Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• A small number of games have contributed a substantial majority of our revenue.
• If we fail to maintain and grow our user base, we will not be able to sustain our growth and our business may be materially and adversely affected.
• We collaborate with game developers to provide games to our users, and any loss or deterioration of our relationship with our game developer partners may result in the loss of user base and revenues.
• Our growth prospects will suffer if we are unable to successfully implement our game development strategies on mobile games.
• We work with game distribution platforms to distribute our games, and our business may be materially and adversely affected if they breach their contractual obligations, or if we fail to maintain relationships with a sufficient number of platforms, or if the platforms lose popularity among Internet users.

Mitigation Strategies

• We must extend the lifecycle of these games through regular upgrades and expansions to maintain user interest, which requires the investment of significant resources.
• We must continue to maintain the popularity of our existing games and launch new games that attract and retain a significant number of users in order to grow our revenue and sustain our competitive position.
• We seek to continue to place high priority on sourcing and developing games that operate on smartphones and tablets.
• We expect to continue to make significant investments to our technology infrastructure to maintain and improve all aspects of user experience and game performance.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Facebook’s Excellent Game-Advertiser Award
• Facebook Staff Favorites Recognition
• Best Overseas Publisher Award

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Adopted low-carbon office concept, encouraged public transport use, and implemented smoking ban in the office.
• Committed to paper and material recycling, reusing obsolete mainframes and keyboards.

Social Achievements

• Relocated Guangzhou headquarters to larger premises, improving employee work environment.
• Organized diversified staff activities (badminton, table tennis, basketball, parties, etc.) to enrich employee life and enhance team cohesion.
• Conducted campus presentations and recruitment activities, promoting university student employment.

Governance Achievements

• Complied with the applicable code provisions of the Code as set out in Appendix 14 to the Listing Rules, except for code provision A.2.1 (separation of Chairman and CEO roles).

Climate Goals & Targets

Environmental Challenges

• Suspension of approval process for new online games in the PRC from March 2018 to the end of 2018, dampening game developer enthusiasm and reducing new game releases and updates.
• Intense competition in the game industry.

Mitigation Strategies

• Improved operating standards of game products, maintaining steady improvement in product operating indicators (MAUs increased, ARPPU increased).
• Strengthened relationships with international game publishing and distribution partners.
• Expanded mobile games portfolio by developing additional high-quality mobile games.
• Utilized data analysis to collect and store user behavior data.
• Expanded product offerings to attract a diverse user community and enhanced in-house R&D capabilities.

Supply Chain Management

Supplier Audits: Annual assessment

Responsible Procurement

• Code of conduct requiring suppliers to meet legal requirements concerning occupational health and safety, anti-discrimination, environmental protection, anti-corruption, and anti-fraud.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 of the Listing Rules (Environmental, Social and Governance Reporting Guide)

Awards & Recognition

• 6th Jincha Award for 2018 Best Mobile Game Publisher
• 2018 Zhuoer Award for Top 10 Most Popular Windows Games

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Adopted low-carbon office concept, encouraged employees to use public transport, and implemented a smoking ban in the office.
• Implemented paper and material recycling programs.

Social Achievements

• Organized diversified staff activities, including badminton, table tennis, basketball games, monthly birthday parties, and annual dinners.
• Provided annual physical examinations for employees and publicized knowledge of occupational diseases.

Governance Achievements

• Complied with the applicable code provisions of the Code as set out in Appendix 14 to the Listing Rules, except for code provision A.2.1 and A.5.1.
• Established an Audit Committee, a Nomination Committee, and a Remuneration Committee.

Climate Goals & Targets

Environmental Challenges

• Intense competition in the game industry.
• Decreased supply of game products from China due to market and regulatory changes.
• Some newly launched games failed to achieve expected performance.

Mitigation Strategies

• Improved operating standards of game products.
• Strengthened relationships with international game publishing and distribution partners.
• Expanded mobile games portfolio by developing additional high-quality mobile games.
• Utilized data analysis to formulate appropriate business strategies.
• Expanded product offerings to attract a diverse user community.

Supply Chain Management

Supplier Audits: Annual

Responsible Procurement

• Code of conduct signed with suppliers requiring compliance with legal requirements concerning occupational health and safety, anti-discrimination, environmental protection, anti-corruption, and anti-fraud.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 to the Listing Rules

Third-party Assurance: Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced paper consumption by approximately 358.34 kg to 298 kg.
• Reduced electricity consumption from 287,912 kWh to 292,296 kWh.
• Recycled approximately 466 kg of paper.

Social Achievements

• Launched various recreational activities for employees (badminton, table tennis, basketball, etc.)
• Organized monthly birthday parties, festival events, and an annual dinner for employees.
• Provided annual physical examinations for employees.

Governance Achievements

• Complied with the applicable code provisions of the Code as set out in Appendix 14 to the Listing Rules except for the deviation from code provision C.2.1 of Part 2 of the CG Code (Chairman and CEO are the same person).

Climate Goals & Targets

Environmental Challenges

• Overall revenue declined compared to the previous year due to intense competition in the global game industry, government regulation, and the ongoing global pandemic.
• A small number of games contributed a substantial majority of revenue.
• Dependence on game distribution platforms.
• Protecting user and customer data.
• Compliance with evolving regulations in different jurisdictions.

Mitigation Strategies

• Actively responded to market changes and improved the layout of HTML5 games.
• Strengthened relationships with international game publishing and distribution partners.
• Developed additional high-quality mobile and HTML5 games.
• Implemented control measures to protect user data, including encryption and access restrictions.
• Invested in compliance resources and engaged external consultants to ensure compliance with applicable laws and regulations.

Supply Chain Management

Supplier Audits: Annual assessment of 46 major suppliers

Responsible Procurement

• Code of conduct requiring suppliers to meet legal requirements concerning occupational health and safety, anti-discrimination, environmental protection, anti-corruption, and anti-fraud.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Appendix 27 (2020) to the Listing Rules issued by the Stock Exchange