东方精工：2026年半年度报告（英文）

Guangdong Dongfang Precision Science & Technology Co., Ltd.

Semi-Annual Report 2026

【Date of Disclosure】28 July 2026

Part I Important Notes, Table of Contents and Definitions

T The Board of Directors (or the “Board”) as well as the directors and senior management of Guangdong Dongfang Precision Science & Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the contents of this Report are true, accurate and complete and free of any misrepresentations, misleading statements, or material omissions, and collectively and individually accept legal responsibility for such contents.

Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s Financial Controller, and Shao Yongfeng, the Company’s Accounting Supervisor hereby guarantee that the financial statements carried in this Report are truthful, accurate and complete.

All directors of the Company attended in person the board meeting for the approval of this Report.

For possible risks with respect to the Company, please refer to “X Risks Faced by the Company and Countermeasures” of “Part III Management Discussion and Analysis” herein. And investors are kindly advised to read through the aforesaid contents.

The profit distribution proposal approved by the Board of Directors is as follows: Based on the total share capital on the record date for the implementation of the dividend plan, a cash dividend of RMB 2.00 (including tax) per 10 shares will be distributed to all shareholders, with no bonus shares (including tax) and no capitalization of reserves.

Special Declaration

This Report has been prepared in Chinese and translated into English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.

Table of Contents

Part I Important Notes, Table of Contents and Definitions....2

Part II Corporate Information and Key Financial Information....8

Part III Management Discussion and Analysis....12

Part IV Corporate Governance, Environmental and Social Responsibilities....69

Part V Significant Events....74

Part VI Share Changes and Shareholder Information....112

Part VII Corporate Bonds....119

Part VIII Corporate Financial Statements....120

Documents Available for Reference

1. The financial statements signed and sealed by the Company’s legal representative, Chief Financial Officer, and the person-in-charge of the financial organ.

2. All the originals of the Company’s announcements and documents that were disclosed to the public during the Reporting Period on the media designated by the CSRC for information disclosure.

3. The 2026 Semi-Annual Report carrying the signature of the legal representative.

4. The documents above are lodged in the Securities Department of the Company, No. 2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China.

Definitions

Part II Corporate Information and Key Financial Information

I Corporate Information

II Contact Information

III Other Information

1. Contact information of the company

Whether the company's registered address, company office address and its postal code, company website and e-mail address have changed during the reporting period.

□ Applicable  Not applicable

The company's registered address, company office address and its postal code, the company's website and e-mail address remain unchanged during the reporting period, which can be found in the 2025 Annual report.

2. Information disclosure and location.

Whether the information disclosure and location have changed during the reporting period.

 Applicable □ Not applicable

3. Other relevant information

Whether other relevant information has changed in the reporting period

□ Applicable √ Not applicable

IV Key Financial Information

Indicate whether there is any retrospectively restated datum in the table below.

□ Yes √ No

Note 1: During the reporting period, the exchange loss caused by foreign exchange rate fluctuations affected the Net profi attributable to the listed company’s shareholders before non-recurring gains and losses by RMB 18.90 million. Excluding the impac of the exchange loss, the Net profit attributable to the listed company’s shareholders before non-recurring gains and losses for the reporting period was RMB 104.9975 million.

Note 2: During the reporting period, the Company’s main businesses consist of three segments: Intelligent Marine Equipment,

Intelligent Packaging Equipment and Embodied Intelligent Robot Equipment. Details are as follows:

(1) Intelligent Packaging equipment segment: revenue increased by 17% year-on-year on a comparable basis; excluding the impact of exchange loss, the Net profit attributable to the listed company’s shareholders before non-recurring gains and losses contributed by this segment rose by 74% year-on-year;

(2) Intelligent Marine equipment segment: revenue increased by 35% year-on-year on a comparable basis; excluding the impact of exchange loss, the Net profit attributable to the listed company’s shareholders before non-recurring gains and losses contributed by this segment grew by 18% year-on-year.

V Accounting Data Differences under China’s Accounting Standards for Business Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards

1. Net Profit and Equity under CAS and IFRS

□ Applicable  Not applicable

No difference for the Reporting Period.

2. Net Profit and Equity under CAS and Foreign Accounting Standards

□ Applicable  Not applicable

No difference for the Reporting Period.

VI Non-recurring Gains and Losses

 Applicable □ Not applicable

Unit: RMB yuan

Details of other profit and loss items that meet the definition of non-recurring profit or loss.

□ Applicable  Not applicable

No such cases in the Reporting Period.

Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:

□ Applicable  Not applicable

No such cases in the Reporting Period.

Part III Management Discussion and Analysis

I Principal Operations of the Company in the Reporting Period

In the first half of 2026, Dongfang Precision completed the closing of the major asset sale of 100% equity in Fosber Group, Fosber Asia, and Tiruña Asia, the former business entities of the corrugated cardboard production line division, achieving a total divestment of the corrugated cardboard production line-related business. Taking this as an opportunity, the Company firmly promoted the implementation of its technology transformation strategy, shifting its strategic focus toward technological upgrading. Through practical actions of strategic transformation, the Company actively responded to the call and guidance of the Outline of the 15th Five-Year Plan for National Economic and Social Development of the People’s Republic of China regarding the development of new quality productive forces and the expansion of emerging industries during the 15th Five-Year Plan period.

During the Reporting Period, based on its three decades of accumulated expertise and heritage in the highend intelligent equipment manufacturing sector, Dongfang Precision concentrated its resources on the technology sector and emerging industries, and redefined and repositioned its core business segments. After the adjustment, the Company’s main business segments focus on three core pillars: intelligent marine equipment, embodied intelligence robotic equipment, and intelligent packaging equipment. This repositioning of the Company’s principal business segments is intended to focus on the main tracks of national strategy, capitalize on the strategic development window, and further deepen its industrial layout. With the three core businesses as the foundation for the listed company’s development, Dongfang Precision strives to forge a new hallmark of high‑ quality development.

(I) Industries in which the Company principally operates

According to the Classification of Strategic Emerging Industries (2018) and the Industrial Classification for National Economic Activities (GB/T 4754-2017), the industries in which the Company principally operates are shown below:

The Company’s Principal Business Divisions and Their Industries

(II) Industry overview

1. Industry of the intelligent marine equipment business segment

1.1 Outboard motor industry

(1) Application scenarios of outboard motors

Outboard motors are the key auxiliary equipment for small- and medium-sized ships and are characterized by their compact structures, light weights, convenient installation and maintenance, easy operations, and low noise, they have become indispensable key equipment in the modern aquatic leisure and entertainment sector. The performance of outboard motors directly determines the navigation efficiency and user experience of vessels. The downstream of the outboard motor industry involves the shipbuilding industry, primarily applied in areas such as yachts, sailboats, and other vessels, encompassing applications including leisure and sports, commercial operations, and governmental maritime administration.

Applications ofParsun Power’s Outboard Motors

Field	Scenario	Example
Recreational	Recreational fishing, sailing and water sports
Commercial	Fishing, water traffic and waterway maintenance
Governmental	Emergency rescue and maritime patrol Beach landing and water reconnaissance

(2) Market size and development trends of outboard motors

Global Market: According to a report by the international market research agency GMI, the global marke sales for outboard motors are expected to reach USD15,975 million by 2030, with a compound annual growth rate (CAGR) of 5.35% from 2023 to 2030.

Figure: Global Outboard Motor Sales Volume and Market Size, 2023–2030 (in ten thousands of units, in hundreds of millions of US dollars)

By Application Field: The recreational boating sector is the largest downstream application market for outboard motors. By 2030, it is expected that the market share of outboard motors used in water-based leisure sports will account for 73.22% globally. Yachts are one of the main downstream products equipped with outboard motors. In recent years, the global yacht industry has shown a trend of expanding scale. According to a report by the China Association of the National Shipbuilding Industry, the global leisure boat market size is expected to grow from USD16.4 billion in 2021 to USD23.6 billion in 2027, with a CAGR of approximately 6.20%. Benefiting from the rapid growth of the downstream yacht market, the global outboard motor market for water leisure sports is expected to grow steadily.

By Power Size: The global outboard motor market exhibits a distinct horsepower segmentation pattern. Low-Horsepower outboard motors are mainly used in scenarios such as recreational fishing, small yachts, and shortdistance water transportation. Mid-to-high horsepower outboard motors carry higher unit prices and account for a large share of the overall market scale. They are primarily applied in high-performance yachts, commercia operations, and governmental and maritime sectors. The market share of mid-to-high horsepower outboard motors accounts for more than three-quarters of the total market. In 2023, the mid-to-high power outboard motor marke share in the global outboard motor market was 79.72%. North America and Europe are the main markets for midto-high power outboard motors. From 2023 to 2030, the compound annual growth rate (CAGR) of the mid-to-high power outboard motor market in the Asia-Pacific region is expected to reach 8.97%.

Figure: Market Size and Forecast of Outboard Motors by HP, 2023–2030 (in hundreds of millions of US dollars)

Chinese Market: By 2030, the market size of outboard motors in China is expected to reach USD588 million, with a compound annual growth rate (CAGR) of 9.79% from 2022 to 2030, significantly higher than the globa CAGR. Benefiting from the rapid growth of China’s economy and changes in residents’ recreational habits, China has become one of the fastest-growing countries in the global outboard motor market.

(3) Industry policies related to the outboard motor sector

With steady economic growth, rising household income and evolving consumption habits, China’s aquatic tourism and leisure industry has achieved rapid development in recent years. Government authorities at all levers in China have provided substantial policy support for the development of boat and yacht-related industries.For example, the National Development and Reform Commission has included high-performance ships, such as superyachts, luxury cruise ships, marine surveillance vessels, and small-waterplane-area twin hulls, among items for encouragement. The Ministry of Industry and Information Technology has proposed developing brand products, such as luxury superyachts, sightseeing boats, and official boats. The State Council has also proposed vigorously developing marine tourism, manufacturing localised tourism equipment such as cruises and cruise yachts, and vigorously developing cruise yacht tourism. China’s yacht industry will usher in rapid development.

Jointly issued by the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Ecology and Environment, and the Ministry of Transport, the "Action Plan for the Green Development of the Shipbuilding Industry (2024—2030)" states:"Actively and steadily promote the research and development and demonstration application of batterypowered ship types that meet the necessary conditions; actively and steadily expand the scope of application of traction batteries in ships." The "Action Plan for Promoting the High-Quality Development of the Marine Economy in Guangdong Province (2025—2027)" points out:"Strengthen the research, development and manufacturing of new types of special ships such as new energy ships, intelligent ships, and advanced cruise ships and ferries; accelerate the research and development of unmanned ship and boat technologies." And, the "Action Plan for the Development of the Electric Ship Industry in Fujian Province (2026—2028)" proposes:"Vigorously promote the application of electric ships in inland rivers, lakes, and other water areas; accelerate the mass construction of electric cruise ships and electric cargo ships; support the construction and commissioning of coastal electric sightseeing ships, ferries, and yachts; promote the electrified upgrading and renewal of official ships used by departments such as transportation, water conservancy, cultural tourism, marine fisheries, environmental protection, and natural resources."

(4) Market competition landscape in the outboard motor sector

The major participants in the global outboard motor market are Japanese and American brands, including Yamaha and Suzuki from Japan, and Mercury from the United States. Compared to international competitors, Parsun Power, relying on its product performance that is close to the competitors’ and its clear price advantage, competes globally with American and Japanese manufacturers by offering high cost-performance products.

Parsun Power, a holding subsidiary, is a leading company in the domestic outboard motor industry. The company is a national “Little Giant” enterprise specializing in innovation, a national high-tech enterprise, the Jiangsu Province Outboard Motor Engineering Technology Research Center, a recognized enterprise technology center in Jiangsu Province, a leading enterprise in the Chinese internal combustion engine industry, and a member unit of the Small Gasoline Engine Branch of the China Internal Combustion Engine Industry Association. At the same time, its outboard motor products have also received various honors, including the National Torch Program Industrialization Demonstration Project Certificate, China Machinery Industry Innovative Products, Jiangsu Province Famous Brand Products, and Suzhou City Famous Brand Products.

(5) Development trends of the outboard motor industry

Domestic substitution has become the mainstream trend in the development of China’s outboard motor industry. Against the backdrop of economic development and changes in the consumption structure of recreational sports, national encouragement for import substitution of domestic equipment, and the rise of domestic outboard motor brands represented by Parsun Power, China, as one of the fastest-growing major outboard motor markets globally, is expected to usher in a new stage of prosperous development for domestic outboard motor enterprises. Leading domestic outboard motor enterprises are expected to enjoy the dual dividends of high industry growth and domestic substitution.

Continuous improvement in intelligent manufacturing: The Outline of the 15th Five-Year Plan for National Economic and Social Development of the People’s Republic of China proposes to “promote technologica transformation and upgrading, and develop intelligent manufacturing, green manufacturing, and service-oriented manufacturing”. To align with national policies and industry trends that promote the transition of China’s manufacturing toward intelligent and green manufacturing, the domestic outboard motor industry has taken proactive measures. By continuously promoting the intelligent and information-based transformation and upgrading of the outboard motor production and manufacturing process, the industry has achieved cost reduction, quality improvement, and efficiency enhancement. The intelligent and digital upgrading of production lines is also an inevitable choice for modern manufacturing enterprises to enable rapid response and flexible production of large-volume, diversified product portfolios.

Outboard motor horsepower continues to increase, evolving toward green and environmental protection:

Driven by the growing global demand for water‑ based leisure and sports activities, the rising environmental awareness across countries, and the impact of China’s “carbon peaking and carbon neutrality” policies, the trend of global outboard motor products developing toward four-stroke medium-to-large horsepower and new energy is becoming increasingly evident. Against the backdrop of increasing demand for medium-to-large horsepower fuelpowered outboard motors for vessels such as recreational and luxury yachts, medium-to-large horsepower fuelpowered outboard motors are simultaneously evolving toward technical solutions with lower emissions and greater environmental sustainability. Driven by the rapid development of technologies such as electric motors and batteries, the development of electric outboard motors has continued to accelerate in recent years. Electric outboard motors feature zero pollution and ultra-quiet operation, meeting the needs of specific scenarios such as tourist attractions, aquaculture, and fishing. With the continuous development and breakthroughs in related technologies, electric outboard motors are expected to move toward higher power outputs and broader application scopes in the future.

1.2 Electric trolling motor industry

The electric trolling motor is mainly used in recreational fishing and competitive fishing events, and can also serve as an auxiliary electric propulsion device for position holding or course adjustment.

According to the Fact.MR report, the global market size for electric trolling motors is expected to grow from approximately USD583 million in 2023 to around USD851 million by 2034. Among them, bow-mounted models will account for over 60% of the total electric trolling motor market. In a global context, North America and Europe are currently the main markets for electric trolling motors, with regions such as East Asia and Southeast Asia developing at a faster pace. Domestically, the use of electric trolling motors is concentrated in areas where recreational fishing culture is popular, such as coastal provinces in China and locations where fishing enthusiasts gather.

The Chinese electric trolling motor market is in its growth phase. Due to the continuous increase in the number of participants in water-based recreational sports, greater product awareness, and more affordable pricing. electric trolling motors are gradually penetrating from the professional sea fishing tackle market into the broader mass-market water recreation sector. With ongoing trends like technological innovations (such as multi-mode satellite navigation, high-precision positioning control systems, energy system optimization brought by motor and battery technology advancements) and domestic substitution, the Chinese electric trolling motor market has substantial potential for development.

1.3 General machine industry

General machines are widely used in fields including agricultural machinery, garden machinery, and small construction machinery, serving a broad range of purposes.

Global market: In developed countries and regions such as Europe and the United States, general machines have widely entered households as consumer tools. These products enjoy substantial demand, feature short replacement cycles, and exhibit relatively stable market demand. In other developing countries across Asia, Africa, and Latin America, significant demand for general machines has also emerged due to incomplete national power infrastructure and increasing mechanization rates.

From the perspective of the global market, the demand for general machines remains above 60 million units per year. Regions such as North America and Europe, certain Southeast Asian countries, and the Middle East are economically developed with high living standards, making them the primary consumer markets for genera machines. Emerging markets such as Africa and Latin America have also generated significant demand for these products due to economic growth, increased infrastructure construction, and the trend of machinery replacing manual labor. In developing countries across regions such as the Middle East and Africa with large populations,

resulting in low productivity. Gardening machinery and agricultural machinery can serve as effective substitutes for manual labor, significantly improving both work efficiency and production output. In recent years, investment in garden and agricultural machinery in developing countries has increased year by year, making them important markets for general machines

Chinese market: In China, general machines are used as supporting power and are widely applied in generator sets, water pumps, small construction machinery, and other fields closely related to the national economy, covering industry, agriculture, transportation, emergency rescue and disaster relief. According to statistics from the China Internal Combustion Engine Industry Association, currently more than 80% of China’s general machines are exported, and production accounts for approximately 40% to 50% of total global output, making China the world’s largest producer.

2. Industry of the embodied intelligence robotic equipment business segment

Embodied intelligence robots are physical robots equipped with the embodied intelligence paradigm. The core is to provide AI with a physical body to complete a closed-loop interaction of “perception-understandingplanning-execution-feedback” in the real three-dimensional physical world, enabling autonomous learning and adaptive adjustment through dynamic interaction with the environment. Currently, the primary forms of embodied intelligence robots include humanoid robots, quadruped robots, specialized non-standard robots, and desktop-leve small embodied robots.

Specifically, the humanoid robot is an intelligent robot with human-like dimensions, physical features, and mobility. Because its humanoid structure provides the interaction interface best suited for human environments, it is considered the optimal carrier for embodied intelligence. From the perspective of size, functional applications, and target scenarios, humanoid robots can be categorized into full-size, medium-sized, and small-sized humanoid robots. From the perspective of mobility, humanoid robots can be categorized into bipedal and wheeled humanoid robots.

(1) Industry policies related to embodied intelligence robots

The embodied intelligence robot industry is one of the most potential and promising industries in the global technology field today. It deeply integrates numerous fundamental disciplines such as artificial intelligence (AI), mechanical engineering, electronic technology, and materials science, and has become a critical battleground for countries competing for the commanding heights of the AI industry. It is also an important carrier for China to develop new quality productive forces and cultivate emerging industries. As an advanced form of AI, embodied intelligence robots are propelled by AI and embodied intelligence technologies as core drivers. They are rapidly transitioning from technical validation to large-scale deployment. Their industrial development deeply aligns with the core requirements of new quality productive forces, which are “led by technological innovation and oriented toward high-quality development”.

Since 2023, national and local authorities have successively issued a series of policies to support the development of the embodied intelligence industry. The main highlights are as follows:

In October 2023, the Ministry of Industry and Information Technology issued the Guiding Opinions on the Innovative Development ofHumanoid Robots, proposing that: By 2027, the technological innovation capability of humanoid robots will be significantly improved, a safe and reliable industrial chain and supply chain system wil be formed, an internationally competitive industrial ecosystem will be built, and comprehensive strength wil reach the world’s advanced level. To expand the scenario applications of humanoid robots, on one hand, typica manufacturing scenarios should be created. With a focus on key manufacturing fields such as 3C and automobiles, it is necessary to improve the capabilities of humanoid robots in tool operation and task execution and build demonstration production lines and factories for humanoid robots to achieve deep application in typica manufacturing scenarios. Facing structured production and manufacturing processes, the application and popularization of humanoid robots in processes such as assembly, transfer, inspection, and maintenance should be promoted.

In January 2024, seven authorities, including the Ministry of Industry and Information Technology, jointly released the Implementation Opinions on Promoting the Innovation and Development of Future Industries, proposing that: Facing major national strategic needs and the people’s needs for a better life, we should accelerate the implementation of major technical equipment breakthrough projects, achieve breakthroughs in high-end equipment products such as humanoid robots, quantum computers, ultra-high-speed trains, next-generation large aircraft, green intelligent ships, and unmanned vessels, drive the industrialization of new technologies through complete machines, and build a world-leading high-end equipment system.

In March 2025, the Several Policy Measures of Guangdong Province to Promote the Innovation and Development of the Artificial Intelligence and Robotics Industry proposed many initiatives, including supporting breakthroughs in key core technologies; supporting various innovation subjects such as enterprises, universities, and scientific research institutes to carry out joint research; establishing industrial innovation alliances around the upstream and downstream of the AI and robotics industrial chain; creating application scenarios; organizing and carrying out “Robot +” actions; and deeply exploring and opening up application scenarios in fields such as industry, agriculture, urban management, medical care, elderly care services, and special operations.

In December 2025, eight authorities, including the Ministry of Industry and Information Technology, jointly issued the Implementation Opinions on the “AI + Manufacturing” Special Initiative, proposing that: It is necessary to promote innovation in embodied intelligence products, build pilot testing bases and training grounds for humanoid robots, create benchmark production lines for humanoid robots, and take the lead in applications within typical manufacturing scenarios. Humanoid robots are positioned as the core carrier of embodied intelligence and are included in the key tasks for breakthroughs in intelligent equipment. The goal is to promote their transition from R&D to engineering, mass production, and large-scale application by 2027.

In March 2026, Chapter 5 “Cultivating and Strengthening Emerging and Future Industries” of the Outline of the 15th Five-Year Plan for National Economic and Social Development of the People’s Republic of China proposed that: It is important to coordinate the layout of embodied intelligence training grounds, promote collaborative training and evolution through the integration of virtual and real environments, deeply research physical artificial intelligence, develop embodied models and algorithms with integrated “large and small brains”, make breakthroughs in key technologies such as the main body and core components, and accelerate the upgrades and application of various product forms such as humanoid robots.

(2) Commercial applications and future development trends of embodied intelligence robots

Based on the existing application scenarios and plans of mainstream domestic and foreign manufacturers in the field of embodied intelligence robots, the existing and potential main application scenarios in the short to medium term include: scientific research and education (scientific research, secondary development, science popularization and education), commercial services (reception, guided tours and explanations, interactive entertainment), data collection, industrial manufacturing, and home services. Other application fields include labor replacement in special scenarios with high repeatability and high danger, such as firefighting and disaster relief, power grid inspection, emergency rescue, and security patrolling

Rather than evolving independently in silos, the above application scenarios exhibit a collaborative relationship characterized by “mutual nourishment through technical iteration, phased deployment across diverse scenarios, and layered market expansion”, collectively forming a complete industrial ecosystem transitioning from technical validation to large-scale commercialization.

In the medium to long term, the commercialization of embodied intelligent robots aims to penetrate both manufacturing facilities and residential environments, providing services for industrial, household, and societal applications. The order of application will be jointly determined by the degree of structure of the application scenario and the complexity of the tasks to be executed.

Looking forward, driven by multiple forces including breakthroughs in technology and products, the rapid development of related industries and markets, and national support policies, the embodied intelligence robo industry will exhibit the following development trends: continued expansion of application scenarios and accelerating commercialization; sustained cost reductions coupled with faster progress toward mass production; and deep collaboration across the industrial chain, where ecosystem development will emerge as the decisive factor for long‑ term competitiveness.

(3) Market size of the embodied intelligence robot industry

By 2025–2026, the embodied intelligence robot industry has successfully transitioned beyond its early‑ stage technology incubation phase. The focus of development has gradually shifted from technology R&D to market‑ oriented deployment and commercial value realization. 2025 is generally regarded as the inaugura year of commercialization for the industry, with humanoid robot shipments and deliveries surging from pilot‑ scale projects in the thousands to commercial‑ scale adoption in the tens of thousands, giving rise to a market valued in the tens of billions of RMB.

According to Omdia Market Radar: General-purpose Embodied Intelligent Robots, 2026 released by the overseas research institution Omdia, the total global shipments of general-purpose embodied robots, including bipedal and wheeled humanoid robots, will reach approximately 13,300 units in 2025. Compared to the shipmen volume of 2,300 units in 2024, this represents a significant growth of nearly five times. Meanwhile, the report estimates that by 2035, global shipments of embodied intelligence robots will reach 2.6 million units, with a compound annual growth rate of 85% during the 2024–2035 period, indicating the industry’s enormous growth potential.

According to the 2025 Humanoid Robot Market Research Report jointly released by domestic research institutions CCID Media and China Electronics News, global humanoid robot shipments in 2025 will be approximately 17,000 units, with a market size of RMB2.88 billion; shipments from Chinese humanoid robot companies will be approximately 14,400 units, accounting for 84.7% of total global shipments, and China’s corresponding market size will reach RMB1.55 billion, accounting for approximately 53.8% of the global market size.

The humanoid robot industry has completed its foundational technology accumulation and entered a critical phase of commercialization. The industrial breakthroughs in 2025 further verify the feasibility of its commercial deployment. Looking ahead, driven by technological upgrades, cost reductions, and expanding application scenarios, the humanoid robot market is set to expand further. According to market agency forecasts, the globa market is expected to reach a scale exceeding RMB100 billion by around 2035.

(4) Market competition and industry chain development of the embodied intelligence robot industry

The global embodied intelligence robot industry is transitioning from technology validation to the critical phase of large‑ scale commercial deployment, with market competition characterized by a dual-core drive from China and the United States. The U.S. robotics industry features prominent representatives including Tesla, Figure, and Boston Dynamics, while China’s market is driven by enterprises such as Unitree Robotics, UBTECH, Leju Robotics, AGIBOT, GALBOT, and Dobot. This competitive landscape is further enriched by a wave of new entrants, ranging from startups to automakers like XPeng and Xiaomi, as well as AI technology firms.

The embodied intelligence robot industry chain has evolved into a development structure comprising three major segments: upstream components and systems, midstream body structure design and production, and downstream application scenarios, as shown in the figure below:

Embodied Intelligence Robot Industry Chain

Regarding the embodied intelligence robot equipment business segment of Dongfang Precision, the main businesses during the Reporting Period include:

1. Production and assembly of humanoid robot bodies and manufacturing of key core components for humanoid robots: This process is positioned in the midstream of the industrial chain, and involves cooperation with the humanoid robot enterprise Leju Robotics in the production and assembly of complete humanoid robots, as well as the manufacturing of key core components for humanoid robots.

2. Humanoid robot data collection/training and scenario‑ based application solutions: This process is positioned downstream in the industry chain, aimed at accelerating the deployment of humanoid robots across multiple application scenarios.

3. Industry of the intelligent packaging equipment segment

Dongfang Precision’s intelligent packaging equipment business segment primarily serves downstream customers in the corrugated packaging sector. The Company produces and sells complete production lines and single machines for carton manufacturing to industry customers in this field.

(1) Development trends in the packaging equipment-related industries

End demand for corrugated packaging is growing: Corrugated packaging products are used in a vast number of fields, including food and beverage, household chemicals, electronic products, and e-commerce express delivery, and are inelastically demanded by consumers. Electronic products, beverages, food, household chemicals, and express delivery take up 26%, 21%, 20%, 13% and 13%, respectively, of the downstream application market of paper packaging. China’s express market and the relevant fields such as e-commerce and logistics show an increasing demand for corrugated packaging, which will drive the expansion of the capacity of corrugated packaging enterprises and thus increase the demand for corrugated packaging machinery

Digital and intelligent upgrading brings new development opportunities. The “strategy of robot assembling line” and “smart factory” are increasingly recognized by the industry. In recent years, leading domestic enterprises in the corrugated paper/containerboard packaging field, including Nine Dragons Paper (Holdings) Limited (Nine Dragons Paper), Shanying International Holdings Co., Ltd., Xiamen Hexing Packaging Printing Co., Ltd. (HXPP), MYS Group Co. Ltd. (MYS), Shenzhen YUTO Packaging Technology Co., Ltd., and Shenzhen Jinjia Group Co., Ltd., have successively entered markets such as intelligent manufacturing one after another. The capacity upgrade in the paper packaging and printing industry continues to deepen. Against the backdrop of intelligent manufacturing, leading enterprises in the corrugated paper packaging equipment industry are also expected to embrace new development opportunities.

The rapid development of digital printing brings more development opportunities for the industry. According to the report of Smithers Pira, during the period from 2024 to 2029, the compound annual growth rate of digital inkjet printing in the packaging field will be approximately 15%. It is estimated that the global market size of digital inkjet printing in the packaging field will reach USD18.08 billion by 2029. In the Chinese market, with the continuous growth of demand for “small-batch + multi-variety + personalized + customized” packaging in the packaging field, digital inkjet printing is rapidly penetrating the packaging sector. According to the forecas of Qianzhan Research Institute, the compound annual growth rate of digital inkjet printing in China’s packaging field will be about 18.0% from 2024 to 2029.

(2) Market competition in packaging equipment-related industries

In the field of corrugated box printing and packaging equipment, the major manufacturers include Dongfang Precision, Bobst, Gopfert, Ward, Shanghai Dinglong and Guangzhou Keshenglong. Dongfang Precision is a professional manufacturer with an early start and strong comprehensive strength among domestic fellow companies, enjoying high brand awareness and customer recognition in the industry, with products exported to more than 60 countries and regions across Europe, America, Asia, Africa, Latin America, and Oceania. It can provide industry customers with dozens of products of different specifications and market positions, leading the industry in terms of the richness of its corrugated box printing and packaging equipment portfolio.

In the field of digital printers, major manufacturers include HP, EFI, Koenig & Bauer Durst, Wonder Digital, Hanway, and Atexco. Wonder Digital, a majority-owned subsidiary of Dongfang Precision, is a leader in the domestic digital printer industry, and has been committed to extending digital printing technology to such fields as paper packaging (color printing & pre-printing), advertising, home furnishing, building materials, and label printing. With its comprehensive product matrix, Wonder Digital provides paper packaging digital printers that meet the diverse needs of industry customers with different market positions and levels. Wonder Digital’s digita printers have been exported to countries and regions such as Europe, America, the Middle East, Latin America, and Southeast Asia.

(III) Principal operations of the Company in the Reporting Period

With “intelligent equipment manufacturing” as its primary strategic focus, Dongfang Precision is firmly advancing the implementation of its “Technology Transformation” strategy. Currently, the Company’s main business segments include “intelligent marine equipment, embodied intelligence robotic equipment, and intelligent packaging equipment”.

Business Segments of Dongfang Precision

1. Intelligent marine equipment business

The main products of Parsun Power, a subsidiary, are outboard motors of various specifications and series. The product power range is broad, covering from 2 horsepower to 300 horsepower. The products are of stable quality and reliable performance, with some products offering comprehensive performance comparable to internationally renowned brands, and emissions meeting European and American standards. Most models have passed the China Classification Society (CCS) certification, European CE certification, and U.S. EPA certification. These products are widely used in water leisure sports, fisheries, water transportation, emergency rescue, coastal landing, maritime patrol, and other fields, and are exported globally.

(1) Outboard motors

Parsun Power has achieved a complete product line layout of “gasoline — diesel — electric” outboard motors. Leveraging its years of experience and leading market share in the gasoline outboard motor sector, the company is now advancing towards high-power diesel and electric outboard motors. In the future, Parsun Power's outboard motor products will gradually focus on mid-to-high power, while expanding the electric outboard motor product line to continue solidifying its position as a leading domestic outboard motor brand.

Gasoline outboard motors are the most diverse product range in Parsun Power’s portfolio, covering from 2 horsepower to 300 horsepower, including two-stroke and four-stroke models. Parsun Power has accumulated extensive experience in this field over many years, developing proprietary technologies that are applied to its products. In 2021 and 2023, Parsun Power successfully commended volume production of 115hp and 130hp gasoline outboard motors respectively. In 2024, Parsun Power launched China’s first domestically developed

300hp gasoline outboard motor. In 2025, Parsun Power achieved volume production of the 300hp gasoline outboard motor and deliver over 200 units, filling a gap in the domestic industry. It became the first Chinese enterprise to mass-produce 300hp gasoline outboard motors, positioning China as the third country worldwide— following the United States and Japan—to successfully achieve volume production of 300hp gasoline outboard motors.

The 300-horsepower outboard motor belongs to the high-power segment, with application scenarios covering recreational, commercial, and other professional fields, including sea fishing, surfing, marine cruising, fisheries, water transportation, as well as maritime law enforcement patrols, maritime search and rescue, etc. It employs a range of advanced technologies, such as four-stroke engines, electronic fuel injection (EFI), lightweight materials, and integrated electronic control systems. It is the representative of high-end positioning and high-value-added products in the global outboard motor market.

As a Chinese manufacturer, Parsun Power’s breakthrough in the large-horsepower model allows it to directly target high-value markets, competing globally with the core advantages of Chinese manufacturing. Parsun Power is poised to become one of the core competitors in the global high-end outboard motor market, laying the foundation for its entry into the global high-end leisure yacht market and becoming a key driver of future revenue growth.

Diesel outboard motors retain the advantages of gasoline outboard motors, such as ease of installation, maintenance, and operation, while also offering greater fuel efficiency, lower emissions, higher torque, enhanced safety, and easier maintenance, mainly used in commercial transport, offshore oil extraction, and public law enforcement fields. The development of Parsun Power’s own-brand diesel outboard motors is advancing rapidly. In March 2026, Parsun Power launched the world’s only 200hp-class diesel outboard motor. This produc represents a breakthrough over gasoline outboard motors in both technology and performance, including lower diesel volatility for safer operation; superior fuel efficiency that delivers greater economic value to customers amid fuel price fluctuations; and strong torque output at low engine speeds for more stable power delivery and faster response.

Electric outboard motors use rechargeable batteries as an energy source and convert electrical energy into kinetic energy via an electric motor. Compared with fuel-powered outboard motors, they feature zero emissions, lower noise, and are easier to operate. Parsun Power’s electric outboard motors primarily focus on small to medium horsepower, mainly used in environmentally sensitive areas such as tourist resorts.

(2) Electric trolling motors

In 2025, Parsun Power launched and achieved volume production and delivery of its first intelligent electric trolling motor. This product is Parsun Power’s first electric trolling motor and also China’s first electric trolling motor product with a folding structure. During the development process of this product, Parsun Power has adhered to the “high-end positioning, positive R&D” philosophy and performed over 40 rounds of shape optimization, more than 70 structural adjustments, over 100 software version iterations, and nearly a thousand water tests, achieving core technology and production manufacturing independence and control.

Parsun Power’s general machine products mainly include gasoline motors; gasoline generator sets and Page 27 of 239

gasoline water pump sets. Gasoline motors, primarily single-cylinder four-stroke units, utilize gasoline as fuel and are adaptable for use in agricultural machinery, gardening equipment, and other small machinery applications. Gasoline generator sets combine these motors with generators, functioning as standby power sources. The gasoline water pump sets feature centrifugal pumps driven by gasoline motors and are extensively utilized in agricultural irrigation, livestock watering, and similar domains.

Parsun Power’s general machine products are mainly sold to Africa and Middle East. With a leading market layout and relying on excellent product quality and stable performance, Parsun Power has established a significant brand advantage and a good market reputation in these regions.

(4) Operational model of the Intelligent marine equipment business

Regarding the business of Outboard motors and Electric trolling motors:

In terms of sales, Parsun Power follows a global industry-standard sales model that primarily relies on distribution, supplemented by direct selling. The demand for outboard motors, which are the company’s main product, is mainly distributed overseas, with end customers scattered throughout the world. Adopting a distribution-centric sales model enables Parsun Power to reach end customers to the fullest extent possible. In terms of production, Parsun Power produces outboard motor products independently, utilizing sales demand forecasts, customer orders, product inventory status, material delivery progress, and product production cycles to formulate production plans. The company then organizes the production of components in accordance with specialized processes and procedures. In procurement, following the principle of “sales determine production, production determines procurement”, Parsun Power determines the procurement requirements for its outboard motor business, while also taking into account reasonable safety stock.

Regarding the business of General machines:

Parsun Power has adjusted its general machine business from the early independent production model to an OEM outsourcing model based on its strategic positioning. According to the principle of “sales determine procurement”, while also taking into account reasonable safety stock, Parsun Power provides design drawings, technical specifications, and quality requirements to the OEM manufacturers. These manufacturers directly purchase raw materials, carry out customized production, and deliver finished products.

Primary Product Portfolio of Parsun Power

Brand	Product type	Product image	Main characteristics
PARSUN百胜	mid-to-high power outboard motors	300-hp(four-stroke) gasolineoutboard motor	High-Efficiency Power System4.2L, V6, DOHC engine delivers powerful power output, Electronic Fuel Injection (EFI) technology precisely controls the fuel-air mixture, enabling more complete combustion and reducing fuel consumption, and Variable Valve Timing (VVT) technology enhances mid-to-low speed torque and improves acceleration performance.Enhanced Structural StrengthHydrodynamic exterior design reduces water resistance, delivering more stable and efficient power transmission.High-flow water pump impeller design increases cooling water pressure to ensure reliable operation.High-grade marine-grade materials improve corrosion resistance and durability of components, lowering maintenance and replacement costs. Multi-layer anti-corrosion coatings and anode protection further upgrade the corrosion protection level.Reliable Power TransmissionThe classic 1.8L L4 DOHC engine provides stable power output with high reliability.Electronic Fuel Injection (EFI) technology precisely controls the fuel-air mixture for more complete combustion, reducing fuel consumption and emissions.Mature and robust throttle and shift mechanisms with low maintenance costs.
	Intelligent control system	130/115-hp(four-stroke) gasolineoutboard motor

Guangdong Dongfang Precision Science & Technology Co., Ltd.

Brand	Product type	Product image			Main characteristics
					Efficient PowertrainSenseless brushless motor technology offers strong anti-interference performance, high efficiency, low noise and long service life. It provides instantaneous torque output for faster response.Intelligent Energy ManagementHigh-density lithium battery packs ensure reliable endurance and support multiple charging modes.The BMS system monitors temperature, voltage and current in real time, with multiple built-in protection mechanisms.Precise Handling ExperienceElectronic throttle and direct-drive transmission structure enable millisecond-level power response.
	General Machines				High rotation speed, simple structure, and stable operation.Portable, cost-effective, lightweight, and easy to use and maintain.Widely used in agriculture, landscaping, engineering operations and other scenarios.

2. Embodied intelligence robotic equipment business

The operating entities of the embodied intelligence robotic equipment business under Dongfang Precision are the majority-owned subsidiary Dongfang Primo and the subsidiary Dongfang Digicom. They respectively carry out the production and assembly of embodied intelligence robot bodies, the manufacturing of key core components for embodied intelligence robots, as well as businesses related to embodied intelligence robot data collection/data training and scenariobased application solutions. During the Reporting Period, the robots produced and delivered by the Company were primarily humanoid robots.

(1) Production and assembly of humanoid robot bodies and manufacturing of key core components for humanoid robots

In March 2026, the automated humanoid robot production line, jointly created by Dongfang Precision and Leju Robotics and operated by Dongfang Precision’s majority-owned subsidiary Dongfang Primo, was completed at the Foshan manufacturing base and entered the large-scale production stage. According to the production line construction plan, the designed annual production capacity of this line is expected to reach the scale of tens of thousands of units. The completion and commissioning of this production line not only mark a “zero‑ to‑ one” breakthrough for Dongfang Precision in entering the manufacturing of embodied intelligence robotic equipment, but also signifies the materialization of the strategic cooperation agreement reached with Leju Robotics in 2025 on “Dongfang Precision providing humanoid robot production and manufacturing for Leju Robotics”.

During the Reporting Period, the primary products of the majority-owned subsidiary Dongfang Primo were the Kuavo (Kuavo 5) series of full-sized humanoid robots produced and assembled for Leju Robotics, including bipedal and wheeled humanoid robots (as shown in the table below).

Leveraging its mature experience and manufacturing management capabilities in high-end equipment manufacturing Page 32 of 239

Kuavo 5 Full-sized Humanoid Robot	Kuavo 5-W Wheeled Humanoid Robot

and large-scale automated production line integration, Dongfang Precision assists Leju Robotics in achieving capacity ramp-up for humanoid robots, ensuring stable yield rates and timely delivery during the initial phase of mass production. According to Leju Robotics’ information disclosure, it is expected that for the foreseeable future, Leju Robotics’ full-sized robot products will be primarily produced by Dongfang Primo.

Currently, Dongfang Primo is dedicated to refining and maturing the production processes, manufacturing workflows, quality systems, and talent teams of the robot production line through ongoing efforts, with a key focus on building core value capabilities in three areas: quality control, delivery cycles, and production costs. If Dongfang Primo can provide customers with industry-leading commitments and services in the aforementioned three areas in the future, it will serve as the fundamental guarantee for the Company to continuously obtain orders and achieve sustained performance growth.

(2) Humanoid robot data collection/data training and scene-based robot application solutions

The physical attributes of humanoid robots, along with the requirement to adapt their task objectives to diverse realworld scenarios, determine that constructing a large-scale, high-quality, cross-scenario real-machine data ecosystem and generating real-machine data in real-world scenarios is the key path for humanoid robots to move toward practica application and deployment in diverse scenarios. Real-machine data is a resource widely recognized by the industry, and its value lies in providing support for subsequent scenario exploration and model optimization.

Data collection/training provides high-fidelity simulation environments covering core and long-tail scenarios across various industries and fields, enabling the large‑ scale generation of high‑ quality real‑ machine data. This reduces the comprehensive costs of R&D and implementation for specific robot applications, while also establishing a unified annotation framework and quality validation process to produce structured, reusable datasets. Meanwhile, large-scale data collection offers significant cost advantages by improving efficiency through multi-robot parallel operations. Furthermore, A collaborative model combining government, industry, academia, research, and users for building a shared data platform not only avoids duplication of effort and waste of resources, but also accelerates industry‑ wide technological progress via data trading or open‑ source sharing.

Systematic, large-scale, and industrialized data collection will become the core data source as the embodied intelligence robot industry enters the stage of large-scale development. It may even become the core infrastructure for industry development, spanning the entire industry lifecycle, including technological upgrades, deep scenario expansion, and the deepening of commercial deployment. Under the guidance of national policies, since 2025, many loca governments in China have stepped up efforts to accelerate the construction of humanoid robot data collection centers and are actively fostering regional data collection industries for humanoid robots. The industrialized collection model generally involves professional platforms jointly established by governments, enterprises, and scientific research institutions. To date, robot data training centers or training grounds have been established in Beijing, Shanghai, Qingdao, Jiujiang, Suzhou, and other locations.

Scan code and enter information; grasp scan gun; scan barcode

Examples ofDaily Scenariosfor Data Collection/Training

As professional platforms for data collection, humanoid robot data training centers or training grounds serve a diverse clientele, including robot manufacturers, embodied intelligence large model developers, and scientific research institutes. Their primary businesses include the sale of data products and the leasing of training facilities. On one hand, data collection/training provides downstream customers with standardized training datasets and offers venues and equipment for customers to independently collect customized data required for production and operations. On the other hand, the collected data feeds back into the iterative upgrading of models used by humanoid robots, ultimately forming a closed loop of “data collection—commercial monetization—model optimization—data quality improvement”, driving the continuous and healthy development of the industrial ecosystem.

In May 2026, the Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligence Robot Data Training Center was officially inaugurated, jointly established by Dongfang Precision, the Administrative Committee of Foshan High‑ tech Industrial Development Zone, and Foshan Financial Investment Holdings Co., Ltd. Dongfang Digicom, a wholly-owned subsidiary of Dongfang Precision, is responsible for the project construction, daily operation, data training, and marketing of the data training center. The completion and operation of the aforementioned data training center mark the implementation of the cooperation direction of “jointly promoting the expansion of humanoid robo applications” under the strategic cooperation agreement reached between Dongfang Precision and Leju Robotics in 2025.

During the Reporting Period, the strategic and business positioning of the subsidiary Dongfang Digicom has gradually transformed from a “provider of industrial Internet industry solutions” to an “integrator of robot application solutions oriented toward application scenarios”. Positioned itself as the “last‑ mile enabler” for humanoid robot deployment, and with robot data collection/data training, industrial digital capabilities, and robot hardware sales as its core levers, the subsidiary aims to use humanoid robot application scenarios as demand guidance. Relying on high-quality realmachine datasets built by professional data collection platforms and collaborating with research and development resources within the industrial ecosystem, it co‑ develops application models and delivers deployable scenario‑ based solutions for specific humanoid robot use cases, addressing the current generalization limitations of humanoid robots in niche applications, thereby accelerating the deployment of humanoid robots across multiple scenarios such as industry, commerce, and daily life.

In recent years, Dongfang Digicom has carried out digital empowerment businesses in fields such as industrial manufacturing, helping industry customers build digital workshops and digital factories. The deep understanding, practica experience, and accumulated expertise in the digitalization of industrial manufacturing scenarios gained through the aforementioned industrial digital business will become valuable resources and important support for Dongfang Digicom to drive business transformation and conduct secondary development, model construction, and solution implementation for humanoid robots in industrial, commercial, and other application scenarios. Dongfang Digicom combines core digital capabilities such as the industrial Internet, data integration, and intelligent scheduling with embodied intelligence robots. By integrating system platforms, algorithm scheduling, data collection and integration capabilities, scenario applications, and engineering delivery capabilities, it provides integrated solutions ranging from robot scheduling middleware to on‑ site deployment. These solutions target scenarios such as industrial flexible manufacturing, cultural tourism and exhibition, and education and training. Through this approach, the company is transitioning from a production‑ line digitalization service provider to a multi‑ scenario embodied robotic system integrator.

3. Intelligent packaging equipment business

(1) Corrugated box printing and packaging production lines

Domestically, Dongfang Precision (China) is responsible for business operations associated with corrugated box printing and packaging equipment, while in the overseas market, it is Dongfang Precision (Europe).

Dongfang Precision (China) built its first water-based ink printing press in 1996, and in 1998 pioneered China's first bottom-fed printing-slotting-die-cutting machine. The product matrix of Dongfang Precision (China) includes corrugated converting line and single machine products that are of dozens of specifications and different market positioning, featuring fixed type/open-close type, top printing/bottom printing, and other technologies. These products mainly include “Dongfang Star” Quickset Top Printing FFG and Top Printing Open-Close Type FFG Inline, as well as “Asia Star” Bottom Printing Die Cutter Stripper Vacuum Stacker Converting Line, Bottom Printing Open-Close Type FFG Inline and Bottom Printing Open-Closed Type/FFG & Stitcher.

In addition to providing advanced corrugated carton printing and packaging complete lines and standalone equipment products to industry customers, Dongfang Precision (China) also continuously conducts businesses such as integrated smart factory planning and smart logistics and management systems. The smart logistics solutions target major logistics scenarios in the paper packaging manufacturing process, integrating technologies such as automated equipment, intelligent algorithms and digital management platforms, to help industry customers build digital factories/digital workshops and achieve intelligent upgrading, cost reduction, quality improvement and efficiency enhancement.

Dongfang Precision (Europe) specializes in high-end corrugated converting line products. Its primary products include “FD” Quickset Top Printing FFG, “HGL” Quickset Bottom Printing FFG, and Quickset Bottom Printing/Die Cutter Stripper Vacuum Line. These products are designed with non-crush feeder design, full servo control, and fully automatic control features, making them more suitable for high-definition printing.

(2) Digital Printers

The business is primarily led by the subsidiary Wonder Digital, which provides solutions for customers in the digital printing industry, including digital printers, ink, accessories, and professional services.

Wonder Digital has introduced a variety of digital printers to meet the diverse needs of different market segments and customer levels, including Multi Pass digital printer series applicable for small-batch paper packaging printing, Single Pass digital printer series applicable for large/medium/small batch paper packaging printing, Single Pass digital series applicable for pre-printing on raw paper , and Hybrid printer series that combines Multi Pass high-precision printing and Single Pass high speed printing into one.

Wonder Digital offers a diverse range of products that cover various types and specifications, from post printing to pre-printing, from water-based dye/pigment, water-based ink to spot color UV ink, from boxes, offset cartons to sheet metal. The products also support a range of application modes and scenarios, from single-sheet printing to exchange orders seamlessly with variable data printing, and from single machine printing to integration with ERP systems. Apart from digital printers, Wonder Digital also sells supporting units after printing section including slotting and varnish coating units, as well as special ink products that are compatible with its own-brand equipment. These special ink products, including water-based dye ink, water-based pigment ink, and UV ink.

(3) The operational model of the intelligent packaging equipment business

R&D model: The intelligent packaging equipment business of the Company has domestically industryleading independent design and R&D capabilities, continually establishing high-level R&D innovation management mechanisms. The R&D team, spearheaded by industry experts, employs a blend of long and shortterm product R&D planning, supported by a market-oriented R&D mechanism.

Procurement and production model: The intelligent packaging equipment business of the Company procures raw materials, such as steel plates, metal components, and electrical parts (such as motors and PLCs), from external suppliers, while producing some core components in-house. The complete lines’ products adhere to a “made-to-order production” model. Upon receiving orders and partial deposits from customers, the Company purchases raw materials from suppliers based on specific customer requirements and inventory levels, and develops production plans and schedules.

The delivery period for orders of corrugated box printing and packaging complete machine equipment under the Dongfang Precision brand was 3 to 6 months, and the delivery period for orders of digital printing equipment under the Wonder Digital brand was 1 to 3 months.

Marketing Model: The intelligent packaging equipment business of the Company employs a “direct selling + distribution” marketing model. It utilizes a direct sales approach for the domestic market, and a combination of direct sales and agent distribution for overseas markets, tailoring the strategy to suit the unique needs of different countries and regions. This approach not only widens the scope of sales channels and increases sales volume but also reduces market expansion and sales costs.

The Company’s complete production line and single machine products are typically one-time sales, with more significant transaction amounts. However, accessories, software, and services can be sold multiple times throughout the life-cycle of complete production line or single machine products. The growing number of existing equipment sold in the downstream industry market presents a steady stream of sales opportunities for accessories, software, and services. Additionally, providing high-quality technical support and services helps to promote the sales of complete production line products. In terms of the settlement of orders, the Company collects down payment in advance and payment by stages for the sales of corrugated box printing and packaging equipment.

Primary Products of the intelligent packaging equipment business

Product type	Brand	Product image	Main characteristics
Integrated corrugated box printing and packaging lines	东方精工DONGFANG PRECISION	DONGFANG STAR I QUICKSET TOP PRINTING FFG	Fixed typeFull servo controlNo downtime for plate change2 minutes quick order changeVacuum adsorption large belt, high precision cardboard transfer, long service lifeEnergy saving up to 30Only 2 people are needed to operate the whole line
		DONGFANG STAR II TOP PRINTING OPEN-CLOSE TYPE FFG	Vacuum adsorption roller transfer;Computerized adjustment, easy to operate;High speed and stable operation; Patented folding structure; Improve carton molding effectOnly 2-3 persons are needed to operate the whole line
			High-end down-printing fixed in-lineSpindle servo driveQuick order changeComplete pre-press and post-press supporting units

Primary Product Portfolio of Dongfang Precision’s intelligent packaging Equipment Business – Digital Printers

Product type	Brand	Product image	Main characteristics
Digital Printers	WONDER万德数科	WONDER INNO PRO SINGLE PASS	- Print reference accuracy: 1200 NPI- Speed: up to 150 m/min- Printing thickness: 1.2 mm - 20 mm- Maximum printing width: 2500 mm- Printing materials: yellow/white kraft liner, honeycomb panel, coated paper- Modular freely combinable linked production line- Adaptable to diverse customer requirements
			A cost-effective tool for bulk ordersAdopts Epson's latest HD industrial printheads.Printing width up to 2500mmSpeed up to 700 $m^2/h$ - 1400 $m^2/h$ Printing thickness 1.2mm-35mmCoated paper and honeycomb board can also be easily printed.Base accuracy 1200dpi.

II Core Competitiveness Analysis

(I) Industry-leading technology and strong capabilities of R&D and innovation

1. Regarding the Intelligent marine equipment Business

Parsun Power is a national-level “Little Giant” with specialties, refined management, unique technologies and innovation and a high-tech enterprise. It has long focused on the research and development of domestic outboard motors, accumulating rich innovative achievements. By the end of June 2026, Parsun Power had accumulated 140 intellectual property rights and participated in the formulation of several industry standards. It has also won the second prize of the China Machinery Industry Science and Technology Award twice, and has established industry-university-research cooperation with multiple renowned domestic universities and institutions.

In 2021 and 2023, Parsun Power successfully achieved mass production of 115hp and 130hp gasoline outboard motors. In 2024, it released its first domestically produced 300hp gasoline outboard motor, and in 2025, it released its first domestically produced electric trolling motors. In March 2026, it launched the world’s only 200hp-class diesel outboard motor, which represents a breakthrough over gasoline outboard motors in both technology and performance. The core technologies of the aforementioned new products are independently controllable, and their manufacturing supply chains have been localized. This has become an important milestone for China's high-end manufacturing in the field of water powersports equipment.

In recent years, Parsun Power has continuously broken through the ceiling in the domestic outboard motor sector. While maintaining independent and controllable core technologies as well as localized manufacturing and supply chains, it has enabled China’s manufacturing industry to advance from the "follower" stage to the "peer competitor" stage in the volume production and delivery of high-horsepower gasoline outboard motors, marking the formal entry of China’s outboard motor industry into the global high-end mainstream market and its ability to compete head-to-head with internationally renowned industry brands on the global stage.

Parsun Power’s High-power Outboard Motor Emission Testing Center Laboratory received the CNAS Laboratory Accreditation Certificate from the China National Accreditation Service for Conformity Assessment (CNAS) in 2025. This made Parsun Power the first company in the Chinese outboard motor industry to obtain CNAS certification for a professional laboratory, filling the gap in China’s specialized testing platform for highhorsepower gasoline outboard motors. This certification signifies that Parsun Power has established an independent R&D and testing system that leads the domestic industry and carries national credibility, providing important support for performance, emission and reliability testing of high-horsepower and various new products, and has further solidified Parsun Power’s position as an industry benchmark in the domestic gasoline outboard motor field. It also signifies that Parsun Power’s professional testing in this specialized field is now on par with international top-level standards, and the testing reports will be globally recognized.

The CNAS laboratory accreditation received by Parsun Power in the domestic gasoline outboard motor field helps shorten R&D cycles and reduce R&D costs for Parsun Power in the development and testing of highhorsepower outboard motors, thus creating a more competitive core advantage. It also provides strong localized support for other domestic companies in the same field for the R&D, production, and certification of highperformance, large-power outboard motors. This contributes to the green transformation of China’s shipbuilding industry and the achievement of the “dual carbon” goals.

Parsun Power has been awarded the “National Postdoctoral Research Workstation” certificate by the Ministry of Human Resources and Social Security and the National Postdoctoral Affairs Management Committee, which means Parsun Power’s research capabilities in the frontier field of relevant area, and its ability to nurture top talen and foster industry-academia-research collaboration has gained national recognition, and marks a new milestone in the company’s scientific research strength and talent development, as well as further enhancement of the company’s technological image and brand influence.

2. Regarding the Intelligent packaging equipment

Wonder Digital is a national-level high-tech enterprise and a "Specialized, Refined, Differential and Innovative" Little Giant Enterprise. It connects the physical and digital worlds through a comprehensive digita printing matrix and provides integrated solutions. Its branded UV digital color printing presses and high-speed digital printing presses achieve a maximum printing precision of 1800 NPI, with color printing quality comparable to traditional offset printing. Its large-format roll-to-roll high-speed digital printing presses are domestically leading, boasting comprehensive advantages in footprint, energy consumption and cost-effectiveness.

(II) Profound Know-How experience and experienced team in the industry

Dongfang Precision has a team with deep industry Know-how and extensive experience. With over 20 years of experience, the team has a profound understanding of the industry layout, development planning, R&D roadmap, production operations, marketing, and team management in the field; The core management team has a broad vision and is able to deeply grasp the overall development trends of the high-end equipment manufacturing industry. Through forward-looking strategic planning and layout, the steady and sustainable development of the Company is achieved. Furthermore, the Company practices a professional manager management model, continuously improving organizational structure, management authority, incentive systems, and cultura development. These measures help the Company attract talent and enhance the team’s combat effectiveness

(III) High brand popularity and customer recognition worldwide

Parsun Power, a subsidiary, is a leading company in the domestic outboard motor industry. From 2020 to 2022, Parsun Power’s outboard motor products maintained the highest national market share for three consecutive years. The Parsun Power brand has received numerous honors, including “Jiangsu Province Famous Brand Product” and “Suzhou Famous Brand Product”. Overseas, Parsun Power’s sales network covers more than 100 countries and regions, establishing business partnerships with numerous customers worldwide

The corrugated box printing and packaging lines under the Dongfang Precision brand, together with the digital printing equipment under the Wonder brand, enjoy considerable brand recognition and industry influence both in China and overseas. Dongfang Precision brand’s corrugated box printing and packaging lines are sold in more than 60 countries and regions. The holding subsidiary Wonder Digital is in the top tier of the domestic digital printer field, with its products sold in over 80 countries and regions and a market stock of over 1,600 units.

(IV) Strong capabilities of strategic control and integration

Since going public, Dongfang Precision has continuously expanded upstream and downstream in its core industries. Over many years of practice, the Company has developed strong strategic control and deep integration capabilities across its business segments, accumulating rich experience and practical knowledge. Strategic management capabilities have become the Company's core strength in successfully managing its various business entities.

In practice, the Company has developed a set of effective post-investment integration management methods by deeply understanding the industry, forecasting industry trends, and focusing on strategic goals. These methods include corporate governance standardization policy, the “Board of Directors-Supervisory Committee-General Meeting” operation mechanism, the strategic and financial control system, decentralized authorization management, complete audits, and management incentives, forming a set of measures for effective controls for post-investment integration with the Company’s own characteristics to secure the effective implementation of the strategic plan.

Since acquiring the controlling stake in Parsun Power in 2015, Dongfang Precision has helped Parsun Power enhance its R&D, marketing, supply chain, and manufacturing through strategic adjustments and the introduction of outstanding talent. Between 2020 and 2025, Parsun Power achieved a compound annual growth rate of 24% in both revenue and net profit.

(V) Dual-wheel drive of organic growth and external expansion to seize a leading position in the embodied intelligence industry chain

Dongfang Precision is firmly advancing the technological transformation of its principal business, rapidly entering the embodied intelligence equipment track through the “dual engines” of organic cultivation and external integration.

In terms of organic cultivation, the Company has taken the lead in achieving a breakthrough in mass production of robot hardware. During the Reporting Period, the automated humanoid robot production line operated by Dongfang Primo was completed and entered the stage of mass production, making the subsidiary one of the earlier equipment manufacturing enterprises in China to possess large-scale mass production capabilities. Dongfang Primo focuses on refining the three core values of production cost, quality control, and delivery cycle to build a solid foundation for sustained performance growth. In addition, the Company has proactively planned data infrastructure. The Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligence Robot Data Training Center, constructed, operated, and marketed by Dongfang Digicom, was inaugurated and commenced operations during the Reporting Period. The first phase plans for 34 training stations with an annual output of approximately 1 million high-quality real-machine training data entries. In the long term, it aims to become a leading public data service foundation for embodied intelligence in China, making data collection the core engine that drives technological iteration, scenario expansion, and commercial deployment.

In terms of external integration, through multiple precise equity investments, Dongfang Precision has completed its layout covering intelligent brains, core components (including dexterous hands, edge-side chips, joint modules, etc.), hardware manufacturing, and application scenarios. This has given rise to a synergistic ecosystem that combines strategic investment with the industrialization of externally sourced businesses. The Company seeks cooperation in production, application scenarios, and market expansion by combining Dongfang

Precision’s resource endowment and accumulated capabilities in the equipment manufacturing industry with the leading technologies, products, and application experience of partners within the industrial ecosystem, aiming to complement each other, amplify value together, and foster co‑ creation and shared benefits throughout the industry chain.

III Analysis of Principal Operations

In the first half of 2026, the national economy maintained steady progress while achieving new results in high‑ quality development. The intelligent transformation and upgrading of the manufacturing sector continued to intensify, and new quality productive forces were actively cultivated. Under the strong leadership of the Board of Directors and the management team, all employees worked diligently and strived for progress in the first half of 2026, promoting the steady implementation of the Company’s “Technology Transformation” strategy. The principal businesses overall sustained a robust and positive growth momentum.

In the second quarter of 2026, the Company completed a major asset sale and the overall divestment of the corrugated cardboard production line business. Prior to the divestment, the business belonged to the Company’s intelligent packaging equipment business segment. The completion of the asset sale resulted in a significant change in the composition of the Company’s intelligent packaging equipment business segment since the second quarter of 2026, as compared with the same period of 2025.

To facilitate investors’ more accurate and clear understanding of the revenue and profit performance of the Company’s principal business segments in the first half of 2026, the data for the same period of the previous year has been adjusted on a comparable basis, using the composition of the Company’s principal business segments as of 30 June 2026 (excluding the divested corrugated cardboard production line business) as the benchmark, as listed below:

Unit: RMB’0,000

Note 1: During the Reporting Period, the impact of exchange losses caused by foreign exchange rate fluctuations on the net profit attributable to shareholders of the listed company before non-recurring gains and losses was RMB18.9 million.

Note 2: During the Reporting Period, the Company’s principal businesses included three major business segments: intelligent marine equipment, intelligent packaging equipment, and embodied intelligence robotic equipment. Specifically: (1) Intelligent packaging equipment segment: On a year-on-year comparable basis, the revenue for the Reporting Period increased by 17% year-on-year; excluding the impact of exchange losses, the net profit attributable to shareholders of the listed company before non-recurring gains and losses for the Reporting Period increased by 74% year-on-year; (2) Intelligent marine equipment segment: On a year-on-year comparable basis, the revenue for the Reporting Period increased by 35% year-on-year; excluding the impact of exchange losses, the net profit attributable to shareholders of the listed company before non-recurring gains and losses for the Reporting Period increased by 18% year-on-year.

The operating conditions of the principal businesses during the Reporting Period are as follows:

1. Intelligent marine equipment business segment

In the first half of 2026, the majority-owned subsidiary Parsun Power achieved operating revenue of RMB650 million, a year-on-year increase of approximately 35%, and achieved a net profit of RMB66 million, a year-on-year increase of approximately 14%. Both revenue and net profit once again hit record highs for the firs half of the year. Parsun Power has entered a fast track of sound growth in its principal business since 2021. During the five years from the first half of 2021 to the first half of 2026, the compound annual growth rates of Parsun Power’s operating revenue and net profit both exceeded 20%. The operating revenue in the first half of 2026 increased by more than three times compared to the first half of 2021.

Parsun Power launched and commenced mass production of the world’s first 200‑ horsepower diesel outboard motor, spearheading the high‑ end segment of the domestic outboard motor market. In the first half of 2026, Parsun Power released the D200 high-horsepower diesel outboard motor, which is the only 200hp diesel outboard motor in the world and marks another breakthrough achievement for Parsun Power in the independent innovation of high-end domestic equipment. The high‑ horsepower diesel outboard motor will prove instrumental in Parsun Power’s further expansion into commercial, government, and other application markets. The product was launched in March 2026 and rapidly transitioned to the phase of mass production after multiple rounds of durability testing and quality optimization. The mass production and delivery were achieved during the Reporting Period. This enables Parsun Power to once again fill the gap in the field of high-horsepower diesel outboard motors in China. With the mass production and delivery of the F300 and D200 high-horsepower outboard motors, high-horsepower models are becoming a key engine for Parsun Power to enter the global mainstream outboard motor market and drive performance growth.

The outboard motor product portfolio continues to evolve, with ever-improving product strength covering all scenarios. Parsun Power is committed to building a comprehensive outboard motor product portfolio spanning gasoline, diesel, and electric models, covering a broad range of end‑ use applications and power ratings from low to high, to meet diverse customer needs. In 2025, Parsun Power successfully achieved the mass production and delivery of the F300 300hp gasoline outboard motor. In the first half of 2026, it successfully achieved the mass production and delivery of the D200 200hp diesel outboard motor. These products, together with existing consumer-grade outboard motors for water leisure and sports activities, electric outboard motors, and intelligent control systems supporting outboard motors, jointly drive the continuous evolution and upgrade of Parsun Power’s outboard motor portfolio toward higher horsepower, multi‑ fuel capability, and electrification.

Strong growth was seen in Asia, Africa, and Latin America, alongside notable breakthroughs in new product sales. Parsun Power achieved further success in Asia, Africa, and Latin America, the key focus areas for overseas market expansion. Following a year-on-year growth of over 60% in outboard motor sales in these regions in 2025 compared to 2024, the company again achieved a 60% year-on-year growth in outboard motor sales in these markets in the first half of 2026 compared to the first half of 2025. In the first half of the year, more than 50 new global distributors were added, and sales channels were established in several new countries. The layout of global sales channels is becoming increasingly refined, enabling the precise expansion of the international market footprint. Furthermore, the new products that Parsun Power has been actively nurturing in recent years delivered robust sales performance. Revenue contributions from electric outboard motors and high‑ horsepower outboard motors both posted significant year‑ on‑ year growth compared to the same period in 2025.

Lean operations and digitalization have mutually reinforced each other, delivering simultaneous improvements in both quality control and inventory turnover efficiency. During the Reporting Period, Parsun Power continued to deepen lean management, with inventory turnover significantly improved compared to the first halves of 2025 and 2024. Work safety was strongly guaranteed, with the Company recording zero safety incidents and zero quality incidents in the first half of the year. Digital transformation progressed steadily. While the functions of the U9 system were continuously refined, the QMS (Quality Management System) was launched and deeply integrated with the ERP system. Additionally, Parsun Power completed the CNAS laboratory reassessment and the additional assessment for general machines, further strengthening system compliance and operational efficiency.

General machine business: Strong performance drove record revenue, while capacity expansion laid a solid foundation for sustained growth. During the Reporting Period, Parsun Power’s general machine business continued its growth trend, achieving a year-on-year increase in sales revenue of over 50% compared to the firs half of 2025. With strong performance in both orders and delivery, it has become a powerful engine driving the company’s overall performance growth. In terms of production capacity, the average monthly capacity for genera machines has increased to 100,000 units, ensuring timely delivery to meet market demand; in terms of quality, the entire process from components to complete machine assembly is strictly controlled, with production quality showing steady improvement, providing a solid foundation for rapid business expansion

2. Embodied intelligence robot equipment business segment

(1) Production and assembly of humanoid robot bodies and manufacturing of key core components for humanoid robots

In March 2026, the automated humanoid robot production line, jointly created by Dongfang Precision and Leju Robotics and operated by Dongfang Primo (a majority-owned subsidiary of Dongfang Precision), was completed and entered the large-scale production stage at Dongfang Primo’s manufacturing base in Foshan. This marks Dongfang Precision’s “zero‑ to‑ one” breakthrough in the field of embodied intelligent robot equipment manufacturing.

During the Reporting Period, the primary products of Dongfang Primo were the Kuavo (Kuavo 5) series of full-sized humanoid robots produced and assembled for Leju Robotics, including bipedal and wheeled humanoid robots. In the first half of 2026, Dongfang Primo signed orders totaling approximately RMB83 million, achieved mass delivery of humanoid robot products, and recognized operating revenue of RMB26.66 million.

(2) Humanoid robot data collection/data training and scene-based robot application solutions

During the Reporting Period, the Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligence Robot Data Training Center, for which the subsidiary Dongfang Digicom is responsible for project construction, daily operations, and commercialization, was officially inaugurated. The center has a tota construction area of over 5,500 square meters, covering humanoid robot scenario-based training, AI robo research and study, etc. The project is planned to be constructed in phases, with 2026–2027 being the first phase. According to the project plan, the first-phase goal is to achieve rotational training for 34 workstations, enabling deep integration into the production environments of Foshan’s pillar industries, such as home appliances and equipment manufacturing, and achieving an annual output goal of approximately 1 million high-quality training data entries. The long-term construction goal is to become a leading domestic public data service foundation for embodied intelligence.

The Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligence Robot Data Training Center utilizes Leju Robotics’ “Kuavo” robots for data training and collection. It has established multiple training workstations covering three major categories of real-world scenarios: industrial manufacturing (part sorting, par off-lining, and tooling loading of the production line), commercial services (retail, express delivery), and home services. Relying on a digital collection platform, it constructs high-quality real-machine datasets through remotecontrolled human-machine collaboration, digital environment simulation, and real-machine deploymen optimization.

Within the framework of the joint construction of the Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligence Robot Data Training Center, Dongfang Digicom also cooperates with Turing Inno to operate a robot research and study center. By fully leveraging the resources and experience of both parties in robotics and research training, they collaborate to carry out embodied intelligence robot research and study business for student groups and jointly create teaching application solutions for embodied intelligence robots. The long-term goal is to build a market-oriented practical education base for “AI + Research and Study”.

3. Intelligent packaging equipment business segment

Market expansion: Against the backdrop of domestic peers actively going global and expanding into overseas markets, the corrugated box printing and packaging equipment business of Dongfang Precision (China) has continued to achieve results in overseas market expansion, leveraging its years of accumulated goodwill, leading technology levels, high-quality products, and a robust sales and service system. Dongfang Precision (China) adopted an “agency sales + direct sales” model for its overseas business, with a focus on expanding direct sales business in countries along the “Belt and Road” initiative. During the Reporting Period, the international direct sales and channel agencies of the corrugated box printing and packaging equipment business of Dongfang Precision (China) exerted efforts simultaneously, with orders on hand increasing by over 80% compared to the same period in 2025. Orders for complete and integrated line products also registered steady growth. Sales breakthroughs were achieved in select country markets, including Europe and Australia. By deepening engagement with major international corporate customers, Dongfang Precision (China) continues to strengthen the foundation for its overseas market development. Driven by sales growth in overseas markets, the corrugated box printing and packaging equipment business of Dongfang Precision (China) saw steady growth in revenue and profit. In the digital printer business segment, the majority-owned subsidiary Wonder Digital also achieved multiple breakthroughs in overseas market expansion during the Reporting Period, extending its sales footprint to several new overseas markets.

Product R&D: In the first half of 2026, Dongfang Precision (China) successfully completed the technica transformation and implementation of the vacuum stripper stacker, reaching marketable conditions and securing intended transactions. Compared with traditional models, this new product possesses multiple advantages when integrated into a line: It can accurately process “one-out-of-many” orders; the application of a vacuum structure significantly improves the waste stripping effect; and it can achieve non-stop sampling inspection to meet ful automation requirements. During the Reporting Period, Wonder Digital released several new digital printer products using advanced technology, including high-definition high-speed integrated lines, high-definition directoutput all-in-one scanners, and ultra-high concentration water-based ink scanners, and secured sales orders for these new products during the Reporting Period.

4. Industrial investment segment

While focusing on the three core principle businesses of “intelligent marine equipment”, “embodied intelligence robotic equipment”, and “intelligent packaging equipment”, Dongfang Precision also places high importance on external expansion through equity investments. Adhering to the principle of “the principa businesses as the core + extended investment as the support”, the Company leads and coordinates “organic growth + external expansion” with the “1+N” development model.

“1” refers to focusing on the core businesses, firmly establishing its foundational position, continuously expanding and strengthening, and enhancing core competitiveness to maintain and increase market share amidst the trends of digitalization and intelligence. “N” refers to external expansion, which can include the following three aspects:

(1) Deepening chain extension: Mergers and acquisitions synergy, strengthening core moa

Building on the advantages of Dongfang Precision’s main business, the Company focuses on acquiring highquality companies within the same industry chain globally. By vertically integrating the supply chain, it implements precise mergers and acquisitions of high-quality targets in related fields. After the acquisition, the Company performs deep integration, outputs key capabilities, and stimulates internal industry chain synergies to further strengthen its core businesses.

(2) Breaking boundaries for ecological co-creation: Strategic investment and co-creation of “new quality productive force clusters” of strategic emerging industries

Dongfang Precision focuses on “new quality productive forces”, the core theme of national strategic emerging industries and future industries. The Company is firmly promoting the implementation of its technology transformation strategy and shifting its strategic focus toward technological upgrading. Through practical actions in strategic transformation, the Company actively responds to the call and guidance of the Outline of the 15th Five-Year Plan for National Economic and Social Development of the People’s Republic of China regarding the development of new quality productive forces and the expansion of emerging industries during the 15th Five-Year Plan period.

During the Reporting Period, Dongfang Precision’s primary efforts in strategic investment focused on the field of “embodied intelligence robots”. By making multiple equity investments in this field and developing a “clustered strategic investment” landscape, the Company has established an ecological layout covering the “intelligent brain”, core components, hardware manufacturing, and application scenarios within the embodied intelligence industry chain.

As of the date of submission and disclosure of this Report, the equity investments in the aforementioned fields are presented in the table below:

Note: Dongfang Precision strictly complies with the Accounting Standards for Business Enterprises in the accounting treatment of equity investments in the enterprises listed in the table above within the Company’s consolidated financial statements. According to the relevant provisions of the Accounting Standards for Business Enterprises, except for Dongfang Primo, a majority-owned subsidiary of Dongfang Precision, the other enterprises listed in the table above are not included in the consolidated financial statement for the current Reporting Period.

In terms of clustered strategic investment in the field of embodied intelligence robots, Dongfang Precision takes “building an entire industry chain ecosystem for embodied intelligence robots and empowering the intelligent upgrading of traditional industries” as its core mission, focusing on creating a dual-wheel drive mode of “strategic investment + industrial collaboration”. By deeply synergizing its industrial resources and manufacturing expertise in the high‑ end equipment sector with the target companies’ cutting‑ edge technologies, proven products, and application experience in embodied intelligence and AI large models, the Company seeks to strengthen cooperation across three key dimensions: manufacturing, application deployment, and market expansion, thereby jointly creating value and achieving mutual benefits across the upstream and downstream of the industry chain.

In addition to focusing on the strategic investment ecosystem layout in the field of “embodied intelligence robots”, the Company’s layout in the field of “key structural materials for controlled nuclear fusion + nuclear power equipment” consists of its previous equity investment in Guizhou Aerospace Xinli Technology Co., Ltd. The Company is firmly optimistic about the application prospects and development potential of Aerospace Xinli’s related products in fields such as controllable nuclear fusion, nuclear power equipment, and aerospace.

(3) Positioning on key core tracks: Forward-looking investment to build future competitiveness

In terms of industries that align with the Company’s external investment business, Dongfang Precision and its subsidiary Yineng Investment closely follow the core theme of “high-quality development” in China’s manufacturing industry during the 15th Five-Year Plan period. They focus on new industries and tracks guided by the outline of the 15th Five-Year Plan, paying attention to hard technology fields with significant technological barriers, broad future development potential, and national strategic value, such as aerospace and new materials. They identify excellent companies in niche sectors and obtain small equity stakes in these companies through investment. As of now, Dongfang Precision has invested in ExPace in commercial aerospace and in Sichuan Tengden UAV in the low-altitude equipment sector, aiming to yield good returns while exploring new directions and opportunities for the Company’s development.

5.Analysis of key financial indicators of principal operations

Unit: RMB yuan

There have been no significant changes in the composition or sources of the company's profits during the reporting period.  Applicable □ Not applicable

On April 9, 2026, the Company completed the closing of the sale of 100% equity interests in three subsidiaries, namely Fosber Group, Fosber Asia and Tiruña Asia. In accordance with the accrual basis principle and the relevant provisions on transfer of control under the Accounting Standards for Business Enterprises, the Company derecognized all assets and liabilities of the aforesaid subsidiarie whose sale had been closed at the consolidated financial statements level in the second quarter of 2026, and they are no longer included in the scope of consolidated financial statements from the second quarter onwards. In the corresponding period of 2025, the aforesaid disposed assets were within the scope of Dongfang Precision’s consolidated financial statements. Therefore, this asset sale has resulted in material changes in the Company’s consolidated financial statements for the second quarter of 2026 compared with the corresponding period of the prior year. The gain arising from the disposal of these subsidiaries amounted to RMB 4.385 billion (converted at the spot exchange rate on the delivery date), and all of the aforesaid investment income is recorded as non-recurring gains and losses in the current reporting period.

Composition of operating revenue Unit: RMB

Under the circumstances that the statistical caliber of the Company's main business data is adjusted in the Reporting Period, the Company's main business data that adjusted according to the caliber at the end of the Reporting Period □ Applicable √ Not applicable

√ Applicable □ Not applicable

Unit: RMB

IV Analysis of Non-Core Businesses

√ Applicable □ Not applicable

Unit: RMB yuan

V Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB yuan

2. Overseas assets that take up a large percentage of the Company’s net asset value:

√ Applicable □ Not applicable

3. Assets and Liabilities at Fair Value

√ Applicable □ Not applicable

Unit: RMB yuan

Indicate whether any significant change occurred to the measurement attributes of the major assets in the Reporting Period. □ Yes √ No

4. Assets to which the Company’s Rights Were Restricted as at the Period-End

Unit: RMB yuan

VI Investments Made

1. Total Investment Amount

√ Applicable □ Not applicable

2. Significant Equity Investments Acquired in the Reporting Period

□ Applicable √Not applicable

3. Significant Non-Equity Investments of which the Acquisition Was Uncompleted in the Reporting Period

□ Applicable √ Not applicable

4. Financial Investments

(1) Securities Investments

√ Applicable □ Not applicable

Unit: RMB yuan

(2) Investments in Derivative Financial Instruments

√ Applicable □Not applicable

1) Derivative Investments for Hedging Purposes in the Reporting Period

√ Applicable □Not applicable

Unit: RMB'0,00

Guangdong Dongfang Precision Science & Technology Co., Ltd.

Guangdong Dongfang Precision Science & Technology Co., Ltd.

2) Derivative Investments for Speculative Purposes in the Reporting Period

□Applicable √Not applicable

5. Use of Raised Funds

□ Applicable √ Not applicable

No such cases in the Reporting Period.

Ⅶ Sale of Major Assets and Equity Investments

1. Sale of Major Assets

√Applicable □ Not applicable

Note: The transaction price is denominated in RMB and converted at the spot exchange rate on the settlement date of the asset sale. On 28 November 2025, the Company convened a meeting of the Board of Directors to review and approve matters including the Plan for Major Asset Sale. On

29 November 2025, the Company made the initial disclosure of the major asset sale, namely that the Company proposed to sell its 100% equity interests in Fosber Asia and Tiruña Asia to Foresight US Bid mathrm C o, Inc. (hereinafter referred to as “Foresight US”) by way of a cash transaction. The Company’s wholly-owned subsidiary, Dong Fang Precision (Netherland) Coöperatief U.A. (hereinafter referred to as “Dongfang Precision (Netherland)”), proposed to sell its 100% equity interests in Fosber Group to Foresight Italy Bid Co S.p.A. (hereinafter referred to as “Foresight Italy”) via a cash transaction.

On 9 April 2026, the Company, Dongfang Precision (Netherland) and the buyers completed the settlement of this transaction in accordance with the terms of the Equity Transfer Agreements and performed all respective obligations to be fulfilled at settlement (including delivery of settlement documents such as relevant share certificates, capital contribution certificates, registers of members and corporate books). Upon settlement, the buyers became the holders of 100% equity interests in Fosber Group, Fosber Asia, and Tiruña Asia. The Company and Dongfang Precision (Netherland) ceased to hold ownership of the target assets. The Company disclosed the Announcement on Completion of Settlement for Major Asset Sale on 14 April 2026.

In accordance with the accrual basis of accounting and the provisions on transfer of control under the Accounting Standards for Business Enterprises, the Company derecognized all assets and liabilities of the above-mentioned subsidiaries at the consolidated financial statements level in the second quarter of 2026. Such subsidiaries have not been included in the scope of consolidation starting from the second quarter. The above disposed assets were within the scope of consolidation of Dongfang Precision in the same period of 2025. Accordingly, the sale of the assets has resulted in material changes to the Company’s consolidated financial statements for the second quarter of 2026 compared with the same period of last year. The gain arising from the disposal of these subsidiaries amounted to RMB4.385 billion (converted at the spot exchange rate on the settlement date).

2. Sale of Major Equity Investments

□ Applicable √ Not applicable

No such cases in the Reporting Period.

Ⅷ Principal Subsidiaries and Joint Stock Companies

√ Applicable □ Not applicable

Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:

Unit: RMB yuan

Details of the acquisition and disposal of subsidiaries during the reporting period

√ Applicable □ Not applicable

On April 9, 2026, the Company completed the closing of the sale of 100% equity interests in three subsidiaries, namely Fosber Group, Fosber Asia and Tiruña Asia. In accordance with the accrual basis principle and the relevant provisions on transfer of contro under the Accounting Standards for Business Enterprises, the Company derecognized all assets and liabilities of the aforesaid subsidiaries whose sale had been closed at the consolidated financial statements level in the second quarter of 2026, and they are no longer included in the scope of consolidated financial statements from the second quarter onwards. In the corresponding period of 2025, the aforesaid disposed assets were within the scope of Dongfang Precision’s consolidated financial statements. Therefore, this asset sale has resulted in material changes in the Company’s consolidated financial statements for the second quarter of 2026 compared with the corresponding period of the prior year.

Ⅸ Structured Bodies Controlled by the Company

√ Applicable □ Not applicable

1. In March 2022, Hainan Yinen Investment Co., Ltd., a wholly-owned subsidiary of the Company, participated in the capital contribution to Changzhou Xinchen Venture Capital Partnership (Limited Partnership), for the purpose of indirectly investing in Sinoscience Fullcryo Technology Co., Ltd. (referred to as "Fullcryo" in this Report) and Sinoscience Fullcryo (Zhongshan) Equipment Manufacturing Co., Ltd. by making a capital contribution to a limited partnership and obtained non-controlling interests of the two companies.

2. In December 2025, Hainan Yinen Investment Co., Ltd., a wholly-owned subsidiary of the Company, participated in the capital contribution to Changzhou Xinchen No.2 Venture Capital Partnership (Limited Partnership). The purpose of this partnership is to make equity investments in Sinoscience Fullcryo Technology Co., Ltd. through investing in a special fund.

As the limited partners of the above-mentioned 2 partnership, Yineng Investment accounts for 94.86% of the total capital contributions in both of the 2 partnerships. Considering the partnership's agreements on investmen orientation, investment decisions, operation and management, income apportionment, and loss bearing, and the fact that Yineng Investment accounts for the majority of the capital contributions to the partnership, the abovementioned 2 partnership is included in the consolidated statements of Dongfang Precision as a "structured body controlled by the Company" from the perspective of commercial substance and after complying with the Accounting Standard for Business Enterprises and referring to the professional opinions of the independen auditor.

Ⅹ. Possible risks and countermeasures

1.Risk of short-term fluctuations in operational performance arising from the major asset sale

During the current reporting period, the Company completed the overall closing of the sale of 100% equity interests in three companies, namely Fosber Group, Fosber Asia and Tiruña Asia, and completely divested the corrugated board production line (including corrugating rolls) business. The aggregate operating revenue and net profit of the aforesaid three companies accounted for a relatively high proportion of the Company’s consolidated operating revenue and net profit in the years prior to the completion of the sale. Although other existing businesses still maintain a certain scale, and the embodied intelligent robot equipment business cultivated by the Company prior to the completion of the asset sale has also been rapidly implemented during the current reporting period with substantial progress and phased achievements, it is unavoidable that, within a short period following the completion of the aforesaid asset sale transaction, the operating revenue and net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses at the consolidated financial statements level of the Company will decline compared with the levels before the asset sale. While the Company will obtain considerable cash inflows and recognize investment income related to asset disposal through the aforesaid asset sale transaction, such investment income falls under non-recurring gains and losses.

Upon completion of this transaction, the Company may experience dilution of earnings per share after deducting non-recurring gains and losses for the current period as a result of this transaction. The Company hereby reminds investors of the risk of fluctuations in operating performance arising from the asset sale by the listed company.

Countermeasures:

(1) Effectively utilizing the cash proceeds recovered from the transaction, increasing investment in the Intelligent marine equipment business, and further focusing on Embodied Intelligent Robot equipment business to achieve high-quality development of the listed company.

Dongfang Precision will fully utilize the cash proceeds recovered from the transaction to provide stronger financial support for the development of its existing businesses. Upon completion of this transaction, the listed company will concentrate its efforts on developing the Intelligent marine equipment business, further focusing on Embodied Intelligent Robot equipment business, achieving high-quality development and enhancing its marke competitiveness and profitability.

(2) Adhering to standardized operations, improving corporate governance, and providing institutional safeguards for the company’s development. Dongfang Precision will strictly comply with the Company Law, the Securities Law, and the Code of Corporate Governance for Listed Companies, as well as other relevant laws, regulations and normative documents. It will continuously improve corporate governance to ensure that shareholders can fully exercise their rights, that the Company operates in a standardized manner with scientific decision-making, strong execution, effective supervision and efficient operations, safeguarding the overal interests of the Company, particularly the legitimate rights and interests of minority shareholders, and providing institutional guarantees for the company’s development

(3) Further improving the company’s profit distribution system and strengthening investor returns. In accordance with the Articles ofAssociations and the Guidelines for the Regulation ofListed Companies No. 3— Cash Dividends of Listed Companies, as well as other relevant laws, regulations and normative documents, the Company has further clarified the specific conditions, ratios, distribution forms and conditions for stock dividends in its profit distribution, particularly cash dividends. It has also improved the decision-making procedures and mechanisms for profit distribution and the principles for adjusting profit distribution policies, thereby strengthening the protection mechanism of the rights and interests of minority investors. Upon completion of the transaction, the Company will continue to strictly implement its existing dividend policy and, where conditions for profit distribution are met, actively promote profit distribution to shareholders and strive to enhance shareholder returns.

2. Potential risks of conducting entrusted wealth management

Based on the phased operation and development of its main business and its cash management situation, the Company has moderately conducted entrusted wealth management with a portion of its idle self-owned funds every year since 2020, subject to approval by the shareholders' meeting and the board of directors. The purpose of the aforesaid entrusted wealth management is to improve the utilization efficiency of self-owned funds, enhance the Company’s overall return on net assets, and create more value for all shareholders, on the premise of no affecting the steady development of the Company’s main business, ensuring the funding requirements for norma operations of the Company in all aspects, and maintaining fund safety and controllable risks.

However, conducting the aforesaid business entails risks arising from financial market fluctuations and uncertain returns. In the wealth management business, if risk events occur in relation to the trustee’s investmen strategies, use of funds or other aspects, there is a potential risk that the Company may incur certain investmen losses.

Countermeasures:

On the premise of ensuring that the funds required for the normal operation of the Company’s main business are not affected, the Company shall reasonably control the fund scale of financial asset investments; continuously establish and improve internal control systems and mechanisms related to entrusted wealth management; continuously strengthen risk control management to ensure the safety of investment funds and strictly control risk exposure; strictly select partners, and choose to conduct entrusted wealth management business in cooperation with professional financial institutions that possess relevant professional qualifications, enjoy good reputation, have large scale, are capable of ensuring fund safety, and meanwhile have sound operating performance and strong fund operation capabilities..

3. Risk that the development of the Embodied Intelligent Robot equipment business, may fall short of expectations

Embodied intelligence, as a new industry and new track under the strategic guidance of the Outline of the 15th Five-Year Plan for National Economic and Social Development, has continuously received extensive attention from the market, industry, society and media in recent years. The embodied intelligent robot equipment business, which Dongfang Precision has strategically cultivated, achieved a "from zero to one" breakthrough in the first half of 2026 with substantial progress and phased achievements: the humanoid robot body production and assembly business carried by the controlling subsidiary DongFang Primo completed the construction of an automated humanoid robot production line and entered the large-scale production phase during the current reporting period, having achieved mass production and delivery of humanoid robots; the embodied intelligent robot data collection/data training and scenario-oriented robot application solution business operated by the subsidiary Dongfang Digicom completed the construction and official inauguration of the "Guangdong-Hong Kong-Macao Greater Bay Area (Foshan) Embodied Intelligent Robot Data Training Center" during the curren reporting period.

However, the Embodied Intelligent Robot field remains in a stage of continuous technological breakthroughs, exploration of commercial application scenarios and rapid iteration. The large-scale commercialization of such technologies requires overcoming multiple barriers, including technological reliability, product quality stability, market acceptance cultivation, and adaptation to legal and regulatory frameworks. If future progress in key technological breakthroughs, product quality stability and practical application scenarios falls short of expectations, it may slow the overall development of the sector. If the cultivation of downstream application market demand lags behind, it will directly affect the overall development of the industry and, in turn, adversely impact the Company’s business expansion and revenue realization in the strategic emerging industries segment. Meanwhile, external factors such as industry regulatory policies, the development of industry standard systems and public acceptance may also constrain the commercialization of related products. If the overall progress in core technological breakthroughs, product quality and market cultivation falls short of expectations, the commercial promotion of relevant products may face a risk of material delay.

Countermeasures:

The Company will dynamically adjust capital expenditure and the pace of industrialization in line with technological development, application implementation and commercialization progress, and will reasonably control the scale of investment in the strategic emerging industries segment to avoid operational risks arising from blind and excessive investment. It will also conduct regular comprehensive assessments of factors such as the industry development environment, technological iteration, market demand and policy changes, adjust its business development strategies in a timely manner, optimize its business layout where necessary, and mitigate the impac of overall industry risks on the Company’s operations and development.

Ⅺ. Implementation of Market Value Management System and Valuation Enhancement Plan

whether the Company has formulated a market value management system.

□ Yes √ No

whether the Company has disclosed a valuation enhancement plan.

□ Yes √ No

ⅪI. Implementation of the “Quality and Earnings Dual Improvement” Action Plan

whether the Company has disclosed the “Quality and Earnings Dual Improvement” Action Plan.

□ Yes √ No

Part IV Corporate Governance, Environmental and Social

Responsibilities

I Changes of Directors and Senior Management

□ Applicable  Not applicable

The Company’s directors and senior management remained unchanged during the Reporting Period. For details, see the 2025 Annual Report.

II Dividend Plan for the Reporting Period

 Applicable □Not applicable

III Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for Employees

 Applicable □ Not applicable

1. Equity Incentives

During the reporting period, the Company did not implement any equity incentive plans.

2. Implementation of Employee Stock Ownership Plans

☑ Applicable □ Not applicable

The situation of all effective employee stock ownership plans during the reporting period

The shareholding of directors and senior management personnel in the employee stock ownership plan during the reporting period

Note: On July 28, 2026, the Company issued the “Announcement Regarding the Change of Board Secretary,” stating that Ms. Feng Jia had resigned from her positions as a director of the Company’s Fifth Board of Directors and as Board Secretary; her resignation took effect upon delivery to the Company’s Board of Directors. Changes in asset management institutions during the reporting period

Changes in asset management institutions during the reporting period

□ Applicable √ Not applicable

Changes in equity caused by holders' disposal of shares, etc. during the reporting period

√Applicable □ Not applicable

Given that the Company’s Board of Directors approved the “Proposal Regarding the Expiration of the First Lock-up Period of the 2024 Employee Stock Ownership Plan and the Fulfillment of Unlocking Conditions” on October 17, 2025, the first lock-up period of the 2024 Employee Stock Ownership Plan expired on October 25, 2025, and the unlocking conditions for the first lock-up period

have been met. A total of 8,532,000 shares are eligible for unlocking. During the reporting period, following deliberation and approval by the Employee Stock Ownership Plan Management Committee, and in compliance with the “2024 Employee Stock Ownership Plan Proposal” and the “2024 Employee Stock Ownership Plan Management Measures” while ensuring legality and compliance, the Management Committee decided to sell the aforementioned 8,532,000 unlocked shares. As of the end of the reporting period, the disposal of these shares has been completed.

Exercise of Shareholder Rights During the Reporting Period

□ Applicable √ Not applicable

Other relevant matters regarding the employee stock ownership plan during the reporting period

During the reporting period, the Company convened the first 2026 meeting of participants in the 2024 Employee Stock Ownership Plan and a Board of Directors meeting, at which the “Proposal on Adjusting Matters Related to the Company’s 2024 Employee Stock Ownership Plan” was reviewed and approved. Given that the Company completed the closing of the sale of 100% of the equit interests in Guangdong Fosber Intelligent Equipment Co., Ltd. and Dylan (Guangdong) Intelligent Equipment Manufacturing Co., Ltd. in April 2026, and considering that certain employees of the two aforementioned sold companies participated in the Company’s 2024 and 2025 Employee Stock Ownership Plans as holders, in order to maintain the fairness of the incentive mechanism and to refine the handling of incentive shares under special circumstances, the Company has made relevant adjustments to the provisions of the Employee Stock Ownership Plan.

Changes in the members of the management committee of the employee stock ownership plan

√Applicable □ Not applicable

During the reporting period, the Company convened the first 2026 meeting of participants in the 2024 Employee Stock Ownership Plan. The meeting reviewed and approved the “Proposal on the Election of Members to the Management Committee of the Company’s 2024 Employee Stock Ownership Plan,” electing Qiu Yezhi, Xie Weiwei, and Wang Qiang as the new members of the Management Committee for the Company’s 2024 Employee Stock Ownership Plan. Their terms of office will coincide with the duration of the 2024 Employee Stock Ownership Plan.

The financial impact of the employee stock ownership plan on the listed company during the reporting period and relevant accounting treatments

☑ Applicable □ Not applicable

According to "Accounting Standards for Business Enterprises No. 11 - Share-based Payments", for equity-settled share-based payments in exchange for employees' services that can only be exercised when the services during the waiting period are completed or the stipulated performance conditions are met, on each balance sheet date during the waiting period, the services obtained in the current period should be included in relevant costs or expenses and capital reserve based on the best estimate of the number of exercisable equity instruments and in accordance with the fair value of the equity instruments on the grant date. The amortization expense of the company's employee stock ownership plan in 2026H1 was 1.640.47million yuan, which was included in relevan expense accounts and capital reserve

The situation of the termination of the employee stock ownership plan during the reporting period.

□ Applicable √ Not applicable

3. Other Incentive Measures for Employees

□ Applicable √ Not applicable

IV Disclosure of Environment Information

 Applicable □ Not applicable

Whether the listed company and its major subsidiaries are included in the list of enterprises required to disclose environmental information in accordance with the law

 Yes □ No

V Social Responsibilities

The Company attached importance to fulfilling social responsibility in daily operations, intending to promote harmony and coprosperity between it and parties related to its interests. The Company also took active measures in the protection of the rights and interests of shareholders, creditors, employees, suppliers, customers, and consumers, environmental protection, sustainable development, public relations, and social public welfare undertakings, and strived to maximize comprehensive social benefits including the sustainable development of itself.

(1) Corporate governance: During the Reporting Period, the Company strictly abided by the Company Law, the Securities Law and Code of Corporate Governance for Listed Companies, continued to refine the corporate governance structure, improve the internal control system, formed the decision-making system comprising the Shareholders' General Meeting, the Board of Directors and the Management, and timely fulfilled its obligation of information disclosure according to laws and regulations and effectivel safeguarded the rights and interests of all shareholders.

(2) Rights and interests of employees: The Company provided employees with welfare and care by providing holiday gifts and holding employee birthday parties, annual meetings, and team-building activities, improved employees' professional competence by offering regular or irregular training to employees in the headquarters and domestic and foreign branches and subsidiaries, and continued to improve the competitive comprehensive remuneration system to retain and attract talents needed for the Company's sustainable development.

(3) Relationship with customers and suppliers: Long adhering to the principle of "honest business" and "mutual benefit and win-win", the Company took the initiative to construct and develop a strategic partnership with suppliers and customers and jointl built a platform of trust and cooperation, and earnestly fulfilled its social responsibilities to suppliers, customers and consumers. The Company has been well-performing contracts with suppliers and customers and ensuring that the rights and interests of all parties are highly valued and duly protected

(4) Production safety: The Company strictly abided by the Labour Law and the Labour Contract Law, adhered to the "peopleoriented" principle, attached importance to the needs of employees,strived to improve the working and living environments o employees, and has set up a labor union to effectively protect the interests of employees. It also provided labor protection supplies according to the risk factors of different posts, organized occupational health examinations for employees (before taking the post, on the post and before leaving the post), and bought safety liability insurance for employees on highly risky posts. In 2020, Dongfang Precision extended its Grade II Production Safety Standardization Certificate for Machinery Enterprises, and Parsun Power and Fosber Asia were granted the Grade III Production Safety Standardization Certificate for Machinery Enterprises.

(5) Environmental Protection: Dongfang Precision was granted the “National Pollutant Discharge Permit” and commissions a third-party monitoring agency to conduct quarterly testing of wastewater, exhaust emissions, and noise levels, issuing third-party testing reports; it also commissions a qualified environmental protection company to transport wastewater on a monthly basis, thereby meeting the zero-discharge requirement for wastewater as specified in the environmental protection approval; Every year, the company organizes and successfully undergoes recertification reviews for the “OHSAS 18001:2007 Occupational Health and Safety Management System” and the “ISO 14001:2015 Environmental Management System.”

The subsidiary, Parsun Power, has obtained the “National Pollutant Discharge Permit” and has passed ISO 14001:2015 Environmental Management System certification. To address pollutants that may be generated during the company’s daily production processes, Parsun Power has purchased environmental protection equipment and facilities, including one 80,000 m³/h zeolite rotor + RTO exhaust gas treatment system, one 28,000 m³/h exhaust gas treatment system, and one wastewater reuse system, which are capable of meeting daily pollutant treatment requirements. During the reporting period, Parsun Power’s exhaust gas treatment and wastewater treatment facilities operated stably under good working conditions, with exhaust emissions meeting regulatory standards. All hazardous waste was safely transferred and disposed of by appropriately qualified entities in accordance with regulations and registered with the environmental protection authorities.

(6) Anti-fraud: The Group complied a thorough internal authorization manual that detailed provisions on internal authorization process of major matters to ensure appropriate internal control and reduce the risk of fraud. In order to create a fair, just, honest and non-corrupt internal business environment and strengthen internal monitoring, the Company also established and launched the antifraud reporting platform to encourage employees to report fraud findings.

Part V Significant Events

I Undertakings of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Period or Unfulfilled and Overdue at the Period-End

 Applicable □Not applicable

Guangdong Dongfang Precision Science & Technology Co., Ltd Semi-Annual Report 2026

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II Occupation of the Company’s Capital by the Controlling Shareholder or Other Related Parties for Non-Operating Purposes

□ Applicable  Not applicable

No such cases in the Reporting Period.

III Irregularities in Provision of Guarantees

□ Applicable  Not applicable

No such cases in the Reporting Period.

IV Engagement and Disengagement of Independent Auditor

Whether the semi-annual financial report was audited.

□ Yes √ No

The semi-annual financial report was not audited.

V Explanations Given by the Board of Directors Regarding the Independent Auditor's “Modified Opinion” on the Financial Statements of the Reporting Period

□ Applicable  Not applicable

VI Explanations Given by the Board of Directors Regarding “Modified Opinion” on the Financial Statements of Last Year

□ Applicable  Not applicable

VII Insolvency and Reorganization

□ Applicable  Not applicable

No such cases in the Reporting Period.

VIII Legal Matters

Significant Legal Matters

□ Applicable  Not applicable

No such cases in the Reporting Period.

Other Legal Matter

□ Applicable  Not applicable

IX Punishments and Rectifications

□ Applicable  Not applicable

No such cases in the Reporting Period.

X Credit Quality of the Company as well as Its Controlling Shareholder and Actual Controller

□ Applicable  Not applicable

XI Significant Related-Party Transactions

1. Continuing Related-Party Transactions

□ Applicable  Not applicable

No such cases in the Reporting Period.

2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Investments

□ Applicable  Not applicable

No such cases in the Reporting Period.

3. Related-Party Transactions Regarding Joint Investments in Third Parties

□ Applicable  Not applicable

No such cases in the Reporting Period.

4. Amounts Due to and from Related Parties

□ Applicable  Not applicable

No such cases in the Reporting Period.

5. Transactions with Related Financial Companies

□ Applicable  Not applicable

No such cases in the Reporting Period.

6. Transactions between the finance company controlled by the company and related parties

□ Applicable  Not applicable

No such cases in the Reporting Period.

7. Other Significant Related-Party Transactions

□ Applicable  Not applicable

No such cases in the Reporting Period.

XII Significant Contracts and Execution thereof

1. Entrustment, Contracting and Leases

(1) Entrustment

□ Applicable  Not applicable

No such cases in the Reporting Period.

(2) Contracting

□ Applicable  Not applicable

No such cases in the Reporting Period.

(3) Leases

□ Applicable  Not applicable

No such cases in the Reporting Period.

2. Significant Guarantees

 Applicable □ Not applicable

Guangdong Dongfang Precision Science & Technology Co., Ltd

Note:

In the “Announcement on the Completion of the Closing of a Major Asset Sale” disclosed by Dongfang Precision on April 14, 2026, it was clearly stated that, as of the closing date, the bank loan guarantee provided by Dongfang Precision to Tiruña Asia had been released.

3. Cash Entrusted for Wealth Management

 Applicable □ Not applicable

Unit: RMB’0,000

Specific circumstances where the Company, as the sole principal, entrusts financial institutions to conduct asset management, or invests in high-risk entrusted wealth management products with low security and poor liquidity.:

□ Applicable √ Not applicable

4. Other Significant Contracts

□ Applicable  Not applicable

No such cases in the Reporting Period.

XIII Communications with the Investment Community such as Researches, Inquiries and Interviews

√ Applicable □ Not applicable

XIV Other Significant Events

□ Applicable  Not applicable

XV Significant Events of Subsidiaries

□ Applicable  Not applicable

Part VI Share Changes and Shareholder Information

I Share Changes

1. Share Changes

Unit: share

Reasons for share changes:

 Applicable □ Not applicable

1.Cancellation of Repurchased Shares

On June 27, 2026, the Company issued the “Announcement on the Completion of Share Repurchase and Cancellation and Changes in Shareholding.” Following approval by the Company’s shareholders’ meeting and board of directors, the Company completed the cancellation of 432 repurchased shares held in the Company’s special securities account for share repurchases through the Shenzhen Stock Exchange and the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. Upon completion of the cancellation of the aforementioned shares, the Company’s total issued share capital was reduced by 432 shares.

2. Changes in Restricted shares of senior management

In early 2026, China Securities Depository and Clearing Corporation, Ltd. calculated the transferable quota for the Company’s shares held in 2026 based on the total number of shares held by all directors and senior executives as of the share quota determination date (December 31, 2025). Following this calculation, 1,835,100 shares were released from the lock-up period in early 2026.

During the reporting period, the lock-up ratio for shares held by former director Xie Weiwei and former supervisor He Baohua (who resigned in September 2025) was reduced from 100% to 75% (with 25% of their shares becoming unlocked six months after the date of their resignation), resulting in a total of 294,522 shares being released from the lock-up period;

75% of the shares held by former independent director Liu Da (who resigned in September 2024; his term, as determined at the time of his appointment, was set to expire in November 2026) have been restricted, resulting in an increase of 69,975 restricted shares.

Approval of Share Changes

 Applicable □ Not applicable

In the Reporting Period, share changes related to the company's cancellation of repurchased shares, the Company followed the applicable laws and regulations and its Articles of Association, executed the approval procedures with the general meeting and the Board of Directors, and obtained approval from the Shenzhen Stock Exchange.

Transfer of share ownership:

 Applicable □ Not applicable

In the Reporting Period, transfer of shares related to the cancellation of certain repurchased shares by the company ,the Company completed the transfers with the Shenzhen branch of China Securities Depository and Clearing Co., Ltd. after they were approved by the Shenzhen Stock Exchange.

Progress of implementation of share buyback

□ Applicable  Not applicable

Progress on reducing the repurchased shares by way of centralized bidding:

□ Applicable  Not applicable

Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share attributable to the Company’s ordinary shareholders, and other financial indicators of the prior year and the prior accounting period, respectively:

□ Applicable  Not applicable

Other information that the Company considers necessary or is required by the securities regulator to be disclosed:

□ Applicable  Not applicable

2. Changes in Restricted Shares

 Applicable □ Not applicable

Unit: share

II Issuance and Listing of Securities

□ Applicable  Not applicable

III Shareholders and Their Shareholdings

Unit: share

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Top 10 shareholders involved in refinancing shares lending:

□ Applicable √ Not applicable

Changes in top 10 shareholders compared with the prior period:

□ Applicable √ Not applicable

Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period.

□ Yes  No

No such cases in the Reporting Period

IV Changes in the Shareholdings of Directors and Senior Management

ApplicableNot applicable

There were no changes in the shareholdings of the Company’s directors and senior management during the reporting period; please refer to the 2025 Annual Report for details.

V Changes of the Company’s Controlling Shareholder and Actual Controller

Controlling Shareholder changed during the Reporting Period

□ Applicable  Not applicable

No such cases in the Reporting Period.

Actual Controller changed during the Reporting Period

□ Applicable  Not applicable

No such cases in the Reporting Period.

VI Preference Shares

□ Applicable  Not applicable

No preference shares in the Reporting Period.

Part VII Corporate Bonds

□ Applicable √ Not applicable

Part VIII Corporate Financial Statements

I Auditor’s Report

Whether the semi-annual financial statements were audited.

□ Yes  No

The semi-annual financial statements were not audited.

II Financial Statements

Currency unit for the tables in the notes to the financial statements: RMB yuan

1. Consolidated Balance Sheet

Prepared by: Guangdong Dongfang Precision Science & Technology Co., Ltd.

30 June 2026 Unit: RMB yuan

Legal representative: Tang Zhuolin Chief in charge of accounting work: Shao Yongfeng Head of accounting institution: Shao Yongfeng

2. Parent Company Balance Sheet

Unit: RMB yuan

3. Consolidated Income Statement

Unit: RMB yuan

Legal representative: Tang Zhuolin Chief in charge of accounting work: Shao Yongfeng Head of accounting institution: Shao Yongfeng

4. Parent Company Income Statement

Unit: RMB yuan

5. Consolidated Statement of Cash Flows

Unit: RMB yuan

6. Parent Company Statement of Cash Flow

Unit: RMB yuan

7. Consolidated Statements of Changes in Equity

Amount of current period

Unit: RMB yuan

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Amount of previous period Unit: RMB yuan

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8. Company Statement of Changes in Equity

Amount of current period

Unit: RMB yuan

Guangdong Dongfang Precision Science & Technology Co., Ltd.

Amount of previous period

Unit: RMB yuan

III Corporate Background

Guangdong Dongfang Precision Science & Technology Co., Ltd. (the "Company"), a joint stock company with limited liability registered in Guangdong Province of the People's Republic of China and established on 9 December 1996, obtained a Business License for Enterprise Legal Person with a registration number of 440682000040868.

In August 2011, upon the approval by the China Securities Regulatory Commission (CSRC) in the Reply on Approving the Initial Public Offering of Shares by Guangdong Dongfang Precision Science & Technology Co., Ltd. (ZH.J.X.K. [2011] No. 1237), the Company issued Renminbi-denominated ordinary shares to the public, and was listed on the Shenzhen Stock Exchange in the same month. The Company started to use the unified social credit code (914406002318313119) in 2016. The Company is headquartered in 2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China.

The Group's main businesses include three major business segments: smart marine equipment, embodied intelligent robotics equipment and smart packaging equipment.

The actual controllers of the Company are Tang Zhuolin and Tang Zhuomian.

These financial statements were authorized for issue by the Board of Directors of the Company on 24 July 2026.

IV.Basis of Preparation of the Financial Statements

These financial statements have been prepared in accordance with China’s “Accounting Standards for Business Enterprises — Basic Standards” promulgated by the Ministry of Finance and the specific accounting standards, application guidance, interpretations and other relevant regulations issued or amended thereafter (hereafter collectively referred to as “Accounting Standards for Business Enterprises” or “CAS”). In addition, the financial statements also disclose relevant financial information in accordance with the Rules No. 15 for the Preparation of Information Disclosure by Companies Offering Securities to the Public - General Provisions on Financial Reports.

The financial statements are prepared on a going concern basis.

V.Principal Accounting Policies and Accounting Estimates

The Group has formulated specific accounting policies and accounting estimates according to the characteristics of its actual production and operation, which is mainly embodied in the provision for the bad debt of accounts receivable, provision for write-down of inventories, depreciation of fixed assets, provision for product warranties, capitalization conditions for expenditure on the development phase of research and development expenses and recognition and measurement of revenue.

1. Statement of compliance

The financial statements present truly and completely the financial positions of the Group and the Company as at 30 June 2025, and the financial performance and the cash flows for the 1^st half of 2026 then ended in accordance with Accounting Standards for Business Enterprises.

2. Accounting year

The accounting year of the Group is from 1 January to 31 December of each calendar year.

3. Functional currency

The Group’s functional currency and the currency used in preparing the financial statements were Renminbi. The amounts in the financial statements were denominated in Renminbi yuan, unless otherwise stated.

4. Determination method and selection basis of materiality criteria

Materiality criteria

Significant construction in progress

Budgeted amount for investment exceeds RMB50,000,000

Significant cash flows from investing activities

Amount exceeds RMB50,000,000

Significant non-wholly owned subsidiaries

Significant associates

Net assets of non-wholly owned subsidiaries account for more than 10% of consolidated net assets

The carrying amount of long-term equity investments in associates accounts for more than 5% of the consolidated net assets

5. Business combination

Business combinations are classified into business combinations involving entities under common control and business combinations not involving entities under common control.

Business combinations involving entities under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

5. Business combination (cont’d)

Business combinations involving entities under common control (cont’d)

Assets and liabilities obtained by combining party in the business combination involving entities under common control (including goodwill arising from the acquisition of the merged party by the ultimate controller) are recognized on the basis of their carrying amounts at the combination date recorded on the financial statements of the ultimate controlling party. The difference between the carrying amount of the consideration paid for the combination (or aggregate face values of the shares issued) and the carrying amount of the net assets obtained is adjusted to capital surplus. If the capital surplus are not sufficient to absorb the difference, any excess is adjusted to retained earnings.

Business combinations not involving entities under common control

A business combination not involving entities under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination.

The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair values at the acquisition date. The excess of the sum of the consideration paid (or equities issued) for business combination and equity interests in the acquiree held prior to the date of acquisition over the share of the attributable net identifiable assets of the acquiree, measured at fair value, was recognized as goodwill, which is subsequently measured at cost less cumulative impairment loss. In case the fair value of the sum of the consideration paid (or equities issued) and equity interests in the acquire held prior to the date of acquisition is less than the fair value of the share of the attributable net identifiable assets of the acquiree, a review of the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities, the consideration paid for the combination (or equity issued) and the equity interests in the acquiree held prior to the date of acquisition is conducted. If the review indicates that the fair value of the sum of the consideration paid (or equities issued) and equity interests in the acquiree held prior to the date of acquisition is indeed less than the fair value of the share of the attributable net identifiable assets of the acquiree, the difference is recognized in profit or loss.

6. Consolidated financial statements

The consolidation scope for consolidated financial statements is determined based on the concept of control, including the Company and all subsidiaries’ financial statements. Subsidiaries are those enterprises or entities which the Company has control over (including enterprises, separable components of investee units and structured entities controlled by the Company). An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. Any inconsistent accounting policies have been adjusted to become consistent with the Company’s accounting policies. All assets, liabilities, equities, revenues, costs and cash flows arising from intercompany transactions are eliminated on consolidation.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

6. Consolidated financial statements (cont’d)

The excess of current loss attributable to non-controlling shareholders of a subsidiary over their entitlements to the opening balance of equity shall be charged to non-controlling interests.

For subsidiaries obtained through a business combination not involving entities under common control, the operating results and cash flows of the acquirees will be recognized in consolidated financial statements from the date the Group effectively obtains the control until the date that control is terminated. When consolidated financial statement is prepared, the subsidiaries’ financial statements will be adjusted based on the fair values of the identifiable assets, liabilities and contingent liabilities at the acquisition date.

For subsidiaries acquired through combination of entities under common control, the business results and cash flows of the combined entities are included in the consolidated financial statements from the beginning of the period in which the combination occurred. When preparing and comparing the consolidated financial statements, the Group makes adjustments to relevant items of the financial statements of the previous period, deeming the reporting entity formed through combination as existing since initial implementation of control by the ultimate controlling party.

In the event of the change in one or more elements of control as a result of changes in relevant facts and conditions, the Group reassesses whether it has control over the investee.

If the control right is not lost, the change of minority shareholders' equity shall be regarded as equity transaction.

7. Cash and cash equivalents

Cash comprises cash on hand and deposits readily available for payments. Cash equivalents represent short-term highly liquid investments which are readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value.

8. Foreign currency translation

For foreign currency transactions, the Group translates the foreign currency into its functional currency.

Upon initial recognition, foreign currency transactions are translated into the functional currency using the spot exchange rate of the dates on which transactions occur. At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet date. The translation differences arising from the settlement and foreign currency monetary items are recognized in profit or loss. Also at the balance sheet date, foreign currency non-monetary items measured at historical cost continue to be translated using the spot exchange rate at the dates of the transactions and it does not change its carrying amount in functional currency. Foreign currency non-monetary items measured at fair value are translated using the spot exchange rate. The differences arising from the above translations are recognized in current profit or loss or other comprehensive income according to the nature of foreign currency non-monetary items.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

8. Foreign currency translation (cont’d)

The Group translates the functional currencies of foreign operations into Renminbi when preparing the financia statements. Asset and liability items in the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date. Equity items, except for retained earnings, are translated at the spot exchange rates at the date when such items arose. Revenue and expense items in the income statement are translated using the average exchange rate for the periods when transactions occur. Translation differences arising from the aforesaid translation of financial statements denominated in foreign currency shall be recognized as other comprehensive income. When foreign operations are disposed, other comprehensive income relating to the foreign operation is transferred to current profit or loss. Partial disposal shall be recognized on a pro-rata basis.

Cash flows denominated in foreign currencies and foreign subsidiaries’ cash flows are translated using the average exchange rate for the period when cash flows occur. The impact on cash by the fluctuation of exchange rates is presented as a separate line item of reconciliation in the statement of cash flows.

9. Financial instruments

Financial instruments refer to the contracts which give rise to a financial asset in one entity and a financia liability or equity instrument in another entity.

Recognition and derecognition of financial instruments

The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the financial instrument.

A financial asset (or part of it, or a part of a group of similar financial asset) is derecognized when one of the following criteria is met, that is, when a financial asset is written off from its account and balance sheet:

(1) The right of receiving the cash flow generated from the financial asset has expired;

(2) The right of receiving cash flow generated by the financial assets is transferred, or an obligation of paying the full amount of cash flow received to third parties in a timely manner has been undertaken under “passthrough” agreements, where (a) substantially all risks and rewards of the ownership of such type of financial assets have been transferred, or (b) control over such type of financial assets has not been retained even though substantially all risks and rewards of the ownership of such type of financial assets have been neither transferred nor retained.

If the obligation of financial liability has been fulfilled, cancelled or expired, the financial liability is derecognized. If the present financial liability is substituted by the same debtee with another liability differing in substance, or the terms of the present liability have been substantially modified, this substitution or modification is treated as derecognition of a present liability and recognition of a new liability with any arising differences recognized in profit or loss.

Conventional dealings in financial assets are recognized or derecognized under the trade day accounting method. Conventional dealings refer to the receipt or delivery of financial assets within periods stipulated by the law and according to usual practices. The trade day is the date on which the Group undertakes to buy or sell a financia asset.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

Financial instruments (cont’d)

Classification and measurement of financial assets

At initial recognition, the Group classifies its financial assets into: financial assets at fair value through profit or loss, financial assets at amortized cost, or financial assets at fair value through other comprehensive income, according to the Group’s business model for managing financial assets and the contract cash flow characteristics of the financial assets. When and only when the Group changes its business model of managing financial assets, all relevant financial assets affected will be re-classified.

Financial assets are measured at fair value on initial recognition, but if the accounts receivable or notes receivable generated from the sales of goods or provision of services do not contain significant financing components or do not consider financing components of no longer than one year, the initial measurement will be based on the transaction price.

For financial assets at fair value through profit or loss, the relevant transaction costs are directly recognized in profit or loss; for other financial assets, the relevant transaction costs are recognized in their initial recognition amount.

The subsequent measurement of financial assets is dependent on its classification:

Debt instruments measured at amortized cost

Financial assets fulfilling all of the following conditions are classified as financial assets at amortized cost: the objective of the Group’s business management model in respect of such type of financial assets is to generate contract cash flow; the contract terms of such type of financial assets provide that cash flow generated on specific dates represents interest payment in relation to principal amounts based on outstanding principal amounts only. Interest income from such type of financial assets are recognized using the effective interest rate method, and any profit or loss arising from derecognition, amendments or impairment shall be charged to current profit or loss.

Debt instruments atfair value through other comprehensive income

Financial assets fulfilling all of the following conditions are classified as financial assets at fair value through other comprehensive income: the objective of the Group’s business management model in respect of such type of financial assets is both to generate contract cash flow and to sell such type of financial assets; the contract terms of such type of financial assets provide that cash flow generated on specific dates represents interest payment in relation to principal amounts based on outstanding principal amounts only. Interest income from this type of financial assets is recognized using the effective interest rate method. Other than interest income, impairment loss and exchange differences which shall be recognized as current profit or loss, other fair value changes shall be included in other comprehensive income. Upon derecognition of the financial assets, the cumulative gains or losses previously included in other comprehensive income shall be transferred from other comprehensive income to current profit or loss.

Financial assets atfair value through profit or loss

Other than financial assets measured at amortized cost and financial assets at fair value through other comprehensive income as aforementioned, all financial assets are classified as financial assets at fair value through profit or loss, which are subsequently measured at fair value, any changes of which are recognized in current profit or loss.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

Financial instruments (cont’d)

Classification and measurement of financial liabilities

The Group classifies its financial liabilities at initial recognition: financial liabilities at fair value through profit or loss, and other financial liabilities. For financial liabilities at fair value through profit or loss, the relevant transaction costs are directly recognized in profit or loss; for other financial liabilities, the relevant transaction costs are recognized in their initial recognition amount.

The subsequent measurement of financial liabilities is dependent on its classification:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include mainly financial liabilities held for trading(comprising derivatives classified as financial liabilities). Financial liabilities held for trading (comprising derivatives classified as financial liabilities) are subsequently measured at fair value and all changes are recognized in current profit or loss.

Other financial liabilities

Subsequent to initial recognition, these financial liabilities are carried at amortized cost using the effective interest method.

Impairment of financial instruments

Methods for determining expected credit losses and accounting treatment methods

The Group performs impairment treatment on financial assets at amortized cost, debt instruments at fair value through other comprehensive income and contract assets based on expected credit losses (ECL) and recognizes allowances for losses.

For receivables and contract assets that do not contain significant financing components, the Group adopts a simplified measurement method to measure allowances for losses based on an amount equivalent to the lifetime expected credit losses.

Financial assets other than those measured with simplified valuation methods, the Group evaluates at each balance sheet date whether its credit risk has significantly increased since initial recognition. The period during which credit risk has not significantly increased since initial recognition is considered the first stage, at which the Group shall measure loss allowance based on the amount of expected credit loss for the next 12 months and shal compute interest income according to the book balance and effective interest rate; the period during which credi risk has significantly increased since initial recognition although no credit impairment has occurred is considered the second stage, at which the Group shall measure loss allowance based on the amount of expected credit loss for the entire valid period and shall compute interest income according to the book balance and effective interest rate; The period during which credit impairment has occurred after initial recognition is considered the third stage, at which the Group shall measure loss allowance based on the amount of the lifetime expected credit loss and shal compute interest income according to the amortized cost and effective interest rate. For financial instruments with low credit risk at the balance sheet date, the Group assumes that their credit risk has not increased significantly since initial recognition.

The Group estimates the expected credit loss of financial instruments individually and on a group basis. The Group considers the credit risk features of different customers and estimates the expected credit losses of financia instruments based on aging portfolio.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

Financial instruments (cont’d)

Impairment of financial instruments (cont’d)

For the Group’s criteria for judging whether credit risks have significantly increased, the definition of assets subjected to credit impairment, and assumptions underlying the measurement of expected credit losses, please refer to Note IX.2.

The Group's approach to measuring ECLs on financial instruments reflects factors such as the unbiased probability-weighted average amount determined by evaluating a range of possible outcomes, the time value of money, and reasonable and supportable information about past events, current conditions and projections of future economic conditions available at the balance sheet date without undue additional cost or effort.

When the Group no longer reasonably expects to be able to fully or partially recover the contract cash flow of financial assets, the Group directly writes down the book balance of such financial assets.

Derivative financial instruments

The Group uses derivative financial instruments. Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Gains or losses arising from changes in the fair value of derivative instruments shall be directly recognized in current profit or loss.

Transfer of financial assets

If the Group has transferred substantially all the risks and rewards associated with the ownership of a financia asset to the transferee, the asset should be derecognized. If the Group retains substantially all the risks and rewards of ownership of a financial asset, the asset should not be derecognized.

When the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, it may either derecognize the financial asset and recognize any associated assets and liabilities if control of the financial asset has not been retained; or recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability if control has been retained.

Assets formed by the continuing involvement by way of the provision of financial guarantee in respect of the transferred financial assets shall be recognized as the lower of the carrying value of the financial asset and the amount of financial guarantee. The amount of financial guarantee means the maximum amount among considerations received to be required for repayment.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

10. Inventories

Inventories include raw materials, work-in-progress, finished goods, product deliveries, semi-finished goods, materials consigned for processing, etc.

Inventories are initially recorded at costs. Inventories’ costs include purchasing costs, processing costs and other costs. Actual costs of product deliveries are recognized using the weighted average method. Turnover materials include low-value consumables, packaging materials, etc., which are expensed in full.

The Group adopts the perpetual inventory system.

Inventories on the balance sheet date are stated at the lower of cost or net realisable value. Inventory valuation allowance is made and recognized in profit or loss when the net realisable value is lower than cost. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. Valuation allowances for raw materials are established by category, and those for finished goods by individual item. For inventories that relate to products produced and sold in the same region, have the same or similar ultimate purpose, and are difficult to separate in measurement, valuation allowances are established on a combined basis.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

11. Long-term equity investments

Long-term equity investments include equity investments in subsidiaries, joint ventures and associates.

Long-term equity investments were recorded at initial investment cost on acquisition. For long-term equity investments acquired through the business combination of entities under common control, the initial investmen cost shall be the share of carrying value of the equity of the merged party at the date of combination as stated in the consolidated financial statements of the ultimate controlling party. Any difference between the initial investment cost and the carrying value of the consideration for the combination shall be dealt with by adjusting the capital surplus(if the capital surplus are insufficient for setting off the difference, such difference shall be further set off against retained earnings). Upon disposal of the investment, other comprehensive income prior to the date of combination shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee. Equity recognized as a result of changes in equity other than the set-off of profit and loss, other comprehensive income and profit allocation of the investee shall be transferred to current profit and loss upon disposal of the investment. Items which remain long-term equity investments after the disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be accounted for in full. For long-term equity investments acquired through the business combination of entities not under common control, the initial investment cost shall be the cost of combination (for business combinations of entities not under common control achieved in stages through multiple transactions, the initial investment cost shall be the sum of the carrying value of the equity investment in the acquired party held at the date of acquisition and new investment cost incurred as at the date of acquisition). The cost of combination shall be the sum of assets contributed by the acquiring party, liabilities incurred or assumed by the acquiring party and the fair value of equity securities issued. Upon disposal of the investment, other comprehensive income recognized under the equity method held prior to the date of acquisition shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investee. Equity recognized as a result of changes in equity other than the set-off of profit and loss, other comprehensive income and profit allocation of the investee shall be transferred to current profit and loss upon disposal of the investment. Items which remain long-term equity investments after the disposal shall be accounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be accounted for in full. The initial investment cost of long-term equity investments other than those acquired through business combination shall be recognized in accordance with the following: for those acquired by way of cash payments, the initial investment cost shall be the consideration actually paid plus expenses, tax amounts and other necessary outgoings directly related to the acquisition of the long-term equity investments.

In the financial statements of the Company, the cost method is used for long term equity investments in investees over which the Company exercises control. Control is defined as the power exercisable over the investee, the entitlement to variable return through involvement in the activities of the investee and the ability to influence the amount of return using the power over the investee.

When the cost method is used, long-term equity investments are measured at initial cost on acquisition. When additional investments are made or investments are recouped, the cost of longterm equity investments shall be adjusted. Cash dividend or profit distribution declared by the investee shall be recognized as investment income for the period.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

11. Long-term equity investments (cont’d)

The equity method is used to account for long-term equity investments when the Group can jointly control or has significant influence over the invested entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant influence means having the authority to take part in the decision over the financial and operational policies but not the authority to control or jointly control with other parties the formulation of such policies.

Under the equity method, any excess of the initial investment cost over the Company’s share of the net fair value of the investment’s identifiable assets and liabilities is included in the initial investment cost of the long-term equity investment. When the carrying amount of the investment is less than the Company’s share of the fair value of the investment’s identifiable net assets, the difference is recognized in profit or loss of the current period and debited to long-term equity investments.

Under the equity method, after the long-term equity investments are acquired, investment gains or losses and other comprehensive income are recognized according to the entitled share of net profit or loss and other comprehensive income of the investee and the carrying amount of the long-term equity investment is adjusted accordingly. When recognising the Group’s share of the net profit or loss of the invested entity, the Group makes adjustments based on fair values of the investees’ identifiable assets and liabilities at the acquisition date in accordance with the Group’s accounting policy and accounting period to investee’s net profits, eliminating pro-rata profit or loss from internal transactions with associates and joint ventures attributed to investor (except that loss from inter-group transactions deemed as asset impairment loss shall be fully recognized), provided that invested or sold assets constituting businesses shall be excluded. When the invested enterprise declares profit distribution or cash dividends, the carrying amount of investment is adjusted down by the Group’s share of the profit distribution and dividends. The Group shall derecognize its share of the losses of the investee after the long-term equity investment together with any long-term interests that in substance forms part of the Group’s net investment in the investee are reduced to zero, except to the extent that the Group has incurred obligations to assume additiona losses. The Group also adjusts the carrying amount of long-term equity investments for other changes in owner’s equity of the investees (other than the net-off of net profits or losses, other comprehensive income and profi distribution of the investee), and includes the corresponding adjustment in equity.

12. Fixed assets

A fixed asset is recognized when, and only when, it is probable that future economic benefits that are associated with the fixed asset will flow to the Group and the cost can be measured reliably. Subsequent expenditures related to a fixed asset are recognized in the carrying amount of the fixed asset if the above recognition criteria are met, and the carrying value of the replaced part is derecognized; otherwise, those expenditures are recognized in profi or loss as incurred.

Fixed assets are initially recognized at cost. Cost of purchased fixed assets includes purchasing price, relevant taxes, and any directly attributable expenditure for bringing the asset to working conditions for its intended use.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

12. Fixed assets (cont’d)

Except for those incurred by using the accrued expenses for safety production, fixed assets are depreciated on a straight-line basis, and the respective estimated useful lives, estimated residual value ratios and annual depreciation rates are as follows:

The Group reviews, at least at each year end, useful lives, estimated residual values, and depreciation methods of fixed assets and makes adjustments if necessary.

13. Construction in progress

Construction in progress is measured at the actual construction expenditures, including necessary project work expenses incurred during the period while construction is in progress, and other related fees.

The criteria for construction in progress to be transferred to fixed assets when it is ready for its intended use are as follows:

Criteria

Buildings and constructions

Actual start of use

Machinery

The earlier of actual start of use/completion

of installation and acceptance

14. Borrowing costs

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts of other borrowing costs incurred are recognised as an expense in the period in which they are incurred.

When assets that meet the capitalisation criteria are constructed or produced and reach their intended usable or saleable state, borrowing costs cease to be capitalised. Borrowing costs incurred thereafter are recognised in profit or loss for the period.

During the capitalisation period, the amount of interest capitalised for each accounting period is determined as follows: for specific borrowings, the amount is determined by deducting temporary deposit interest income or investment income from the actual interest expenses incurred during the period; for general borrowings within the Group, there were no borrowings that met the capitalisation criteria during the current year.

If the construction or production of an asset that meets the capitalisation criteria is subject to an abnormal interruption, other than those necessary to achieve the intended usable or saleable state, and the interruption lasts continuously for more than three months, capitalisation of borrowing costs is suspended. Borrowing costs incurred during the interruption period are recognised as expenses and charged to the current period's profit or loss until the construction or production activities of the asset resume.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

15. Intangible assets

Overseas land use rights and trademark rights are intangible assets with indefinite useful lives. Impairment tests shall be conducted annually regardless of whether there are indications of impairment. Such intangible assets shall not be amortized and their useful life shall be reviewed during each accounting period. If there is evidence suggesting that their useful life is limited, accounting treatment will be performed according to the above policy on intangible assets with definite useful life.

Other intangible assets are amortised on a straight-line basis over their useful lives as follows:

The land ownership of Fosber S.p.A. ("Fosber Group"), a subsidiary of the Company, in Italy has a permanent term, and the Company believes that the land ownership will be used and will bring expected inflows of economic benefits to the Company in the foreseeable future, so its useful life is regarded as indefinite. The trademarks registered by subsidiaries Fosber Group and Fosber America, Inc. ("Fosber America") have a useful life in accordance with the law, but at the expiration of the protection period, Fosber Group and Fosber America can apply for an extension at low service charges, so the Company will benefit from the above trademarks in the long term. Thus, the Company recognized the trademark use right as intangible assets with indefinite useful life. The useful life of intangible assets with indefinite useful life will be reviewed at the end of each year. After review, the useful life of the above intangible assets is still uncertain.

The Group classifies the expenses for internal research and development as research costs and development costs. All research costs are charged to the current profit or loss as incurred. Expenditure incurred on projects to develop new products is capitalized and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits (including demonstration that the product derived from the intangible asset or the intangible asset itself will be marketable or, in the case of internal use, the usefulness of the intangible asset as such), the availability of technical and financial resources to complete the project and procure the use or sale of the intangible asset, and the ability to measure reliably the expenditure during the development. Development costs which do not meet these criteria is recognized in profit or loss when incurred.

After meeting the above conditions, passing the technical feasibility and economic feasibility study, the corresponding projects of the Group enter the development stage and begin to be capitalized after being reviewed and approved.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

16. Impairment

The Group assesses impairment of assets other than inventories, contract assets and assets related to contract costs, deferred tax assets and financial assets, using the methods described below:

Impairment of assets (other than the impairment of inventories, contract assets and contract cost assets, investment properties measured using the fair value model, deferred tax assets, and financial assets ) is determined in the following way: the Group assesses at the balance sheet date whether there is any indication that an asset may be impaired; if any indication exists that an asset may be impaired, the Group estimates the recoverable amount of the asset and performs impairment testing; goodwill arising from a business combination, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired.

The recoverable amount is the higher of the asset’s fair value less costs to sell and its present value of estimated future cash flows. The Group estimates recoverable value for individual assets. When it is difficult to estimate individually, the recoverable value of the cash generating units which the asset belongs to will be estimated. The definition of cash generating units is determined on the basis of whether the cash generating units generate cash flows which are largely independent of those from other cash generating units

Where the carrying amount of an asset or a cash generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount. The difference between the carrying amount and recoverable amount is recognized in profit or loss and allowance for impairment is made accordingly.

In connection with impairment tests for goodwill, the carrying value of goodwill arising from business combination is allocated to relevant cash generating units (“CGU”) from the date of acquisition on a reasonable basis. If it is difficult to allocate such goodwill to a relevant CGU, it should be allocated to a relevant CGU group. A relevant CGU or CGU group is defined as one which can benefit from the synergies of the business combination and is not larger than the reporting segments determined by the Group.

In connection with impairment tests for CGUs or CGU groups that comprise goodwill, where indications of impairment exists in a CGU or CGU group related to goodwill, impairment tests should be performed first on CGUs or CGU groups that do not comprise goodwill and recognize impairment loss after estimating the recoverable amount. Then impairment tests on CGUs or CGU groups that comprise goodwill should be performed and the carrying value and recoverable amount should be compared. Where the recoverable amount is lower than the carrying value, the impairment loss should first be offset against the carrying value of the goodwill allocated to CGUs or CGU groups and then against assets in the CGUs or CGU groups other than goodwill in proportion to the weighting of these assets.

Previously recognized impairment losses are not reversed in subsequent periods.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

17. Long-term prepaid expenses

Long-term prepaid expenses are amortized using the straight-line method, with the amortization periods as follows:

18. Employee benefits

Employee benefits include all kinds of rewards or compensation incurred by the Group in exchange for service rendered by employees or in the termination of employment, other than share-based payment. Employee benefits include short-term benefits, retirement benefits, dismission benefits and other long-term employees’ benefits. Benefits provided by the Group to the spouses, children and dependents of employees and families of deceased employees are also a part of employee benefits.

Short-term benefits

For accounting periods during which services are rendered by employees, short-term benefits that will incur is recognized as liability and included in profit and loss or related capital costs.

Retirement benefits (defined contribution schemes)

Employees of the Group participated in pension insurance and unemployment insurance schemes managed by the local government. The contribution costs are charged as asset cost or to profit or loss when incurred.

Retirement benefits (defined benefit schemes)

The Group operates a defined benefit pension scheme, which requires payments to an independently operated fund. No funds have been injected into the scheme. The cost of benefits provided under the defined benefit scheme is calculated using the expected benefit accrual unit approach.

Remeasurement arising from defined benefit pension schemes, including actuarial gains or losses, changes in the asset cap effect (deducting amounts included in net interest on net liabilities of the defined benefit schemes) and return on scheme assets (deducting amounts included in net interest on net liabilities of the defined benefi schemes) are instantly recognized in the balance sheet and charged to equity through other comprehensive income for the period during which it is incurred. It will not be reversed to profit and loss in subsequent periods.

Previous service costs are recognized as current expenses when: the defined benefit scheme is revised, or relevant restructuring costs or dismission benefits are recognized by the Group, whichever earlier.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

18. Employee benefits (cont’d)

Retirement benefits (defined benefit schemes) (cont’d)

Net interest is arrived at by multiplying net liabilities or net assets of defined benefits with a discount rate. Changes in net obligations of defined benefits are recognized as cost of sales, administrative expenses, R&D expenses, selling expenses and finance costs in the income statement. Service costs included current services costs, past service costs and settlement of profit or loss. Net interest included interest income from scheme assets, interest expenses for scheme obligations and interest of the asset cap effect.

19. Provisions

Other than contingent consideration and assumed contingent liabilities in a business combination not involving entities under common control, the Group recognizes as provision an obligation that is related to contingen matters when all of the following criteria are fulfilled:

(1) the obligation is a present obligation of the Group;

(2) the obligation would probably result in an outflow of economic benefits from the Group;

(3) the obligation could be reliably measured.

Provisions are initially measured according to the best estimate of expenses on fulfilling the current liabilities, in connection with the risk, uncertainty and timing value of the currency. The carrying value of the provisions would be reassessed on every balance sheet date. The carrying value will be adjusted to the best estimated value if there is certain evidence that the current carrying value is not the best estimate.

The contingent liabilities obtained from a business combination not involving entities under common control shall be measured at fair value at the time of initial recognition. After the initial recognition, according to the amount confirmed by provisions and the balance of the initial recognition amount after deducting the accumulated amortization determined by the revenue recognition principle, the higher of the two shall prevail for subsequen measurements.

20. Share-based payments

Share-based payments can be distinguished into equity-settled share-based payments and cash-settled share-based payments. Equity-settled share-based payments are transactions of the Group settled through the payment of shares or other equity instruments in consideration for receiving services.

Equity-settled share-based payments made in exchange for services rendered by employees are measured at the fair value of equity instruments granted to employees. Instruments which are vested immediately upon the grant are charged to relevant costs or expenses at the fair value on the date of grant and the capital surplus are credited accordingly. Instruments of which vesting is conditional upon completion of services or fulfillment of performance conditions are measured by recognising services rendered during the period in relevant costs or expenses and crediting the capital surplus accordingly at the fair value on the date of grant according to the best estimates of the number of exercisable equity instruments conducted by the Group at each balance sheet date during the pending period. The fair value of equity instruments is determined using the closing price of the Company’s stock on the date of grant.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

21. Revenue generating from contracts with customers

The Group recognizes its revenue upon the fulfilment of contractual performance obligations under a contract, namely, when the customer obtains control over the relevant products or services. The acquisition control over relevant products or services shall mean the ability to direct the use of the products or the provision of the services and receive substantially all economic benefits derived therefrom.

Contract for the sales of products

The product sales contract between the Group and its customers typically includes different contractual performance obligations for the transfer of products and the rendering of services. With respect to the sales of products, the Group typically recognizes its revenue at the time when the customer takes control over the products, taking into account the following factors: the acquisition of the current right to receive payments for the products, the transfer of major risks and rewards of ownership, the transfer of the legal title of the products, the transfer of the physical assets of the products, and customers’ acceptance of the products.

Contract for the rendering of installation services

The service contract between the Group and its customers includes contractual performance obligations for installation services. As the customer is able to forthwith obtain and consume the economic benefits brought by the Group’s contractual performance when the Group performs a contract, the Group considers such contractual performance obligations to be obligations performed over a period of time, and revenue shall be recognized on each balance sheet date according to the progress of installation.

Significant financing component

Where a contract contains a significant financing component, the Group determines transaction prices based on amounts payable assumed to be settled in cash by customers immediately upon the acquisition of control over the products or services. The difference between such transaction price and contract consideration is amortized over the contract period using the effective interest method based on a ratio that discounts the nominal contractua consideration to the current selling price of the products or services. The Group shall not give consideration to any significant financing component in a contract if the gap between the customer’s acquisition of control over the products or services and payment of consideration is expected to be less than 1 year

Warranty clauses

The Group provides quality assurance for products sold in accordance with contract terms and laws and regulations. The accounting treatment of quality assurance in the form of warranty assuring customers products sold are in compliance with required standards is set out in Note III.20. Where the Group provides a service warranty for a standalone service in addition to the assurance of compliance of products with required standards, such warranty is treated as a standalone contractual performance obligation, and a portion of the transaction price shall be allocated to the service warranty based on a percentage of the standalone price for the provision of product and service warranty. When assessing whether a warranty is rendering a standalone service in addition to providing guarantee to customers that all sold goods are in compliance with required standards, the Group wil consider whether or not such warranty is a statutory requirement, the term of the warranty and the nature of the Group’s undertaking to perform its obligations.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

22. Contract assets and contract liabilities

The Group presents contract assets or contract liabilities on the balance sheet according to the relationship between contractual performance obligations and customer payments.

Contract assets

Contract assets are the right to receive consideration following the transfer of products or services to customers which is dependent on factors other than the passage of time.

For details of the Group’s determination and accounting treatment of expected credit losses from contract assets, please refer to Note III.8.

Contract liabilities

Contract liabilities are the obligation to pass products or services to customers in connection with customer consideration received or receivable, for example, amounts received prior to the transfer of the promised products or services.

23. Assets relating to contract cost

The Group’s assets relating to contract costs include the contract acquisition costs and contract performance costs. The costs are presented in inventory, other current assets or other non-current assets based on liquidity of the assets.

Where the Group expects the incremental costs for acquiring a contract to be recoverable, such contract acquisition costs are recognized as an asset (unless the amortisation period of the asset is not more than 1 year).

Costs incurred by the Group for the performance of a contract are recognized as an asset as contract performance costs if they do not fall under the scope of the relevant standards for inventories, fixed assets or intangible assets but meet all the following conditions:

(1) they are directly related to a current or anticipated contract, including direct labour, direct materials, manufacturing expenses (or similar expenses), to be borne by customers as specifically stipulated, and otherwise incurred solely in connection with the contract;

(2) they will increase the resources to be utilized in the Company’s future performance of its contractua obligations;

(3) they are expected to be recoverable.

24. Government grants

Government grants are recognized when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. The grant is measured as the amount received or receivable where it takes the form of a cash asset, or at fair value where it is not a cash asset. Where the fair value cannot be reliably obtained, it should be measured at the nominal value.

In accordance with the stipulations of the government instruments, government grants applied towards acquisition or the formation of long-term assets in other manners are asset-related government grants; the instruments unspecifically refer to the exercise ofjudgement based on the basic conditions for receiving the asset-related grant applied towards or the formation of long-term assets in other manners. All other grants are recognized as incomerelated government grants.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

24. Government grants (cont’d)

Government grants relating to income and applied to make up for related costs or losses in future periods shall be recognized as deferred income, and shall be recognized in profit or loss of the period for which related costs or loss are recognized. Government grants specifically applied for the reimbursement of incurred related costs and expenses shall be directly recognized in profit or loss.

Government grants relating to assets shall offset the carrying amount of related assets, or be recognized as deferred income and credited to profit or loss over the useful life of the asset concerned by reasonable and systematic instalments (provided that government grants measured at nominal value shall be directly recognized in profit or loss). Where the asset concerned is disposed of, transferred, retired or damaged prior to the end of its useful life, the balance of the deferred income yet to be allocated shall be transferred to “asset disposal” under current profit or loss.

25. Deferred tax assets

The Group recognizes deferred tax assets and liabilities based on temporary differences using the balance sheet liability method. Temporary differences are differences between the carrying amount of assets or liabilities in the balance sheet and their tax base on the balance sheet date. Temporary differences also include the differences between the carrying values and tax bases of items not recognized as assets or liabilities where the tax base can be calculated according to the relevant tax regulations.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

(1) where the taxable temporary difference arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

(2) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized except:

(1) where the deductible temporary difference arises from transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

(2) deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures are recognized when all following conditions are met: it is probable that the temporary differences will reverse in the foreseeable future, it is probable that taxable profit against the deductible temporary differences will be available.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

25. Deferred tax assets (cont’d)

As at balance sheet date, deferred tax assets and liabilities are measured in accordance with relevant tax laws at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, and reflects the tax consequences that would follow the manner in which the Group expects, at the balance sheet date, to recover the assets or settle the carrying amount of its assets and liabilities.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset and presented as a net amount if all of the following conditions are met: the Group has the legal right to set off the current income tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities, provided that the taxable entity concerned intends either to settle current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

26. Leases

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As lessee

The Group recognizes leases as the right-of-use asset and lease liabilities, except for short-term leases and leases of low-value assets.

Right-of-use assets

At the commencement date of the lease, the Group recognizes a right-of-use asset. The cost of the right-ofuse asset comprises: (1) the amount of the initial measurement of the lease liability; (2) any lease payments made at or before the commencement date less any lease incentives received; (3) any initial direct cost incurred; (4) an estimate of costs incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. The right-of-use assets are depreciated on a straight-line basis subsequently by the Group. If ownership of the leased asset transfers to the Group at the end of the lease term, depreciation is calculated using the estimated useful life of the asset. Otherwise, the right-of-use assets are depreciated over the shorter of the lease term and the estimated useful lives of the assets.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

26. Leases (cont’d)

Lease liabilities

At the commencement date, the Group measures the lease liability at the present value of the lease payments tha are not paid at that date, except for short-term leases and low-value asset leases. Lease payments include constant payments and the substantial constant payments net of lease incentives, variable lease payments that depend on an index or ratio, the estimated payables of guaranteed residual value, and also include the exercise price of the purchase option or the amount to be paid upon vest of the termination option, provided that the Group is reasonably certain that the option will be vested or that the lease term reflects that the Group will exercise the termination option.

In calculating the present value of the lease payments, the Group uses the interest rate implicit in the lease as the discount rate. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate. The Group calculates the interest expenses of the lease liability in each period during the lease term using the constant periodic rate of interest, and recognizes such interest expenses in profit or loss, except those that in the related asset costs as required. Variable lease payments that are not included in the measurement of the lease assets are recognized in profit or loss as incurred, except those that shall be included in the related asset costs as required.

After the commencement date, the Group increases the book value of the lease liability when interest is recognized and decreases the book value of the lease liability when lease payments are made. In the event of any change to the substantial constant payments, the estimated payables of guaranteed residual value, the index or ratio used to determine lease payments, the assessment results or actual vesting of the purchase option, the renewal option or the termination option, the Group remeasures the lease liability at the present value of the modified lease payments.

Short-term leases and leases oflow-value assets

A short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less, and does not contains any purchase option. The Group does not recognize the right-of-use assets and lease liabilities for buildings short-term leases. The Group recognizes lease payments on short-term leases and leases of low-value assets in the related asset costs or profit or loss on a straight-line basis over the lease term.

As a lessor

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset, except that a lease is classified as an operating lease at the inception date.

As a lessor of operating leases

Rental income of operating leases is recognized in current profit or loss over the respective periods during the lease term on a straight-line basis, while variable lease payment not included in lease receipts is charged to profit or loss as and when incurred.

Initial direct costs are capitalised and recognised over the lease term on the same basis as rental income, through profit or loss.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

27. Share repurchase

The consideration and transaction costs paid to repurchase equity instruments are charged against owner’s equity. Except for share-based payments, the issue (including refinancing), repurchase, disposal or retirement of the Company’s own equity instruments are accounted for as changes in equity.

28. Expenses for safety production

The expenses for safety production set side as stipulated shall be included in the cost of relevant products or current profits and losses, and included in the special reserve at the same time. When such expenses are used, accounting treatment will be performed according to whether fixed assets are formed. If identified as expense expenditures, the special reserve will be written down directly; if fixed assets are formed, the expenses incurred will be collected, fixed assets will be recognized when they reach a predetermined usable state, and the equivalen amount of special reserve will be written down and the equivalent accumulated depreciation will be recognized.

29. Put option related to non-controlling interests

In the process of acquiring majority equity of subsidiaries, the Group grants to minority shareholders the option to sell the shares of subsidiaries held by them to the Group (put option). The Group recognizes the shares of subsidiaries held by minority shareholders as non-controlling interests in its consolidated financial statements; for the put option, the Group undertakes the obligation to redeem the shares of the subsidiaries held by minority shareholders in cash. The Group removes the present value of the amount payable to redeem the put option from its equity (excluding non-controlling interests) and classifies it as financial liability, which is remeasured in subsequent periods at the present value of the the amount payable to redeem the put option and recognized in profit or loss.

30. Fair value measurement

At each balance sheet date, the Group measures the fair value of derivative financial instruments and equity instrument investments. Fair value means the price receivable from the disposal of an asset or required to be paid for the transfer of a liability in an orderly transaction incurred by market participants on the measurement date.

The fair value hierarchy to which an asset or liability measured or disclosed in the financial statements at fair value will be determined on the basis of the lowest level of input which is significant for the fair value measurement as a whole. Input at the first level represents unadjusted quoted prices in an active market for the acquisition of the same asset or liability on the measurement date. Input at the second level represents directly or indirectly observable assets or liabilities apart from input at the first level. Input at the third level represents unobservable input for the asset or liability.

At each balance sheet date, the Group reassesses assets and liabilities measured at fair value on an ongoing basis recognized in the financial statements to determine whether the level of fair value measurement should be changed.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

31. Significant accounting judgements and estimates

The preparation of financial statements requires judgement and estimation of the management. Such judgement and estimation will affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities as at the balance sheet date. However, the consequence arising from the uncertain nature of such estimation may result in significant adjustment to the carrying value of the asset or liability affected in the future.

Judgement

In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:

Determination ofstandalone contractualperformance obligations

The intelligent packaging equipment (printers and corrugators) business of the Group includes four kinds of product or service commitments, i.e. the sale, installation, transportation and insurance services of machinery. As the customer can benefit from the individual use of the four kinds of products or services or their use together with other readily available resources and such product or service commitments are distinctly separable from other products or service commitments, the aforesaid product or service commitments constitute standalone contractua performance obligations respectively.

Business model

The classification of financial assets at initial recognition is dependent on the Group’s business model for managing the assets. Factors considered by the Group in judging the business model include enterprise valuation, the method of reporting the results of financial assets to key management members, risks affecting the results of financial assets and the method for managing such risks, as well as the form of remuneration received by the management personnel of the businesses concerned. In assessing whether the business model is aimed at receiving contract cash flow, the Group is required to analyse and exercise judgment in respect of the reasons, timing, frequency and values of any disposals prior to maturity.

Characteristics of contract cash flow

The classification of financial assets at initial recognition is dependent on the characteristics of the contract cash flow of such type of financial assets. Judgement is required to determine whether the contract cash flow represents interest payment in relation to principal amounts based on outstanding principal amounts only, including judgement of whether it is significantly different from the benchmark cash flow when assessing modifications to the time value of currencies, and judgement of whether the fair value of early repayment features is minima where the financial assets include such early repayment features.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within subsequent financial years, are discussed below.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

31. Significant accounting judgements and estimates (cont’d)

Estimation uncertainty (cont’d)

Impairment offinancial instruments and contract assets

The Group has adopted the expected credit loss model to evaluate the impairment of financial instruments and contract assets. The application of the expected credit loss model requires significant judgement and estimates and the consideration of all reasonable and soundly based information, including forward-looking information. In making such judgement and estimates, the Group estimates the projected movements of the debtor’s credit risk according to past repayment records, economic policies, macro-economic indicators and industry risks. Different estimates may affect impairment allowances, and established impairment allowances may not equal the actua impairment loss amount in the future.

Impairment ofnon-current assets other thanfinancial assets (exclusive ofgoodwill)

The Group assesses at each balance sheet date whether there is an indication that a non-current asset other than financial assets may be impaired. For an intangible asset with an indefinite useful life, in addition to the annual impairment test, it is also tested when there is an indication that it may be impaired. Non-current assets other than financial assets are tested for impairment when there is an indication that the carrying amount is irrecoverable. Where the carrying amount of an asset or an asset group exceeds its recoverable amount—the higher of the asset or asset group’s fair value less costs to sell and its present value of estimated future cash flows, it is considered impaired. The net amount of the fair value less costs to sell is determined based on the price of a similar asset’s sales contract in a fair transaction or the observable market price less the incremental cost directly attributable to the disposal of the asset. When estimating the present value of future cash flows, the management must choose a proper discount rate.

Impairment ofgoodwill

Goodwill must be tested for impairment at least annually. It requires estimating the present value of future cash flows of an asset group or asset group portfolio allocated with goodwill. When estimating the present value of future cash flows, the Group needs to estimate future cash flows generating from the asset group or asset group portfolio, and at the same time choose a proper discount rate to determine the present value of future cash flows. For details, see Note V.20.

Fair value ofunlisted equity investments

The unlisted equity investments have been valued based on the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics. This valuation requires the Group to make estimates about expected future cash flows, credit risk, volatility and discount rates, and hence they are subject to uncertainty.

Deferred tax assets

Deferred tax assets are recognized for all unused tax losses, to the extent that it is likely that taxable profit will be available to utilize these unused tax losses. Significant judgments are needed from management to estimate the timing and amount of taxable profit in the future, with tax planning strategies, to determine the amount of the deferred tax assets that should be recognized.

V.Principal Accounting Policies and Accounting Estimates (Cont’d)

31. Significant accounting judgements and estimates (cont’d)

Estimation uncertainty (cont’d)

Lessee’s incremental borrowing rate

If the interest rate implicit in the lease cannot be readily determined, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The Group discounted the lease payments using the lessee’s incremental borrowing rate. The Group determines the incremental borrowing rate based on the economic environment by reference to the observable interest rate. Then the Group adjusts the reference interest rate based on its own circumstances, underlying assets, lease terms and amounts of lease liabilities to determine the applicable incremental borrowing rate.

Provisions

The Group estimates and makes corresponding provision for product quality guaranty according to contract terms, existing knowledge and past experience. When such contingencies have formed a present obligation and it is probable that an outflow of economic benefits from the Group will be required to settle the obligation, the Group recognizes the contingencies as provisions based on the best estimate of the expenditure required to settle the related present obligation. The recognition and measurement of provisions largely depend on the judgment of management. In the process of making judgment, the Group is required to assess the risks, uncertainties, time value of money and other factors related to such contingencies.

The Group will undertake the provisions for post-sale quality maintenance provided to customers for the sale, maintenance and renovation of the sold goods. The provisions have been made taking into account the Group’s recent data of maintenance experience, and taking into account the risks, uncertainties and other factors related to maintenance matters. Any increase or decrease in this provision may affect the profit and loss in future years.

VI. Taxation

Principal tax items and tax rates

The taxpaying entities subject to different corporate income tax rates are as follows:

VI. Taxation (Cont’d)

2. Tax concessions

Suzhou Parsun Power Machine Co., Ltd., a subsidiary of the Company, passed the high-tech enterprise review by the Department of Science and Technology of Jiangsu Province, Department of Finance of Jiangsu Province and Jiangsu Provincial Tax Service of State Taxation Administration on 18 November 2022 and obtained a High-tech Enterprise Certificate (certificate no.: GR202232005866) jointly issued by the above authorities, with a validity o three years, during which the subsidiary paid the corporate income tax at a reduced rate of 15%. On 25 December 2025, Parsun Power once again passed the re-certification review as a high-tech enterprise (Certificate No.: GR202532001269), valid for three years, so the preferential tax rate of 15% was applicable to the corporate income tax of Parsun Power as at 2026.

Shenzhen Wonder Printing System Co.,Ltd., a subsidiary of the Company, passed the high-tech enterprise review by the Department of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 19 December 2022 and obtained a High-tech Enterprise Certificate (certificate no.: GR202244206125) jointly issued by the above authorities, with a validity of three years, during which the subsidiary paid the corporate income tax at a reduced rate of 15%. On 25 December 2025, Wonder Printing once again passed the re-certification review as a high-tech enterprise (Certificate No.: GR202544202708), valid for three years, so the preferential tax rate of 15% was applicable to the corporate income tax of Wonder Printing as at 2026.

Dongfang Digicom Data Technology (Guangdong) Co., Ltd., a subsidiary of the Company, passed the high-tech enterprise review by the Department of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 28 December 2024 and obtained a High-tech Enterprise Certificate (certificate no.: GR202444005593) jointly issued by the above authorities, with a validity of three years, during which the subsidiary paid the corporate income tax at a reduced rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of Wonder Printing as at 2026.

Unit: RMB yuan

VII Notes to the Consolidated Financial Statements

1. Cash and bank balances

Unit: RMB yuan

Other information:

The fund deposited abroad with restrictions on repatriation was equivalent to RMB3,961,358,430.50 (On 31 December 2025, the number was RMB1,011,711,436.77). Current bank deposits earn interest income based on interest rates for current deposits.

Other cash and cash equivalents include: 1) deposits secured by bank-accepted bills and loan guarantees, etc., with a carrying amount of RMB 40,684,556.30; 2) investment funds deposited, with a carrying amount of RMB 476,049,248.87; 3) funds in transit, with a carrying amount of RMB 38,466.81.

2. Financial assets held for trading

Unit: RMB yuan

3. Derivative financial assets

4. Notes receivable

(1) Notes receivable by type

(2) At the end of the period, the company had endorsed or discounted notes receivable that had not yet matured as of the balance sheet date.

Unit: RMB yuan