,037.16|840,274.48|
|Co., Ltd.||||
|Shenzhen Mokylin Technology Co., Ltd.|Income from evaluation service, technical service fees||473,057.78|
|Beijing Colorful Game Technology Co., Ltd.|Software operating income|5,557.51|12,466.87|
|Shanghai Fuhai Sanqi Investment Management Co., Ltd.|Service consultation income|1,870,000.00||

Note to related party transactions for the purchase and sale of goods, provision and acceptance of labor services
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Affiliated-party guarantee
The company acts as the guarantor
Unit: RMB
||||||
|-|-|-|-|-|
|||||Has the guarantee been|
|The guaranteed|Amount of guarantee|Starting date of guarantee|Ending date of guarantee||
|||||fulfilled?|

 The company acts as the guaranteed
Unit: RMB
||||||
|-|-|-|-|-|
|||||Has the guarantee been|
|Guarantor|Amount of guarantee|Starting date of guarantee|Ending date of guarantee||
|||||fulfilled?|
|Li Weiwei, Zeng Kaitian|210,000,000.00|May 23rd, 2017|May 22nd, 2018|Yes|
|Li Weiwei, Zeng Kaitian|90,000,000.00|May 24th, 2017|May 22nd, 2018|Yes|
|Li Weiwei, Zeng Kaitian|69,000,000.00|June 9th, 2017|June 8th, 2018|Yes|
|Li Weiwei, Zeng Kaitian|80,000,000.00|January 30th, 2018|November 16th, 2018|Yes|
|Li Weiwei, Zeng Kaitian|200,000,000.00|February 28th, 2018|November 16th, 2018|Yes|
|Li Weiwei, Zeng Kaitian|210,000,000.00|June 22nd, 2018|June 21st, 2019|No|
|Li Weiwei, Zeng Kaitian|159,000,000.00|June 25th, 2018|June 21st, 2019|No|

Status of associated guarantee
(3) Asset transfer and debt restructuring of affiliated party
Unit: RMB
|||||
|-|-|-|-|
||Details of transaction between|Amount incurred in the current|Amount incurred in the|
|Related party||||
||related parties|period|previous period|
|Wuhu Ningzhong Auto Parts||||
||Disposal of equity|819,000,000.00||
|Technology Co., Ltd.||||

(4) Remuneration for key management personnel
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Remuneration for key management|||
||17,574,216.02|14,575,079.96|
|personnel|||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 6. Accounts receivable and payable by related parties
(1) Receivables
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||Ending balance||Beginning balance||
|Project name|Related party|||||
|||Book balance|Provision for bad debts|Book balance|Provision for bad debts|
|Accounts receivable|Shanghai Yuhouyi Network Technology Co., Ltd.|2,091,604.00|104,580.20|5,473,326.88|273,666.34|
||Shanghai Mango Interactive Entertainment|||||
|Accounts receivable||||141,403.60|7,070.18|
||Technology Co., Ltd.|||||
|Accounts receivable|Beijing Colorful Game Technology Co., Ltd.|370.22|18.51|13,214.88|660.74|
|Prepayment|Chengdu Modu Technology Co., Ltd.|||1,000,000.00||
|Prepayment|Chengdu Mofei Technology Co., Ltd.|2,000,000.00||842,842.60||
|Prepayment|Longzhang Animation (Shanghai) Co., Ltd.|||14,485,783.74||
||Longzhang Network Technology (Shanghai) Co.,|||||
|Prepayment||2,061,081.07||1,982,010.00||
||Ltd.|||||
|Prepayment|Shenzhen QiFun Network Corp. Ltd.|2,264,856.00||1,978,994.10||
|Prepayment|Chengdu 91ACT Technology Company|||1,450,617.07||
||Chengdu Popcorn Interactive Entertainment|||||
|Prepayment||1,000,000.00||||
||Technology Co., Ltd.|||||
||Shenzhen Zhanlong Interactive Entertainment|||||
|Prepayment||650,147.37||||
||Technology Co., Ltd.|||||
|Prepayment|Jiangsu Yezi Network Technology Co., Ltd.|3,000,000.00||||
|Prepayment|Shenzhen Yiwan Network Technology Co., Ltd.|2,193,140.33||1,757,963.61||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Other receivables|Wuhu Ningzhong Auto Parts Technology Co., Ltd.|401,310,000.00|

(2) Payables
Unit: RMB
|||||
|-|-|-|-|
|Project name|Related party|Ending book value|Opening book balance|
|Accounts payable|Chengdu Mofei Technology Co., Ltd.|11,483,657.92||
|Accounts payable|Chengdu Modu Technology Co., Ltd.|1,794,731.88||
|Accounts payable|Chengdu Popcorn Interactive Entertainment Technology Co., Ltd.|175,699.90||
|Accounts payable|Shanghai Zhangmeng Network Technology Co., Ltd.|1,941,996.00||
|Accounts payable|Chengdu Pengwan Technology Co., Ltd.|311,961.83|11,622,401.24|
|Accounts payable|Guangzhou Joyegame Software Co., Ltd.||3,951.38|
|Accounts payable|Shenzhen Mokylin Technology Co., Ltd.||14,717,281.13|
|Accounts payable|Shaoxing Shangyu Zhangyu Network Technology Co., Ltd.|33,370.33||
|Accounts payable|Shanghai Mango Interactive Entertainment Technology Co., Ltd.|490,418.65|346,198.97|
|Accounts payable|Beijing Colorful Game Technology Co., Ltd.|1,512,769.27|1,138,598.90|
|Accounts payable|Shanghai Aoting Network Technology Co., Ltd.|7,360.48|7,360.48|
|Accounts payable|Shanghai Tingting Network Technology Co., Ltd.|299,979.17|727,664.83|
|Accounts payable|Shenzhen Yiwan Network Technology Co., Ltd.|339,622.58||
|Other payables|Chengdu Modu Technology Co., Ltd.||6,000,000.00|
|Other payables|Chengdu Mofei Technology Co., Ltd.||6,000,000.00|
|Other payables|Huai’an Sanqi||19,032,685.81|
|Other payables|YHKT Entertainment Co., Ltd.||2,000,000.00|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Other payables|Xiamen Huoyou Information Technology Co., Ltd.|5,000,000.00|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report VIII. Share-based payment
1. Overview of share payment
□Applicable√Not Applicable
IX. Commitment and contingencies
1. Material commitments
The existence of material commitments at the balance sheet date
As of December 31st, 2018, the Company had no major commitments needed to be disclosed for normal production and business activities.
2. Contingencies
(1) The existence of material contingencies at the balance sheet date
As of December 31st, 2018, the Company had no major contingencies needed to be disclosed for normal production and business activities.
(2) The fact that the Company has no significant contingencies required to be disclosed should also be explained
The Company does not have material commitments or contingencies that need to be disclosed.
3. Others
X. Events after the Balance Sheet Date
1. Profit distribution
Unit: RMB
|||
|-|-|
|Proposed distributed profits or dividends|423,246,120.00|
|Profits or dividends that are approved to be issued after deliberation|423,246,120.00|

 2. Description of events after the balance sheet date
The Company held the 23rd meeting of the 4th Board of Directors on January 3rd, 2019 and the first Extraordinary General Meeting of 2019 on January 21st, 2019, at which the Plan for Repurchasing Shares of the Company by Centralized Competitive Bidding was reviewed and approved. The Company held the 24th meeting of the 4th Board of Directors on January 21st, 2019, at
which the Proposal on Amending and Supplementing the “Plan for Repurchasing Shares of the Company by Centralized Competitive
Bidding” was reviewed and approved. The Company intends to use its own funds or self-raised funds to concentrate buy back shares
of the Company by centralized competitive bidding. The repurchase amount is not less than RMB 300 million (included) and not
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report more than RMB 600 million (included), with the repurchase price not exceeding 15.00 yuan / share (included). The specific repurchase quantity is based on the number of shares actually repurchased at the end of the repurchase period. On April 11th, 2019, the Company repurchased shares through a stock repurchase special securities account for the first time by centralized competitive bidding. A total of 8,639,653 shares were repurchased, accounting for0.41% of theCompany’s current total share capital, with highest price of 13.73 yuan / share and the lowest price of 13.13 yuan / share. The total amount paid was RMB 116,113,041.13 (excluding transaction costs). This repurchase was in line with the requirements of theCompany’s repurchase program.
On February 28th, 2019, theCompany’s wholly-owned subsidiary Tibet Taifu Culture Media Co., Ltd. (hereinafter referred to as “Tibet Taifu”) and Beijing Zhaoxi Guangnian Information Technology Co., Ltd. (hereinafter referred to as “Zhaoxi Guangnian Company”) signed the Equity Transfer Agreement of Shanghai Mokun Digital Technology Co., Ltd., under which it sold100% equity of Shanghai Mokun Digital Technology Co., Ltd. held by Tibet Taifu to Zhaoxi Guangnian Company at a price of RMB 110 million. The procedures for the industrial and commercial change have been completed for this transaction.
On March 13th, 2019, the Company received a notice from Wu Xushun, one of the controlling shareholders and actual controllers of the Company. Wu Xushun subscribed offline the shares of Yinhua MSCI China A-Share Index Exchange-Traded Open-Ended Securities Investment Fund (hereinafter referred to as “Yinhua MSCI China ETF), and directly purchased Yinhua MSCI China ETF shares with 21,200,000 shares, to subscribe for the fund share corresponding to the value of 21,200,000 shares. After the completion of the share swap, WuXushun’s shareholding ratio decreased to5.12%, so the total shareholding ratio of Wu Xushun, the original largest shareholder, and his persons acting in concert Wu Weihong and Wu Weidong (hereinafter referred to as “Wu Family”) fell to18.27%, resulting in a change in theCompany’s largest shareholder from Wu Family to Li Weiwei.
On April 8th, 2019, the Company held the 3rd Extraordinary General Meeting of 2019, at which the Proposal on Advancing the General Election of Non-independent Directors for the Fifth Board of Directors and the Proposal on Advancing the General Election of Independent Directors for the Fifth Board of Directors were reviewed and approved. The Company officially completed the general election of the Board of Directors, and the Fifth Board of Directors was formed. Li Weiwei, Yang Jun and Chen Xialin, who were recommended by Li Weiwei for non-independent directors, were elected. Candidates Ni Ning, Zhu Ning, Yin Bin and Chen Jianlin for independent directors were elected. Seven members of theCompany’s Fifth Board of Directors were recommended by Li Weiwei. Based on the above facts, the voting rights held by Li Weiwei have had a material influence on the resolution of theCompany’s 3rd Extraordinary General Meeting of 2019, and played a decisive role in electing more than half of the members of theCompany’s Board of Directors through this meeting, effectively controlling the majority of the new board of directors, that is owning the controlling right of a listed company as specified in provisions of the Listing Rules. After the reelection, Li Weiwei became the controlling shareholder and actual controller of the Company.
The Company held the 26th Meeting of the 4th Board of Directors on March 18th, 2019, at which the Proposal on Changing the Name of the Company was reviewed and approved. The Company plans to change its Chinese name from“芜湖顺荣三七互娱网络科技股份有限公司” to“芜湖三七互娱网络科技集团股份有限公司”. (The final company name is subject to the approval of the Administration for Industry and Commerce).
XI. Other Important Events
1. Discontinued operation
Unit: RMB
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||||
|-|-|-|-|-|-|-|
|||||||Discontinued operating profit|
|Item|Income|Fees|Total profit|Income taxes|Net profit|attributable to the owner of|
|||||||parent company|
|Shunrong|||||||
||385,219,167.92|386,251,651.91|443,643.42|-814,778.26|1,258,421.68|1,258,421.68|
|Auto Parts|||||||

Other notes
The expenses are the operating costs, taxes and surcharges and current operating expenses for the January to November of the year. 2. Segment information
(1) Basis for determining reportable divisions and accounting policies
The Company determines the reporting segment based on internal organizational structure, management requirement and internal reporting system, and determines the reporting segment based on the industry segment. The performance of the auto parts business and the online game business were assessed separately. Each segment uses assets and liabilities separately.
(2) Financial information of reportable divisions
Unit: RMB
||||||
|-|-|-|-|-|
||Automotive Parts|Online Games Business|||
|Item|||Offset among segments|Total|
||Business Division|Division|||
|Operating income|385,219,167.92|7,247,460,500.55||7,632,679,668.47|
|Operating cost|285,491,515.41|1,487,131,978.05||1,772,623,493.46|
|Total assets||8,435,308,789.48||8,435,308,789.48|
|Total liabilities||2,282,059,377.06||2,282,059,377.06|

 3. Other significant transactions and events having influence on the investors' decisions
The Proposal on theCompany’s Phase II ESOP Plan (Draft) and Its Summary, the Proposal on the Management Rules of the Company's Phase II ESOP, and the Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters Related to the Company's Phase II ESOP were reviewed and approved at theCompany’s 16th meeting of the 4th Board of Directors held on July 2nd, 2018 and the 2nd Extraordinary General Meeting of 2018 held on July 18th, 2018. On September 5th, 2018, theCompany’s Phase II ESOP has been transferred to the unlimited tradable shares of the Company held by the
Company’s actual controllers Wu Weihong and Wu Weidong through the block trading method, totaling 26,310,527 shares, accounting for1.24% of the Company's total share capital. The total transaction amount is RMB 249,999,996.58 (including transaction costs), with the average transaction price being 9.50 yuan/share.
As of September 5th, 2018, the Company has completed the purchase of shares in the Phase II Employee Stock Ownership Plan within 6 months after reviewed and approved at the Company's General meeting of Shareholders. The shares purchased in this
shareholding plan are locked in accordance with the regulations, and the lock-up period will be from September 6th, 2018 to
September 5th, 2019.
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report XII. Notes to Main Items of Financial Statements of Parent Company
1. Other receivables
Unit: RMB
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
|Dividends receivable|500,000,000.00||
|Other receivables|891,766,571.39|1,655,547,345.04|
|Total|1,391,766,571.39|1,655,547,345.04|

 (1) Dividend receivable
1) Dividends receivable
Unit: RMB
||||
|-|-|-|
|Item (or invested organization)|Ending balance|Beginning balance|
|Shanghai Sanqi Interactive Entertainment|500,000,000.00||
|Total|500,000,000.00||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report (2) Other receivables
1) Classification of other receivables
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||||||||
|||||Accrual|Book value|||||Book value|
||Amount|Proportion|Amount|||Amount|Proportion|Amount|Accrual proportion||
|||||proportion|||||||
|Other accounts receivable|||||||||||
|withdrawn provision for bad|||||||||||
||891,798,933.09|100.00%|32,361.70|0.00%|891,766,571.39|1,668,884,090.50|100.00%|13,336,745.46|0.80%|1,655,547,345.04|
|debts based on credit risk|||||||||||
|feature combination|||||||||||
|Total|891,798,933.09|100.00%|32,361.70|0.00%|891,766,571.39|1,668,884,090.50|100.00%|13,336,745.46|0.80%|1,655,547,345.04|

 Other receivables of individual account with significant amount and with bad debt provision accrued at the end of current period:
□Applicable√Not Applicable
Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio:
√Applicable□Not Applicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Other receivables|Provision for bad debts|Accrual proportion|
|Items within 1 year||||
|Subtotal within 1 year|317,234.07|15,861.70|5.00%|
|1 - 2 year (s)|40,000.00|4,000.00|10.00%|
|2 - 3 years|||30.00%|
|Over 3 years|25,000.00|12,500.00|50.00%|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
|||||
|-|-|-|-|
|3 - 4 years|25,000.00|12,500.00|50.00%|
|Total|382,234.07|32,361.70||

Description of basis for this portfolio determination:
Other receivables of same aging share similar characteristics of credit risk
Other receivables with bad debts provisions accrued by balance percentage method in the portfolio:
□Applicable√Not Applicable
Other receivables with provisions of bad debts accrued by other methods in the portfolio:
√Applicable□Not Applicable
The related accounts (including the controlling shareholder) within the scope of the consolidation have a lower credit risk, and the provision for bad debts of other receivables in the portfolio is0%. The ending balance of other receivables in this portfolio is RMB 891,416,699.02, and the ending balance of bad debt provision is RMB 0.00.
2) Reserve of the bad debts that are accrued, withdrew and taken back in current period
The provision for bad debt accrued in this current period is RMB 0.00 and the provision for bad debts returned back or taken back in this current period is RMB 13,304,383.76.
Including important provision for bad debt transferred back or recovered in this period:
Unit: RMB
||||
|-|-|-|
|Organization name|Amount carried forward or recovered|Change the way of return|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3) Classification of other receivables based on the fund nature
Unit: RMB
||||
|-|-|-|
|Fund nature|Ending book value|Opening book balance|
|Deposits and guarantees|65,000.00|65,000.00|
|Amount of affiliated parties|490,106,699.02|1,402,274,181.21|
|Related parties borrowing||266,543,561.64|
|Equity disposal receivables|401,310,000.00||
|Others|317,234.07|1,347.65|
|Total|891,798,933.09|1,668,884,090.50|

 4) Other accounts receivable in top five based on year-end balance collected from arrears party
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Proportion in total|Ending balance of|
|Organization name|Fund nature|Ending balance|Aging|ending balance of|provision for bad|
|||||other receivables|debts|
|Wuhu Ningzhong||||||
||Equity disposal|||||
|Auto Parts||401,310,000.00|Within 1 year|45.00%||
||receivables|||||
|Technology Co., Ltd.||||||
||Amount of affiliated|||||
|Anhui Xuhong||300,000,000.00|Within 1 year|33.64%||
||parties|||||
|Shanghai Sanqi||||||
||Amount of affiliated|||||
|Interactive||170,000,000.00|Within 1 year|19.06%||
||parties|||||
|Entertainment||||||
||Amount of affiliated|||||
|Tibet Xintai||20,100,000.00|Within 1 year|2.25%||
||parties|||||
|Zhangshu Wangzhong||||||
|Investment||||||
||Others|166,745.03|Within 1 year|0.02%|8,337.25|
|Management Center||||||
|(Limited Partnership)||||||
|Total|--|891,576,745.03|--|99.97%|8,337.25|

 2. Long-term equity investment
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Impairment|||Impairment||
||Book balance||Book value|Book balance||Book value|
|||provision|||provision||
|Investment to|||||||
||6,374,799,990.80||6,374,799,990.80|5,724,695,055.23||5,724,695,055.23|
|subsidiaries|||||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||||
|-|-|-|-|-|
|Investment intoassociatedenterprises andjoint ventures|||||
||27,593,699.69|27,593,699.69|29,729,869.92|29,729,869.92|
|Total|6,402,393,690.49|6,402,393,690.49|5,754,424,925.15|5,754,424,925.15|

 (1) Investment to subsidiaries
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||||||Estimated accrued||
|||||||Ending balance of|
||Beginning|Increase in|Decrease in||impairment||
|Invested company||||Ending balance||depreciation|
||balance|current period|current period||provision of||
|||||||reserves|
||||||current period||
|Shanghai Sanqi|||||||
|Interactive|4,720,000,000.00|||4,720,000,000.00|||
|Entertainment|||||||
|Shunrong Auto|||||||
||749,895,064.43||749,895,064.43||||
|Parts|||||||
|Jiangsu Zhiming|254,799,990.80|||254,799,990.80|||
|Jiangsu Aurora||1,400,000,000.00||1,400,000,000.00|||
|Total|5,724,695,055.23|1,400,000,000.00|749,895,064.43|6,374,799,990.80|||

(2) Investment into associates and joint ventures
Unit: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase or decrease in this period||||||||||
|||Addi|||Other||Profit orcashdividenddeclared tobedistributed|||||
||||||||||||Ending|
|||tiona||Profit and loss|comprehe|||||||
|Investment|Beginning||Negative|||Other||Withdrawn||Ending|balance of|
|||l||on investments|nsive|||||||
|company|balance||investmen|||equity||impairmen|Others|balance|depreciation|
|||inves||confirmed with|income|||||||
||||t|||change||t provision|||reserves|
|||tmen||equity method|adjustme|||||||
|||ts|||nt|||||||
|I. Joint ventures||||||||||||
|II. Associates||||||||||||
|Shanghai Jueli||||||||||||
|Culture Media|29,729,869.92|||-2,136,170.23||||||27,593,699.69||
|Co., Ltd.||||||||||||
|Subtotal|29,729,869.92|||-2,136,170.23||||||27,593,699.69||
|Total|29,729,869.92|||-2,136,170.23||||||27,593,699.69||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3. Operating incomes and operating costs
Unit: RMB
||||||
|-|-|-|-|-|
||Amount incurred in the current period||Amount incurred in the previous period||
|Item|||||
||Income|Cost|Income|Cost|
|Main business|||751,646.53|31,646.53|
|Total|||751,646.53|31,646.53|

 Other notes:
None
4. Investment income
Unit: RMB
||||
|-|-|-|
|Item|Amount incurred in the current period|Amount incurred in the previous period|
|Long-term equity investment income|||
||700,000,000.00||
|measured by cost method|||
|Long-term equity investment income|||
||-2,136,170.23|-1,555,025.80|
|measured by equity method|||
|Investment profits by the disposal of|||
||69,104,935.57|-295,279,968.69|
|long-term equity investment|||
|Investment profit by marketable financial|||
|||1,582,261.90|
|assets during the holding period|||
|Investment profit by the disposal of|||
|||1,000,000.00|
|marketable financial assets|||
|Total|766,968,765.34|-294,252,732.59|

 XIII. Supplementary data
1. Incidental profit or loss statement in current period
√Applicable□Not Applicable
Unit: RMB
||||
|-|-|-|
|Item|Amount|Description|
|||Mainly profit and loss from the|
|Losses and profits on disposal of non-current assets|56,085,328.82|disposal of long-term equity|
|||investment and fixed assets.|
|Government subsidy included in current profit or loss (except those closely||Mainly government subsidy other|
|related to enterprise operation and received based on consolidated national|38,851,289.40|than the refund of value-added|
|standard quota or quantitative)||tax.|

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report
||||
|-|-|-|
|Funds occupation fees collected from non-financial enterprises and includedin current profit or loss||Mainly interest income from|
||17,307,831.49||
|||borrowings.|
|||Mainly the income from bank’s|
|Profit or loss of asset whose investment or management is entrusted to others|16,941,398.12||
|||financial products.|
|Except effective hedging business relating to normal operating business ofthe company, profit or loss caused by change in the fair value of|||
|||Mainly the investment income|
|held-for-trading financial asset and financial liabilities, and investment profit|-9,740,417.35|from disposal of available-for-sale|
|for disposal of trading financial asset, trading financial liabilities andavailable-for-sales financial assets.||financial assets.|
|Other non-operating revenue and expenditure except the foregoing items|2,945,610.96||
|||Mainly including performance|
|||compensation income (the|
|||Company’s impairment loss|
|||accrued against the goodwill of|
|Other items consistent with definition of non-recurring profit and loss|446,156,583.73|Shanghai Mokun Company is|
|||RMB 959,833,685.66 and|
|||included in recurring profit and|
|||loss) and performance|
|||compensation expenses.|
|Less: Affected amount of income taxes|33,857,857.74||
|Affected amount of minority interest income|1,095,547.63||
|Total|533,594,219.80|--|

As to non-recurring profits and losses determined based on the definition provided in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-Recurring Profit and Loss, and the recurring profits and losses determined from non-recurring profits and losses listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public - Non-Recurring Profit and Loss, reasoning shall be provided□Applicable√Not Applicable
2. Return on equity and earnings per share
|||||
|-|-|-|-|
|||Earnings per shareeBasic earning per share Diluted earning per share(yuan/share) (yuan/share)||
||Weighted average rat|||
|Profits during reporting period|||Diluted earning per share|
||of return on equity|||
||||(yuan/share)|
|Net profits attributable to the company common||0.47|0.47|
||16.59%|||
|shareholders||||
|Net profits attributable to the company common||||
|shareholders after deducting non-recurring profits and|7.81%|0.22|0.22|
|losses||||

Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.
2018 Annual Report 3. Data differences due to different accounting standards in China and the rest of the world
(1) Differences regarding net profits and net assets between financial statements disclosed by international standards and Chinese standards
□Applicable√Not Applicable
(2) Differences regarding to net profits and net assets between financial statements disclosed by overseas standards and Chinese standards
□Applicable√Not Applicable
Should there be any discrepancy between the English version and the Chinese version of this Report, the Chinese version shall prevail.