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吉比特:G-bitsNetworkTechnology(Xiamen)Co.,Ltd.2023AnnualReport(Summary)

公告原文类别 2024-03-29 查看全文

吉比特 --%

Stock Code: 603444 Stock Name: G-bits

G-bits Network Technology (Xiamen) Co. Ltd.

2023 Annual Report (Summary)

March 2024

Should there be any discrepancy between the English version and the Chinese version of this Report

the Chinese version shall prevail.Part I Important Notes

I. The summary of the Annual Report is extracted from the full text of the Annual Report.To gain a thorough understanding of the Company's operational achievements financial

status and future development plans investors are advised to carefully read the full

Annual Report on the website www.sse.com.cn.II. The board of directors (or the “Board”) supervisory board directors supervisors and

senior management of the Company guarantee the truthfulness accuracy and

completeness of the annual report ensuring that there are no false records misleading

statements or material omissions. They also bear individual and joint legal

responsibilities.III. All directors of the Company attended the board meeting for the review of the Annual

Report.IV. KPMG Huazhen LLP has issued a standard unqualified audit opinion for the Company.V. The profit distribution proposal or reserve capitalization proposal for the Reporting

Period approved by the Board of directors

In recent years the number of R&D personnel in the Company has been continuously

increasing. By the end of 2021 2022 and 2023 the company had 530 692 and 855 R&D

personnel respectively with a sustained increase in R&D investment. However due to factors

such as intensified market competition and changes in consumer willingness to spend the core

product revenue of the Company experienced a decline. Taking into account the aforementioned

factors as well as the potential capital investment in subsequent reserve projects the capital

needs for overseas business development and the funding requirements for the execution of

repurchase plans the Board of Directors of the Company at its 20th meeting of the 5th session

deliberated and decided not to distribute cash dividends for the year 2023 nor to distribute profits

in any other form.To share the operational achievements and boost investor confidence it is proposed to

authorize the Board of Directors to decide on the mid-term profit distribution plan for 2024

2(including the semi-annual and first three quarters) under the following conditions and implement

it within the specified period: (1) The Company is profitable for the period and the accumulated

undistributed profits are positive. After evaluating the current operating conditions and the funds

required for sustainable future development the Board of Directors deems the funds to be

sufficient and it is suitable to distribute cash dividends for the period; (2) The cumulative amount

of cash dividends during the period shall not exceed 100% of the net profit attributable to

shareholders of the Company.The above proposal is subject to approval by the shareholders' meeting.The Company completed the cash dividend distribution for the 2023 interim period on

September 27 2023 totaling RMB 504 million. The cash dividend amount for the full year 2023

accounted for 44.82% of net profit attributable to shareholders of the Company in the Company's

2023 consolidated financial statements.

3Part II Basic Information of the Company

I. Company Profile

Stock Profile

Previous Stock

Types of Stocks Stock Exchange Stock Name Stock Code

Name

Shanghai Stock

A-shares G-bits 603444 N/A

Exchange

Securities Affairs

Contact Information Board Secretary

Representative

Name LIANG Lili CAI Luxi

Telephone 0592-3213580 0592-3213580

G-bits Building No.4 Wang Hai G-bits Building No.4 Wang Hai

Office Address

Road Software Park II Xiamen Road Software Park II Xiamen

Email ir@g-bits.com ir@g-bits.com

II. Key Accounting Data and Financial Indicators of the Company

(I) Key Accounting Data and Financial Indicators for the Past 3 Years

Unit: RMB Yuan

Item 31 December 2023 31 December 2022 YoY+/- (%) 31 December 2021

Total assets 6636771238.42 6490420298.78 2.25 7103275522.22

Equity attributable to

shareholders of the 4463842027.96 3978734566.03 12.19 4580137503.55

Company

Item 2023 2022 YoY+/- (%) 2021

Operating revenue 4184851388.03 5167615488.17 -19.02 4619046080.80

Net profit attributable

to shareholders of 1125119212.35 1460874459.68 -22.98 1468498092.21

the Company

Net profit attributable

to shareholders of

the Company after

1118962328.861468317227.00-23.791225770911.42

deducting non-

recurring profits and

losses

Net cash flows from

1185500983.671752393962.54-32.352418288430.93

operating activities

a decrease

Weighted average of 6.45

26.0432.4935.97

return on equity (%) percentage

points

Basic earnings per

15.6320.33-23.1220.43

share (RMB/share)

4Description:

i. Overview of Main Game Revenue and Profits

1. Domestic Game Business

(1) The operating revenue and profit of Asktao (PC) this year remained basically flat

compared to last year;

(2) The operating revenue of Asktao (Mobile) this year decreased compared to last

year with distribution expenses remaining basically stable resulting in a decrease in overall profit

compared to last year;

(3) The operating revenue and distribution expenses of Overmortal (Mainland Version)

decreased significantly compared to last year. However the decrease in operating revenue

compared to the decrease in distribution expenses was greater this year resulting in a significant

decrease in overall profit compared to last year;

(4) Aobi Island: Dreamland was launched in July 2022. The operating revenue this

year decreased compared to last year but the decrease in distribution expenses this year was

greater (mainly due to the large distribution expenses at the initial launch in 2022). The product

profits turned losses into profits this year;

(5) Dragon POW! was launched in August 2023 contributing incremental revenue.

The initial distribution expenses was substantial and as of the end of this period it has not yet

made a profit;

(6) Beasts Evolved 2 and Pica Town: Dream Origin Gameplay were launched in

December 2023 and as of the end of the reporting period the games are still in a loss-making

state.

2. Overview of Overseas Business

This year the Company's overseas revenue totaled RMB 272 million an increase of

5.03% compared to last year. The Company primarily launched Overmortal (European and

5American version) overseas this year. As of the end of the reporting period the overall overseas

gaming business has not yet generated profits.ii. Overview of Company Personnel

1. At the end of the reporting period the total number of employees was 1447 an increase

of 193 compared to the end of the previous year (a growth of 15.39%). Among them the number

of R&D personnel increased by 163 and the number of operational personnel increased by 24.

2. The average monthly number of employees in the Company this year was approximately

1386 an increase of approximately 246 compared to last year (a growth of 21.58%). Among

them the number of R&D personnel increased by approximately 159 and the number of

operational personnel increased by approximately 83.The number of Company employees increased compared to the previous year resulting in

corresponding increases in basic salaries and related expenses. However bonuses provided by

the Company based on operational performance decreased compared to the previous year

resulting in a slight decrease in overall personnel-related expenses.iii. Overview of Equity Investment Business

The Company's investment targets mainly consist of upstream and downstream enterprises

in the game industry or industry investment funds. There were a few new equity investments this

year. The total return from investment business this year (including investment income gains or

losses from changes in fair value assets impairment losses etc.) are detailed in the table below:

Unit: RMB Yuan

Item 2023 2022

Investment income recognized under the equity

method for joint ventures and associates

9207061.6474292570.87

(Profits of the investee recognized based on

ownership percentage)

Provision for impairment of long-term equity

investments -19961119.52 -143022342.67

(Impairment of equity investments)

Investment income

2198115.56-54000.00

(Gain on disposal of equity investments)

Gain or loss from fair value changes of other non-

-42380484.84-67007069.44

current financial assets

6Item 2023 2022

(Fair value changes of investees)

Investment income during the holding period of

other non-current financial assets 6180720.21

(Dividends from investees)

Total -50936427.16 -129610121.03

iv. Overview of Foreign Exchange Gain/Losses

The period-end central parity rate of the USD against the RMB was 7.0827 representing

an increase of 1.70% compared to the end of the previous year. Some of the Company's

transactions are settled in USD and the Company holds a relatively large amount of USD. The

income generated from exchange rate changes this year amounted to RMB 31.51 million (of

which RMB 19.17 million is attributable to shareholders of the Company). In comparison the

income generated from exchange rate changes in the same period last year was RMB 173 million

(with the exchange rate at the end of the previous year increasing by 9.24% compared to the

end of the year before last) This year's income generated from exchange rate changes

decreased by RMB 141 million compared to the previous year.v. Overview of Operating Cash Flow

1. The net cash flow from operating activities for the current year decreased by 32.35%

compared to last year mainly due to a year-on-year decrease in revenue from core products

resulting in a decrease in cash inflows from operating activities.

2. The year-on-year decrease in operating revenue for the current year was 19.02% which

is roughly equivalent to the decrease in cash inflows from operating activities (a year-on-year

decrease of 17.78%). However the year-on-year decrease in cash outflows from operating

activities was only 10.76%. Therefore the decrease in net cash flow from operating activities

exceeded the decrease in operating revenue.vi. Overview of Deferred Game Revenue

As of December 31 2023 the Company's unamortized deferred game revenue balance

amounts to 441 million yuan a decrease of RMB 115 million compared to the previous year-end

7balance of RMB 556 million. The main reasons are:

1. The Company's cooperation with the developer of Mole's World expired on May 26 2023

and the Company recognized the deferred revenue balance as operating revenue during the

reporting period as the performance obligations are no longer required.

2. The decrease in revenue from core products led to a corresponding decrease in the

balance of deferred revenue.vii. Adjusted Net Profit Attributable to Shareholders of the Company

To better reflect the operating performance of the Company's main business the impact of

exchange rate changes and equity investment activities on profit has been excluded. The

adjusted net profit attributable to shareholders of the Company for the year 2023 decreased by

21.35% compared to last year. The summary is as follows:

Unit: RMB Yuan

Item 2023 2022

Net profit attributable to shareholders of the Company 1125119212.35 1460874459.68

Less: (1) Changes in Equity Holdings Period (Gains

or Losses from Changes in Fair Value Investment -60053823.16 -107674340.91

Income and Asset Impairment Losses etc.)

(2) Foreign Exchange Gains 19167301.84 104159091.54

(3) Taxes and Charges Related to Investment

-2522112.51-21352917.98

Operations and Foreign Exchange Movements

Adjusted Net Profit Attributable to Shareholders of the

1168527846.181485742627.03

Company(II) Quarterly Key Accounting Data during the Reporting Period

Q1 Q2 Q3 Q4 Total

Operating

1144370036.561204554622.60957847434.54878079294.334184851388.03

revenue

Net profit

attributable to

306552774.63369418231.91183338216.61265809989.201125119212.35

shareholders of

the Company

Net profit

attributable to

shareholders of

280615068.87365081137.68178116785.81295149336.501118962328.86

the Company

after deducting

non-recurring

8Q1 Q2 Q3 Q4 Total

profits and

losses

Net cash flows

from operating 245586232.47 356063608.17 222909244.23 360941898.80 1185500983.67

activities

Description:

1. The decrease in fourth-quarter revenue compared to the third quarter is mainly due to a

decrease in revenue from core products and a relatively small contribution from newly launched

products.

2. The increase in net profit attributable to shareholders of the Company in the fourth

quarter compared to the third quarter is mainly due to:

(1) In the first three quarters of the year the provision for bonuses was relatively

sufficient based on operating performance. However at the year-end a portion of the bonuses

was offset based on the Company's annual operating performance project performance and

employee performance.

(2) In the fourth quarter of the year Xiamen Leiting Interactive Network Co. Ltd. offset

the difference between the provision for income tax based on a 25% rate in 2022 and the actual

settlement and payment of taxes. Based on cautious consideration income tax was still

provisioned at a rate of 25% for the year 2023.

3. The increase in net cash flow from operating activities in the fourth quarter compared to

the third quarter is mainly due to:

(1) The Company typically pays salaries on the 5th of each month. However due to the

National Day holiday salaries were paid at the end of September resulting in lower salary

payments in the fourth quarter compared to the third quarter.

(2) Fluctuations in quarterly performance and the tax declaration period resulted in lower

tax payments in the fourth quarter compared to the third quarter.

9III. Shareholder Composition

(I) Number and shareholding of the Company's shareholders

Total number of ordinary shareholders at the end of the reporting period 21808

Total number of ordinary shareholders as of the end of the previous month before

26350

the disclosure date of the annual report

Total number of preferred shareholders with voting rights restored at the end of the

-

reporting period

Total number of preferred shareholders with voting rights restored as of the end of

-

the previous month before the disclosure date of the annual report

Top 10 shareholders

Number of Pledged marked or

Increase/decreas shares held at frozen shares

Name of Shareholding Restricted Nature of

e in the Reporting the end of the

shareholder percentage (%) shares held Shareholder

Period reporting Status Quantity

period

Domestic

LU Hongyan -216860 21412615 29.72 None

individual

Domestic

CHEN Tuolin 8240025 11.44 None

individual

Hong Kong

Securities Overseas

1457789 7058812 9.80 None

Clearing corporation

Company Ltd.Domestic

HUANG Zhihui -75500 1374782 1.91 None

individual

Domestic

LI Peiying 1350000 1.87 None

individual

Zhongtai

Securities Asset

Management -

China Merchants

-437459 891281 1.24 None Other

Bank - Zhongtai

Xinghe No. 12

Collective Asset

Management Plan

China Minsheng

Bank Co. Ltd. -

Huaxia CSI

Animation &

546936 682008 0.95 None Other

Game Exchange-

Traded Open-End

Index Securities

Investment Fund

China

Construction Bank

Corporation - -139623 423811 0.59 None Other

Zhongtai Kaiyang

Value-Optimized

10Flexible Allocation

Mixed-Type

Securities

Investment Fund

China Universal

Asset

Management-

China Life

Insurance Co.Ltd. - Dividend

Insurance-China

Universal Asset 409700 409700 0.57 None Other

Management

Growth Equity

Portfolio Single

Asset

Management Plan

(Available for

Sale)

Ping An Fund -

Ping An Life

Insurance

Company of

China Ltd. - Ping

An Life - Ping An -217776 398968 0.55 None Other

Fund Equity

Entrusted

Investment No. 1

Single Asset

Management Plan

Related or acting-in-concert parties

N/A

among the shareholders listed above

Explanation of preferred

shareholders with voting rights

N/A

restored and their shareholding

quantities(II) Diagram of Equity and Control Relationships Between the Company and

Controlling Shareholder

11(III) Diagram of Equity and Control Relationships Between the Company and the

Ultimate Controlling Party

12Part III Management Discussion and Analysis

I. Discussion and Analysis of Business Operations

The Company specializes in the development and operation of online games with a focus

on nurturing innovative talent and promoting efficiency. The Company’s mission is to present

unique products and enriching entertainment to a global audience.In terms of in-house game development the Company's self-developed products such as

Asktao (PC) Asktao (Mobile) and Overmortal have garnered a strong following among players

and maintained solid profitability. Asktao (PC) has been in continuous operation for nearly 18

years since its launch in 2006 releasing key updates such as New Year versions anniversary

versions mid-year versions and zodiac-themed versions all of which have been well-received

by players. Asktao (Mobile) available for almost 8 years has consistently performed well with

an average ranking of 35th on the App Store's bestselling games list during the reporting period

with a peak ranking of 10th place. Overmortal launched in February 2021 has maintained an

average ranking of 44th on the App Store's bestselling games list during the reporting period

with a peak ranking of 7th place.In terms of game operation the Company maintains a "boutique" approach through its self-

operated platform Leiting Game implementing a differentiation strategy. Over years of

accumulation and refinement Leiting Game has developed outstanding game operation

capabilities and has successfully operated a diverse portfolio of games including Asktao (Mobile)

Overmortal Aobi Island: Dreamland Dragon POW! World Flipper Tale of Immortal (PC)

Dungeon Survivor II: Dark Tide (Android) Dungeon Survivor III: Dark Genesis Funny Fighters:

Battle Royale and Gumballs among others.In the future the Company will continue to iterate and update existing products to enhance

game performance and user experience as well as prolong the lifecycle of products through

continuous IP development. In terms of new product research and development the Company

will remain focused on MMORPG idle game categories and SLG while exploring content-

oriented products. The goal is to consistently strengthen the engineering capabilities of the R&D

13team and develop high-quality games that combine entertainment playability and commercially

viable design. Regarding product licensing the Company will continue to focus on classic gaming

IPs multiplayer competitive games mid-core games and commercially viable games with

experiential differences. This approach will be adjusted according to market dynamics and other

relevant factors.The Company will increase its investment in overseas markets continuously. Apart from a

few reserved IP-based products all in-house developed products must be targeted towards

overseas markets to be considered for approval. The Company will also continue to recruit

outstanding producers and distribution teams with profound insights into various cultures

worldwide to accelerate the development of its overseas business.(I) Major Product Performance

Overview of Launched Products:

In-house

Name Genre Release Date

Developed/Licensed

Asktao (PC) In-house Developed Turn-Based MMORPG April 2006

Asktao (Mobile) In-house Developed Turn-Based MMORPG April 2016

Idle Taoist Immortality

Overmortal In-house Developed February 2021

Cultivation Game

Aobi Island: Dreamland Licensed Casual Simulation July 2022

Fantasy Roguelike Shooting

Dragon POW! Licensed August 2023

Game

First-Person Shooting PC

Outpost: Infinity Siege In-house Developed March 2024

Game

Monster Never Cry In-house Developed Western Fantasy Idle Game March 2024

Beasts Evolved 2 Licensed Strategy Card Game December 2023

Funny Fighters: Battle

In-house Developed Casual Competitive RPG July 2019

Royale

Licensed in Charge

World Flipper of Localization RPG with Pinball Element October 2021

Development

Dungeon Survivor III:

Licensed Dungeon RPG October 2021

Dark Genesis

Note: All the games are mobile games except Asktao (PC) and Outpost: Infinity Siege.

14i. Asktao (PC)

The Company’s first product Asktao (PC) an online game that the Company developed

independently was launched in April 2006 and quickly became a favorite among gamers even

reaching a peak of nearly one million concurrent users. The game's excellence was recognized

with the Best Design for Digital Balance and the Best 2D (characters/scenes) Art Design awards

at the 5th annual CGDA (China Game Developers Awards). It was also nominated as one of the

Top 10 Outstanding PC Games in 2022 by CADPA (China Audio-Video and Digital Publishing

Association).Since its release in 2006 Asktao (PC) has won players' hearts with its high-quality

gameplay and reasonable business design. To prolong the game's life cycle and increase its IP

value the Company adapts to market trends and player feedback to update the game

consistently. Every year the Company release four major updates the new year annual mid-

year and zodiac updates to keep the game fresh and maintain its profitability.ii. Asktao (Mobile)

In April 2016 the Company launched Asktao (Mobile) an in-house developed MMORPG.It retains the narrative and world setting of Asktao (PC). Harnessing the loyal user base and IP

value the PC version built over the past decade and with extensive user research it was deeply

optimized to adapt its core gameplay to the mobile platform. The Company also incorporates

15user feedback into regular updates to ensure the game meets player expectations. To extend

the game's life cycle the Company persistently work on enhancing the Asktao brand and its IP

value.Due to its exceptional performance Asktao (Mobile) has gained industry recognition and

was chosen as the 6th game to win the China Excellent Publication Award (Audio-Visual

Electronic Game Publication) from the CADPA. It also won several other awards as well

including Best Original Mobile Game at the 2016 Golden Plume Awards and Best Game Music

Design at the 9th CGDA. It was voted one of the Top Ten Most Popular Original Mobile Online

Games of 2016.During the reporting period Asktao (Mobile) continued its tradition of four major version

update from previous years. In January the new year's costume was launched. The 7th-

anniversary grand event in April featured a fireworks festival a new server ceremony and other

special events. The 7th-anniversary theme song performed by singer Xianzi awakened the

sentimental feelings of fellow players in the game. In July the summer event provided players

with exclusive stress-relief gameplay. In October the National Day event was introduced with

the launch of the custom short film. In November adopting a “Fellow Daoists Create Together”

approach the game introduced its first animated series - Wulong Daoist Adventures in

Zhongzhou presenting players with a rich and immersive gaming world.During the reporting period Asktao (Mobile) maintained an average ranking of 35th on the

App Store's bestselling game list with a peak ranking of 10th.

16iii. Overmortal

Overmortal is an in-house developed idle Taoist immortality cultivation mobile game with

a traditional Chinese ink wash art style. The game depicts a Taoist realm inhabited by humans

immortals monsters and demons. It faithfully recreates the stages and mechanisms of Taoist

spiritual cultivation as well as displaying abilities and techniques from similar novels of the genre.Accompanied by dynamic lighting and sound effects players will enjoy an immersive and

engaging gaming experience.With outstanding game development and operational performance Overmortal has

received high industry recognition winning awards such as the Best Concept Art Design award

at the 12th CGDA the Best Creativity for Mobile Games award at the 14th CGDA and

nominations for the Top 10 Outstanding Creative Games and Top 10 Emerging Games by the

CADPA in 2021.In 2023 Overmortal officially launched the "Guardian Heritage" cultural public

welfare project. It has successfully implemented various intangible cultural heritage public

welfare activities including cuju (ancient Chinese football) paper cutting traditional opera

shadow puppetry and more. The game was honored with the "Outstanding Cultural Heritage

Game of the Year" award at the 8th Golden Gyro Award.After over three years of operation Overmortal has accumulated over 25 million registered

users. In the subsequent operational strategy the Company will focus more on existing users

17refining user acquisition to reduce inefficient spending. In terms of promotion there will be a

continued emphasis on brand exposure moderate adjustments and control of performance-

based advertising expenses and active exploration of innovative marketing methods. For user

operations activities such as daily live streaming Key Opinion Consumer (KOC) promotion

content creation e-commerce initiatives and community re-engagement will be carried out to

continually enhance user engagement and interaction. Simultaneously Overmortal will persist in

IP development enriching game content with diverse derivative materials such as novels music

comics and animations to boost brand influence and foster a unique IP culture recognition

among players.During the reporting period Overmortal maintained an average ranking of 44th on the App

Store's bestselling game list with a peak ranking of 7th.iv. Aobi Island: Dreamland

Aobi Island: Dreamland is a casual mobile game based off an existing IP launched on July

12 2022. The game retains many iconic elements from its web-based predecessor while

introducing various social interaction features and integrating fashion trends such as modernized

Chinese traditional styles. Players can engage in various in-game features such as character

development management simulation and outfit changing. The game has been updated at a

rapid pace since its release providing players with a fresh and varied gaming experience.

18Since its launch the game has maintained a rapid iteration and update pace continuously

introducing new events gameplay features and various brand/IP collaborations. Collaborations

have included partnerships with CCTV Animation Journey to the West The Legend of Nezha

The Adventures of Little Carp and other classic Chinese animation IPs) as well as Pleasant

Goat and Big Big Wolf totaling 11 well-known brands/IPs. A series of exciting events have been

launched providing players with a diverse and enriching gaming experience.v. Dragon POW!

Launched on August 11 2023 Dragon POW! is a top down shoot 'em up mobile game with

a unique gameplay mechanic of counterattacking by devouring bullets. Players take on the role

of a dragon knight who travels through various kingdoms with a small black dragon to retrieve

the lost treasures of the dragons. Instead of dodging enemy attacks players can swallow

incoming bullets to unleash powerful counterattacks resulting in a thrilling gameplay experience.Since the game's launch it has been widely loved by players due to its innovative differentiation

in theme and gameplay.

19vi. Outpost: Infinity Siege

Outpost: Infinity Siege is a first-person shooting PC game that focuses on multiplayer

cooperative survival exploration and construction. It was officially released on the Steam on

March 27th 2024. The game combines three gameplay elements: FPS (first-person shooter)

RTS (real-time strategy) and TD (tower defense). Players can build their own exclusive outposts

casually combine a variety of weapons and ammunition and experience diverse game modes

varied terrains and exploration and battles filled with random elements.

20(II) Overview of Main Reserve Products

The Company's main reserve products are as follows:

Main Reserve Products (In-house Developed)

Products Estimated

Status of Game Planned Regions for

Developed In- Genre Release Date

ISBN Licensing Release

House

Mainland China

Idle Taoist

Hong Kong Macao

M72 (Code Name) ISBN License Applied Cultivation TBD

Taiwan and

Simulation

Southeast Asia

Mainland China

Hong Kong Macao Second Half

Fantasy Idle

M88 (Code Name) ISBN License Applied and Taiwan as well of 2024

Cultivation Game

as Japan and South (Overseas)

Korea

ISBN License

Fortress Battle Tower Defense SLG Worldwide TBD

Obtained

Western Fantasy

M11 (Code Name) Not Yet Applied Worldwide TBD

Idle Game

Note: The ISBN License is a mandatory government approval required to legally launch a

game in China.Main Reserve Products (Licensed)

ISBN Authorized Estimated Release

Licensed Products Genre

License Regions Date

3D Vertical

One Piece: Dream

Owned Adventure Mobile Mainland China April 1st 2024

Pose

Game

Science Fiction

Theme Card Game Second Half of 2024

Billion Light Years Owned Worldwide

with Light SLG (Mainland China)

Elements

League of Gods:

Owned Chinoiserie RPG Mainland China Second Half of 2024

Fantasyland

Mainland China

Business Simulation Hong Kong Macao 2024

Chinese Cuisine Cruise Owned

Game Taiwan and (Overseas)

Singapore Malaysia

Lost Castle 2 Not Owned Roguelike Worldwide TBD

Note: 1. The games listed above are some of the Company's reserved products among which

One Piece: Dream Pose is co-distributed by Leiting Games in collaboration with other

companies.

2. The final launch status timing and intended release regions of games listed in the

21product reserve inventory are subject to uncertainty and may depend on products and market

conditions. Please stay up to date with the latest news and announcements from Leiting

Games.

3. The game Billion Light Years is identified by the codename and this codename is

provisional and does not represent the final official name.The introduction of some reserve products is as follows:

i. M72 (Code Name)

M72 (Code Name) is an idle mobile game with a Taoist immortality theme. You start as a

novice Taoist and gradually grow into an important member of your sect engaging in

breathtaking adventures across three realms. The game brings to life 3D aerial combat

recreating the mid-air battles and the use of magical talismans reminiscent of renowned Chinese

fantasy tales. Having applied for a license by the end of 2023 M72 (Code Name) is now

passionately under development.ii. M88 (Code Name)

M88 (Code Name) is an immersive idle MMORPG mobile game. Within the game players

have the freedom to customize their characters combine diverse skillsets and select their

preferred class branches. Employing strategies to combat formidable foes players explore the

realm of lost mysterious legends in this world of sword and magic. You can build your own homes

22engage in guild activities participate in team battles and embark on adventurous journeys with

other players relaxing in the laid-back idle gaming experiences. The overseas version of M88

(Code Name) is scheduled to be launched in the second half of 2024.

iii. One Piece: Dream Pose

One Piece: Dream Pose is an immersive 3D mobile game designed for portrait mode

and officially licensed by Toei Animation based on the beloved One Piece IP. As captains

players can rally companions from the New World and step into the shoes of the Straw Hat

Pirates reliving their epic adventures in the One Piece universe. The game's world is crafted

with stunning details and graphics. The game has secured its license and is scheduled to be

launched on April 1st 2024.

23iv. Billion Light Years

Billion Light Years is an engaging space warfare strategy game. Players begin their

gaming experience with a midcore strategy card game which seamlessly transitions into a

more casual SLG gameplay as they progress. Within the game players can immerse

themselves in adrenaline-fueled real-time battles strategize on ship customization and

weapon combinations and collect various types of sci-fi battleships. Additionally players can

set sail on thrilling expeditions experience unexpected events and team up with allies for

epic cosmic battles. The game has secured its license and is scheduled to be launched in

the second half of 2024.

24(III) Overseas Business Overview

The Company has been actively expanding its overseas operations gradually establishing

a comprehensive system for testing and releasing products abroad covering most regions

overseas. This enables the Company’s Minimum Viable Product (MVP) approach can be easily

applied in overseas markets allowing for earlier participation in paid testing compared to the

domestic market. This provides more comprehensive basic information and data for product

selection development and optimization.In 2023 the Company's overseas business achieved operating revenue of RMB 272 million

representing a year-on-year growth of 5.03%. During the Reporting Period the Company

successfully launched products overseas including Overmortal (European and American

version) Overmortal (Vietnamese version) and Funny Fighters: Battle Royale (Southeast Asian

version). In January 2024 Dragon POW! was launched in the Hong Kong Macau Taiwan

regions and South Korea while other previously launched projects continued to operate steadily.Furthermore several in-house developed products from the Company have undergone

multiple rounds of testing in overseas markets adopting the MVP approach for rapid iteration.The Company also has a reserve of several licensed products for overseas distribution including

Code M88 Billion Light Year Chinese Cuisine Cruise Lost Castle 2 and more.

25(IV) Investment Activities Overview

The Company continues to deepen its presence in the gaming market focusing on the

research and development as well as operational aspects of online gaming. Simultaneously it

invests in upstream and downstream enterprises related to the game industry including high-

quality game developers publishers and industry funds.Below are introductions to some of the enterprises in which the Company has invested or

holds shares:

i. Qingci Games Inc.Qingci Games established in March 2012 specializes in online game development and

operations. It's known for The Marvelous Snail the idle mobile game with a beautiful hand-drawn

art style and the roguelike game Gumballs. It was listed on the Hong Kong Exchanges in

December 2021 and G-bits holds an 18.55% stake in Qingci Games.According to publicly disclosed information from Qingci Games the game The Marvelous

Snail has been released in multiple overseas regions including Japan the United States

Canada Australia and Thailand. As of the end of 2023 the total revenue of The Marvelous Snail

both domestically and internationally has reached approximately RMB 3.26 billion with a

cumulative registered user count exceeding 26.72 million.ii. TapTap

TapTap founded in March 2016 manages the TapTap platform. G-bits holds a 9.67% stake

in TapTap. TapTap platform is a renowned third-party platform connecting game developers

publishers and players allowing users to download high-quality games and share their

experiences with others. From January to June 2023 the average monthly active users for the

TapTap Chinese version App were approximately 33.97 million people while the TapTap

international version app had an average of around 7.14 million monthly active users.iii. Xiamen Yongshi Technology Co. Ltd.Xiamen Yongshi Technology Co. Ltd. established in December 2014 focuses on online

26game development and production. G-bits holds a 20.00% stake in Xiamen Yongshi. Azure Lane

an anime-style game co-developed by Xiamen Yongshi is the first domestically produced

second-dimensional game to top the Japanese iOS bestselling list. It received the Google Play

Best Game Award in 2017 and holds a 9.4 rating on TapTap. Another in-house developed game

Eye of Deep Space was honored with the "Best 3D Game Award" on the 2021 Made with Unity

China list and has garnered over 0.13 million five-star reviews on the App Store.iv. Xiamen Taojin Interactive Network Co. Ltd.Established in June 2013 Xiamen Taojin Interactive Network Co. Ltd. focuses on online

game development and production. Xiamen Taojin created the popular roguelike series Dungeon

Survivor. G-bits holds a 30.00% stake in Xiamen Yongshi. Developed by Taojin Interactive

Dungeon Survivor II: Dark Tide (Android Version) and Dungeon Survivor III: Dark Genesis are

operated by Leiting Game. As of the end of 2023 Dungeon Survivor II: Dark Tide (Android

Version) has accumulated a registered user count exceeding tens of millions.v. Xiamen Zhenyouqu Information Technology Co. Ltd.Xiamen Zhenyouqu Information Technology Co. Ltd. established in August 2012 mainly

develops and produces online games. G-bits holds a 10.00% stake in Xiamen Zhenyouqu. It has

numerous popular games such as Sausage Party Ulala: Idle Adventure and Rapid Clash. In

particular Sausage Party has over 240 million downloads on TapTap.vi. Unity Technologies China

Unity Technologies China established on November 29 2021 is a joint venture of US-

based game engine developer Unity Technologies. G-bits holds a 1.6% stake in Unity

Technologies China. Founded in 2004 Unity Technologies is one of the leading companies in

the industry. Unity Technologies China is committed to creating a more suitable engine version

for local developers and its products have extensive applications in various fields such as

gaming automotive consumer culture and tourism industrial manufacturing and film and

animation. In 2023 Unity Technologies China officially launched the Unity Technologies China

Edition Engine marking the commencement of the localization process for Unity in China.

27vii. PeroPeroGames

PeroPeroGames founded in August 2017 mainly develops and produces online games.G-bits holds a 15.00% stake in PeroPeroGames. Its parkour-themed music game Muse Dash

has accumulated sales exceeding 10 million copies and it boasts a positive user review rate of

90% on the Steam.

II. Industry Overview During the Reporting Period

(I) Industry Landscape

The cultural industries of online gaming and online animation are important branches of the

internet economy benefiting from the overall growth of the internet industry and exhibiting rapid

development over an extended period. In recent years as the demographic dividends of the

game industry have gradually diminished the market has entered a stage of stock competition.The industry growth rate is gradually slowing down marking a period characterized by both

challenges and opportunities.According to the 2023 China Game Industry Report jointly released by the Game Publishing

Committee of China Audio-visual and Digital Publishing Association (GPC) and the China Game

Industry Research Institute the Chinese game user base reached 668 million people with a

year-on-year growth of 0.61%. The actual sales revenue of the China’s domestic game market

in 2023 reached RMB 302.96 billion a year-on-year growth of 13.95%. This growth was primarily

driven by the release of high-quality new games. In the segmented market mobile games still

maintain a leading position with actual sales revenue accounting for 74.88%. In addition PC

and console games also have a considerable number of products and audiences and new tracks

such as cross-platform games and mini-games have shown impressive performance making the

industry growth direction more flexible and diverse.

28"Going global" remains a key development strategy for many gaming companies in China.

According to the 2023 Research Report on Chinese Gaming Overseas compiled by China Audio-

visual and Digital Publishing Association (GPC) and the China Game Industry Research Institute

the actual sales revenue of games developed independently by China in overseas markets in

2023 reached US$16.37 billion experiencing a 5.65% year-on-year decrease. Intense

competition in the international market rising costs of acquiring traffic and a lack of localized

talent are significant challenges for China gaming companies venturing into overseas business.Furthermore technological innovation has become a key driver of global competitiveness

in the game industry. In 2023 the emergence of various AI tools has played an increasingly

important role in improving game development efficiency and content generation quality driving

more innovation applications in the gaming field and bringing about more changes and

opportunities. Therefore adhering to high-quality and refined development embracing a dual-

drive strategy of technology and content innovation continuously cultivating differentiated tracks

and placing more emphasis on user experience have become strategic means for the Chinese

game industry to face competition and achieve healthy development.

29(II) Impact of Industry Policies on the Company's Sector

In recent years regulatory authorities have attached great importance to the standardized

and healthy development of the game industry issuing a series of policies related to the

protection of minors and prevention of gaming addiction. Since the implementation of the revised

Law of the People's Republic of China on Protection of Minors in 2021 and the issuance of the

Notice of Further Strict Management to Effectively Prevent Minors from Addiction to Online

Games the gaming regulatory authorities the game industry and various sectors of society have

collaborated efforts. Approved games have achieved comprehensive access to the anti-addiction

real-name authentication system. The total gaming duration and spending limits for minors have

significantly decreased marking a phased achievement in the efforts to prevent gaming addiction

among minors. On January 1 2024 the Regulation on the Protection of Minors in Cyberspace

officially came into effect providing more specific guidelines for the improvement and

implementation of the protection of minors in the game industry.In addition to emphasizing the implementation of the basic requirements of the anti-

addiction gaming system regulatory authorities have also put forward corresponding

requirements for user information protection product content review and the development of

functional games. This indicates the key areas for the future work of gaming enterprises

emphasizing the need to enhance the protection of personal information security while ensuring

30the protection of minors.

As the policy environment for the game industry in our country continues to optimize with

successive laws regulations and institutional norms being introduced and a continued focus on

high-quality original games awareness of protecting gaming intellectual property rights has

further increased. The ecological environment of the game industry in our country is becoming

healthier and more standardized moving towards high-quality and high-level development.III. Overview of Core Business During the Reporting Period

(I) Core Business Operations of the Company

The Company specializes in the development and operation of online games with a focus

on nurturing innovative talent and promoting efficiency. The Company’s mission is to present

unique products and enriching entertainment to a global audience.Founded in 2004 the Company has immersed itself in the game industry. Through years

of development and technological advancement the Company has grown significantly

enhancing its technical capabilities and expanding its product portfolio. Rooted in traditional

Chinese culture the Company has developed games such as Asktao (PC) Asktao (Mobile) and

Overmortal. Asktao (PC) has been in continuous operation for nearly 18 years since its debut in

2006. Building on its strong user base and IP popularity the Company launched the mobile

version of the MMORPG Asktao(Mobile) in April 2016 which has enjoyed steady popularity for

nearly 8 years. In February 2021 the Company launched Overmortal an ink-wash style idle

mobile game about the Taoist cultivation of immortality. Since its release it has attracted over

25 million users.

Leiting Games a platform the Company operates independently has robust game

management capabilities. Leiting Games has managed a wide range of games such as Asktao

(Mobile) Overmortal Aobi Island: Dreamland Dragon POW! World Flipper Tale of Immortal

(PC) Dungeon Survivor II: Dark Tide (Android) Dungeon Survivor III: Dark Genesis Funny

Fighters: Battle Royale and Gumballs among other successful titles.

31(II) Primary Business Model of the Company

i. Revenue Streams

The payment models for online games primarily include pay for virtual items pay for

downloads pay based on playtime and in-game advertising. The Company's game product

revenue mainly comes from the payment model based on virtual items wherein players can enter

the game for free and the operator primarily profits from selling virtual items within the game.Payment for virtual items is the prevalent revenue model adopted by the online game industry in

China.ii. Operating Models

There are three main operating models for the Company’s games: independent operation

licensed operation and cooperative operation.

1) Independent Operation: The Company publishes games on its platform and handles

both publishing and promotion. These games might be developed by the Company or by other

organizations.

2) Licensed Operation: The Company licenses games developed by itself to external

publishers who are responsible for managing the game's publishing and promotion. The

Company’s role is limited to technical support and content development.

3) Cooperative Operation: The Company partners with third-party platforms such as the

App Store and Android application stores to co-publish and promote its games whether

developed by the Company itself or licensed.The Company’s mobile games mainly follow the independent operation and cooperative

operation models. For example Asktao (PC) is licensed to Beijing Guangyu Online Technology

Co.Ltd. and other PC games from the Company’s mainly follow the cooperative operation model.

32(III) Analysis of Core Competencies During the Reporting Period

i. Strong Independent Research and Development (R&D) Capabilities

1. Overview of the Company’s R&D Performance

The Company attached great importance to R&D and talent development. During this

reporting period The Company’s R&D expense amounted to RMB 679 million accounting for

16.23% of its revenue. This sustained investment has laid the foundation for its innovation. The

Company’s R&D team has grown year on year with the number of employees reaching 530 in

2021 692 in 2022 and 855 in 2023 representing 56.08% 55.18% and 59.09% of the total

number of employees respectively.

2. Boost R&D Performance with the Minimum Viable Product (MVP) Approach

Games as a form of cultural entertainment derive their strength from delivering fresh and

captivating experiences to users. The Company places significant emphasis on product

innovation striving to develop games that stand out both unique and commercially. By focusing

33on differentiation the Company continuously explores innovative approaches in core gameplay

conceptualization art style and other aspects thereby enhancing the competitive edge of its

products. However this pursuit of differentiation also escalates the complexity of project

development necessitating enhanced capabilities in gameplay refinement project management

and data analysis within the development teams. Drawing from years of experience the

Company has embraced an iterative development model known as the MVP approach in its R&D

process.In applying the MVP approach to the Company’s R&D at the start of a project the Company

assembles a core team to develop a prototype based on the creative designer's idea. Extensive

user testing is then used to validate the feasibility of the core gameplay mechanics. Throughout

the development process the game undergoes numerous iterations and is fine-tuned based on

test data. This MVP approach starting from the demo version allows the Company to keep a

tight rein on product direction avoid wasteful investments and control R&D costs. Frequent

testing during development helps the Company to control variables between two successive tests

allowing the Company to analyze user behavior feedback more accurately. As a result the

Company has able to address issues that arise during development in a timely manner

increasing R&D efficiency. As the demo evolves into a final project the Company continually

refines and adapts the MVP approach to ensure seamless integration between gameplay testing

and art assets.

34While the MVP approach is effective in controlling R&D costs it doesn't imply smaller

projects or less overall investment. The scope of the project depends on the experience of the

core team project management skills technological accumulation the nature of the project etc.The Company is committed to nurturing excellent game producers over the long term and

through the MVP approach the Company filters projects and allocates more resources in the

hope of producing more innovative engaging and high-quality products.In addition the MVP approach involves the Company’s operations team working closely

with the R&D team on a variety of tests and analyses. This allows the Company to gain a deep

understanding of the market and users of its products so that the Company can tailor its

strategies and minimize the risks and costs of release.

3. Middle Platform Construction A Strong R&D Foundation

The Company has prioritized the establishment of solid R&D middle platforms. This

includes the Company’s Technical Center Art Center Audio Department and Test Center.These pillars support every aspect of development from R&D and art design to soundtrack

creation and product testing. This system not only ensures development efficiency and high

quality output but also optimizes the allocation of resources across projects minimizing

redundant costs and ensuring a stable R&D process.The Company’s Technical Center specializes in game development focusing on both

35conventional and emerging technologies. It provides strong support including performance

testing and optimization effectively tackling technical challenges and improving R&D efficiency.Currently the Technical Center focuses on developing compilers and auxiliary tools for GS while

building server frameworks and various public services rooted in GS. It's designing PKG and

development tool chain is based on the GS environment so that it can develop universal tools

for all R&D teams and provide automated building and deployment solutions. The center

conducts in-depth research on Unity Unreal engine and 3D rendering technologies. The center

standardizes modularizes and builds frameworks for projects to provide service tailored to the

needs of different teams. As a result The Technical Center manages to reduce both the

resources and time costs of game development while improving R&D quality. In addition The

Technical Center applies cutting-edge AI technologies across all stages of game development

including planning development and testing improving both the R&D efficiency and the overall

gaming experience. In 2023 it established an AI Web Hub within the company consolidating

various commonly used AI drawing tools thereby facilitating painting-related tasks and

enhancing efficiency.The Company’s Art Center focuses on improving the quality and style of game art. It

establishes efficient pipelines for 2D 3D and content-oriented production lines laying a solid

foundation for both existing and future projects. Tailoring unique art styles to fit each game's

theme the Art Center strives to create differentiated game experiences while catering to diverse

aesthetic preferences incorporating mainstream elements to evoke emotional resonance with

players. Through continuous testing and iteration it seeks the optimal balance between

distinctiveness and mainstream appeal. Focusing on artistic excellence the Art Center sets

rigorous standards and guidelines for each product continually enhancing design capabilities

and quality control. The Art Center closely monitors the development of new technologies in its

daily work and actively promotes the application of cutting-edge technologies such as AIGC in

game art. In the field of game image generation these techniques are utilized to create artistic

original drawings and in-game assets including icons. These AI drawing tools help reduce the

time and resources required for producing a large volume of content enabling a more efficient

workflow and enhancing the productivity of game art production.

36The Company’s Audio Department is dedicated to creating immersive audio that integrates

with the game's narrative and gameplay. It pioneers the use of state-of-the-art audio and AI

technology to effectively create audio that enhances the gaming experience and is tailored to

player preferences.The Company’s Test Center manages project testing for daily and version updates to

ensure that the performance is up to the standard. The center ensures a stable allocation of

testing resources improving both the efficiency and standardization of our testing process. By

drawing on past experience it provides reusable testing methodologies to ensure that our games

maintain a stable quality.ii. Exceptional Game Operations

1. Overview of Company's Game Operations

Leiting Games an independently operated platform is committed to a quality-first

approach that prioritizes the user experience. The high-quality unique and highly engaging

games under Leiting Games' operations have gained significant popularity and earned an

excellent reputation.With years of experience Leiting Games has developed a comprehensive

understanding of operating various game genres including MMORPG Roguelike idle games

and casual simulation. Leiting Games' operational framework covers everything such as game

version optimization brand development media outreach event planning cooperative channels

customer support etc. With a keen understanding of the unique features of mobile games and

the target market as well as a sharp insight into player demographics behaviors and spending

habits Leiting Games tailor its strategies to deliver precise and effective promotion.

372. Player-Centric Approach for Long-Term Operations

The Company upholds a "player-centric" game design and operation philosophy dedicated

to fostering enjoyable experiences in the entertainment industry.The Company deeply understands user needs and creates high-quality original games

beloved by players. After the game launches the Company strengthens communication with

players through various channels. For example the Asktao (Mobile) project team conducts online

activities annually and organizes offline events to interact with core players regarding game

version planning promotion plans and other aspects. Moreover the Company listens to

feedback from key opinion leaders (KOLs) and collaborates with players to "customize" the game.The Company actively responds to user demands providing sincere and comprehensive

customer service. Guided by the service philosophy of "becoming an official friend to users and

creating a wonderful service experience" the Company embeds a "Contact Customer Service"

button within games. It provides players with comprehensive and meticulous service through

38various channels such as a 24-hour customer service hotline WeChat customer service official

account customer service forums and customer service email catering to users' real-time

inquiries complaints feedback and other requests. Additionally to improve response speed the

Company utilizes advanced technologies such as AI to build an intelligent self-service system

further enhancing customer service levels. A service quality inspection team is also established

to monitor service quality daily aiming to enhance player experience.

3. Precision and Effective Marketing Promotion Strategies

In recent years "buying traffic" has become an important promotion method in the game

industry. However its rising cost can negatively impact a game's profitability. Over the years the

Company has consistently prioritized creating unique high-quality products and tailoring its

promotion strategies accordingly. The Company’s promotion plans are based on the game's

features the target market and our understanding of the player base — their preferred platforms

behaviors and spending habits. Simultaneously the Company explores customer acquisition

from various methods including daily live streaming Key Opinion Customer (KOC) promotion

content creation e-commerce and community re-engagement. This allows the Company to

reach its target audience effectively and precisely while avoiding over-reliance on "buying traffic".

39(1) User Relationship Management

The Company values user relationship management as it facilitates communication

between the Company and its players. It allows the Company to meet the evolving demands of

our players by understanding their needs deeply a strategy that benefits its relationship with the

users and enhances the Company’s reputation within the industry. With sincerity towards the

players being the core of the Company’s operations game designers promotions staff and

customer support personnel organized numerous events for players. Some activities for users of

Asktao (Mobile) are as follow:

Since 2016 Asktao (Mobile) project team has been organizing multiple “Designers Talk”

events annually in different cities providing an opportunity for game designers to engage with

players. By the end of 2023 they have covered a total of 18 cities including Wuhan Chengdu

Hangzhou and others. Starting from 2018 Asktao (Mobile) project team has held an annual

Asktao Conference which gives players an opportunity to engage in in-depth discussions and

participate in fun events either online or offline. In 2023 Asktao (Mobile) project team gathered

offline with 51 players to discuss 102 topics. Since 2017 Asktao (Mobile) has held a national

competition every year attracting a huge number of participants. The competition includes warm-

ups point-based matches city matches (offline) knockout stages and finals (offline) creating

an energetic and engaging environment. In 2023 the national championship-related live

broadcasts or videos of Asktao (Mobile) reached 5.33 million people with an official online live

broadcast accumulating 0.19 million views.

(2) Advertising

The Company primarily engages in advertising promotion activities on platforms with active

user engagement by deploying advertising materials Key Opinion Customer (KOC)

recommendations gaming live streams and various other methods. At the same time the

Company supports UGC (user-generated content) across multiple platforms to spread the

product information faster and further. The Company also focuses on user retention with well-

designed gameplay and customer service. The Company believes that improving the user

experience is the key to higher user retention and long-term product success.

40In response to traditional “buying traffic” methods the company consistently refines its

advertising delivery model to adapt to changes in the market and user demands. It strives to

reach the target audience with lower acquisition costs enhancing the level of Return on

Investment (ROI). In terms of innovative marketing the Company’s games like Asktao (Mobile)

and Overmortal have run KOL (key opinion leader) promotional campaigns on short video

platforms based on the dates of major version updates and user activities. These targeted

promotions ensure a continuous flow of new users. Furthermore the Company continuously

explores and experiments with various innovative marketing strategies including the TikTok

Creator Program native bidding ad placements cloud-based micro-end advertising and e-

commerce live streaming.

(3) IP Development

The Company’s IP development aims to enrich the game's world character portrayals and

storylines to deepen players' immersion and emotional connection to the game.Asktao (Mobile) a classic IP that has been in operation for almost 18 years represents the

Company’s efforts to strengthen the Asktao brand. To build the brand the Company is enhancing

game stories and player immersion through various Asktao IP derivatives including novels

audiobooks merchandise and short films. From 2018 to 2021 Asktao (Mobile) successively

released two official novels Asktao: Dashing Spear and Asktao: Tao in the Heart. The Company

invited dozens of veteran players to participate in creative discussions and trial readings for the

novels aiming to vividly depict the world of Asktao (Mobile) as envisioned by the players. In

November 2023 adopting a "Co-creation with Fellow Daoists" approach the Company launched

the first animated series of Asktao (Mobile) titled Wulong Daoist Adventures in Zhongzhou. This

series faithfully reproduces classic scenes and NPC characters from the game presenting

players with a more diverse and immersive gaming world.Overmortal is a unique Taoist immortality cultivation-themed IP which is enhanced by music

recordings comics novels animations and more. Since its launch in 2022 the derivative IP

animation has been consistently updated on platforms such as Tik Tok Kuaishou and Bilibili.The cumulative fan base across all platforms has exceeded 2.5 million. Additionally the game

41continues to engage and retain users through a long-term strategy of IP content. It has released

brand documentaries such as the film Ordinary Yet Extraordinary the mini-drama Mr. White Fox

the audiobook Between Demon and Immortal the game's theme song animation and more.These contents maintain consistently high levels of popularity on major platforms and have

received widespread acclaim from players.

(4) Collaborations

Based on the characteristics of games and players the Company frequently collaborates

with products that have a high overlap with the target user base to conduct joint activities. This

approach aims to attract more user attention and recognition. Collaborative partners include

games novels animated films online animated series and other well-known IPs.During the reporting period Asktao (Mobile) collaborated with the China Academy of Art

and the inheritor of the art of velvet flowers creating a seventh-anniversary costume and a Qixi

(Chinese Valentine's Day) velvet flower gift box that integrate traditional Chinese colors and

patterns. This initiative aimed to promote the protection inheritance and innovation of Chinese

traditional culture and intangible cultural heritage. In addition Overmortal partnered with the West

Lake Scenic Area and the classic cultivation IP Shrouding the Heavens working towards

constructing a " Self-Cultivation Universe" for players to enhance their immersive experience.Aobi Island: Dreamland maintained frequent content updates throughout the year. It collaborated

with 11 well-known brands/IPs including CCTV Animation (Journey to the West The Legend of

Nezha The Adventures of Little Carp) as well as Pleasant Goat and Big Big Wolf launching a

series of exciting activities to provide players with a rich gaming experience.

(5) Charts & Recommendations

The Company’s high-quality unique and intriguing games have earned the

recognition from leading platforms such as the App Store and TapTap. The Company is

regularly featured in its charts attracting a significant number of downloads and earning

widespread attention. In addition players' ratings and discussions on these platforms have

further increased its games' popularity. During the reporting period several of the Company’s

42games including Asktao (Mobile) Overmortal Aobi Island: Dreamland World Flipper

Dungeon Survivor III: Dark Genesis Beasts Evolved 2 and Path of Immortals: Survivor were

featured on popular platforms such as the App Store.

(6) Word-of-Mouth Marketing

The Company leverages its excellent product quality to drive word-of-mouth marketing

through various third-party gaming platforms recommendations from KOCs (key opinion

consumers) WeChat accounts QQ groups and its official channels. The Company’s approach

includes user selection expectation management feature communication and user feedback

tracking to refine and improve its operations.

43Part IV Financial Statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 31 December 2023 31 December 2022

CURRENT ASSETS:

Cash and Cash equivalents 2397018382.09 2628619551.17

Settlements Provision

Loans to banks and other financial institutions

Financial assets held for trading 1125621695.38 629605938.78

Derivative financial assets

Notes receivable

Accounts receivable 238756746.14 264695831.84

Financing receivables

Prepayments 21422780.34 13330296.84

Insurance premium receivable

Due from reinsurers

Receivable reinsurance contract reserve

Other receivables 5599445.09 8022029.25

Including: Interest receivable

Dividends receivable 4000000.00

Financial assets purchased under agreements to resell

Inventories

Contract assets

Assets classified as held for sale

Current portion of non-current assets 11536441.92 20502738.32

Other current assets 11746515.71 14078760.20

Total current assets 3811702006.67 3578855146.40

NON-CURRENT ASSETS:

Loans and advances

Debt investment

Other debt investments

Long-term receivables 11908237.48 16707513.05

Long-term equity investments 1164814123.76 1187261211.65

Other equity instruments investments

Other non-current financial assets 620273547.42 656389807.13

Investment properties 170713042.03 185051014.53

Fixed assets 596402026.29 639100053.20

Construction in progress 1660948.61

Productive biological assets

Oil and gas assets

Right-of-use assets 36327899.47 7639002.23

Intangible assets 69766821.60 72135456.36

Development expenditures

Goodwill 3808266.80 3808266.80

Long-term prepaid expenses 20045631.47 5681818.18

Deferred tax assets 83259745.81 97185342.58

Other non-current assets 46088941.01 40605666.67

Total non-current assets 2825069231.75 2911565152.38

Total assets 6636771238.42 6490420298.78

CURRENT LIABILITIES:

Short-term borrowings

Borrowing from the central bank

44Item 31 December 2023 31 December 2022

Deposits and balances from banks and other financial

institutions

Financial liabilities held for trading

Derivative financial liabilities

Notes payable

Accounts payable 188815811.08 282198091.94

Receipts in advance 501832.24 64876.98

Contract liabilities 417007621.68 509694875.47

Financial assets sold under agreements to buy

Customer deposits and balances from banks and other

financial institutions

Customer brokerage deposits

Securities underwriting brokerage deposits

Payroll and employee benefits payable 455196050.52 530906045.00

Taxes payable 182803660.02 262203676.39

Other payables 34516136.28 75527618.02

Including: Interest payable

Dividend payable

Fees and commission payable

Payable reinsurance

Liabilities classified as held for sale

Current portion of non-current liabilities 10800876.22 4148677.00

Other current liabilities 13186313.60 25882386.82

Total current liabilities 1302828301.64 1690626247.62

NON-CURRENT LIABILITIES:

Insurance reserves

Long-term borrowings

Bonds payable

Including: Preference share

Perpetual debt

Lease liabilities 28132847.55 3606651.23

Long-term Payable

Long-term payroll and employee benefits payable

Provisions

Deferred income 159642.70 684231.97

Deferred tax liabilities 705651.53 3464492.20

Other non-current liabilities 57336347.24 82537676.23

Total non-current liabilities 86334489.02 90293051.63

Total liabilities 1389162790.66 1780919299.25

SHAREHOLDERS' EQUITY:

Paid-in capital 72041101.00 71866482.00

Other equity instruments

Including: Preference share

Perpetual debt

Capital reserve 1400918753.30 1334367676.34

Less: treasury shares

Other comprehensive income 73375545.86 59710028.24

Special reserve

Surplus reserve 36020550.50 35941112.50

General reserve

Retained earnings 2881486077.30 2476849266.95

Equity attributable to shareholders of the Company 4463842027.96 3978734566.03

Non-controlling interests 783766419.80 730766433.50

Total shareholders’ equity 5247608447.76 4709500999.53

Total liabilities and shareholders’ equity 6636771238.42 6490420298.78

45Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

COMPANY STATEMENT OF FINANCIAL POSITION

As at 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 31 December 2023 31 December 2022

CURRENT ASSETS:

Cash and Cash equivalents 172514364.01 316357502.93

Financial assets held for trading 328976474.94 60342000.00

Derivative financial assets

Notes receivable

Accounts receivable 45693275.98 31868438.63

Financing receivables

Prepayments 1158216.36 560714.17

Other receivables 70829561.42 116613690.66

Including: Interest receivable

Dividends receivable 69977500.00 114576000.00

Inventories

Contract assets

Assets classified as held for sale

Current portion of non-current assets 5555356.97 4089865.87

Other current assets 383623.67 177765.77

Total current assets 625110873.35 530009978.03

NON-CURRENT ASSETS:

Debt investment

Other debt investments

Long-term receivables 2486121.17 5861968.11

Long-term equity investments 2150458973.88 2128930582.66

Other equity instruments investments

Other non-current financial assets 148546250.01 148339140.34

Investment properties 283235747.11 304655429.83

Fixed assets 10328855.38 10849209.46

Construction in progress

Productive biological assets

Oil and gas assets

Right-of-use assets

Intangible assets 423898.63 518200.56

Development expenditures

Goodwill

Long-term prepaid expenses 364995.95

Deferred tax assets

Other non-current assets

Total non-current assets 2595844842.13 2599154530.96

Total assets 3220955715.48 3129164508.99

CURRENT LIABILITIES:

Short-term borrowings

Financial liabilities held for trading

Derivative financial liabilities

Notes payable

Accounts payable 3091805.96 7546577.55

Receipts in advance 534094.42 34710.95

Contract liabilities 19695860.98 28818229.76

Payroll and employee benefits payable 103614920.85 118552169.31

Taxes payable 27210531.94 47822500.61

46Item 31 December 2023 31 December 2022

Other payables 5012208.17 5109242.69

Including: Interest payable

Dividend payable

Liabilities classified as held for sale

Current portion of non-current liabilities

Other current liabilities 1454183.60 1976867.48

Total current liabilities 160613605.92 209860298.35

NON-CURRENT LIABILITIES:

Long-term borrowings

Bonds payable

Including: Preference share

Perpetual debt

Lease liabilities

Long-term payable

Long-term payroll and employee benefits payable

Provisions

Deferred income 151675.64 533731.97

Deferred tax liabilities 3061614.95

Other non-current liabilities 1777206.67 1653646.50

Total non-current liabilities 1928882.31 5248993.42

Total liabilities 162542488.23 215109291.77

SHAREHOLDERS’ EQUITY:

Paid-in capital 72041101.00 71866482.00

Other equity instruments

Including: Preference share

Perpetual debt

Capital reserve 1210019236.80 1143391521.98

Less: treasury shares

Other comprehensive income -24035.06 -24035.06

Special reserve

Surplus reserve 36020550.50 35941112.50

Retained earnings 1740356374.01 1662880135.80

Total shareholders’ equity 3058413227.25 2914055217.22

Total liabilities and shareholders’ equity 3220955715.48 3129164508.99

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 2023 2022

1. Total revenue 4184851388.03 5167615488.17

Including: Operating revenue 4184851388.03 5167615488.17

Interest income

Net earned premiums

Net fee and commission revenue

2. Total cost of sales 2500157080.35 2800021736.04

Including: Cost of sales 479905478.93 582139390.15

Interest expenses

Fees and commission expenses

Surrenders

Net payments for insurance claims

Net provision of insurance reserve

47Item 2023 2022

Policyholder dividends

Reinsurance expenses

Taxes and surcharges 25074744.32 20542210.28

Selling expenses 1127241515.96 1401713286.40

General and administrative expenses 314983930.97 340059533.55

Research and development expenses 679358601.39 672606989.65

Financial expenses -126407191.22 -217039673.99

Including: Interest expenses 1561576.37 371657.45

Interest income 90555821.67 44784179.87

Add: Other income 41385502.91 48614213.47

Investment income/(losses) 34921944.16 106355390.43

Including: Share of profits or loss of associates and joint

9207061.6474292570.87

ventures

Gain from derecognition of financial assets

measured at amortized cost

Exchange gains or losses

Net exposure hedging gains/ (losses)

Gain/ (losses) on the changes in fair value -32966781.00 -27356324.21

Credit impairment losses 3727608.72 6004840.37

Assets impairment losses -25895706.04 -180603588.49

Gain/ (losses) from disposal of assets 326039.11 -74690.07

3. Operating profit 1706192915.54 2320533593.63

Add: Non-operating income 576190.90 4111201.50

Less: Non-operating expenses 6800538.08 9706890.19

4. Profit/(loss) before tax 1699968568.36 2314937904.94

Less: Income tax expense 238876135.03 355440226.60

5. Net profit /(loss) 1461092433.33 1959497678.34

(1) Categorized by operation continuity

Net profit from continuing operations 1461092433.33 1959497678.34

Net profit from discontinuing operations

(2) Categorized by ownership

Net profit attributable to shareholders of the Company 1125119212.35 1460874459.68

Net profit attributable to non-controlling interests 335973220.98 498623218.66

6. Other comprehensive income net of tax 14236742.09 76362714.35

(1) Other comprehensive income net of tax attributable to

13665517.6273759967.18

shareholders of the Company

(i) Other comprehensive income that will not be reclassified to

profit or loss

Remeasurement gains or losses of a defined benefit plan

Other comprehensive income using the equity method that will

not be reclassified to profit or loss

Changes in fair value of other equity instrument investments

Changes in fair value of enterprise's own credit risk

(ii) Other comprehensive income to be reclassified to profit or

13665517.6273759967.18

loss

Other comprehensive income that can be reclassified to profit

3870111.8424210160.88

or loss in equity method

Changes in fair value of other debt investments

Amount of financial assets reclassified into other

comprehensive income

Provision for credit impairment of other debt investments

Cash flow hedging reserves (effective part of profit and loss of

cash flow hedging)

Exchange differences on translation of foreign currency

9795405.7849549806.30

financial statements

Others

48Item 2023 2022

(2) Other comprehensive income net of tax attributable to non-

571224.472602747.17

controlling interests

7. Total comprehensive income 1475329175.42 2035860392.69

Total comprehensive income attributable to shareholders of the

1138784729.971534634426.86

Company

Total comprehensive income attributable to non-controlling

336544445.45501225965.83

interests

8. Earnings per share

Basic earnings per share (RMB yuan / share) 15.63 20.33

Diluted earnings per share (RMB yuan / share) / /

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

INCOME STATEMENT OF COMPANY

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 2023 2022

1. Total revenue 358670329.43 366952095.41

Less: Total cost of sales 47110325.74 52957080.97

Taxes and surcharges 4621644.92 3978019.77

Selling expenses

Administrative expenses 49461736.62 56893848.36

Research and development expenses 119182218.79 121330495.33

Finance expenses -13529502.51 -1478215.01

Including: Interest expenses (expressed with positive

value)

Interest income (expressed with positive

11999749.201437605.32

value)

Add: Other income 23161446.02 9852216.87

Investment income/(losses) 643832058.16 1069054203.86

Including: Share of profits or losses of associates and

-45879868.75-12277587.40

joint ventures

Gain from derecognition of financial assets

measured at amortized cost

Net exposure hedging gains/ (losses)

Gain/ (losses) on the changes in fair value -4565761.05 9449592.39

Credit impairment losses -509115.93 -278868.81

Assets impairment losses

Gain/ (losses) from disposal of assets 419.03 -26349.81

2. Operating profit/Loss 813742952.10 1221321660.49

Add: Non-operating income 6345.58 22245626.22

Less: Non-operating expenses 1525892.86 1838051.86

3. Profit/(loss) before tax 812223404.82 1241729234.85

Less: Income tax expense 14264764.61 30618060.18

4. Net profit /(loss) 797958640.21 1211111174.67

(1) Net profit from continuing operations 797958640.21 1211111174.67

(2) Net profit from discontinuing operations

5. Other comprehensive income net of tax

(1) Other comprehensive income net of tax

Other comprehensive income that will not be reclassified to

profit or loss

Other comprehensive income using the equity method that

will not be reclassified to profit or loss

Changes in fair value of other equity instrument investments

49Item 2023 2022

Changes in fair value of enterprise's own credit risk

(2) Other comprehensive income to be reclassified to profit or

loss

Other comprehensive income that can be reclassified to

profit or loss in equity method

Changes in fair value of other debt investments

Amount of financial assets reclassified into other

comprehensive income

Provision for credit impairment of other debt investments

Cash flow hedging reserves (effective part of profit and loss

of cash flow hedging)

Exchange differences on translation of foreign currency

financial statements

Others

6. Total comprehensive income 797958640.21 1211111174.67

7. Earnings per share

(1) Basic earnings per share (RMB yuan / share)

(1) Diluted earnings per share (RMB yuan / share)

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 2023 2022

1. CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from the sale of goods and the rendering of services 4275602815.62 5283768708.60

Net increase in customer bank deposits and due to banks and other

financial institutions

Net increase in loans from the central bank

Net increase in funds borrowed from other financial institutions

Cash premiums received on original insurance contracts

Net cash received from re-insurance business

Net increase in deposits and investments from insurers

Cash received from interest fees and commission

Net increase in funds deposit

Net increase in repurchase business funds

Net income from securities trading brokerage business

Tax refunds received

Cash received relating to other operating activities 153020528.31 102742365.44

Sub-total of cash inflows from operating activities 4428623343.93 5386511074.04

Cash paid for purchase of goods and services 689290600.25 805723313.49

Net increase in loans and payments on behalf of customers

Net increase in deposits with central bank and other financial

institutions

Payments for claims for original insurance contracts

Net increase in funds lent

Cash paid for interest fees and commission

Commissions on insurance policies paid

Cash paid to and on behalf of employee 1042923072.57 927760338.06

Cash paid for taxes 465104414.01 676767132.59

Cash paid relating to other operating activities 1045804273.43 1223866327.36

Sub-total of cash outflows from operating activities 3243122360.26 3634117111.50

Net cash flows from operating activities 1185500983.67 1752393962.54

50Item 2023 2022

2. CASH FLOWS FROM INVESTING ACTIVITIES

Cash received from disposal of investments 5032510000.00 5396627362.89

Cash received from investment income 78529048.99 80526820.62

Net proceeds from disposal of property plant and equipment

1310.0060970.00

intangible assets and other long-term assets

Cash received from disposal of subsidiaries and other business

units

Cash received relating to other investing activities 6841666.67

Sub-total of cash inflows from investing activities 5111040358.99 5484056820.18

Purchase of property plant and equipment intangible assets and

55673991.8543603059.73

other non-current assets

Cash paid for investments 5545911111.00 5254320492.69

Net increase in secured loans

Net cash paid for acquisition of a subsidiary and other operating

units

Cash paid relating to other investing activities

Sub-total of cash outflows from investing activities 5601585102.85 5297923552.42

Net cash flows from investing activities -490544743.86 186133267.76

3. CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from investment 63743604.71 677105.70

Including: Cash receipts from capital contributions from non-

controlling interests of subsidiaries

Proceeds from borrowings

Cash receipts relating to other financing activities

Subtotal of cash inflows from financing activities 63743604.71 677105.70

Repayments for debts

Cash payments for distribution of dividends or profit and interest

1013195819.002398348767.95

expenses

Including: Dividends or profit paid to non-controlling shareholders

283992000.00252000000.00

of subsidiaries

Cash payments relating to other financing activities 9796328.24 6132880.88

Subtotal of cash outflows from financing activities 1022992147.24 2404481648.83

Net cash flows from financing activities -959248542.53 -2403804543.13

4. EFFECT OF EXCHANGE RATE CHANGES ON CASH AND

36832233.24187832199.74

CASH EQUIVALENTS

5. NET INCREASE IN CASH AND CASH EQUIVALENTS -227460069.48 -277445113.09

Add: Cash and cash equivalents at beginning of year 2622640821.07 2900085934.16

6. CASH AND CASH EQUIVALENTS AT END OF THE YEAR 2395180751.59 2622640821.07

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

Item 2023 2022

1. CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from the sale of goods and the rendering of services 311647085.47 351742009.71

Tax refunds received

Cash received relating to other operating activities 86859266.26 103204659.03

Sub-total of cash inflows from operating activities 398506351.73 454946668.74

Cash paid for purchase of goods and services 4520905.45 7222101.67

Cash paid to and on behalf of employee 182754174.90 176848240.26

Cash paid for taxes 54430631.86 99585994.33

51Item 2023 2022

Cash paid relating to other operating activities 24747344.33 38592651.08

Sub-total of cash outflows from operating activities 266453056.54 322248987.34

Net cash flows from operating activities 132053295.19 132697681.40

2. CASH FLOWS FROM INVESTING ACTIVITIES

Cash received from disposal of investments 760500000.00 2235600000.00

Cash received from investment income 735185796.88 1811930454.50

Net proceeds from disposal of property plant and equipment

30033.00

intangible assets and other long-term assets

Cash received from disposal of subsidiaries and other business units

Cash received relating to other investing activities 336800.00

Sub-total of cash inflows from investing activities 1495685796.88 4047897287.50

Purchase of property plant and equipment intangible assets and

3792909.092322412.61

other non-current assets

Cash paid for investments 1098900000.00 2014400000.00

Cash Paid for disposal of subsidiaries and other business units

Cash paid relating to other investing activities

Sub-total of cash outflows from investing activities 1102692909.09 2016722412.61

Net cash flows from investing activities 392992887.79 2031174874.89

3. CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from investment 63743604.71 677105.70

Proceeds from borrowings

Cash receipts relating to other financing activities

Subtotal of cash inflows from financing activities 63743604.71 677105.70

Repayments for debts

Cash payments for distribution of dividends or profit and interest

729203819.002146864067.95

expenses

Cash payments relating to other financing activities 413368.72 1231686.64

Subtotal of cash outflows from financing activities 729617187.72 2148095754.59

Net cash flows from financing activities -665873583.01 -2147418648.89

4. EFFECT OF EXCHANGE RATE CHANGES ON CASH AND

993.2646784.25

CASH EQUIVALENTS

5. NET INCREASE IN CASH AND CASH EQUIVALENTS -140826406.77 16500691.65

Add: Cash and cash equivalents at beginning of year 312508715.23 296008023.58

6. CASH AND CASH EQUIVALENTS AT END OF THE YEAR 171682308.46 312508715.23

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting

Department: Chen Hualiang

52CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

2023

Equity attributable to shareholders of the Company

Total

Item Other equity instruments Less: Other Non-controlling

Special Surplus General Retained shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive Others Subtotal interests

Others reserve reserve reserve earnings equity

share debt Shares income

1. Balance at the end

71866482.001334367676.3459710028.2435941112.502476849266.953978734566.03730766433.504709500999.53

of previous year

Changes in accounting

policies

Corrections of prior

period errors

Others

2. Balance at the

71866482.001334367676.3459710028.2435941112.502476849266.953978734566.03730766433.504709500999.53

beginning of the year

3. Increase/(decrease)

174619.0066551076.9613665517.6279438.00404636810.35485107461.9352999986.30538107448.23

during the period

(1) Total

13665517.621125119212.351138784729.97336544445.451475329175.42

comprehensive income

(2) Shareholders’

contributions and 174619.00 66279676.56 66454295.56 348038.26 66802333.82

reduction

(i) Shareholders

‘contributions in 174619.00 63568985.71 63743604.71 - 63743604.71

ordinary share

(ii) Other equity

instruments

contributions

(iii) Amount of share-

based payments 2710690.85 2710690.85 348038.26 3058729.11

recognized in equity

(iv) Others

(3). Profit distribution 79438.00 -720482402.00 -720402964.00 -283992000.00 -1004394964.00

(i) Transfer to surplus

79438.00-79438.00

reserve2023

Equity attributable to shareholders of the Company

Total

Item Other equity instruments Less: Other Non-controlling

Special Surplus General Retained shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive Others Subtotal interests

Others reserve reserve reserve earnings equity

share debt Shares income

(ii) Transfer to general

Reserve

(iii) Distribution to

-720402964.00-720402964.00-283992000.00-1004394964.00

shareholders

(iv) Others

(4) Transfer within

equity

(i) Capital reserves

converted to share

capital

(ii) Surplus reserves

converted to share

capital

(iii) Loss made up by

surplus reserves

(iv) Changes in the

defined benefit plan

transferred to retained

earnings

(v) Other

comprehensive income

transferred to retained

earnings

(vi) Others

(5). Special reserve

(i). Additions

(ii). Utilisation

(6) Others 271400.40 271400.40 99502.59 370902.99

4. Balance at the end

72041101.001400918753.3073375545.8636020550.502881486077.304463842027.96783766419.805247608447.76

of the period2022

Equity attributable to shareholders of the Company

Item Other equity instruments Less: Other Non-controlling Total shareholders’

Special Surplus General

Share capital preference Perpetual Capital reserve Treasury comprehensive Retained earnings Others Subtotal interests equity

Others reserve reserve reserve

share debt Shares income

1. Balance at the end

71864752.001314418710.72-14049938.9435941112.503171962867.274580137503.55479481724.365059619227.91

of previous year

Changes in accounting

policies

Corrections of prior

period errors

Others

2. Balance at the

71864752.001314418710.72-14049938.9435941112.503171962867.274580137503.55479481724.365059619227.91

beginning of the year

3. Increase/(decrease)

1730.0019948965.6273759967.18-695113600.32-601402937.52251284709.14-350118228.38

during the period

(1) Total

73759967.181460874459.681534634426.86501225965.832035860392.69

comprehensive income

(2) Shareholders’

contributions and 1730.00 7420142.21 7421872.21 1309040.04 8730912.25

reduction

(i) Shareholders

‘contributions in 1730.00 675375.70 677105.70 - 677105.70

ordinary share

(ii) Other equity

instruments

contributions

(iii) Amount of share-

based payments 6744766.51 6744766.51 1309040.04 8053806.55

recognized in equity

(iv) Others

(3). Profit distribution -2155988060.00 -2155988060.00 -252000000.00 -2407988060.00

(i) Transfer to surplus

reserve

(ii) Transfer to general

Reserve

(iii) Distribution to

-2155988060.00-2155988060.00-252000000.00-2407988060.00

shareholders

(iv) Others2022

Equity attributable to shareholders of the Company

Item Other equity instruments Less: Other Non-controlling Total shareholders’

Special Surplus General

Share capital preference Perpetual Capital reserve Treasury comprehensive Retained earnings Others Subtotal interests equity

Others reserve reserve reserve

share debt Shares income

(4) Transfer within

equity

(i) Capital reserves

converted to share

capital

(ii) Surplus reserves

converted to share

capital

(iii) Loss made up by

surplus reserves

(iv) Changes in the

defined benefit plan

transferred to retained

earnings

(v) Other

comprehensive income

transferred to retained

earnings

(vi) Others

(5). Special reserve

(i). Additions

(ii). Utilisation

(6) Others 12528823.41 12528823.41 749703.27 13278526.68

4. Balance at the end

71866482.001334367676.3459710028.2435941112.502476849266.953978734566.03730766433.504709500999.53

of the period

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting Department: Chen

HualiangCOMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

Prepared by: G-bits Network Technology (Xiamen) Co. Ltd.Unit: RMB Yuan

2023

Other equity instruments Less: Other

Item Special Surplus Retained Total shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive

Others reserve reserve earnings equity

share debt Shares income

1. Balance at the end of previous year 71866482.00 1143391521.98 -24035.06 35941112.50 1662880135.80 2914055217.22

Changes in accounting policies

Corrections of prior period errors

Others

2. Balance at the beginning of the year 71866482.00 1143391521.98 -24035.06 35941112.50 1662880135.80 2914055217.22

3. Increase/(decrease) during the period 174619.00 66627714.82 79438.00 77476238.21 144358010.03

(1) Total comprehensive income 797958640.21 797958640.21

(2) Shareholders’ contributions and reduction 174619.00 66627714.82 66802333.82

(i)Shareholders’ contributions in ordinary share 174619.00 63568985.71 63743604.71

(ii)Other equity instruments contributions

(iii) Amount of share-based payments recognized in equity 3058729.11 3058729.11

(iv) Others

(3). Profit distribution 79438.00 -720482402.00 -720402964.00

(i) Transfer to surplus reserve 79438.00 -79438.00

(ii) Distribution to shareholders -720402964.00 -720402964.00

(iii) Others

(4) Transfer within equity

(i) Capital reserves converted to share capital

(ii) Surplus reserves converted to share capital

(iii) Loss made up by surplus reserves2023

Other equity instruments Less: Other

Item Special Surplus Retained Total shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive

Others reserve reserve earnings equity

share debt Shares income

(iv) Changes in the defined benefit plan transferred to retained

earnings

(v) Other comprehensive income transferred to retained

earnings

(vi) Others

(5). Special reserve

(i). Additions

(ii). Utilisation

(6) Others

4. Balance at the end of the period 72041101.00 1210019236.80 -24035.06 36020550.50 1740356374.01 3058413227.25

2022

Other equity instruments Less: Other

Item Special Surplus Total shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive Retained earnings

Others reserve reserve equity

share debt Shares income

1. Balance at the end of previous year 71864752.00 1134650612.13 -24035.06 35941112.50 2607757021.13 3850189462.70

Changes in accounting policies

Corrections of prior period errors

Others

2. Balance at the beginning of the year 71864752.00 1134650612.13 -24035.06 35941112.50 2607757021.13 3850189462.70

3. Increase/(decrease) during the period 1730.00 8740909.85 -944876885.33 -936134245.48

(1) Total comprehensive income 1211111174.67 1211111174.67

(2) Shareholders’ contributions and reduction 1730.00 8729182.25 8730912.25

(i)Shareholders’ contributions in ordinary share 1730.00 675375.70 677105.70

(ii)Other equity instruments contributions

(iii) Amount of share-based payments recognized in equity 8053806.55 8053806.552022

Other equity instruments Less: Other

Item Special Surplus Total shareholders’

Share capital preference Perpetual Capital reserve Treasury comprehensive Retained earnings

Others reserve reserve equity

share debt Shares income

(iv) Others

(3). Profit distribution -2155988060.00 -2155988060.00

(i) Transfer to surplus reserve

(ii) Distribution to shareholders -2155988060.00 -2155988060.00

(iii) Others

(4) Transfer within equity

(i) Capital reserves converted to share capital

(ii) Surplus reserves converted to share capital

(iii) Loss made up by surplus reserves

(iv) Changes in the defined benefit plan transferred to retained

earnings

(v) Other comprehensive income transferred to retained

earnings

(vi) Others

(5). Special reserve

(i). Additions

(ii). Utilisation

(6) Others 11727.60 11727.60

4. Balance at the end of the period 71866482.00 1143391521.98 -24035.06 35941112.50 1662880135.80 2914055217.22

Legal Representative: Lu Hongyan Chief Accountant: Lin Jiajin Head of Accounting Department: Chen

Hualiang

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