[Definitions](index=4&type=section&id=Section%201%20Definitions) This section defines key terms including the company's abbreviation, "360 Security Brain", and "government and enterprise" clients - The company is abbreviated as "360", formerly known as "Jiangnan Jiajie Elevator Co., Ltd.", and "the Group" when including subsidiaries[7](index=7&type=chunk) - "360 Security Brain" refers to the company's globally largest distributed intelligent security system, possessing five core capabilities: threat perception, inference and traceability, attack warning, decision support, and self-learning[9](index=9&type=chunk) - "Government and enterprise" clients include, but are not limited to, party, government, military, and enterprise entities[9](index=9&type=chunk) [Company Profile and Key Financial Indicators](index=7&type=section&id=Section%202%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information and key financial performance metrics over the past three years [Company Information](index=7&type=section&id=2.1%20Company%20Information) This section details 360 Security Technology Inc.'s basic information, including its name, legal representative, addresses, stock details, and auditing firm - The company's Chinese name is 360 Security Technology Inc., abbreviated as 360[12](index=12&type=chunk) - The legal representative is Zhou Hongyi[12](index=12&type=chunk) - The company's stock code is 601360, stock abbreviation is 360, listed on the Shanghai Stock Exchange[16](index=16&type=chunk) - The company's appointed accounting firm is Deloitte Touche Tohmatsu Certified Public Accountants LLP[17](index=17&type=chunk) [Key Accounting Data and Financial Indicators for the Past Three Years](index=8&type=section&id=2.2%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Past%20Three%20Years) This section presents the company's key accounting data and financial indicators from 2018-2020, showing a decline in revenue and net profit in 2020 but growth in total assets and net assets Key Accounting Data (Unit: Thousand Yuan, Currency: RMB) | Indicator | 2020 | 2019 | Period-on-Period Change (%) | 2018 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 11,614,731 | 12,841,095 | (9.55) | 13,129,263 | | Net Profit Attributable to Shareholders of Listed Company | 2,912,505 | 5,980,435 | (51.30) | 3,534,835 | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Gains and Losses) | 2,546,767 | 3,524,621 | (27.74) | 3,418,496 | | Net Cash Flow from Operating Activities | 1,942,970 | 2,759,929 | (29.60) | 3,747,795 | | Net Assets Attributable to Shareholders of Listed Company (Year-end) | 36,825,916 | 28,700,288 | 28.31 | 23,982,254 | | Total Assets (Year-end) | 44,261,773 | 33,751,570 | 31.14 | 29,348,279 | Key Financial Indicators (Unit: Yuan/Share or %) | Indicator | 2020 | 2019 | Period-on-Period Change (%) | 2018 | | :--- | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/Share) | 0.43 | 0.88 | (51.14) | 0.53 | | Diluted Earnings Per Share (Yuan/Share) | 0.43 | 0.88 | (51.14) | 0.53 | | Basic Earnings Per Share (Excluding Non-Recurring Gains and Losses) (Yuan/Share) | 0.38 | 0.52 | (26.92) | 0.51 | | Weighted Average Return on Net Assets (%) | 9.61 | 22.95 | Decreased by 13.34 percentage points | 17.24 | | Weighted Average Return on Net Assets (Excluding Non-Recurring Gains and Losses) (%) | 8.41 | 13.53 | Decreased by 5.12 percentage points | 16.67 | - **Operating revenue** in the fourth quarter of 2020 significantly increased quarter-on-quarter, reaching **3,640,871 thousand yuan**[22](index=22&type=chunk) [Non-Recurring Gains and Losses and Amounts](index=9&type=section&id=2.3%20Non-Recurring%20Gains%20and%20Losses%20and%20Amounts) This section details the company's non-recurring gains and losses for 2018-2020, with a significant decrease in 2020 primarily due to lower disposal gains from long-term equity investments - Total non-recurring gains and losses amounted to **365,738 thousand yuan** in 2020, significantly lower than **2,455,814 thousand yuan** in 2019 and **116,339 thousand yuan** in 2018[24](index=24&type=chunk) - The **disposal gain from long-term equity investments** was **241,122 thousand yuan** in 2020, substantially lower than **2,160,319 thousand yuan** in 2019, which was the primary reason for the decrease in total non-recurring gains and losses[24](index=24&type=chunk) [Items Measured at Fair Value](index=10&type=section&id=2.4%20Items%20Measured%20at%20Fair%20Value) This section outlines the company's financial assets measured at fair value, totaling 4.87 billion yuan at period-end, including trading financial assets and other equity instrument investments Items Measured at Fair Value (Unit: Thousand Yuan, Currency: RMB) | Project Name | Beginning Balance | Ending Balance | Current Period Change | Impact on Current Period Profit | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 130,450 | 22,590 | (107,860) | 266 | | Accounts Receivable Financing | | 390 | 390 | | | Other Equity Instrument Investments | 3,040,410 | 4,239,239 | 1,198,829 | 141 | | Other Non-Current Financial Assets | 500,970 | 605,903 | 104,933 | 83,596 | | Total | 3,671,830 | 4,868,122 | 1,196,292 | 84,003 | [Business Overview](index=10&type=section&id=Section%203%20Business%20Overview) This section provides an overview of the company's core business segments, including internet commercialization, smart life, government and enterprise security, and digital city operations [Internet Commercialization Business](index=11&type=section&id=3.1%20Internet%20Commercialization%20Business) The company leverages its vast user base and traffic from security and information products to monetize through internet advertising and value-added services, primarily gaming - Key products include **360 Security Guard**, **360 Mobile Security**, and **360 Secure Browser**[28](index=28&type=chunk) - The search business consistently ranks among the top in the PC market for user numbers, search volume, and market share, while the PC information flow business has become the largest in China[28](index=28&type=chunk) - Commercialization is achieved through internet advertising and services, and internet value-added services (primarily gaming), leveraging a massive user base and traffic entry points[28](index=28&type=chunk) [Smart Life Business](index=11&type=section&id=3.2%20Smart%20Life%20Business) The Smart Life business, centered on the 'Home Security Brain', offers smart hardware products and solutions for family safety, living services, and communication - Centered on the "Home Security Brain", the business aims to create a safe, secure, and healthy smart life through IoT smart hardware[29](index=29&type=chunk) - The product line covers over 10 categories, including family safety, living services, and communication and travel, such as smart cameras, children's watches, and driving recorders[29](index=29&type=chunk) [Government and Enterprise Security Business](index=11&type=section&id=3.3%20Government%20and%20Enterprise%20Security%20Business) The company's Government and Enterprise Security business, rebranded as '360 Government and Enterprise Security Group', focuses on providing advanced network threat detection and collaborative defense capabilities powered by the 360 Security Brain - Based on 15 years of offensive and defensive combat experience, massive security big data, a leading security confrontation knowledge base, world-class vulnerability discovery capabilities, and APT hunting capabilities, a new generation network security capability system centered on the **360 Security Brain** has been built[30](index=30&type=chunk) - During the reporting period, 360 Enterprise Security Group was officially renamed 360 Government and Enterprise Security Group, explicitly focusing on the "government + enterprise market" to support the development of national security in the digital era[30](index=30&type=chunk) [Digital City Business](index=11&type=section&id=3.4%20Digital%20City%20Business) The Digital City business, centered on the 360 City Security Operating System, integrates 5G, AIoT, and cloud computing to build smart city infrastructure and provide precise governance services - Centered on the **360 City Security Operating System**, it fully integrates innovative technologies such as 5G, AIoT, and cloud computing to build a smart city underlying infrastructure with "dual security, continuous evolution, dynamic expansion, and open sharing"[31](index=31&type=chunk) - It provides precise services for urban governance and management departments, ensuring physical environment security, virtual environment security, and three-dimensional space security, promoting the construction of smart cities and urban security systems[31](index=31&type=chunk) [Explanation of Significant Changes in Major Assets During the Reporting Period](index=12&type=section&id=3.5%20Explanation%20of%20Significant%20Changes%20in%20Major%20Assets%20During%20the%20Reporting%20Period) During the reporting period, the company experienced significant increases in monetary funds due to private placement and new bank loans, and in long-term equity investments from increasing its stake in Tianjin Jincheng Bank Major Asset Changes (Unit: Thousand Yuan, Currency: RMB) | Project Name | December 31, 2020 | December 31, 2019 | Change Ratio | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 26,555,881 | 19,462,739 | 36.44% | Increase mainly due to 4.855 billion yuan from private placement and 1.970 billion yuan in new short-term bank loans | | Long-Term Equity Investments | 4,652,238 | 3,427,193 | 35.74% | Increase mainly due to increased investment in Tianjin Jincheng Bank | - Overseas assets amounted to **3,344,640 thousand yuan**, accounting for **7.56%** of total assets[33](index=33&type=chunk) [Analysis of Core Competencies During the Reporting Period](index=12&type=section&id=3.6%20Analysis%20of%20Core%20Competencies%20During%20the%20Reporting%20Period) The company's core competencies stem from its extensive network security big data, world-class vulnerability discovery capabilities, strong R&D team, operational platform advantages, brand influence, and massive user base - The company possesses massive network security big data, including approximately **29 billion sample data**, **22 trillion security logs**, **9 billion domain name information**, and over **2 EB of security big data**, ranking first in China by data volume[34](index=34&type=chunk) - The company has world-class vulnerability discovery capabilities, having identified over **40 overseas APT organizations** and repeatedly detected APT attacks using in-the-wild 0-day vulnerabilities, ranking first globally in vulnerability disclosure rewards[35](index=35&type=chunk) - R&D technical personnel account for as high as **62.45%** of the workforce, with R&D investment reaching **2.871 billion yuan**, significantly exceeding industry peers[36](index=36&type=chunk) - "360" is a household name in China's cybersecurity industry, possessing widespread brand influence, industry appeal, and user trust[38](index=38&type=chunk) - As of the end of the reporting period, the market penetration rate of the company's PC security products was **98.01%**, with average monthly active users remaining above **480 million**; mobile security products had average monthly active users of **530 million**[39](index=39&type=chunk) [Discussion and Analysis of Operations](index=15&type=section&id=Section%204%20Discussion%20and%20Analysis%20of%20Operations) This section discusses the company's operational highlights, strategic initiatives, and financial performance during the reporting period, including its response to the pandemic, expansion into government and enterprise security, and capital market activities [Discussion and Analysis of Operations](index=15&type=section&id=4.1%20Discussion%20and%20Analysis%20of%20Operations) This section highlights the company's 2020 operational achievements, including pandemic response, contributions to national security, strategic upgrades in government and enterprise security, and strengthening of its 'big security' ecosystem through private placement and M&A - In 2020, the company actively responded to the COVID-19 pandemic, launching the "Hundred Cities Campaign" to provide free community epidemic prevention, remote office collaboration, and network security products and services to government and enterprise units nationwide[603](index=603&type=chunk) - The 360 Security Brain intercepted over **4.5 million new mobile malicious program samples** and blocked **100.6 billion phishing website attacks**; Mobile Security blocked approximately **22.4 billion spam calls** and **17.7 billion junk messages**[603](index=603&type=chunk) - The company officially established the "360 Government and Enterprise Security Group", explicitly focusing on the "government + enterprise market", with the 360 Security Brain at its core, serving the security infrastructure construction and operation in multiple landmark cities such as Chongqing, Tianjin, and Qingdao[605](index=605&type=chunk) - The company completed a private placement of shares, raising **4.93 billion yuan**, introducing over ten strategic investors, and improving its shareholder structure[606](index=606&type=chunk) - During the reporting period, the company wholly acquired Yifangyun, Zhiyu, and Hansight, strategically invested in Tianjin Jincheng Bank, and increased its stake in Hillstone Networks, expanding its business service capabilities across multiple dimensions and strengthening its "big security" ecosystem layout[606](index=606&type=chunk) [Key Operating Performance During the Reporting Period](index=17&type=section&id=4.2%20Key%20Operating%20Performance%20During%20the%20Reporting%20Period) At the end of the reporting period, total assets reached 44.26 billion yuan, up 31.14%, while operating revenue decreased by 9.55% to 11.61 billion yuan, and net profit attributable to shareholders declined by 51.30% to 2.91 billion yuan Key Financial Data (Unit: Thousand Yuan, Currency: RMB) | Subject | Current Period Amount | Prior Period Amount | Change Ratio (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 11,614,731 | 12,841,095 | (9.55) | | Operating Cost | 4,351,504 | 4,448,808 | (2.19) | | Selling Expenses | 1,660,052 | 1,486,002 | 11.71 | | Administrative Expenses | 657,318 | 697,894 | (5.81) | | Research and Development Expenses | 2,871,129 | 2,528,171 | 13.57 | | Financial Expenses | (755,639) | (596,484) | (26.68) | | Net Cash Flow from Operating Activities | 1,942,970 | 2,759,929 | (29.60) | | Net Cash Flow from Investing Activities | (3,131,705) | (4,119,882) | 23.99 | | Net Cash Flow from Financing Activities | 6,427,649 | (752,650) | 954.00 | - Net cash flow from financing activities significantly increased by **954.00%** year-on-year, primarily due to **4.855 billion yuan** received from private placement and **1.970 billion yuan** in new short-term bank loans[609](index=609&type=chunk) Main Business by Industry (Unit: Thousand Yuan, Currency: RMB) | Industry Segment | Operating Revenue | Operating Revenue Year-on-Year Change (%) | Gross Margin (%) | Gross Margin Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | :--- | | Internet Advertising and Services | 7,512,419 | (22.75) | 70.10 | Decreased by 1.90 percentage points | | Smart Hardware | 2,141,773 | 27.77 | 18.35 | Increased by 3.37 percentage points | | Internet Value-Added Services | 1,134,216 | 18.41 | 85.87 | Increased by 2.30 percentage points | | Security and Other Businesses | 807,968 | 70.73 | 75.71 | Increased by 6.04 percentage points | - The decline in internet advertising and services revenue was mainly due to the impact of the COVID-19 pandemic and intense market competition, but operating revenue gradually recovered from the second quarter due to active innovation and expansion into key industries[612](index=612&type=chunk)[613](index=613&type=chunk)[614](index=614&type=chunk) - Smart hardware business revenue increased by **27.77%** year-on-year, primarily benefiting from continuous improvement in product competitiveness and market share, expansion of operator sales channels, and overseas market development[615](index=615&type=chunk)[616](index=616&type=chunk) - Security and other business revenue increased by **70.73%** year-on-year, mainly driven by breakthrough progress in government and enterprise security business and successful bids and business development for multiple local security brain projects[619](index=619&type=chunk) - R&D investment reached **2.871 billion yuan**, a year-on-year increase of **13.57%**, with R&D technical personnel accounting for as high as **62.45%**[625](index=625&type=chunk) [Analysis of Assets and Liabilities](index=24&type=section&id=4.3%20Analysis%20of%20Assets%20and%20Liabilities) At period-end, total assets grew by 31.14% to 44.26 billion yuan, with significant increases in monetary funds, long-term equity investments, and other equity instrument investments, while short-term borrowings and contract liabilities also rose substantially Asset and Liability Changes (Unit: Thousand Yuan, Currency: RMB) | Project Name | Current Period End Amount | Current Period End Amount as % of Total Assets | Prior Period End Amount | Prior Period End Amount as % of Total Assets | Current Period End Amount vs. Prior Period End Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 26,555,881 | 60.00 | 19,462,739 | 57.66 | 36.44 | Mainly due to 4.855 billion yuan received from private placement and 1.970 billion yuan in new short-term bank loans | | Trading Financial Assets | 22,590 | 0.05 | 130,450 | 0.39 | (82.68) | Decrease mainly due to maturity and redemption of wealth management products | | Prepayments | 332,108 | 0.75 | 168,493 | 0.50 | 97.10 | Increase mainly due to increased prepayments for security business | | Other Receivables | 217,544 | 0.49 | 384,029 | 1.14 | (43.35) | Decrease mainly due to collection of investment disposal receivables from 2019 | | Inventories | 406,581 | 0.92 | 278,103 | 0.82 | 46.20 | Increase mainly due to growth in smart hardware revenue and increased product categories, leading to higher inventory | | Contract Assets | 82,062 | 0.19 | | | 100.00 | Increase due to implementation of new revenue standards | | Non-Current Assets Due Within One Year | 570,000 | 1.29 | | | 100.00 | Increase due to reclassification of debt investments due within one year | | Debt Investments | 330,000 | 0.75 | 880,000 | 2.61 | (62.50) | Decrease due to reclassification of portion due within one year | | Long-Term Equity Investments | 4,652,238 | 10.51 | 3,427,193 | 10.15 | 35.74 | Increase mainly due to increased investment in Tianjin Jincheng Bank | | Other Equity Instrument Investments | 4,239,239 | 9.58 | 3,040,410 | 9.01 | 39.43 | Increase mainly due to increase in fair value of investment projects and additional investment in Hillstone Networks | | Intangible Assets | 631,479 | 1.43 | 333,969 | 0.99 | 89.08 | Increase mainly due to acquisition of subsidiaries and new purchases of intangible assets | | Goodwill | 1,709,711 | 3.86 | 1,092,114 | 3.24 | 56.55 | Increase mainly due to new M&A projects such as Hansight | | Long-Term Deferred Expenses | 265,305 | 0.60 | 148,090 | 0.44 | 79.15 | Increase mainly due to increased game copyright fees for new games | | Deferred Income Tax Assets | 41,889 | 0.09 | 3,695 | 0.01 | 1,033.67 | Increase mainly due to increased deductible temporary differences, leading to increased deferred income tax assets | | Short-Term Borrowings | 1,970,179 | 4.45 | | | 100.00 | Increase due to new short-term bank loans | | Advances from Customers | | | 636,053 | 1.88 | (100.00) | Decrease due to implementation of new revenue standards | | Contract Liabilities | 967,866 | 2.19 | | | 100.00 | Increase due to implementation of new revenue standards | | Other Current Liabilities | 81,375 | 0.18 | 1,069 | | 7,512.25 | Increase due to reclassification of VAT portion from original advances from customers upon implementation of new revenue standards | | Deferred Income Tax Liabilities | 80,209 | 0.18 | 33,529 | 0.10 | 139.22 | Increase mainly due to increased taxable temporary differences | - Restricted monetary funds at period-end amounted to **3,405,584 thousand yuan**, primarily time deposits pledged to banks for corporate overdraft facilities and commercial acceptance bill endorsement and discounting services[630](index=630&type=chunk) [Analysis of Investment Status](index=27&type=section&id=4.4%20Analysis%20of%20Investment%20Status) During the reporting period, the company's total equity investments significantly increased, with long-term equity investments reaching 4.65 billion yuan and other equity instrument investments reaching 4.24 billion yuan, notably including a strategic investment in Tianjin Jincheng Bank - The Group's long-term equity investments at period-end amounted to **4,652,238 thousand yuan**, accounting for **10.51%** of total assets, an increase of **35.74%** compared to the end of the previous year[632](index=632&type=chunk) - The Group's other equity instrument investments at period-end amounted to **4,239,239 thousand yuan**, accounting for **9.58%** of total assets, an increase of **39.43%** compared to the end of the previous year[632](index=632&type=chunk) - In June 2020, the company invested **1,281,492 thousand yuan** in Tianjin Jincheng Bank Co., Ltd., acquiring a **30%** stake and becoming its largest shareholder[633](index=633&type=chunk) Financial Assets Measured at Fair Value (Unit: Thousand Yuan, Currency: RMB) | Project | Carrying Amount at Period-End | | :--- | :--- | | Trading Financial Assets | 22,590 | | Other Equity Instrument Investments | 4,239,239 | | Other Non-Current Financial Assets | 605,903 | | Total | 4,867,732 | [Analysis of Major Holding and Participating Companies](index=28&type=section&id=4.5%20Analysis%20of%20Major%20Holding%20and%20Participating%20Companies) This section lists the basic information of the company's major holding and participating subsidiaries, including their business scope, registered capital, total assets, net assets, and net profit - Major subsidiaries include 360 Technology Group Co., Ltd., Beijing Qihoo Technology Co., Ltd., Shenzhen Qihoo Smart Technology Co., Ltd., covering businesses such as internet advertising and services, technology development and services, and smart hardware R&D and sales[636](index=636&type=chunk) - A major associate is Opera Limited, primarily engaged in web browsers[637](index=637&type=chunk) [Discussion and Analysis of the Company's Future Development](index=30&type=section&id=4.6%20Discussion%20and%20Analysis%20of%20the%20Company's%20Future%20Development) This section discusses the importance of cybersecurity in the digital era, national policy support, the company's 'big security' strategy and 2021 operating plan, and potential risks related to technological advancements, operational management, industry competition, and brand reputation - Digitalization is a global trend, with cybersecurity serving as the "foundation" of digital strategy, and the nation places high importance on cyberspace security, ushering in a new era of vigorous industry development[638](index=638&type=chunk)[639](index=639&type=chunk) - The company adheres to the "big security" strategic philosophy, building a new generation network security capability system centered on the Security Brain, aiming to become a new era network security operator and service provider with national-level technical capabilities, national-level data scale, and national-level planning capabilities[642](index=642&type=chunk) - The 2021 operating plan includes: continuing to expand security business and co-building local network security infrastructure clusters with city and government-enterprise clients; leveraging PC traffic advantages, increasing mobile investment and product innovation; increasing game R&D and expanding overseas markets; broadening smart life product sales channels and strengthening technology R&D investment[643](index=643&type=chunk)[644](index=644&type=chunk)[645](index=645&type=chunk)[646](index=646&type=chunk) - The company may face risks related to technological advancements, operational management and transformation, intensified industry competition, and brand and qualification issues[647](index=647&type=chunk)[648](index=648&type=chunk)[649](index=649&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk) [Significant Matters](index=35&type=section&id=Section%205%20Significant%20Matters) This section covers key corporate events, including profit distribution plans, fulfillment of commitments, changes in accounting policies, auditor appointments, major litigation, related party transactions, and social responsibility initiatives [Proposed Profit Distribution or Capital Reserve Conversion Plan for Ordinary Shares](index=35&type=section&id=5.1%20Proposed%20Profit%20Distribution%20or%20Capital%20Reserve%20Conversion%20Plan%20for%20Ordinary%20Shares) The board approved a 2020 profit distribution plan to not issue cash dividends or share transfers, retaining undistributed profits to support business development, R&D, new business expansion, and M&A - The company proposes no cash dividends or share transfers for 2020, with remaining undistributed profits carried forward to the next year[652](index=652&type=chunk) - Undistributed profits will be used for daily operations, security technology R&D, new business expansion such as government and enterprise security and digital cities, payment of current liabilities, and investment and M&A in upstream and downstream industries[654](index=654&type=chunk) Ordinary Share Dividend Distribution Plan for the Past Three Years (Unit: Yuan, Currency: RMB) | Dividend Year | Dividend Per 10 Shares (Yuan) (Tax Included) | Cash Dividend Amount (Tax Included) | Ratio of Cash Dividend to Net Profit Attributable to Ordinary Shareholders of Listed Company in Consolidated Statements (%) | | :--- | :--- | :--- | :--- | | 2020 | 0 | 0 | 0 | | 2019 | 0.53 | 358,494,923.85 | 5.99 | | 2018 | 0.53 | 358,494,923.85 | 10.14 | [Fulfillment of Commitments](index=36&type=section&id=5.2%20Fulfillment%20of%20Commitments) This section details the timely and strict fulfillment of various commitments made by the company's actual controller, shareholders, and the company itself, including those related to independence, related party transactions, and share lock-ups, with 360 Technology exceeding its 2017-2020 performance targets - The company's actual controller Zhou Hongyi, controlling shareholder Tianjin Qixin Zhicheng Technology Co., Ltd., and other committing parties timely and strictly fulfilled commitments regarding personnel independence, asset integrity, financial independence, business independence, and organizational independence during the reporting period[656](index=656&type=chunk) - The committing parties have fulfilled their commitments to resolve related party transactions and avoid horizontal competition, striving to minimize related party transactions with the listed company and its subsidiaries, and avoiding engaging in businesses that substantially compete with the listed company and its subsidiaries[658](index=658&type=chunk)[660](index=660&type=chunk) - 360 Technology's net profit attributable to parent company owners after deducting non-recurring gains and losses for 2020 was **3,566.56 million yuan**, and the cumulative actual profit from 2017 to 2020 was **13,752.36 million yuan**, exceeding the performance commitment by **702.36 million yuan**[668](index=668&type=chunk) [Analysis of Reasons and Impact of Changes in Accounting Policies, Accounting Estimates, or Correction of Significant Accounting Errors](index=46&type=section&id=5.3%20Analysis%20of%20Reasons%20and%20Impact%20of%20Changes%20in%20Accounting%20Policies%2C%20Accounting%20Estimates%2C%20or%20Correction%20of%20Significant%20Accounting%20Errors) During the reporting period, the company adopted new revenue standards effective January 1, 2020, which is not expected to significantly alter revenue recognition methods or require restatement of 2019 comparable figures - The company adopted the revised "Enterprise Accounting Standard No. 14 - Revenue" (new revenue standard) issued by the Ministry of Finance starting from January 1, 2020[669](index=669&type=chunk) - This change in accounting policy does not affect the company's relevant financial indicators for 2019 and is not expected to cause significant changes in the company's revenue recognition methods[669](index=669&type=chunk) [Appointment and Dismissal of Accounting Firms](index=47&type=section&id=5.4%20Appointment%20and%20Dismissal%20of%20Accounting%20Firms) The company re-appointed Deloitte Touche Tohmatsu Certified Public Accountants LLP as its financial and internal control auditor for 2020, with audit fees of 6.8 million yuan and 1.5 million yuan, respectively - The company re-appointed Deloitte Touche Tohmatsu Certified Public Accountants LLP as its financial audit and internal control audit institution for 2020[671](index=671&type=chunk) Accounting Firm Remuneration (Unit: Ten Thousand Yuan, Currency: RMB) | Firm Type | Name | Remuneration | | :--- | :--- | :--- | | Domestic Accounting Firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP | 680 | | Internal Control Audit Accounting Firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP | 150 | [Major Litigation and Arbitration Matters](index=47&type=section&id=5.5%20Major%20Litigation%20and%20Arbitration%20Matters) The company has a significant arbitration case involving City Channel Limited against Qifei International, with a claim amount of 2.23 billion yuan, which remains unsettled despite a 2019 settlement agreement - The company has a major arbitration matter: City Channel Limited, as the applicant, filed for arbitration against Qifei International as the respondent with the Hong Kong International Arbitration Centre[674](index=674&type=chunk) - The litigation (arbitration) involves an amount of **2,230,971.01 thousand yuan**[674](index=674&type=chunk) - In May 2019, City Channel and Qifei International reached a settlement, agreeing to terminate the relevant arbitration proceedings and waive their respective arbitration claims, but as of the end of the reporting period, the case remains unsettled as the plaintiff has not yet filed an application to terminate the arbitration[674](index=674&type=chunk) [Major Related Party Transactions](index=49&type=section&id=5.6%20Major%20Related%20Party%20Transactions) This section discloses the company's 2020 daily related party transactions, including purchases of raw materials and services, sales of products and services, and leases, all within the approved limits 2020 Daily Related Party Transactions (Unit: Ten Thousand Yuan) | Related Party Transaction Category | Related Party | Actual Amount Incurred in 2020 | | :--- | :--- | :--- | | Purchase of Raw Materials and Services from Related Parties | Controlling shareholder Tianjin Qixin Zhicheng Technology Co., Ltd. and its controlled companies (excluding the listed company) | 7,141 | | | Companies controlled by Zhou Hongyi and his family members, or where they serve as directors or senior management (excluding the controlling shareholder and its controlled companies and the listed company) | 4 | | | Companies controlled by the company's directors, supervisors, and senior management, or where they serve as directors or senior management (excluding the listed company) | 196 | | Sale of Products, Goods, and Provision of Services to Related Parties | Controlling shareholder Tianjin Qixin Zhicheng Technology Co., Ltd. and its controlled companies (excluding the listed company) | 17,256 | | | Companies controlled by Zhou Hongyi and his family members, or where they serve as directors or senior management (excluding the controlling shareholder and its controlled companies and the listed company) | 683 | | | Companies controlled by the company's directors, supervisors, and senior management, or where they serve as directors or senior management (excluding the listed company) | 13 | | Lease | Controlling shareholder Tianjin Qixin Zhicheng Technology Co., Ltd. and its controlled companies (excluding the listed company) | 5,921 | [Major Contracts and Their Performance](index=51&type=section&id=5.7%20Major%20Contracts%20and%20Their%20Performance) This section details the company's guarantees and entrusted wealth management activities during the reporting period, including a 900 million yuan guarantee for Tianjin Jincheng Bank and investments in bank wealth management products - The company provided a general guarantee of **900,000 thousand yuan** for its associate, Tianjin Jincheng Bank, committing to bear its remaining operating risks in proportion to its equity stake, limited to one time the amount of its paid-in registered capital in Tianjin Jincheng Bank[684](index=684&type=chunk)[685](index=685&type=chunk) Overall Entrusted Wealth Management (Unit: Thousand Yuan, Currency: RMB) | Type | Source of Funds | Amount Incurred | Unexpired Balance | Overdue Unrecovered Amount | | :--- | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | Own Funds | 63,330 | 22,590 | | - The total actual income or loss from entrusted wealth management for the current period was **1,417 thousand yuan**[690](index=690&type=chunk) [Work on Actively Fulfilling Social Responsibilities](index=58&type=section&id=5.8%20Work%20on%20Actively%20Fulfilling%20Social%20Responsibilities) During the reporting period, the company actively fulfilled its social responsibilities, as detailed in its 2020 Social Responsibility Report, and adhered strictly to environmental policies as an internet industry company not classified as a key polluting entity - During the reporting period, the company actively fulfilled its social responsibilities, with specific details available in the "360 Security Technology Inc. 2020 Social Responsibility Report" simultaneously published on the SSE website[692](index=692&type=chunk) - The company operates in the internet industry and is not classified as a key polluting entity by environmental protection authorities; the company and its subsidiaries strictly comply with national environmental policies in their operations, and no penalties for violations were incurred during the reporting period[693](index=693&type=chunk) [Changes in Ordinary Shares and Shareholder Information](index=59&type=section&id=Section%206%20Changes%20in%20Ordinary%20Shares%20and%20Shareholder%20Information) This section details changes in the company's ordinary share capital, restricted shares, and shareholder structure, including the impact of a private placement on shareholding percentages [Changes in Ordinary Share Capital](index=59&type=section&id=6.1%20Changes%20in%20Ordinary%20Share%20Capital) During the reporting period, restricted shares decreased due to the lifting of lock-ups from a major asset restructuring, while unrestricted circulating shares increased, and a private placement in early 2021 further increased total share capital to 7.15 billion shares - In 2020, restricted shares decreased by **1,392,049,331 shares**, and unrestricted circulating shares increased by **1,392,049,331 shares**[695](index=695&type=chunk) - On January 4, 2021, the company completed the registration and custody procedures for its private placement of A-shares, adding **381,308,030 restricted circulating shares**, changing the company's total share capital from **6,764,055,167 shares** to **7,145,363,197 shares**[696](index=696&type=chunk)[698](index=698&type=chunk) - The aforementioned private placement had no impact on earnings per share and return on net assets for the current reporting period[698](index=698&type=chunk) [Changes in Restricted Shares](index=62&type=section&id=6.2%20Changes%20in%20Restricted%20Shares) This section details the changes in restricted shares for various shareholders during the reporting period, primarily due to the lifting of lock-ups on shares acquired through a major asset restructuring - Qi Xiangdong's restricted shares at the beginning of the year were **121,207,120 shares**, with **84,844,984 shares** released from restriction during the year, resulting in **36,362,136 restricted shares** at year-end[699](index=699&type=chunk) - Tianjin Xinxinsheng Equity Investment Partnership (Limited Partnership) had **277,307,438 restricted shares** at the beginning of the year, with **194,115,206 shares** released from restriction during the year, resulting in **83,192,232 restricted shares** at year-end[700](index=700&type=chunk) - The main reason for the restrictions was shares acquired through a major asset restructuring of the listed company[699](index=699&type=chunk)[700](index=700&type=chunk)[701](index=701&type=chunk) [Shareholders and Actual Controller Information](index=65&type=section&id=6.3%20Shareholders%20and%20Actual%20Controller%20Information) As of the reporting period end, the company had 147,483 ordinary shareholders, with Tianjin Qixin Zhicheng Technology Co., Ltd. as the controlling shareholder and Zhou Hongyi as the actual controller, whose shareholding percentages were diluted after a private placement - As of the end of the reporting period, the total number of ordinary shareholders was **147,483**[703](index=703&type=chunk) - The controlling shareholder is Tianjin Qixin Zhicheng Technology Co., Ltd., holding **3,296,744,163 shares** at period-end, representing **48.74%** of the share capital, all of which are pledged[704](index=704&type=chunk) - The actual controller is Zhou Hongyi, holding **821,281,583 shares** at period-end, representing **12.14%** of the share capital, with no pledges[704](index=704&type=chunk) - After the private placement, Tianjin Qixin Zhicheng Technology Co., Ltd.'s shareholding percentage was passively diluted from **48.74%** to **46.14%**, and Zhou Hongyi's shareholding percentage was passively diluted from **12.14%** to **11.49%**[712](index=712&type=chunk)[713](index=713&type=chunk) [Preferred Shares Information](index=72&type=section&id=Section%207%20Preferred%20Shares%20Information) This section confirms that the company had no preferred shares during the reporting period - During the reporting period, the company had no preferred shares[715](index=715&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=73&type=section&id=Section%208%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section provides information on the shareholding changes and remuneration of directors, supervisors, and senior management, their appointments, and the overall employee structure and compensation policies [Changes in Shareholdings and Remuneration](index=73&type=section&id=8.1%20Changes%20in%20Shareholdings%20and%20Remuneration) This section discloses the shareholding changes and pre-tax remuneration of current and former directors, supervisors, and senior management during the reporting period, with Chairman Zhou Hongyi's shareholding remaining unchanged - Chairman and General Manager Zhou Hongyi held **821,281,583 shares** at year-end, with a total pre-tax remuneration of **3.83 million yuan** received from the company during the reporting period[718](index=718&type=chunk) - During the reporting period, the company paid a total pre-tax remuneration of **11.3882 million yuan** to its directors, supervisors, and senior management[730](index=730&type=chunk) [Appointments of Current and Former Directors, Supervisors, and Senior Management During the Reporting Period](index=76&type=section&id=8.2%20Appointments%20of%20Current%20and%20Former%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management%20During%20the%20Reporting%20Period) This section details the positions held by the company's directors, supervisors, and senior management within shareholder entities and other organizations, including Chairman Zhou Hongyi's roles in various affiliated companies - Mr. Zhou Hongyi currently also serves as the Executive Director of the controlling shareholder, Tianjin Qixin Zhicheng Technology Co., Ltd[724](index=724&type=chunk) - Zhou Hongyi holds executive director or chairman positions in multiple affiliated companies, such as Chairman of Qikoo Internet Technology (Shenzhen) Co., Ltd. and Chairman of Beijing Mijin Hefeng Technology Co., Ltd[725](index=725&type=chunk)[726](index=726&type=chunk)[727](index=727&type=chunk) - Several independent directors and supervisors hold positions in other listed companies or investment institutions, such as MING HUANG (Huang Ming) serving as an independent director of JD.com, Inc., and Zheng Qingsheng as a partner at Sequoia Capital China Fund[727](index=727&type=chunk)[728](index=728&type=chunk)[729](index=729&type=chunk) [Remuneration of Directors, Supervisors, and Senior Management](index=80&type=section&id=8.3%20Remuneration%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section clarifies that the remuneration for directors, supervisors, and senior management is determined by benchmarking against industry peers and company performance, with a total pre-tax remuneration of 11.39 million yuan paid during the reporting period - The company's remuneration plan for directors, supervisors, and senior management is determined by referencing companies in the same industry or of comparable scale, combined with the company's operating performance[730](index=730&type=chunk) - During the reporting period, the company paid a total pre-tax remuneration of **11.3882 million yuan** to its directors, supervisors, and senior management[730](index=730&type=chunk) [Changes in Directors, Supervisors, and Senior Management](index=81&type=section&id=8.4%20Changes%20in%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, Xu Jingchang was elected as an independent director and Zhao Luming was appointed as Board Secretary, while several former independent directors, directors, and the previous Board Secretary resigned for personal reasons - Xu Jingchang was elected as an independent director, and Zhao Luming was appointed as Board Secretary[731](index=731&type=chunk) - XUN CHEN (Chen Xun), Liu Guibin, SHEN NANPENG (Shen Nanpeng), and Wang Wei resigned due to personal reasons[731](index=731&type=chunk) [Employee Information of the Parent Company and Major Subsidiaries](index=82&type=section&id=8.5%20Employee%20Information%20of%20the%20Parent%20Company%20and%20Major%20Subsidiaries) As of the reporting period end, the company had 6,639 employees, with R&D personnel accounting for 62.45%, supported by comprehensive compensation policies and diverse training programs to attract and retain talent - As of the end of the reporting period, the company had a total of **6,639 employees**, of whom **4,146** were R&D personnel, accounting for **62.45%**[732](index=732&type=chunk) - At the end of the reporting period, the number of sales personnel increased significantly year-on-year, mainly due to the expansion of the company's government and enterprise security business; additionally, a minor adjustment in the classification of management and sales personnel in individual business departments during the reporting period also contributed to the year-on-year increase in total sales personnel[732](index=732&type=chunk) - The company adheres to a compensation philosophy that is internally equitable and externally competitive, establishing its compensation structure through a scientific job evaluation system[733](index=733&type=chunk) - The company builds a comprehensive leader development system, a systematic professional technical talent development system, and an integrated general capability enhancement system through 360 University, optimizing multiple high-quality projects to empower the company's sustainable development[734](index=734&type=chunk)[735](index=735&type=chunk) [Corporate Governance](index=84&type=section&id=Section%209%20Corporate%20Governance) During the reporting period, the company strictly adhered to relevant laws and regulations, improving its corporate governance structure and internal control systems, and ensuring standardized operations - During the reporting period, the company strictly complied with the "Company Law", "Securities Law", "Guidelines for Corporate Governance of Listed Companies", "Shanghai Stock Exchange Stock Listing Rules", and other relevant laws, regulations, and normative documents, formulating its "Articles of Association" and internal control norms, improving its internal corporate governance structure, strengthening internal control management systems, continuously enhancing its corporate governance level, and standardizing company operations[736](index=736&type=chunk) - The company held three shareholder meetings this year[737](index=737&type=chunk) - All members of the company's board of directors personally attended or participated in all board meetings via telecommunication, and independent directors raised no objections to company matters[738](index=738&type=chunk)[740](index=740&type=chunk) - The company prepared and disclosed the "2020 Internal Control Evaluation Report", and the internal control audit report received a standard unqualified opinion[742](index=742&type=chunk)[743](index=743&type=chunk) - The company conducts performance appraisals for senior management based on target completion and continuously improves its performance appraisal, incentive, and restraint mechanisms[741](index=741&type=chunk) [Corporate Bonds Information](index=86&type=section&id=Section%2010%20Corporate%20Bonds%20Information) This section confirms that the company had no corporate bonds during the reporting period - During the reporting period, the company had no corporate bonds[743](index=743&type=chunk) [Financial Report](index=87&type=section&id=Section%2011%20Financial%20Report) This section presents the company's audited financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in equity, along with detailed notes on accounting policies and estimates [Audit Report](index=87&type=section&id=11.1%20Audit%20Report) Deloitte Touche Tohmatsu Certified Public Accountants LLP issued a standard unqualified audit opinion on 360's 2020 financial statements, highlighting revenue recognition for internet advertising and services, and the existence and restricted nature of monetary funds as key audit matters - Deloitte Touche Tohmatsu Certified Public Accountants LLP issued a standard unqualified audit report for the company[745](index=745&type=chunk) - Key audit matters included the recognition of internet advertising and services revenue and the disclosure of the existence and restricted nature of monetary funds[747](index=747&type=chunk)[748](index=748&type=chunk) [Financial Statements](index=91&type=section&id=11.2%20Financial%20Statements) This section provides the company's 2020 consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, offering a comprehensive view of financial position, operating results, and cash flows Consolidated Balance Sheet Key Data (Unit: Thousand Yuan) | Project | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Monetary Funds | 26,555,881 | 19,462,739 | | Long-Term Equity Investments | 4,652,238 | 3,427,193 | | Total Assets | 44,261,773 | 33,751,570 | | Short-Term Borrowings | 1,970,179 | | | Total Liabilities | 7,504,261 | 5,069,869 | | Total Equity Attributable to Parent Company Owners | 36,825,916 | 28,700,288 | Consolidated Income Statement Key Data (Unit: Thousand Yuan) | Project | 2020 | 2019 | | :--- | :--- | :--- | | Operating Revenue | 11,614,731 | 12,841,095 | | Operating Cost | 4,351,504 | 4,448,808 | | Research and Development Expenses | 2,871,129 | 2,528,171 | | Net Profit | 2,837,902 | 5,949,509 | | Net Profit Attributable to Parent Company Shareholders | 2,912,505 | 5,980,435 | Consolidated Cash Flow Statement Key Data (Unit: Thousand Yuan) | Project | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 1,942,970 | 2,759,929 | | Net Cash Flow from Investing Activities | (3,131,705) | (4,119,882) | | Net Cash Flow from Financing Activities | 6,427,649 | (752,650) | [Company Basic Information](index=110&type=section&id=11.3%20Company%20Basic%20Information) This section covers 360 Security Technology Inc.'s historical evolution, major asset restructuring, the progress and outcome of its private placement of A-shares, and its registered information and primary business scope - The company was renamed 360 Security Technology Inc. on February 28, 2018, after completing a major asset sale, exchange, and share issuance to acquire assets[777](index=777&type=chunk) - On December 23, 2020, the company received **4,855,285,524.84 yuan** in proceeds from a private placement, issuing **381,308,030** ordinary A-shares[778](index=778&type=chunk) - The newly issued shares from this offering completed registration and custody procedures with China Securities Depository and Clearing Corporation Limited Shanghai Branch on January 4, 2021, changing the company's share capital to **7,145,363,197.00 yuan**[779](index=779&type=chunk) - The company's main business scope includes internet and software-related technology consulting, technology transfer, technology promotion services; R&D and sales of computer software, hardware, and auxiliary equipment; engaging in internet cultural activities; internet information services; cloud computing and big data services; and network security services[779](index=779&type=chunk) [Basis of Preparation of Financial Statements](index=111&type=section&id=11.4%20Basis%20of%20Preparation%20of%20Financial%20Statements) This section states that the financial statements are prepared on a going concern basis, adhering to accounting standards issued by the Ministry of Finance, primarily using historical cost, with certain financial instruments measured at fair value - The company's financial statements are prepared on a going concern basis, and no significant doubts or circumstances regarding its ability to continue as a going concern have been identified[783](index=783&type=chunk) - The Group complies with the Enterprise Accounting Standards and related regulations issued by the Ministry of Finance, using the accrual basis for accounting and historical cost as the measurement basis (except for certain financial instruments measured at fair value)[781](index=781&type=chunk)[782](index=782&type=chunk) [Significant Accounting Policies and Accounting Estimates](index=112&type=section&id=11.5%20Significant%20Accounting%20Policies%20and%20Accounting%20Estimates) This section details the company's specific accounting policies and estimates across various financial statement items, including financial instruments, revenue recognition, and the impact of new revenue standards, along with key assumptions and uncertainties in accounting estimates - The financial statements prepared by the company comply with the requirements of enterprise accounting standards, truly and completely reflecting the company's and consolidated financial position as of December 31, 2020, and the company's and consolidated operating results, changes in shareholders' equity, and cash flows for 2020[785](index=785&type=chunk) - After initial recognition, the Group subsequently measures different categories of financial assets at amortized cost, fair value through other comprehensive income, or fair value through profit or loss[796](index=796&type=chunk)[798](index=798&type=chunk) - The Group performs impairment accounting and recognizes loss provisions for financial assets measured at amortized cost, financial assets classified as fair value through other comprehensive income, and contract assets, based on expected credit losses[800](index=800&type=chunk) - The Group recognizes revenue when it satisfies a performance obligation in a contract, which is when the customer obtains control of the related goods or services, at the transaction price allocated to that performance obligation[839](index=839&type=chunk) - The first implementation of the new revenue standard on January 1, 2020, resulted in the reclassification of accounts receivable to contract assets, and advances from customers to contract liabilities and other current liabilities[869](index=869&type=chunk)[870](index=870&type=chunk)[871](index=871&type=chunk)[872](index=872&type=chunk)[873](index=873&type=chunk) - Key assumptions and uncertainties in accounting estimates include fair value measurement, estimated useful lives and residual values of fixed assets and intangible assets, impairment of accounts receivable and contract assets, recognition of deferred income tax assets, goodwill impairment, impairment of long-term assets other than goodwill, and pending litigation matters[855](index=855&type=chunk)[856](index=856&type=chunk)[857](index=857&type=chunk)[858](index=858&type=chunk)[859](index=859&type=chunk)[860](index=860&type=chunk)[861](index=861&type=chunk)[863](index=863&type=chunk) [Taxation](index=145&type=section&id=11.6%20Taxation) This section outlines the company's main tax categories and rates, including VAT, cultural business construction fees, urban maintenance and construction tax, education surcharges, and corporate income tax, noting that some subsidiaries benefit from a 15% preferential corporate income tax rate as high-tech enterprises Main Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax | Note 1 | 13%/9%/6%/3% | | Cultural Business Construction Fee | Taxable advertising and service revenue | 3%/1.5%/0% | | Urban Maintenance and Construction Tax | Payable turnover tax | 1%/5%/7% | | Education Surcharge | Payable turnover tax | 3% | | Local Education Surcharge | Payable turnover tax | 2% | | Corporate Income Tax | Taxable income | 0%-25% | - The company's subsidiaries, including 360 Technology Group Co., Ltd. and Beijing Qihoo Technology Co., Ltd., have obtained high-tech enterprise certification and enjoy a preferential corporate income tax rate of **15%**[879](index=879&type=chunk) - From January 1, 2020, to December 31, 2020, the cultural business construction fee was exempted[879](index=879&type=chunk) [Notes to Consolidated Financial Statement Items](index=146&type=section&id=11.7%20Notes%20to%20Consolidated%20Financial%20Statement%20Items) This section provides detailed notes on various consolidated financial statement items, including monetary funds, accounts receivable, long-term equity investments, goodwill, operating revenue and costs, R&D expenses, and investment income, explaining their composition and significant changes - Monetary funds at period-end amounted to **26,555,881 thousand yuan**, of which **3,405,584 thousand yuan** were restricted, primarily pledged deposits for corporate overdraft facilities and commercial acceptance bill endorsement and discounting services[881](index=881&type=chunk)[882](index=882&type=chunk)[883](index=883&type=chunk) - Accounts receivable at period-end had a carrying value of **1,950,684 thousand yuan**, with a bad debt provision of **53,112 thousand yuan**, of which **21,979 thousand yuan** was for individually assessed bad debt provisions[890](index=890&type=chunk)[891](index=891&type=chunk) - Long-term equity investments at period-end amounted to **4,652,238 thousand yuan**, with a major increase of **1,281,492 thousand yuan** from the investment in Tianjin Jincheng Bank Co., Ltd[924](index=924&type=chunk) - Other equity instrument investments at period-end amounted to **4,239,239 thousand yuan**, primarily including Tencent Music Entertainment Group and Hillstone Networks Co., Ltd[926](index=926&type=chunk) - Goodwill at period-end had an original carrying amount of **1,709,711 thousand yuan**, with major increases from the acquisitions of Hansight and its controlled companies, and Guizhou Shouwang Lingyu Data Intelligence Co., Ltd. and its controlled companies[940](index=940&type=chunk) - Operating revenue was **11,614,731 thousand yuan**, and operating cost was **4,351,504 thousand yuan**, with internet advertising and services revenue accounting for **7,512,419 thousand yuan**[983](index=983&type=chunk) - R&D expenses amounted to **2,871,129 thousand yuan**, with employee compensation and benefits being the main component at **2,103,344 thousand yuan**[993](index=993&type=chunk) - Investment income was **539,079 thousand yuan**, a significant year-on-year decrease of **82.19%**, primarily due to the transfer of Qi An Xin equity in the prior period[996](index=996&type=chunk) - Deferred income tax assets at period-end amounted to **41,889 thousand yuan**, and deferred income tax liabilities at period-end amounted to **80,209 thousand yuan**[948](index=948&type=chunk) [Changes in Consolidation Scope](index=198&type=section&id=11.8%20Changes%20in%20Consolidation%20Scope) During the reporting period, the company expanded its consolidation scope through non-same-control business combinations, adding subsidiaries like Project L, Hansight, and Guizhou Shouwang Lingyu Data Intelligence, while also disposing of Project L's equity and liquidating several other subsidiaries - During this period, non-same-control business combinations occurred, adding Project L, Hansight and its controlled companies, and Guizhou Shouwang Lingyu Data Intelligence Co., Ltd. and its controlled companies as subsidiaries[1024](index=1024&type=chunk) - The merger cost for Project L was **487,636 thousand yuan**, resulting in goodwill of **390,398 thousand yuan**[1027](index=1027&type=chunk) - The merger cost for Hansight and its controlled companies was **488,335 thousand yuan**, resulting in goodwill of **366,670 thousand yuan**[1028](index=1028&type=chunk) - The merger cost for Guizhou Shouwang Lingyu Data Intelligence Co., Ltd. and its controlled companies was **176,750 thousand yuan**, resulting in goodwill of **174,861 thousand yuan**[1029](index=1029&type=chunk)[1030](index=1030&type=chunk) - The company disposed of all equity in Project L in September 2020, with a disposal price of **463,766 thousand yuan**[1025](index=1025&type=chunk)[1037](index=1037&type=chunk) - This year, seven new subsidiaries were established, including 360 Vision (Beijing) Technology Co., Ltd. and Tianjin 360 Hongteng Technology Co., Ltd[1039](index=1039&type=chunk) - This year, six subsidiaries were liquidated, including Ningbo Dazhen Communication Technology Co., Ltd. and Sidakang (Shenzhen) Technology Co., Ltd[1040](index=1040&type=chunk) [Interests in Other Entities](index=206&type=section&id=11.9%20Interests%20in%20Other%20Entities) This section details the company's corporate group structure, including significant wholly-owned and non-wholly-owned subsidiaries, joint ventures, and associates, along with key financial information for important non-wholly-owned subsidiaries and the basis for control over Shenzhen Fenglian Technology Co., Ltd - The company owns multiple wholly-owned subsidiaries, including 360 Technology Group Co., Ltd. and Beijing Qihoo Technology Co., Ltd[1042](index=1042&type=chunk) - Important non-wholly-owned subsidiaries include Beijing Qibao Technology Co., Ltd. and Beijing Hongteng Smart Technology Co., Ltd[1044](index=1044&type=chunk) - The company obtained control over Shenzhen Fenglian Technology Co., Ltd. (holding **46.32%** of shares) by signing a "Concerted Action Agreement" with minority shareholders[1043](index=1043&type=chunk) - Important associates include Opera Limited and Tianjin Jincheng Bank Co., Ltd[1048](index=1048&type=chunk)[1050](index=1050&type=chunk) Key Financial Information of Important Non-Wholly-Owned Subsidiaries (Unit: Thousand Yuan) | Subsidiary Name | Total Assets at Period-End | Total Liabilities at Period-End | Current Period Operating Revenue | Current Period Net Profit | | :--- | :--- | :--- | :--- | :--- | | Beijing Qibao Technology Co., Ltd. | 204,905 | 167,627 | 222,023 | (69,705) | | Beijing Hongteng Smart Technology Co., Ltd. | 1,842,116 | 2,759,993 | 247,099 | (482,223) | [Risks Related to Financial Instruments](index=212&type=section&id=11.10%20Risks%20Related%20to%20Financial%20Instruments) This section describes the market risks (foreign exchange risk, interest rate risk, other price risk), credit risk, and liquidity risk associated with the company's financial instruments, along with the policies and measures implemented to manage these risks - The Group faces market risks primarily including foreign exchange risk (mainly related to the US dollar), interest rate risk (mainly involving bank deposits and bank borrowings with floating interest rates), and other price risks (mainly arising from other equity instrument investments)[1056](index=1056&type=chunk)[1059](index=1059&type=chunk)[1060](index=1060&type=chunk) - Foreign exchange risk sensitivity analysis shows that a **5% depreciation of RMB** would lead to a **7,084 thousand yuan** decrease in total profit and owners' equity, while a **5% appreciation of RMB** would lead to a **7,084 thousand yuan** increase[1058](index=1058&type=chunk) - Other price risk sensitivity analysis shows that a **5% increase** in the price of other equity instrument investments would lead to a **198,929 thousand yuan** increase in other comprehensive income and owners' equity, while a **5% decrease** would lead to a **198,929 thousand yuan** decrease[1061](index=1061&type=chunk) - Credit risk primarily arises from monetary funds, notes receivable, accounts receivable, accounts receivable financing, other receivables, and debt investments, with the company mitigating risk through credit limit approval and monitoring procedures[1062](index=1062&type=chunk) Analysis of Financial Liabilities by Undiscounted Remaining Contractual Obligations Maturity (Unit: Thousand Yuan, Currency: RMB) | Project | Within 1 Year | Total | | :--- | :--- | :--- | | Short-Term Borrowings | 1,970,179 | 1,970,179 | | Accounts Payable | 2,145,230 | 2,145,230 | | Other Payables | 767,884 | 767,884 | | Financial Guarantees | 900,000 | 900,000 | | Total | 5,783,293 | 5,783,293 | [Disclosure of Fair Value](index=215&type=section&id=11.11%20Disclosure%20of%20Fair%20Value) This section discloses the fair values of assets and liabilities measured at fair value at period-end, including trading financial assets, other equity instrument investments, and accounts receivable financing, detailing the valuation techniques and key parameters for each fair value hierarchy level Total Assets Continuously Measured at Fair Value (Unit: Thousand Yuan, Currency: RMB) | Project | Level 1 Fair Value Measurement | Level 2 Fair Value Measurement | Level 3 Fair Value Measurement | Total | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | | 22,590 | | 22,590 | | Other Equity Instrument Investments | 3,978,573 | 9,074 | 251,592 | 4,239,239 | | Other Non-Current Financial Assets | | | 605,903 | 605,903 | | Accounts Receivable Financing | | 390 | | 390 | | Total | 3,978,573 | 32,054 | 857,495 | 4,868,122 | - The fair value of Level 1 fair value measurement items is determined by unadjusted quoted prices for identical assets or liabilities in active markets[1066](index=1066&type=chunk) - Level 2 fair value measurement items use the discounted cash flow method and recent transaction method, with inputs including expected return rates, discount rates, and quoted prices for similar or identical assets[1067](index=1067&type=chunk) - Level 3 fair value measurement items use the listed company comparable method and the fair value method of underlying investment projects, with inputs including liquidity discounts and the fair value method of underlying investment projects[1068](index=1068&type=chunk) - During the year, some other equity instrument investments were reclassified to Level 3 because the investee companies had no recent new rounds of financing, leading to a change in valuation technique from the recent transaction method to the listed company comparable method[1070](index=1070&type=chunk) [Related Parties and Related Party Transactions](index=218&type=section&id=11.12%20Related%20Parties%20and%20Related%20Party%20Transactions) This section provides detailed information on the company's parent company, subsidiaries, joint ventures, associates, and oth

公司代码：601360 公司简称：三六零 2020 年半年度报告 三六零安全科技股份有限公司 2020 年半年度报告 1 / 192 2020 年半年度报告 重要提示 一、 本公司董事会、监事会及董事、监事、高级管理人员保证半年度报告内容的真实、准确、完 整，不存在虚假记载、误导性陈述或重大遗漏，并承担个别和连带的法律责任。 二、 公司全体董事出席董事会会议。 三、 本半年度报告未经审计。 四、 公司负责人周鸿祎、主管会计工作负责人张矛及会计机构负责人（会计主管人员）张海龙声 明：保证半年度报告中财务报告的真实、准确、完整。 五、 经董事会审议的报告期利润分配预案或公积金转增股本预案 无 六、 前瞻性陈述的风险声明 □适用 √不适用 七、 是否存在被控股股东及其关联方非经营性占用资金情况 否 八、 是否存在违反规定决策程序对外提供担保的情况？ 否 九、 重大风险提示 报告期内，公司未发现存在对未来发展战略、持续经营活动产生不利影响的重大风险。 对于发展中面临的经营风险，公司将采取措施积极应对，具体情况详见本报告"第四节 经营 情况的讨论与分析"中"三、其他披露事项"之"（二）可能面对的风险"的相关内容。 十、 ...