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Become a ”leader in the digital economy of Zhejiang and domestic media"

Zhejiang Newspaper Digital Culture Group Co., Ltd.

Managing Director Zhang Xuenan

Zhejiang Newspaper Digital Culture Group Co., Ltd. (Stock Code:600633.SH , Abbreviation: Zhejiang Digital Culture) was born out of Zhejiang Newspaper Media Group Co., Ltd., the first company in China to be listed as a whole by the media operating assets of the newspaper group. Since its listing in 2011, it has focused on the development goal of becoming a “leader in Zhejiang and domestic media digital economy”, relying on the advantages of party newspaper resources and capital platform, tightly grasping policies and industry development opportunities, promoting institutional and institutional reform and industrial innovation transformation, has successfully developed from a traditional newspaper listed company to an industrial group with Internet digital culture business as the core. At present, the main business focuses on digital entertainment, big data, digital sports and other core businesses, focusing on building digital culture and The government's digital economy empowerment platform has two core sectors, focusing on the development of cultural industry services such as e-commerce services and art services, and cultural industry investment business. At the same time, it concentrates resources to build a media integration business sector, vigorously serves the national media integration and development strategy, and promotes the company's high-quality and sustainable development. It is hailed by the capital market as a benchmark for the innovation and transformation of the state-owned media industry.

Since its listing, the company has strictly complied with the "Company Law", "Securities Law" and other laws and regulations, and the "Articles of Association" and other system regulations, with high-quality information disclosure as the core, strict risk control, prevention of insider trading, realization of the company's standardized development, and full protection of investors' rights and interests.On March 1 this year, the newly revised "Securities Law of the People's Republic of China" officially came into force, marking a new stage of development in the legalization of China's securities market, which provides a more complete and solid legal guarantee for further improving the overall quality of listed companies and strengthening the protection of investors' rights and interests.

The company will take the implementation of the new "Securities Law" as an opportunity, continue to focus on the protection of investors' rights and interests, take shareholders and social value creation as its purpose, with awe, plan the way of development, and actively practice high-quality development under standardized operation, work together and forge ahead, and strive to create value for investors and the capital market.

1. Realize industrial innovation and transformation, forge the core competitiveness of enterprises, and make every effort to create value for investors

The company is a listed company that laid out the Internet digital culture industry earlier in China. It makes full use of the first-mover advantage of the capital market. It has always maintained the ability of continuous innovation in institutional and institutional reform and transformed it into abundant motivation. It has always been at the forefront of the industry in terms of strategic planning and industrial layout. Adhere to both endogenous development and external mergers and acquisitions, and continue to improve the entire digital culture industry chain and accelerate transformation and upgrading.

After the successful backdoor listing in 2011, the company focused on the concept of “media control capital and capital strengthening media” established before the listing, and made every effort to move towards the strategic goal of “Internet hub media group”, and promptly laid out Internet-related fields; in 2013, the company completed its first non-public offering, acquiring Hangzhou Wing Wing and Shanghai Haofang to build a digital entertainment platform; in 2016, the company completed its second non-public offering, raising funds to invest in the construction of a “four-in-one” big data industry ecosystem; in 2017, the company implemented its second major asset reorganization, divesting news and media assets, focusing on digital entertainment, Big data, digital sports and other core Internet emerging industries with good development prospects and in-depth layout have been completed. At the same time, it has intervened in high-tech fields such as artificial intelligence through investment and incubation to further improve the ecological chains of various industries; in 2018, the company completed a new round of three-year planning and formulation, further focusing on the two major sectors of digital culture and the government's digital economy empowerment platform, with the goal of becoming “the leader of Zhejiang and the domestic media digital economy.”The successive industrial reforms of Zhejiang Digital Culture have put the company on a good development track. While enhancing the value of the company, it also creates value for all shareholders, protects shareholders' rights and interests, and realizes the unity of economic and social benefits.

On April 28 this year, the company's 2019 annual report was officially announced.In 2019, the company achieved operating income of 2.827 billion yuan and a net profit of 690 million yuan, of which the net profit attributable to the shareholders of the listed company was 508 million yuan, and the net profit attributable to the shareholders of the listed company after deducting non-recurring gains and losses was 279 million yuan.Revenue and net profit increased by 47% and 21% year-on-year, respectively, while net profit attributable to the parent and net profit attributable to the non-parent increased by 6% and 12% year-on-year, respectively.Behind the steadily improving data, the wisdom, courage and hard work of the company's colleagues and partners are condensed, and it is also the best embodiment of the company's continuous breakthroughs in business and the continuous improvement of its core competitiveness.

During the reporting period, the company continued to consolidate its comprehensive competitive strength in the digital entertainment sector.As an important business sector of Zhejiang Digital Culture, Frontier Network has maintained a strong growth momentum, steadily occupying the main market of the domestic Internet casual game industry and continuing to expand, continuing to strongly support the company's stable performance and growth.The digital sports sector promotes the overall transformation, focuses on the e-sports business, and lays a solid foundation for further expanding and strengthening e-sports brands and expanding the upstream and downstream industrial chains.At the same time, the company continues to enhance its market development capabilities in the big data sector.Fuchun Cloud has made breakthroughs in the construction of Internet data centers, achieved profitability goals, and actively developed various data value-added services based on high-quality IDC services.Based on the early practical experience of “Internet+government services”, the company has further sunk into the construction of new infrastructure at the city level, and has deeply participated in the construction of smart cities such as “Hangzhou City Brain” and “Digital Zhejiang”.At the same time, relying on the resource endowments and technology accumulation of the Party Newspaper Group and listed companies, the company actively explores a new path of media integration and development, taking short videos as its starting point, and making every effort to build a “media cloud platform” integrating content aggregation, review, distribution and monetization. With a registered capital of RMB 500 million, Zhejiang Baorong Media Technology (Zhejiang) Co., Ltd. has made a new appearance.

Looking back on the company's post-listing journey, the company's goals, forms, products, teams, etc. have always been continuously adjusted, optimized and developed according to market conditions, but one thing has never changed, that is, the concept and determination of firmly embracing the Internet to promote its own industrial innovation have not changed.More than eight years of exploration and practice have made us deeply realize that strong resource integration capabilities are the core competitiveness of the company's development, unwavering innovation is the strong driving force for the company's development, and sound capital operation is the “reservoir” for the company's development. Conducting business in accordance with the law and compliance is the lifeline of the company's development.After more than eight years of struggling to move forward, there are both strategic choices that take advantage of the trend and tactical firmness that defies the trend.However, with every leap and every step of expansion, the company has been unwavering and unremitting in its efforts, and has used passion and hard work to achieve the “Zhejiang Newspaper speed” of high-quality development.

For more than eight years since its listing, the company's performance has maintained stable growth, and it has achieved a cumulative net profit attributable to shareholders of listed companies of 5.233 billion yuan, continuously creating value for investors.The company's innovation and transformation have also been recognized by the regulatory level and investors. The leaders of the exchange have successively conducted special research and guidance on the implementation of the company's mergers and acquisitions, and fully affirmed the company's experience and achievements in exploring and implementing industrial transformation; the company has been selected for the Shanghai Stock Exchange Corporate governance sector, the Shanghai Stock Exchange 180 index sample stocks and the Shanghai-Shenzhen 300 index sample stocks, and was continuously selected for the top 500 Asian brands in 2016 and 2017.

2. Adhere to high standards of information disclosure, continue to pay a high proportion of cash dividends, and share development results with investors

1．Practice the new securities law and adhere to high standards of information disclosure

At the beginning of its listing, the company established an investor communication system with information disclosure as the core, supplemented by multi-channel platforms such as securities E-interaction, official website, telephone, Weibo, WeChat, etc., to continuously improve the actual effect of investor communication.During the implementation of major matters, the company strictly complies with relevant laws and regulations, takes the initiative to report and communicate with the securities regulatory authorities in advance, and makes timely and adequate disclosure of the content that investors are concerned about.Relying on high standards of information disclosure, the company has been awarded the A-level information disclosure rating of the Shanghai Stock Exchange for 5 consecutive years.

The newly revised “Securities Law” adds special chapters on “Information disclosure” and "Investor protection", further improves the information disclosure supervision system, regulates the specific content of investor protection, and increases penalties for violations of securities supervision laws, which provide a more complete and solid legal guarantee for further improving the overall quality of listed companies and strengthening the protection of investors' rights and interests.Focusing on the newly revised "Securities Law", the company will continue to focus on protecting the rights and interests of investors, adhere to high standards of information disclosure, ensure the timeliness and fairness of information disclosure, ensure that the disclosed information is true, accurate and complete, and be concise, clear, easy to understand, and safeguard investors' right to know.

2.Improve communication channels and build bridges for investor relations

In recent years, due to the environmental impact of the macroeconomic environment at home and abroad, the overall market of the A-share market has declined.In order to stabilize the company's equity structure and maintain its market image, the company has increased its efforts to carry out investor relations management, arranged many trips to Beijing, Guangzhou, Shenzhen and other places to communicate face-to-face with investors, and promptly transmitted the company's operating performance, institutional mechanism innovation, industrial structure optimization and adjustment and other information, enhance investor interaction and exchanges, and enhance market recognition of the company.After the release of regular reports and major matters, the company organizes performance briefings in a timely manner. The chairman, senior executives, and the heads of related subsidiaries meet face-to-face with industry researchers and investors to exchange the company's development strategy and business situation in many ways, and participate in the online collective reception day for investors of listed companies in the jurisdiction organized by the securities regulatory department. Since its listing, it has received more than 2,000 investors.

In daily investor exchanges, the company has actively and conscientiously responded through multiple channels such as the SSE E-interactive platform, telephone, WeChat public account, from mergers and acquisitions, non-public offerings, to daily operations and the operation of the three conferences, and established a good interactive relationship with investors through timely and adequate communication, which better protects investors' right to know.

The company actively participates in investor protection-related activities of associations of listed companies at all levels, takes the initiative to assume corresponding social responsibilities, and strives to contribute to the sustainable and healthy development of the capital market.In December 2014, the company was selected as the first Investor Relations Management Professional Committee and the Cultural Media Industry Committee of the China Association of Listed Companies. In 2014 and 2015, the company was selected as the “Top 100 Most Respected Listed Companies by Investors” by the China Association of Listed Companies for two consecutive years. In September 2018, the company was re-selected as the Second Investor Relations Management Professional Committee of the China Association of Listed Companies and served as the vice chairman of the unit. In 2019, the company was elected as the vice chairman of the Fifth Council of the Zhejiang Association of Listed Companies, and fully devoted itself to investor protection and other work, from further standardizing the level of corporate governance and improving the quality of information disclosure. , Enhance the company's investment and customs management capabilities, guide the establishment of correct market value management concepts and other aspects to make suggestions and suggestions to the committee, and help China's capital market form a good atmosphere for protecting small and medium-sized investors and serving small and medium-sized investors.

3.Maintain a high proportion of cash dividends and continue to give back to investors

As an important part of investor protection, cash dividends of listed companies are the best feedback and protection for investors.Zhejiang Digital Culture has always attached great importance to sharing business results with investors. At the beginning of the listing, the cash dividend requirement will be written into the "Articles of Association", and a higher proportion of cash dividend policy will be implemented than the statutory requirements. In three of the nine years, the proportion of cash dividends exceeded 50%, and as of 2019, the cumulative cash dividend has exceeded 1.353 billion yuan.

Facing the fluctuations in the stock market in recent years, the company and the controlling shareholders have taken timely measures to stabilize the company's stock price, boost market confidence, and protect the interests of investors.In 2015, in order to actively respond to the call of the Securities and Exchange Commission to stabilize the stock market, the company's management increased its holdings with its own funds, while the controlling shareholders increased their holdings by nearly 100 million yuan with their own funds; in 2018, due to the environmental impact at home and abroad, the company launched a share repurchase plan for the first time when the fundamentals were good but the stock price fell sharply. , Using 307 million yuan of its own funds to repurchase 36,193,430 shares of the company, accounting for 2.78% of the company's total share capital, the controlling shareholder also once again implemented a 100 million yuan shareholding increase plan to boost investor confidence.The above-mentioned measures not only convey the confidence of the company and the controlling shareholders in the company's future development prospects, but also demonstrate the company's determination and responsibility to protect the rights and interests of investors, and have won praise from the securities regulatory authorities and the majority of investors.

3. Enhance the ability to find opportunities in crisis, insist on accelerating kinetic energy change, and play a new chapter in the future

Entering 2020, the current global epidemic spread, financial market turmoil, and economic and trade frictions are constantly increasing, and the severity, complexity, and uncertainty of global economic and social development are intensifying and dangerous.This year will not only be a turning point in the world pattern, but also a turning point in the life and death of many industries and enterprises.How can we maintain our strategic determination and continue to enable us to move forward?

Not long ago, General Secretary Xi Jinping visited Zhejiang again in the spring breeze and rain. The whole province was very encouraged and excited. The General Secretary pointed out that ”danger and opportunity always coexist. Overcoming danger is opportunity.“ He eagerly looks forward to Zhejiang's ”efforts to become an important window for the new era to fully demonstrate the superiority of the socialist system with Chinese characteristics." This is the new goal, new positioning and new mission proposed by the General Secretary to Zhejiang.

As the first state-owned cultural enterprise listed in Zhejiang Province, Zhejiang Digital Culture has been at the forefront of industrial innovation and development and institutional mechanism reform, and is also a pioneer and pathfinder of the digital economy.We will strengthen our confidence in self-development, strive to enhance our ability to turn crises into opportunities, tightly grasp the strategic opportunities of the Internet, big data technological innovation and the great development of the cultural industry, and open innovation channels to reshape the industrial pattern.

In the new year, the company will firmly grasp the tuyere of “new consumption” and further optimize the layout of the digital entertainment industry based on the mobile network. While maintaining the stable growth of the domestic game business, it will further expand its overseas business layout, increase technology research and development and market expansion efforts, explore the possibility of artificial intelligence being applied to leisure, social, culture and other digital entertainment fields, and promote cultural products to “go deep” and “go global”.

In the new year, the company will tightly seize the opportunities of “new infrastructure”, continuously strengthen the leading position of “Fuchunyun” Internet data center in the industry, and actively look for new expansion opportunities, and further explore the expansion of the upstream and downstream related extension services of the industrial chain based on high-quality IDC resources, and promote Fuchunyun to become a new growth point for the company's operating performance.At the same time, it has further invested in the construction of smart cities and smart government affairs such as “Urban Brain” and “Digital Zhejiang” to help Zhejiang's digital transformation continue to be at the forefront of the country.

In the new year, the company will make every effort to stimulate the new vitality and potential of the content industry under the deep integration of media, integrate resources and high standards to promote the construction of the media fusion platform, promote the rapid realization of independent and clear market-oriented operations of the media fusion business sector, and concentrate on building the “Tianshu” media fusion cloud platform to complete the grafting and integration of the resources of the “Tianmu” media fusion cloud platform, and actively explore the organic combination of the media fusion platform with big data, artificial intelligence, blockchain and other high-tech technologies, and initially form an Internet content aggregation system, operation system, communication system and business system that meets mainstream values.

In the new year, the company will also vigorously promote the construction of the Zhejiang Digital Cultural Industrial Park project to further meet the strategic needs of the company's future development, realize the effect of industrial agglomeration, and create a new landmark for the convergence and development of Internet digital culture.

The future has come, and it is coming.What is uncertain is the environment, and what is certain is ourselves.In this era of ”great changes that have not been encountered in a hundred years", in the context of the integration and development of the media industry truly entering the deep-water zone, and at the moment when the epidemic has forced the digital economy to leapfrog development, we are firmly confident, holding on to the future, and committed to making digital connections a better life.This is our common pursuit and hope now and in the future, as well as our firm determination and confidence to develop and break through.

In the new year, the company will continue to uphold the concept of high-quality development, always adhere to the belief in investor protection, effectively assume the responsibility and mission of protecting investors' rights and interests, and make unremitting efforts to promote the construction of a good capital market environment to create more and higher value for shareholders.