2017 Annual Report
Wuhu Shunrong Sanqi Interactive Entertainment Network
Technology Co., Ltd.
2017 Annual Report
April 2018
2017 Annual Report
Section I Table of Contents and Definitions
2017 Annual Report
Contents
Section I Table of Contents and Definitions ............................................................................................................................................2
Section II Company Profile and Main Financial Indicators .....................................................................................................................7
Section III Summary of the Company’s Business .................................................................................................................................14
Section IV Discussion and Analysis of Operations ................................................................................................................................20
Section V Financial Reports ..................................................................................................................................................................76
2017 Annual Report
Definitions
Term Definition
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
Company/the Company/Listed Company/Sanqi Wuhu Shunrong Auto Parts Co., Ltd./Wuhu Shunrong Sanqi Interactive
Interactive Entertainment Entertainment Network Technology Co., Ltd.
Shanghai Sanqi Interactive Entertainment Sanqi Interactive Entertainment (Shanghai) Technology Co., Ltd.
Company Law The Company Law of the People’s Republic of China
Securities Law The Securities Law of the People’s Republic of China
Articles of Association of Wuhu Shunrong Auto Parts Co., Ltd. / Articles
Articles of Association of Association of Wuhu Shunrong Sanqi Interactive Entertainment
Network Technology Co., Ltd.
Auditor GP Certified Public Accountants (Special General Partnership)
Legal counsel Beijing Tian Yuan Law Firm
Sponsor (lead underwriter) GF Securities Co., Ltd.
GF Securities GF Securities Co., Ltd.
Yuan or 10,000 Yuan RMB yuan or RMB 10,000 yuan
Reporting Period/this Reporting Period From January 1, 2017 to December 31, 2017
End of Reporting Period/End of this Reporting
December 31, 2017
Period
A game that is based on web technologies, uses standard protocols as the
basic transmission form, and does not require any client software or
Browser game
requires a mini client based on browser kernel. Game users can directly
play the game over the Internet using a web browser.
A game that is downloaded over mobile network and runs on a mobile
Mobile game
phone or other mobile terminals.
RPG Role-playing games
ARPG Action role-playing game
SLG Strategy games
MMOARPG Massive multiplayer on-line action role-playing game
Shanghai Mokun Shanghai Mokun Digital Technology Co., Ltd.
Jiangsu Zhiming Jiangsu Zhiming Network Technology Co., Ltd.
2017 Annual Report
Shunrong Investment Wuhu Shunrong Investment Co., Ltd.
Shunrong Yonghong Shanghai Shunrong Yonghong Technology Development Co., Ltd.
Guangzhou Senyun Guangzhou Senyun Auto Parts Co., Ltd.
Shunrong Auto Parts Wuhu Shunrong Auto Parts Co., Ltd.
Yanling Investment Shanghai Yanling Investment Management Co., Ltd.
Tibet Xintai Tibet Xintai Culture & Media Co., Ltd.
Anhui Vogue Entertainment Anhui Vogue Entertainment Network Technology Co., Ltd.
Vogue Entertainment International Vogue Entertainment International Limited.
G-MEI Network G-MEI Network Technology Co., Ltd.
Guangzhou Sanqi Guangzhou Sanqi Network Technology Co., Ltd.
Guangzhou Xingzhong Guangzhou Xingzhong Information Technology Co., Ltd.
Anhui Xuhong Anhui Xuhong Information Technology Co., Ltd.
ENP Games ENP Games Co., Ltd.
Anhui Sanqi Anhui Sanqi Network Technology Co., Ltd.
Jiangsu Aurora Jiangsu Aurora Network Technology Co., Ltd.
Shanghai Yingtong Shanghai Yingtong Network Technology Co., Ltd.
Wisdom Entertainment International Wisdom Entertainment Online International Limited.
Wisdom Game International Wisdom Game Online International Limited.
Shanghai Guanhang Shanghai Guanhang Network Technology Co., Ltd.
Anhui Jiashang Anhui Jiashang Network Technology Co., Ltd.
Chengdu Shengge Chengdu Shengge Times Network Technology Co., Ltd.
Beijing Shangheng Beijing Shangheng Jiatian Network Technology Co., Ltd.
Jiangsu Jiaqu Jiangsu Jiaqu Network Technology Co., Ltd.
Shanghai Zhiren Shanghai Zhiren Culture & Media Co., Ltd.
Tibet Taifu Tibet Taifu Culture & Media Co., Ltd.
37 Games Entertainment 37 Games Entertainment Limited
Shanghai Mobile Game Shanghai Mobile Game Digital Technology Co., Ltd.
Anhui Guanyu Anhui Guanyu Culture & Media Co., Ltd.
Tibet Yaotong Tibet Yaotong Network Technology Co., Ltd.
Tibet Shengge Tibet Shengge Network Technology Co., Ltd.
Guangzhou Jisheng Guangzhou Jisheng Network Technology Co., Ltd.
Guangzhou Sanqi Interactive Entertainment Guangzhou Sanqi Interactive Entertainment Technology Co., Ltd.
Guangzhou Huoshanhu Guangzhou Huoshanhu Information Technology Co., Ltd.
2017 Annual Report
Guangzhou Jishi Guangzhou Jishi Network Technology Co., Ltd.
Huoerguosi Qianyu Huoerguosi Qianyu Network Technology Co., Ltd.
Huoerguosi Xinghui Huoerguosi Xinghui Network Technology Co., Ltd.
Huoerguos Xinrui Huoerguosi Xinrui Network Technology Co., Ltd.
Top Increase Top Increase Global Limited
Lihui Venture Huoerguosi Lihui Venture Investment Co., Ltd.
Anhui Aurora Anhui Sanqi Aurora Network Technology Co., Ltd.
Shanghai Langkun Shanghai Langkun Digital Technology Co., Ltd.
Shanghai Kunkun Shanghai Kunkun Digital Technology Co., Ltd.
Shanghai Miji Shanghai Miji Digital Technology Co., Ltd.
Shanghai Aojue Shanghai Aojue Digital Technology Co., Ltd.
Huoerguosi Jiaji Huoerguosi Jiaji Digital Technology Co., Ltd.
Guangzhou Jisheng Guangzhou Jisheng Co., Ltd.
Chengdu Pengwan Technology Co., Ltd. Chengdu Pengwan Technology Co., Ltd. and its subsidiaries
Shenzhen Moklyin Technology Co., Ltd. Shenzhen Moklyin Technology Co., Ltd. and its subsidiaries
Zhangshu Wangzhong Investment Management Center (Limited
Wangzhong Investment
Partnership)
2017 Annual Report
Section II Company Profile and Main Financial Indicators
I. Company Information
Stock Name Sanqi Interactive Entertainment Stock Code
Place of Listing Shenzhen Stock Exchange
Chinese Name of the
芜湖顺荣三七互娱网络科技股份有限公司
Company
Abbreviation of the Chinese
三七互娱
Name of the Company
WUHU SHUNRONG SANQI INTERACTIVE ENTERTAINMENT NETWORK
Name in English
TECHNOLOGY CO.，LTD.
Legal Representative Li Weiwei
Registered Address Nanling County Economic Development Zone, Wuhu City, Anhui Province
Postal Code of the Registered
Address
11/F, Tower A1, Wanjiang Fortune Plaza, No. 88, Ruixiang Road, Jiujiang District, Wuhu City,
Business Address
Anhui Province
Postal Code of the Business 241000
2017 Annual Report
Address
Website www.37.com
Email ir@37.com
II. Contact Persons and Contact Details
Secretary to the Board of Directors Securities Affairs Representative
Name Ye Wei Chen Zhenhua
11/F, Tower A1, Wanjiang Fortune Plaza, 11/F, Tower A1, Wanjiang Fortune Plaza,
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
Fax 0553-7653737 0553-7653737
Email ir@37.com ir@37.com
III. Information Disclosure and Location
Newspapers designated by the Company for
China Securities Journal, Shanghai Securities News and Securities Times
information disclosure
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
Location of annual reports of the Company
District, Wuhu City, Anhui Province
IV. Changes in Registration Information
Organization Code 71392778-9
1. On March 2, 2011, the Company issued its IPO on SME Board of Shenzhen Stock
Exchange. The Company is mainly engaged in manufacturing and sales of plastic fuel
tanks of automobiles. 2. On May 27, 2014, the material asset restructuring of the
Company involving IPO, assets purchase with cash, supporting fund raising, and
related-party transactions was conditionally passed at the 22th Session of 2014 of the
Changes in the principal businesses of the Review Board for Merger, Acquisition, and Restructuring of Listed Companies, China
Company since listing of its shares (if any) Securities Regulatory Commission. On December 2, 2014, the Company received the
Reply of CSRC Regarding Wuhu Shunrong Auto Parts Co., Ltd. Issuing Shares to Li
Weiwei and Others, Purchasing Assets, and Raising Supporting Funds. Through
purchase of 60% of the share in Shanghai Sanqi Interactive Entertainment, the
Company grew from single main business of automotive plastic fuel tanks
manufacturing to two main businesses, advanced manufacturing and modern cultural
2017 Annual Report
creativity industry. 3. On December 18, 2015, the Company received the Reply of
China Securities Regulatory Commission Regarding Approval of Non-public Offering
of Shares of Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co.,
Ltd. (Zheng Jian Xu Ke [2015] No. 2941), according to which, the Company was
approved to issue not more than 165,289,300 shares by non-public offering and the
funds raised would be used for purchasing 40% of the share in Shanghai Sanqi
Interactive Entertainment. Shanghai Sanqi Interactive Entertainment has become a
wholly-owned subsidiary of the Company since 2016.
Changes in controlling shareholders (if
None
any)
V. Other Relevant Information
The accounting firm employed by the Company
Name of the accounting firm GP Certified Public Accountants (Special General Partnership)
Business address 10/F, Yuehai Group Building, No.555 Dongfeng East Road, Yuexiu, Guangzhou
Name of the signature auditor Xiong Yongzhong, Yang Xinchun
Sponsor institute employed by the Company to perform the duty of continuous supervision in the auditing period
√ Applicable □ Not applicable
Name of Sponsor Period of Continuous
Name of Sponsor Institute Business Address
Representative Supervision
Metro Plaza, No. 183-187,
Tianhe Road North, Tianhe From January 12, 2016 to
GF Securities Co., Ltd. Yuan Ruobin and Zhu Baoli
District, Guangzhou City, December 31, 2017
Guangdong Province
Financial advisor employed by the Company to perform the duty of continuous supervision in the auditing period.
√Applicable □ Not applicable
Name of Sponsor Period of Continuous
Name of Sponsor Institute Business Address
Representative Supervision
Metro Plaza, No. 183-187,
Tianhe Road North, Tianhe From May 9, 2017 to December
GF Securities Co., Ltd. Lv Shaoyi and Tian Li
District, Guangzhou City, 31, 2018
Guangdong Province
VI. Key Accounting Data and Financial Indicators
Does the Company need to retroactively adjust or restate accounting data of previous years?
2017 Annual Report
□ Yes √ No
Variance in
2017 2016 comparison with the
previous year
Operating income (yuan) 6,188,828,116.75 5,247,893,728.73 17.93% 4,656,787,281.09
Net income attributable to
shareholders of the listed company 1,620,582,427.47 1,070,162,324.07 51.43% 506,016,504.78
(yuan)
Net income attributable to
shareholders of the listed company
1,048,251,240.84 1,010,769,599.36 3.71% 449,076,050.96
net of non-recurring profit and loss
(yuan)
Net cash flow from operating
1, 831,895,928.30 1,051,939,577.83 74.14% 1,081,238,239.96
activities (yuan)
Basic earnings per share
0.76 0.51 49.02% 0.29
(yuan/share)
Diluted earnings per share
0.76 0.51 49.02% 0.29
(yuan/share)
Return on weighted average net
28.12% 26.56% 1.56% 17.58%
assets
Variance in
comparison with the
End of 2017 End of 2016 End of 2015
end of the previous
year
Total assets (yuan) 9,160,137,685.38 6,386,216,011.34 43.44% 4,623,310,755.63
Net assets attributable to
shareholders of the listed company 7,016,770,210.85 4,523,665,282.04 55.11% 3,563,355,144.71
(yuan)
The Company considers and uses one non-GAAP measure, Adjusted Net Income/ (Loss), as supplemental measure to review and
assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation
or as a substitute for the financial information prepared and presented in accordance with China Accounting Standards. The
Company's Adjusted Net Income is RMB 1,408,706,561.26 for the year 2017, which is defined as net income attributable to
shareholders of the listed company of RMB1, 620,582,427.47 excluding performance compensation income/expenses of RMB
397,608,243.44 and related goodwill impairment of RMB 299,457,551.04 generated by business acquisitions, after tax income/loss
from disposal of equity investments of RMB 199,561,658.81 and share-based compensation of RMB 85,836,485.00. The Adjusted
Net Income for the year 2016 is RMB 1,060,713,029.67. The Adjusted Net Income for the reporting period increased by 32.81%
compared to last year.
2017 Annual Report
VII. Differences in Accounting Data under Domestic and Overseas Accounting Standards
1. The differences in net income and net assets in the financial statements disclosed in accordance with
international accounting standards and in accordance with Chinese accounting standards
□ Applicable √ Not applicable
The Company did not have any discrepancies in net income and net assets in the financial reports disclosed in accordance with
international accounting standards and the Chinese accounting standards during the reporting period.
2. The differences in net income and net assets in the financial statements disclosed in accordance with
overseas accounting standards and in accordance with Chinese accounting standards
□ Applicable √ Not applicable
The Company did not have any discrepancies in net income and net assets in the financial reports disclosed in accordance with
overseas accounting standards and in accordance with Chinese accounting standards during the reporting period.
VIII. Key Quarterly Financial Indicators
Unit: yuan
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Operating income 1,618,738,028.51 1,460,690,875.99 1,384,968,829.74 1,724,430,382.51
Net income attributable to
433,033,150.06 417,517,368.31 360,788,807.71 409,243,101.39
shareholders of the listed company
Net income attributable to
shareholders of the listed company 345,442,083.59 413,305,351.97 311,725,820.31 -22,222,015.03
net of non-recurring profit and loss
Net cash flow from operating
638,703,409.51 458,143,900.12 319,124,714.02 415,923,904.65
activities
The Company’s net income attributable to the shareholders of the listed company after deducting non-recurring gains and losses is
RMB -22,222,015.03 in Quarter 4, which was mainly due to the recognition as non-recurring gains and losses by the Company of the
compensation of RMB 401,364,984.06 arising from Shanghai Mokun’s failure to meet the performance commitment, and due to the
inclusion of the goodwill impairment of RMB 299,457,551.04 corresponding to the asset in recurring gains and losses.
The Company considers and uses one non-GAAP measure, Adjusted Net Income/ (Loss), as supplemental measure to review and
assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation
or as a substitute for the financial information prepared and presented in accordance with China Accounting Standards. The
Company's Adjusted Net Income is RMB 1,408,706,561.26 for the year 2017, which is defined as net income attributable to
shareholders of the listed company of RMB1, 620,582,427.47 excluding performance compensation income/expenses of RMB
397,608,243.44 and related goodwill impairment of RMB 299,457,551.04 generated by business acquisitions, after tax income/loss
from disposal of equity investments of RMB 199,561,658.81 and share-based compensation of RMB 85,836,485.00. The Adjusted
Net Income for the Quarter 1 to Quarter 4 are RMB 350,533,150.06, RMB 418,801,935.61, RMB 328,279,066.60 and RMB
311,092,408.99 respectively.
2017 Annual Report
Is there major discrepancy between above financial indicators or the sum of their direct aggregate and relevant financial indicators in
quarterly reports and semi-annual reports disclosed by the Company?
□ Yes √ No
IX. Non-Recurring Items and Amounts
√ Applicable □ Not applicable
Unit: yuan
Item Amount of 2017 Amount of 2016 Amount of 2015 Remarks
Mainly the profits and
Profits and losses on disposal of non-current losses from disposal
assets (including the part written-off with of long-term equity
200,975,719.36 7,667,198.02 557,400.93
the provision for impairment loss on assets investment and
accrued) disposal of fixed
assets
Government subsidy recorded in current
profits and losses (except government Mainly government
subsidy closely related to company business 29,695,208.76 68,413,211.24 60,066,571.65 subsidies other than
and granted according to the unified quota VAT refunds
or ration of the national standard)
Payment for use of funds that is recorded in
Mainly income from
current profits and losses and is collected 15,607,133.62
borrowing interest
from non-financial businesses
Mainly the income of
Profits and losses from entrusting others to
13,370,838.07 6,931,102.57 3,411,610.12 bank financial
invest in or manage assets
products
Profits and losses on changes in fair value
arising from holding of trading financial
assets and trading financial liabilities and
Mainly the investment
return on investment from disposal of
income from disposal
trading financial assets, trading financial 40,268,035.00 3,608,355.70 1,287,609.34
of available-for-sale
liabilities, and available-for-sale financial
financial assets
assets, except for effective hedging business
relating to the normal operating business of
the Company
Other non-operating incomes and
1,251,440.52 -8,461,639.08 -2,191,357.89
expenditures except above items
Mainly performance
Other profits and losses items that fit the
296,624,143.44 compensation income
definition of non-recurring profits and losses
(The amount of
2017 Annual Report
impairment loss of
RMB 299,457,551.04
provided by the
Company on the
goodwill of Shanghai
Mokun was included
in current profit or
loss), the share
payment expenses,
and performance
compensation
expenses
Less: affected amount of income tax 36,707,567.83 10,764,962.34 3,021,230.09
Affected amount of minority equity
-11,246,235.69 8,000,541.40 3,170,150.24
(after-tax)
Total 572,331,186.63 59,392,724.71 56,940,453.82 --
The reason shall be specified for items of non-recurring profit and loss defined in accordance with definition in Explanatory
Announcement No.1 on Information Disclosure for Companies Offering their Securities to the Public - Non-recurring Profit and Loss
and items of non-recurring profit and loss listed in the above announcement that are defined to be recurrent profit and loss.
□ Applicable √ Not applicable
The Company did not define items of non-recurring profit and loss defined and listed in Explanatory Announcement No.1 on
Information Disclosure for Companies Offering their Securities to the Public - Non-recurring Profit and Loss to be items of recurrent
profit and loss in the reporting period.
2017 Annual Report
Section III Summary of the Company’s Business
I. Main Business in the Reporting Period
Does the Company need to comply with the disclosure requirements for special industries?
No
The Company is principally engaged in interactive entertainment business and manufacturing and sales of plastic fuel tanks for
automobiles. The interactive entertainment business mainly focuses on the research, development, publishing and operation of
mobile games and browser games, while arranging pan-entertainment business including film and TV, animation, music and VR.
The Company steadily promoted the development strategy of “platformization, globalization and pan-entertainment” for interactive
entertainment business based on IP during the reporting period. Its overall strength ranked the 18 th among the top 100 Internet
companies in China; the auto parts business developed steadily.
During the reporting period, the Company achieved an operating revenue of RMB 6.189 billion with a year-on-year increase of
17.9%, a pretax income of RMB 1.917 billion with a year-on-year increase of 45.3%, and the net income attributable to shareholders
of the listed company of RMB 1.621 billion with a year-on-year increase of 51.4%. The main reasons for the Company’s increase in
the net income attributable to the shareholders of the listed company include: (1) The Company’s game R&D business and mobile
game publishing business achieved great development during the reporting period. R&D products represented by Yong Heng Ji Yuan,
Swords of Archangels H5 and Mobile Game Chuan Qi Ba Ye have significantly increased the Company’s profitability in the mobile
game business; (2) The Company confirmed related performance compensation gains and goodwill impairment losses for the reason
that Shanghai Mokun, its subsidiary, failed to achieve the performance commitments. The main reason for Shanghai Mokun’s failure
to reach the performance commitments is that the product launch time was postponed. Shanghai Mokun had successfully launched
the major product and has achieved impressive billing as of the release date of this report.
II. Significant Changes in Main Assets
1. Significant changes in main assets
Main Assets Description of Significant Changes
Equity assets increased RMB 312 million in the reporting period, which was mainly due
to the inclusion of Shanghai Mokun, an original JV of the Company, into the
Equity assets consolidation scope within the reporting period. For details, see the Note 10
Available-For-Sale Financial Assets and Note 11 Long-Term Equity Investment in the
Notes to the Consolidated Financial Statements in part II of Section V Financial Report.
Fixed assets No major change during the reporting period.
Intangible assets No major change during the reporting period.
Construction in progress Construction in process increased RMB 20 million in the reporting period , which was
2017 Annual Report
mainly due to the Company’s investment in second-phase equipment project. For details,
see the Note 13 Construction in Progress in the Notes to the Consolidated Financial
Statements in part II of Section V Financial Report.
monetary funds increased RMB 762 million in the reporting period, which was mainly
due to the increase in cash inflow generated by the Company's operating activities during
Monetary funds
the reporting period. For details, see the Item 5 Consolidated Cash Flow Statement in II.
Financial Statements of Section V Financial Report.
other current assets increased RMB 357 million in the reporting period, which was
mainly due to the Company’s confirmation of performance compensation related to the
failure of Shanghai Mokun, acquired by the Company during the reporting period, to
Other current assets
fulfil its performance commitments. For details, see the Note 9 Other Current Assets in
the Notes to the Consolidated Financial Statements in part II of Section V Financial
Report.
Other receivables increased RMB 265 million in the reporting period, mainly because the
Company’s loans to others and relevant interest due within 1 year was reclassified from
Other receivables
other non-current assets to this item. For details, see the Note 6 Other Receivables in the
Notes to the Consolidated Financial Statements in part II of Section V Financial Report.
Goodwill increased RMB 960 million in the reporting period, which was mainly due to
the new consolidation of the goodwill of Shanghai Mokun. For details, see the Note 16
Goodwill
Goodwill in the Notes to the Consolidated Financial Statements in part II of Section V
Financial Report.
Other non-current assets increased RMB 594 million in the reporting period, which was
mainly due to the prepayment for the purchase of office buildings and parking spaces.
Other non-current assets
For details, see the Note 19 Other Non-Current Assets in the Notes to the Consolidated
Financial Statements in part II of Section V Financial Report.
2. Main overseas assets
□ Applicable √ Not applicable
III. Analysis of Core Competitiveness
Does the Company need to comply with the disclosure requirements for special industries?
No
The Company steadily promoted the development strategy of “platformization, globalization and pan-entertainment” for interactive
entertainment business based on IP and formed the following core competitiveness:
1. Team Strengths
The Company's core team consists of the experienced publishing team of mobile games and browser games, and the R&D team with
2017 Annual Report
leading technology. The core team members have years of experience in publishing, operation and R&D of games, as well as
numerous successful products. The core team has a prospective insight, full of creativity and efficient execution. It always upholds
the marathon-type entrepreneurial spirit and leads the Company to keep up with the industry leader: (1) mobile game R&D and
publishing. The Company's publishing business of domestic mobile games caught up from behind. It achieved a market share of
5.2% in 2017, becoming the leading mobile game publisher after Tencent and NetEase (source: 2017-2018 Research Report of
China’s Mobile Games Market from iiMedia Research). The Company’s billing of overseas mobile games publishing business also
realized a year-on-year increase of nearly 80%. Yong Heng Ji Yuan and Swords of Archangels H5, which are researched and
developed by the Company based on its accumulated strength, have respectively obtained a monthly gross billing of more than RMB
350 million globally in the reporting period and a monthly gross billing of over RMB 180 million during the reporting period. Mobile
Game Chuan Qi Ba Ye broke RMB 100 million after releasing on the Tencent platform in 30 days. (2) Browser games. The
Company’s browser game platform ranked second in terms of market share, just behind Tencent. The Company opened a total of
nearly 28,000 groups of servers in China in 2017, ranking first in the ranking list of server quantity of operating platforms in 2017.
(Source: 2017 Browser Game Data Report from 9K9K.COM).
2. The Company Achieved Differentiated Competitive Advantages in the Mobile Game Publishing Business and Established A Good
Brand Image
The Company is experienced in the mobile game publishing business and formed strong differentiated competitive advantages,
mainly reflected in:
(1) The Company specializes in mobile game traffic operation and has efficient traffic conversion capabilities. The Company is
capable of continuously introducing sufficient users to target games to maintain a healthy growth of active players in an environment
where mobile internet traffic prices continue to rise. At the same time, the Company has extensively covered downstream partners in
the industry chain and established sustainable cooperation with mainstream channels domestically, to ensure that the Company’s
mobile game products continue to acquire users. The mobile game products launched by the Company achieved high levels of billing
in channels such as Tencent, Huawei and OPPO during the reporting period. The newly added registered users of mobile games
through traffic operations reached more than 86 million in the reporting period, taking the leading place in the industry;
(2) The Company is able to dig deep into the upper stream of the industry chain for high-quality products, has strong capabilities of
adjustment, optimization and operation of products, which continuously improves the quality of games and guarantees a longer life
cycle and high cumulative billing of games. The Company’s self-developed Yong Heng Ji Yuan has been launched for more than one
and a half years. Its users and billing remain stable; newly registered users of the self-developed Swords of Archangels H5 reached 8
million within 3 months after launch at the end of September 2017, with a total top-up billing of over RMB 500 million, which has
set a benchmark for H5 game category of the mobile network.
(3) The accumulated registered mobile game users owned by the Company have reached 189 million. The Company, given the
circumstances where traffic prices continue to rise, provides players with diversified game options and operation services to attend
players’ needs through a rich product reserve and customer service system, demonstrating the capability of further improving game
experience, activity degree and retention rate. 1) The gameplay provided by the Company includes ARPGs (action role-playing
games), SLGs (simulation games) and turn-based RPGs (turn-based role-playing games). Game categories consist of ancient fantasy
games, card games, female-oriented games, and games adapted from cartoons and animations, etc. The Company is one of the few
publishing company in the industry that can provide comprehensive game categories and one-stop services besides Tencent and
NetEase; 2) The Company has a complete player account system, customer service system and experienced customer service team.
Combined with sufficient product offerings, it has the ability to further enhance game experience, activity degree and retention rate
and increase the Company’s revenue and advertising effectiveness under the \"platformization\" strategy.
2017 Annual Report
Relying on the publishing with differentiated
competitive advantages during the reporting
period, the Company was awarded “2017
China’s Top 10 Mobile Game Operators” and
“2017 China’s Top 10 Mobile Game
Operating Platforms” in 2017 China “Top Ten
Games” Grand Celebration which was guided
by the Digital Publishing Division of the State
Administration of Press, Publication, Radio,
Film and Television, hosted by China
Audio-Video and Digital Publishing
Association and organized by the Game
Committee of the China Audio-Video and
Digital Publishing Association. It also won the
“Top Ten Mobile Game Companies” in 2017
China Game Billboard. The Company achieved a market share of 5.2% of the domestic mobile game publishing market in 2017 as of
December 31, 2017 and is expected a continuous increase of the market share.
3. Brouser Game Operation Business Kept Leading in China and Fine Operation Created Long-Term Income-Generating
Competitive Products
The Company’s browser game platform ranked second in terms of market share, just behind Tencent. The Company opened a total of
nearly 28,000 groups of servers domestically in 2017, ranking first in the ranking list of group quantity of operating platforms in
2017. The Company has formed the following competitive advantages with respect to browser game business:
(1) The sound brand reputation of the Company helped establishment of brand barriers for its browser game platform, brought more
players with self-owned flow and reduced the Company's costs of acquisition of players;
(2) Leading market position and market share has attracted more R&D manufacturers and companies to cooperate, while
strengthening the Company's bargaining power over R&D manufacturers and media channels;
(3) The pragmatic business style and excellent performance have enabled the Company to establish a close cooperative relationship
with multiple Internet media channels and enhance the Company’s bargaining power over Internet channel suppliers. It can obtain
more and better channel resources at the same price.
(4) The Company specializes in fine-quality game operation. The games such as Swords of Archangels and Chuan Qi Ba Ye etc.
launched in 2014 still showed strong and lasting vitality. They became rare long-term revenue-generating products in the field of
browser games; The new products achieving the total billing of over RMB 10 million in 2017 include: Jin Zhuang Chuan Qi, Mo Yu,
Browser Game Yong Heng Ji Yuan, Nine Gods, Journey to the West: The Demons Strike Back and Princess Agents.
(5) The Company's core operating practices for different game genre and different player types accumulated over many years of
continuous game operation experience have been widely recognized in the industry. It has acquired the operation rights of multiple
gaming platforms such as Jinshan Liebao, 2345 and Douyu, further enriching the publishing channels and increasing market share of
the Company. Relying on the outstanding performance of its browser game business during the reporting period, the Company won
the “2017 Top 10 Most Popular Browser Games” for Swords of Archangels and Chuan Qi Ba Ye and the \"2018 Top 10 Most
2017 Annual Report
Anticipated Browser Games\" for A Step into the Past and Jin Zhuang Chuan Qi in 2017 China “Top Ten Games” Grand Celebration;
Chuan Qi Ba Ye was awarded the \"Favorite Browser Game of Players\" and Xue Meng Rong Yao was awarded “The Most
Anticipated Browser Game of Players” in 2017 Golden Plume Award.
4. Development Capabilities for High-Quality Games
The Company's researched and developed series of core technologies such as game engines and game frameworks with excellent
performance and stability can support the development of high-quality online games with engaging gameplay, which is an important
guarantee for the Company's continued introduction of delicate games. The mature core technology and rich product experience
enable the Company to control costs and shorten the product development period, timely launch of fine games that meet the
development direction of the industry and seize the market opportunities with guaranteed quality. The Company implements the
principle of market orientation and sustainable development and balances the commercial nature and entertainment of game products
with a deep understanding of player needs in the game operation business, making the R&D games launched have the following
features:
(1) The life circle of games is long and the players’ activity degree is stable. The browser games including Swords of Archangels and
Chuan Qi Ba Ye launched in 2014 and the mobile game Yong Heng Ji Yuan launched in June 2016 remained stable and high billing
and continued to contribute profits during the reporting period.
(2) The games meet the market demands and have a high success rate. Five web and mobile games launched from 2014 to the release
date of this report achieved the monthly gross billing of more than RMB 100 million, realizing a high success rate.
(3) Long-term player recognition forms brand barriers. The Company's self-developed browser games including Chuan Qi Ba Ye and
Swords of Archangels have maintained a stable and high billing through excellent self-developed quality since their launch in 2014.
They receive continuous recognition from core players as the domestic representatives of \"Mir\" and \"MU\" games. Mobile Game
Chuan Qi Ba Ye broke through RMB 100 million in 30 days after launch and the gross billing of Swords of Archangels H5 in a single
month surpassed RMB 180 million in the reporting period, which verifies the word-of-mouth effect and brand barriers of
self-developed games.
The Company completed the acquisition of Shanghai Mokun and strengthened the Company's R&D capabilities for high-quality
games during the reporting period. As of the report date, the Company was researching and developing three browser games
including Tu Long Rong Yao, Xue Meng Rong Yao and MU X, and nine mobile games including Mobile Game MU Miracle, Huang
Jin Cai Jue, Ling Yu, Fighter of the Desti hny, H-GAME, Mobile Game T, Mobile Game F, Legend Mobile Game Y and Project X -
Legend H5, which are expected to be launched in succession in 2018. Based on its strong development capabilities for delicate games,
the Company expects to continue to produce long-term high-quality games just like Yong Heng Ji Yuan, Chuan Qi Ba Ye and Swords
of Archangels.
2017 Annual Report
.
2017 Annual Report
Section IV Discussion and Analysis of Operations
I. Overview
The Company focused on IP and steadily promoted the development strategy of “platformization, globalization and
pan-entertainment” for interactive entertainment business during the reporting period. Its overall strength ranks the 18 th among the
top 100 Internet companies in China; its auto parts business achieved a steady development. The Company achieved an operating
revenue of RMB 6.189 billion with a year-on-year increase of 17.9%, a pretax income of RMB 1.917 billion with a year-on-year
increase of 45.3% and the net income attributable to shareholders of the listed company of RMB 1.621 billion with a year-on-year
increase of 51.4%. The Company completed the overall acquisition of Shanghai Mokun and Jiangsu Zhiming in May 2017,
enhancing the Company’s capabilities of game R&D and publishing.
i. Interactive Entertainment Business
1. Mobile game business. The Company continued to defend the position of first-tier publishers of mobile games in markets at home
and abroad. Its investment in mobile game R&D continued to increase.
(1) The Company’s mobile game business obtained an operating revenue of RMB 3.284 billion and the gross profit of RMB 2.512
billion during the reporting period, achieving a year-on-year increase of 100.4% and 147.7% respectively.
a. Domestic Publishing.
During the reporting period, the Company successfully launched long-term and high-quality games including Yong Heng Ji Yuan,
Swords of Archangels H5 and Xian Ling Jue Xing. The highest number of monthly active users (MAU) exceeded 13 million. The
highest monthly billing surpassed RMB 500 million. The highest record of single-day billing of Yong Heng Ji Yuan as a
representative work broke through RMB 70 million during the reporting period.
The domestic mobile game publishing industry during the reporting period was highly competitive with the following characteristics:
(1) The continuous increase in traffic costs has caused industry reshuffle and survival of the fittest. The Company is strong on traffic
operation and product operation. The number of its newly registered users of mobile games in the report period exceeded 74 million,
leading the industry. Its market share has maintained a steady growth to 5.2%, second only to Tencent and NetEase, and was
expected to increase during the reshuffle process in the market. Its influence on the flow end and product end will also be enhanced
thereby.
(2) Leading products have obvious effects. According to the China’s Game Industry Report for January-June 2017 released jointly
by GPC (Game Committee of the China Audio-Video and Digital Publishing Association), CNG and IDC (International Data
Corporation), the proportion of total billing of the top 10 products among the total market billing increased from 52.9% to 54.9%,
showing a significant leading product effect. The Company is expected to expand the competitive advantages in the publishing
business relying on the products already released such as Yong Heng Ji Yuan, Swords of Archangels H5 and Xian Ling Jue Xing,
reserved self-developed products such as Mobile Game MU Miracle, Project X - Legend H5, and Legend Mobile Game Y, as well as
authorized products such as Ming Yun Xian Feng, Sword and Rebirth, Code M - MMO, Code X - Cards, Code H -legend and Code S
- SLG.
2017 Annual Report
(3) The Company has rapidly expanded its game genre. The Company specializes in
product such as ARPG, SLG and turn-based RPG, etc. According to the China’s Game
Industry Report for January-June 2017 released jointly by GPC, CNG and IDC, ARPG,
SLG and turn-based RPG totally accounted for more than 50% of the market share,
which will benefit the further increase of the Company’s market share. As for game
themes, the Company is expected to further expand the market share by publishing
multi-category mobile games such as Xian Ling Jue Xing, Ling Yu, Sword and Rebirth
and other ancient fantasy games, card games, female-oriented games, and games adapted
from cartoons and animations.
b. Overseas publishing. The Company adopted to the strategy of “localized operation + multi-dimensional marketing” and has
accumulated rich experience in overseas game business operation. During the reporting period, the Company's billing of overseas
publishing business of mobile games broke through RMB 1 billion, achieving an increase of nearly 80% over the same period of last
year. Yong Heng Ji Yuan reached a maximum billing of RMB 70 million in a single month overseas during the reporting period and
took the first place in the best-selling list of Hong Kong, Macao and Taiwan, Singapore, Malaysia, Vietnam and Philippines etc., the
second place in Indonesia and Turkey, the third place in Thailand and South Korea and the fifth place in a number of overseas
markets. In addition, Demon Seals, Age of Immortals, Zhu Xian, Loongcraft and other games released by the Company also achieved
good results overseas, among which, Demon Seals ranked the 3rd in the best-selling list in Taiwan. Age of Immortals ascended to the
second in Singapore and Malaysia. Zhu Xian won the 4th place in Thailand. The Company will continue to explore overseas markets
in 2018 and bring together various products to the overseas markets such as Clans of Intrigue, Kun Lun Xu, Divine, Qing Yun Jue
and Mo San Guo. At the same time, it will launch Lords of Conquest, Primal Wars: Dino Age and other European and American
custom products, and release Demon Seals in Korea and Yong Heng Ji Yuan in Japan to further consolidate the strategic layout of
globalization.
(2) With respect to products, the Company’s self-developed Yong Heng Ji Yuan has achieved a cumulative global billing of over
RMB 3.41 billion and a global maximum monthly billing of over RMB 350 million during the reporting period, which laid a solid
foundation for the Company’s mobile game R&D business. The Company’s overall acquisition of Shanghai Mokun during the
reporting period strengthened the Company's game R&D capabilities. As of the end of the reporting period, the Company was
researching and developing nine mobile games including Mobile Game MU Miracle, Ling Yu, Fighter of the Destiny, Huang Jin Cai
Jue, H-Game, Mobile Game T, Mobile Game F, Legend Mobile Game Y and Project X - Legend H5. It has signed a number of
mobile games with the exclusive right, tentatively known as Ming Yun Xian Feng, Sword and Rebirth, Code M - MMO, Code X -
Cards, Code H -legend and Code S - SLG, which will be launched in 2018 in succession. Based on the competitive advantages
formed by the publishing and R&D business, the Company expects to continue to bring to the market long-term and global
high-quality mobile games that are comparable to Yong Heng Ji Yuan and Swords of Archangels H5.
2017 Annual Report
2. Browser game business. 1) The Company’s browser game platform ranked second in terms of market share, just behind Tencent.
The Company opened a total of nearly 28,000 groups of servers in China in 2017, ranking first in the ranking list of group quantity of
operating platforms in 2017. 2) Its 37GAMES international platform market covers more than 180 countries, making it one of the
most popular game platforms in the world. The Company’s browser game business generated revenue of RMB 2.298 billion and
gross profit of RMB 1.537 billion during the reporting period, which was lower than the same period of 2016. The main reasons
included:
(1) Browser game users have fallen in size. With the habit of users moving from personal computers to mobile phones and other
mobile devices, the scale of browser game users declined during the reporting period;
(2) In the past few years, some browser game R&D companies have turned to mobile game R&D due to the rapid demand increase in
the mobile game market, which caused a decline in the number of high-quality products on the market and also on the Company.
The Company adopted a proactive strategy to respond to market changes during the reporting period. 1) With respect to authorized
products, the Company cooperated closely with the top domestic browser game R&D teams and successively launched Moyu,
Journey to the West: The Demons Strike Back, Nine Gods, Princess Agents, and Jue Shi Xian Wang and other products in 2017
combining its IP advantages, which stabilized operating income. It will launch a variety of browser game products in 2018 including
Rise of Taichi, One Piece Online, A Step into the Past and The Legendary Swordsman; 2) with respect to R&D, the Company
stepped up its efforts to practice R&D. The self-developed games which were launched in the reporting period included Jin Zhuang
Chuan Qi and Browser Game Yong Heng Ji Yuan. Browser games under research and development include Tu Long Rong Yao, Xue
Meng Rong Yao and MU X, which are expected to launch in 2018 successively; 3) with respect to strategic investment, the Company
and invested companies including Chengdu Pengwan Technology Co., Ltd., Longzhang Animation (Shanghai) Co., Ltd., Chengdu
Modu Technology Co., Ltd. and Chengdu Mofei Technology Co., Ltd. actively participate in browser game cooperation and business
synergy.
2017 Annual Report
3. Pan-entertainment interaction. 1) With respect to endogenous development, the Company has formed three business segments
including mobile game publishing, browser game publishing and game R&D. Each business segment supports each other, which
achieves efficient resource integration in product R&D, marketing and business cooperation, creating a closed loop of the game
industry chain and promote the continuous growth of the Company's income level. 2) With respect to outreach development, the
Company newly participated in a series of game R&D and publishing companies with equity during the reporting period, including
XD Network Co., Ltd. (game R&D and publishing), Najia Technology (Shenzhen) Co., Ltd. (game R&D), Shanghai Yuhouyi
Network Technology Co., Ltd. (game publishing), Chengdu Modu Technology Co., Ltd. (game R&D), Chengdu Mofei Technology
Co., Ltd. (game R&D) and Shenzhen Zen Game Technology Co., Ltd. (game R&D). Such a series of game R&D investment
increased the sustainable growth capacity of upstream high-quality contents and guaranteed the continuous supply of diversified
contents. At the same time, such a series of game publishing investment to jointly explore the market formed a good complement to
R&D. The Company completed the overall acquisition of Shanghai Mokun and Jiangsu Zhiming in the reporting period, enhancing
the Company’s capabilities of game R&D and publishing. 3) With respect to pan-entertainment layout, the Company has invested in
film, television, animation, music, VR and other fields. the Company invested and released Reset, a domestic sci-fi movie, in the
reporting period through New Clues (Beijing) Film & TV Investment Co., Ltd. indirectly invested by Huai'an Sanqi Yijian
Pan-Entertainment Asset Management Center (Limited Partnership); Forever Young, invested by the Company and jointly produced
with Hangzhou Southern Pictures Co., Ltd., has grossed over RMB 700 million as of the release day of this report and received
favorable comments in the market. At the same time, Till the End of the World, as the first domestic romance film with a background
story based on Antarctica, was produced by Beijing C2M Media Co., Ltd, which was invested by the Company. It gained a positive
reputation in the market and earned a total revenue of more than RMB 200 million. King of Fighters: Destiny, an animation which
was produced by Shanghai Jueli Culture Co., Ltd., where the Company held shares was launched in the reporting period; the
Company achieved a breakthrough in digital music business through Shanghai Rock Forward Entertainment Co., Ltd. indirectly
invested by Huai'an Sanqi Yijian Pan-Entertainment Asset Management Center (Limited Partnership); VR content R&D teams of
both Archiact Interactive Ltd. and Tianshe (Shanghai) Cultural Media Co., Ltd. where the Company held shares continued to produce
Hidden Fortune, a VR game of treasure-hunting, League of Guardians, a VR game of tower defense and other products; 4) The
Company established Yangzhou Fuhai Sanqi Internet Culture Investment Center (Limited Partnership) with Shenzhen Oriental
Fortune Capital Investment Management Co., Ltd., a leading entertainment investment institution in China, to jointly focus on the
investment in the Internet entertainment industry under the hot trend of pan-entertainment.
2017 Annual Report
4. IP strategy. The Company continued to explore quality IPs to produce quality games in combination of its own advantages in the
game business. In addition to direct purchase of high-quality IPs, the Company has reached a good cooperation with partners such as
Mango Media. They will continue to have more cooperation on IP. The Company built an pan-entertainment strategy system based
on high-quality IP strategy to meet the diversified entertainment needs of users, and further explored the value of IP in the fields of
film and television, games, animation, live broadcasting, music and VR etc. At present, the Company reserves a large number of
quality IPs:
(1) Game IP: MU, World of Legend, Lineage II , Wu Yi, Asura, Seal online, The King of Fighters, Samurai Shodown and Nekketsu
Kouha Kunio-kun Series etc.
(2) Film and TV IP: Princess Agents, Fighter of the Destiny, Chinese Hero Zhao Zilong, Journey to the West: the Demons Strike Back,
The Monkey King 2 in 3D, Taichi, and Nirvana in Fire etc.
(3) Literature IP: A Step into the Past, Transcending the Nine Heavens, and Gate of Revelation etc.
(4) Animation IP: One Piece and Astro Boy etc.
ii. Auto Parts Business
The Company achieved positive results in the auto parts business in the reporting period by constantly increasing technical
investment, optimizing the technological process and improving its management level.
II. Analysis of Principal Business
1. Overview
Refer to relevant contents in “I. Overview” of “Discussion and Analysis of Operations”
2. Revenue and Costs
(1) Composition of operating revenue
Unit: yuan
2017
Year-on-year
Proportion in the Proportion in the
Amount Amount Increase (Decrease)
Operating Revenue Operating Revenue
Total of operating
6,188,828,116.75 100% 5,247,893,728.73 100% 17.93%
revenue
By Industries
Online game 5,628,616,443.76 90.95% 4,622,288,449.71 88.08% 21.77%
Auto parts 560,211,672.99 9.05% 625,605,279.02 11.92% -10.45%
By Products
Browser game 2,298,860,026.39 37.15% 2,948,803,661.57 56.19% -22.04%
2017 Annual Report
Mobile games 3,283,622,990.10 53.06% 1,639,185,366.69 31.24% 100.32%
Auto parts 560,211,672.99 9.05% 625,605,279.02 11.92% -10.45%
Other 46,133,427.27 0.74% 34,299,421.45 0.65% 34.50%
By Regions
Domestic market 5,269,286,525.60 85.14% 4,500,535,129.96 85.76% 17.08%
Overseas market 919,541,591.15 14.86% 747,358,598.77 14.24% 23.04%
(2) Industries, products, or regions taking up more than 10% of the Company’s operating revenue or
profits
√ Applicable □ Not applicable
Does the Company need to comply with the disclosure requirements for special industries?
No
Unit: yuan
Operating Revenue Operating Cost Gross Margin Increased or Increased or Increased or
Decreased Rate of Decreased Rate Decreased
Operating Revenue of Operating Rate of Gross
over the Same Period Costs over the Margin over
of the Previous Year Same Period of the Same
the Previous Period of the
Year Previous Year
By Industries
Online game 5,628,616,443.76 1,533,843,501.10 72.75% 21.77% 2.10% 5.25%
Auto parts 560,211,672.99 414,353,738.66 26.04% -10.45% -5.60% -3.80%
By Products
Browser 2,298,860,026.39 761,943,558.28 66.86% -22.04% -13.12% -3.40%
games
Mobile games 3,283,622,990.10 771,899,942.82 76.49% 100.32% 23.43% 14.64%
Auto parts 560,211,672.99 414,353,738.66 26.04% -10.45% -5.60% -3.80%
Other 46,133,427.27 100.00% 34.50% 0.00% 0.00%
By Regions
Domestic 5,269,286,525.60 1,745,664,356.75 66.87% 17.08% 7.07% 3.10%
market
Overseas 919,541,591.15 202,532,883.01 77.97% 23.04% -34.85% 19.56%
market
In case of any adjustment to the statistical caliber of the Company’s main business data in the report period, the Company’s main
business data in the latest one year after adjustment by the end of the reporting period shall prevail.
2017 Annual Report
□Applicable √ Not applicable
(3) Is the sales proceeds in kind of the Company more than service revenue?
□ Yes √ No
(4) Performance of important sales contracts signed by the Company as of current reporting period
□ Applicable √ Not applicable
No
(5) Composition of operating costs
By Industries and Products
Unit: yuan
2017 2016 Year-on-year
Industries Item Proportion in the Proportion in the Increase
Amount Amount
Operating Costs Operating Costs (Decrease)
Online game Online game 1,533,843,501.10 78.73% 1,502,334,412.70 77.39% 2.10%
Auto parts Auto parts 414,353,738.66 21.27% 438,952,363.96 22.61% -5.60%
2017 2016 Year-on-year
Product Types Item Proportion in the Proportion in the Increase
Amount Amount
Operating Costs Operating Costs (Decrease)
Browser games Browser games 761,943,558.28 39.11% 876,972,214.03 45.18% -13.12%
Mobile games Mobile games 771,899,942.82 39.62% 625,362,198.67 32.21% 23.43%
Auto parts Auto parts 414,353,738.66 21.27% 438,952,363.96 22.61% -5.60%
Note:
(6) Is there any change in the scope of consolidation in the reporting period?
√ Yes □ No
In May 2017, the company acquired 68.43% of the equity in Shanghai Mokun, and the company began to include Shanghai Mokun
and its subsidiaries including Shanghai Langkun, Shanghai Miji, Shanghai Kunkun, Shanghai Aojue and Huoerguosi Jiaji, in the
scope of consolidated statements from May 31, 2017.
2. Newly-established subsidiary in the current period:
In February 2017, Tibet Xintai, the company’s first-tier subsidiary, established Lihui Venture. The company holds 100% of the
equity in this newly-established subsidiary and has included it in the scope of consolidation since February 2017.
2017 Annual Report
In March 2017, Jiangsu Aurora, the company’s second-tier subsidiary, established Anhui Aurora. The company holds 80% of the
equity in this newly-established subsidiary and has included it in the scope of consolidation since March 2017.
In April 2017, Top Increase, the company’s third-tier subsidiary, established 37 Games company. The company holds 100% of the
share in this newly-established subsidiary and has included it in the scope of consolidation since April 2017.
In August 2017, Jiangsu Aurora, the company’s second-tier subsidiary, established Guangzhou Jisheng. The company holds 80% of
the share in this newly-established subsidiary and has included it in the scope of consolidation since August 2017.
(7) Significant changes or adjustments of the Company’s businesses, products, or services in the reporting
period
□ Applicable √ Not applicable
(8) Major customers and suppliers
Major customers
Total sales amount of top 5 customers (yuan) 2,437,105,234.58
Proportion of the total sales amount of top 5 customers 39.38%
in annual gross sales
Proportion of related-party sales amount in sales 0.00%
amount of top 5 customers in annual gross sales
Information of top 5 customers
Sales amount (yuan)
S/N Name of Customer Proportion in annual gross sales
1 No. 1 883,130,692.89 14.27%
2 No. 2 698,031,405.69 11.28%
3 No. 3 367,434,362.57 5.94%
4 No. 4 328,889,590.32 5.31%
5 No. 5 159,619,183.11 2.58%
Total -- 2,437,105,234.58 39.38%
Other information of the major customers
□ Applicable √ Not applicable
Major suppliers
Total purchase amount of top 5 suppliers (yuan) 570,457,026.86
Total purchase amount of top 5 suppliers in annual 29.66%
gross purchases
Proportion of related-party purchase amount in the 0.00%
purchase amount of top 5 suppliers in annual gross
2017 Annual Report
purchases
Information of top 5 suppliers
S/N Name of supplier Purchase amount (yuan) Proportion in annual gross purchases
1 No. 1 259,137,583.55 13.47%
2 No. 2 131,887,811.91 6.86%
3 No. 3 63,933,766.07 3.32%
4 No. 4 61,580,079.92 3.20%
5 No. 5 53,917,785.41 2.80%
Total -- 570,457,026.86 29.66%
Other information of the major suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: yuan
Year-on-year
2017 2016 Description of significant changes
increase (decrease)
The variation mainly results from the
increase in internet traffic charges in
the reporting period. For details, see
Operating expenses 18.69% the Note 41 Operating Expenses in the
1,908,207,466.32 1,607,745,221.19
Notes to the Consolidated Financial
Statements in part II of Section V
Financial Report.
The variation mainly results from
increase in R&D costs and share-based
payment expense in the reporting
General and period. For details, see the Note 42
50.83%
administrative expenses 776,659,541.86 514,933,615.17 General and Administrative Expenses
in the Notes to the Consolidated
Financial Statements in part II of
Section V Financial Report.
The variation mainly results from the
increase in interest expenditure due to
additional bank loans and great
Financial expenses -622.96%
28,555,783.27 -5,460,395.61 exchange losses arising from
depreciation of the U.S. dollar against
RMB in the reporting period. The
2017 Annual Report
variation in the prior year mainly
resulted from exchange gains. For
details, see the Note 43 Financial
Expenses in the Notes to the
Consolidated Financial Statements in
part II of Section V Financial Report.
4. Investment in research & development
√ Applicable □ Not applicable
i. Mobile Game R&D Projects
Project 1: MU (Mobile Game)
MU is an ARPG mobile game that is licensed by Webzen with the theme of miracle client game. With the support of the Unity3D
engine, the game not only allows players to experience the classic on-hook treasure hunting, but also restore partial dress-up and a
variety of magnificent streamer effects of equipment.
Project 2: Search for Gold (Huang Jin Cai Jue)
Search for Gold (Huang Jin Cai Jue) is a magical ARPG mobile game. The triad of heaven, human and demons constitutes a huge
world view. Warriors, wizards and Taoist priests are destined to fight against the demons and recast the heaven! The game not only
authentically presents the classic PK, but also creates unique gameplay including capture of the BOSS as a fight pet, cross-server
winning and awarding of gold ingots for equipment recovery. It strives to present players with a wonderful world of games.
Project 3: Ling Yu
Ling Yu is a 2D H5 mobile game with a theme of immortal cultivation. It's easy to hang up for treasure hunting without burden,
which is unique and breaks the traditional features of games. Different choices made by players in the game will affect their own
characters, while changing the game's storyline. When the character reaches a certain level, the player will activate the hidden
immortal and gain the exclusive and powerful secrets specially for immortals, making the player a unique immortal.
Project 4: Fighter of the Destiny
Fighter of the Destiny is adapted from a novel of the same name from Mao Ni, an author of Tencent Literature. It is a MMORPG
mobile game developed based on the Unity engine. It perfectly restores the characters, plots and scenes of the TV series. Chen
Changsheng, Xu Yourong and other partners accompany the players to practice, fight against the destiny and change their lives in the
game; Qing Gong of four levels in the game help players free to soar the eastern continent. Abundant partners, implements and other
game features help players practice and break the predicaments. Furthermore, family, couples and other rich social gameplay allow
players to find a good partner to practice together.
Project 5: H-Game
H-Game is an anime IP-based 3D ARPG mobile game based on the Unity engine. It is rich in characters, has a strong sense of
fighting and exquisitely reproduces the feelings of adventure in the fantasy world. It satisfies most of the players for experiencing the
story and is also integrated with team cooperation, wrestle competition and fighting against people, which greatly enhance the fun of
the game.
2017 Annual Report
Project 6: Mobile Game T
Mobile Game T is a competitive game of top-view team shooting based on Unity3D. The game brings brand-new 5v5PVP gameplay
through exquisite levels and hero designs, so that players can experience the hot shooting fun through the top-level view. The game
adopts the next-generation art production method to present cartoons and powerful scenes and characters, magnifies the drama
experience of some of the core battles, and combine multiple layers of light and shadow effects, striving to provide players with a
sense of reality and stunning visual experience.
Project 7: Mobile Game F
Mobile Game F is a competitive and turn-based 3D card games featuring next-generation screen effects and fighting theme
developed based on the Unity3D engine. The R&D team has made a deep customization of the Unity3D engine, and developed
specifications for art resources and development standards in line with the future high-quality mobile game market based on the
project type. The game fully exploits players’ free and fragmented time. It solves tedious repetitive operation behaviors with
humanized system design such as \"mopping-up\" and automatic fighting. It always focuses players’ interest on the core gameplay,
allowing the players to obtain the best gaming experience within a limited time.
Project 8: Legend Mobile Game Y
Legend Mobile Game Y is produced by the company's R&D team. The classic combination battle of warriors, wizards and Taoist
priests is reproduced in the game, following the grand and free world outlook and iterative update of the technical level, so that the
PK is more exciting and the siege is more refreshing, with rich and varied BOSS gameplay and a wide variety of luxury equipment.
In addition, more layers of remodeling of screen effects and 3D modeling of characters give more freedom of battle experience,
satisfying the warriors' pursuit of the game.
Project 9: Project X - Legend H5
Project X - Legend H5 is an ARPG mobile game independently researched and developed by the Company. The screen effects are
based on nostalgic realism. It reproduces the classic gameplay including killing the BOSS and PK of miracle games. The brand new
placement design, creative combination battle of warriors, wizards and Taoist priests, and the special three-in-one ring help the
players to easily upgrade and enjoy PK.
ii. Browser Game R&D Projects
Project 1: Tu Long Rong Yao
Tu Long Rong Yao is an ARPG browser game with the theme of oriental magical realism. The game offers three kinds of
occupations for players to choose from. Each profession has its own unique skills and distinctive style equipment to play its own role
in the classic system gameplay, giving players a different gaming experience. The game has exquisite scenes, realistic sound effects,
gorgeous skill effects and various forms of monsters and characters, allowing players to enjoy the visual and auditory effects while
playing the game.
Project 2: Xue Meng Rong Yao
Xue Meng Rong Yao is a 3D MMOARPG browser game that is authorized by NCSOFT Lineage II of South Korea. It successfully
restores the classic gameplay and top-level game screen effects of the original client game. The advanced settings and transition of
the professions, creation of the equipment and stunning fights fully guarantee the fighting fun of the original client game.
Project 2: MU X
2017 Annual Report
MU X is a miracle-type 3D ARPG browser game that uses advanced self-developed 3D game engine to restore the miraculous
images of miracle-type games. While continuing to maintain the classic gameplay of miracle-type games, it also features cross-server
free trade, multiple roles and other industry-leading and innovative gameplay.
Investment in research & development
2017 2016 Changes in proportion
Number of R&D personnel
1, 461 1,004 45.52%
(person)
Proportion of R&D personnel 54.05% 45.72% 8.33%
Amount of R&D investment
439,094,559.01 317,670,122.59 38.22%
(yuan)
Proportion of R&D investment
7.09% 6.05% 1.04%
in operating revenue
Amount of capitalized R&D
7,663,076.06 7,073,030.69 8.34%
investment (yuan)
Proportion of capitalized R&D
1.75% 2.23% -0.48%
investment in R&D investment
Reason for significant changes in the proportion of total R&D investment in operating revenue compared to the previous year
□ Applicable √ Not applicable
Reasons for significant changes in capitalization rate of R&D investment and their rationality
□ Applicable √ Not applicable
5. Cash flow
Unit: yuan
Year-on-year increase
Item 2017
(decrease)
Subtotal of cash inflows from
6, 764,509,897.17 5,304,046,606.31 27. 53%
operating activities
Subtotal of cash outflows from
4, 932,613,968.87 4,252,107,028.48 16. 00%
operating activities
Net cash flow from operating
1, 831,895,928.30 1,051,939,577.83 74.14%
activities
Subtotal of cash inflows from
2, 567,482,176.55 872,586,555.02 194.24%
investment activities
Subtotal of cash outflows from
3, 935,420,406.47 2,390,119,798.33 64.65%
investment activities
2017 Annual Report
Net cash flow from investment
-1, 367,938,229.92 -1,517,533,243.31 -3.98%
activities
Subtotal of cash inflows from
1, 344,262,496.88 449,463,250.61 199.08%
financing activities
Subtotal of cash outflows from
1,034,016,584.46 280,642,645.46 268.45%
financing activities
Net cash flow from financing
310,245,912.42 168,820,605.15 83.77%
activities
Net increase of cash and cash
761,697,925.86 -286,575,995.03 -365.79%
equivalents
Main factors affecting significant changes year on year in relevant data
√Applicable □ Not applicable
1. The net cash flow from operating activities increased by 74.14%, mainly due to the increase in operating revenue during the
reporting period.
2. The subtotal of cash inflows from investing activities increased by 194.24%, mainly due to the increase in the amount of
redemption of financial products by the company, the sale of equity of Shanghai Zheyuan Culture & Media Co., Ltd. and Tianjin
Zilong Jidian Interactive Entertainment Co., Ltd.
3. The subtotal of cash outflows from investing activities increased by 64.65%, mainly due to the increase in the purchase of financial
products by the company and the prepayment for the purchase of office buildings and parking spaces.
4. The subtotal of cash inflows from financing activities increased by 199.08%, mainly due to the increase in bank loans and share
issuance for financing during the reporting period.
5. The subtotal of cash outflows from financing activities increased by 268.45%, mainly due to the increase in repayment of bank
loans due by the Company, increase in payment of dividends, and the payment for acquisition of minority equity during the reporting
period.
Reasons for significant discrepancy between the net cash flow from operating activities and net income of the current year in the
reporting period.
□ Applicable √ Not applicable
III. Analysis of Non-Principal Business
√ Applicable □ Not applicable
Unit: yuan
Proportion in Pre-tax
Amount Reasons for formation Sustainable or not
incomes
Mainly the investment income
Investment income 256,030,245.92 13.36% No
from disposal of equity
2017 Annual Report
investment and performance
compensation
Mainly the impairment loss
Impairment loss on
351,295,883.79 18.33% on goodwill of Shanghai No
assets
Mokun .
Mainly the performance
compensation recognized for
Non-operating
403,057,922.86 21.03% the failure of Shanghai No
income
Mokun to fulfil its
performance commitments
Mainly the VAT refunds and
Other income 111,259,077.18 5.80% other government grants Yes
related to daily operations
IV. Analysis of Assets and Liabilities
1. Significant changes in composition of assets
Unit: yuan
December 31,2017 December 31,2016 Increase
and
decrease
Proportion in Proportion in Description of significant changes
Amount Amount in
total assets total assets
proportio
n
The proportion of monetary funds in
total assets on December 31, 2017
increased by 4.43% from that of
1,580,910,931.
Monetary funds 17.26% 819,213,006.12 12.83% 4.43% December 31, 2016, mainly due to the
increase in cash inflow generated by
the company's operating activities
during the reporting period.
The proportion of accounts receivable
in total assets on December 31, 2017
decreased by -3.11% from that of
Accounts 884,909,012.7 December 31, 2016, mainly due to an
9.66% 815,645,754.68 12.77% -3.11%
receivable 7 increase in total assets arising from the
accelerated collection of accounts
receivable during the reporting period
and increase in total assets arising from
2017 Annual Report
increase in other assets such as
goodwill and other non-current assets.
.
No major changes of the proportion of
101,828,085.3 inventories in total assets on December
Inventory 1.11% 71,481,925.54 1.12% -0.01%
1 31, 2017 from that of December 31,
2016.
Investment real
0.00% 0.00% 0.00%
estate
The proportion of long-term equity
investments in total assets on
December 31, 2017 decreased by
Long-term equity 376,972,832.0 -8.20% from that of December 31,
4.12% 786,567,839.80 12.32% -8.20%
investment 8 2016, mainly due to the inclusion of
Shanghai Mocun, the original JV of the
Company, in the consolidation scope
within the reporting period.
The proportion of fixed assets in total
assets on December 31, 2017 decreased
by -1.06% from that of December 31,
292,395,887.1
Fixed assets 3.19% 271,491,379.50 4.25% -1.06% 2016, mainly due to an increase in total
assets arising from increase in assets
such as goodwill and other non-current
assets.
No major changes of the proportion of
Construction in construction in process in total assets
50,672,878.42 0.55% 31,078,391.88 0.49% 0.06%
process on December 31, 2017 from that of
December 31, 2016.
The proportion of short-term loans in
total assets on December 31, 2017
decreased by -1.78% from that of
372,054,500.0
Short-term loans 4.06% 372,878,500.00 5.84% -1.78% December 31, 2016, mainly due to an
increase in total assets arising from
increase in assets such as goodwill and
other non-current assets.
The proportion of newly-added
long-term loans in total assets
310,775,272.0
Long-term loans 3.39% 0.00% 3.39% accounted for 3.39% by December 31,
2017, mainly due to the new mortgage
borrowings for purchase of office
2017 Annual Report
space.
The proportion of the other non-current
assets in total assets on December 31,
2017 increased by 2.78% from that of
December 31, 2016, mainly due to the
Other non-current 592,189,323.9
6.46% 234,948,261.89 3.68% 2.78% Company’s recognition of performance
assets
compensation related to the failure of
Shanghai Mokun, acquired by the
Company during the reporting period,
to fulfil its performance commitments.
The proportion of goodwill in total
assets on December 31, 2017 increased
2,540,312,996. 1,579,976,961. by 2.99% from that of December 31,
Goodwill 27.73% 24.74% 2.99%
76 87 2016, mainly due to recognition of the
goodwill generated by the
consolidation of Shanghai Mokun.
The proportion of other non-current
assets in total assets on December 31,
Other non-current 914,263,967.1 2017 increased by 4.96% from that of
9.98% 320,590,794.35 5.02% 4.96%
assets 6 December 31, 2016, mainly due to
prepayment for purchase of office
buildings and parking spaces.
The proportion of accounts payable in
total assets on December 31, 2017
decreased by -2.87% from that of
741,792,973.3
Accounts payable 8.10% 700,713,118.00 10.97% -2.87% December 31, 2016, mainly due to an
increase in total assets arising from
increase in assets such as goodwill and
other non-current assets.
The proportion of other payables in
total assets on December 31, 2017
Other payables 61,572,020.26 0.67% 293,166,635.18 4.59% -3.92% decreased by -3.92% from that of
December 31, 2016, mainly due to
decrease of investment payable.
2. Assets and liabilities measured at fair values
√ Applicable □ Not applicable
Unit: yuan
Item Beginning Current profits Cumulative Impairment Purchase Sales amount in Ending
2017 Annual Report
balance and losses from changes in fair accrued in amount in current period balance
variation in fair value recorded current period current period
value in profits and
gains
Financial assets
3. Financial
57,541,101.9
assets available 5,445,472.73 -24,337,628.17 80,189,997.98 3,756,740.62
for sale
Total of the 57,541,101.9
5,445,472.73 -24,337,628.17 80,189,997.98 3,756,740.62
above
Is there significant change in the measurement attribute of the Company’s main assets in the reporting period?
□ Yes √ No
3. Limitation of assets rights as of the end of the reporting period
The Company is free from any limitation of assets right as of the end of the reporting period.
V. Analysis of Investments
1. General
√ Applicable □ Not applicable
Investment amount in the reporting period Investment amount in the same period of
Variation
(yuan) the previous year (yuan)
2,401,535,373.99 1,426,943,171.05 68.30%
2. Important equity investment in the reporting period
√ Applicable □ Not applicable
Unit: yuan
Investm
Name Progre
ent
of the Princip Types ss as of Involve Disclos
Invest Invest Shareh Invest Antici profit Disclosu
compan al Capital of the ment in ure
ment ment olding Partner ment pated and loss re date
y busines source product balanc litigatio index
method amount ratio horizon income in the (if any)
investe s s e sheet n (if any)
current
d in date
period
Shangh Technic 952,74 Share Compl
Acquisi 68.43% No Long Game -24,826, No
ai al 9,968.6 payme eted
2017 Annual Report
Mokun develop tion 9 nt and term R&D industr 452.48
ment private ial and
and offerin comme
services g rcial
in the change
fields of s`
digital
technol
ogy and
comput
er
science;
comput
er
network
enginee
ring;
comput
er
system
integrat
ion;
corpora
te
marketi
ng
plannin
g; sales
of
digital
product
s,
comput
er
hardwar
e and
softwar
e,
periphe
ral
equipm
ent,
2017 Annual Report
commu
nication
equipm
ent,
commu
nication
equipm
ent, and
electron
ic
product
s;
design
of
comput
er
hardwar
e and
softwar
e; data
processi
ng
services
; import
and
export
busines
s of
goods
and
technol
ogy.
Technic
al Compl
develop Share Game eted
ment, payme distribu industr
Jiangsu 254,79
transfer Acquisi --49.00 nt and Long tion ial and 19,165,2
Zhimin 9,990.8 No No
and tion % private term and comme 38.82
g
consulti offerin operati rcial
ng g on change
services s
in the
2017 Annual Report
fields of
network
technol
ogy and
comput
er
technol
ogy;
comput
er
system
integrat
ion and
network
enginee
ring
services
;
animati
on
design;
graphic
design
and
product
ion;
sales of
comput
er
softwar
e and
ancillar
y
equipm
ent;
operatio
n of
game
product
s with
informa
tion
2017 Annual Report
network
(includi
ng
distribu
tion of
virtual
currenc
y of
online
games).
Cultural
industry
investm
ent on
the
Internet
, film
and
televisi
on
Yangzh
investm Shenzh
ou
ent en
Fuhai
busines Orienta Compl
Sanqi
s, l eted
Internet
investm Fortune Invest industr
Culture Newly
ent 50,000, Proprie Capital Long ment ial and
Investm establis 64.52% 0.00 No
manage 000.00 tary Invest term manage comme
ent hed
ment ment ment rcial
Center
busines Manag change
(Limite
s, ement s
d
investm Co.,
Partners
ent Ltd.
hip)
consulti
ng
busines
s, asset
manage
ment
services
, and
other
investm
2017 Annual Report
ent
busines
s
permitt
ed by
laws
and
adminis
trative
regulati
ons.
Technic
al
develop
ment,
transfer,
consulti
ng and
services http://w
in the ww.cnin
fields of fo.com.
comput cn/cninf
er o-new/d
Compl
science isclosur
eted
and Game e/fulltex
XD industr
technol 100,05 R&D Februar t/bulleti
Networ Proprie Long ial and
ogy and Other 0,000.0 2.38% No and 0.00 No y 06, n_detail
k Co., tary term comme
network 0 distribu 2017 /true/12
Ltd. rcial
technol tion
change
ogy; 44?anno
s`
sales of unceTi
comput me=201
ers, 7-02-06
softwar %2007:
e and
auxiliar
y
equipm
ent
(except
for
special
2017 Annual Report
product
s for
informa
tion
system
security
of
comput
ers);
comput
er
system
integrat
ion;
web
design;
softwar
e
develop
ment;
design ,
product
ion,
agency
services
and
publishi
ng of
various
types of
advertis
ements;
investm
ent
manage
ment;
busines
s
consulti
ng
(except
for
2017 Annual Report
brokera
ge);
clothing
sales;
telecom
municat
ions
busines
s.
Product
ion and
distribu
tion of
broadca
sting,
film,
televisi
on and
music
progra
ms;
corpora
Compl
Zhongn te
eted
an image
industr
Hong plannin Culture
80,189, Proprie Long ial and
Culture g; Other 0.52% No and 0.00 No
997.98 tary term comme
Group organiz media
rcial
Co., ation of
change
Ltd. cultural
s
and
artistic
exchan
ge
activitie
s;
technol
ogy
develop
ment
and
sales of
mobile
2017 Annual Report
phones,
comput
er
hardwar
e and
softwar
e,
ancillar
y
equipm
ent,
electron
ic
product
s, and
commu
nication
product
s;
design,
product
ion,
agency
services
and
distribu
tion of
various
types of
advertis
ements;
confere
nce and
etiquett
e
services
;
investm
ent in
foreign
countrie
s using
2017 Annual Report
its own
funds;
equity
investm
ent;
educati
onal
informa
tion
consult
ation
(excludi
ng
interme
diary
services
for
self-fun
ded
oversea
s
study);
manufa
cturing
of pipe
fittings,
steel
pipes,
mechan
ical
parts,
expansi
on
joints,
prefabri
cated
and
directly
buried
insulati
on
pipes;
2017 Annual Report
Propriet
ary
trading
and
agency
services
for
import
and
export
of
various
types of
goods
and
technol
ogies
(except
for
product
s and
technol
ogies
that the
state
restricts
enterpri
ses to
operate
or are
prohibit
ed from
import
and
export)
Guangz Product Compl
hou ion of eted
Invest
Haojiah radio industr
5,000,0 Proprie Long ment
uo Yiqi and Other 20.00% No ial and 0.00 No
00.00 tary term manage
Media televisi comme
ment
Partners on rcial
hip progra change
2017 Annual Report
(Limite ms s`
d (specifi
Partners c scope
hip) of
busines
s is
subject
to the
Permit
for
Product
ion and
Operati
on of
Radio
and
Televisi
on
Progra
ms);
advertis
ing
busines
s;
movie
and
televisi
on
agency
services
;
organiz
ation
and
plannin
g
services
for
large-sc
ale
events
(large-s
2017 Annual Report
cale
events
refer to
parties,
sports
games,
celebrat
ions, art
and
model
contests
, art
festival
s, film
festival
s,
public
welfare
perform
ances,
exhibiti
ons, etc.
Activiti
es that
are
subject
to
special
examin
ation
and
approva
l may
only be
operate
d after
acquisit
ion of
relevant
approva
l;
cultural
2017 Annual Report
and
artistic
consulti
ng
services
;
plannin
g and
creative
services
;
plannin
g of
non-pro
fit
cultural
activitie
s
particip
ated by
the
masses
includin
g
literary
perform
ances
and
competi
tions;
investm
ent with
the
compan
y's own
capital;
investm
ent
consulti
ng
services
;
2017 Annual Report
busines
s
manage
ment
consulti
ng
services
;
Comput
er
system
integrat
ion;
researc
h and
develop
ment,
sales of
comput
er
hardwar
e and Compl
Chengd softwar eted
u Modu e and industr
Capital
Technol electron 12,000, Proprie Long Game ial and -1,030,0
increas 20.00% No No
ogy ic 000.00 tary term R&D comme 25.53
e
Co., product rcial
Ltd. s; change
comput s
er
network
technol
ogy
services
; basic
softwar
e
services
;
applicat
ion
softwar
2017 Annual Report
e
services
; import
and
export
of
goods
and
technol
ogy;
leasing
of
network
connect
ion
equipm
ent,
furnitur
e and
househ
old
applian
ces.
Researc
h and
develop
ment,
sales of
comput
Compl
er
Chengd eted
hardwar
u Mofei industr
e and Capital
Technol 12,000, Proprie Long Game ial and -1,037,5
softwar increas 20.00% No No
ogy 000.00 tary term R&D comme 01.22
e and e
Co., rcial
electron
Ltd. change
ic
s
product
s;
services
,
develop
ment,
2017 Annual Report
promoti
on and
transfer
of
comput
er
network
technol
ogy;
comput
er
system
integrat
ion;
basic
softwar
e
services
;
applicat
ion
softwar
e
services
;
technol
ogy
import
and
export;
leasing
of
furnitur
e and
househ
old
applian
ces.
Shangh Investm Invest Compl
Newly
ai Fuhai ent 3,000,0 Proprie Long ment eted
establis 30.00% No 419.01 No
Sanqi manage 00.00 tary term manage industr
hed
Asset ment, ment ial and
2017 Annual Report
Manage investm comme
ment ent rcial
Co., consulti change
Ltd. ng, s
asset
manage
ment,
busines
s
manage
ment
consulti
ng,
busines
s
consulti
ng,
financia
l
consulti
ng.
Technic
al
develop
ment,
transfer,
consulti
ng and
Compl
services
Najia eted
in the
Technol industr
fields of Newly
ogy 40,000, Proprie Long Game ial and
digital establis 7.20% No 0.00 No
(Shenzh 000.00 tary term R&D comme
technol hed
en) Co., rcial
ogy and
Ltd. change
comput
s
er
science
and
technol
ogy;
comput
er
2017 Annual Report
network
enginee
ring;
comput
er
system
integrat
ion;
design
of
comput
er
softwar
e and
hardwar
e; data
processi
ng
services
;
marketi
ng
plannin
g; sales
of
comput
er
hardwar
e and
softwar
e and
auxiliar
y
equipm
ent,
telecom
municat
ions
equipm
ent and
electron
ic
2017 Annual Report
product
s, and
import
and
export
of
goods
and
technol
ogies.
Adverti
sing
busines
s; flat
and
three-di
mensio
nal
design;
web
design;
researc
h and
develop
ment,
technic
al
mainten
ance of
social
network
ing
platfor
ms;
sales of
toys,
artware
(excludi
ng gold
and
silver
jewelry
2017 Annual Report
),
digital
electron
ic
product
s,
statione
ry,
plastic
product
s and
hardwar
e
product
s.
Design
and
technic
al
consulti
ng of
animati
on
product
s.
(Items
that are
subject
to
approva
l
accordi
ng to
the law
may
only be
carried
out
after
approva
l by the
relevant
2017 Annual Report
departm
ent) ^
Product
ion of
radio
and
televisi
on
progra
ms;
film
product
ion;
manufa
cturing
and
processi
ng of
toys,
artware
(excludi
ng gold
and
silver
jewelry
),
digital
electron
ic
product
s,
statione
ry,
plastic
product
s and
hardwar
e
product
s;
publicat
ion
2017 Annual Report
product
ion and
distribu
tion;
online
game
product
ion.
Technic
al
develop
ment,
transfer,
consulti
ng and
services
in the
fields of
network
technol
ogy and
Shangh
comput Compl
ai
er eted
11wan
technol industr
Networ Capital Game
ogy; 23,500, Proprie Long ial and -1,633,1
k increas 25.00% No distribu No
comput 000.00 tary term comme 40.77
Technol e tion
er rcial
ogy
system change
Co.,
integrat s
Ltd.
ion;
network
enginee
ring;
animati
on
design;
creative
services
;
graphic
design
and
2017 Annual Report
product
ion;
sales of
comput
ers,
softwar
e and
auxiliar
y
equipm
ent;
import
and
export
of
goods
and
technol
ogies.
Compl
eted
Supply
Archiac industr
of VR Capital VR
t 6,858,8 Proprie Long ial and
game increas 10.00% No Game 0.00 No
Interact 00.00 tary term comme
content e R&D
ive Ltd. rcial
s
change
s`
Technol
ogy
services
of
Compl
comput
Chengd eted
er
u 91Act industr
hardwar Capital
Technol 11,500, Proprie Long Game ial and 1,001,26
e and increas 20.50% No No
ogy 000.00 tary term R&D comme 0.32
softwar e
Co., rcial
e; R&D
Ltd. change
and
s`
sales of
comput
er
hardwar
2017 Annual Report
e and
softwar
e and
auxiliar
y
equipm
ent,
electron
ic
product
s, office
equipm
ent and
commu
nication
s
equipm
ent
(excludi
ng
wireless
broadca
st
televisi
on
transmi
ssion
equipm
ent and
satellite
ground
receptio
n
equipm
ent);
network
technol
ogy
develop
ment,
technic
al
2017 Annual Report
consulti
ng,
technol
ogy
transfer
;
multim
edia
design;
animati
on
design;
import
and
export
of
goods
and
technol
ogies.
Technic
al
develop
ment,
technic
al
transfer
Shenzh and Compl
en related eted
Chanyo informa industr
Capital
u tion 18,000, Proprie Long Game ial and
increas 2.78% No 0.00 No
Technol consult 000.00 tary term R&D comme
e
ogy ation of rcial
Co., online change
Ltd. games s`
and
comput
er
softwar
e;
design
of web
2017 Annual Report
pages;
domesti
c trade
(except
for the
above
items
that are
subject
to
examin
ation
and
approva
l before
registrat
ion
accordi
ng to
the laws
and
regulati
ons as
well as
decisio
ns of
the
State
Council
);
import
and
export
busines
s
(except
for
items
that are
prohibit
ed by
laws,
2017 Annual Report
adminis
trative
regulati
ons and
State
Council
. The
restricte
d items
may be
operate
d after
acquisit
ion of
relevant
approva
l);
plannin
g of
cultural
activitie
s
(excludi
ng
restricte
d
items);
advertis
ing
busines
s (The
items
that are
subject
to
examin
ation
and
approva
l of
advertis
ing
2017 Annual Report
busines
s
accordi
ng to
laws,
adminis
trative
regulati
ons and
decisio
ns of
the
State
Council
may be
operate
d upon
acquisit
ion of
relevant
approva
l.) ^
Informa
tion
service
busines
s
(Interne
t
informa
tion
services
only);
operatio
n of
game
product
s with
Internet
(includi
ng
distribu
2017 Annual Report
tion of
virtual
currenc
y of
online
games).
Design,
develop
ment
and
sales of
comput
er
hardwar
e and
softwar
e;
comput
er
system
Chengd integrat Compl
u ion; eted
Pengwa network industr
Capital
n enginee 33,021, Proprie Long Game ial and 2,076,42
increas 22.34% No No
Technol ring 823.48 tary term R&D comme 6.17
e
ogy design rcial
Co., and change
Ltd. constru s`
ction
(operati
ng with
qualific
ations
and
licenses
); web
design;
technic
al
support
services
,
2017 Annual Report
technic
al
consulti
ng,
technic
al
services
and
technol
ogy
promoti
on for
comput
ers;
digital
content
services
;
animati
on
design.
1,
602,67 -6,283,7
Total -- -- -- -- -- -- -- -- 0.00 -- -- --
0,580.9 75.68
3. Important non-equity investment in the reporting period
√ Applicable □ Not applicable
Unit: yuan
Reasons
Cumulati
for
ve Cumulati
failure to
Investme investme ve
Investme Industrie achieve
nt nt returns
Investme nt in s of the Anticipat schedule Disclosu Disclosu
amount amount Capital Project as of the
Projects nt fixed investme ed d re date re index
in this as of the source progress end of
method assets or nt income progress (if any) (if any)
reporting end of this
not projects and
period this reporting
anticipat
reporting period
ed
period
income
2017 Annual Report
12/F,
14/F,
17/F to
23/F of
Office http://w
Building ww.cninf
and -3/F o.com.cn
and -4/F /cninfo-n
of ew/discl
undergro osure/szs
Commer
und 795,864, 795,864, Mortgag April 26, e_sme/b
Other Yes cial real 0.00 0.00 N/A
parking 793.02 793.02 e loan 2017 ulletin_d
estate
spaces of etail/true
Zhongro /120338
ng Plaza, 7463?an
No. 666 nounceTi
Huangpu me=201
Road 7-04-26
Middle,
Tianhe,
Guangzh
ou
795,864, 795,864,
Total -- -- -- -- -- 0.00 0.00 -- -- --
793.02 793.02
4. Financial assets measured at fair value
√ Applicable □ Not applicable
Unit: yuan
Profits and Cumulative Sales
Purchase
Initial losses from changes in fair amount in Cumulative
amount in the Ending Capital
Category of assets investment change in fair value recorded the returns on
reporting balance source
cost value in the in profits and reporting investment
period
current period gains period
81,100,692 3,756,740.6 57,541,101.
Shares 0.00 -23,559,590.80 80,189,997.98 0.00 Proprietary
.72 2
81,100,692 3,756,740.6 57,541,101.
Total 0.00 -23,559,590.80 80,189,997.98 0.00 --
.72 2
2017 Annual Report
5. Use of raised funds
√ Applicable □ Not applicable
(1) Overall use of raised funds
√ Applicable □ Not applicable
Unit: 10,000 yuan
Total
Proportion
Total amount of
Cumulativ of Purpose
amount of raised fund Total Amount of
Total Cumulativ e amount cumulative and
Year of raised with amount of raised fund
Fundraisin amount of e amount of raised amount of direction
fundraisin funds used purposes raised s idle for
g mode raised of raised fund with raised fund of raised
g in the changed in funds not over two
funds funds used purposes with funds not
current the used years
changed purposes used
period reporting
changed
period
Private
2017 45,596.25 45,596.25 45,596.25 0 0 0.00% 0 --
offering
Total -- 45,596.2 45,596.2 45,596.2 0 0 0.00% 0 --
5 5
Overall use of raised funds
With the Reply of China Securities Regulatory Commission on Approving the Share Issuance of Wuhu Shunrong Sanqi Interactive
Entertainment Network Technology Co., Ltd. to Yang Dongmai etc. for Purchasing Assets and Raising Supporting Funds (Zheng
Jian Permit [2017] No. 579), Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. offered to 2 specific
targets including Shenzhen Guodiao Investment M&A Equity Investment Fund Partnership (Limited Partnership) and Shenzhen
Yidun Media Investment Fund Partnership (Limited Partnership) 17,866,869 RMB common shares (A shares) of non-public
issuance shares (with a nominal value of RMB 1 per share). The issue price was RMB 25.52 per share and the total funds raised
were RMB 455,962,496.88. After deduction of the issuance costs of RMB 31,313,316.06 (including tax) and the VAT input tax of
RMB 1,768,867.9. The net amount of funds was RMB 426,418,048.75. As of June 30, 2017, the supporting funds raised by the
above issuance had been put in place and examined by Pan-China Certified Public Accountants (Special General Partnership). It
issued the Tianjian Yan [2017] No. 3-64 Capital Verification Report on July 1, 2017. The funds raised were mainly used for the
cash consideration of RMB 422,642,500.00 for purchasing 68.43% of the equity of Shanghai Mokun and 49.00% of the equity of
Jiangsu Zhiming and RMB 33,320,000.00 for related intermediary agency expenses of the transaction.
(2) Projects to be invested in with raised funds
√ Applicable □ Not applicable
Unit: 10,000 yuan
Projects to be invested Change Total Total Investme Cumulati Investme Date Benefit in Whether Significa
2017 Annual Report
and investment of project amount investme nt ve nt when the this the nt change
direction of excess or not of raised nt after amount investme progress project reporting expected in
funds (includin fund to adjustme in this nt by the reaches period benefit is feasibility
g partial be nt (1) reporting amount end of the the reached of the
change) invested period as of the current expected or not project or
end of the period (3) serviceab not
current ＝(2)/(1) le
period (2) condition
s
Projects to be invested in
Cash consideration for
purchasing 68.43% of May 31,
No 33,346.25 33,346.25 28,346.25 33,346.25 100.00% -2,482.65 No No
the equity of Shanghai
Mokun
Cash consideration for
purchasing 49.00% of --100.00 May 31,
-- No 8,918 8,918 8,918 8,918 1,916.52 --Yes --No
the equity of Jiangsu %
Zhiming
Payment for related
intermediary agency June 30,
No 3,332 3,332 3,332 3,332 100.00% 0 Yes No
expenses of the
transaction
Subtotal of the projects
-- 45,596.25 45,596.25 40,596.25 45,596.25 -- -- -- --
to be invested in
Subtotal of projects to
-- -- -- -566.13 -- --
be invested in
Investment direction of excess funds
No
Repayment of bank
-- 0 0 0 0 0.00% -- -- -- --
loan (if any)
Supplement of current
-- 0 0 0 0 0.00% -- -- -- --
funds (if any)
Subtotal of investment
direction of excess -- 0 0 0 0 -- -- 0 -- --
funds
Total -- 45,596.25 45,596.25 40,596.25 45,596.25 -- -- -566.13 -- --
Failure to meet Shanghai Mokun Digital Technology Co., Ltd., a subsidiary of the Company, failed to fulfil its
scheduled progress or performance commitments during the reporting period, the main reason of which was that its product
2017 Annual Report
anticipated income and launch schedule was postponed. It has successfully launched its main products and achieved impressive
reasons (specific billing as of the date of this report, which was expected to have a positive effect on its future performance.
projects)
Description of
significant changes in No
project feasibility
Amount, purpose, and N/A
progress of excess
funds
Change in place of N/A
implementation of
projects invested in
with raised funds
Adjustment of N/A
implementation
method of projects
invested in with raised
funds
Applicable
In order to ensure the successful implementation of the Company's restructuring before the raised funds
arrived, the Company had invested in the fundraising projects at the earlier stage with self-raised funds
Up-front cost and
according to the actual situation, including the payment of cash consideration of RMB 50 million and
replacement of projects
related intermediary agency expenses of RMB 4.466 million for this transaction, totaling RMB 54.466
invested in with raised
million. After the raised funds were in place, the 7th meeting of the 4th Board of Directors of the Company
funds
reviewed and approved the Proposal on Replacing the Up-Front Funds Invested in the Fundraising Project
with the Funds Raised, agreeing that the company would use the raised funds of RMB54.466 million to
replace the self-raised funds invested in advance.
Temporary supplement N/A
of current funds with
idle raised funds
Amount of surplus N/A
raised funds in project
implementation and the
reason
Purpose and direction
The funds raised have all been used up during the reporting period without surplus.
of unused raised funds
Problems or other
situations in use and No
disclosure of raised
2017 Annual Report
funds
(3) Change in projects invested in with raised funds
□ Applicable √ Not applicable
There is no change in projects invested in with raised funds in the reporting period.
VI. Sales of Major Assets and Equity
1. Sales of major assets
□ Applicable √ Not applicable
The Company did not sell any major asset in the reporting period.
2. Sales of major equity
√ Applicable □ Not applicable
Net
income
realized Implem
by the entation
Proporti
equity of the
on of
for the sales as
net
listed planned
income Transfer
compan or not,
Impact from Pricing Related- Relation of the
y from and
Price of sales equity principl party ship equity Disclos
Counter Equity Date of the explain Disclos
(10,000 on the sales in e for transacti with the involve ure
party sold sales beginni the ure date
yuan) Compan Pre-tax equity on or counter d in index
ng of reasons
y income sales not party whole
the and
of the or not
current measure
listed
period s taken
compan
to the by the
y
date of compan
sales y if not.
(10,000
yuan)
Zhongn Shangha No
March Market Non-rel
an Hong i Aurora effect As
31, 13,365 29.3 5.36% fair No ated Yes
Culture Networ on the planned
2017 value parties
Group k Compan
2017 Annual Report
Co., Technol y's
Ltd. ogy Co., business
Ltd. ;
increase
its
current
net
income
No
effect
Shangha
on the
Tianjin i
Compan
Kale Haoyua
y's
Interacti n January Market Non-rel January
business As
ve Culture 13, 19,500 0 4.49% fair No ated Yes 05,
; planned
Technol & 2017 value parties
increase
ogy Co., Media
its
Ltd. Co.,
current
Ltd.
net
income
No
effect
Tianjin
on the
Zilong
Huaren Compan
Qidian
Culture y's
Interacti August Market Non-rel
Limited business As
ve 21, 5,500 0 1.00% fair No ated Yes
Liability ; planned
Entertai 2017 value parties
Compan increase
nment
y its
Co.,
current
Ltd.
net
income
VII. Analysis of Main Controlling and Shareholding Companies
√ Applicable □ Not applicable
Main subsidiaries and shareholding companies contributing to more than 10% of the net income of the Company
Unit: yuan
Company Type of the Principal Registered Total assets Operating Operating
Net assets Net income
name: Company business capital revenue profit
2017 Annual Report
Shanghai
Sanqi 1,
10,000,000.0 6,080,611,03 3,321,683,31 5,619,311,64 1,514,053,82
Interactive Subsidiary On-line game 575,879,628.
0 8.82 7.25 4.89 6.46
Entertainmen
t
Subsidiaries acquired and disposed in the reporting period
√ Applicable □ Not applicable
Methods of subsidiary acquisition and Impact on overall production, operation,
Company name:
disposal in the reporting period and performance
Shanghai Mokun’s ability of high-quality
game R&D effectively enhances the R&D
Shanghai Mokun Acquisition
ability of the listed company and improves
users' willingness to pay.
Description of main controlling and shareholding companies
VIII. Structured Entities Controlled by the Company
□ Applicable √ Not applicable
IX. Prospect for Future Development of the Company
i. Development Strategy and Business Plan of the Company
1. Development Strategy
The Company will adhere to the development strategy of “platformization, globalization and pan-entertainment”, uphold the
marathon-type entrepreneurial spirit, and lead the Company to keep catching and surpassing the industry leader under the trend that
the global online game industry still maintains growth. The Company will create brand barriers by leveraging team strengths,
differentiated competitive advantages of mobile game publishing business, leading advantages in the browser game industry and
R&D advantages of superior games, and will enhance operating performance through endogenous and outreach development.
Looking into the future, the Company will further develop its IP strategy and customize more premium games with high-quality IPs
to become the world's leading developer, operator and distributor of mobile games and browser games, and will continue to increase
its presence in the interactive entertainment industry and improve its interactive entertainment ecosystem.
2. Business Plan
(1) Further Promote the “ARPG+ Multi-Category” Product Strategy of Mobile Game
The achievements of games such as Yong Heng Ji Yuan, Swords of Archangels H5, Xian Ling Jue Xing and King of Avalon in R&D
and publishing business verified the \"ARPG+ multi-category\" product strategy of the Company for mobile game R&D and
publishing and the Company's capacities of purchase and conversion of traffic and channel cooperation. Accordingly, the Company
will further strengthen its R&D and publishing competitive advantages in mobile games and make full use of its abundant product
reserves. It will make greater efforts to expand the leading edge in superior ARPG game products with Mobile Game Chuan Qi Ba
2017 Annual Report
Ye, Swords of Archangels H5 and Yong Heng Ji Yuan etc. Meanwhile, it will occupy a larger market share by publishing
multi-category mobile games such as Fighter of the Destiny, Xian Ling Jue Xing, Ling Yu, Sword and Rebirth and other ancient
fantasy games, card games, female-oriented games, and games adapted from cartoons and animations.
(2) Adequate Browser Game Product Reserves and Continuous Elaborate Operation on High-Quality Products
The Company will conduct elaborate operation on high-quality browser games in 2018. The main products that will be released in
2018 include Rise of Taichi, One Piece Online, A Step into the Past, The Legendary Swordsman and Xue Mai and self-developed Tu
Long Rong Yao, Xue Meng Rong Yao and MU X.
(3) In-Depth Localization and Operation on High-Quality Products to Increase Overseas Market Share
The Company will expand the countries and regions covered by the 37GAMES platform to dig deep into the European and American
market using English, Asia market, as well as the markets using minor languages such as German, French and Turkish etc. The
Company will further leverage its first-mover advantage in overseas markets and rely on advanced game R&D capabilities and
localization capabilities to expand its overseas business scale and increase its overseas market share.
(4) Strengthen R&D of Mobile Games and Browser Games and Consolidate Brand Barriers of Self-Developed Games
The Company will continue to consolidate its R&D capabilities in mobile games and browser games, enhance the performance of its
product engines, improve the artistic quality of its products, and actively carry out design innovations in 2018. Meanwhile, it will
conduct multi-platform and multi-gameplay development for the Company's self-developed premium games such as Chuan Qi Ba Ye,
Swords of Archangels and Yong Heng Ji Yuan etc. to enhance the core user stickiness, accumulate reputation and further consolidate
brand barriers. In addition, the Company will further recruit excellent R&D talents, expand R&D teams and further enrich the
product lines.
(5) Strengthen Cooperation with R&D Manufacturers and Media Channels, and Consolidate the Company’s Bargaining Power in the
Industry Chain
The Company will continue to strengthen cooperation with R&D manufacturers and media channels, and expand the Company’s
market share through benign cooperation in 2018, thereby further enhancing its bargaining power in the industry chain.
(6) Maintain Synergy among Business Segments and Enhance Complementarity between Endogenous Development and Outreach
Development
While maintaining the rapid growth of endogenous development, the Company will focus on its development strategy and plans and
actively accelerate the Company's layout of the upstream and downstream of the industrial chain through investment, equity
participation, mergers and acquisitions and other means, including media channels, game videos, andfilm and TV, animation and
other interactive entertainment industries, to maximize the value of the platform users and the Company.
(7) Continue to Implement the IP Strategy and Reserve Premium Contents Customized and Developed based on IPs
Based on the pan-entertainment layout such as animation, film and TV, the Company actively seeks ways including investment,
mergers and acquisitions to increases investment in animation, VR and other fields to carry out the layout of pan-entertainment
industries. Relying on IP, it will develop and publish premium pan-entertainment contents of new areas. In particular, it will soon
introduce finished product contents of the animation industry to further expand the Company's brand strength in the game market.
iii. Future Challenges Faced by the Company and Countermeasures
2017 Annual Report
1. Market Competition Risks and Countermeasures
The online game industry has formed fierce competition in products and market channels. With the development of various
entertainment industries and the Internet industry, online game users are also upgrading their requirements of products. If market
competition is further intensified, it will exert pressure on the Company's development from the aspects of products and market
channels.
With respect to countermeasures, the Company needs to maintain its existing brand advantages and bargaining power and accelerate
the integration of upstream and downstream of the industry chain, while leveraging its first-mover advantage in overseas game
markets to accelerate the expansion of overseas business scale. In addition, it should constantly introduce more exquisite mobile
games and browser games by virtue of continuously successful product R&D experience and accumulation and through targeted
development with abundant IP resources, so as to achieve continuous connection with users through ceaseless boutique games and
maintain improvement of core competitiveness in the market.
2. Operational Risks and Countermeasures
The online game industry has the characteristics of fast product replacement, limited life cycle and fast change of user preferences.
Game-related companies need to increase investment in technology development and keep up with industry technology trends. If the
game industry's technology, products and other aspects undergo major changes, but the Company fails to keep up with the pace of
industrial technology development, resulting in failure of products to meet market demand, significant negative impact may generate
on user experience of the original business and brand image etc., thereby affecting the Company's operating performance.
With respect to countermeasures, the Company needs to increase its investment in product R&D and should, at the same time,
continue outreach development and deploy the upstream of the industrial chain through investment, equity participation, mergers and
acquisitions.
3. Loss of Core Personnel and Countermeasures
A stable and high-quality game development talent team is an important guarantee for the Company, as a light-asset online game
company, to maintain its leading edge in technology. If the Company cannot effectively maintain the incentive mechanism of the
core personnel and constantly improve it in accordance with changes in the market environment, it will affect the enthusiasm and
creativity of the core personnel, and even result in the loss of core personnel. If the Company cannot externally introduce technical
and operational talents that are closely related to the Company's development and retain them, the Company's business operation,
development space and profitability levels will be adversely affected.
In response, the Company attaches great importance to training and seeking of professional talents. It has built a platform-based
talent management mechanism in an innovative manner to inspire outstanding game producers through high project awards while
giving them great space for R&D and freedom of creation. The Company maintains the stability of core technology and management
personnel by signing agreements with key personnel, creating a sound working environment and establishing a good corporate
culture. At the same time, the Company has always paid attention to the training and increase of sense of belonging of employees,
especially the core employees and managers, to help them build a sense of ownership of the Company and increase their loyalty to
the Company.
2017 Annual Report
Section V Financial Reports
I. Financial Statements
Numbers in the financial statements and notes thereto are expressed in Renminbi yuan.
Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd.
CONSOLIDATED BALANCE SHEET
31 December 2017
(Expressed in Renminbi yuan)
Item Closing balance Opening balance
Current assets:
Monetary funds 1,580,910,931.98 819,213,006.12
Notes receivable 55,340,000.00 94,638,841.21
Accounts receivable 884,909,012.77 815,645,754.68
Advance payments 283,516,789.29 291,963,008.64
Interests receivable 582,592.17
Other receivables 388,111,919.85 122,662,618.02
Inventory 101,828,085.31 71,481,925.54
Held-for-sale assets 75,066,714.34
Other current assets 592,189,323.99 234,948,261.89
Total current assets 3,962,455,369.70 2,450,553,416.10
Non-current assets:
Available-for-sale financial assets 882,481,586.86 785,068,643.78
Long-term equity investment 376,972,832.08 786,567,839.80
Fixed assets 292,395,887.17 271,491,379.50
Construction in progress 50,672,878.42 31,078,391.88
Intangible assets 44,898,112.29 43,864,656.11
Development expenditure 4,070,272.43 8,689,105.40
Goodwill 2,540,312,996.76 1,579,976,961.87
2017 Annual Report
Long-term deferred expenses 79,803,089.59 101,966,657.36
Deferred income tax assets 11,810,692.92 6,368,165.19
Other non-current assets 914,263,967.16 320,590,794.35
Total non-current assets 5,197,682,315.68 3,935,662,595.24
Total assets 9,160,137,685.38 6,386,216,011.34
Current liabilities:
Short-term loans 372,054,500.00 372,878,500.00
Notes payable 17,414,395.42
Accounts payable 741,792,973.33 700,713,118.00
Payments received in advance 84,886,734.84 59,679,946.95
Payroll payable 113,480,021.50 81,943,285.80
Taxes payable 58,281,315.47 53,798,244.69
Interests payable 390,533.38 411,567.28
Other payables 61,572,020.26 293,166,635.18
Non-current liabilities due within
28,117,893.57
one year
Other current liabilities 57,738,251.19 44,259,562.28
Total current liabilities 1,518,314,243.54 1,624,265,255.60
Non-current liabilities:
Long-term loans 310,775,272.06
Bonds payable 27,163,239.26 23,757,428.88
Deferred income 17,226,474.44 9,039,043.38
Total non-current liabilities 355,164,985.76 32,796,472.26
Total liabilities 1,873,479,229.30 1,657,061,727.86
Owner’s equity:
Share capital 2,148,110,844.00 2,084,794,788.00
Other equity instruments 1,947,846.62 1,947,846.62
Capital reserves 1,972,639,580.66 934,484,599.29
Other comprehensive incomes -25,087,592.30 -4,618,535.07
Surplus reserves 99,561,946.09 93,488,947.26
Undistributed profit 2,819,597,585.78 1,413,567,635.94
Total owner’s equity attributable to
7,016,770,210.85 4,523,665,282.04
parent company
Minority interests 269,888,245.23 205,489,001.44
2017 Annual Report
Total owner's equity 7,286,658,456.08 4,729,154,283.48
Total liabilities and owner's equity 9,160,137,685.38 6,386,216,011.34
Legal representative: Li Weiwei Person in charge of accounting: Ye Wei Person in charge of the accounting Department: Ye Wei
BALANCE SHEET OF THE PARENT COMPANY
(Expressed in Renminbi yuan)
Item Closing balance Opening balance
Current assets:
Monetary capital 5,437,518.91 15,360,874.41
Advance payments 1,886,792.45
Dividends receivable 500,000,000.00
Other receivables 1,655,547,345.04 49,248,886.95
Assets held for sale 69,996,897.11
Other current assets 403,527,827.28 299,277.50
Total current assets 2,134,509,588.34 566,795,831.31
Non-current assets:
Available-for-sale financial assets 60,000,000.00 189,996,897.11
Long-term equity investment 5,754,424,925.15 5,586,179,960.15
Deferred income tax assets 3,334,186.37
Other non-current assets 50,000,000.00 298,500,000.00
Total non-current assets 5,867,759,111.52 6,074,676,857.26
Total assets 8,002,268,699.86 6,641,472,688.57
Current liabilities:
Short-term loans 369,000,000.00 370,000,000.00
Payroll payable 539,632.89 208,649.67
Taxes payable 17,271,522.21 133,574.94
Interests payable 390,533.38 411,567.28
Other payables 565,086,466.06 285,250,797.14
Other current liabilities 936,428.02
Total current liabilities 953,224,582.56 656,004,589.03
Non-current liabilities:
Total liabilities 953,224,582.56 656,004,589.03
2017 Annual Report
Owner’s equity:
Share capital 2,148,110,844.00 2,084,794,788.00
Capital reserves 4,401,934,248.25 3,253,924,796.01
Surplus reserves 99,561,946.09 93,488,947.26
Undistributed profit 399,437,078.96 553,259,568.27
Total owner's equity 7,049,044,117.30 5,985,468,099.54
Total liabilities and owner's equity 8,002,268,699.86 6,641,472,688.57
CONSOLIDATED INCOME STATEMENT
(Expressed in Renminbi yuan)
Item Accruals in the current period Accruals in the prior period
I. Total operating revenue 6,188,828,116.75 5,247,893,728.73
Including: operating revenue 6,188,828,116.75 5,247,893,728.73
II. Total operating costs 5,039,424,012.89 4,137,677,116.62
Including: operating costs 1,948,197,239.76 1,941,286,776.66
Taxes and surcharges 26,508,097.89 29,714,525.49
Operating expenses 1,908,207,466.32 1,607,745,221.19
General and administrative
776,659,541.86 514,933,615.17
expenses
Financial expenses 28,555,783.27 -5,460,395.61
Impairment loss on assets 351,295,883.79 49,457,373.72
Investment income
256,030,245.92 54,668,504.76
(represented in \"-\" for loss)
Including: investment income
from associated enterprise and joint -11,139,329.07 33,654,987.57
venture
Gains and losses on asset
1,055,284.09 1,316,063.68
disposal (represented in “-” for loss)
Other incomes 111,259,077.18
III. Operating profit (represented in \"-\"
1,517,748,711.05 1,166,201,180.55
for loss)
Add: Non-operating income 403,057,922.86 162,018,871.61
Less: Non-operating expenditures 4,187,038.90 9,448,442.14
IV. Pre-tax profit (represented in \"-\" for
1,916,619,595.01 1,318,771,610.02
total loss)
2017 Annual Report
Less: Income tax expense 80,119,872.98 102,102,999.99
V. Net profit (represented in “-” for net
1,836,499,722.03 1,216,668,610.03
loss)
(I) Net profit of continued
operations (represented in “-” for net 1,836,499,722.03 1,216,668,610.03
loss)
Net income attributable to owners
1,620,582,427.47 1,070,162,324.07
of parent company
Minority interest income 215,917,294.56 146,506,285.96
VI. Other net comprehensive incomes
-19,783,336.38 -14,243,985.29
after tax
Other comprehensive incomes after
tax attributable to owners of parent -20,469,057.23 -8,895,261.69
company
(II) Other comprehensive incomes
that can be reclassified as profit or loss in -20,469,057.23 -8,895,261.69
the future
2. Profit and loss on
changes in fair value of available-for-sale -21,799,686.38 -7,908,783.53
financial assets
5. Converted difference in
1,330,629.15 -986,478.16
foreign currency statements
Other comprehensive incomes after
685,720.85 -5,348,723.60
tax attributable to minority shareholders
VII. Total comprehensive incomes 1,816,716,385.65 1,202,424,624.74
Total comprehensive income
1,600,113,370.24 1,061,267,062.38
attributable to owners of parent company
Total comprehensive incomes
216,603,015.41 141,157,562.36
attributable to minority shareholders
VIIII. Earnings per share:
(1) Basic earnings per share 0.76 0.51
(2) Diluted earnings per share 0.76 0.51
In case of business combination under common control in the current period, the combined party realized a net profit of RMB 0.00
yuan prior to the combination and it realized a net profit of RMB 0.00 yuan in the prior period.
Legal representative: Li Weiwei Person in charge of accounting: Ye Wei Person in charge of the accounting department: Ye Wei
2017 Annual Report
INCOME STATEMENT OF PARENT COMPANY
(Expressed in Renminbi yuan)
Item Accruals in the current period Accruals in the prior period
I. Operating revenue 751,646.53 124,856,929.57
Less: Operating cost 31,646.53 123,665,864.69
Taxes and surcharges 1,349,357.00 46,078.86
Operating expenses 491,661.09
General and administrative
17,159,274.42 10,613,763.22
expenses
Financial expenses 4,144,539.06 8,035,038.84
Impairment loss on assets 10,753,616.43 2,581,848.90
Investment income
-294,252,732.59 607,782,394.69
(represented in \"-\" for loss)
Including: investment
income from associated enterprise and -1,555,025.80 -940,529.89
joint venture
Other incomes 156,969.20
II. Business profit (represented in “-”
-326,782,550.30 587,205,068.66
for loss )
Add: Non-operating revenue 401,364,984.06 178,189.52
Less: Non-operating expenditures 2,000,000.00
III. Pre-tax profit (represented in “-” for
74,582,433.76 585,383,258.18
total loss)
Less: Income tax expense 13,852,445.44 1,019,059.92
IV. Net profit (represented in “-” for net
60,729,988.32 584,364,198.26
loss)
(I) Net profit of continued
operations (represented in “-” for net 60,729,988.32 584,364,198.26
loss)
VI. Total comprehensive incomes 60,729,988.32 584,364,198.26
VII. Earnings per share:
CONSOLIDATED CASH FLOW STATEMENT
(Expressed in Renminbi yuan)
Item Accruals in the current period Accruals in the prior period
I. Cash flows from operating activities:
2017 Annual Report
Cash received from the sales of
6,627,148,304.92 5,123,965,167.21
goods or rendering services
Cash received from tax refunds 81,575,068.42 92,618,857.31
Other cash received relating to
55,786,523.83 87,462,581.79
operating activities
Sub-total of cash inflow from operating
6,764,509,897.17 5,304,046,606.31
activities
Cash paid for goods acquired and
1,918,243,942.60 1,847,381,195.05
services received
Cash paid to and on behalf of
597,184,300.24 401,186,834.55
employees
Taxes paid 363,818,448.62 288,953,619.88
Other cash paid relating to
2,053,367,277.41 1,714,585,379.00
operating activities
Sub-total of cash outflow from
4,932,613,968.87 4,252,107,028.48
operating activities
Net cash flows from operating activities 1,831,895,928.30 1,051,939,577.83
II. Cash flows from investing activities
Cash received from withdrawal of
304,550,800.00 33,610,847.31
investment
Cash received from return on
25,999,566.33 11,350,004.68
investment
Net cash received from disposal
of fixed assets, intangible assets and 8,909,245.08 13,257,703.03
other long-term assets
Other cash received relating to
2,228,022,565.14 814,368,000.00
investing activities
Sub-total of cash inflow from investing
2,567,482,176.55 872,586,555.02
activities
Cash paid for purchase of fixed
assets, intangible assets and other 1,018,821,190.70 209,226,627.28
long-term assets
Cash paid for investment 344,220,277.93 1,225,093,171.05
Net cash paid for acquisition of
450,009,937.84
subsidiaries and other business entities
Other cash paid relating to
2,122,369,000.00 955,800,000.00
investing activities
2017 Annual Report
Sub-total of cash outflow from
3,935,420,406.47 2,390,119,798.33
investing activities
Net cash flows from investing activities -1,367,938,229.92 -1,517,533,243.31
III. Cash flows from financing
activities:
Cash received from absorbing
433,862,496.88 16,002,903.80
investment
Including: cash received from
subsidiary investment from minority 4,900,000.00
shareholders
Cash received from borrowings 910,400,000.00 406,600,775.46
Cash received from issuing bond 26,859,571.35
Sub-total of cash inflow from financing
1,344,262,496.88 449,463,250.61
activities
Cash paid for repayment of debts 572,506,834.37 65,116,982.42
Cash paid for distribution of
368,016,434.03 215,525,663.04
dividends or profits or interest payment
Including: dividend and profit
paid to minority shareholders by 128,000,000.00 100,931,000.00
subsidiaries
Other cash paid relating to
93,493,316.06
financing activities
Sub-total of cash outflow from
1,034,016,584.46 280,642,645.46
financing activities
Net cash flows from financing activities 310,245,912.42 168,820,605.15
IV. Effect of changes in foreign
exchange rate on cash and cash -12,505,684.94 10,197,065.30
equivalents
V. Net increase in cash and cash
761,697,925.86 -286,575,995.03
equivalents
Add: Opening balance of cash
819,213,006.12 1,105,789,001.15
and cash equivalents
VI. Closing balance of cash and cash
1,580,910,931.98 819,213,006.12
equivalents
CASH FLOW STATEMENT OF PARENT COMPANY
(Expressed in Renminbi yuan)
Item Accruals in the current period Accruals in the prior period
2017 Annual Report
I. Cash flows from operating activities:
Cash received from the sales of
831,026.44 56,370,508.35
goods or rendering services
Other cash received relating to
1,173,262,433.61 6,684,417.01
operating activities
Sub-total of cash inflow from operating
1,174,093,460.05 63,054,925.36
activities
Cash paid for goods acquired and
31,646.53 60,632,762.92
services received
Cash paid to and on behalf of
3,096,452.80 6,895,773.15
employees
Taxes paid 1,484,543.09 2,105,246.44
Other cash paid relating to
1,204,811,508.30 106,063,884.41
operating activities
Sub-total of cash outflow from
1,209,424,150.72 175,697,666.92
operating activities
Net cash flows from operating activities -35,330,690.67 -112,642,741.56
II. Cash flows from investing activities
Cash received from withdrawal of
195,000,000.00
investment
Cash received from return on
1,582,261.90 108,722,924.58
investment
Other cash received relating to
6,000,000.00
investing activities
Sub-total of cash inflow from investing
202,582,261.90 108,722,924.58
activities
Cash paid for investment 474,642,388.20
Net cash paid for acquisition of
372,642,500.00
subsidiaries and other business entities
Other cash paid relating to
51,500,000.00
investing activities
Sub-total of cash outflow from
372,642,500.00 526,142,388.20
investing activities
Net cash flows from investing activities -170,060,238.10 -417,419,463.62
III. Cash flows from financing
activities:
2017 Annual Report
Cash received from absorbing
428,962,496.88
investment
Cash received from borrowings 560,000,000.00 370,000,000.00
Sub-total of cash inflow from financing
988,962,496.88 370,000,000.00
activities
Cash paid for repayment of debts 561,000,000.00
Cash paid for distribution of
228,181,607.55 111,921,553.41
dividends or profits or interest payment
Other cash paid relating to
4,313,316.06
financing activities
Sub-total of cash outflow from
793,494,923.61 111,921,553.41
financing activities
Net cash flows from financing activities 195,467,573.27 258,078,446.59
IV. Effect of changes in foreign
exchange rate on cash and cash 5.12
equivalents
V. Net increase in cash and cash
-9,923,355.50 -271,983,753.47
equivalents
Add: Opening balance of cash
15,360,874.41 287,344,627.88
and cash equivalents
VI. Closing balance of cash and cash
5,437,518.91 15,360,874.41
equivalents
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
Current Amount
(Expressed in Renminbi yuan)
Current period
Owner’s equity attributable to parent company
Other equity
instruments
Perpet Other Provisio Minorit Total
Item
Less: Undistri
Share ual Capital compre Special Surplus ns for y owner's
Prefer treasury buted
capital capita Other reserves hensive reserves reserves general interests equity
red stocks profit
l s incomes risks
Share
securi
ties
I. Closing balance 2,084, 1,947, 934,484 -4,618,5 93,488, 1,413,5 205,489 4,729,1
of the prior year 794,78 846.6 ,599.29 35.07 947.26 67,635. ,001.44 54,283.
2017 Annual Report
8.00 2 94
II. Opening 2,084, 1,947, 1,413,5 4,729,1
934,484 -4,618,5 93,488, 205,489
balance of current 794,78 846.6 67,635. 54,283.
,599.29 35.07 947.26 ,001.44
year 8.00 2 94
III. Increase and
decrease of current 63,316 1,038,1 1,406,0 2,557,5
-20,469, 6,072,9 64,399,
year (represented ,056.0 54,981. 29,949. 04,172.
057.23 98.83 243.79
in “-” for 0 37 84
decrease)
(I) Total 1,620,5 1,816,7
-20,469, 216,603
comprehensive 82,427. 16,385.
057.23 ,015.41
incomes 47
(II) Capital input 63,316 1,038,1 1,077,2
-24,203,
and reduced by ,056.0 54,981. 67,265.
771.62
owners 0 37
1. Common shares 63,316 1,148,0 1,216,2
4,900,0
input by ,056.0 09,452. 25,508.
00.00
shareholders 0 24
2. Amount of
share-based 85,836, 15,147, 100,984
payment recorded 485.00 615.00 ,100.00
in owner's equity
-195,69 -239,94
-44,251,
3. Others 0,955.8 2,342.4
386.62
7
-214,55 -128,00 -336,47
(III) Profit 6,072,9
2,477.6 0,000.0 9,478.8
distribution 98.83
3 0 0
1. Appropriation 6,072,9 -6,072,9
of surplus reserves 98.83 98.83
2. Distribution to -208,47 -128,00 -336,47
owners (or 9,478.8 0,000.0 9,478.8
shareholder) 0 0 0
IV. Closing 2,148, 1,947, 1,972,6 2,819,5 7,286,6
-25,087, 99,561, 269,888
balance of current 110,84 846.6 39,580. 97,585. 58,456.
592.30 946.09 ,245.23
period 4.00 2 66 78
Amount of Prior Period
(Expressed in Renminbi yuan)
Item Prior period
2017 Annual Report
Owner’s equity attributable to parent company
Other equity
instruments
Minorit
Perpet Other Provisio Total
Less: Undistri y
Share Capital compre Special Surplus ns for owner's
ual interest
Prefer treasury buted
capital equity
capita Other reserves hensive reserves reserves general
s
red stocks profit
l s incomes risks
Share
securi
ties
1,042, 1,975,5 3,710,9
I. Closing balance 4,276,7 35,052, 506,077 147,570
397,39 51,294. 25,416.
of the prior year 26.62 527.43 ,201.90 ,271.88
4.00 76
II. Opening 1,042, 1,975,5 3,710,9
4,276,7 35,052, 506,077 147,570
balance of current 397,39 51,294. 25,416.
26.62 527.43 ,201.90 ,271.88
year 4.00 76
III. Increase and
decrease of current 1,042, 1,947, -1,041,0 1,018,2
-8,895,2 58,436, 907,490 57,918,
year (represented 397,39 846.6 66,695. 28,866.
61.69 419.83 ,434.04 729.56
in “-” for 4.00 2 47
decrease)
(I) Total 1,070,1 1,202,4
-8,895,2 141,157
comprehensive 62,324. 24,624.
61.69 ,562.36
incomes 07
(III) Capital input 1,947,
1,330,6 17,692, 20,970,
and reduced by 846.6
98.53 167.20 712.35
owners
1. Common shares
-259,66 2,030,1 1,770,4
input by
1.93 60.70 98.77
shareholders
2. Capital input by 1,947,
15,539, 17,486,
owners of other 846.6
105.81 952.43
equity instruments
1,590,3 122,900 1,713,2
3. Others
60.46 .69 61.15
-162,67 -100,93 -205,16
(III) Profit 58,436,
1,890.0 1,000.0 6,470.2
distribution 419.83
3 0
1. Appropriation 58,436, -58,436,
of surplus reserves 419.83 419.83
2017 Annual Report
2. Distribution to -104,23 -100,93 -205,16
owners (or 5,470.2 1,000.0 6,470.2
shareholder) 0 0
(IV) Internal 1,042, -1,042,3
carryover of 397,39 97,394.
owner's equity 4.00
1. Capitalized 1,042, -1,042,3
capital reserve (or 397,39 97,394.
stock capital) 4.00
IV. Closing 2,084, 1,947, 1,413,5 4,729,1
934,484 -4,618,5 93,488, 205,489
balance of current 794,78 846.6 67,635. 54,283.
,599.29 35.07 947.26 ,001.44
period 8.00 2 94
STATEMENT OF CHANGES IN OWNER'S EQUITY OF PARENT COMPANY
Current Amount
(Expressed in Renminbi yuan)
Current period
Other equity instruments
Perpetu Other
Less: Undistri Total
Item Share Capital comprehe Special Surplus
al
Preferre treasury buted owner's
capital capital Others reserves nsive reserves reserves
d Share stocks profit equity
securiti incomes
es
I. Closing balance 2,084,79 3,253,924 93,488,94 553,259 5,985,468
of the prior year 4,788.00 ,796.01 7.26 ,568.27 ,099.54
II. Opening
2,084,79 3,253,924 93,488,94 553,259 5,985,468
balance of current
4,788.00 ,796.01 7.26 ,568.27 ,099.54
year
III. Increase and
-153,82
decrease in current 63,316,0 1,148,009 6,072,998 1,063,576
2,489.3
year (represented 56.00 ,452.24 .83 ,017.76
in “-” for decrease)
(I) Total
60,729, 60,729,98
comprehensive
988.32 8.32
incomes
(III) Capital input
63,316,0 1,148,009 1,211,325
and reduced by
56.00 ,452.24 ,508.24
owners
1. Common shares 63,316,0 1,148,009 1,211,325
input by 56.00 ,452.24 ,508.24
2017 Annual Report
shareholders
-214,55
(III) Profit 6,072,998 -208,479,
2,477.6
distribution .83 478.80
1. Appropriation of 6,072,998 -6,072,9
surplus reserves .83 98.83
2. Distribution to -208,47
-208,479,
owners (or 9,478.8
478.80
shareholder)
IV. Closing
2,148,11 4,401,934 99,561,94 399,437 7,049,044
balance of current
0,844.00 ,248.25 6.09 ,078.96 ,117.30
period
Amount of Prior Period
(Expressed in Renminbi yuan)
Prior period
Other equity instruments
Perpetu Other
Less: Undistri Total
Item Share al Capital comprehe Special Surplus
Preferre treasury buted owner's
capital capital Others reserves nsive reserves reserves
d Share stocks profit equity
securiti incomes
es
I. Closing balance 1,042,39 4,296,322 35,052,52 131,567 5,505,339
of the prior year 7,394.00 ,190.01 7.43 ,260.04 ,371.48
II. Opening
1,042,39 4,296,322 35,052,52 131,567 5,505,339
balance of current
7,394.00 ,190.01 7.43 ,260.04 ,371.48
year
III. Increase and
decrease of current 1,042,39 -1,042,39 58,436,41 421,692 480,128,7
year (represented 7,394.00 7,394.00 9.83 ,308.23 28.06
in “-” for decrease)
(I) Total
584,364 584,364,1
comprehensive
,198.26 98.26
incomes
-162,67
(II) Profit 58,436,41 -104,235,
1,890.0
distribution 9.83 470.20
1. Appropriation of 58,436,41 -58,436,
surplus reserves 9.83 419.83
2017 Annual Report
2. Distribution to -104,23
-104,235,
owners (or 5,470.2
470.20
shareholder)
(III) Internal
1,042,39 -1,042,39
carryover of
7,394.00 7,394.00
owner's equity
1. Capitalized
1,042,39 -1,042,39
capital reserve (or
7,394.00 7,394.00
stock capital)
IV. Closing
2,084,79 3,253,924 93,488,94 553,259 5,985,468
balance of current
4,788.00 ,796.01 7.26 ,568.27 ,099.54
period
II. Notes to Items of Consolidated Financial Statements
1. Monetary funds
Unit: yuan
Item Closing balance Opening balance
Cash on hand 59,238.53 31,328.92
Bank deposit 1,573,326,143.60 809,039,113.18
Other monetary capital 7,525,549.85 10,142,564.02
Total 1,580,910,931.98 819,213,006.12
Including: total amount deposited
309,430,937.71 156,677,334.45
overseas
Additional descriptions
Other monetary capital refers to the balance of the company and its subsidiaries in the third-party payment platform and securities
investment accounts.
2. Notes receivable
(1) Presentation of notes receivable by categories
Unit: yuan
Item Closing balance Opening balance
Bank acceptance bill 55,340,000.00 94,638,841.21
Commercial acceptance bill 0.00 0.00
Total 55,340,000.00 94,638,841.21
2017 Annual Report
(2) Notes receivable that are endorsed or discounted by the company at the end of the period but are not
mature on the balance sheet date
Unit: yuan
Amount derecognized at the end of the Amount note derecognized at the end of
Item
period the period
Bank acceptance bill 52,112,168.54 0.00
Total 52,112,168.54 0.00
3. Accounts receivable
(1) Disclosure of accounts receivable by categories
Unit: yuan
Closing balance Opening balance
Provision for bad
Book balance Book balance Provision for bad debt
Category debt Book
Book value
Provision value Provision
Amount Ratio Amount Amount Ratio Amount
ratio ratio
Accounts receivable
which are grouped
according to credit 932,039, 47,130,5 884,909,0 858,763 43,117,58 815,645,75
99.73% 5.06% 99.74% 5.02%
risk features and for 535.47 22.70 12.77 ,336.37 1.69 4.68
which provision for
bad debt is made
Accounts receivable
whose single
amounts are small
2,493,58 2,493,58 2,220,4 2,220,496
but for which 0.27% 100.00% 0.00 0.26% 100.00% 0.00
9.80 9.80 96.62 .62
provision for bad
debt is separately
made
934,533, 49,624,1 884,909,0 860,983 45,338,07 815,645,75
Total 100.00% 5.31% 100.00% 5.27%
125.27 12.50 12.77 ,832.99 8.31 4.68
Accounts receivable whose single amounts are large and for which provision for bad debt is separately made at the end of the period:
□ Applicable √ Not applicable
In the group, accounts receivable for which provision for bade debt are made by aging-of-accounts-receivable method:
√ Applicable □ Not applicable
Unit: yuan
2017 Annual Report
Closing balance
Age
Accounts receivable Provision for bad debt Provision ratio
Accounts receivable due within one year
Subtotal of accounts receivable
927,992,733.55 46,399,636.66 5.00%
due within one year
1-2 years 2,664,303.53 266,430.36 10.00%
2-3 years 1,237,061.92 371,118.58 30.00%
Over 3 years 145,436.47 93,337.10 64.18%
3-4 years 76,706.96 38,353.49 50.00%
4-5 years 68,729.51 54,983.61 80.00%
Total 932,039,535.47 47,130,522.70 5.06%
Description of the basis of grouping:
Accounts receivable of the same age have similar credit risk characteristics.
In the group, the accounts receivable for which provision for bad debt is made by the percentage-of-balance method:
□ Applicable √ Not applicable
In the portfolios, accounts receivable for which provision for bad debt is made by other methods:
(2) Provision for bad debt made, recovered, or reversed in the current period
The provision for bad debt increases by RMB 420,382.55 for business combination not under common control in the current period;
the provision for bad debt in the amount of RMB 4,491,422.56 yuan is made in the current period; and RMB 0.00 yuan of the
provision for bad debt is recovered or reversed in the current period.
Among them, provisions for bad debt whose recovered or reversed amounts are large in the current period are:
Unit: yuan
Name of the entity Recovered or reversed amount Means of recovery
(3) Accounts receivable actually written off in the current period
Unit: yuan
Item Amount written off
Accounts receivable 625,770.92
Of them, significant accounts receivable written off include:
Unit: yuan
Amount arising from
Nature of the Write-off procedures
Name of the entity Amount written off Write-off reasons related-party
account receivable performed
transaction or not
Description of write-off of accounts receivable:
2017 Annual Report
(4) Top 5 accounts receivable in term of closing balance collected as per debtors
Proportion in the balance of
Debtor Book balance Provision for bad debt
accounts receivable
No. 1 184,054,231.93 19.69% 9,202,918.96
No. 2 173,966,306.59 18.62% 8,698,315.33
No.3 45,409,205.50 4.86% 2,270,460.28
No. 4 38,441,674.46 4.11% 1,922,083.72
No. 5 38,107,381.33 4.08% 1,905,369.07
Subtotal 479,978,799.81 51.36% 23,999,147.36
4. Advance payments
(1) Advance payments presented by ages
Unit: yuan
Closing balance Opening balance
Age
Amount Ratio Amount Ratio
Within 1 year 198,328,892.96 69.95% 226,593,287.73 77.61%
1-2 years 56,723,653.42 20.01% 62,704,684.15 21.48%
2-3 years 28,413,652.41 10.02% 2,628,587.26 0.90%
Over 3 years 50,590.50 0.02% 36,449.50 0.01%
Total 283,516,789.29 -- 291,963,008.64 --
Reasons for untimely settlement of advance payment whose age is over one year and whose amount is significant:
Entity Advance payment whose Reason for no carry-over
age is over one year
TOEI ANIMATION CO., LTD. 20,294,889.79 Advance payment for new product
design, and the game is not released.
Longzhang Animation (Shanghai) 14,485,783.74 Advance payment for entrusted R&D,
Co., Ltd. and the game is not released.
Tencent Technology (Shenzhen) 6,937,000.00 Prepaid royalty, and the game is not
Co., Ltd. released.
Chinese Gamer International 5,000,000.00 Advance payment for new product
Corporation design, and the game is not released.
LEDO (HK)CO.,LIMITED. 4,535,092.02 Advance payment for game sharing, and
the game is not releases.
Total 51,252,765.55
2017 Annual Report
(2) Advance payments whose closing balance is within top five and which are collected by payees of the
advance payments
Proportion in the balance of advance
Entity Book balance
payment
No. 1 26,031,189.79 9.16%
No. 2 20,670,730.34 7.27%
No. 3 14,485,783.74 5.10%
No. 4 11,920,123.43 4.19%
No. 5 10,050,128.69 3.54%
Total 83,157,955.99 29.26%
Additional descriptions:
Provision for bad debt increased by RMB 0.00 yuan for business combination not under common control in the current period.
Provision for bad debt in the amount of RMB 720,439.08 yuan was made in the current period, and the provision for bad debt in the
amount of RMB 11,934,738.90 yuan was written off in the current period.
5. Interests receivable
(1) Classification of interest receivable
Unit: yuan
Item Closing balance Opening balance
Time deposit 582,592.17 0.00
Total 582,592.17
6. Other receivables
(1) Disclosure of other receivables by categories
Unit: yuan
Closing balance Opening balance
Provision for bad
Book balance Book balance Provision for bad debt
Category debt Book
Book value
Provision value Provision
Amount Ratio Amount Amount Ratio Amount
ratio ratio
Other receivables
411,171, 23,059,3 388,111,9 131,367 8,705,376 122,662,61
which are grouped 100.00% 5.61% 100.00% 6.63%
304.86 85.01 19.85 ,994.36 .34 8.02
according to credit
2017 Annual Report
risk features and for
which provision for
bad debt is made
411,171, 23,059,3 388,111,9 131,367 8,705,376 122,662,61
Total 100.00% 5.61% 100.00% 6.63%
304.86 85.01 19.85 ,994.36 .34 8.02
Other receivables whose single amounts are significant and for which provision for bad debt is separately made at the end of the
period:
□ Applicable √ Not applicable
In the portfolio, other receivables for which provision for bade debt is made by aging-of-other-receivables method:
√ Applicable □ Not applicable
Unit: yuan
Closing balance
Age
Other receivables Provision for bad debt Provision ratio
Accounts receivable due within one year
Subtotal of accounts receivable
396,403,847.19 19,820,192.36 5.00%
due within one year
1-2 years 11,706,554.31 1,170,655.44 10.00%
2-3 years 359,145.00 107,743.50 30.00%
Over 3 years 2,701,758.36 1,960,793.71 72.57%
3-4 years 670,709.95 335,354.98 50.00%
4-5 years 2,028,048.41 1,622,438.73 80.00%
Over 5 years 3,000.00 3,000.00 100.00%
Total 411,171,304.86 23,059,385.01 5.61%
Description of the basis of grouping:
Accounts receivable of the same age have similar credit risk characteristics.
In the portfolio, other receivables for which provision for bad debt is made by the percentage-of-balance method:
□ Applicable √ Not applicable
In the portfolios, other receivables for which provision for bad debt is made by other methods:
□ Applicable √ Not applicable
(2) Provisions for bad debt made, recovered, or reversed in the current period
The provision for bad debt increases by RMB 483.908.03 yuan for business combination not under common control in the current
period; the provision for bad debt in the amount of RMB 13,871,106.48 yuan is made in the current period; and RMB 0.00 yuan of
the provision for bad debt is recovered or reversed in the current period.
Among them, provisions for bad debt whose recovered or reversed amounts are of significance in the current period are:
Unit: yuan
2017 Annual Report
Name of the entity Recovered or reversed amount Means of recovery
(3) Other receivables actually written off in the current period
Unit: yuan
Item Amount written off
Other receivables 1,005.84
Of them, significant other receivables written off include:
Unit: yuan
Amount arising from
Nature of other Write-off procedures
Name of the entity Amount written off Write-off reasons related-party
receivables performed
transaction or not
Description of write-off of other receivables:
(4) Classification of other receivables by nature
Unit: yuan
Nature Closing book balance Opening book balance
Deposit, earnest money, and reserve 45,432,385.25 32,683,728.43
Investment in films 20,000,000.00
Intercompany lending 267,459,561.64 1,500,000.00
Receivables from disposal of fixed assets 7,700,000.00
Investment margin 65,000,000.00
Receivable sharing and royalty 33,849,014.57
Equity-related receivables 57,768,000.00
Others 6,662,343.40 4,484,265.93
Total 411,171,304.86 131,367,994.36
(5) Top 5 other receivables in term of closing balance collected as per debtors
Unit: yuan
Proportion in total Closing balance of
Entity Nature Closing balance Age closing balance of provision for bad
other receivables debt
Shenzhen Zhonghui
Intercompany
Television Culture 266,543,561.64 Within 1 year 64.83% 13,327,178.08
lending
Communication Co.,
2017 Annual Report
Ltd.
Zhongnan Red
Receivables from
Culture Group Co., 42,768,000.00 Within 1 year 10.40% 2,138,400.00
equity disposal
Ltd.
Tibet Yifu Deposit, earnest
14,200,000.00 Within 1 year 3.45% 710,000.00
Advertising Co., Ltd. money, and reserve
Shanghai Quwei
Accounts to be
Network Technology 12,792,458.57 Within 1 year 3.11% 639,622.93
recovered
Co., Ltd.
Shanghai Fizeo Deposit, earnest
10,000,000.00 1-2 years 2.43% 1,000,000.00
Advertising Co., Ltd. money, and reserve
Total -- 346,304,020.21 -- 84.22% 17,815,201.01
7. Inventory
Shall the company comply with the disclosure requirements for the real estate industry?
No
(1) Classification of inventory
Unit: yuan
Closing balance Opening balance
Item Falling price Falling price
Book balance Book value Book balance Book value
reserve reserve
Raw materials 54,932,578.33 54,932,578.33 22,718,587.77 22,718,587.77
Products
3,074,467.07 3,074,467.07 1,289,419.12 1,289,419.12
in-progress
Goods on hand 45,497,455.50 1,676,415.59 43,821,039.91 49,805,352.24 2,331,433.59 47,473,918.65
Total 103,504,500.90 1,676,415.59 101,828,085.31 73,813,359.13 2,331,433.59 71,481,925.54
Shall the company comply with the disclosure requirements of the Guidelines of Shenzhen Stock Exchange for Industrial Information
Disclosure No. 4 – Listed Company Engaged in Seeds and Planting Businesses?
No
(2) Inventory falling price reserves
Unit: yuan
Increase in the current period Decrease in the current period
Item Opening balance Closing balance
Withdrawal Others Transfer or Others
2017 Annual Report
write-off
Goods on hand 2,331,433.59 66,962.78 721,980.78 1,676,415.59
Total 2,331,433.59 66,962.78 721,980.78 1,676,415.59
Reason for inventory falling-price reserve
Item Basis for inventory falling-price reserve
reversed or written off in the current period
Goods on hand Realizable net value is lower than the book value. For the inventory sold, inventory falling-price
reserve is written off.
(3) Description of inclusion of the amount of borrowing costs capitalized in closing balance of inventory
No
(4) Completed and unaccounted assets formed from construction contract at the end of the period
Unit: yuan
Item amount
Additional descriptions:
8. Held-for-sale Assets
Unit: yuan
Book value at the end of
Item Fair value Expected disposal costs Expected disposal time
the period
Long-term equity
1,313,076.61 4,000,000.00 0.00 December 31, 2018
investment to be sold
Available-for-sale
73,753,637.73 86,778,813.76 0.00 December 31, 2018
financial assets to be sold
Total 75,066,714.34 90,778,813.76 0.00 --
Additional descriptions:
The said assets are expected to be sold in the following 12 months.
9. Other current assets
Unit: yuan
Item Closing balance Opening balance
Wealth investment product of bank 110,000,000.00 170,000,000.00
Remaining VAT credit and VAT to be 76,813,938.41 60,590,757.42
2017 Annual Report
credited
VAT prepaid 4,010,401.52 4,357,504.47
Performance compensation receivable 401,364,984.06
Total 592,189,323.99 234,948,261.89
Additional descriptions:
The performance compensation receivable means the amount receivable by the company according to the profit compensation
agreement entered into by the company and the original shareholders, Yang Dongmai, Chen Wei, and Zhangshu Wangzhong
Investment Management Center (Limited Partnership) when the company acquired 68.43% of the share in Shanghai Mokun in the
current period. According to the calculation method agreed in the profit compensation agreement and in light with the audited net
profits attributable to shareholders of parent company achieved by Shanghai Mokun in 2016 (the performance undertaking was
fulfilled) and 2017, net of non-recurring profits and losses, the above three original shareholders of Shanghai Mokun shall
compensate the company RMB 401,364,984.06 yuan in 2017.
10. Available-for-sale financial assets
(1) Details of available-for-sale financial assets
Unit: yuan
Closing balance Opening balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Available-for-sale equity
894,281,586.86 11,800,000.00 882,481,586.86 796,868,643.78 11,800,000.00 785,068,643.78
instrument:
Measured at fair
57,541,101.92 57,541,101.92 5,445,472.73 5,445,472.73
value
Measured at cost 836,740,484.94 11,800,000.00 824,940,484.94 791,423,171.05 11,800,000.00 779,623,171.05
Total 894,281,586.86 11,800,000.00 882,481,586.86 796,868,643.78 11,800,000.00 785,068,643.78
(2) Available-for-sale financial assets measured at fair value at the end of the period
Unit: yuan
Classification of
Available-for-sale equity Available-for-sale debt
available-for-sale Total
instrument instrument
financial assets
Cost of equity instrument
/ amortized cost of debt 81,100,692.72 81,100,692.72
instrument
Fair value 57,541,101.92 57,541,101.92
2017 Annual Report
Aggregate variation in
fair value recorded in
-23,559,590.80 -23,559,590.80
other comprehensive
incomes
(3) Available-for-sale financial assets measured at costs at the end of the period
Unit: yuan
Book balance Provision for impairment Shareholdi Cash
Decrease Decrease ng ratio in dividend
Invested Increase in Increase in
in the in the the in the
entity Opening the current Closing Opening the current Closing
current current invested current
period period
period period enterprise period
Shenzhen
Mokylin 60,000,000 60,000,000 1,582,261.
1.95%
Technolog .00 .00
y Co., Ltd.
Tianjin
Purple
Dragon
Singular
60,000,000 34,735,789 25,264,211
Point 2.00%
.00 .00 .00
Interactive
Entertainm
ent Co.,
Ltd.
Hangzhou
Southern 69,996,897 69,996,897
Pictures .11 .11
Co., Ltd.
Chengdu
Jule
100,000.00 100,000.00 100,000.00 100,000.00 8.00%
Technolog
y Co., Ltd.
Beijing
Jizhi
6,000,000. 6,000,000. 6,000,000. 6,000,000.
Xunyou 10.00%
00 00 00
Technolog
y Co., Ltd.
Shenzhen 50,000,000 50,000,000 8.89%
2017 Annual Report
QiFun .00 .00
Network
Corp. Ltd.
Guangzho
u
4,000,000. 4,000,000. 4,000,000. 4,000,000.
Joyegame 15.00%
00 00 00
Software
Co., Ltd.
Chengdu
Pengwan 5,000,000. 5,000,000.
Technolog 00
y Co., Ltd.
Suzhou
Youge
Hulian
Venture
5,000,000. 5,000,000.
Investment 2.98%
00
Center
(Limited
Partnershi
p)
Chengdu
91ACT
8,000,000. 8,000,000.
Technolog
00
y
Company
Guangzho
u Xiaoyi
Network 200,000.00 200,000.00 200,000.00 200,000.00 10.00%
Technolog
y Co., Ltd.
Xiamen
Intensive
8,000,000. 8,000,000.
Joint 10.00%
00
Technolog
y Co., Ltd.
Beijing
Chinese
50,000,000 50,000,000
Anci 16.67%
.00 .00
Equity
Investment
2017 Annual Report
Fund
Manageme
nt Center
(Limited
Partnershi
p)
Hunan
Tianlei
1,500,000. 1,500,000. 1,500,000. 1,500,000.
Network 10.00%
00 00 00
Technolog
y Co., Ltd.
Shanghai
Mango
Creative
240,000,00 240,000,00 8,769,681.
Equity 7.78%
0.00 0.00
Investment
Fund
(L.P.)
Beijing
Colorful
5,000,000. 5,000,000.
Game 8.54%
00
Technolog
y Co., Ltd.
Jiangsu
Mingtong
Informatio 50,000,000 50,000,000
5.00%
n .00 .00
Technolog
y Co., Ltd.
Zhongshen
g Chunqiu
Film and
9,000,000. 9,000,000.
TV 5.00%
00
Culture
(Beijing)
Co., Ltd.
Shanghai
Mango
42,000,000 42,000,000
Interactive 7.00%
.00 .00
Entertainm
ent
2017 Annual Report
Technolog
y Co., Ltd.
Archiact
20,587,940 6,858,800. 6,858,800. 20,587,940
Interactive 10.00%
.96 00 00 .96
Ltd.
Tianjin
Digital
Color 80,000,000 80,000,000
1.55%
Interactive .00 .00
Technolog
y Co., Ltd.
Tianshe
(Shanghai)
10,000,000 10,000,000
Culture & 18.30%
.00 .00
Media Co.,
Ltd.
Shanghai
Quwei
7,000,000. 7,000,000.
Network 4.75%
00
Technolog
y Co., Ltd.
Antic
gameworl 38,332.98 38,332.98 5.00%
d co.,ltd
X.D.
100,050,00 100,050,00
Network 2.38%
0.00 0.00
Co., Ltd.
Najia
Technolog
40,000,000 40,000,000
y 7.20%
.00 .00
(Shenzhen
) Co., Ltd.
Shenzhen
Zen-game 18,000,000 18,000,000
2.78%
Technolog .00 .00
y Co., Ltd.
Haojiahuo
Media 5,000,000. 5,000,000.
20.00%
Fund I 00
Partners
2017 Annual Report
(Limited
Partnershi
p)
Shenzhen
Chengwan
3,000,000. 3,000,000. 3,000,000. 3,000,000.
Network
00 00 00
Technolog
y Co., Ltd.
791,423,17 172,908,80 127,591,48 836,740,48 11,800,000 3,000,000. 3,000,000. 11,800,000 10,351,943
Total --
1.05 0.00 6.11 4.94 .00 00 00 .00 .58
(4) Variation in impairment of available-for-sale financial assets in the reporting period
Unit: yuan
Classification of
Available-for-sale equity Available-for-sale debt
available-for-sale Total
instrument instrument
financial assets
Opening balance of the
11,800,000.00 11,800,000.00
provision for impairment
Withdrawal in current
3,000,000.00 3,000,000.00
period
Decrease in the current
3,000,000.00 3,000,000.00
period
Closing balance of the
11,800,000.00 11,800,000.00
provision for impairment
11. Long-term equity investment
Unit: yuan
Increase/decrease in the current period
Gains or Closing
losses on balance
Adjustme
Additiona investmen Issuing Provision of
Invested Opening Negative nt to other Variation Closing
l t cash for provision
entity balance investmen comprehe in other Others balance
investmen recognize dividends impairme for
t nsive incomes
t d under or profits nt impairme
incomes
the equity nt
law
I. Cooperative enterprises
2017 Annual Report
II. Associated enterprises
Yangzhou
Fuhai
Sanqi
Internet 50,000,00 50,000,00
Culture 0.00 0.00
Investme
nt Center
(L.P.)
Chengdu
Mixiusi
2,205,871
Technolo
.87
gy Co.,
Ltd.
Shenzhen
EONE
Network 4,338,029 1,192,297 5,530,326
Technolo .22 .18 .40
gy Co.,
Ltd.
Shanghai
Aurora
Network 24,850,47 25,143,47 293,000.8
0.00
Technolo 3.57 4.43
gy Co.,
Ltd.
Shanghai
Tingting
Network 7,870,181 -1,151,77 6,718,402 6,718,402
Technolo .20 8.70 .50 .50
gy Co.,
Ltd.
Shanghai
Aoting
network 2,978,876
Technolo .18
gy Co.,
Ltd.
Shanghai
2,661,827 -1,808,70 1,609,702 2,462,825
Menggon
.62 4.17 .28 .73
gfang
2017 Annual Report
Network
Technolo
gy Co.,
Ltd.
Beijing
Zhuayou
Interactiv
e 4,951,569 -76,654.7 4,874,914 4,874,914
Network .26 1 .55 .55
Technolo
gy Co.,
Ltd.
Wuhan
Yihua
Kaitian
Culture 5,107,618 -1,045,75 3,081,218 -1,313,07 5,830,002
and .78 7.92 .74 6.61 .99
Communi
cation
Co., Ltd.
Longzhan
g
Network
Technolo 5,979,810 -257,493. 5,722,316
gy .31 62 .69
(Shanghai
) Co.,
Ltd.
Shenzhen
Zhanlong
Interactiv
e
9,483,047 -2,169,47 7,313,570
Entertain
.02 6.51 .51
ment
Technolo
gy Co.,
Ltd.
Huai’an
Sanqi 101,280,0 397,840.8 101,677,8
Jianyi 00.00 0 40.80
Pan-Inves
2017 Annual Report
tment
Managem
ent
Center
(L.P.)
Xiamen
Yiqi
Investme
1,875,924 249,334.0 2,125,258
nt
.67 7 .74
Managem
ent Co.,
Ltd.
Mango
(Xiamen)
Incubatio
n and
40,000,00 -1,353,23 38,646,76
Equity
0.00 7.79 2.21
Investme
nt Fund
Partnershi
p (L.P.)
Shanghai
Jueli
31,828,20 -2,098,33 29,729,86
Culture &
7.79 7.87 9.92
Media
Co., Ltd.
Shanghai
Zheyuan
84,456,68 85,000,00 543,312.0
Culture & 0.00
7.93 0.00
Media
Co., Ltd.
Chengdu
91ACT
11,500,00 1,001,260 11,000,00 23,501,26
Technolo
0.00 .32 0.00 0.32
gy
Company
Chengdu
Modu
12,000,00 -1,030,02 10,969,97
Technolo
0.00 5.53 4.47
gy Co.,
Ltd.
2017 Annual Report
Chengdu
Mofei
12,000,00 -1,037,50 10,962,49
Technolo
0.00 1.22 8.78
gy Co.,
Ltd.
Shanghai
Fuhai
Sanqi
Investme 3,000,000 3,000,419
419.01
nt .00 .01
Managem
ent Co.,
Ltd.
Shanghai
11wan
Network 23,500,00 -1,633,14 21,866,85
Technolo 0.00 0.77 9.23
gy Co.,
Ltd.
Penta
980,182.9 -467,875. 530,972.6
Game 18,665.48
4 79
Co., Ltd.
Chengdu
Pengwan
33,021,82 2,076,426 22,003,82 57,102,07
Technolo
3.48 .17 4.00 3.65
gy Co.,
Ltd.
Shanghai 460,904,2 458,141,0 -2,763,23
0.00
Mokun 79.49 44.54 4.95
Longzhan
g
Animatio
n
(Shanghai
) Co.,
Ltd.
786,567,8 145,021,8 568,284,5 -11,139,3 4,690,921 11,593,31 31,709,41 376,972,8 16,778,06
Subtotal
39.80 23.48 18.97 29.07 .02 7.05 2.87 32.08 5.10
786,567,8 145,021,8 568,284,5 -11,139,3 4,690,921 11,593,31 31,709,41 376,972,8 16,778,06
Total
39.80 23.48 18.97 29.07 .02 7.05 2.87 32.08 5.10
2017 Annual Report
Additional descriptions
(1) When the company acquired the remaining 68.43% of Shanghai Mokun this year, it controlled Shanghai Mokun. Therefore, it is
deemed that the investment originally accounted by equity method was disposed according to its fair value.
(2) The company increased its investment in Chengdu Pengwan Technology Co., Ltd. and Chengdu 91ACT Technology Co., Ltd.
this year and thus had significant influence on them. The investment originally recorded in available-for-sale financial assets were
re-measured and carried over to long-term equity investment accounted by equity method.
(3) As of the end of this reporting period, the excess deficit unrecognized by Longzhang Animation (Shanghai) Co., Ltd. amounted to
RMB 5,201,916.08 yuan.
12. Fixed Assets
(1) Details of fixed assets
Unit: yuan
Housing and Machinery and Electronics and
Item Means of transport Total
building equipment office supplies
I. Original book
value
1.Opening balance 135,597,500.07 299,583,305.52 15,091,603.97 95,169,527.99 545,441,937.55
2.Increase in
30,569,403.66 40,566,606.54 5,143,156.31 27,550,787.52 103,829,954.03
current period
(1) Purchase 24,551,151.32 1,224,917.85 21,445,588.39 47,221,657.56
(2) Construction in
30,577,453.66 16,015,455.22 46,592,908.88
progress
(3) Increase of
business 3,918,238.46 6,097,149.13 10,015,387.59
combination
3.Decrease in
1,558,469.66 18,999,213.43 2,195,248.91 2,686,244.15 25,439,176.15
current period
(1) Disposal or
1,558,469.66 18,999,213.43 2,195,248.91 2,686,244.15 25,439,176.15
scrap
4.Ending balance 164,616,484.07 321,150,698.63 18,039,511.37 120,026,021.36 623,832,715.43
II Accumulated
depreciation
1. Opening
35,534,828.04 162,506,051.43 8,817,796.12 67,091,882.46 273,950,558.05
balance
2017 Annual Report
2.Increase in
5,002,917.82 28,634,373.59 2,815,578.65 22,434,579.26 58,887,449.32
current period
(1) Provision 5,002,917.82 28,634,373.59 2,430,373.57 18,846,246.22 54,913,911.20
(2) Increase of
business 385,205.08 3,588,333.04 3,973,538.12
combination
3.Decrease in
895,265.07 13,567,664.27 2,085,486.45 2,140,985.52 18,689,401.31
current period
(1) disposal or
895,265.07 13,567,664.27 2,085,486.45 2,140,985.52 18,689,401.31
scrap
4.Ending balance 39,642,480.79 177,572,760.75 9,547,888.32 87,385,476.20 314,148,606.06
III. Provision for
impairment
1.Opening balance
2.Increase in
17,288,222.20 17,288,222.20
current period
(1) Provision 17,288,222.20 17,288,222.20
3. Decrease in
current period
(1) Disposal or
scrap
4.Ending balance 17,288,222.20 17,288,222.20
IV. Book value
1.Ending book
124,974,003.28 126,289,715.68 8,491,623.05 32,640,545.16 292,395,887.17
value
2.Opening book
100,062,672.03 137,077,254.09 6,273,807.85 28,077,645.53 271,491,379.50
value
13. Construction in Progress
(1) Details of construction in progress
Unit: yuan
Item Closing balance Opening balance
2017 Annual Report
Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Second-phase
51,102,382.68 429,504.26 50,672,878.42 31,078,391.88 31,078,391.88
equipment project
Total 51,102,382.68 429,504.26 50,672,878.42 31,078,391.88 31,078,391.88
(2) Details of current variation in important construction in progress
Unit: yuan
Includin
Proporti g:
Transfer- Accumul Capitaliz
on of amount
ins of Other ated ation
Increase accumul of
fixed decrease amount ratio of
Opening in Closing ated Project capitaliz Source
Project Budget assets in s in the of interest
balance current balance project progress ed of fund
the current capitaliz in the
period investme interests
current period ed current
nt in the in the
period interests period
budget current
period
Second-
phase
31,078,3 66,616,8 46,592,9 51,102,3 Others
equipme
91.88 99.68 08.88 82.68
nt
project
Others
31,078,3 66,616,8 46,592,9 51,102,3
Total -- -- --
91.88 99.68 08.88 82.68
(3) Provision for impairment of construction in progress in the current period
Unit: yuan
Item Provision withdrawn in current period Reason for withdrawal of provision
Second-phase equipment project 429,504.26 Realizable net value less than book value
Total 429,504.26 --
Additional descriptions
2017 Annual Report
14. Intangible assets
(1) Details of intangible assets
Unit: yuan
Land use Unpatented Domain Game Office
Item Patent Edition fee Trademark Total
right technology name copyright software
I. Original
book value
1.Opening 26,840,827. 12,778,182. 87,914,583. 1,014,267.7 7,827,547.7 137,075,932
345,593.94 354,930.00
balance 98 04 37 1 8 .82
2.Increase
14,374,586. 5,961,929.9 20,506,938.
in current 87,631.79 82,790.39
06 3
period
(1) 5,949,549.9 6,451,472.1
87,631.79 331,500.00 82,790.39
Purchase 3
(2)
7,663,076.0 7,663,076.0
Internal
6
R&D
(3)
Increase of 6,380,010.0 6,392,390.0
12,380.00
business 0
combination
3.Decrease
3,288.01 3,288.01
in current
period
(1)
3,288.01 3,288.01
Disposal
4.Ending 26,840,827. 12,778,182. 102,289,169 1,093,770.0 13,789,477. 157,579,582
433,225.73 354,930.00
balance 98 04 .43 9 71 .98
II.
Accumulate
d
amortizatio
n
1.Opening 4,499,882.0 60,351.11 353,680.11 1,757,000.1 50,241,477. 323,060.28 5,128,082.5 62,363,533.
2017 Annual Report
balance 3 5 41 1
2.Increase
15,492,058. 2,294,594.9 19,092,972.
in current 539,494.56 27,952.15 1,249.89 638,909.16 98,712.96
99 3
period
(1) 15,492,058. 2,284,690.9 19,083,068.
539,494.56 27,952.15 1,249.89 638,909.16 98,712.96
Provision 99 9
(2)
Increase of
9,903.94 9,903.94
business
combination
3.Decrease
in current 137.00 137.00
period
(1)
137.00 137.00
Disposal
4.Ending 5,039,376.5 2,395,909.3 65,733,536. 7,422,677.4 81,456,369.
88,303.26 354,930.00 421,636.24
balance 9 1 40 4
III.
Provision
for
impairment
1. Opening 30,440,779. 30,847,743.
406,963.12
balance 99
2. Increase
in current 377,358.34 377,358.34
period
(1)
377,358.34 377,358.34
Provision
3. Ending 30,440,779. 31,225,101.
784,321.46
balance 99
IV. Book
value
1. Closing 21,801,451. 10,382,272. 6,114,853.0 5,582,478.8 44,898,112.
344,922.47 672,133.85
book value 39 73 4 1
2.Opening 22,340,945. 11,021,181. 7,232,325.9 2,292,502.1 43,864,656.
285,242.83 1,249.89 691,207.43
book value 95 89 7 5
2017 Annual Report
At the end of the period, the ratio of the intangible assets formed through internal research and development to the balance of
intangible assets is 16.91%.
15. Development expenditures
Unit: yuan
Increase in current period Decrease in current period
Transferred i
Opening Internal deve Recognized Ending
Item nto current
balance lopment exp Others as intangible balance
profits or lo
enditure assets
sses
I 6,137,026.43 762,426.06 0.00 6,899,452.49
II 763,623.57 763,623.57
III 3,951,558.23 3,951,558.23
IV 1,788,455.40 118,714.20 1,788,455.40 118,714.20
Total 8,689,105.40 4,832,698.49 7,663,076.06 1,788,455.40 4,070,272.43
Additional descriptions
16. Goodwill
(1) Original book value of goodwill
Unit: yuan
Name of the Increase in current period Decrease in current period
invested entity or
Opening balance Formed by busin Ending balance
goodwill Disposal
ess combination
formation
Shanghai 37
Interactive 1,578,065,048.53 1,578,065,048.53
Entertainment
ENP Games 1,911,913.34 1,911,913.34
Chengdu
263,737.88 263,737.88
Shengge
Shanghai Mokun 1,259,793,585.93 1,259,793,585.93
Total 1,580,240,699.75 1,259,793,585.93 2,840,034,285.68
(2) Provision for impairment of goodwill
Unit: yuan
2017 Annual Report
Name of the Increase in current period Decrease in current period
invested entity or
Opening balance Ending balance
goodwill Provision Disposal
formation
Chengdu
263,737.88 263,737.88
Shengge
Shanghai Mokun 299,457,551.04 299,457,551.04
Total 263,737.88 299,457,551.04 299,721,288.92
The company shall specify the goodwill impairment test procedure, parameters, and recognition method of impairment loss on
goodwill:
At the end of 2017, the book value of the goodwill formed by the aforesaid business combination has been allocated to the relevant asset
group in a reasonable manner from the date of purchase, and the relevant asset group containing goodwill has been tested for
impairment. The Company calculates the recoverable amount of the goodwill formed by the business combination in accordance with
the present value of the estimated future cash flow, and determines the above-mentioned key data based on historical experience and
market development forecast.
The Company will calculate the future recoverable amount of Shanghai Mokun Digital Technology Co., Ltd. based on the present value
of the estimated future cash flow, and determine the above-mentioned key data based on historical experience and market development
forecast. With reference to Evaluation Report (Huaxin Zhonghe Ping Bao Zi No. 1050) issued by Huaxin Zhonghe Assets Evaluation
Co., Ltd., as the sum of the closing balance of goodwill and the fair value of identifiable net assets is higher than the appraised value of
all shareholders' equity, the positive difference equals to the provision for impairment of goodwill made at the end of 2017.
Except for the goodwill of Shanghai Mokun Digital Technology Co., Ltd., no impairment was found in other goodwill of the
company upon test during the year.
Additional descriptions
17. Long-term deferred expenses
Unit: yuan
Increase in the Amortized amount
Item Opening balance Other decreases Closing balance
current period in the current period
Copyright royalty 95,486,474.35 67,226,410.32 82,738,231.09 5,153,546.92 74,821,106.66
Trademark
212,758.37 112,920.18 99,838.19
registration fee
Building renovation
6,267,424.64 1,777,105.52 3,162,385.42 4,882,144.74
cost
Total 101,966,657.36 69,003,515.84 86,013,536.69 5,153,546.92 79,803,089.59
Additional descriptions
2017 Annual Report
18. Deferred income tax assets / deferred income tax liabilities
(1) Deferred income tax assets without offset
Unit: yuan
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provisions for
36,779,247.42 7,231,974.30 24,316,216.59 5,325,124.20
impairment of assets
Deductible loss 3,304,795.02 826,198.75
Changes in fair value of
available-for-sale 23,559,590.80 2,091,835.89
financial assets
Accrued compensation
3,756,740.62 338,106.66
for performance
Government subsidies
included in deferred 8,817,182.16 1,322,577.32 4,172,163.95 1,043,040.99
income
Total 76,217,556.02 11,810,692.92 28,488,380.54 6,368,165.19
(2) Details of unrecognized deferred income tax assets
Unit: yuan
Item Closing balance Opening balance
Deductible temporary difference 114,160,721.60
Deducible losses 186,240,044.70 115,102,956.23
Total 300,400,766.30 115,102,956.23
(3) Deductible losses on unrecognized deferred tax assets due in the following years
Unit: yuan
Year Closing balance Opening balance Remarks
2019 5,191,066.43 10,025,154.51
2020 29,786,482.41 30,548,602.85
2021 53,635,799.65 74,529,198.87
2017 Annual Report
Years after 2021 97,626,696.21
Total 186,240,044.70 115,102,956.23 --
Additional descriptions:
19. Other non-current assets
Unit: yuan
Item Closing balance Opening balance
Prepayment for engineering equipment 68,399,174.14 22,090,794.35
Prepayment for equity 50,000,000.00 298,500,000.00
Prepayment for housing purchase 795,864,793.02
Total 914,263,967.16 320,590,794.35
Additional descriptions:
20. Short-term loans
(1) Classification of short-term loans
Unit: yuan
Item Closing balance Opening balance
Guaranteed borrowings 372,054,500.00 372,878,500.00
Total 372,054,500.00 372,878,500.00
Description of the classification of short-term loans:
The company classifies short-term loans according to the borrowing conditions for short-term loans.
21. Notes payable
Unit: yuan
Type Closing balance Opening balance
Banker’s acceptance bill 17,414,395.42
Total 17,414,395.42
The total amount of matured notes payable unpaid at the end of the current period is 0.00.
22. Accounts payable
(1) Presentation of accounts payable
Unit: yuan
2017 Annual Report
Item Closing balance Opening balance
Amount payable for materials 78,742,772.74 131,694,803.22
Game sharing payable 406,735,668.55 387,526,162.21
Internet promotion and traffic costs
219,833,849.91 167,461,532.64
payable
Other costs payable 36,480,682.13 14,030,619.93
Total 741,792,973.33 700,713,118.00
(2) Significant accounts payable whose age is over one year
Unit: yuan
Item Closing balance Reason for no payment or carry-down
Chengdu Molong Technology Co., Ltd 16,334,639.34 Settlement method is in negotiation
Shanghai Lingyao Network Technology
3,472,410.00 Settlement method is in negotiation
Co., Ltd
Total 19,807,049.34 --
Additional descriptions:
23. Payments received in advance
(1) Presentation of payments received in advance
Unit: yuan
Item Closing balance Opening balance
Payment for goods received in advance 2,085,495.91 740,494.12
Game top-up received in advance 81,795,279.69 57,497,008.43
Sharing received in advance 1,005,959.24 1,442,444.40
Total 84,886,734.84 59,679,946.95
24. Payroll payable
(1) Presentation of payroll payable
Unit: yuan
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
I. Short-term
81,585,709.27 586,309,688.88 555,086,412.23 112,808,985.92
compensation
2017 Annual Report
II. Post-employment
benefit – defined 243,576.53 36,417,719.81 36,064,510.76 596,785.58
contribution plan
III. Dismissal welfare 114,000.00 1,543,676.36 1,583,426.36 74,250.00
Total 81,943,285.80 624,271,085.05 592,734,349.35 113,480,021.50
(2) Presentation of short-term compensation
Unit: yuan
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Salary, bonus,
78,674,091.95 516,656,964.28 487,209,133.55 108,121,922.68
allowance, and subsidy
2. Employee welfare
5,763.16 29,813,468.13 29,819,231.29
expenses
3. Social insurance
169,523.89 18,479,368.51 18,306,127.47 342,764.93
premiums
Including: Medical
150,195.68 15,989,060.75 15,839,817.19 299,439.24
insurance premium
Work-related injury
6,437.23 538,528.07 538,732.12 6,233.18
insurance premium
Maternity insurance
12,890.98 1,664,893.84 1,649,188.85 28,595.97
premium
Major disease insurance
286,885.85 278,389.31 8,496.54
premium
4. Housing provident
98,826.20 15,918,716.88 15,793,675.08 223,868.00
fund
5. Labor-union
expenditure and 2,637,504.07 5,441,171.08 3,958,244.84 4,120,430.31
personnel education fund
Total 81,585,709.27 586,309,688.88 555,086,412.23 112,808,985.92
(3) Presentation of defined contribution plan
Unit: yuan
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Basic endowment 226,973.86 35,237,516.94 34,882,248.45 582,242.35
2017 Annual Report
insurance
2. Unemployment
16,602.67 1,180,202.87 1,182,262.31 14,543.23
insurance premium
Total 243,576.53 36,417,719.81 36,064,510.76 596,785.58
Additional descriptions:
25. Taxes payable
Unit: yuan
Item Closing balance Opening balance
Value-added tax 22,778,212.15 20,166,324.01
Corporate income tax 31,249,164.08 26,758,616.95
Individual income tax 1,078,087.62 527,592.44
Urban construction and maintenance tax 929,920.78 2,540,913.79
Education surcharges 497,953.99 1,250,581.03
Local education surcharges 331,969.34 804,142.95
Property tax 454,278.16 455,002.54
Land use tax 253,945.28 253,945.34
Water conservancy fund 182,693.41 195,487.74
Stamp duty 485,653.80 371,327.30
River management fee 39,257.62 614.80
Embankment protection fee 179.24 179.23
Foreign income tax 402,862.35
Cultural construction costs 70,654.22
Total 58,281,315.47 53,798,244.69
Additional descriptions:
26. Interests payable
Unit: yuan
Item Closing balance Opening balance
Interest on the short-term loan 390,533.38 411,567.28
Total 390,533.38 411,567.28
Information of important overdue interest:
Unit: yuan
2017 Annual Report
Borrowing entity Overdue amount Overdue reason
Additional descriptions:
27. Other payables
(1) Other payables presented by natures of the accounts
Unit: yuan
Item Closing balance Opening balance
Deposit and earnest money 7,650,158.00 1,650,000.00
Temporary collection receivable 2,000,000.00 499,955.79
Freight and storage fees 9,825,807.62 10,634,324.38
Investment payable 35,448,685.81 276,200,000.00
Others 6,647,368.83 4,182,355.01
Total 61,572,020.26 293,166,635.18
28. Non-current liabilities due within one year
Unit: yuan
Item Closing balance Opening balance
Long-term loans due within one year 28,117,893.57
Total 28,117,893.57
Additional descriptions:
Non-current liabilities that are due within one year are corporate mortgage loans that are used by the company’s subsidiaries to
purchase office space within one year.
29. Other current liabilities
Unit: yuan
Item Closing balance Opening balance
Temporary assessment of output tax 53,981,510.57 44,259,562.28
Performance compensation payable 3,756,740.62
Total 57,738,251.19 44,259,562.28
Increase or decrease in short-term bonds payable:
Bond Nomina Issuanc Bond Issuanc Openin Issuanc Interest Premiu Repay Closing
name l value e date term e g e in provide m or ment in balance
amount balance current d discoun current
2017 Annual Report
period accordi t period
ng to amortiz
nomina ation
l value
Additional description:
30. Long-term loans
(1) Classification of long-term loans
Unit: yuan
Item Closing balance Opening balance
Mortgaged or guaranteed loans 310,775,272.06
Total 310,775,272.06
Description of the classification of long-term loans:
The long-term loans are mortgage loans used by the company's subsidiaries to purchase office space, and the company assumed joint
and several liabilities for the loans.
Additional descriptions, including the interest rate collars:
The interest rate is 5% above the benchmark interest rate for 5-year financial institutions' RMB loans.
31. Bonds payable
(1) Bonds payable
Unit: yuan
Item Closing balance Opening balance
Convertible corporate bonds 27,163,239.26 23,757,428.88
Total 27,163,239.26 23,757,428.88
(2) Increase / decrease in bonds payable (excluding preferred stock, perpetual capital securities, and other
financial instruments classified as financial liabilities)
Unit: yuan
Amount
Interests Repayme
issued in Amortizat
Bond Issuing Bond Issuing Opening credited nt in the Closing
Par value the ion of
name date period value balance at par current balance
current premium
value period
period
private 23,028,00 20,237,72 20,368,37 1,151,400 1,768,572 23,288,34
2016/12/2 2021/12/1
convertibl 0.00 0.27 7.02 .00 .06 9.08
2017 Annual Report
e bonds
1st
private
convertibl 3,831,571 3,367,303 3,389,051 191,578.5 294,259.7 3,874,890
2016/12/2 2021/12/1
e bonds .35 .68 .86 7 5 .18
2nd
23,605, 23,757, 1,342,9 2,062,8 27,163,
Total -- -- --
023.95 428.88 78.57 31.81 239.26
(3) Description of conditions and time of bond-for-share swap for convertible corporate bonds
The issuer of the convertible corporate bonds in this period is ENP Games, a subsidiary controlled by the company, whose
convertible corporate bond holders can request conversion from the date of one year after the date of issue to one month before the
expiry date. However, the conversion right may not be exercised within one year from the date of issuance.
32. Deferred income
Unit: yuan
Increase in the Decrease in the Reason for
Item Opening balance Closing balance
current period current period formation
Government subsidy 4,172,163.95 5,235,700.00 590,681.78 8,817,182.17 Related to assets
Deferred income Game royalty not
4,866,879.43 10,690,519.57 7,148,106.73 8,409,292.27
from royalty income amortized
Total 9,039,043.38 15,926,219.57 7,738,788.51 17,226,474.44 --
Projects involving government subsidies:
Unit: yuan
Amount of Amount recorded Amount recorded
In relation to
additional in non-operating in other incomes
Liability item Opening balance Closing balance assets/in relation
subsidies in the revenue in the in the current
to incomes
current period current period period
Subsidy for
automobile fuel
780,000.08 130,000.00 650,000.08 Related to assets
system R&D
center project
Subsidy for small
and
medium-sized
180,347.19 27,450.92 152,896.27 Related to assets
enterprises single
equipment
acquisition
2017 Annual Report
Anhui Province
\"6+1\"
Independent
Innovation 798,633.33 98,800.00 699,833.33 Related to assets
Capacity
Construction
Subsidy Fund
Nanling County
Economic and
Trade Committee
433,333.35 50,000.00 383,333.35 Related to assets
Enterprise
Development
Special Fund
Provincial
Innovative
Enterprise R&D 242,812.50 27,750.00 215,062.50 Related to assets
Equipment
Subsidy
2015 Provincial
Special Funds for
the Construction 247,437.50 27,750.00 219,687.50 Related to assets
of Innovative
Provinces
Subsidies for
purchase of R&D 744,800.00 78,400.00 666,400.00 Related to assets
equipment
2016 Provincial
Special Funds for
the Construction 744,800.00 78,400.00 666,400.00 Related to assets
of Innovative
Provinces
Equipment
subsidy for
industrial
technology
reform project
3,420,000.00 57,000.00 3,363,000.00 Related to assets
provided by the
strong province
construction fund
of Nanling
County Economic
2017 Annual Report
and Information
Commission in
2017
Industrial reform
subsidy of
Nanling County
1,682,700.00 14,022.50 1,668,677.50 Related to assets
Economic and
Information
Commission
Special fund for
innovative
provisions
construction of
Nanling County 133,000.00 1,108.36 131,891.64 Related to assets
Economic and
Information
Commission in
2017
Total 4,172,163.95 5,235,700.00 590,681.78 8,817,182.17 --
Additional descriptions:
33. Capital stock
Unit: yuan
Increase / decrease in current period (+/-)
Opening Reserve-for-sh Closing
Offering of
balance Bonus shares are swap Others Subtotal balance
new shares
Total number 2,084,794,788. 2,148,110,844.
63,316,056.00 63,316,056.00
of share 00
Additional descriptions:
In this year, the company issued shares and paid cash to buy 68.43% shares in Shanghai Mokun and 49% shares in Jiangsu Zhiming,
and raised funds by issuing 63,316,056.00 shares.
34. Other equity instruments
(1) Variations in preferred stock, perpetual debts, and other financial instruments outstanding at the end of
the period
Unit: yuan
2017 Annual Report
Outstanding Increase in the current Decrease in the current
Opening Closing
financial period period
instruments Qty. Book value Qty. Book value Qty. Book value Qty. Book value
Convertible
corporate
bond equity 1 1,947,846.62 1 1,947,846.62
component
value
Total 1 1,947,846.62 1 1,947,846.62
Description of current increase or decrease in other equity instruments and reasons for the variation and the basis of related
accounting treatment:
Additional descriptions:
35. Capital reserves
Unit: yuan
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Capital surplus (share
931,765,345.03 1,251,820,587.00 218,356,526.65 1,965,229,405.38
premium)
Other capital reserves 2,719,254.26 4,690,921.02 7,410,175.28
1,972,639,580.66
Total 934,484,599.29 1,256,511,508.02 218,356,526.65
Additional descriptions, including descriptions of current increase and decrease and reasons for the variation:
(1) The increase in the current year of capital surplus includes the increase in capital reserve of RMB 1,148,009,452.24 yuan
generated from the company’s issuing shares and raising funds to purchase 68.43% equity in Shanghai Mokun and 49% equity in
Jiangsu Zhiming, the increase in capital reserve of RMB 85,836,485.00 yuan resulted from the equity incentive of Guangzhou Sanqi,
a subsidiary held by the company, the increase in capital reserve of RMB 17,826,400.46 yuan resulted from the aquisition of part of a
subsidiary of Shanghai Mokun by other investors, the increase in capital reserve of RMB 148,249.30 yuan resulted from option
exercise by employees of ENP Games, a subsidiary of the company;
The decrease in the current year of capital premium results from offset of capital reserve of RMB 216,666,155.75 yuan as the
company purchases 49% share in Jiangsu Zhiming, and the offset of capital reserve-capital premium of RMB 1,690,370.90 yuan as
the company transfers 5% share in Guangzhou 37, a subsidiary held by the Company.
(2) Other shareholders increase their capital in Wuhan Yihua Kaitian Culture Transmission Co., Ltd and Shanghai Menggongfang
Network Technology Co., Ltd, affiliates of Tibet Taifu who is a subsidiary of the company, and thus cause other capital reserve to
increase by RMB 4,690,921.02 yuan.
36. Other comprehensive incomes
Unit: yuan
2017 Annual Report
Accruals in the current period
Less: accounts
recorded in
other
Accruals in
comprehensive Attributable Attributable
Opening the current Less: Closing
Item incomes in the to parent to minority
balance period Income tax balance
prior period company shareholder
before expense
and carried after tax s after tax
income tax
down to
current profits
and losses
II. Other comprehensive incomes that
-21,875,172 -2,091,835. -20,469,057 -25,087,5
can be reclassified as profits and -4,618,535.07 685,720.85
.27 89 .23 92.30
losses in the future
Profits and losses on variation in
-24,337,628 -2,091,835. -21,799,686 -25,470,4
fair value of available-for-sale -3,670,780.00 -446,105.90
.17 89 .38 66.38
financial assets
Difference from translation of 2,462,455.9 1,330,629.1 1,131,826.7 382,874.0
-947,755.07
foreign-currency financial statements 0 5 5
Total of other comprehensive -21,875,172 -2,091,835. -20,469,057 -25,087,5
-4,618,535.07 685,720.85
incomes .27 89 .23 92.30
Additional descriptions, including adjustment to the effective part of profits and losses on cash flow hedging converted to initially
recognized amount of hedged items:
37. Surplus reserves
Unit: yuan
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Statutory surplus reserve 93,488,947.26 6,072,998.83 99,561,946.09
Total 93,488,947.26 6,072,998.83 99,561,946.09
Description of surplus reserves, including descriptions of current increase and decrease and reasons for the variation:
The increase in surplus reserve in the current period is the statutory surplus reserve of 10% of the net profit realized by the company
in the current period.
38. Undistributed profit
Unit: yuan
Item Current period Prior period
2017 Annual Report
Undistributed profit at the end of the prior period
1,413,567,635.94 506,077,201.90
before adjustment
Undistributed profit at the beginning of the period
1,413,567,635.94 506,077,201.90
after adjustment
Add: net profit attributable to owner(s) of the
1,620,582,427.47 1,070,162,324.07
parent company in the current period
Less: Provision of statutory surplus reserve 6,072,998.83 58,436,419.83
Dividend payable on common stock 208,479,478.80 104,235,470.20
Undistributed profit at the end of the year 2,819,597,585.78 1,413,567,635.94
Ledger of undistributed profit at the beginning of the period after adjustment:
1) Due to retrospective adjustment according to the accounting standards for enterprises and their applicable new regulations,
undistributed profit of RMB 0.00 at the beginning of the period is affected.
2) Due to changes in the accounting policies, undistributed profit of RMB 0.00 at the beginning of the period is affected.
3) Due to correction of significant accounting errors, undistributed profit of RMB 0.00 at the beginning of the period is affected.
4) Due to changes in the consolidation scope as a result of the common control, undistributed profit of RMB 0.00 at the beginning of
the period is affected.
5) A total of undistributed profit of RMB 0.00 at the beginning of the period is affected by other adjustments.
39. Operating revenues and costs
Unit: yuan
Accruals in the current period Accruals in the prior period
Item
Revenue Cost Revenue Cost
Main businesses 6,188,729,008.57 1,948,067,595.79 5,247,426,215.96 1,940,783,836.36
Other businesses 99,108.18 129,643.97 467,512.77 502,940.30
Total 6,188,828,116.75 1,948,197,239.76 5,247,893,728.73 1,941,286,776.66
40. Taxes and surcharges
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Urban construction and maintenance tax 7,941,837.63 9,792,292.91
Educational surcharge 3,518,238.96 4,546,187.19
Property tax 1,145,438.72 790,118.01
Land use tax 3,207,777.30 2,140,781.70
Vehicle and vessel tax 20,389.47 12,458.00
Stamp tax 6,703,094.58 2,572,252.86
2017 Annual Report
Local educational surcharge 2,345,492.62 3,184,179.41
Water conservancy fund 1,404,336.13 1,518,937.12
Construction costs of cultural undertakings 104,319.98 88,523.15
River management fee 7,404.96 135,997.02
Business tax 4,932,798.12
Others 109,767.54
Total 26,508,097.89 29,714,525.49
Additional descriptions:
41. Operating expenses
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Salary and benefits 89,002,610.72 69,275,392.58
Depreciation 2,452,462.02 2,261,428.79
Office cost 2,294,285.34 3,910,249.66
Internet promotion and traffic cost 1,767,614,006.47 1,480,035,900.50
Travel cost 2,725,380.16 2,745,335.60
Insurance premium 7,521,664.12 6,317,205.24
Transportation and storage fees 27,201,590.38 31,710,085.98
Packaging fee 1,135,941.11 3,533,778.77
Material consumption 2,269,378.06 2,730,746.55
Three-guarantee cost 415,210.57 690,279.56
Entertainment cost 4,151,221.02 1,819,112.94
Others 1,423,716.35 2,715,705.02
Total 1,908,207,466.32 1,607,745,221.19
Additional descriptions:
During the reporting period, labor dispatch expenses were classified as \"wage and welfare expenses\". The amount of RMB
18,542,124.59 in the prior period was reclassified from \"other\" items to \"wage and welfare expenses\" items.
42. General and administrative expenses
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Salary and benefits 108,714,662.59 78,106,747.94
2017 Annual Report
Office cost 34,206,282.94 36,843,326.62
Travel and meeting cost 12,278,341.07 8,892,605.81
Depreciation and amortization 13,818,326.98 13,134,251.68
Trade union and educational funds 5,001,412.49 4,073,229.32
Business entertainment cost 13,901,648.09 8,708,914.97
Taxes 3,789,460.86
Labor insurance premium 9,014,592.10 6,183,170.17
Lease cost 20,591,183.94 15,864,767.85
Agency fees and consulting fees 15,404,989.50 9,397,473.36
R&D cost 436,169,030.12 310,597,091.90
Share-based compensation 100,984,100.00
Others 6,574,972.04 19,342,574.69
Total 776,659,541.86 514,933,615.17
Additional description:
During the reporting period, Shanghai 37 Interactive Entertainment, a first-level subsidiary of the company, transferred 5% share in
Guangzhou 37, a second-level subsidiary of the company, to Huai’an Shunjing Enterprise Management Partnership (Limited
Partnership) for the consideration of RMB10,000,000.00 yuan in cash. The partners of Huai’an Shunjing Enterprise Management
Partnership (Limited Partnership) are all major managers of Guangzhou 37. After deducting the cash consideration based on the fair
value of Guangzhou Sanqi on the reference date, the company recognizes the share-based payment cost of RMB 100,984,100.00
yuan.
43. Financial expenses
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Interest expenditure 32,858,899.90 10,629,855.46
Formality charges or other expenses of
606,729.28 1,088,513.84
financial institution
Less: interest income 24,363,295.31 5,952,056.07
Exchange gains and losses 19,453,449.40 -11,226,708.84
Total 28,555,783.27 -5,460,395.61
Additional descriptions:
44. Impairment loss on assets
Unit: yuan
2017 Annual Report
Item Accruals in the current period Accruals in the prior period
I. Loss on bad debts 19,082,968.12 37,088,335.72
II. Inventory falling price loss 66,962.78 2,095,172.29
III. Impairment loss on available-for-sale
3,000,000.00 1,700,000.00
financial assets
V. Impairment loss on long-term equity
11,593,317.05 7,150,283.00
investment
VII. Impairment loss on fixed assets 17,288,222.20
IX. Impairment loss on construction in
429,504.26
progress
XII. Impairment loss on intangible assets 377,358.34 1,423,582.71
XIII. Impairment loss on goodwill 299,457,551.04
Total 351,295,883.79 49,457,373.72
Additional descriptions:
45. Investment income
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Income from long-term equity investment
-11,139,329.07 33,654,987.57
calculated by equity method
Investment income from disposal of long-term
218,512,763.55 6,351,134.34
equity investment
Investment income from available-for-sale
10,503,501.81 3,722,924.58
financial assets during holding
Investment income from disposal of
20,264,211.00 3,608,355.70
available-for-sale financial assets
Interest income arising from bank financial
13,370,838.07 6,931,102.57
products
Investment income arising from changes in fair
1,411,495.72
value of original equity
Others 3,106,764.84 400,000.00
Total 256,030,245.92 54,668,504.76
Additional descriptions:
2017 Annual Report
46. Incomes from assets disposal
Unit: yuan
Source of incomes from assets disposal Accruals in the current period Accruals in the prior period
Profit or loss arising from fixed asset disposal 1,055,284.09 1,316,063.68
47. Other incomes
Unit: yuan
Sources of other incomes Accruals in current period Accruals of last period
VAT refund immediately after collection 81,575,068.42
Support subsidy of Huai’an Software
10,516,637.23
Park
Other government subsidy relating to
19,167,371.53
operation (see Note 48 for details)
Total 111,259,077.18
48. Non-operating income
Unit: yuan
Amount included in current
Item Accruals in the current period Accruals in the prior period
non-recurring profits and losses
Government subsidy 11,200.00 161,032,068.55 11,200.00
Infringement compensation 1,528,930.43 1,528,930.43
Performance compensation
401,364,984.06 401,364,984.06
receivable
Others 152,808.37 986,803.06 152,808.37
Total 403,057,922.86 162,018,871.61 403,057,922.86
Government subsidies recorded in current profits and losses:
Unit: yuan
Will the
subsidy affect Special Accruals in Accruals in Related to
Nature of the
Subsidy item Granted by Granted for the current subsidy or the current the prior assets/related
subsidy
profits and not? period period to incomes
losses
Refund of The state The subsidy
81,575,068.4 92,618,857.3 Related to
VAT tax taxation Subsidy received for No No
2 1 income
immediately bureaus of engaging in
2017 Annual Report
after Shanghai, the trade or
collection Guangzhou industry
and Huai’an encouraged
etc. or supported
by the state
(according to
the state-level
policy
provisions)
Subsidy
received in
accordance
Huai'an
Support with local
Software
subsidy of government
Park 10,516,637.2 26,076,899.9 Related to
Huai'an Subsidy support No No
Management 3 6 income
Software policies such
Development
Park as investment
Co., Ltd.
promotion by
local
governments
The subsidy
received for
assuming the
state’s role in
Refund of guaranteeing
The local
formality a utility or Related to
taxation Subsidy No No 1,135,760.56
charges of socially income
bureaus
individual tax necessary
product
supply or
price control
function
Subsidy
received in
Support accordance
subsidy of The Finance with local
The Finance Bureau of government Related to
Subsidy No No 1,339,770.00 8,072,920.00
Bureau of Jiading, support income
Jiading, Shanghai policies such
Shanghai as investment
promotion by
local
2017 Annual Report
governments
Subsidy
Subsidy of received in
Wuhu
Wuhu accordance
Machinery
Machinery with local
Industrial
Industrial government
Development 19,252,000.0 Related to
Development Subsidy support No No 4,935,700.00
Zone Finance 0 income
Zone Finance policies such
and Taxation
and Taxation as investment
Service
Service promotion by
Center
Center local
governments
The subsidy
received for
engaging in
the trade or
Copyright
industry
subsidy of Shanghai
encouraged Related to
Shanghai Copyright Subsidy No No 3,500.00
or supported income
Copyright Association
by the state
Association
(according to
the state-level
policy
provisions)
Subsidy
Huai'an City
Excellent received for
Bureau of
Copyright of research and
Culture,
Huai’an City development, Related to
Radio, and Award No No 3,000.00
2016, the technology income
TV News
Legendary renewal and
Publishing
Dominance transformatio
(Copyright)
n, etc.
Subsidy
Special
received for
subsidy fund Guangzhou
research and
of Science and
development, Related to
Guangzhou Technology Award No No 100,000.00
technology income
Enterprise Innovation
renewal and
R&D Commission
transformatio
Investment
n, etc.
Special Technology Award Subsidy No No 100,000.00 Related to
2017 Annual Report
subsidy fund Industry and received for income
of Information research and
Guangzhou Bureau of development,
Enterprise Tianhe technology
R&D District renewal and
Investment transformatio
n, etc.
Subsidy
Project
received in
supporting
Huai'an accordance
subsidy of
Overseas with local
Huai'an
Students government
Overseas Related to
Pioneering Subsidy support No No 3,540,171.40 6,105,251.40
Students income
Park policies such
Pioneering
Management as investment
Park
Committee promotion by
Management
local
Committee
governments
Subsidy
received in
Jishan accordance
Township with local
Government, government
Refund of Related to
Nanling Subsidy support No No 1,411,521.00 668,615.54
land use tax income
County, policies such
Anhui as investment
Province promotion by
local
governments
Subsidy
received in
“Four
Nanling accordance
Standards”
Economic with local
enterprise
Development government
reward of Related to
Zone Award support No No 120,000.00 90,000.00
Nanling income
Construction policies such
Economic
Investment as investment
Development
Co., Ltd. promotion by
Zone
local
governments
Special Science and Subsidy
Subsidy No No 90,100.00 90,100.00 Related to
subsidy for Technology received in
2017 Annual Report
rent of key Industry and accordance income
industry Information with local
enterprises of Bureau of government
Tianhe Tianhe support
Finance District, policies such
Bureau Guangzhou as investment
promotion by
local
governments
The subsidy
received for
Employment
assuming the
stabilization
Guangzhou state’s role in
subsidy of
Social guaranteeing
Guangzhou
Insurance a utility or Related to
Social Subsidy No No 580,232.70 1,184,923.56
Fund socially income
Insurance
Management necessary
Fund
Center product
Management
supply or
Center
price control
function
Human
Supporting
Resources
fund of the
and Social Subsidy
Finance
Security received in
Bureau of
Bureau of accordance
Horgos
Horgos with local
Economic
Economic government
Development Related to
Development Subsidy support No No 118,857.00
Zone income
Zone policies such
Management
Management as investment
Committee,
Committee, promotion by
Xinjiang
Xinjiang local
Uygur
Uygur governments
Autonomous
Autonomous
Region
Region
Special Subsidy
subsidy of Tianhe received in
Tianyinghui Finance accordance Related to
Subsidy No No 500,000.00
Brand Bureau of with local income
Building Guangzhou government
Services for support
2017 Annual Report
2017 policies such
as investment
promotion by
local
governments
Subsidy
received in
accordance
Wuhu
Tax refund of with local
Advertising
Wuhu government
Industrial Related to
Advertising Subsidy support No No 268,618.87
Park Asset income
Industrial policies such
Management
Park as investment
Co., Ltd.
promotion by
local
governments
Subsidy
received in
Anime
accordance
support funds
Shanghai with local
of Shanghai
Culture government
Culture Related to
Radio TV Subsidy support No No 235,849.06
Radio TV income
Management policies such
Management
Bureau as investment
Bureau for
promotion by
2017
local
governments
Subsidy
received in
accordance
Tax refund of The with local
the government government
Related to
government of Jiading Subsidy support No No 518,800.00
income
of Jiading District, policies such
District Shanghai as investment
promotion by
local
governments
Municipal Huai'an Subsidy
Cultural Software received in Related to
Award No No 400,000.00
Industry Park accordance income
Development Management with local
2017 Annual Report
Guidance Committee of government
Fund 2016 Jiangsu support
Province policies such
as investment
promotion by
local
governments
Huai’an
Economic Subsidy
and received for
Technologica research and
Overseas
l development, Related to
outsourcing Award No No 400,000.00 410,000.00
Development technology income
reward
Zone renewal and
Economic transformatio
Development n, etc.
Bureau
Subsidy
received in
accordance
Talent Work with local
Leading government
Huai’s Talent Related to
Group Office Subsidy support No No 150,000.00
Plan Subsidy income
of Huai’an policies such
City as investment
promotion by
local
governments
Special Subsidy
reward for received in
introducing accordance
key with local
enterprises Tianhe government
Related to
provided by Finance Award support No No 122,100.00
income
the Business Bureau policies such
and Finance as investment
Bureau of promotion by
Tianhe local
District governments
Fashion Subsidy
Guangzhou Related to
creative Subsidy received in No No 400,000.00
Finance income
animation accordance
2017 Annual Report
support of Bureau with local
Guangzhou government
Culture support
Radio and policies such
Television as investment
Press promotion by
local
governments
Subsidy
received in
“Four accordance
Standards” with local
enterprise government
Wuhu Bureau Related to
reward of the Award support No No 2,000.00 5,000.00
of Statistics income
Bureau of policies such
Statistics of as investment
Wuhu County promotion by
local
governments
Technology Subsidy
Innovation received for
Award of Wuhu Bureau research and
Wuhu Bureau of Science development, Related to
Award No No 50,000.00
of Science and technology income
and Technology renewal and
Technology transformatio
2016 n, etc.
Subsidy
received in
accordance
Wuhu with local
Subsidy fund
Economic government
of strong Related to
and Award support No No 500,000.00
manufacturin income
Information policies such
g province
Committee as investment
promotion by
local
governments
Refund of Subsidy
formality fees Huai’an State received in Related to
Award No No 25,238.00
for Tax Bureau accordance income
withholding with local
2017 Annual Report
taxes and government
refund of support
taxes by policies such
Huai’an State as investment
Administratio promotion by
n of Taxation local
of Jiangsu governments
Province
Employment
stabilization
Human
subsidy of
Resources
Human The subsidy
and Social
Resources received for
Security
and Social assuming the
Bureau of
Security state’s role in
Horgos
Bureau of guaranteeing
Economic
Horgos a utility or Related to
Development Subsidy No No 940.75
Economic socially income
Zone
Development necessary
Management
Zone product
Committee,
Management supply or
Xinjiang
Committee, price control
Uygur
Xinjiang function
Autonomous
Uygur
Region
Autonomous
Region
The subsidy
Employment received for
stabilization assuming the
Nanling
subsidy of state’s role in
County
Nanling guaranteeing
Social
County a utility or Related to
Insurance Subsidy No No 81,015.00
Social socially income
Fund
Insurance necessary
Management
Fund product
Center
Management supply or
Center price control
function
Supporting The taxation Subsidy
fund of Guro bureau and received in Related to
Subsidy No No 1,348,511.17
District, the accordance income
Seoul, South government with local
2017 Annual Report
Korea of Guro government
District, support
Seoul, South policies such
Korea as investment
promotion by
local
governments
The subsidy
Employment received for
stabilization assuming the
Shenzhen
subsidy of state’s role in
Municipal
Shenzhen guaranteeing
Social
Municipal a utility or Related to
Insurance Subsidy No No 2,856.24 24,042.83
Social socially income
Fund
Insurance necessary
Management
Fund product
Bureau
Management supply or
Bureau price control
function
Subsidy
Provincial received in
Foreign accordance
Trade with local
Nanling
Promotion government
County Related to
Policy Fund Subsidy support No No 64,500.00
Bureau of income
of Nanling policies such
Commerce
County as investment
Bureau of promotion by
Commerce local
governments
Blue Collar
Subsidy
Apartment
received in
Rental
Nanling accordance
Subsidy of
Economic with local
Nanling
Development government
Economic Related to
Zone Subsidy support No No 27,648.00
Development income
Construction policies such
Zone
Investment as investment
Construction
Co., Ltd. promotion by
Investment
local
Co., Ltd.
governments
2017 Annual Report
The subsidy
received for
Refund of
assuming the
individual
Jiading state’s role in
income tax of
Branch of guaranteeing
Jiading
Shanghai a utility or Related to
Branch of Subsidy No No 1,568,532.21
Local socially income
Shanghai
Taxation necessary
Local
Bureau product
Taxation
supply or
Bureau
price control
function
Subsidy
received in
Reward fund
accordance
of Anhui Anhui Xinwu
with local
Xinwu Economic
government
Economic Development Related to
Subsidy support No No 1,554,900.00
Development Zone income
policies such
Zone Management
as investment
Management Committee
promotion by
Committee
local
governments
The subsidy
Employee received for
training assuming the
The Finance
subsidy of state’s role in
Office of
the Finance guaranteeing
Nanxiang
Office of a utility or Related to
Town, Subsidy No No 1,123,603.08
Nanxiang socially income
Jiading
Town, necessary
District,
Jiading product
Shanghai
District, supply or
Shanghai price control
function
The subsidy
Supporting received for
China
fund of China engaging in
Culture Related to
Culture Subsidy the trade or No No 80,000.00
Industry income
Industry industry
Association
Association encouraged
or supported
2017 Annual Report
by the state
(according to
the state-level
policy
provisions)
The subsidy
received for
Employment assuming the
stabilization state’s role in
Wuhu Social
subsidy of guaranteeing
Insurance
Wuhu Social a utility or Related to
Treatment Subsidy No No 49,423.00
Insurance socially income
and Payment
Treatment necessary
Center
and Payment product
Center supply or
price control
function
Subsidy
received in
Construction accordance
subsidy of Nanling with local
non-public County Party government
Related to
building of Committee Subsidy support No No 40,000.00
income
parties “Big Organization policies such
Four Department as investment
Centers” promotion by
local
governments
Subsidy
Nanling received for
Provincial
County research and
Technologica
Economic development, Related to
l Innovation Subsidy No No 300,000.00
and technology income
Demonstratio
Information renewal and
n Enterprise
Commission transformatio
n, etc.
Subsidy
Nanling
received in
Anhui County
accordance Related to
Industrial Economic Subsidy No No 50,000.00
with local income
Boutique and
government
Information
support
2017 Annual Report
Commission policies such
as investment
promotion by
local
governments
Subsidy
received in
Special accordance
subsidy fund with local
Wuhu Bureau
for talents of government
of Human Related to
Wuhu Bureau Subsidy support No No 20,000.00
and Social income
of Human policies such
Affairs
and Social as investment
Affairs promotion by
local
governments
Subsidy
The country received in
government’s accordance
quality Nanling with local
reward of County government
Related to
Nanling Market Award support No No 300,000.00
income
County Supervision policies such
Market Bureau as investment
Supervision promotion by
Bureau local
governments
Subsidy
Nanling received for
High-tech County research and
product Economic development, Related to
Subsidy No No 100,000.00
subsidies (2) and technology income
for 2015 Information renewal and
Commission transformatio
n, etc.
Subsidy
Subsidy of
Nanling received in
Nanling
County accordance
County Related to
Environment Subsidy with local No No 22,400.00
Environment income
al Protection government
al Protection
Bureau support
Bureau
policies such
2017 Annual Report
as investment
promotion by
local
governments
Advanced Subsidy
grassroots received in
Party accordance
organization Nanling with local
reward of County Party government
Related to
Nanling Committee Award support No No 3,000.00
income
Economic Organization policies such
Development Department as investment
Zone and promotion by
Nanling local
County governments
Advanced Subsidy
grassroots received in
Party accordance
organization Nanling with local
reward of County Party government
Related to
Nanling Committee Award support No No 10,000.00
income
Economic Organization policies such
Development Department as investment
Zone and promotion by
Nanling local
County governments
Subsidy
received in
Special accordance
publication with local
Shanghai
fund of government
Press and Related to
Shanghai Subsidy support No No 300,000.00
Publication income
Press and policies such
Bureau
Publication as investment
Bureau promotion by
local
governments
Provincial Tianhe Subsidy
subsidy for District received in
Related to
entrepreneurs Human Subsidy accordance No No 300,000.00
income
hip Resources with local
promoting and Social government
2017 Annual Report
employment Security support
of Tianhe Bureau of policies such
District Guangzhou as investment
Human promotion by
Resources local
and Social governments
Security
Bureau of
Guangzhou
Subsidy for
Subsidy
entrepreneurs
received in
hip
accordance
promoting Guangzhou
with local
employment Labor
government
of Employment Related to
Subsidy support No No 120,000.00
Guangzhou Service income
policies such
Labor Management
as investment
Employment Center
promotion by
Service
local
Management
governments
Center
Subsidy
received in
accordance
with local
Shanghai
Special fund government
Municipal Related to
for service Subsidy support No No 21,200.00
Bureau of income
trade policies such
Finance
as investment
promotion by
local
governments
Employment Jiangsu The subsidy
stabilization Huai'an received for
subsidy of Economic assuming the
Jiangsu and state’s role in
Huai'an Technologica guaranteeing Related to
Subsidy No No 12,392.10
Economic l a utility or income
and Development socially
Technologica Zone Social necessary
l Insurance product
Development Fund supply or
2017 Annual Report
Zone Social Management price control
Insurance Center function
Fund
Management
Center
Subsidy
Work-related received in
injury reward accordance
Guangzhou
of with local
Social
Guangzhou government
Insurance Related to
Social Award support No No 7,856.62
Fund income
Insurance policies such
Management
Fund as investment
Center
Management promotion by
Center local
governments
Bigger and
stronger Huai'an
Subsidy
innovation Economic
received for
development and
research and
reward of and Technologica
development, Related to
Technologica l Award No No 10,000.00
technology income
l Development
renewal and
Development Zone
transformatio
Zone Management
n, etc.
Management Committee
Committee
Subsidy
received for
Automotive Anhui research and
Fuel System Science and development, Related to
Subsidy No No 130,000.00 130,000.00
R&D Center Technology technology assets
Project Department renewal and
transformatio
n, etc.
Subsidy
Subsidy for Wuhu City received for
purchase of Economic research and
Related to
single and Subsidy development, No No 27,450.92 27,450.94
assets
equipment in Information technology
SMEs Committee renewal and
transformatio
2017 Annual Report
n, etc.
Subsidy
Provincial
Nanling received for
\"6+1\"
County research and
Independent
Economic development, Related to
Innovation Subsidy No No 98,800.00 98,800.00
and technology assets
Capacity
Information renewal and
Building
Commission transformatio
Subsidy Fund
n, etc.
Special
provincial
Subsidy
fund for
Nanling received for
enterprise
County research and
development
Economic development, Related to
of Nanling Subsidy No No 50,000.00 50,000.00
and technology assets
County
Information renewal and
Economic
Commission transformatio
and
n, etc.
Information
Commission
Subsidy
Provincial received for
Innovative Wuhu research and
Enterprise Science and development, Related to
Subsidy No No 27,750.00 27,750.00
R&D Technology technology assets
Equipment Bureau renewal and
Subsidy transformatio
n, etc.
Subsidy
2015
Nanling received for
Provincial
County research and
Special
Economic development, Related to
Funds for the Subsidy No No 27,750.00 27,750.00
and technology assets
Construction
Information renewal and
of Innovative
Commission transformatio
Provinces
n, etc.
Subsidy for Nanling Subsidy
purchase of County received for
Related to
R&D Economic Subsidy research and No No 78,400.00 39,200.00
assets
equipment and development,
and appliance Information technology
2017 Annual Report
Commission renewal and
transformatio
n, etc.
Subsidy
2016
received for
Provincial
Wuhu research and
Special
Science and development, Related to
Funds for the Subsidy No No 78,400.00 39,200.00
Technology technology assets
Construction
Bureau renewal and
of Innovative
transformatio
Provinces
n, etc.
Equipment
subsidy for
industrial
technology
reform
project Subsidy
provided by Nanling received for
the strong County research and
province Economic development, Related to
Subsidy No No 57,000.00
construction and technology assets
fund of Information renewal and
Nanling Commission transformatio
County n, etc.
Economic
and
Information
Commission
in 2017
Industrial
Technology Subsidy
Award Nanling received for
Subsidy of County research and
Nanling Economic development, Related to
Subsidy No No 14,022.50
County and technology assets
Economic Information renewal and
and Commission transformatio
Information n, etc.
Commission
2017 Nanling Subsidy
Related to
Provincial County Subsidy received for No No 1,108.36
assets
Special Economic research and
2017 Annual Report
Funds for the and development,
Construction Information technology
of Innovative Commission renewal and
Provinces of transformatio
Nanling n, etc.
County
Economic
and
Information
Commission
(Bureau of
Science and
Technology)
The subsidy
Subsidy for received for
the assuming the
elimination state’s role in
of yellow car Wuhu City guaranteeing
provided by Environment a utility or Related to
Subsidy No No 11,200.00
Wuhu Air al Protection socially income
Pollution Bureau necessary
Control Joint product
Conference supply or
Office price control
function
111,270,277. 161,032,068.
Total -- -- -- -- -- --
18
Additional descriptions:
The amount of government subsidies included in current profits and losses includes government subsidies included in other income
and non-operating income.
49. Non-operating expenditures
Unit: yuan
Amount included in current
Item Accruals in the current period Accruals in the prior period
non-recurring profits and losses
Donations 134,259.40 8,830,161.71 134,259.40
Fines and late fees 219,253.60 391,027.78 219,253.60
Compensations payable 3,756,740.62 3,756,740.62
Others 76,785.28 227,252.65 76,785.28
2017 Annual Report
Total 4,187,038.90 9,448,442.14 4,187,038.90
Additional descriptions:
50. Income tax expense
(1) Details of income tax expense
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Income tax expense in the current period 83,470,564.82 105,142,968.87
Deferred income tax expense -3,350,691.84 -3,039,968.88
Total 80,119,872.98 102,102,999.99
(2) Adjustment process of accounting profit and income tax expense
Unit: yuan
Item Accruals in the current period
Total profit 1,916,619,595.01
Income tax expense calculate at statutory / applicable tax rate 479,154,898.75
Effect of application of a different tax rate to the subsidiaries -380,387,821.90
Effect of income tax before adjustment 3,630,801.13
Effect of non-taxable revenue -101,659,205.72
Effect of non-deductible costs, expenses, and losses 115,616,753.32
Effect of use of deductible losses on unrecognized deferred
-32,822,639.08
income tax assets in the prior period
Effect of deductible temporary difference or deductible losses on
26,863,431.99
unrecognized deferred income tax assets in the current period
R&D plus deductions -31,796,610.81
Change in the balance of deferred income tax resulting from tax
1,520,265.30
rate adjustment
Income tax expense 80,119,872.98
Additional descriptions
51. Other comprehensive incomes
Refer to the Note 39 “Other comprehensive incomes”
2017 Annual Report
52. Items of cash flow statement
(1) Other cash receipts relating to operating activities
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Received operating exchange amount 3,000,000.00 6,042,338.29
Received government subsidy 29,104,526.97 67,973,060.30
Received interest 8,756,161.69 8,036,639.40
Received deposit and earnest money 6,814,202.79 4,000,001.00
Housing rent 423,739.74
Received others 8,111,632.38 986,803.06
Total 55,786,523.83 87,462,581.79
Description of other cash receipts relating to operating activities:
(2) Other cash payments relating to operating activities
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Out-of-pocket general and administrative
247,180,669.80 155,615,103.85
expenses
Out-of-pocket operating expenses 1,782,270,017.79 1,548,433,319.17
Deposit and reserve fund paid 19,562,859.61
Formality charges 606,729.28 1,088,513.84
Non-operating expenditures 430,298.28 9,448,442.14
Other payments 3,316,702.65
Total 2,053,367,277.41 1,714,585,379.00
Description of other cash payments relating to operating activities:
(3) Other cash receipts relating to investing activities
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Government subsidies received relating to
5,235,700.00 1,568,000.00
assets
Bank financial products 2,212,369,000.00 807,800,000.00
Recovered movie investment 5,000,000.00
2017 Annual Report
Refunded royalty 4,417,865.14
Earnest money for equity repurchase 6,000,000.00
Total 2,228,022,565.14 814,368,000.00
Description of other cash receipts relating to investing activities:
(4) Other cash payments relating to investing activities
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Bank financial products 2,122,369,000.00 889,300,000.00
Lending to Zhonghui Film and TV 1,500,000.00
Investment deposit 65,000,000.00
Total 2,122,369,000.00 955,800,000.00
Description of other cash payments relating to investing activities:
(5) Other cash receipts relating to financing activities
Unit: yuan
Item Accruals in the current period Accruals in the prior period
Issuance cost for raising capital 4,313,316.06
Cash paid for purchasing the minority
89,180,000.00
equity of the subsidiaries
Total 93,493,316.06
Description of other cash receipts relating to financing activities:
53. Supplements to cash flow statement
(1) Supplements to cash flow statement
Unit: yuan
Supplementary information Current amount Amount of prior period
1. Reconciliation of net profit to cash flows
-- --
of operating activities:
Net income 1,836,499,722.03 1,216,668,610.03
Add: Provisions for asset impairment 351,295,883.79 49,457,373.72
Depreciation of fixed assets , depletion of oil
54,913,911.20 60,373,166.14
& gas assets, and depreciation of productive
2017 Annual Report
living assets
Amortization of intangible assets 19,083,068.70 10,449,990.71
Amortization of long-term advance
86,013,536.69 102,681,716.87
payments
Losses on disposal of fixed assets, intangible
assets, and other long-term assets -1,055,284.09 -1,316,220.96
(represented with “-” for gains)
Losses on scrapping of fixed assets
157.28
(represented with “-” for gains)
Financial expenses (represented with “-” for
45,364,584.84 -596,853.38
gains)
Investment loss (represented with “-” for
-256,030,245.92 -54,668,504.76
gains)
Decrease in deferred income tax assets
-3,350,691.84 -3,039,968.88
(represented with “-” for increase)
Decrease in inventory (represented with “-”
-30,413,122.55 -6,022,126.05
for increase)
Decrease in operating receivables
-244,342,642.44 -474,333,644.72
(represented with “-” for increase)
Decrease in operating payables (represented
270,541,351.33 148,829,490.37
with “-” for decrease)
Others -296,624,143.44 3,456,391.46
Net cash flows from operating activities 1,831,895,928.30 1,051,939,577.83
2. Investing and financing activities not
-- --
concerning cash income and expenses
3. Net change in cash and cash equivalents: -- --
Closing balance of cash 1,580,910,931.98 819,213,006.12
Less: Opening balance of cash 819,213,006.12 1,105,789,001.15
Net increase in cash and cash equivalents 761,697,925.86 -286,575,995.03
(2) Net cash payment for acquisition of subsidiaries in the current period
Unit: yuan
Amount
Cash or cash equivalent payments in the current period for business
483,462,500.00
combination occurred in the current period
Including: --
2017 Annual Report
Shanghai Mokun 483,462,500.00
Less: Cash and cash equivalents held by the subsidiary on the
33,452,562.16
acquisition date
Including: --
Shanghai Mokun 33,452,562.16
Including: --
Net cash payment for acquisition of the subsidiary 450,009,937.84
Additional descriptions:
(3) Components of cash and cash equivalents
Unit: yuan
Item Closing balance Opening balance
I. Cash 1,580,910,931.98 819,213,006.12
Including: cash on hand 59,238.53 31,328.92
deposit payable on demand 1,573,326,143.60 809,039,113.18
Other monetary funds payable on
7,525,549.85 10,142,564.02
demand
III. Closing balance of cash and cash
1,580,910,931.98 819,213,006.12
equivalents
Additional descriptions:
54. Notes to items of statement of changes in owner’s equity
The company shall specify items of “Others”, under which the closing balance of the prior period is adjusted, and the adjustment
amount:
None
55. Assets with restricted ownership or limited right of use
Unit: yuan
Item Book value at the end of the period Reason for limitation
Loans borrowed by the company’s
subsidiary with mortgage on the office
Other non-current assets 795,864,793.02
building for which pre-paid housing
payment is made
Total 795,864,793.02 --
Additional descriptions:
2017 Annual Report
56. Foreign-currency monetary items
(1) Foreign-currency monetary items
Unit: yuan
Balance of foreign currency at Closing balance translated into
Item Exchange rate for translation
the end of the period Renminbi
Monetary capital -- -- 334,644,180.37
Including: US dollar 16,185,840.93 6.5342 105,761,521.80
Euro 2.94 8.1374 23.92
Hong Kong dollar 235,790,101.01 0.8359 197,096,945.43
KRW 3,854,375,104.36 0.0061 23,511,688.14
NTD 26,038,334.73 0.2199 5,725,829.81
JPY 37,709,336.00 0.05789 2,182,993.46
THB 1,836,910.50 0.1988 365,177.81
Accounts receivable -- -- 123,507,712.82
Including: US dollar 2,457,373.75 6.5342 16,056,971.56
Euro 38,021.31 8.1374 309,394.61
Hong Kong dollar 37,760,965.30 0.8359 31,564,390.89
NTD 104,687,702.67 0.2199 23,020,825.82
PHP 8,977,590.17 0.1309 1,175,166.55
MYR 7,188,832.80 1.6071 11,553,173.19
THB 52,087,462.01 0.1988 10,354,987.45
Turkish lira 56,150.34 1.7291 97,089.55
SGD 178,838.80 4.8831 873,287.74
Indonesian Rupiah (Indonesian
5,051,975,939.23 0.000482 2,435,052.40
Rupees)
Vietnamese Dong 6,820,135,176.34 0.0003 2,046,040.55
KRW 3,263,549,732.00 0.0061 19,907,653.37
AUD 6,266.48 5.0928 31,913.93
JPY 70,190,217.98 0.05789 4,063,311.72
GBP 414.65 8.7792 3,640.30
AED 182.45 1.7790 324.58
Polish Zloty 979.53 1.8509 1,813.01
DKK 676.50 1.0479 708.90
2017 Annual Report
HUF 2,548.00 0.0255 64.97
Brazil Real 5,976.02 1.9725 11,787.70
CAD 21.89 5.2090 114.03
Other receivables 1,577,191.56
Including: US dollar 3,000.00 6.5342 19,602.60
KRW 223,946,568.00 0.0061 1,366,074.06
JPY 3,188,599.95 0.05789 184,588.05
SGD 31,500.00 0.2199 6,926.85
Accounts receivable 153,823,142.89
Including: NTD 112,113,636.17 0.2199 24,653,788.59
USD 14,513,527.35 6.5342 94,834,290.41
EURO 7,984.30 8.1374 64,971.44
THB 28,007.57 0.1988 5,567.90
Vietnamese Dong 4,676,607,625.40 0.0003 1,402,982.29
KRW 4,901,100,543.09 0.0061 29,896,713.31
JPY 51,214,872.14 0.05789 2,964,828.95
Other payables 859,006.92
Including: USD 90,000.00 6.5342 588,078.00
GBP 44,414,577.00 0.0061 270,928.92
Short-term borrowing 3,054,500.00
Including: KRW 500,000,000.00 0.0061 3,054,500.00
Additional descriptions:
(2) Description of overseas business entities, including disclosure of the principal places of business overseas,
recording currencies, and basis for selection of recording currencies for important overseas business
entities, as well as reasons for any change in the recording currency.
□ Applicable √ Not applicable
III. Change in the Scope of Consolidation
1．Business combination not under common control
(1) Business combination not under common control occurred in the current period
Unit: yuan
2017 Annual Report
Revenue of Net profit of
the acquired the acquired
Basis for
party from party from
Name of the Time of Cost of Proportion of Method of determination
Acquisition the the
acquired equity equity the equity equity of the
date acquisition acquisition
party acquisition acquisition acquired acquisition acquisition
date to the date to the
date
end of the end of the
period period
Acquisition
952,749,968. by share
May 31, 2017 68.43% Date of
Shanghai 69 issuance and -36,280,070.8
May 31, 2017 exercising 9,541,311.27
Mokun cash payment
control
March 3, 430,000,000. Acquisition
31.57%
2016 00 with cash
Additional descriptions:
According to the Agreement on Assets Acquisition by Share Issuance and Cash Payment by and between Rest Shareholders of
Shanghai Mokun Digital Technology Co., Ltd. and Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd.
singed by the company and Yang Dongmai, Chen Wei, and Wangzhong Investment on July 31, 2016, the company acquires 68.42%
share in Shanghai Mokun by means of share issuance and cash paying. Of the transaction consideration, 65% (RMB 619,287,500.00
yuan) is paid by share issuance, and a total of 35,809,147 shares are issued; the remaining 35% (RMB 333,462,500.00 yuan) is paid
with cash. The transaction price of the assets to be purchased is determined with reference to the results of the Evaluation Report
(Zhong Qi Hua Ping Bao Zi (2017) No. 3021) issued by China Enterprise Appraisals (CEA).
The company originally held 31.57% share in Shanghai Mokun. After the purchase of the remaining 68.43% share by share issuance
and cash payment, Shanghai Mokun became a subsidiary wholly owned by the Company.
(2) Consolidated costs and goodwill
Unit: yuan
Consolidated costs Shanghai Mokun
-- Cash 333,462,500.00
-- Fair value of equity securities issued 619,287,468.69
-- Fair value of the share held prior to the acquisition date on the
439,548,684.96
acquisition date
Total combination cost 1,392,298,653.65
Less: fair value of identifiable net assets acquired 132,505,067.72
Balance between the goodwill/consolidated costs and the fair
1,259,793,585.93
value of the identifiable net assets acquired
Description of the method to determine the fair value of consolidated costs and contingent considerations and their variations:
Method to determine the consolidated costs:
2017 Annual Report
The transaction price of the assets to be purchased is determined by reference to the evaluation results of the evaluation report of
CEA (Zhong Qi Hua Ping Bao Zi (2017) No. 3021) , and is determined by the parties to the reorganization as RMB 952,750,000.00
yuan.
Method to determine the fair value of equity instruments:
According to applicable provisions of the Accounting Standards for Business Enterprises No. 20 – Business Combination, the
company needs to determine the fair value of the equity instruments issued. In the process of determining the fair value of equity
instruments issued, the management of the company gives consideration to the following factors:
As provided in Article 45 of the Administrative Measures for Material Assets Reorganization of Listed Companies, the price of the
share issued by the listed company shall not be 90% lower than the market reference price, which shall be any of the average stock
trading prices of 20, 60, or 120 trading days before the date when the resolution of the Board on this asset acquisition by stock
issuance is announced. In determining the price of the stocks issued for asset acquisition, on the basis of full consideration to the
price-to-earning ratio of the stock of the listed company and valuation of comparable listed companies, the listed company, through
full negotiation with its counterparties and taking the interests of all parties into account, determines to use the average stock trading
price of 20 trading days prior to the date when the resolution of the Board on this asset acquisition by share issuance is announced as
the market reference price and determines that the issuing price is 90% of such market reference price. The average stock trading
price of 20 trading days prior to the date when the resolution of the Board on this asset acquisition by stock issuance (total amount of
traded stock of 20 trading days prior to the resolution announcement date / total volume of traded stock of 20 trading days prior to the
resolution announcement date) is RMB 19.30 yuan / stock. The price of the share issued for asset acquisition is determined to be 90%
of the market reference price, that is, RMB 17.37 yuan / stock. After distribution of stock dividend of RMB 0.10 yuan / stock, the
issuing price of the stock is RMB 17.27 yuan / stock.
Taking the above into consideration, the management of the company deems it inappropriate to use the stock price of the company to
determine the fair value of the equity instrument issued. The company shall use the stock issuing price as the fair value of the equity
instrument issued for acquisition of Shanghai Mokun.
Major reasons for formation of huge goodwill:
On the acquisition date, the net book value of Shanghai company is RMB 126,125,057.72 yuan. According to the “Evaluation Report
on the Value of All Equities in Shanghai Mokun Involved in the Assets to be Acquired by Wuhu Shunrong Sanqi Interactive
Entertainment Network Technology Co., Ltd. through Share Issuance and Cash Payment” [Zhong Qi Hua Ping Bao Zi (2017) No.
3021] issued by Beijing China Enterprise Appraisals Co., Ltd., the appreciation of intangible assets upon evaluation is recognized to
be RMB 6,380,010.00 yuan, and the fair value of the identifiable net assets on the acquisition date is RMB 132,505,067.72 yuan. The
balance between the consolidated cost and the fair value of the identifiable net assets is recognized as goodwill.
Additional descriptions:
(3) Identifiable assets and liabilities of the acquired party on the acquisition date
Unit: yuan
Shanghai Mokun
Fair value on the acquisition date Book value on the acquisition date
Assets: 151,999,008.48 145,618,998.48
Monetary funds 33,452,562.16 33,452,562.16
Accounts receivable 7,987,268.45 7,987,268.45
2017 Annual Report
Inventory 0.00 0.00
Fixed assets 6,041,849.47 6,041,849.47
Intangible assets 6,382,486.06 2,476.06
Advance payments 7,600.00 7,600.00
Interest receivable 364,624.11 364,624.11
Other receivables 5,063,444.43 5,063,444.43
Non-current assets due within one year 12,000,000.00 12,000,000.00
Other current assets 80,086,426.81 80,086,426.81
Long-term deferred expenses 612,746.99 612,746.99
Liabilities: 19,493,940.76 19,493,940.76
Loans 0.00 0.00
Accounts payable 173,180.00 173,180.00
Deferred income tax liabilities 0.00 0.00
Payments received in advance 1,716,467.56 1,716,467.56
Payroll payable 6,103,707.09 6,103,707.09
Taxes payable 634,016.72 634,016.72
Other payables 78,245.86 78,245.86
Deferred income 10,788,323.53 10,788,323.53
Net Asset 132,505,067.72 126,125,057.72
Less: Minority interest 0.00 0.00
Net assets acquired 132,505,067.72 126,125,057.72
Determination method of the fair value of identifiable assets and liabilities:
Contingent liabilities of the acquired party assumed in business combination:
Additional descriptions:
(4) Gains or losses on remeasurement of the share held prior to the acquisition date at the fair value
Is there more than one transaction for realization of business combination in steps and acquisition of the control in the reporting
period?
√ Yes □ No
Unit: yuan
Book value of the Fair value of the Gains or losses on Determination Amount of other
Name of the share originally held share originally held remeasurement of method of the fair comprehensive
acquiree prior to the prior to the the share held prior value of the share incomes relating to
acquisition date on acquisition date on to the acquisition originally held prior the share originally
2017 Annual Report
the acquisition date the acquisition date date at the fair value to the acquisition held prior to the
date on the acquisition date
acquisition date and converted to
main assumptions investment income
Shanghai Mokun 458,141,013.24 439,548,684.96 -18,592,328.28 Equity trading price 0.00
Additional descriptions:
2. Change in the combination scope arising from other reasons
Describe any change in the combination scope arising from other reasons (such as establishment of a new subsidiary, liquidation of a
subsidiary) and relevant details:
In February 2017, Tibet Xintai, the first-tier subsidiary of the company, established Lihui Venture. The company holds 100% of the
share in this newly-established subsidiary and has included it in the scope of consolidation since February 2017.
In March 2017, Jiangsu Aurora, the second-tier subsidiary of the company, Anhui Aurora. The company holds 80% of the share in
this newly-established subsidiary and has included it in the scope of consolidation since March 2017.
In April 2017, Top Increase, the third-tier subsidiary of the company, establishes 37 Games company. The company holds 100% of
the share in this newly-established subsidiary and has included it in the scope of consolidation since April 2017.
In August 2017, Jiangsu Aurora, the second-tier subsidiary of the company, established Guangzhou Jisheng. The company holds
80% of the share in this newly-established subsidiary and has included it in the scope of consolidation since August 2017.
See Note IX “Equity in Other Entities” for details.
IV. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of enterprise group
Name of the Principal place of Place of Nature of Shareholding ratio Way of
subsidiary business registration business Direct Indirect acquisition
First-tier
subsidiary
Business
Shanghai Sanqi
combination not
Interactive Guangzhou Shanghai Software 100.00%
under common
Entertainment
control
Shunrong Auto
Wuhu Wuhu Manufacturing 100.00% Establishment
Parts
Tibet Xintai Tibet Tibet Investment 100.00% Establishment
Second-tier
subsidiary
2017 Annual Report
Business
Shunrong Investment, combination
Wuhu Wuhu 100.00%
Investment Manufacturing under common
control
Shunrong
Shanghai Shanghai Manufacturing 100.00% Establishment
Yonghong
Guangzhou
Guangzhou Guangzhou Manufacturing 100.00% Establishment
Senyun
Yanling
Shanghai Shanghai Investment 100.00% Establishment
Investment
Business
Anhui Vogue combination not
Guangzhou Wuhu Software 100.00%
Entertainment under common
control
Business
Shanghai combination not
Guangzhou Shanghai Software 100.00%
Yingtong under common
control
Business
combination not
Guangzhou Sanqi Guangzhou Guangzhou Software 80.00%
under common
control
Business
Vogue
combination not
Entertainment BVI BVI Software 100.00%
under common
International
control
Business
Guangzhou combination not
Guangzhou Guangzhou Software 100.00%
Xingzhong under common
control
Business
combination not
Anhui Sanqi Guangzhou Wuhu Software 100.00%
under common
control
Business
combination not
Jiangsu Aurora Guangzhou Huai’an Software 80.00%
under common
control
Shanghai Guangzhou Shanghai Software 100.00% Business
2017 Annual Report
Guanhang combination not
under common
control
Business
combination not
Anhui Jiashang Guangzhou Wuhu Software 100.00%
under common
control
Business
combination not
ENP Games South Korea South Korea Software 54.90%
under common
control
Business
Easy Gaming, combination not
USA USA Software 100.00%
Inc. under common
control
Lihui Venture Xinjiang Xinjiang Investment 100.00% Establishment
Third-tier
subsidiary
Business
AZA Games Co. combination not
South Korea South Korea Software 54.90%
Ltd under common
control
BRAEVE Co.,
Japan Japan Software 53.33% Establishment
Ltd
Business
combination not
G-MEI Network Taiwan BVI Software 100.00%
under common
control
Business
combination not
Chengdu Shengge Chengdu Chengdu Software 80.00%
under common
control
Business
Beijing combination not
Guangzhou Beijing Software 80.00%
Shangheng under common
control
Business
Jiangsu Jiaqu Guangzhou Huai’an Software 80.00% combination not
under common
2017 Annual Report
control
Business
combination not
Shanghai Zhiren Guangzhou Shanghai Software 100.00%
under common
control
Business
Shanghai Mobile combination not
Guangzhou Shanghai Software 80.00%
Game under common
control
Anhui Xuhong Guangzhou Wuhu IT 100.00% Establishment
Business
combination not
Anhui Guanyu Guangzhou Wuhu Advertising 100.00%
under common
control
Guangzhou Sanqi
Interactive Guangzhou Guangzhou Software 80.00% Establishment
Entertainment
Business
combination not
Top Increase BVI BVI Software 100.00%
under common
control
Anhui Aurora Guangzhou Wuhu Software 80.00% Establishment
Guangzhou
Guangzhou Guangzhou Software 80.00% Establishment
Jisheng
Fourth-tier
subsidiary
Business
combination not
Jiangsu Zhiming Guangzhou Huai’an Software 100.00%
under common
control
Business
37 Games combination not
HK HK Software 100.00%
Entertainment under common
control
Business
Wisdom Game combination not
BVI BVI Software 100.00%
International under common
control
Wisdom HK HK Software 100.00% Business
2017 Annual Report
Entertainment combination not
International under common
control
Business
combination not
Tibet Taifu Tibet Tibet Software 100.00%
under common
control
Guangzhou
Guangzhou Guangzhou Software 80.00% Establishment
Jisheng Network
Guangzhou
Guangzhou Guangzhou Software 85.00% Establishment
Huoshanhu
Guangzhou Jishi Guangzhou Guangzhou Software 80.00% Establishment
Huoerguosi
Xinjiang Xinjiang Software and IT 100.00% Establishment
Xinghui
Huoerguosi
Xinjiang Xinjiang Software and IT 80.00% Establishment
Xinrui
37 Games
South Korea South Korea Software 100.00% Establishment
Company
Fifth-tier
subsidiary
Tibet Yaotong Guangzhou Tibet Software 100.00% Establishment
Tibet Shengge Guangzhou Tibet Software 100.00% Establishment
Huoerguosi
Xinjiang Xinjiang Software and IT 100.00% Establishment
Qianyu
Business
combination not
Shanghai Mokun Shanghai Shanghai Software 100.00%
under common
control
Sixth-tier
subsidiary
Business
Shanghai combination not
Shanghai Shanghai Software 76.50%
Langkun under common
control
Business
combination not
Shanghai Kunkun Shanghai Shanghai Software 100.00%
under common
control
2017 Annual Report
Business
combination not
Shanghai Miji Shanghai Shanghai Software 100.00%
under common
control
Business
combination not
Shanghai Aojue Shanghai Shanghai Software 100.00%
under common
control
Seventh-tier
subsidiary
Business
combination not
Huoerguosi Jiaji Xinjiang Xinjiang Software 76.50%
under common
control
Description of shareholding ratio in the subsidiary inconsistent with the percentage of voting rights:
Basis for control on the investee with a half or less of the voting rights and no control on the investee with more than a half of the
voting rights:
Basis of control over significant structure entity included in the scope of consolidation:
Basis for identifying the company as an agent or a trustor:
(2) Significant non-wholly-owned subsidiaries
Unit: yuan
Current dividends
Current profits and losses
Shareholding ratio of announced to be Closing balance of
Name of the subsidiary attributable to minority
minority shareholders distributed to minority minority interest
shareholders
shareholders
Jiangsu Aurora 20.00% 136,927,678.24 98,000,000.00 140,264,144.76
Guangzhou Sanqi 20.00% 88,541,223.83 30,000,000.00 118,675,816.34
Description of shareholding ratio of minority shareholders in the subsidiary inconsistent with the percentage of voting rights:
Additional descriptions:
(3) Major financial information of significant non-wholly-owned subsidiaries
Unit: yuan
Name of Closing balance Opening balance
the Non-curr Non-curr Non-curr Non-curr
Current Total Current Total Current Total Current Total
subsidiar ent ent ent ent
assets assets liabilities liabilities assets assets liabilities liabilities
y assets liabilities assets liabilities
2017 Annual Report
Jiangsu 695,370, 290,177, 985,548, 161,313, 122,914, 284,228, 588,863, 12,653,2 601,516, 83,911,3 10,922,5 94,833,9
Aurora 986.38 856.65 843.03 849.14 270.08 119.22 073.64 07.39 281.03 76.34 72.09 48.43
Guangzh 1,043,43 115,896, 1,159,32 531,531, 34,416,6 565,948,
ou Sanqi 0,956.42 348.84 7,305.26 578.14 45.44 223.58
Unit: yuan
Accruals in the current period Accruals in the prior period
Cash flows Cash flows
Name of the Total Total
Business from Business from
subsidiary Net profit comprehensi Net profit comprehensi
revenue operating revenue operating
ve income ve income
activities activities
Jiangsu 1,014,730,24 684,638,391. 684,638,391. 797,291,694. 713,291,613. 482,429,940. 482,429,940. 317,079,561.
Aurora 2.51 21 21 37 54 94 94
Guangzhou 2,098,517,90 470,530,214. 470,530,214. 863,880,248.
Sanqi 6.50 76 76
Additional descriptions:
In the prior year, Guangzhou Sanqi was not disclosed as a significant non-wholly-owned subsidiary of the company. Thus the data of
the prior year in the statements are absent.
2. Transactions resulting in change in share of owner’s equity in a subsidiary with the company still
controlling the subsidiary
(1) Details of change in the share of owner’s equity in the subsidiary
Name of subsidiary Change date Shareholding ratio before Shareholding ratio after
change change
ENP Games March 2017 55.41% 54.99%
August 2017 54.99% 54.90%
Guangzhou Sanqi May 2017 85.00% 80.00%
Jiangsu Zhiming May 2017 51.00% 100.00%
(2) Effect of the transaction on minority interest and owner’s equity attributable to the parent company
Unit: yuan
ENP Games Guangzhou Sanqi Jiangsu Zhiming
-- Cash 10,000,000.00 89,180,000.00
-- Fair value of non-cash assets 165,619,990.80
Total of acquisition cost /
10,000,000.00 254,799,990.80
disposal consideration
2017 Annual Report
Less: net assets of the
subsidiary calculate at the ratio 148,249.30 11,690,370.90 38,133,835.05
of the share acquired/disposed
Difference -148,249.30 -1,690,370.90 216,666,155.75
Included: adjusted capital
-148,249.30 -1,690,370.90 216,666,155.75
reserve
Additional descriptions:
(1) The company paid RMB 254,799,999.80 yuan to Hu Yuhang by issuing shares and paying cash to purchase 49% share he held in
Jiangsu Zhiming. The formalities for industrial and commercial registration of changes was completed on May 10, 2017. Tianjian
Accounting Firm issued the Audit Report (Tian Jian Shen (2017) No. 3-460) for the transitional period (from September 1, 2016 to
May 31, 2017) .
(2) The company transferred 5% share it held in Guangzhou Sanqi Network Technology Co., Ltd. to Huai’an Shunjing Enterprise
Management Partnership (Limited Partnership) for RMB 10 million yuan, whose partners are key managers of Guangzhou Sanqi.
3. Equity in joint ventures or associated enterprises
(1) Significant joint ventures or associated enterprises
Shareholding ratio Accounting
Name of the joint method of
venture or Principal place of Place of Nature of investment in the
associated business registration business Direct Indirect joint venture or
enterprise associated
enterprise
Yangzhou Fuhai
Sanqi Internet
Culture
Yangzhou Yangzhou Investment 64.52% Equity method
Investment
Center (Limited
Partnership)
Huai’an Sanqi
Yijian
Entertainment
Assets Huai’an Huai’an Investment 39.70% Equity method
Management
Center (Limited
Partnership)
Mango (Xiamen)
Creative
Xiamen Xiamen Investment 31.75% Equity method
Incubation Equity
Investment Fund
2017 Annual Report
Partnership
(Limited
Partnership)
Description of the shareholding ratio in the joint venture or associated enterprise inconsistent with the percentage of voting rights:
(1) The company held 64.52% share in Yangzhou Fuhai Sanqi Internet Culture Investment Center (Limited Partnership), which is not
included in the scope of consolidation because: A. according to the joint venture agreement, the joint venture will set up an
Investment Decision-making Committee to take charge of making decisions regarding investment and other| 三七互娱：2017年年度报告（英文版） （下载公告） |
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| 公告日期:2018-04-24 |
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